The most significant events often escape media attention. How many would know from reading their daily newspaper or watching television that we live in an unprecedented economic period when the number of people living in extreme poverty is declining fast? According to a just-published World Bank report, the percentage of people living on less than $1.25 per day—or its local equivalent—has plummeted from 52 percent of the global population in 1981 to 22 percent in 2008. The World Bank doesn’t provide more recent data, but other indices show that the 2008 financial crisis did not interrupt this trend. For millions of households, crossing the symbolic $1.25 threshold means leaving destitution behind and moving toward a more dignified life—no trivial achievement. Moreover, this escape from poverty happens while the global population continues to grow. Doomsday prophets who warned about a ticking “population bomb” have not been vindicated, to say the least. Global warming messiahs, beware: human ingenuity proves able to cope with the predicaments of Mother Nature.
Thirty years ago, half of the planet lived in utter misery, and many commentators argued that poverty was destiny. At best, most pundits conceded that pockets of poverty could be alleviated through international aid. Only a handful of economists begged to differ: Theodor Schultz, Milton Friedman, and Peter Bauer were the mavericks advocating free-market policies for every nation as the way out of poverty. They have been proven right. China’s economy has been growing since the mid-1980s—when Deng Xiaoping, its de facto leader, abandoned central planning, opened the borders for foreign investment, and promoted entrepreneurship at home.
In 1991, after the Soviet economic model proved bankrupt, India left behind its socialist ideology, opened its borders to foreign competition, and deregulated its economy. The economies of the two most populous countries on earth have grown without interruption ever since. Remember, too, that South Korea and Taiwan understood the virtues of free markets long before China or India discovered them. Many smaller countries, across a huge range of cultures, soon followed suit. African governments, too, converted to free-market economics with significant results— Kenya, Uganda, Senegal, and Sierra Leone, among others. The International Monetary Fund, though useless as a lender, has proven beneficial in Africa by persuading local leaders to create independent central banks, which now manage reliable and stable currencies. The central banks, among other free-market institutions, have ignited economic growth in Africa, formerly ravaged by hyperinflation. The reconversion to monetary stability has also played a decisive role in rekindling Brazil’s economy, which had been stalled in the 1970s by monetary follies.