The nightly news is always full of terrible stories – the latest atrocities from ISIS, or a pending economic meltdown in Europe, or a military standoff in Eastern Europe, etc. Perhaps President Obama was right when he said of the media “if it bleeds, it leads.” Admittedly, I have at times been part of the problem with my own writing regarding risks to be considered in the world of finance and investing. In this edition of Financially Speaking, I want to take a different path and talk about some of the good news the world has to offer. As always, comments and opposing views are welcome.
Booming Global Population
The population of the world is growing, and improving living standards are part of the reason. In 1981, the global population was 4.5 billion people. It had grown to over 7 billion by 2012, an increase of 35. The breakdown of population by continent shows Asia has the largest portion with 60 of global population. Africa is second at 16, Europe is third at 10 and North America is fourth with 8. South America, Oceania (Pacific islands including Australia) and Antarctica complete the list of continents with the remaining 6. Much of this growth in global population occurs in developing countries where younger demographics and higher birth rates are common. In fact, the population of developing countries between 1981 and 2010 grew by nearly 60. You might assume that, with that kind of rapid growth, the living standards of all those new people would be compromised. But that has not been the case. One method to measure the standard of living is the percent of world population living in extreme poverty, generally considered to be $1.25 per day. That number has dropped dramatically from 50 of world population in 1981 to about 21 in 2010, a reduction of 60. A shrinking percentage of those in extreme poverty naturally implies an improvement in global living standards. Although that improving condition may seem counterintuitive, it is important to remember that only when reasonable access to food, water, shelter and security are present will humans purposely migrate and grow in numbers. And indeed, improvements in food distribution, water access, sanitation and medical technology have rapidly expanded in recent history. In 2011, an estimated 87 of the world’s population has access to clean drinking water. The underlying message is that global living conditions have improved. Arguably, economic progress and development has played a major role in these basic human condition improvements.
Going one step further, we can look at population growth as being the result of a changing ratio of births and deaths. Infant mortality, a common measure of living standard improvement, has fallen by 44 in the time period of 1981 to 2010. At the same time, life expectancy has increased. The current global life expectancy is about 70 years, up 6 years since 1990. We can again attribute these improvements to greater access to food, water and medical treatment. Fewer infant deaths and longer lives also point to living improvements and human development. Looking beyond births and deaths, we can measure the global standard of living by looking at literacy rates. This measure is looked at for those people between ages 15 and 24 and that number stands at 89.5 as of 2011. Surprised? I was. My point is that even with all the terrible events this world experiences, humans move ahead for the good of all. The world is not perfect, but it is measurably better than just a few decades ago.
Finally, I wondered if maybe I was getting too excited about these measured improvements in human living conditions. Are they coming at the expense of our environment? This is a complicated question with many ways to examine it and, no doubt, very strong opinions. I don’t intend to answer that question definitively, but I came across an interesting statistic showing that the amount of carbon dioxide emissions has decreased in most developed nations since 1999. The U.S. alone has dropped carbon dioxide emissions by 14. This one statistic alone does not prove anything other than to recognize that global challenges can be addressed. The human race does not have to be on a path of self-destruction. It only seems that way when you watch the nightly news.
Barron Financial Group, LLP is a fee-only Registered Investment Advisor regulated by the Connecticut Department of Banking.
This newsletter is for general information only and should not be considered investment advice. Investors should consult with a trained investment professional to discuss their particular situation.