so what shall we spar about today [Music] today we're going to be asking has capitalism made the world a better place [Music] we're going to be looking at this debate between two groups of economists about global poverty reduction so has it happened how fast does it happen if it has and can it be attributed to success of capitalism spreading around the world over the last 100 or so years what we're going to be looking at here is the percentage of people in the entire world who live in extreme poverty going from 100 to 0 and from the year 1820 to 2015. now what do we mean by extreme poverty that's people living on less than 1. 90 per day now that figure in 1820 was around 90 percent so it started declining fairly slowly but then at around in the late 1800s 1900s starts dropping more sharply after the world wars accelerates even more so we're now down at around 10 so this is the central claim made by gates pinker and so on absolute poverty has come down during a period when capitalism was spreading around the world a capitalist system has led to the almost eradication of extreme poverty i send some skepticism from you well as you expect i'm going to take issue with this claim that living on 1.
90 a day is a useful measure of people living in poverty for example in the uk virtually no one lives on that level the average earnings are more like a hundred dollars per day that's not to say that we have no one living in poverty or even extreme poverty in this country that's yeah possible yeah and that's a point that has been made by some of the critics of this argument so a couple of left-wing economists uh including most prominently jason hickell have critiqued this idea of using such a low poverty line so let's have a look at other poverty lines this is 1. 90 a day so let's say that we're here now 1980. okay so another one sets the poverty line at 3.
20 a day so 55 more or less here and it went down to about 25 25 okay okay so that's a quarter of the world populations they're living on 3. 20 there's another one which is 10 a day and that went from 65 percent down to about 55. i mean yes things have improved i mean but it's not as rosy a picture maybe as rosa pink ten dollars a day still not a lot there's a famous line from a play that china in in this space of time in fact went from famine to slim fast over a billion people surely they are distorting somehow these numbers is this just china basically okay we're now going to have a look at a chart which takes the same metric and looks at how does global poverty reduction appear when you look at the entire world and then when you look at the world minus china so 1981 so we're looking at that more recent period through to 2015 the axis starts at zero percent of people in extreme poverty and will go up to 100 again to be consistent when we look at the entire world in china included we start off at about 40 there and we've come down to about just under 10 if we look at the world not including china this is the world average without without china it was initially lower and is now at broadly the same point so world minus china so it's true that when you include china a billion being lifted out of absolute poverty has had a big impact but this isn't just china the world has got better in terms of in terms of people being in extreme poverty over the last 35 years so if we look at the gini coefficient the gini coefficient is um a measure of inequality if the world were perfectly equal it would be at zero and one is complete inequality from 1850 to let's say the years just before the recession or just as the recession started hitting um i'm gonna look at inequality from from 0.
5 to 0. 7 and what happened is that inequality actually rose this line alone shows you an inverse trend from what we were seeing but i think the process of capitalism which led to this increasing equality is the same process that lifted more than a billion out of extreme poverty and when you have huge economic growth in capitalism most of those gains accrue to the people at the top but if that system also brings raises raises everyone by a certain level then that's still a good thing on net one way that we measure poverty is to look at the share of the population that lives below the average income now even though i would say that's an improvement on the poverty line 1. 90 and so on i think it's still faulty and i'll show you why so in the uk we measure relative poverty by looking at the number of people who live at sixty percent uh below the median income so let's say the medium income is ten thousand pounds just plucking a figure out of thin air we're looking at the number of people that are earning sixty percent of that so six thousand pounds so this is what's happened in the uk we're looking at before housing costs and after housing costs number of children who live in poverty we had a third of kids in this period of time now we have 28 of children small improvement before housing costs it's a quarter of kids in 95 96 it went down to 17 in this period more here where there was a recession there wasn't much change so the government actually acknowledged this and said well maybe this measure of poverty relative poverty is wrong it doesn't include whether these kids live in good housing whether they live in crime ridden areas whether they're performing well in schools all these things that go beside income and that affect our lives now the problem with this idea is that policy makers didn't like the fact that they wanted to de-link poverty from income that would have been an issue at the international level because this is how everyone measures poverty and so this was abandoned however one could argue that taking them into account is crucial to assessing whether people who live in extreme poverty are also having a bad quality of life so this is another argument that the sort of pro-capitalist lobby would make um or pro capitalism lobby which is that if life expectancy has gone up then that surely is a sign that the fundamental reason that that you know humans exist is is actually you know we're getting that right so i'm gonna do a chart here showing global average from 1960 to 2015.
and that has gone up from about 52 to now about 72. that seems to me again evidence that global quality of life global life expectancy global health all of these things that this this indicator captures have steadily increased over that period when capitalism has been spreading across the planet if we want to stick to the quantitative element of how many years we get to live there's clearly a sign of improvement but look at what happened in the u.
