Tuesday, May 08, 2007
On this day:

Kling: The real solution to poverty

Economist Arnold Kling has some thoughts on the subject over at TCS Daily, and reminds us of just how good we have it here in 21st Century America:

In the United States, the poverty threshold for a family of four is just under $20,000 a year in income. However, consider what would happen if you were to force every family of four all over the world the world to live on $20,000 a year. The majority of families would say, "Thank you." Outside the United States, there are more people living under our poverty threshold than over it. Perhaps as many as one billion people are living on less than one-tenth of our poverty threshold, or less than $2000 a year for a family of four.

If $500 a year per person represents extreme poverty, then consider that in the year 1800 the average income per person in the world was half that. What we consider extreme poverty today would have been considered upper-middle-class two hundred years ago. If that seems implausible, consider that even in Africa longevity has more than doubled over the past hundred years. This reflects better nutrition and public health, even though African economies on the whole are doing very poorly. William Nordhaus, in The Health of Nations, argues persuasively that if improvements in longevity were included in GDP, then our estimates of growth over the last century would roughly double.

Overall, as David R. Henderson and Charles L. Hooper wrote three years go for TCS, virtually every American alive today is in the top one percent of income, if one takes a worldwide historical perspective. It would be better to live on $20,000 a year in America today than to be a relatively wealthy person living here one hundred years ago.

His conclusion? That "decentralized capitalism, in which no one sets out to broadly reduce poverty, is the best anti-poverty program." Lots of good stuff. Read the whole thing.