Search This Blog

Monday, December 29, 2014

Curing Poverty Chapter 1: The goal

I'm currently reading The Poverty of Nations by Wayne Grudem and Barry Asmus that was published about a year ago.  It was on my reading list, and my daughter bought it for me for Christmas.  I've begun to read it and will give a summary as I go.  In the last post I introduced the book.

Chapter 1
Per capita income must increase for a nation to become wealthier.  More goods and services need to be created.  That is, goods that have a monetary value must increase in number.  If people bake bread at home and eat it, per capita income does not increase.

This measure does not give any indication of how well the wealth is distributed in a country, however.  We do not know whether the wealth is in the hands of a few, or in many hands.  For a nation to become more wealthy, the wealth needs to benefit many people.

Wealthier nations are able to afford cleaner water, air and better medical care.  So while more wealth is not the only answer to better lives, it is a necessary starting point.

The rest of the book is a description of how the GDP (gross domestic product) can be increased.   But in summary, a country needs to continually produce more goods and services each year.  The country will have to figure out for itself what those goods and services need to be.

The authors interact with other goals that have been suggested about how to eliminate poverty.  These include more aid, more equal distribution of wealth, discovering new natural resources, debt forgiveness, better trade terms, more fair trade goods, and restraining multinational corporations.  the authors show briefly why these are not adequate for lifting a nation out of poverty.  More substantial objections will be explored later in the book.

Of particular interest in terms of current American cultural and political thought is the morality of profit.  The Occupy Wallstreet movement is in the recent past, and many in America have recently begun to think that profits are evil.  The authors point out (p. 53) that ". . . profit is not immoral, but is a measure of morally positive value that has been added to the nation."  When two or more parties agree mutually to buy and sell and one makes a profit, then the other has agreed that the value is fair and that they are willing to pay it.  Profits then reflect an increase in value over raw materials because of human talent, training, and hard work.

How then can a nation increase the amount of goods and services that it produces?  How can more garments be produced?  More food, refrigerators, or whatever?  This will be dealt with in the rest of the book.

Grudem and Asmus point out several historical examples of nations that have become more wealthy.  Britain, Japan, Hong Kong, and South Korea, all come to mind.  They mention the Industrial Revolution and how it eventually benefited England, but they don't mention the social destruction that went along with it as well.  I hope that they address these factors as the book unfolds.

Biblically, the authors point to the wife of Proverbs 31 who seems to be an entrepreneurial capitalist.  They also point to the Creation mandate of Genesis 1 where Adam and Eve are commanded to subdue the earth and implies that they were to use the resources of nature for their own benefits.  The New Testament also points to the importance of working.

Chapter two: Wrong Goals:  What won't work

Saturday, December 27, 2014

Curing Poverty Introduction

Every year especially at the Thanksgiving and Christmas holiday season I give thought to those who are less fortunate than I am materially.  There is so much food, so many things in my life, and yet there are many around the world who have little or not enough of food, water, and other things that make life more enjoyable.

I give thought to what I can do to help those people.  I have been interested in micro finance and have contributed money that way in the past.  And yet I have read articles that lead to me believe that those avenues may not be as helpful to lifting people out of poverty as we would hope.

So it was with great interest that I became aware of a book The Poverty of Nations by Wayne Grudem and Barry Asmus that was published about a year ago.  It was on my reading list, and my daughter bought it for me for Christmas.  I've begun to read it and will give a summary as I go.

Within my lifetime (55 years) the Western world has given at least 500 billion dollars to Africa, yet that continent remains mired in poverty.  What has happened?  Surely that much money should have raised the average African to at least being out of poverty.  But that's not what has happened.  In this book, the authors show how nations (not individuals) can leave poverty behind them.  They examine these factors (seventy nine total) and show both economically (Barry Asmus) and Biblically (Wayne Grudem) why these principles work.

The authors want to provide a sustainable solution to poverty for nations.  It is important that the solution last  - so it must be sustainable.  The authors realize that within nations there will be inequality of wealth, and that some nations will be wealthier than others.  That is the way life is, but it is important (and Biblical) that people not be left in poverty.  The focus of the book is on "national laws, national economic policies, and national cultural values habits because we are convinced that the primary causes of poverty are factors that affect an entire nation." (p. 26)

It is important that these changes come from within the poor nation itself.  Outsiders cannot impose solutions, nor should they act in ways that will lead to dependence by the poor nation (paternalism).

The authors recognize that wealth is not all that there is to life.  Many poor people may be better adjusted and happier than many wealthy people in their own countries or in other countries.  It could also be argued that although we in the USA may be very wealthy materially, that we are in fact very impoverished spiritually and in our relationships.  Nevertheless, it is not good that there are so many poor people in the world who are unable to feed themselves and their families, or who are stuck with the barest essentials while others have so much more.

Why don't economists agree on the solutions(s) to poverty?  The authors list six reasons and interact with them.

  1. Some do agree with our authors, and they list several works that could be read.
  2. Some economists are "professional donors."  That is, they give away others' money and have a stake in the system continuing as it is.
  3. Pure economists only address economic concerns and do not address cultural, moral, or spiritual values.  The authors of this book believe that all these factors are important for lifting people out of poverty.
  4. Some people do not believe that certain cultural values are better or worse than others.  All cultural values are equal.  
  5. Some people believe that wealth comes becomes of accidents of geography.  The book Guns, Germs, and Steel is one such approach.
  6. Planners (I am so glad they included this part) believe that government experts can adequately plan economies and thereby create wealth.  If it hasn't worked well before (or at all) it is because the wrong experts have been in place.  Sounds like the current administration in Washington!! 

So what can I, as an American do?  First, it is my hope that by reading this book and summarizing it for you, I can raise your awareness of the issues.  Perhaps an influential person in a poor country will read these posts, and then read the book and take action in their own country.  Second, you and I can influence our leaders in the West and businesses that deal with poor countries to put in place policies that will actually benefit these poorer nations.  We can also encourage the elimination of policies that do not help and may actually keep poor countries in poverty.  Third, as we work through the book, hopefully there will be other ways that we can help that become more obvious.  Lastly, we in the West are not guaranteed to remain prosperous.  We may be leaving some of the principles that have helped us create our wealth.  So it would be wise of us to examine our own culture to see what we can do to not squander the wealthy inheritance that we have been given.

Dennis Prager interview with Wayne Grudem on the topic and the book.

Chapter 1 is next