Capitalism kills poverty

“It’s the greatest achievement in human history, and one you probably never heard about,” trumpets Mark J. Perry at the American Enterprise Institute. He knows exactly why you never heard about it: the achievement he refers to is a hundred-megaton left-wing narrative-killer. To put it simply, the spread of capitalism around the world over the past 25 years has caused the fastest, deepest reduction in poverty in human history.

Perry cites a Wall Street Journal op-ed from Dartmouth economics professor Douglas Irwin to report the good news:

The World Bank reported on Oct. 9 that the share of the world population living in extreme poverty had fallen to 15% in 2011 from 36% in 1990. Earlier this year, the International Labor Office reported that the number of workers in the world earning less than $1.25 a day has fallen to 375 million 2013 from 811 million in 1991.

Such stunning news seems to have escaped public notice, but it means something extraordinary: The past 25 years have witnessed the greatest reduction in global poverty in the history of the world.

To what should this be attributed? Official organizations noting the trend have tended to waffle, but let’s be blunt: The credit goes to the spread of capitalism. Over the past few decades, developing countries have embraced economic-policy reforms that have cleared the way for private enterprise.

The reduction in world poverty has attracted little attention because it runs against the narrative pushed by those hostile to capitalism. The Michael Moores of the world portray capitalism as a degrading system in which the rich get richer and the poor get poorer. Yet thanks to growth in the developing world, world-wide income inequality—measured across countries and individual people—is falling, not rising, as Branco Milanovic of City University of New York and other researchers have shown.

The president of the American Enterprise Institute, Arthur Brooks, joins the celebration: “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.”

Irwin’s article recounts capitalist triumphs in South America, Africa, India, and yes, even China. The introduction of a relatively small jolt of capitalist freedom was enough to produce astounding reductions in desperate poverty in …read more    

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