Good News For the Poor
posted by Bob Clasen
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Ignorance shrouds capitalism's profound impact on reducing poverty
Jim Klauder
Sunday, January 2, 2005
It should come as heartening news that 2004 was one of the most prosperous years in history. Not because the U.S. economy grew by a solid 4.3 percent, but because developing countries experienced an explosive 6.1 percent economic growth.
According to a recent study by the World Bank, 2004's growth reflected "an expansion without precedent over the past 30 years." Equally encouraging, the report notes that "the rapid growth of developing economies ... has produced a spectacular, if not historic, fall in poverty."
Amazingly, the World Bank report did not get much coverage in our mainstream media. It seems the press was more interested in covering the evils of globalization than in taking notice of how world trade -- which grew by an astounding 10.2 percent this year -- is driving economic growth.
When Americans do hear about the World Bank, it's usually because an unruly mob is protesting against it. The protesters are long on rhetoric but short on facts.
But it's not just protesters who are misguided. Many of our nation's teachers also don't realize why poverty in developing countries is declining at such a rapid rate. Far too often, teachers are uneasy when they realize that free markets are the best way to help those in poverty.
For example, most Americans would be surprised to learn that millions of poor people who live on less than $1 per day would be better off if they could go into debt. The reason they can't is that the institutions required to sustain capitalism are not present.
At the Foundation for Teaching Economics, we've been demonstrating the importance of free markets when we conduct professional development seminars for teachers around the country. We provide teachers with information and curriculum materials that address the question, "Is capitalism good for the poor?"
The poor who are addressed in our lessons are the absolute poor -- the more than 1 billion people around the world who live on less than $1 per day. They have nothing, and they have no way of acquiring anything because of the governmental and social institutions that surround them.
One big reason people in more advanced societies are able to enjoy a more comfortable existence is that they are able to purchase items by going into debt. Americans take that for granted. Any person living in absolute poverty would love to trade positions with any one of us and walk in our shoes -- to have a job and be able to borrow money for a car or a home.
It's a shame that America's youth do not understand these basic economic concepts. If they did, they'd be less inclined to join globalization protests because they would understand why the economies of China and India grew by 8.8 percent and 6 percent, respectively, last year.
In fact, the recent success of developing countries at fighting poverty could be an Economics 101 lesson for today's American classroom. In East Asia and the Pacific region alone, the number of poor dropped from 472 million in 1990 to 271 million in 2001. By 2015, that number should shrink to 19 million, according to the World Bank.
The bank predicts that the total number of those living in poverty will be halved between 1990 and 2015. Globally, that means that those living on $1 per day or less would drop from 1.2 billion in 1990 to 622 million in 2015.
It is undeniable that 2004 was a great year for the poor. The World Bank's prediction that global poverty will continue plummeting is particularly encouraging. But if we are ever to wipe poverty from the face of the Earth, our next generation of leaders must first understand what makes the global economy tick -- the fundamental relationship between free trade and economic growth.
Jim Klauder is vice president of the Foundation for Teaching Economics (www.fte.org), a nonprofit organization dedicated to improving economic education.
____________________________________________________________
http://www.sfgate.com/cgi-bin/article.cgi?f=/chronicle/archive/2005/01/02/INGORAIISN1.DTL
________________________
Ignorance shrouds capitalism's profound impact on reducing poverty
Jim Klauder
Sunday, January 2, 2005
It should come as heartening news that 2004 was one of the most prosperous years in history. Not because the U.S. economy grew by a solid 4.3 percent, but because developing countries experienced an explosive 6.1 percent economic growth.
According to a recent study by the World Bank, 2004's growth reflected "an expansion without precedent over the past 30 years." Equally encouraging, the report notes that "the rapid growth of developing economies ... has produced a spectacular, if not historic, fall in poverty."
Amazingly, the World Bank report did not get much coverage in our mainstream media. It seems the press was more interested in covering the evils of globalization than in taking notice of how world trade -- which grew by an astounding 10.2 percent this year -- is driving economic growth.
When Americans do hear about the World Bank, it's usually because an unruly mob is protesting against it. The protesters are long on rhetoric but short on facts.
But it's not just protesters who are misguided. Many of our nation's teachers also don't realize why poverty in developing countries is declining at such a rapid rate. Far too often, teachers are uneasy when they realize that free markets are the best way to help those in poverty.
For example, most Americans would be surprised to learn that millions of poor people who live on less than $1 per day would be better off if they could go into debt. The reason they can't is that the institutions required to sustain capitalism are not present.
At the Foundation for Teaching Economics, we've been demonstrating the importance of free markets when we conduct professional development seminars for teachers around the country. We provide teachers with information and curriculum materials that address the question, "Is capitalism good for the poor?"
The poor who are addressed in our lessons are the absolute poor -- the more than 1 billion people around the world who live on less than $1 per day. They have nothing, and they have no way of acquiring anything because of the governmental and social institutions that surround them.
One big reason people in more advanced societies are able to enjoy a more comfortable existence is that they are able to purchase items by going into debt. Americans take that for granted. Any person living in absolute poverty would love to trade positions with any one of us and walk in our shoes -- to have a job and be able to borrow money for a car or a home.
It's a shame that America's youth do not understand these basic economic concepts. If they did, they'd be less inclined to join globalization protests because they would understand why the economies of China and India grew by 8.8 percent and 6 percent, respectively, last year.
In fact, the recent success of developing countries at fighting poverty could be an Economics 101 lesson for today's American classroom. In East Asia and the Pacific region alone, the number of poor dropped from 472 million in 1990 to 271 million in 2001. By 2015, that number should shrink to 19 million, according to the World Bank.
The bank predicts that the total number of those living in poverty will be halved between 1990 and 2015. Globally, that means that those living on $1 per day or less would drop from 1.2 billion in 1990 to 622 million in 2015.
It is undeniable that 2004 was a great year for the poor. The World Bank's prediction that global poverty will continue plummeting is particularly encouraging. But if we are ever to wipe poverty from the face of the Earth, our next generation of leaders must first understand what makes the global economy tick -- the fundamental relationship between free trade and economic growth.
Jim Klauder is vice president of the Foundation for Teaching Economics (www.fte.org), a nonprofit organization dedicated to improving economic education.
____________________________________________________________
http://www.sfgate.com/cgi-bin/article.cgi?f=/chronicle/archive/2005/01/02/INGORAIISN1.DTL
Comments
I guess you are making a case for "not going it alone". Yes there is nothing wrong with capitalism and we need only look to the former Soviet Union, China and even a little in North Korea to see that the profit motive brings about efficiency and growth.
However, the situation in the US shows a widening of rich and poor, and the working poor class is getting larger. Voting against one's self interest is going to be a theme I am going to come back to over and over again until stupid middle class Republican figure out they are the dupes of the wealthy.
Bob, I am not a socialist, but those who cannot see that the system is stacked against the middle class as more an more tax breaks go to the rich, and taxes on working people keep going up. You know the breakout point to escape the social security tax is up to $90,000.00 this year. So everything else being equal, quietly, and without fanfare, you got a tax increase if you make over $90,000.
Considering the payroll tax isn't used for what it was intend for, it is a shocker that no one talks about it. However, since the Democrats are as guilty of balance the budget with the social security surplus, I guess we can't expect the truth out of anyone.
I am reading Robert Reich's "Reason". An absolute must read.
This isn't news in the sense that "Hello, capitalism works". It is good news that world proverty is on the wane, if accurate, but I doubt that was the author's real point.