Who Really Wants to Solve the Problem of Poverty?

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Thu, Sep 18 - 9:00 am EST | 4 years ago by
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The Good Life - Poverty

Let me share with you the most impressive number of our generation: 600 million.

That is how many people have been lifted out of extreme poverty in the last 25 years. Never before in history have so many raised themselves to a minimum level of comfort.
The poverty line is a matter of controversy, as various economists and nations set it differently, depending on calculations of income and purchasing power. But the World Bank‘s number is the most widely cited at $1.25 per day. The excellent Gapminder data site sets it at $2 per day.

Most of the advances were made in the world’s two most populous nations, India and China. Three decades ago, India’s extreme poverty rate was 60%; it is now 33%. China’s progress is even more dramatic: it had a poverty rate of 84% in 1981; now it’s 12%. Latin America has also progressed, as has much of the rest of Asia and northern Africa. Only in sub-Saharan Africa, with a few exceptions there (go Botswana!), has the decline of poverty been excruciatingly slow. Overall in the developing world the poverty rate has declined in our generation from 52% to 21%. Those numbers are from this report at The Wall Street Journal’s site.

That’s great, great news. And it should be celebrated by morally healthy people the world over.

But the good news is under-reported, and there’s a curious silence about it from some quarters. The reason for the silence is that the explanation for the poverty reduction seems to be this:

  • India was very poor because it had experimented with moderate socialism upon gaining independence in 1947, led for many years by Jawaharlal Nehru. But by the 1980s (and especially in 1991) it relaxed its opposition to free markets and deregulated significantly. As a result, enterprise flourished in some sectors and the number of poor declined dramatically.
  • China was desperately poor because it experimented with strong socialism when the communists took over in 1949 – but by the late 1970s, after the death of Mao Zedong, it loosened its restrictions on private property, commerce, and allowed more trade with and investment from foreign countries.

In other words, both moved away from socialism and towards capitalism.

Other factors certainly are certainly involved. I am fond of the “Bollywood Hypothesis” of economist Nimish Adhia, for example, which is that prior to the 1980s businessmen, foreign investors, and the concepts of profit and competition were uniformly portrayed in Hindi films as immoral and heartless – but by the 1980s successful businessmen began to appear regularly as decent (and even occasionally heroic) individuals. The movie industry thus paved the way culturally for India to make its desperately-needed political reforms.

And now for the Yabuts, which is my name for those who seem to have an automatic reaction of explaining away data that does not fit their prior commitments. “Yeah but what about …”

In this case, instead of focusing on the significance of the poverty numbers, the Yabuts immediately turn the discussion to sweatshops, the environment, inequality, and so on. That is fine – and each of those topics deserves a column of its own – but if that is your first response to the awesome good news about poverty reduction, then don’t say that you are so concerned with the fate of poor people.

Yes, people often have to do unpleasant work before rising to prosperity – that’s the way it has been in every single case in history of a nation coming to wealth.

Yes, there are often short-term trade-offs between economic productivity and environmental health – until the nation becomes rich enough to be able to afford to clean and beautify. That’s what happened in the wealthy countries of the world, all of which are cleaner than the poor ones.

Yes, many people have become richer at a faster rate than others – and that is no problem at all, unless they became rich through crime or political pull.

And now for some blamestorming. Let’s return to the silence, mostly from intellectuals of a certain sort, who should be all over the good news about poverty reduction. Yes, I am talking about the vast number of socialist-leaning thinkers who dominate some sectors of our intellectual life.

Most socialists will tell you that they became socialist out of concern for the poor. They came to believe a network of ideas: That only the government can guarantee a minimal standard of living. That the great power of government can be applied efficiently and benevolently as a quick fix for the problems of the most desperately poor. That we are morally obligated to give the government a blank check to do so. They also came to distrust or despise free-market capitalism, which they came to believe sets the rich against the poor and not only fails to guarantee the poor a livelihood but actively exploits them.

We all have our theories. But we also know that humans are prone to take any set of morally-charged beliefs and let them harden. It is also all too easy to make one’s firmly-held beliefs central to one’s personal identity and to take challenges to them as attacks on one’s identity. It becomes almost irresistible then to ignore new data, to resist challenging interpretations, and to react with hostility against those who make them.

So it is with our current generation of socialist-friendlies, for whom it has become a gospel that Thou shalt not say anything good about free markets. That is a gospel that prevents them even from celebrating the improvement in the lives of 600 million human beings.

The real test of character for any thinker is whether one is willing to put one’s theory to the test of practical results. Actively follow the data. Note any striking data. Explain the data.

So the answer to who really wants to solve the problem is: Those who do their homework.

Case studies on India and China should be staple part of the education of any person seriously concerned with poverty. Look at other success cases – South Korea, Poland, Chile, Botswana — to give a few geographically diverse examples.

The common factors are always the same: increased respect for property rights, freedom to trade, openness to foreign investment and human capital, pride in making wealth, and the consequent release of human entrepreneurial energy.

As in China and India, all of these nations have achieved – despite ferocious opposition – at most modest market liberalism.

So just imagine if they tried immodest market liberalism.

Don’t miss last week’s column: Taking Modern Artists at Their Word

* * *

Stephen Hicks is the author of Explaining Postmodernism: Skepticism and Socialism from Rousseau to Foucault and of Nietzsche and the Nazis. He blogs at StephenHicks.org. For future columns on The Good Life, feel welcome to send your philosophical questions and moral dilemmas to him at .

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