Here are some figures you won't believe if you only read the headlines about global poverty. More wealth has been created in the past six decades than in all previous history, and it has reduced poverty. The number of people living on less than US$1 a day dropped from 40 per cent in 1981 to 18 per cent in 2004. In the same period, the number living on less than US$2 a day has dropped from 67 per cent to 48 per cent.
Too many people still live in poverty; half a billion on US$1 a day and 2.6 billion on less than US$2 a day. But the evidence is clear that open economies, open trade and open societies - those that cherish the rule of law, property rights, labour rights and democracy - do better. Closed economies are always run by oppressive leaders. If they don't let people decide their economic rights, they are most likely to suppress their human and political rights. No two democracies have ever gone to war and there has never been a famine in a democracy with a free press.
Every now and again a serious report emerges that nails the issues, and its ideas are put centre stage. Success is when these ideas become cliches. A report by former German leader Willy Brandt invented the phrase 'north-south', and put forward the idea that rich countries should be obliged to give 1 per cent of their gross domestic product in aid to poor countries. A report on the environment by former Norwegian prime minister Gro Harlem Brundtland coined the phrase 'sustainable development'.
I am a member of the UN Commission on the Legal Empowerment of the Poor, chaired by former US secretary of state Madeleine Albright and Peruvian economist Hernando de Soto. We had our final meeting recently, and the commission's report will be profound; it may change the thinking on how we alleviate poverty.
Poverty is man-made; we can fix it. What's the common denominator in success and failure? Open economies always do better. Trade and competition bring better results and are powerful weapons to drive out corruption, as well as to allocate resources more efficiently. Private ownership, spread through society, works. Firm, predictable civil institutions create a vital factor to promote success: trust. Trust in the courts and in contracts is a serious issue. People are driven underground when they don't trust their institutions, which is why 40 per cent of developing nations' economies are in the informal sector. Why register a company if it costs so much? This relegates local businesses to the back streets. Secure property rights boost investment. Evidence abounds that when trust emerges, investment rises.
When China established de facto securitisation of property and liberalised agriculture, productivity jumped 42 per cent between 1978 and 1984. The mainland's more open economy has lifted hundreds of millions out of poverty.