Less Poor than Ever Before

This is old news, but I recently rediscovered the Brookings Institution's "Poverty in Numbers" report [PDF] thanks to Bryan Caplan. The results of their analysis are so stunning that they bear repeating.

In 2005, over 1,300 million people lived in extreme poverty, defined by Brookings (and the World Bank) as living on less than $1.25 a day. By 2010, that number had fallen to less than 900 million, and if trends continue, that will fall to less than 600 million by 2015. Considering that this is happening while the human race is adding about a billion people per decade, this should put an end to Malthusian fears of overpopulation once and for all.

Expressed as a percentage of the population, the trend is even more astonishing. In 1981, the global poverty rate was higher than 50%. In 1990, when the UN established the Millennium Development Goals, the poverty rate had fallen to 41.6%. The MDG target of 20.8% by 2015 was already met in 2008. According to Brookings, in 2010 the poverty rate was 15.8%, and if trends continue, that will fall to only 9.9% by 2015.

To put that another way, not only have we achieved the Millennium Development Goal of halving the global poverty rate seven years early, but we are on track to halve it again by the MDG's deadline.

Not only is the overall poverty rate falling, but poverty is falling in every region studied by Brookings. The slowest progress is in Sub-Saharan Africa, but even there we have reason for optimism. For decades, the number of poor in Sub-Saharan Africa just continued to grow. Since 2005, for the first time on record, the total number of poor in that region has fallen. Also for the first time on record, the Sub-Saharan poverty rate fell below 50% between 2005 and 2010. If trends continue, it will fall below 40% by 2015.

It's worth noting that this is not a pre-recession report painting an overly rosy picture. The result was released in January 2011, and these results are despite an extra 64 million people kept in extreme poverty by the Great Recession. As the report says, "if not for the financial crisis our results would be even more dramatic than they are."

To emphasize just how dramatic these results are, the global poverty rate is lower than at any other point in human history. There has truly never been a better time to be human.

Richer than Ever Before

There has never been a better time to be human. Even in the depths of the global Great Recession, average per capita incomes are higher than they have been for most of human history. This is true in rich and poor countries alike, and within developed countries it's true at all income levels. The rich are getting richer while the poor and middle class are getting richer too!

It's true, the last couple years have been a struggle for many around the world. Lots of people, including me, lost their jobs to the Great Recession. However, despite the hardships of the last couple years, we are still living in the greatest era in human history.

According to the World Bank, world GDP per capita in 2010 was $6,035, which is 99.77% of 2008's peak of $6,049. (All dollar amounts in this entry are expressed in constant 2000 US dollars.) GDP per capita in 2010 was 3.04% higher than in 2009, nearly twice the 1970-2008 average of 1.60% growth. The world economy is well on the way to recovery, and there's every reason to expect 2011's GDP per capita to be higher than ever before.

The Great Recession is clearly visible in the graph to the right, as are a handful of other global recessions and slowdowns over the past forty years. The Great Recession is clearly the sharpest decline the world has seen lately, and GDP per capita in 2009 was less than it had been in 2006. Even so, incomes were 2.59% higher in 2009 than in 2005. Indeed, in 2006, for the first time in human history, the average human being earned $16 per day. The average person has not earned less than $16 per day since 2005. To put that another way, the five most prosperous years in human history so far were 2006, 2007, 2008, 2009 and 2010.

This is especially true for the low- and middle-income countries, who as a group have not seen a decline in GDP per capita since 1983. The 2010 GDP per capita of $1,834 was the highest ever recorded for this group of countries, and a full 6.26% higher than the previous record set in 2009. The past decade in particular has seen incredible growth, averaging 4.53% growth in GDP per capita per year. Income per person in 2010 was three times higher than in 1969.

An income of $1,834 per year might not sound like a lot to those of us in first-world countries. Indeed, it's just a little more than $5 per day. But 2010 was the first year ever when the average person in these countries earned $5 per day. It's not a lot, but it's more than they have ever had before. As an indication of just how fast the poor countries are joining the rich, the $4-per-day threshold was first passed as recently as 2006, and the $3-per-day threshold in 1998.

The Great Recession has hit high-income countries much harder than low- and middle-income countries. GDP per capita in high-income countries was still 2.23% lower in 2010 than the 2007 peak of $28,095. Per capita incomes were higher in 2006, 2007 and 2008 than they were in 2010, and even 2005 was higher than 2009.

However, the hardships of the last few years have not undone the prosperity we have achieved. At the lowest point of the Great Recession, in 2009, income per person in high-income countries was $26,807. This was a full 6.92% higher than the heights of the dot-com bubble in 2000. As this video posted by Greg Mankiw notes, "Even after the worst financial crisis since the 1930s, US per capita income is still higher than at the peak of the 1990s boom."

We are also on the road to recovery; incomes grew 2.47% between 2009 and 2010. If we achieve a similar level of growth in 2011, we will set a new record for the most prosperous year ever. Even if we don't set a new record, GDP per capita in the high-income countries will still be twice what it was in the mid-1970s.

Despite the great recession, incomes are at or very close to the highest they have ever been for most people around the world. This is especially true for poorer countries, but it's also true for the recession-ravaged wealthy countries. No generation in human history has had it better than we do. There has never been a better time to be human.

Online Polls from Sixth Debate

In the sixth Republican debate, held in Orlando, Florida, Fox News polled online viewers on a number of questions and then reported on three of the results during the debate. Those questions, the results and my own answers are below. The questions and results are based on the video of the debate here and the transcript here.

I define rich as someone having an annual income higher than:

I was surprised at the result here, with a full 44% of respondents saying someone with an annual income of $999,000 would not be rich. My answer was the lowest available, $100,000, and only 13% agreed with me. My reasoning is that US median individual income for 2010 was $26,197 (table P-7 here). Someone making $100,000 a year makes almost four times more than the median American. If that's not rich, I don't know what is.

If we're talking about households rather than individuals (as I assumed), I might have chosen $250,000, even though I think that's a bit high. For households, an income of $100,000 puts you in the second-highest quintile; the upper cut-off for the second-highest quintile is $100,065 (table H-1 here). I think being in the top-fifth of American households probably qualifies as being rich, so maybe the right answer is slightly higher than $100,000. Even so, the lower cut-off for the top 5% of American households is $180,810, so an annual income of $250,000 puts someone solidly into the top 5%. If that's not rich, once again, I don't know what is.

If you had to cut a government department, what would you cut?

This result wasn't surprising at all. The Department of Education is a huge target for both conservatives and libertarians. I think it could certainly use reform, but I'm not convinced that eliminating the Department entirely is the best way to reform education policy in this country. The same goes for the EPA. They've definitely overstepped their bounds of late, but regulating externalities like pollution is one of the core functions of government.

The Department of Labor could probably be recombined with Commerce, and I'm sure many of the regulations it enforces could be streamlined or eliminated with no ill effects. At the same time, a lot of its agencies perform necessary government functions, like the BLS and OSHA. I think at least some of the opposition to the Department of Labor comes from its name, which some see as synonymous with unions. I didn't realize this until writing this entry, but in fact, the National Labor Relations Board (which does probably deserve to be eliminated) is an independent agency, separate from the Department of Labor.

I voted to eliminate the Department of Housing and Urban Development. As the Department responsible for Fannie Mae and Freddie Mac, HUD has been possibly the most abject failure of any federal department over the last two decades. Even if it hadn't overseen the housing bubble, there's simply no reason that I can see that we need a federal housing policy, or a federal urban development policy. I don't know of anything the federal government does that is more local in nature than urban development. Even the name begs for the department to be localized.

What is the best way to fix immigration in the US?

The third answer read out loud during the debate was "deport all immigrants," which received 22% of the vote and was the second-place answer. I don't remember the exact wording of the options that night, but I hope that either the actual option read "deport all illegal immigrants" or that these 22% of people interpreted it that way. Conflating the illegal/legal immigration issues is something I expect from liberals, not conservatives.

My answer was to "create a path to citizenship," and 35% agreed with me, more than any other answer. However, a stronger fence and more border patrol agents go hand-in-hand, and it's hard to see someone supporting one of those while opposing the other. Combined, the "stronger border" options get 39% of the vote.

I support a path to citizenship out of practicality, although I would prefer to call it a "path to legality." Not everyone who comes to the US wants to stay permanently, and not everyone who stays permanently wants to become a citizen. Our immigration policy has to recognize that fact. But I do support some kind of path to legality for illegal immigrants already here because the other two options are simply impractical. With upwards of ten million illegals in the country, it is practically and fiscally impossible to deport them all. But leaving them alone and maintaining the status quo, where ten million people are in open disobedience of the law, is also impractical. It breeds contempt for the law and for America as a country, as evidenced by the 2006 protests. The only way forward is through some kind of path to legality.

The stronger fence and border patrol also won't work for practical reasons. The border is so porous already that sealing it would cost tens of billions of dollars at a time when we're already borrowing more than 40% of what we spend. Keeping the border sealed would cost tens of billions more. The only reason people immigrate illegally is because we've made it so difficult to immigrate legally. Get rid of the quotas and the waiting lists, and simplify the immigration process, and illegal immigration will fall dramatically overnight.