Malthus must be turning over in his grave after the World Bank announced this week that the percentage of the world’s 7.3-billion-plus people living in extreme poverty is likely to fall to a record low this year of under 10 percent.
Using an updated international poverty line of US $1.90 a day, the Bank projects that “global poverty will have fallen from 902 million people or 12.8 per cent of the global population in 2012 to 702 million people, or 9.6 per cent of the global population, this year.”
The Bank’s president attributes this good news to “strong growth rates in developing countries in recent years, investments in people’s education, health, and social safety nets that helped keep people from falling back into poverty. He cautioned, however, that with slowing global economic growth, and with many of the world’s remaining poor people living in fragile and conflict-affected states, and the considerable depth and breadth of remaining poverty, the goal to end extreme poverty remained a highly ambitious target.”
An ambitious target, for sure. But it is refreshing to learn that strong growth rates are recognized as an important part of the formula to end poverty. As Cato Institute’s HumanProgress.org blog notes,
“The key to the improvements in the lives of ordinary people over the last 200 years were industrialization and trade, which generated historically unprecedented rates of growth. And the importance of growth cannot be overemphasized. There is not a single example of a country emerging from widespread poverty without sustained economic growth.”
Most Americans never experience the kind of extreme poverty other parts of the world are trying to climb out of. But it would be nice if more of us, including our elected officials in Washington, D.C. and Salem, understood that economic growth, generated by a system of free markets and property rights in a capitalist economy, is a necessary condition to improve living standards.