News and Commentary

5 Statistics Showing How Capitalism Solves Poverty

New York Mag writer Jesse Singal tweeted out a rather asinine statement on Thursday about capitalism being unable to solve poverty, which couldn’t be further from the truth.

Singal was venting on Twitter at President Donald Trump’s budget supposedly cutting the Meals On Wheels program:

The notion that Trump is abolishing Meals On Wheels is fake news, but what exactly did Singal mean by “their whole philosophy”?

Singal’s response revealed a lack of understanding about the free market:

Keep in mind that he tweeted that from either his laptop or smartphone, both of which are the product of capitalism.

The best response to Singal’s tweet came from The Resurgent‘s Josh Hammer:

Here are five statistics showing how capitalism solves poverty.

1. The number of people living in extreme poverty worldwide declined by 80 percent from 1970 to 2006. People living on a dollar a day or less dramatically fell from 26.8 percent of the global population in 1970 to 5.4 percent in 2006 – an 80 percent decline. It is a truly remarkable achievement that doesn’t receive a lot of media coverage because it highlights the success of capitalism.

“It was globalization, free trade, the boom in international entrepreneurship,” American Enterprise Institute (AEI) president Arthur Brooks said in a 2012 speech. “In short, it was the free enterprise system, American style, which is our gift to the world.”

2. Poverty worldwide included 94 percent of the world’s population in 1820. In 2011, it was only 17 percent. What is even more incredible is that the global poverty rate was 53 percent in 1981, causing the decline from 53 percent to 17 percent to be “the most rapid reduction in poverty in world history.”

“Since the onset of industrialisation – and as a consequence of this, economic growth — the share of people living in poverty started decreasing and kept on falling ever since,” wrote Oxford University’s Martin Roeser, who compiled the aforementioned data.

Roeser’s chart illustrates this:

3. Globally, those in the lower and middle income brackets saw increases in pay of 40 percent from 1988 to 2008. According to the Adam Smith’s Institute’s Ben Southwood:

Those in the middle and bottom of the world income distribution have all got pay rises of around 40% between 1988-2008. Global inequality of life expectancy and height are narrowing too – showing better nutrition and better healthcare where it matters most. What we should care about is the welfare of the poor, not the wealth of the rich.

4. The world is 120 times better off today than in 1800 as a result of capitalism. The Foundation for Economic Education’s (FEE) Steven Horwtiz, citing author Deidre McCloskey, noted that the 120 times figure comes from multiplying “the gains in consumption to the average human by the gain in life expectancy worldwide by 7 (for 7 billion as compared to 1 billion people).”

“The competitive market process has also made education, art, and culture available to more and more people,” wrote Horwitz. “Even the poorest of Americans, not to mention many of the global poor, have access through the Internet and TV to concerts, books, and works of art that were exclusively the province of the wealthy for centuries.”

Horwitz added capitalism has also resulted in people spending “a much smaller percentage of our lives working for pay” due to the increased value of labor and has produced higher life expectancy “by decades.”

5. Mortality rates for children under the age of five declined by 49 percent from 1990 to 2013. This is according to World Health Organization (WHO) data, a decline termed “faster than ever.” Capitalism results in lower child mortality rates by producing better access to medicine and standards of living.

In sum, the wealth and innovation spurred by capitalism has done more to help the poor than any government program ever could. Singal is simply wrong to suggest that “capitalism is not designed” to solve poverty.

Follow Aaron Bandler on Twitter.

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