If I asked you this question – ‘is there more poverty in the world now than there was 25 years ago?’ what would you say?
I bet many would reply, ‘yes, of course, there is much more poverty now than there was 25 years ago!’
Going by the messages we are fed through our media outlets, one would not be blamed for assuming that there is greater poverty and inequality now than ever before, furthermore, that the planet’s ecological system is on the brink of collapse, placing all of us in peril, and the earth is either going to flood with rising seas or it will explode from climate change in the next 5 years.
But I digress.
Back to poverty.
Between 1990 and 2015, the number of people living in poverty fell from 1.9 billion to 836 million.
This dramatic collapse in global poverty has also happened over a period where the earth’s population grew from 5 billion to 7 billion people.
This is quite an accomplishment!
What’s more, economic models predict that extreme poverty will be all but eradicated within the next 20-30 years.
Who should be given the credit for this great achievement in poverty eradication? Should it be attributed to the United Nations and the success their Millennium Development Goals? The boosting of foreign aid? Government wealth redistribution policies?
This lifting of the greatest number of people out of poverty has occurred because of trade liberalisation.
China can take credit for its free market reforms which it began implementing from the late 1970s and early 1980s.
These reforms in China meant that 680 million people have been lifted out of poverty since 1980. “Indeed, China accounts for three quarters of the people moving out of poverty over the last three decades.” It is also worth noting China has never shown any interest in the United Nations’ Millennium Development Goals, nor in policies of wealth redistribution which are becoming fashionable in the West.
In China, this spectacular economic and social development has seen the children of peasant farmers move to work in the manufacturing industry, to their children having the opportunity for higher education and employment in the professions. This is an amazing development.
But China is not the only place that great numbers have been lifted out of poverty.
According to the Institute for Public Affairs: “Growth in other developing countries has lifted 280 million people out of poverty since 2000 according to former World Bank economist Martin Ravallion.”
I will leave you with this final insight from the IPA’s Peter Gregory:
“There is a lesson in this for foreign aid and charity. If free markets are lifting so many hundreds of millions of people out of poverty, foreign aid must re-cast its role as enabling poor people to participate in markets.”
The opportunity to trade, to form new relationships, and partnerships, and to participate in markets is perhaps the most significant way to eradicate poverty.
Political leaders and social activists: Take note.