"To see where we are coming from we must go far back in time. 30 or even 50 years are not enough. When you only consider what the world looked during our life time it is easy to make the mistake of thinking of the world as relatively static – the rich, healthy and educated parts of the world here and the poor, uneducated, sick regions there – and to falsely conclude that it always was like that and that it always will be like that.
Take a longer perspective and it becomes very clear that the world is not static at all. The countries that are rich today were very poor just very recently and were in fact worse off than the poor countries today.
To avoid portraying the world in a static way – the North always much richer than the South – we have to start 200 years ago before the time when living conditions really changed dramatically.
Researchers measure extreme poverty as living with less than 1.90$ per day. These poverty figures take into account non-monetary forms of income – for poor families today and in the past this is important, particularly because of subsistence farming. The poverty measure is also corrected for different price levels in different countries and adjusted for price changes over time (inflation) – poverty is measured in so-called international dollar that accounts for these adjustments.
The first chart shows the estimates for the share of the world population living in extreme poverty. In 1820 only a tiny elite enjoyed higher standards of living, while the vast majority of people lived in conditions that we would call extreme poverty today. Since then the share of extremely poor people fell continuously. More and more world regions industrialised and thereby increased productivity which made it possible to lift more people out of poverty: In 1950 three-quarters of the world were living in extreme poverty; in 1981 it was still 44%. For 2015 – the last year for which we currently have data – research suggests that the share in extreme poverty has fallen below 10%.
That is a huge achievement, for me as a researcher who focuses on growth and inequality maybe the biggest achievement of all in the last two centuries. It is particularly remarkable if we consider that the world population has increased 7-fold over the last two centuries – switch to the ‘Absolute’ view in the visualisation below to see the number of people in and out of poverty. In a world without economic growth, such an increase in the population would have resulted in less and less income for everyone; A 7-fold increase in the world population would have been enough to drive everyone into extreme poverty. Yet, the exact opposite happened. In a time of unprecedented population growth our world managed to give more prosperity to more people and to continuously lift more people out of poverty.
Increasing productivity was important because it made vital goods and services less scarce: more food, better clothing, and less cramped housing. Productivity is the ratio between the output of our work and the input that we put in our work; as productivity increased we benefitted from more output, but also from less input – weekly working hours fell very substantially.
Economic growth was also important because it changed the relationship between people. In the long time in which the world lived in a non-growth world the only way to become better off is if someone else got worse off. Your own good luck is your neighbours bad luck. Economic growth changed that, growth made it possible that you are better off when others become better off. The ingenuity of those that built the technology that increased productivity – the car, the machinery, and communication technology – made some of them very rich and at the same time it increased the productivity and the incomes of others. It is hard to overstate how different life in zero-sum and a positive-sum economy are.
Unfortunately the media is overly obsessed with reporting single events and with things that go wrong and does not nearly pay enough attention to the slow developments that reshape our world. With this empirical data on the reduction of poverty we can make it concrete what a media that would report global development would look like. The headline could be "The number of people in extreme poverty fell by 130,000 since yesterday” and they wouldn’t have this headline once, but every single day since 1990, since, on average, there were 130,000 people fewer in extreme poverty every day."
Sunday, June 24, 2018
The short history of global living conditions and why it matters that we know it
Great post by Max Roser. Excerpt: