Extreme Poverty
Pope Leo claims that “hundreds of millions of people throughout the world are immersed in extreme poverty” because “disproportionate wealth remains in the hands of a few,” and this needs to be fixed by a “more equitable distribution of wealth.”
IN FACT, extreme poverty is concentrated in nations with high levels of government corruption, communistic policies, and low levels of human capital like useful skills and mutual trust. Although the root causes of poverty are varied and hard to objectively measure because association does not prove causation, the following facts suggest that wealth attainment didn’t cause it, and wealth redistribution won’t fix it:
- Per the World Bank, “Until the mid-18th century, improvements in living standards worldwide were barely perceptible,” and “most societies were resigned to poverty as an inescapable fact of life.”
- In the mid-18th to early-19th centuries, the Industrial Revolution and modern capitalism emerged, and the countries that adopted capitalism saw manifold increases in wealth, while the rest of the world continued its prior pattern of economic stagnation.
- Per a paper in the Oxford Review of Economic Policy by Harvard economics professor Jeffrey D. Sachs, “Despite the clear association of modern capitalism with the richest countries in the world, most of the poorer countries rejected capitalist models until they had tried a number of alternatives. Many of those detours — especially socialism and national socialism — imposed horrific costs on these societies and on others that got in their way.”
- After the bulk of the world adopted capitalism in the 1980s and 1990s, the portion of the world’s population living below the World Bank’s extreme poverty line plunged from 44% in 1999 to 9% in 2019.
- In 2020, the decades-long trend of falling global poverty rates dramatically reversed when governments enacted Covid-19 lockdowns, thereby destroying jobs, running up government debts, fueling inflation, and causing multitudes of deaths through missed medical care, depression, substance abuse, anxiety, school closures, and other collateral damages.
- While admitting that “past economic growth and poverty reduction have been associated with high GHG [greenhouse gas] emissions,” a 2024 World Bank report calls for “trade-offs” because “ending poverty for the 3 billion people who struggle on less than $6.85 a day would come at a high cost to the environment.”
- A synthesis of more than 100 studies and data from 170 countries show that government corruption is strongly associated with poverty.
- Per a 2006 study of 100+ nations by the World Bank, “rich countries are largely rich because of the skills of their populations and the quality of the institutions supporting economic activity,” and “if an economy has a very efficient judicial system, clear property rights, and an effective government, the result will be a higher total wealth.”
- Per a 2001 World Bank report on “Attacking Poverty,” “the richer the country, the higher the average consumption of the poorest fifth of its population — and the smaller on average the fraction living on less than $1 a day.”
- Government confiscation of private wealth drains it from investments that increase productivity, which is the primary driver of living standards and one of the main reasons why middle- and low-income Americans are richer than their counterparts in every other nation of the world.
- In 2010, the poorest 20% of Americans were 3–30 times richer than the national averages for all people in a wide array of developing nations.
Instead of acknowledging the facts of this matter, authorities like Pope Leo and influential media outlets like the New York Times have maligned the principles and people that rescued the bulk of the world’s population from poverty. Thus, they give a pass to the individuals and ideologies that continue to impoverish hundreds of millions of people.
