No one would expect sunshine and smiles from an organization called the National Intelligence Council. One of its main tasks is to prepare a document called "Global Trends" once every four years for the new or re-elected U.S. president, laying out likely scenarios for how the world will develop over the coming decade or two. The most recent version, published in January, is every bit as intense as you might anticipate. Its three-page preface warns that we are facing "rising tensions between countries" at a time when "Global growth will slow, just as increasingly complex global challenges impend." Worse still, while "regional aggressors and nonstate actors will see openings to pursue their interests ... Nor is the picture much better on the home front for many countries." And these are just the headings in bold face: The fine print is even more alarming.
But the National Intelligence Council is not all doom and gloom. I gave a talk a few years ago in its offices in Langley, Virginia. The council's members were a lively, thoughtful and witty group, whose ability to see multiple sides to every story — perhaps the defining feature of the true strategist — was extraordinary. Fittingly, their latest Global Trends report is subtitled "Paradox of Progress." The heart of the paradox they describe is summed up by the graph reproduced here, showing the change between 1820 and 2015 in the number of humans living in absolute poverty and the number of people living above that miserable level.
When I'm teaching, I like to call this "the happiest graph on Earth." Inevitably, because my background is in premodern economic history, I have some quibbles with the council's data. I strongly suspect that by 1820, only three-quarters of the world's population had incomes below the equivalent of $1.90 per day. Most of the other quarter were merely poor, rather than extremely poor, living it up on as much as $2.50 per day (for comparison, the global average is now over $25 per day) while a tiny minority made much more (Rome's first emperor, Augustus, had personal assets worth something like $4.6 trillion in today's terms). This recalculation, based more on archaeological and anthropological observations than on the kind of data the council's sources used, would slightly diminish the graph's impact — but only very slightly. The graph remains miraculous, and hardly anyone living before 1820 would have believed it possible.
Discussions of poverty in recent years have focused relentlessly on inequality, and gloomy tomes analyzing its rise within most nations during our lifetimes — Thomas Piketty's book Capital in the Twenty-First Century and my colleague Walter Scheidel's The Great Leveler — have deservedly become depressing best-sellers. Up to a point, this is as it should be: Inequality is important, and a series of psychological studies has shown that among both chimpanzees and humans, those who rise to the top of steep hierarchies tend to be happier, have better health and live longer than those who do not.
However, the council's graph shows the limits of the focus on inequality. The global economy has lifted well over a billion people out of extreme poverty since the 1980s. Never in human history have so many people experienced such rapid gains in health, lifespans and perhaps happiness too. In fact, so many people have escaped from extreme poverty that the World Bank felt forced to redefine what counted as misery in 2015, raising the bar from an older limit of $1.25 per day to the current one of $1.90. This has been the post-Cold War world's greatest triumph. Its greatest tragedy, of course, is that the better part of another billion people still languishes in extreme poverty, but everything suggests that number really will dwindle to zero over the coming decades. We know how to eradicate extreme poverty.
The Makings of a Wealthier World
Two big things went into creating the happiest graph on Earth: globalization and energy capture. Since Adam Smith worked on The Wealth of Nations in the 1770s, there has been a long-term trend toward more open, interconnected markets, lower barriers to trade and higher volumes of long-distance commerce. The trend certainly hasn't been consistent: Napoleon's Continental System set it back for nearly a decade between 1806 and 1814, the Great Depression did so even more dramatically in the 1930s, and there have been plenty more times when protectionism temporarily triumphed. However, despite constant pushback from conservatives, more and more of the world has joined an increasingly global market, raising incomes (but also inequality) enormously.
Despite the astonishing gains of the past two centuries, many experts believe that a lot of money is still lying on the globalizing table. According to the World Economic Forum, if every country reduced trade barriers by improving the performance of their border administration and transport infrastructure just halfway to the standards of best global practice, the world's GDP would grow by $2.6 trillion (4.7 percent), with the gains flowing disproportionately to the poorest places in the world. Sub-Saharan Africa, for instance, would see GDP grow by 12 percent. If these calculations are anywhere near correct, more globalization can play a huge part in ending extreme poverty.
Increasing energy capture, though, historically has been even more important than globalization in buoying the poorest of society. Before the Industrial Revolution, even the most developed agrarian economies the world had ever seen — Rome in the first century or two A.D. and China in the 11th and 12th — hadn't raised per capita energy consumption above about 30,000 kilocalories per day. Typically, adults each directly consumed less than 2,000 kilocalories per day as food; the rest went toward fuel, transport and the myriad other tasks an agrarian economy needs to accomplish.
Learning how to harness the energy trapped in fossil fuels annihilated these limits. By 1820, when the council's graph begins, British energy budgets had already risen above 40,000 kilocalories per person per day. They reached 92,000 in 1900, and in the 2010s Americans consume roughly 230,000 kilocalories per person per day (an unhealthy 3,770 of them as food, and most of the rest to power our airplanes, SUVs and laptops). Along the way, engineers learned to use new kinds of fossil fuel, advancing from coal to oil and natural gas, to transmit the energy in new forms (above all, electricity) and to convert energy into almost anything we wanted. Between 1500 and 1900, Western farmers roughly doubled wheat yields per hectare, largely by increasing the amount of energy invested in agriculture by adding more manure and draft animals. Between 1900 and 2000, by contrast, American farmers quadrupled output but did so by investing 80 times as much energy per hectare, now in the forms of gasoline-powered machinery, chemical fertilizers and electric pumps. Without the explosion in energy, the right-hand side of the happiest graph on Earth would still look a lot like the left-hand side.
Even more than in the case of globalization, vast gains in energy capture are still available. Huge reserves of fossil fuel remain in the ground, and new extraction techniques are making them accessible. However, most geologists and climatologists think that the massive use of coal, oil and natural gas since 1800 has already damaged the atmosphere and oceans so severely that exploiting these reserves to the full would be a very bad idea. Fortunately, though, engineers are beginning to deliver extraordinary advances in capturing clean energy and storing it in new kinds of batteries. Estimates of the likely impact vary (and the National Intelligence Council has done a commendable job in pulling many of them together), but increasing numbers of engineers and investors expect the 21st century to experience an energy bonanza even wilder than that of the 19th and 20th centuries.
If these interpretations of the council's graph are anywhere near accurate, we can realistically expect the combination of globalization and the ongoing energy revolution to eliminate extreme poverty altogether within the lifetimes of many of the people reading this column — or, at the very least, to force the World Bank to raise the bar for extreme poverty again, this time to a much higher level.
Putting America's Poor First
The most obvious way to falsify my prediction would be to slam the brakes on globalization and new energy research, which is precisely what many governments seem keen to do. U.S. President Donald Trump, often seen as a spokesman for both economic nationalism and traditional fossil fuel industries, recently told the United Nations, "We have it in our power, should we so choose, to lift millions from poverty," but he went on to argue that globalization was not the way to do this. "As President of the United States," he said, to applause, "I will always put America first, just like you, the leaders of your countries, will always, and should always, put your countries first."
If enriching the poor begins at home, though, driving down the number of people living in extreme poverty is likely to become less of a priority for most governments. Not only do fewer than 10 percent of the world's population now live on less than $1.90 per day, but they are also concentrated in a shrinking number of places. Kathryn Edin, a sociologist, and H. Luke Shaefer, a professor of social work, argued in $2.00 a Day: Living on Almost Nothing in America that many Americans do in fact live in extreme poverty but reached this conclusion by excluding all non-cash transfers and benefits. No one can deny that life is very hard indeed for the poorest Americans, and Edin and Shaefer's stories are truly harrowing. But with a federal minimum wage of $7.25 per hour — 30 times higher than the World Bank's cutoff point for extreme poverty — and the likelihood that by 2022 one-sixth of Americans will live in states or cities with a $15 per hour minimum wage, the struggle against poverty in America is not the same as that in the Central African Republic, where the International Monetary Fund reports the average income to be just $1.75 per day.
Lifting up the "left behind" in rich countries and eradicating the last stubborn pockets of global extreme poverty are very different projects, and in the 2010s electorates in Western democracies have increasingly pursued what they see as solutions to the first problem at the expense of solutions to the second. Economists predicted that by 2030 the Trans-Pacific Partnership would be adding $492 billion (0.6 percent) to global GDP, $130 billion (0.5 percent of GDP) of which would flow to the United States while proportionately more would go to poor countries such as Malaysia and Vietnam. Both the Democratic and Republican nominees for the U.S. presidency in 2016 felt compelled to reject this deal. Similarly, American and European politicians alike rushed to distance themselves from the Trans-Atlantic Trade and Investment Partnership, even though economists expected it to raise GDP on both sides of the Atlantic by between 0.3 and 0.7 percent.
American political reservations about pursuing an energy revolution have also grown. Trump's campaign platform promised to roll back regulations on carbon dioxide emissions, which would help coal and oil compete against renewables, and his administration's draft budget for 2018 included cuts of 6 percent for the Department of Energy and a whopping 31 percent for the Environmental Protection Agency. In June, the president announced the United States' intention to withdraw from the Paris climate change agreement, though more recently his administration's position seems to have softened.
If I am interpreting the history behind the happiest graph on Earth correctly, and globalization and the search for new energy sources are indeed the main forces that drive down extreme poverty, much of this sounds like unhappy news indeed. But even so, I remain optimistic that the World Bank will raise its bar yet again in the next few years. William F. Buckley famously defined a conservative as "someone who stands athwart history, yelling Stop," but standing athwart the happiest graph on Earth just seems quixotic. Those who try are likely to merely surrender to a rival control of the 21st century's two greatest forces.
For neither force is the identity of this rival much of a mystery. China's opening to global markets since the 1970s has marked the single biggest step in reducing the number of the world's extremely poor, and at this year's World Economic Forum in Davos, Switzerland, President Xi Jinping pledged that "China will keep its doors wide open" in the "hope that other countries will also keep their doors open to Chinese investors and maintain a level playing field for us." Putting his words into practice, Beijing has successfully promoted its Asian Infrastructure Investment Bank as an alternative to the Western-dominated World Bank and its Regional Comprehensive Economic Partnership in place of the crippled Trans-Pacific Partnership.
At the same time, renewable energy is already growing faster than total energy demand in China, leading the consumption of fossil fuels to fall by 1.4 percent in 2015. That year, China also accounted for 28 percent of global electric vehicle sales, 32 percent of solar panel installations and 47 percent of wind installations. In 2016 it overtook Europe in wind power, and by 2020 it will probably surpass the Continent in solar power, too.
Historians sometimes like to say that mastering coal allowed Britain to dominate the 19th century, and mastering oil allowed the United States to dominate the 20th. If mastering the wind and sun allows China to dominate the 21st, the happiest graph on Earth will keep getting happier — but at a terrible price for the West.
