If capitalism continues to spread for just 40 more years, poverty will have been essentially eradicated from the globe
When individuals work hard, or innovate, they receive outsized rewards. When others see those rewards, they are motivated to work hard and innovate. As the lottery-ticket market has demonstrated, the bigger the prize, the bigger the motivation.
A landmark new study by economists Maxim Pinkovskiy and Xavier Sala-i-Martin set out to study changes in the world distribution of income by gathering data from many different countries. As a byproduct of their work, they are able to count the number of individuals who live on $1 per day or less, a key measure of poverty. According to their calculations:
- The number of people living in poverty so defined has plummeted, from 967,574,000 in 1970 to 350,436,000 in 2006, a decrease of a whopping 64 percent.
- The spread of capitalism to other countries has been followed by prosperity; the trend is even more impressive if one considers that the world population skyrocketed over that time, increasing by 3 billion.
If the trend continues for just 40 more years, poverty will have been essentially eradicated from the globe. And capitalism will have done it, says Hassett.
There are those who have argued that the current financial crisis has served as proof that capitalism is a failed ideology. The work of Pinkovskiy and Sala-i-Martin suggests that there are about a billion people whose lives prove otherwise...
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