Tuesday, 20 October 2015

The real problem is not wealth, but poverty

People from the Pope to Jane Kelsey think the real problem is not poverty, but wealth. “If the problem facing the British economy had been identified as the destabilising effects of extreme wealth,” writes popular British columnist Zoe Williams in this vein, “how long would it have been before the wealthy themselves came to be scrutinised?”

In his column this morning Daniel Hannan identifies this popular but dangeroudly misguided attitude as “the ultimate #FirstWorldProblem.”  Only this time it’s not funny.

Which previous age of human civilisation would not gladly have swapped its troubles for the challenge of being too abundant? How many people in Africa, Asia and Latin America would not do so today?

It’s the abundance created by generations of freeish trade and moderately-hampered markets, he points out, that makes “today’s luxuries [into] tomorrow’s staples: that’s the real miracle of markets.” That’s the real miracle that’s dragged thousands of millions out of poverty, and on too many folk too easily forget.

They bleat for example about the industrial revolution and the birth of capitalism, and forget that capitalism didn’t create poverty—it inherited it. It inherited it and, over those succeeding generations it began to eradicate it. At the birth of the industrial revolution, virtually everybody lived in squalor. Even in 1990,

36 percent of the world’s people lived in extreme poverty, defined as an income of less than a dollar a day. Today, that figure has fallen to 9 percent, and the drop has been sharpest in the places which have opened up to global markets, above all in Africa.

What is till easily forgotten is Daniel’s most important point.  They say, for example, that: “Poverty is not a naturally occurring germ or virus; it is anthropogenically created though wealth extraction.” But …

If you think about it, though, this is pretty much the opposite of the truth. Poverty is mankind’s primordial condition. It is wealth that is man-made. Suppose we followed through Zoe’s logic and stopped “extracting” wealth: stopped mining, stopped trading, stopped employing our fellow human beings. Would that seriously make us better off? [Emphasis mine.]

Reflect upon those words, because they describe a truth all too easily forgotten: “Poverty is mankind’s primordial condition. It is wealth that is man-made.”

It is when that truth is forgotten, or ignored, that it is forgotten that raising people out of poverty requires the creation of wealth, which does not simply happen automatically. It means the continuing expansion of production and trade.

Without that, we simply condemn the poor to eternal poverty. As the Pope would.


  1. This: "...capitalism didn’t create poverty—it inherited it." is the quote of the day Pete.

    1. Yes, an excellent quip. Not mine however, but Yaron Brook's: I've now linked to his 2013 piece in the post. :-)


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