Economic iconoclasm
The poor are getting richer, too

A Yale University researcher cited on TechCentralStation has showed that for the first time in the whole history of civilization, the percentage of extreme poor people worldwide is declining, and has been since 1980.

Yale University's David Dollar points out that from the beginning of human history onward, the number of extreme poor -- those living on less than $1 dollar per day -- has increased with human population. The number of human beings living in extreme poverty has risen every year since the dawn of humanity. Beginning in 1980, at the birth of real globalization, that number began to decline, for the first time ever. Dollar notes that since 1980, the number of extreme poor has fallen by 200 million, even though the human population has increased by 1.8 billion. That's a pretty remarkable proposition. In twenty years, we were able to reverse a pattern that had remained consistent over thousands of years of history -- simply by allowing people to trade freely with another across international borders.

Because the "extreme poor" are subsisting on $1 per day or less, that they are "getting richer" hardly means they are getting rich. But this point is key: for the first time ever in all history, the extreme poor are becoming better off, year by year.

Is this news to you? It should have been reported years ago. I posted earlier how UC Berkeley Professor J. Bradford DeLong wrote,

Since 1975 the world has not only become a richer place, but the world's poor have seen their incomes grow faster than the world's rich. . . .

Why, then, has no one noticed? Why are our newspapers full of reports of growing economic gulfs between rich and poor in our world? And why are they full of reports of the crisis of a model of economic development that does not serve the interests of the world's poor?

The bad news for the "sky is falling" anti-capitalists gets worse, though:

This past June, the Pew Global Attitudes Project released its 2003 worldwide survey, entitled "Views of a Changing World." The study surveyed 38,000 people in 44 nations from every region on earth. The remarkable conclusion: The world's poor can't get enough of globalization. . . .

Pew asked respondents if "people are better off in a free market economy." In all ten African countries, more respondents said yes than no. The same for seven of the eight Asian countries questioned (particularly interesting: the ratio in Vietnam was 95% yes, 4% no; in China, 70% yes, 29% no).

These numbers also become all the more impressive when you look at the world's opinion on U.S. foreign policy and, in particular, its actions with respect to the war with Iraq. There, views of the United States are overwhelmingly negative.

So not only does the third world embrace trade, globalization and capitalism, it is also able to sever U.S. wealth, prosperity and capitalism -- which it likes -- from U.S. foreign policy -- which it doesn't.

President Kennedy once observed, "A rising tide lifts all boats." When wealth is created in a formerly stagnant economy by freeing markets and unleashing human initiative, innovation and will to improve, everyone benefits, even those who fail in their free market ventures.

I wrote a few days ago of a welfare mother named "Rhonda" I assisted last week. Although her life is hard, she is the beneficiary of the largesse of a society wealthy enough to create and sustain the welfare system that sustains her. In former years - let’s say pre-Civil War - she would have been helped by other means: her extended family, benevolent societies, ordinary people she encountered. None may have given her much, but most would have given some. And Americans then were much poorer in both absolute and relative terms than now.

What the explosion of personal wealth in America has allowed us to do, especially in the last 50 years, is to contract out our charity to the government and large non-profit corporations such as the United Way. So Rhonda is receiving far more aid in 2003, in a greater variety, than she could have received in 1903, even adjusted for inflation (but the aid she gets now is much more impersonal and mechanistic than before).

So attached are many Americans to the falsehood that the rich are getting richer and the poor are getting poorer that they knee-jerkingly refuse to believe the evidence to the contrary, even when it is explained by a Berkeley professor - Berkeley, for crying out loud!

But as the Pew Center shows, the people of the Third World know which side their bread is buttered, and they know that the American model is the way out of poverty. (Thanks to Josh Claybourn for the TCS link.)

by Donald Sensing, 9/8/2003 10:38:05 PM. Permalink |