The World Is Getting Better–Part 1–Extreme Poverty

There are days when we all feel that the World is a pretty bad place, that nobody cares about other people and that it's only getting worse. Some people might have extreme-left or extreme-right tendencies and when days like these strike them, they are willing to blame "globalization", or immigrants which in turn does make the world a worse place. So, it is basically a paradox > thinking the world is bad can lead to making the world bad.

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But is the World really, objectively bad? Is it possible that the World is objectively getting better, only people are getting more sensitive to the problems that might bother them, so thanks to the Internet which enables communication to others like themselves, they project their imaginary problems on the entire World? Of course, much more must be done, but in this post, I want to argue that compared to the past, we actually live in better times, but are somehow unaware of it.

As there are many factors which can influence view of the World – we’ll split this theme in a number of posts.

First: a DISCLAIMER: this post series will in absolutely NO WAY argue that since things are getting better, we should stop helping the poor, or curing diseases or giving animals more rights or being even more intolerant of rapists. Just because things are getting better, this does not mean that the work is done. Far from it. Actually, the only point this series tries to say is that things are indeed moving in the right direction and that forces behind these changes ("globalization", democracy, science, vaccines) are in fact improving the world and not hurting it.

So, let's begin. In this first post, let's try and tackle the biggest argument about the World being bad. This argument you can hear almost every day, probably even from your friends – people are dying of hunger and malnutrition, people are living in extreme poverty.

Apple is healing

Image: ulleo/Pixabay

Yes, people are living in extreme poverty. It is not eliminated. Yet. But the World is getting there. Seriously.

Extreme poverty

There is no doubt that extreme poverty is still here, but the fact is – things are getting better indeed. Take a look for example at this chart from Our World in Data.

So what does this graph mean, and how was it calculated? Well, it was calculated using Purchasing-Power Parity or PPP. PPP means adjusting for price levels in different countries – meaning using a consistent unit. To quote from Wikipedia:

Purchasing Power Parity (PPP) is measured by finding the values (in USD) of a basket of consumer goods that are present in each country (such as orange juice, pencils, etc.). If that basket costs $100 in the US and $200 in the United Kingdom, then the purchasing power parity exchange rate is 1:2.

Wikipedia

So, roughly said, this graph represents the share of people in poverty over past two centuries. It is a rough representation since real data was available only after 1981. So the data from before was reconstructed using a different measure. Still, the trend is visible. It has been in a steady decline. But the greatest accomplishments have come in the last 30 or so years, with the share of people living in extreme poverty divided by 4!

To quote directly from Our World In Data: “… poverty falling continuously over the last two centuries. This is even more remarkable when we consider that the population increased 7-fold over the same time. In a world without economic growth, an increase in the population would result in less and less income for everyone.” - Max Roser and Esteban Ortiz-Ospina (2017) – ‘Global Extreme Poverty’. Published online at OurWorldInData.org.

What this means, the World does have a bit of a reason to be proud – population has increased 7-fold, but more and more people are not living in extreme poverty.

Take a look at this chart which wonderfully illustrates what the world was up to with regards to population growth and a number of people living in extreme poverty:

Here you can see that despite world population going up, extreme poverty was mostly in decline.

But, why should capitalism care about people living in poverty? Well, to put simply, the more spending power people have – the more they will actually spend. Simple, right? What this means is – when poverty is reduced everybody wins. People certainly win, and as a matter of fact, so do corporations. When people have money, people buy things. It’s not rocket science.

How else can we display this data so that maybe politicians see the need for investing a bit in international aid? Let us take a look at this analysis. You see how much money was needed before to lift the incomes of all people in extreme poverty up to the line of poverty? You see how much less is it now? It has reduced by 300 billion. This data is generated by multiplying the poverty gap index, by both the poverty line and total population. So both incidence and intensity of poverty have been reduced.

So, it is clear that the world is getting better with regards to a number of people and the situation with extreme poverty on the world-level. In the next chart, you are able to see how extreme poverty has been reducing in the World, by region.

One important thing to note is: “no matter what extreme poverty line we choose, the share of people below that line has declined globally. “

How was poverty reduction achieved anyway?

One of the most important things is actually economic growth. Economic growth in countries such as India and China has had a dramatic impact on World-Wide levels of poverty. Basically, when average salaries in various countries grow, poverty is reduced. This means that salaries need to rise on the lowest levels, since rise on top levels won’t impact poverty in any way.

Next, the World has steadily become smarter, meaning countries have been learning what is working and what is not working in terms of health care. For example, knowledge about how to grow crops has greatly improved this situation. We know what should be planted and what times in a year. Not only that but the world has better crops, more resistant, bred to tolerate drought.

The future?

What I have found is that the World Bank Group has declared a goal of bringing an end to extreme poverty by 2030. This is an important goal because poverty is linked with both Life expectancy and education. This means that people who live in extreme poverty have bad health and shorter lives. Poverty is also connected to education, meaning that the less the education is developed – more poverty is likely.

When looking at previous trends, this all seems very much possible. In effect, there will be less and fewer people who are not adequately educated, there will be less and fewer people who are needlessly living shorter lives, there will be less and fewer people who suffer.

So, when it comes to extreme poverty, the world is getting objectively better. There are enough reasons for optimism.

Main Source:

Max Roser and Esteban Ortiz-Ospina (2017) – ‘Global Extreme Poverty’. Published online at OurWorldInData.org. Retrieved from: https://ourworldindata.org/extreme-poverty/

Further reading:

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