Extreme wealth and extreme poverty have recently increased at the same time. That emerges from a study. However, the fact that the opposite was the case years before is often left unsaid. The number of the super-rich has steadily increased in recent decades, while the number of the very poor has steadily decreased.
Every year, the Oxfam organization presents a study at the World Economic Forum in Davos. In the past, the figures were often incorrect and the methods unscientific. Nevertheless, the media has always reported on it in a big way.
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This year, however, one of Oxfam’s statements is correct: For the first time in 25 years, extreme wealth and extreme poverty have increased simultaneously, Oxfam criticizes. However, in previous years, Oxfam had never reported that the exact opposite was the case. As the chart below shows, the number of billionaires has steadily increased over the past few decades, while the number of people living in extreme poverty has steadily decreased.
Before capitalism emerged, most people in the world lived in extreme poverty – in 1820 the rate was 90 percent. Today it is below 10 percent. The remarkable thing is that in the last few decades, since the end of the socialist planned economy in China and other countries, the decline in poverty has accelerated faster than in any phase of human history before. In 1981 the rate was still 42.7 percent, in 2000 it had already fallen to 27.8 percent and in 2021 it was below ten percent.
According to Forbes, the number of billionaires has quintupled since 2000. This main trend, which has persisted for decades, is crucial. Contrary to the original expectations of the World Bank, which collects this data, poverty has recently increased again. But that has mainly to do with the Covid pandemic, which has led to a renewed deterioration in the situation in countries where poverty is already high.
Rainer Zitelmann is a real estate investor and author of numerous books, including “The Society and its Rich. Prejudices about an envied minority.
If you keep an eye on the long-term trend, then other developments are also pleasing. Child labor has decreased significantly in recent decades. In 2000, 246 million children were working worldwide; 20 years later, in 2020, there were only 160 million. And this despite the fact that the world population increased from 6.1 to 7.8 billion people in the same period.
This shows that anti-capitalists’ belief that the rich get richer at the expense of the poor is a misconception. The opposite is true: economic growth means that at the same time the number of rich is increasing and the number of poor is decreasing – on a global scale. An example of this is China. In 1981, 88 percent of the people there still lived in extreme poverty. Then, Deng Xiaoping began his pro-market reforms with the slogan, “Let some get rich first.” Until then, there wasn’t a single billionaire in China because there was no private property in Mao’s day. Today there are more billionaires in China than anywhere else in the world except the US. And the number of people living in extreme poverty has fallen to less than 1 percent.
Another example is Vietnam: In 1993, 80 percent of the Vietnamese lived in poverty, in 2020 the proportion was only five percent. This was made possible by the introduction of private property and market reforms. At the same time, this led to some people in China becoming very wealthy and today there are even several billionaires in the country that was once one of the poorest countries in the world.
How do you effectively fight poverty and hunger? Many people believe in development aid, but nothing fundamental has changed in Africa in the past 50 years. On the other hand, what has worked very well in various countries is the introduction of a market economy and private property.
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Anti-capitalists like the left organization Oxfam adhere to the “zero-sum belief”. They tell us that the poor are poor only because the rich are rich. But how do you explain the fact that at the same time the number of the extremely rich has increased and that of the extremely poor has decreased? This has been the rule for 200 years. A year in which the opposite is the case, which is largely due to the effects of the corona pandemic on the one hand and a very positive stock market development on the other, is a very rare exception.
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