Global Poverty Shrinks, Western Economies Stagnate

Douglas Irwin: The Ultimate Global Antipoverty Program - WSJ - WSJ:

 Global poverty has been cut in half in 25 years!

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.

The biggest dividend from the end of the Cold War was the bi-polar political sphere became uni-polar, so "what works" moved into ascension. Rather than two Superpowers sending "foreign aid" (bribes to keep countries in their sphere), the forces of the market -- the forces that work, were unleashed over much of the world. 

But we hear very little about this miracle here: 

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 Branko Milanovic of City University of New York and other researchers have shown.

We hear little about it here because it is WAY more than "Michael Moore" -- the myth of "Capitalist Injustice" is endemic in the political, media and educational systems here and in Western Europe. Why? Because successful economies are to bureaucrats and general government based looters as unprotected grain is to rats! The objective of government leaders and workers in wealthy countries (like wealthy companies) tends toward increasing the take of the leadership and the bureaucracy at the expense of all else.

It is easier to see in corporations than countries, because corporations still have to compete with quarterly profit / loss statements, and they have a hard time controlling all education and media! When Gerstner arrived in '93, bottom level IBM employees typically had greater than something like 10 levels of management between them and the CEO, he cut it to typically 4. He left, and now it is back to around 10 -- and IBM is again in crisis. The cat left, the rats took over -- quickly.

We generally all know what works -- hard work, living with and taking reasonable risks, suffering some losses and learning from them, merit based reward systems, responsibility, private property, rule of law, etc ...

We know that, but we WANT certainty, more leisure, freedom from or at least insurance against loss, we like to avoid responsibility for our failures, we like OUR stuff, but tend to think the "other guy" has too much, etc, etc.

There is a reason that capitalism is associated with "animal spirits" -- emotion, natural drives. We intellectually "know" lots of stuff, but it is our emotions that provide the DRIVE! As Adam Smith was very clear on in "The Theory of Moral Sentiments", we may THINK that if a million Chinese were killed by a natural disaster, that ought to weigh heavier on our minds this evening that say the pain from a finger we smashed in a door -- we may THINK that ought to be true, but we all know what IS true!

Capitalism works extremely well with what is. Socialism and Communism tell you that they can produce "what ought to be". The actual results are obvious -- but like the rats and unprotected grain, as soon as there is a "surplus", the looters show up and corrupt the working capitalist system to a wealth transfer system where the leading beneficiaries are the looters and ultimately destroy the working system yet again!

On top of this, the looters work overtime to convince us that there is a local and global zero sum relationship between poverty being reduced in China and stagnation here -- or, between people that make more money here and people that make less money. The capitalist system is driven off greed and produces growth and wealth. The looter system is based off envy and consumes wealth and produces decline. One might think they would "balance".

In the real world, much as with climate, one system is always driving -- "balance", as in "balance of nature" is a looter myth. The climate is always warming or cooling. Nations are always growing or declining.

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