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Chart of the greatest and most remarkable achievement in human history, thanks to free market capitalism

worldpoverty

Pope Francis has been excoriating capitalism lately, blaming it for causing global injustice and climate change, and even comparing the excesses of unfettered capitalism to the “dung of the devil.” The pontiff’s strong anti-capitalism message reminded me of the chart above. In a CD post in 2013, I suggested that a slightly different version of the chart could perhaps qualify as the “chart of the century” because it illustrates one of the most remarkable achievements in human history: the 80% reduction in world poverty in only 36 years, from 26.8% of the world’s population living on $1 or less (in 1987 dollars) in 1970 to only 5.4% in 2006 (light blue line), led by the 97% reduction in the poverty rate in East Asia (excluding Japan and Hong Kong) from 58.8% to 1.7% over that time period. The data in the chart come from a 2009 NBER working paper “Parametric Estimations of the World Distribution of Income,” by economists Maxim Pinkovskiy (MIT) and Xavier Sala-i-Martin (Columbia).

What accounts for the greatest achievement in human history that you never hear about, and which provides some counterbalance to the anti-market message of Pope Francis? AEI president Arthur Brooks explains in the video above, summarized below :

It turns out that between 1970 and 2010 the worst poverty in the world – people who live on one dollar a day or less – that has decreased by 80 percent (see chart above). You never hear about that.

It’s the greatest achievement in human history, and you never hear about it.

80 percent of the world’s worst poverty has been eradicated in less than 40 years. That has never, ever happened before.

So what did that? What accounts for that? United Nations? US foreign aid? The International Monetary Fund? Central planning? No.

It was globalization, free trade, the boom in international entrepreneurship. In short, it was the free enterprise system, American style, which is our gift to the world.

I will state, assert and defend the statement that if you love the poor, if you are a good Samaritan, you must stand for the free enterprise system, and you must defend it, not just for ourselves but for people around the world. It is the best anti-poverty measure ever invented.

MP: I would argue that free market capitalism, American style, has done more to reduce world poverty than any anti-poverty efforts of the Catholic Church and the Vatican. In fact, I would even argue that just one free-market capitalist corporation – Walmart – might even do as much, or more, to alleviate poverty by providing everyday low prices and jobs for hundreds of thousands of low-income people than the anti-poverty efforts of the Catholic Church in the countries where Walmart operates (US, Mexico, Guatemala, Nicaragua, Brazil, Argentina, Chile, India, China, and nine African countries). In addition to reducing poverty with low-cost groceries, clothing and household goods, Walmart improves the lives of underserved individuals and communities with $1.4 billion in charitable giving every year, which is almost $4 million every day!

Discussion (28 comments)

  1. Seattle Sam says:

    Pope Francis called “unfettered capitalism” the “dung of the devil”.
    Could His Holiness to tell me where capitalism is actually unfettered? I’d like to visit this dung heap.

  2. morganovich says:

    given this dramatic trend in poverty reduction, i think it would be really interesting (and instructive) to take a look at places here poverty has NOT gone down but risen.

    venezeula.

    cuba.

    north korea.

    what do they have in common?

    state run economies that have been tightening their control.

    the pope speaks on economic issues from a deep reservoir of delusion and ignorance.

    the instinct to profit is human and beneficial. it’s what leads us to be of the best possible service to one another. it leads us to invest our time, money, and talent seeking to create things that make others better off.

    it allocates resources better and more efficiently than any system based on philanthropic instinct.

    there is simply no other way to be responsive to what is actually demanded.

    1. David says:

      MEMOS to Pope Francis:

      “It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.” — Murray Rothbard

      “Socialism in general has a record of failure so blatant that only an intellectual could ignore or evade it.” — Thomas Sowell

  3. rjs says:

    looks like the largest drop was in China under and after Mao….you saying Mao was a free market capitalist?

    1. morganovich says:

      mao held so many in such poverty for so long, that even the the very minor early steps toward basic economic rights and capitalism yielded huge payoffs.

      consider a system so bad that over 60% of people had income of < %1 a day in 1980.

      anything would be an improvement.

    2. Jon Murphy says:

      Sorry, which chart are you looking at?

      1. Bob says:

        I’m pretty sure he’s making a veiled reference to Mao’s mass killing. I wouldn’t be surprised if that reduced poverty a bit.

        1. Jon Murphy says:

          Well, I’m wondering if he’s looking at a different chart. I don’t see anything that starts in the 1940’s.

  4. David says:

    Unfortunately, there was no free market. Had there been, the economic growth would have been even greater.

  5. Dennis Oddy says:

    The Pope is trying to rebuild the church’s numbers and is reaching out to the socialist to achieve it. He should look at these numbers…but then again we are dung. viva la capitalism!

    1. Fred Z says:

      He’s done a great job of reducing church membership. I’m done, finished, out, self – excommunicated.

      62 years a Catholic and the Church installs that gormless, evil fool as pope.

      1. Mark C says:

        “62 years a Catholic and the Church installs that formless, evil fool as pope”

        As someone raised Catholic (now secular), I always thought that the vote to determine a new pope was “guided by the hand of God.” I guess you’ll have to find a faith where your deity takes orders from you.

  6. Ken says:

    Well, the chart is not telling the truth. If we use just the modest figure of 4% annual inflation, then over 36 years of the chart, that 1 dollar per day becomes 4.10 dollars per day. Notice on that chart how during the very high inflation of the 70’s and 80′ the chart shows a steep decline and then during the next few decades of low inflation, there is a much more modest decline. So, this is really just a chart of inflationary effects not really poverty reduction.

    1. Mark Perry says:

      Ken: Please note the title of the chart: “Poverty Rates for the World and East Asia: $1/day or less (IN 1987 DOLLARS), 1970 to 2006,” so the data ARE adjusted for inflation.

      1. Ken says:

        I find it disheartening to see commenters with the same name as mine fail to read even the simplest of charts.

        The idiotic inflation argument that the stupid Ken makes above is the standard argument of simpletons everywhere. It never crosses these idiots minds that the people who study these things account for inflation.

        1. Emma says:

          @Smart Ken. LOL. Now, if we could only point out this problem to those who elect people like Stupid Ken to public office, we might get somewhere. Thanks for making my evening.

        2. Ron H. says:

          Real Ken

          Don’t be too disheartened. Your comments are usually pretty easy to identify. Phony Ken’s comment doesn’t at all resemble anything you would normally write.

          The idiotic inflation argument that the stupid Ken makes above is the standard argument of simpletons everywhere. It never crosses these idiots minds that the people who study these things account for inflation.

          Yup, that’s the Ken we know and love. 🙂

  7. Lance Leveque says:

    What the Pope, I suspect, is speaking to are the most egregious examples of the excesses of unfettered capitalism today, and relating it to the “dung of the devil.” Many people today do this, particularly from first world nations. They allow egregious examples, and there are many, to cloud the overall successes of what American capitalism has produced worldwide. It’s a fine line between caring for the poor and doing something about it. But many allow their personal frustrations to cloud the successes of capitalism. The only fool proof method of fairness and equality exists on paper outlining communism. It is a cost benefit analysis moving forward that has far outweighed the benefit of many over the excesses of the few. In other words, people simply can’t get past their own selfish needs to right a wrong they feel has disenfranchised them personally. I feel fairly certain that the Pope is perhaps talking more about personal failings, than condemning a system that has hauled millions from poverty in a mere 40 years.

    1. morganovich says:

      lance-

      that sounds awfully revisionist. that is not at all what the pope is saying.

      i am also curious, just what would you cite as ” the most egregious examples of the excesses of unfettered capitalism today”?

      in general, in order to succeed, a capitalist must make the lives of others better. if the good or service they offer does not make your life better, why would you buy it?

      what is egregious about that?

      in general, when you find egregious economic exploitation, you’ll find that it is not by a free market capitalist, but rather a crony enabled by government to seek unjust rents and force others to do that which they would prefer not to.

      it is government and religion that have the track record of egregious, anti human activities, not the capitalists.

    2. Lance Leveque says:

      Morganovich – you’re making my point. There is nothing I said that would lead anyone to assume that I meant egregiousness was merely making the lives of others better. If you’re arguing that capitalism makes lives better, then aren’t we on the same sheet of music? The egregiousness I was referring to, and that I posit the Pope was likely referring to, are situations for example when CEOs elects to take a $485,000,000 bonus, apart from their stock options and retirement portfolio (which they’re certainly entitled to). If you aren’t calling those ‘egregious’ examples, than I agree with you that we’re not on the same sheet of music (and likely are you not in agreement with the Pope as well). I am in full advocacy for capitalism, even a system that allows for such imbalances to occur; however, I was merely interpreting what I feel the Pope is speaking about.

      1. givemefreedom says:

        Lance,

        If you are in full advocacy for capitalism as you say you are, then you would not use phrases such as “unfettered capitalism” “egregiousness……when CEOs elect to take….bonus”, or “even a system that allows for such imbalances”

        If you believe in Free Market Capitalism that is “unfettered” by government meddling, then you would not make the above statements. Further, the Pope has be very clear in his total disdain of Free market capitalism. Your characterization of his statements are completely wrong.

        1. Lance Leveque says:

          givemefreedom,

          The phrase “unfettered capitalism” was in the article, it wasn’t mine. I was merely using the language already stated. But if you want to assign the word egregious to me, then fine.

          Every system has its limitations and every system has its moral boundaries. Provide one example that doesn’t? Provide one example of a system that won’t collapse of its own weight when violating its basic tenets and moral structure over time? Having to say the same thing over and against is an insane prospect, but; I am a free-market-capitalist, period. Just as I am a free-thinking-citizen, but I don’t violate the tenets and moral boundaries in common society to further my personal motivations. Neither do I feel that free-market-thinking-capitalists should/should do the same. They certainly can, and I’m not arguing that they can’t – the system allows for it.

          What the Pope has advocated for, in my opinion, are Christian principles of fairness and principles of morality. But most of all, what you won’t find anywhere is the Pope ever uttering what you say is “total distain for free market capitalism.” That’s someone’s skewed interpretation.

          1. Ron H. says:

            Lance

            But if you want to assign the word egregious to me, then fine.

            Well, gee, it would be easy to do so since you use it in several first-person statements above.

            If you are quoting the Pope, you might consider using quotes or some other mechanism to indicate that the words are his and not yours.

            If none of the terms givemefreedom attributes to you are really yours then it’s not clear what your point is.

  8. cboon says:

    the only thing you did take it away from one place to another, more money to be made in those poor countries , the vatican loves poor people allways did the philipines . latein america etc , poland is out now my conclusion is for the both of you,, nonsence

  9. Richard Rider says:

    As most of us (here) know, most “egregious excesses of capitalism” are really some variation of crony capitalism or fascism — some collusion between government and “rent seeking” business people. It usually results in a misallocation of resources, market distortions, higher prices, windfall profits and a loss to consumers.

    It is NOT “unfettered capitalism.” It’s pretty much the opposite.

    1. givemefreedom says:

      I think someone needs to explain this quote from Frederic Bastiat to the Pope:

      “Treat all economic questions from the viewpoint of the consumer, for the interests of the consumer are the interests of the human race.”

      Dr Perry has posted this quote a number of times. Somehow I doubt Pope Francis has ever read it. It is an important point that most critics of capitalism don’t understand. Free Market Capitalism is for the benefit of the consumer, not for benefit of business. Businesses, if they had a choice, would much rather operate without the competition that free market capitalism creates. It is the consumer who benefits from that competition.

  10. Hammer says:

    Although I agree it’s a great achievement, some who live on a dollar a day are happier than those with an addiction to materialism would ever imagine.
    I’ve met families living in dirt-floored, two-room shacks who are not only happier than my family, but who also feel sorry for us and our materialism.
    I’m still a capitalist.

    1. Ron H. says:

      Hammer

      I’ve met families living in dirt-floored, two-room shacks who are not only happier than my family, but who also feel sorry for us and our materialism.

      If that’s a common benefit of living on less than a dollar/day then that’s the best news I’ve heard in a long time. That means we can stop worrying about those folks, as they are already better off than we are.

      To continue to meddle in their lives by offering various forms of assistance would be unconscionable, and would work counter to their best interest.

      Thanks for making my day.

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