problems with poverty.
In the United States, the government classifies an individual as poor if their income is roughly $12,000 a year. A family of four is considered poor if their income is below roughly $24,000 a year. These income levels equate to the middle class or upper middle class in the rest of the world. To combat its relative poverty, the United States has more than eighty separate federal programs and spends a trillion dollars a year to help the poor.
While there are always issues about how efficient and effective government programs might be, taxpayers in the US (mainly upper income earners) already have a substantial amount of their income involuntarily taken from them for the purpose of helping those in need.
Resources and Need
Estimates from the World Bank show 13% of the world’s population, roughly a billion people, live on less than $2 a day. Even more discouraging are estimates showing half the world’s population, about 3.6 billion people are classified as truly poor. The problems even rich countries face attempting to help the poor in their own countries shows how redistribution, whether voluntary or involuntary, is simply incapable of making significant progress in reducing the world’s poverty.
Fortunately, there is a solution. Poverty can be significantly reduced by giving the poor the same opportunities as those in successful economies. The only practical solution to enhancing the wealth of nations is for poor countries to replicate the formula for success followed by wealthy nations.
The World Bank’s estimates of global poverty indicate this has been happening. In 1981, 44% of the world’s population lived under conditions of abject poverty, literally starving to death. The percentage fell to 37% in 1990 and was down to 13% in 2012.
These changes were due primarily to policy changes in two large countries—China and India. Those policy changes enabled a billion and a half people to move out of conditions characterized as extreme poverty. Chapters 17 and 18 discuss these policy changes.
The only real hope for significantly reducing worldwide poverty is the widespread application of wealth-enhancing policies. This is why we have a moral obligation to examine the evidence concerning the effectiveness of such policies on the wealth of nations. The next chapter marks the beginning of such an examination.
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