The World Bank is considering changing its definition of what constitutes extreme poverty, raising the level below which someone is treated as extremely poor from $1.25 a day to $1.90 a day. This comes after a long trend of people moving out of the category, leading some to point out that the Bank may have an interest in maintaining high numbers of people defined as poor.
This is all quibbling, however. Far too many people around the world live in levels of poverty that would shock even the poorest Americans; whether their income is $1 or $2 or even $3 a day, that is still far too low.
The United Nations is meeting this week to outline a new set of goals that its bureaucrats argue will cure extreme poverty. However, you don’t, cure poverty by setting a target. And you certainly don’t cure poverty by setting an arbitrary income target above which someone is no longer considered extremely poor.
Poverty is eliminated by people becoming wealthier, and the best way to achieve that is to remove the barriers that stop them becoming wealthier.
That’s why I examined the five biggest barriers to wealth creation in the developing world in a new CEI paper. Those barriers are:
- Lack of secure property rights
- Lack of rule of law
- Lack of access to affordable energy
- Lack of access to capital and credit
- Lack of access to affordable quality education
By removing these barriers, governments can see the wealth that their citizens possess explode. There’s a reason why the late Professor C.K. Prahalad referred to “the fortune at the bottom of the pyramid.” Trillions of dollars that the poor could use are locked up by inadequate legal systems and well-intentioned rules that harm the poor day after day.
This process of empowerment comes with other significant advantages. Wealthier societies are also healthier, greener, and more resilient to natural disasters and the vagaries of climate. All the concerns that the Pope has expressed about the future of the world during his visit to the U.S. can be addressed by acting on these simple principles.
And then it wouldn’t matter where the extreme poverty level was drawn. The poor might always be with us, but the conditions of the worst off would be much improved.