On a day of good news about the birth of a royal baby who will one day be king of the United Kingdom and many of its commonwealth nations, the Economist has a story about even more good news. World poverty has halved in two decades. The measure used is the $1.25 a day of consumption that is the average poverty line for the 15 poorest nations. This figure shrank from 43 percent in 1990 to 21 percent in 2010. This was not achieved by redistributing wealth from richer countries, but by having wealth created in poorer ones by economic growth. Roughly 1bn people have been lifted out of poverty, two thirds of them in China and the rest in other developing countries.
In 2005 there was a great call by politicians and celebrities to “Make Poverty History,” and wristbands bearing that slogan became fashion accessories. In response I designed some for the Adam Smith Institute that bore the message “I buy goods from poorer countries.” These were publicized on the ASI site and sent free to anyone who asked for one. We distributed many thousands. My point was that to say “Make Poverty History” does not actually do anything, whereas our slogan was a declaration of personal action. It is by opening our markets and buying the goods from developing countries that we have helped them lift people out of poverty. Globalization has achieved major results where foreign aid’s contribution was only marginal.
With the world economy by no means yet out of its recent troubles, this is no time for complacency. There is a further billion to be raised out of deprivation, but we now know what works and what does not. We must allow more goods from these countries into our markets, and they in turn must make outside investment in them an attractive option. Free trade, free markets and freer economies can indeed make poverty history, and billions of people will face a better life in consequence.
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