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>Trickle down economics comes of age


By: Tim Wood

Posted: 2002/06/14 Fri 04:00  | Moneyweb 1997-2002

NEW YORK -- With the World Development Summit almost upon Jo'burg, we can expect lengthy diatribes about the great evils keeping people in poverty.

You won't hear the truth though since international summits have become a cottage industry for nailing capitalism. The Jo'burg Summit's theme can already be predicted the have nots will shortly and surely explode in rage if the haves don't soon share their comforts and bridge the "wealth gap".

The facts are rather different; vastly so after a mere three decades since international agencies, NGOs and activist groups latched onto apocalyptic homilies as the best means to fund themselves.

Remember when we were going to have consumed all available oil before 2000? Recall when the world would be seared by a depleted ozone layer? Recollect that even before 1990, the world was supposed to run out of food? Neither should we forget that the poor were going to get poorer, while the rich would grow fatter and more grasping.

Not so writes Columbia University economist, Xavier Sala-i-Martin, in a recently published paper. Whereas, in 1970, more than two fifths of the global population lived in poverty, just one fifth suffered so in 1998.

Put another way, absolute poverty more than halved in this period even as the world's population increased by a similar amount.

Over the same time we have replaced and added to oil reserves. Food production has become so efficient that just a few thousand farms are capable of providing the entire earth's caloric requirements. Fewer non-renewable resources are consumed even though industrial output has risen geometrically, and the major urban areas are cleaner than they have ever been.

It is a profound accomplishment; a testimony to human ingenuity, perseverance and innovation.

It also an inescapable fact that virtually all the gains have come from the laboratories and balance sheets of Anglo-Saxon capitalist enterprise. Only the mendaciously ignorant could suggest it was accidental; the byproduct of misbegotten inheritances.

Countries that adopt free market solutions prosper and nowhere is it more evident than in the gap between Africa and Asia. Africa is the only region that has gone backwards in the last third of a century, squandering entirely its liberation from colonialism.

Whereas Africa represented little more than one-tenth of the world's poor in 1970, it now accounts for two thirds of the total. Asia had a radically reversed experience according to Sala-i-Martin's data, moving from nearly four fifths of the world's poor thirty two years ago to just one seventh today. Latin America has stood still.

Most of Asia's gains came from China and India which have one thing in common they abandoned their hybrid Marxist-Leninist claptrap, which focused on social engineering, in favour of freer enterprise that promotes individual liberty. They have a long way to go, but famine and misery aren't as common as they once were.

Despite the evidence, the UN continues to be the chief protagonist in warning that market mechanisms harm the poor, especially in terms of "globalisation". The UN's solution, echoed by the likes of Greenpeace and Sub-Saharan Africa's governments is not to emulate China and India's accelerated growth, but to retard developed country growth.

The radicals sincerely believe, in the face of a thousand failures, that giving bureaucrats more power and money will solve Africa's problems.

That's not a message that Jo'burg's summiteers should be willing to hear. But who will be there to boo the nonsense since those who do make a difference will be at work?


Comment on this story  >

Trickle down economics comes of age (Tim Wood)
. . Timmy: Enough already! You set up your strawmen & knock them down. Very clever. You really sound more 'n more like a cross between Ray Macauey & an AIDS dissident (It trickles, just like snot)
. . Trickle-down would have worked in Africa IF ()
. . Nice one Tim....we both have the advantage of 'distance enhanced objectivity" (The Cyber Editing Team, Asia)
. . . . To Cyber Editing (GUS)
. . to it trickles just like snot (pj allderman)
. . Gobsmacked! (Gobsmacked)
. . wrong tim, only one thing flows downhill. ()
. . . . What on earth is wrong with a wealth gap? (Tim Wood)
. . Music to my ears (CV)


 

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Timothy Wood

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" Africa is the only region that has gone backwards in the last third of a century, squandering entirely its liberation from colonialism."


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