If Pope Francis Wants to Help the Poor, He Should Embrace Capitalism

Markets and globalization have lifted billions out of poverty and lessened global inequality. So what's behind the pope's agenda?

By Stephanie Slade of Reason. Excerpt:

"A man Politico described as insisting "reality comes before theory" could not be more mistaken about the empirical truth of capitalism's role in our world. While income inequality within developed countries may be growing, the income gap between the First World and the rest of the world is decreasing fast. As the World Bank's Branko Milanovic has documented, we are in the midst of "the first decline in global inequality between world citizens since the Industrial Revolution." In 1960, notes the Cato Institute's Marian Tupy, the average America earned 11 times more than the average resident of Asia. Today, Americans make 4.8 times as much. "The narrowing of the income gap," Tupy found, "is a result of growing incomes in the rest of the world," not a decline in incomes in developed nations."

"In just two decades, extreme poverty has been reduced by more than 50 percent. "In 1990, almost half of the population in developing regions lived on less than $1.25 a day," reads a 2014 report from the United Nations. "This rate dropped to 22 per cent by 2010, reducing the number of people living in extreme poverty by 700 million."

How was this secular miracle achieved? The bulk of the answer is through economic development, as nascent markets began to take hold in large swaths of the world that were until recently desperately poor. A 2013 editorial from The Economist noted that the Millennium Development Goals "may have helped marginally, by creating a yardstick for measuring progress, and by focusing minds on the evil of poverty. Most of the credit, however, must go to capitalism and free trade, for they enable economies to grow—and it was growth, principally, that has eased destitution.""

"The image of economic growth as an "engine" that drives progress and lifts people up is nothing novel, of course. In his book The Road to Freedom, American Enterprise Institute president Arthur Brooks discussed the transformation the U.S. underwent in the 1800s as a result of the Industrial Revolution:

Average prosperity in the 19th century began to rocket upwards…In 1850, life expectancy at birth in the United States was 38.3. By 2010, it was 78. The literacy rate in the United States rose from 80 percent in 1870 to 99 percent today. And real per capita GDP increased twenty-two-fold from 1820 to 1998.

Poverty may never be fully a thing of the past. But if you're looking to increase global prosperity and decrease global hardship—something Christians as a rule are pretty concerned with and Pope Francis has expressed a particular interest in—history has shown us the way to do it: through industrialization and mass production, trade liberalization that lets goods and people flow across borders to serve each other better, and property rights that give everyone the ability to put their wealth to work for them."

"mass-market production—including often-vilfiied biotech crops—that has freed millions of people from hunger by allowing us to reap far more food from far fewer resources.

Productivity gains have been so great that humanity is on the brink of being able to release enormous tracts of farmland back to nature while feeding more people than ever before, according to researchers at the Program for the Human Environment at Rockefeller University. But resisting such advances out of skepticism or nostalgia can have devastating consequences. Take for example the story of Golden Rice, a genetically modified crop fortified with Vitamin A, whose introduction has been delayed since 2000 by government regulations. The grain has the potential to save up to 3 million poor people a year from going blind, and to alleviate Vitamin A deficiency—which compromises the immune system—in a quarter of a billion people a year. But unwarranted fears of "frankenfoods" have kept Golden Rice from widespread use in the developing world. In a study published last year in the journal Environment and Development Economics, scholars at Technische Universität München and the University of California, Berkeley estimated those delays resulted in the loss of 1.4 million life years over the past decade—and that was just in India."

"Studies have shown that deforestation reverses when a country's annual GDP reaches about $3,000 per capita. While some environmental indicators do get worse during the early stages of industrialization, the widely accepted Environmental Kuznets Curve hypothesis convincingly argues that they quickly reverse themselves when national income grows beyond a certain threshold."