Is America to Thank for the Global Decline in Poverty?

Arthur Brooks thinks the world's poor were motivated to "throw off their chains of poverty" because they envied Americans.


ASPEN, Colo.—Arthur Brooks, head of the American Enterprise Institute, a right-leaning think tank, remembers that when he was a boy, he would see images in National Geographic of children with distended bellies and flies in their eyes—in other words, kids living in pure, miserable poverty.

But that kind of poverty, in which people live on less than $1 a day, has decreased by 80 percent since his childhood. And it wasn't the UN, World Bank, or foreign aid that was responsible for that decline, he argues. He believes there are five explanations, which he laid out for an audience at the Aspen Ideas Festival, organized by the Aspen Institute and The Atlantic:

"Globalization, free trade, property rights, the rule of law, and innovative entrepreneurship, American style. It was the American free-enterprise system that started to spread around the world. They looked at you and said, 'I want to have their life, their freedom, and their stuff, and they threw off their chains of poverty and tyranny.'"

"You did that for those people," he continued, "You lifted those people out of poverty because of the way you lived your life."

Brooks used the precipitous drop in poverty rates as a data point in his broader argument that work is one of the most important factors in generating happiness. And not just creative, fun work—any work, even Walmart jobs, he says. It doesn't matter if you make minimum wage or Brooks's own $645,000 salary—the important thing is experiencing "earned success," he explains, or "the belief that you're creating value with your life and that you're creating value in the lives of other people."

The opposite of "earned success," he said, is "learned helplessness." Getting something for nothing makes you "despondent and depressed." And that's the mental state the world's poor cast off in recent years, he says.

"Free enterprise does that for everyone," he added. "That's the story of earned success. That's the story of helping people avoid their learned helplessness."

Brooks is right that poverty has declined by 80 percent since the 1970s. And economic growth indisputably reduces poverty—there's really no other way.

But the sharpest decline in poverty during this period occurred in China, where the extreme poverty rate fell from 84 percent in 1981 to 12 percent in 2010. In fact, China alone accounts for three-quarters of the global decline in poverty over the past three decades. China, though, is hardly the picture of "American-style" freedom or "rule of law."

Another thing Brooks didn't mention is the rise of wealth inequality around the world, and particularly in the United States. To his happiness point, income inequality has also been shown to make people unhappy. It stifles economic growth as well, and thus the poverty reduction that we all want.

Here's The Economist:

Income distribution matters, too. One estimate found that two thirds of the fall in poverty was the result of growth; one-third came from greater equality. More equal countries cut poverty further and faster than unequal ones.

There is an uncomfortable chauvinism to the idea that we Americans deserve sole credit for millions of people managing to escape poverty. But there are also huge externalities—both good and bad—to the spread of American-style capitalism abroad.

We may have shipped other countries our version of capitalism, but our version of income inequality came in the box. And that's something we may be less eager to take credit for 30 years from now.