A Billion People Out of Poverty

Cut the global poverty rate in half, lifting a billion people out of poverty, in twenty-five years? Yeah, yeah. But the world reached the goal five years ahead of schedule. Development experts are still rubbing their eyes. [Nobel-prize winning economist] Robert Lucas said, “The consequences for human welfare involved in [understanding rapid economic development] are simply staggering: once one starts to think about them, it is hard to think about anything else.”

The point of calling attention to progress is not self-congratulation but identifying the causes so we can do more of what works… So what is the world doing right?

Market economies, in addition to reaping the benefits of specialization and providing incentives for people to produce things that other people want, solve the problem of coordinating the efforts of hundreds of millions of people by using prices to propagate the information about need and availability far and wide, a computational problem that no planner is brilliant enough to solve from a central bureau…

Though intellectuals are apt to do a spit take when they read a defense of capitalism, its economic benefits are so obvious that they don't need to be shown with numbers. They can literally be seen from space. A satellite photograph of Korea showing the capitalist South aglow in light and the Communist North a pit of darkness vividly illustrates the contrast in the wealth-generating capability between two economic systems, holding geography, history, and culture constant…

[Another] cause is globalization, in particular the explosion in trade made possible by container ships and jet airplanes and by the liberalization of tariffs and other barriers to investment and trade… Notwithstanding the horror that the word elicits in many parts of the political spectrum, globalization, development analysts agree, has been a bonanza for the poor. “Some argue that globalization is a neoliberal conspiracy designed to enrich a very few at the expense of the many. If so, that conspiracy was a disastrous failure – or at least, it helped more than a billion people as an unintended consequence. If only unintended consequences always worked so favorably.”