A key to building a life of freedom is cultivating an abundance mindset, instead of a scarcity mindset. That means realizing that the world is becoming a better place. In today’s episode, Curt interviews Dr. Antony Davies, the Milton Friedman Distinguished Fellow at FEE (Foundation for Economic Education), associate professor of economics at Duquesne University, and co-host of the podcast, Words & Numbers.
Davies recently gave a speech at FEECon (the annual conference of the Foundation for Economic Education) entitled, “The world is becoming a better place.” That’s where we begin our conversation.
“So let’s talk about some good news,” I said. “How is the world becoming better?”
“In all sorts of ways, the one I’d love to point to is poverty,” said Davies. “These numbers come from the United Nations, and you can argue about definitions of poverty, but what they have done is they define extreme poverty, which is living on the equivalent of what in the U.S. we would call roughly a $1.90 a day. That’s the extreme poverty line.
“Of course, there are adjustments for differences in costs of living across countries. This number was, 200 years ago, around 98%. 98% of the world lived in extreme poverty. It dropped to about, I’d say, 70% when our grandparents were around down to maybe 50% … 40% in our parents time. When we were in college, it would’ve been around 30%. Today, it’s less than 10%. It’s been dropping at the same time that the population has been rising.”
But what about the predictions of the naysayers?
“So 200 years ago, Thomas Malthus writes his work of … we use the term Malthusian, which comes from him. Oh, the world is going to hell in a hand basket,” Davies explains. “He looks around, he sees world population growing exponentially and the 98% poverty rate and says, ‘Oh, my God, we’re all gonna die.’
“From Thomas Malthus’ point to the present, not only does world poverty fall, but the population, I think it was 800 million at the time that Malthus was around, and now it’s eight billion or coming up on eight billion. So we’re roughly 10 times the number of people and one-tenth the poverty.”
But what about the concerns over “inequality”?
“It’s (inequality) been rising, although it hasn’t been rising that much, but if you look worldwide, worldwide income inequality is down,” he said. “So, too, are other types, like gender inequality, how women are treated versus men. That’s down over the past one or two generations. Child labor rates are down. Longevity and education are up. All these ways, all these things that we would tend to point to and say, “That’s indicative of a healthy society,” those numbers have all been steadily improving.”
So, I asked Davies, does “inequality even matter”?
“And I know there’s some, due to me even asking that question will say, ‘Oh, you’re so mean,'” I said. “But when you are so focused on inequality, isn’t it at its heart… I mean, Steve Jobs or Bill Gates or Jeff Bezos, they make an extra billion. Now you could argue, ‘Well, they’re not nice people.’
“I’m not saying they’re great people. I don’t know them. How does that affect you? Does it matter or is it just, is it just…envy?”
Responded Davies, “Yeah. I think the concern with inequality, now there are some serious concerns, but they tend to be very small amongst economists as compared to what you hear in the media.”
“But the concern I think goes back to a point you started us off with, and that is this, which is this mindset. Are you in the mindset of scarcity or abundance?
“If you’re in a mindset of scarcity, then your worldview is everything you have is something I don’t, and the more you get, the less is available for me. That’s the mindset of scarcity.
“And so if you buy into that mindset, then by definition, any increase in inequality is also an increase in poverty, because the more Bill Gates has, the less the rest of us have. And, at some point, he has so much that we now become poor because the pie is only so large.”
How does Davies feel about that argument?
“That’s patently false,” he said. “It goes against everything we understand about economics, and if you don’t like economics, it goes against everything we have observed about the reality of the world, that the world is not a fixed pie. It’s a variable size pie. The harder we work, the more ingenious we are, the more we concentrate on satisfying our fellow people, the bigger the pie gets.”
So, if the world is getting better, why is it so easy to “succumb” to the bad news on our news, social media, etc?
“I would guess that it’s a survival response that we’ve learned over eons that it’s beneficial to us, to society to relate bad news because it’s a warning,” said Davies. “I saw this thing in the woods and it attacked and ate my dog. For God’s sake, don’t go in there. Right? And that news spreads and it helps to protect us.
“What’s changed, I think that you put your finger on it. It’s not that we’ve become more susceptible, but rather that there’s a greater opportunity to get bad news because we carry the phone in the pocket and I can find out news about what’s going on on the other side of the planet within seconds of it actually occurring.
“And because of that … Oh, and by the way, I can then forward it to friends. So the ability to be aware of bad news and to share bad news is working on hyper thrusters.”
You can download my full interview with Davies by clicking here.
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