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Poverty does not have to be eternal

Progress is being made to eradicate it

April 6, 2012

CALGARY, AB, Apr. 6, 2012, Troy Media/ – ‘The poor will always be with you,’ remarked a certain carpenter from Nazareth about two millennia ago, and whose life is remembered this time of year and at Christmas.

That statement has long been true: the reasons for poverty are legion, and thus an absolute end to poverty is likely beyond the grasp of imperfect human beings. But that doesn’t mean most poverty cannot be reduced nor its pernicious effects alleviated.

In fact, tremendous progress has been made in reducing poverty worldwide, in particular over the past 200 years.

Uneven progress but still progress

To be specific (according to the late Angus Maddison, a British economist who surveyed the world economy over the last millennia), in the past two centuries worldwide per capita income rose more than eightfold.

While that progress was initially uneven – most of the rise was initially in Europe – other regions are catching up. Witness the growth of Asia over the last 60 years where new wealth creation has decreased poverty.

With his one-thousand year gaze, Maddison asserted three factors could be credited for progress over the centuries.

The first was the conquest or settlement of relatively empty areas which had fertile land, new biological resources, or a potential to accommodate transfers of population, crops or livestock.

While the ‘conquest’ part of that is unfortunate, the reality of people who could turn forests into farms, dry land into ranches and capture more of the ocean’s bounty for nourishment, was of major significance in reducing poverty (and not incidentally, improving the diet of men, women and children).

Maddison suggested the growth of international trade and capital movements as the second major reason for economic growth and reduced poverty.

Banal as it sounds, when more people trade with each other – something human beings have done since we first walked on two legs- opportunities increase and poverty decreases.

That’s why those who reflexively oppose trade, investment and business growth are not exactly helpful in the fight to reduce poverty.

For example, countries with large foreign investment flows prosper. Think of Canada, ever since the Europeans bought our fur pelts 400 years ago, or think of the Dutch, who, as Maddison pointed out, created a modern nation-state in part by protecting the property rights of merchants and entrepreneurs. (Not to mention their promotion of secular education and religious tolerance).

In contrast, countries that lack foreign capital suffer; Cuba and North Korea are prime and stark examples. Both have little trade with others because Marxist politicians like to own and run most everything. Cuba also suffers from the misguided American boycott which also hampers markets.

Maddison’s third necessary factor for flourishing economies over the ages is the role of technological and institutional innovation. The invention of the combustion engine and the resulting motorized farm machinery, for example, helped produce much more food much more cheaply.

Again, British improvements in its banking, financial and fiscal institutions between 1680 and 1820 helped Britain to grow faster than any other European country during that period.

Worldwide, including in Canada, all of the above has helped lift masses of people out of poverty and into better, healthier and longer lives.

One thousand years ago, the average infant could expect to live about 24 years, with one-third of infants perishing in their first year of life. Among the rest, ‘hunger and epidemic disease would ravage the survivors,’ wrote Maddison in his now decade-old book, The World Economy – A Millennial Perspective. In contrast, by 2000, the average infant, using a worldwide average, could expect to live 66 years.  

Between 1970 and 2006, poverty fell from 403 to 152 million

The spillover effects of massive economic growth have had other beneficial effects in multiple areas that also contribute to decent and desirable lives: money for scientific advancement, education, medicine and health care, the arts and a thousand other desirable goods. But the first and most obvious effect has been on poverty reduction.

In a 2009 paper, Columbia University economists Maxim Pinkovskiy and Xavier Sala-i-Martin found that between 1970 and 2006, poverty rates around the world fell by 80 per cent, albeit unevenly – Africa lags behind Asia and Latin America. Nevertheless, worldwide, the total number of poor ‘has fallen from 403 million in 1970 to 152 million in 2006,’ wrote the researchers, who also found that various measures of global inequality declined substantially.

Poverty is a scourge and there are few other issues as critical to ponder. While some individual choices and rotten luck can put people into poverty, progress is being made in getting many people out of it.  

Mark Milke is a Senior Fellow with the Fraser Institute.

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