Pope Francis has renewed the worlds attention on how we might uplift the lives of the poor. His invitation for an open dialogue about free- market capitalism and government anti-poverty campaigns should be welcomed by people of all creeds. In this regard, economists have much to offer in overcoming confusion over causes and solutions as my colleagues and I explain in our recent book, Pope Francis and the Caring Society.
Our first lesson is a simple, under-reported fact: Absolute poverty around the globe is not a growing problem, but a diminishing one.
In 2015, the World Bank announced that the rate of extreme poverty defined as earning less than $1.90 per dayhad dropped below 10 percent for the first time in history. More than one billion people since 1990 have escaped dire impoverishment.
It is no coincidence that poverty had fallen the most in countries that have adopted more market-friendly reforms, namely China, India, and Indonesia.
This points to our second lesson: the causal link between economic freedom and higher standards of living.
When voluntary exchange and private-property rights are vigilantly protected, the economic system becomes an engine of opportunity, enabling people to work their way up the ladder, including by starting their own businesses. The resulting additional wealth in turn gives people greater ability to give to those in need.
Lesson 3: Private charitable giving tends to be far more efficient and effective than government welfare programs funded with confiscatory taxes. This is partly due to competition: Philanthropies often must compete for donor funds, and to succeed they must demonstrate positive impacts. In addition, people respond to taxes by working less and becoming less productive.
Pope Francis is justified in calling for us to create a more caring world but government redistribution has shown that it isnt up to the task.
At a time when modest market-based reforms have enabled hundreds of millions of people to lift themselves out of poverty, let us take one step further. Lets make even greater progress in fighting poverty by offering people more freedom to createand voluntarily sharetheir prosperity.
Pope Francis earns our gratitude for urging the world to help the less fortunate realize their birthright of dignity and well-being. The best way make that happen, however, is to respect the blessing of economic liberty.