Capitalism often gets a bad rap. But make no mistake, the incredible decline in poverty worldwide over the past two centuries — and especially over the past three decades — is largely due to economic growth spurred by capitalism and industrialism.
As proof, the Washington Examiner’s Philip Klein cited a study on poverty by Max Roser of the Institute for New Economic Thinking at Oxford University’s Martin School. The full study, published at OurWorldInData.org, notes that in 1820, 94 percent of the global population lived in poverty, with 84 percent considered to be in extreme poverty. By 1992, the overall poverty number had been nearly halved at 51 percent, and the extreme poverty rate had fallen to 24 percent.
But based on a newer measure of poverty introduced by the World Bank in 2008, Mr. Roser noted the numbers are even better than that, with the overall poverty rate falling from 53 percent in 1981 to 17 percent in 2011. The study termed that drop the most rapid reduction in poverty in world history.
Equally as noteworthy is the dichotomy since 1820 of poverty plummeting while population exploded sevenfold. As Mr. Roser stated, “In a world without economic growth, an increase in the population would result into less and less income for everyone, and a sevenfold increase would have surely resulted in a world in which everyone is extremely poor. Yet, the exact opposite happened. In a time of unprecedented population growth, we managed to lift more and more people out of poverty!”
In 1964, President Lyndon Johnson launched the War on Poverty in America. The poverty rate was just above 17 percent. Since then, U.S. taxpayers have spent more than $22 trillion (adjusted for inflation) fighting the war, yet today’s poverty rate hovers around 15 percent. That fact and Mr. Roser’s study should demonstrate to elected officials at all levels that policies supporting economic growth are the surest means by which to lift people up. All hail capitalism.