Economics 101

Another Day, Another Article on Why Extreme Poverty Is Declining and No One Knows about It

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At the beginning of the month, Fraser Nelson, a columnist with The Spectator, asked, “Around the world, poverty is collapsing. Why is that so hard to believe?” As Nelson notes, this question is becoming perennial. IFWE has written about this phenomenon before, declaring “Extreme Poverty Is Declining. Here’s Why You Might Not Have Heard about It,” and explaining why the surprising news about poverty is that no one realizes it’s declining.

Today, Anne Bradley offers her thoughts on why it’s so hard for people to believe poverty is on the wane. She also explains what’s causing the decline and how Christians can continue to make poverty a thing of the past.

The World Bank and other organizations are always reporting that extreme poverty is on the decline. Why is it so hard for people to realize this? To believe it?

AB: Part of this is due to the digital age, which provides us with immense access to information. It would be easy for anyone to check global poverty stats by going to the World Bank website, but most of us don’t do that. We use social media more and more. It’s inundated with opinion pieces and allows us to live in a kind of echo chamber. So if you believe the world is worse off, you may surround yourself with news that tends to confirm that.

I also think social media makes remote folks seem close, so when we hear bad news we tend to generalize it into trends. That makes it harder for us to believe the world is better off than it was even thirty years ago.

Looking at the data, and if we just isolate it to China, 800 million people have risen out of abject poverty since just 1978. That is phenomenal. But that trend extends to the entire globe, and we have good reason to believe abject poverty will be a thing of the past by 2030.

We have never in human history been able to say this. Most of human history has been a story of material struggle rather than material promise.

How do your students react when you tell them this?

AB: They are stunned and encouraged. On the first day of class, I test them on their awareness of some basic facts: unemployment trends, growth, poverty, etc. They tend to view the world, especially the United States, as worse off rather than better off.

Then we talk about the material goods that even “poor” college students have access to and take for granted: cell phones, laptops, flu shots, electricity, and washing machines. Then they see they are wealthy in global and historical terms.

This is a hopeful and important point of view. It allows my students to broaden the conversation about what they can do, as Christians, to effectively help the poorest and most marginalized people.

What is fueling their reactions?

AB: Part of it is just not having a broad historical view. We tend to weigh what is nearest to us with the most importance. That is a mistake. Looking at history, the recent two-hundred-year trend toward greater wealth is impossible to deny, but you need the perspective to see it.

The social–political narrative students bring to the classroom affects how they view the world. If you view the world as getting worse, then you might believe market trade and globalization have failed us and we need a strong government to help run the economy. If however, you look back at history and see the outcomes of centrally planned economies, you can see how they exacerbate rather than solve poverty.

So your narrative about the world informs what you think governments, charities, and individuals should be doing. Economics explores a theory about the way economies should operate, but that theory must be reconciled with the empirical evidence we see.

What is causing the decline in extreme poverty? How can we continue doing whatever it is that’s causing it?

AB: In the past fifty years the world has come together like never before. We have fewer wars, more economic freedom, less violence, more wealth, more democracies, greater civil rights, fewer trade and communication barriers than ever before.

Lessening trade barriers is key to much of this. When we increase our trading partners, we are able to depend and rely on the gifts and talents of more people. When I buy socks, which are most likely made in China, I am trading with someone. Until recently in history, I had no opportunity to do this. I am giving up some of my income to get the socks and they are giving up some of their labor so that I can have socks. We both win.

As global trade increases, we have the honor of experiencing and benefiting from the God-given gifts of others. This is as it should be because we cannot thrive on our own. We are limited and finite, by God’s design.

We need to keep doing this with as many people across the globe as possible because it empowers poor subsistence farmers from China to Ghana and allows them an opportunity to increase their productivity, which is the key to increasing incomes.

The other result is that wealth empowerment is the key to better political and legal institutions. It tends to force the hands of corrupt governments. It’s much easier to oppress people and deny them basic civil and legal rights when they are poor because they have little recourse. So trade is the key to increasing income and these other societal changes that we are after.

Can you offer a biblical perspective on the issue?

AB: God’s design and desire for his creation is for us to flourish. You see this when you read Genesis—we were created into abundance and then asked to cultivate that abundance using our gifts. But sin marred that process, so the work we must do is harder. Our job remains the same, though. We are to take part in God’s redemptive purposes for his creation by doing what he has called us to do, and doing it well. This means that we need political and civil freedoms to do so. Material well-being is one aspect of biblical flourishing, and we must advocate for a society that allows us the best chances to acquire it.

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