It’s one of the greatest achievements in human history — and no one is talking about it

As a child of the 80s, I remember We Are the World. Yeah, the song is terrible, but it was nice to see rock stars care about charity. Back then poverty in Africa was in the news all the time. But things have been changing in Africa and in other “third-world” countries. More countries are opening up their markets. China, Russia, India, and Botswana are all much freer economies than they were in 1970.

But even I was shocked when I saw this graph:

worldpoverty2

 

Mark Perry, an economics professor at UM-Flint said it best:

Well, the chart above 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. (Source: The 2009 NBER working paper “Parametric Estimations of the World Distribution of Income,” by economists Maxim Pinkovskiy (MIT) and Xavier Sala-i-Martin (Columbia University).

Wow. An 80% drop in world poverty since 1970. Just astounding.

And if you have a few minutes, you really must watch this video… It explains why great data like we see up above is NOT enough to persuade people to move away from socialism and central planning. We need a moral argument for the free enterprise system.

As Arthur Brooks says: Don’t Eat Your Dog.

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Categories:Economy

14 thoughts on “It’s one of the greatest achievements in human history — and no one is talking about it

  1. James Curran says:

    As a financial advisor who for the last 32 years has watched “working class” individuals delay eating there marshmallows by investing in their own financial independence. Delaying pleasure allowed them to participate in a market that grew from under 1000 to over 16000. Providing capital to to free markets reduced poverty and rewarded investors very handsomely. Win Win! Thank you for your brilliant video.

    1. Joshua Mercer says:

      We can’t take credit for the video, as that was made by the American Enterprise Institute. But it is great.

  2. John Gardner says:

    Its a wonder what capitalism, is unfettered, can do!

  3. Pianolady says:

    Did anyone notice the steep drop until the mid 80′s when “Reaganomics” took hold? Therein tells the tale. And is it possible that the steep drop was due to the “War on Poverty”? Granted, these are world figures, but as the U.S. went, so went the world.

  4. Jesús says:

    Are this chart considering inflation or relative poverty?

    1. Joshua Mercer says:

      Yes, all the facts are adjusted to the same standard of one U.S. dollar a day in 1987 dollars.

      1. Ted Seeber says:

        Trouble is, in many countries, food inflation rose. Poverty is now considered $1.25/day.

        We have made tremendous strides though- less than 10% of the world lives on $1.25/day.

        1. Joshua Mercer says:

          Yes, the current rate of poverty is not $1.00/day — it is, I believe, as you say $1.25. Just to be clear, this graph adjusted all the years before and after 1987 to adjust it for inflation. So anyone today earning $1.05/day or $1.15/day or $1.25/day would still be considered in poverty — they in fact would be counted as such on this graph.

  5. Gwen says:

    Wonderfully clear explanation. Truth always takes longer to explain, whereas slogans and sound-bites work for those who spread half-truths and fear.

  6. The temperate mean suggests playing Hudge off against Gudge, since the CREATOR, however “intemperately” we might view it, decided to give autonomy to poor people. GO Chesterton, “Whats wrong with the World”, http://www.readbookonline.net/read/19314/55224/

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