2004 was a good year for removing poverty because developing countries experienced a 6.1 percent economic growth and according to the World Bank, this was an expansion unprecedented in history.
For example, most Americans would be surprised to learn that millions of poor people who live on less than $1 per day would be better off if they could go into debt. The reason they can’t is that the institutions required to sustain capitalism are not present.
The poor who are addressed in our lessons are the absolute poor — the more than 1 billion people around the world who live on less than $1 per day. They have nothing, and they have no way of acquiring anything because of the governmental and social institutions that surround them.
One big reason people in more advanced societies are able to enjoy a more comfortable existence is that they are able to purchase items by going into debt. Americans take that for granted. Any person living in absolute poverty would love to trade positions with any one of us and walk in our shoes — to have a job and be able to borrow money for a car or a home.
It’s a shame that America’s youth do not understand these basic economic concepts. If they did, they’d be less inclined to join globalization protests because they would understand why the economies of China and India grew by 8.8 percent and 6 percent, respectively, last year. [Ignorance shrouds capitalism’s profound impact on reducing poverty]
The poor who lost everything in the tsunami will have to rebuild everything from scratch and also depend on charity. In developed countries people have life insurance, house insurance, and insurance for all possible things. So when an earthquake or hurricane destroys property, these institutions of capitalism kick in and put people back on their feet.
Only about a quarter of the victims would have been breadwinners eligible for life insurance, and maybe only a quarter of them would have had any coverage, he added. The lack of coverage means global insurers expect to pick up only a small portion of the reconstruction bill following Sunday’s killer waves, which wreaked damage of more than $13.6 billion, according to Munich Re, the world’s biggest reinsurer.
In India, where more than 12,000 people died in the tsunami, only about a tenth of the billion-strong population has life insurance. In Sri Lanka, where the death toll could exceed 30,000, insurance is even less common. [Little insurance help for survivors]