Compared to what?
By Scott Sumner
This graph caught my eye:
Notice that prior to 1980, the number of affluent people was growing rapidly, but the number of poor people was also increasing. After 1980, the number of affluent people rose even more rapidly, while poverty began declining. I was in grad school in 1980, and I don’t recall very many people expecting such a dramatic turnaround in the number of poor people. Many experts were predicting a global catastrophe, due to rapid population growth in poor countries.
So what changed in 1980? The most likely explanation for the plunge in global poverty is the neoliberal revolution, which began around 1980. Poverty fell especially rapidly in countries that adopted market reforms, such as Chile, Bangladesh, India and China. Ironically, the media is now full of stories claiming that neoliberalism has failed. My response is simple—compared to what?