Saint Adam Smith

The World Bank has released new global poverty statistics based on 2008 data. The percentage of the world's population subsisting on less than $1.25 per day dropped to 22.4%, just over half the 1990 rate. At the time of the survey there were about 1.3 billion people in extreme poverty, down about 600 million from 1990 despite a rapidly rising population. Roughly 2/3 of these people lived in Sub-Saharan Africa and the trend was downward even there, at least in percentage terms.

A single generation has seen humanitarian progress unparalleled in history. There is every reason to think these numbers can be cut in half again over the next decade or so. If they are it will represent one of the great miracles of all time. We all, if we have any concern for social justice, ought to be pulling out the stops to make sure they are.

A good place to start might be to ask why we've made so much progress. What changed in the latter part of the twentieth century that produced such phenomenal results? Would more of whatever it was do it again?

International aid programs could play a role but they are notoriously wasteful and ineffective. Fair Trade projects can be useful but I have my reservations about them and I can't imagine they could produce gains of the magnitude we are seeing. Technology is certainly a component, especially in improved crop yields from the Green Revolution, but we will have to see continued gains there just to feed a growing population.

My candidate for hero of the hour is Adam Smith. One former third world country after another has applied his theories, opened up its markets, and allowed its people to virtually leap into the middle class. To do that they have had to impose a rule of law, reduce if not eliminate corruption, and abide by international norms.

Just look at East Asia and the Pacific where progress has been the most dramatic. The poorest of the poor dropped from 56% of the population to 14%. Is there any reason to think they can't match Europe and Central Asia where the rate is a manageable .5%? Wouldn't that be a wonderful thing?

The United States has had an outsized influence on all this in no small measure because we trade more than anyone else. Since WWII we have also prospered more than most. We have our poverty and we have seen stagnation in middle class incomes over the last twenty years but nowhere do we see the grinding destitution represented by life on $1.25 a day.

I am not an Obama fan and was frankly skeptical when the president announced a goal to double exports in five years but two years on we are on track to do exactly that. Signing long stalled trade agreements with South Korea, Panama, and Columbia should be a boost for that goal . Further agreements now being negotiated could fuel economic growth for many years to the benefit of all around. The middle class income issue has to be addressed but I don't see how that happens in a period of sustained slow growth. Slow growth in trade would almost certainly mean an anemic economy. How would that help the middle class?

There are other issues to be addressed. The term free trade often fails to reflect reality and the poor often benefit least. But cutting extreme poverty around the globe by half in eighteen years is no small feat. If more trade can contribute to doing it again, and It appears it can, I'm all for it.

I haven't seen a lot of headlines on this. Maybe we could change that. Can we canonize a non Catholic?