by Rick Kahler
Do you think the world is getting better, or worse, or neither? Based on a recent survey by Max Roser of the University of Oxford, you probably said "worse." That was the answer from about 95% of the survey respondents, who were from Sweden, Germany, and the US.
To be fair, it might have been good to put a time frame in that question. How would you have answered if the time frame was the last 70 years, 40 years, or 10 years? I suspect if people were asked if the world is getting better based on how it was 200 years ago, there may have been more positive answers.
In a recent article on ourworldindata.org, Roser noted that in 1820 only a miniscule slice of the elite enjoyed higher standards of living. Over 99% of people lived in extreme poverty, which the researchers measured as earning less than $1.90 a day. That number is adjusted for inflation, different price levels in countries, and currency differences.
Things really improved over the next 130 years. In 1950 (nearly 70 years ago) only 75% of the world was living in extreme poverty. In 1981 (nearly 40 years ago) that number was down to 44%. In the last ten years, the number of those living in extreme poverty dropped from 21% to 10%. That is amazing, especially when we consider that two-thirds of those in the US think extreme poverty has almost doubled in recent years.
As surprising as this data is, Roser adds another factor: the fall in extreme poverty is even more notable when we consider that the world population increased seven-fold in the last 200 years. Conventional wisdom may have assume such an increase in population would have had the opposite effect.
What changed globally to produce such an incredible increase in the global standard of living in the light of exploding population growth? The world experienced an unprecedented period of economic growth and increasing productivity.
What was behind the economic growth? My guess is that an experiment in democracy and free markets begun about 250 years ago with the founding of the United States had a lot to do with it.
It's interesting that we've seen nothing about this trend in the media or from politicians. Wouldn't a headline reading, "Extreme Poverty Rate Falls 50% in Ten Years" be noteworthy? Or how about "130,000 Fewer People A Day Are In Extreme Poverty Since 1990?"
During the same 200 year period, illiteracy dropped from 88% to 15%. Global child mortality decreased from 42% to 4%. The number of those living in democratic societies rose from 1% to 53%. Even global income inequality as measured by the Gini coefficient, while still very high, fell by 5% between 2003 and 2013.
We have heard nothing about any of that. Our news and our politicians do not emphasize how the world is changing but rather what is wrong in the world. Roser notes that, "The media focuses on single events and single events are often bad." Most of us know intellectually that sensationalism sells and a steady diet of sensationalism can cause us to lose perspective.
The stories we hear of how financial well-being is in decline are not true. Such misinformation could be one of the biggest global threats we face. Believing that the poor are getting poorer and the rich growing richer on the backs of the poor polarizes and divides us. If the truth of the progress we've made became common knowledge, it could provide a foundation of collaboration and hope which would serve to unite us to continue the progress.
Rick Kahler, Certified Financial Planner®, MS, ChFC, CCIM, founded Kahler Financial Group, and became South Dakota's first fee-only financial planner in 1983. In 2009, Wealth Manager named Kahler Financial Group as the largest financial planning firm in a seven-state area. A pioneer in the evolution of integrating financial psychology with traditional financial planning profession, Rick is co-founder and co-facilitator of the five-day intensive Healing Money Issues Workshop offered by Onsite Workshops of Nashville, Tennessee. He is one of only a handful of planners nationwide who partner with professional coaches and financial therapists to deliver financial coaching and therapy to his clients. Visit KahlerFinancial.com today!
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