Economic freedom, not government programs, the key to poverty reduction: News: The Independent Institute

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People have struggled with the best way to deal with poverty since the earliest societies, but the answer is obvious if we just look at history.

From the Renaissance to the Industrial Revolution down to modern times, poverty has been more radically and rapidly alleviated whenever people are free to pursue a profession of their choice, to keep the fruits of their labor, to acquire and to retain private property and rely on a legal system to protect their personal and economic freedoms.

Over the past decades, this era of relatively free enterprise and global trade has resulted in an unprecedented reduction in poverty.

This may come as a surprise to many who have heard the narrative, popular in the media and in some academic circles, that not only the rich get richer, the poor get poorer.

Indeed, when a Hans Rosling survey for Gapminder asked people whether the portion of the world’s population living in extreme poverty had a) almost doubled, b) stayed about the same, or c) almost halved over the past 20 years, only 5 percent of Americans answered correctly that it had been nearly halved.

According to World Bank estimates, the share of people living in extreme poverty, defined as living on less than $ 1.90 per day, has steadily declined from 36% in 1990 to 10% in 2015 (and around 8.6% in 2018). lowest level in recorded history.

In total, 1.1 billion people have been lifted out of extreme poverty in just a quarter of a century?

In addition, 80 percent of those who remain in extreme poverty are concentrated in sub-Saharan Africa and South Asia, mainly in countries characterized by war, corruption and a lack of economic freedom.

These findings are supported by various freedom indices, such as the Fraser Institute’s annual World Economic Freedom Index (or its Human Freedom Index, which includes measures of personal freedom in addition to economic freedom).

Such studies consistently show an incredibly strong correlation between nations that offer greater economic and personal freedom and desirable characteristics like higher per capita income and economic growth, lower poverty levels, and longer life expectancy. , lower infant mortality rates, greater gender equality and generally higher levels of happiness.

So while many focus on the next government program that they are sure will be the silver bullet to reducing poverty, the best solution is simply to create the conditions that allow people to prosper by eliminating government laws and regulations. which exacerbate poverty by restricting the economic and personal situation. freedoms.


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