Capitalism Key to Ending Poverty

At about the same time a hodgepodge of protesters descended on Washington, D.C. last month to protest capitalism, globalization and free trade, the United Nations and the Institute for International Studies released a triad of studies declaring that humanity is, for the most part, in the best condition it’s ever been.

World poverty is down. Income gaps are narrowing. And the reasons for all of this are, to the protesters’ chagrin, none other than capitalism, globalization and free trade.

The first study is the 2002 edition of the United Nations’ annual "Human Development Report." The report informs us that as of 2002, 140 of the world’s 200 countries -- 70 percent -- now hold multi-party elections. Eighty-two countries representing 57 percent of the human population are fully democratic, the highest percentage in human history. After a century in which totalitarianism -- Nazism, fascism and communism -- killed more than 170 million people, a clear move toward universal political freedom is afoot.

The numbers on world economics are good, too. World poverty fell more than 20 percent between 1990 and 1999, a decade of aggressive globalization. The number of world Internet users is expected to double by 2005 to one billion. In those regions of the world most sympathetic to liberal reform, the news is even better. In ten years, poverty halved in in East Asia and the Pacific regions.

Since 1990, 800 million people have gained new access to improved water supplies, and 750 million to improved sanitation. In the last 30 years, infant mortality rates have dropped from 96 deaths per 1,000 live births to just 56.

A study from the Institute for International Studies boasts even more good news. The author of that study, Surjit S. Bhalla, employed accounting statistics based on individual incomes instead of national incomes, which allowed him to more accurately measure wealth and poverty rates. Bhalla concludes that the world poverty rate has declined even more dramatically than the U.N. reports, from 44 percent in 1980 to just 13 percent in 2000. Bhalla attributes the decline to progress in China and India, the two most populous nations in the world, and two nations that have made significant moves toward more economic freedom in the last 20 years.

But not all the news is good. Huge swaths of humanity still fester in abject poverty. Not surprisingly, the regions witnessing the most poverty also happen to house those cultures and regimes most averse to markets and capitalism -- sub-Saharan Africa and the Arab world.

Twenty countries in sub-Saharan Africa are poorer now than they were in 1990. Another 23 are, astoundingly, poorer than they were in 1975. Three hundred million people in the region now live in extreme poverty. Sub-Saharan Africa also scores lower on the "freedom index" than any region on the planet.

A third study, conducted by a group of Arab scholars and also released by the U.N., draws similar conclusions about the Arab world. It offers a scathing indictment of Arab culture’s self-imposed isolation from international markets and of its oppression of political and economic freedom. The report points out that over the last 20 years, the Arab world has produced the second lowest per-capita growth rates in income in the world. Total productivity in the Arab world actually declined between 1960 and 2000, a period that saw the rise of militant Islam and, paradoxically, unprecedented economic growth almost everywhere else.

The last half-century has seen an Arab world increasingly hostile to capitalism, particularly to property rights and trade. Consequently, the last half-century has also seen an Arab world lapsing further and further behind the rest of humanity. Arab industrial labor output was at 32 percent of North American output in 1960. By 1990, it had fallen to just 19 percent.

The Atlantic Monthly points out that since the ninth century, the Arab world has translated only about 100,000 books into Arabic. That’s equal to the number of books the nation of Spain translates in one year. Consequently, the Arab world is suffering a "brain drain," as its most promising minds migrate to societies more conducive to learning. Arab scholars have left in droves to pursue academic freedom in other countries. An astounding 51 percent of Arab adolescents told U.N. researchers they wanted to emigrate.

These studies, taken together, paint a telling picture of the state of humanity, and of what steps we can take to make it even better. When countries embrace free markets, trade, and political freedom, they thrive. Incomes grow. Lifespans lengthen. Social maladies mend. When nations isolate themselves from international markets, when they deny citizens free elections, free press, and property, they falter. Incomes wane. Disease and famine swell. Strife looms. Communist and isolated North Korea, for example, has lost 10 percent of its population -- two million people -- to famine since 1995. And that’s in an allegedly "developed" country.

Anti-globalization protesters can rail all they like against the evils of capitalism, international markets and classical liberalism. But the numbers are unmistakable. Wealth is the only remedy for poverty, and capitalism is the only real way to create wealth.

Radley Balko is a writer living in Arlington, Va. He also maintains a weblog at

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