Thursday, October 16, 2014

Diseases of Poverty: Neglecting the Obvious

From Bryan Caplan of EconLog.
"Before blogging Ebola, I've been reading up on the broader category of "diseases of poverty."  The low-point of the Wikipedia entry:
There are a number of proposals for reducing the diseases of poverty and eliminating health disparities within and between countries. The World Health Organization proposes closing the gaps by acting on social determinants. Their first recommendation is to improve daily living conditions. This area involves improving the lives of women and girls so that their children are born in healthy environments and placing an emphasis on early childhood health. Their second recommendation is to tackle the inequitable distribution of money, power and resources. This would involve building stronger public sectors and changing the way in which society is organized. Their third recommendation is to measure and understand the problem and assess the impact of action. This would involve training policy makers and healthcare practitioners to recognize problems and form policy solutions.
On etymology alone, you'd think that economic growth - i.e., producing more wealth per person - would top the list of cures for "diseases of poverty."  But it isn't even mentioned.  Instead, we get to choose between:

1. Targeted redistribution to women and children.

2. General redistribution/bigger public sectors.

3. Better policy evaluation and training of policymakers and health workers.

It's almost like the last two centuries never happened.  Quick recap: During the last two hundred years, living standards exploded even though the distribution of income remained quite unequal.  How is such a thing possible?  Because total production per person drastically increased.  During this era, no country escaped dire poverty via redistribution, but many escaped dire poverty via increased production.  And while the effect of moderate redistributive policies on growth is unclear, there is no doubt that populist and socialist movements determined to "tackle the inequitable distribution of money, power and resources" and "change the way that society is organized" sharply retard growth.  As I told the Gates Foundation when they asked for my input:
Anyone serious about reducing world poverty must come to grips with a single key fact: Redistribution from rich to poor has not and cannot solve more than a tiny fraction of the problem.  Even if you could perfectly equalize income in Third World nations with zero effect on production, the citizens of Third World countries would remain mired in poverty.  Take Bangladesh.  With a GDP of $256B and a population of 164M, equalization would at best give each citizen an income of $1561 per year - about $4 a day.  Countries do not overcome poverty by sharing production more equally.  They overcome poverty by increasing production - what economists call "economic growth."
Diseases of poverty are sadly real, but happily curable.  Avoiding populism and socialism is a good first start.  Economic freedom, especially for reviled multinational corporations, is also vital.  And if First World countries want to lend a hand, nothing cures global poverty faster than open borders."

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