Heeding the Call:

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Heeding the Call

• The Moral Imperative for Economic Growth

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No Minimizing Here Global Poverty Is Serious
and Urgent

• Half the world nearly three billion people
  lives on less than two dollars a day.

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Where Are the Worlds Poor?
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Is Economic Growth Really Good for the Worlds
Poorest People?

• After all, weve all heard claims to the
  contrary, such as . . .

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Is Economic Growth Really Good for the Worlds
Poorest People?

• The income gap between the incomes of rich and
  poor nations is rising, resulting in increasing
  economic injustice.

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Is Economic Growth Really Good for the Worlds
Poorest People?

• Multinational firms close plants at home, and
  open new ones in Third-World countries, because
  of the incentive to reap higher profits by
  exploiting workers in poor nations. These firms
  pay low wages, and do not need to make working
  conditions safe or humane.

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Is Economic Growth Really Good for the Worlds
Poorest People?

• Eventually, the same greedy multinationals close
  up shop and open even newer replacement
  facilities in still poorer nations often due to
  rising local wages and pressure from the workers
  themselves to improve pay and conditions.

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Is Economic Growth Really Good for the Worlds
Poorest People?

• Consumers like you and me of these products
  unwittingly contribute to this cycle of shark
  capitalism, paying exceedingly low prices for
  goods like
• Coffee
• Sporting goods
• Electronics

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That sounds bleak, indeed.

• But scratching below the surface, and looking
  more carefully for some longer-term trends,
  reveals some interesting even hopeful news.

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Economic Growth Trends

• Real GDP Growth in the World Economy
• The rich countries.
• Japan grew rapidly in the 1960s, slower in the
  1980s, and even slower in the 1990s.
• Growth in Europe Big 4, Canada, and the United
  States has been similar.

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Economic Growth Trends

• The growth of real GDP per person in a group of
  poor countries.
• The gaps between real GDP per person in the
  United States and in these countries have
  widened.

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Economic Growth Trends

• Growth in Asian economies.
• China is growing very rapidly.
• Other formerly low-income economiesKorea,
  Taiwan, Singapore, and Hong Kong are
  exampleshave grown very rapidly and have caught
  up or are catching up with the United States.

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Reason for Hope

• Average incomes of the poorest fifth of a
  nations people, on average, rise or fall at the
  same rate at the average income overall (Dollar
  and Kraay, JEG, 2002).
• Very strong empirical regularity
• Holds in a sample of 92 countries
• And holds within that sample for four decades

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Reason for Hope

• Average incomes of the poorest fifth of a
  nations people, on average, rise or fall at the
  same rate at the average income overall (Dollar
  and Kraay, JEG, 2002).
• Holds across regions and overall national income
  levels
• Holds in normal and crisis periods

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Preconditions for Growth

• What features raise incomes overall with little
  impact upon the distribution of income?
• Low inflation and stable monetary exchange
• Equal treatment of all persons
• Openness to trade

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Low inflation
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Equal Treatment of All

• Creative, ingenious people need a climate in
  which they feel safe to live and work.
• They need a reasonable assurance that if they
  work hard to make something happen for themselves
  and their families, it cannot forcibly be taken
  away, whether due to
• Corrupt governments
• Organized crime
• Underdeveloped systems of law, capital, and
  property

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Equal Treatment of All

• According to the 2007 Index of Economic Freedom,

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Openness to Trade
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No unique political system is a precondition

• Liberal democracy appears to work reasonably
  well, over many observations.
• Among other features, it gives a solid base for
  enforceable property rights.
• Authoritarian regimes have, at times, created an
  environment in which growth has occurred.

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Conclusion

• What can you and I do?
• First, get your fingers dirty. Develop a
  discipline of physically the worlds poor.
• Work to discover what you can do relatively
  easily and with more joy to minister to
  worlds hurts and needs.
• Support generously the NGOs that do what you are
  passionate about, and do it well.

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Conclusion

• What can you and I do?
• Promote economic freedom and social justice
  through groups like Amnesty.
• Consider a career in an NGO. Dont just think of
  those as short-term opportunities.
• Consider studying more economics. Were
  hard-headed, but much more thoughtful and
  tender-hearted than you might imagine.