Winning the war on global poverty

Published on Wednesday, 1 January 2014 22:07 - Written by

It may seem a bleak midwinter — with a listless economy, a sputtering “overhaul” of the health care sector, and growing threats abroad — but there is good news.

Global poverty is retreating. Sure, things seem tough here (and President Barack Obama’s focus on “income inequality” makes things seem worse).

“But if you widened the lens, 2013 actually delivered some encouraging, indeed historic, news,” CNN reports. “It came in the form of a study from Oxford University’s Poverty and Human Development Initiative that concluded that developing countries were enjoying remarkable success in alleviating the worst poverty. They’ve had so much success, in fact, that Oxford predicted that crushing poverty in many of the least developed countries in the world (think Bangladesh, Rwanda, Nepal) is actually on track to be fully eradicated within 20 years.”

Let those words sink in. The grinding poverty in some of the poorest nations in the world could be defeated within two decades.

It’s true many people still live in poverty. As many as 20 percent of our fellow men subsist on less than $2 per day.

It’s important to understand why, however — and why that number is decreasing.

While “unrestrained capitalism” is often blamed for the world’s poverty, we have to realize that throughout human history, poverty, war and oppression have been the rule, not the exception. Poverty didn’t emerge as a result of American capitalism. In fact, capitalism (led by the United States) has helped lift more people out of poverty than any other economic system.

History is quite clear. Over thousands of years of human experience — going through economic arrangements such as tribalism, slavery, feudalism, mercantilism, socialism and communism and welfare statism — no arrangement can compare in creating new value, production of goods and services, and prosperity, like the free market.

Foreign aid, which can alleviate immediate suffering in the wake of a disaster, is not a long-term solution.

“One of the main reasons for this is that corrupt governmental leaders all too easily divert the aid from its target and into private pockets,” says author Wayne Grudem in his seminal book “The Poverty of Nations.” “In nation after nation, dictatorial regimes have profited off the money intended to help their impoverished citizens. In order to maintain their control and continue to profit, corrupt governments suppress the rule of law, civil liberties, private property rights, and other factors that would actually encourage development and growth.”

The five poorest nations are also the most corrupt (and among the loudest critics of capitalism): Liberia, Eritrea, Burundi, Zimbabwe, and the Democratic Republic of the Congo.

Other nations, having rejected communism and other forms of socialism, are enjoying real prosperity, precisely because they’re participating more fully in world markets and trade.

Explains economist Anthony Gregory of the Ludwig von Mises Institute, “It is simply a fact that capitalism, even hampered by the state, has dragged most of the world out of the pitiful poverty that characterized all of human existence for millennia.”

World poverty is on the run, and we have capitalism to thank for that happy fact.