Tackling poverty

Today’s march on poverty – with church leaders at the front; Gordon Brown giving the sermon – overlooks an important point. Thanks to global capitalism, we are living in a golden age of poverty reduction: never in human history has the West’s wealth been shared more quickly with the developing world, and to such incredible effect. According to the World Bank, the number in extreme poverty has dropped from 40% in 1981 to 21% in 2001. Poverty has fallen most where capitalism has done best. That is why the bulk of the drop in world poverty is done by India and China. “China prices” mean cheap goods for us – but in China it means 400 million fewer people in poverty, according to the World Bank.

Brown occasionally calls for a Marshall Plan for Africa. But the aid poured into the continent has amounted to about a dozen Marshall Plans over the last few decades – without free trade and with continued bad governance, it doesn’t do any good. So its poverty levels have risen from 41% to 46% over the same period. To Brown’s credit, he also denounces the scandal of the Common Agricultural Policy (CAP) – the white man’s shame – set up to stop African farmers tackle poverty by trading with us. Aid certainly puts food into hungry bellies, and can work up to a point. But the lesson of the last two decades is that trade is a far the most powerful tool. Anyone serious about ending world poverty should make this the primary focus. So it is thanks to global capitalism, not state aid, that the demand on the banners held today – half poverty by 2015 – will likely be met. The best thing G8 leaders can do to promote this is drop their tariffs.

P.S. The common riposte to this from Christian Aid etc is “they may be getting richer in India, but inequality is getting worse”. But of you look at global populations (as opposed to countries) then inequality is lower today than at any point since 1910 according to research by Surjit Bhalla, an Indian economist.