The Poverty of Nations: Chapter 4 Economic Systems

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.

Introduction was here
Chapter 1 was here
Chapter 2 was here
Chapter 3 was here

Now for chapter 4.

This chapter is a description of the free market and its advantages.

First comes the definition.
Economic production and consumption are determined by the free choices of individuals rather than governments and there is private ownership of the means of production.

This system leaves people free to choose to work, and where to work.  They are free to keep the rewards of their labor and talent.

They quote Adam Smith:

That system of laws, therefore, which is connected with the establishment of the bounty, seems to deserve no part of the praise which has been bestowed upon it. The improvement and prosperity of Great Britain, which has been so often ascribed to those laws, may very easily be accounted for by other causes. That security which the laws in Great Britain give to every man that he shall enjoy the fruits of his own labour is alone sufficient to make any country flourish, notwithstanding these and twenty other absurd regulations of commerce; and this security was perfected by the revolution much about the same time that the bounty was established. The natural effort of every individual to better his own condition, when suffered to exert itself with freedom and security is so powerful a principle that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often incumbers its operations; though the effect of these obstructions is always more or less either to encroach upon its freedom, or to diminish its security. In Great Britain industry is perfectly secure; and though it is far from being perfectly free, it is as free or freer than in any other part of Europe.   An Inquiry into the Nature and Causes of the Wealth of Nations   IV.5.82 
  http://www.econlib.org/library/Smith/smWN15.html#IV.5.82  accessed on June 24, 2015

 The authors point out that except for oil rich countries all countries with a high per capita income have a free market system.

Grudem and Asmus also discuss biblical support for a free market economy.  These points include the Biblical teaching about private property, but stewardship for what we do possess.  The fact that we are all created in God's image means that we should all have equal rights before the law.

The foundation of a free market is private ownership of property.  Governments should not over regulate property use.  Clear titles to land, property (including intellectual) are important so that people can actually keep and use their own property.  Without titles, there is no guarantee that my property today will be mine next week.  Furthermore, when I have a title to my property I can use it as collateral for loans.

Getting titles for poor people for property they already own would go a long way to helping lift people out of their poverty.

The authors cite a study by Hernando de Soto, The Mystery of Capital.   De Soto concludes that without legal protection for property poverty cannot be eradicated.  There is no third way between capitalism and socialism.

There is a role for government in all this, but it is limited to preventing and punishing fraud and criminal behavior.  The government also must ensure low tax rates and a stable currency.

In this time when capitalism and free markets are under attack this chapter sorely needs to be read by Americans and Europeans or we may lose the wealth that our ancestors have bequeathed us.

America: the Movie

Today my wife and I went to the theater and watched America narrated and directed by Dinesh D'Souza.

It's about an hour and a half long - plus the trailers of course!

It's worth seeing.  The first part of the movie explores 5 or 6 common criticisms of America including the treatment of the Native Americans, slavery, imperialism, capitalism, and the Mexican-American War.  Most of the remainder of the movie responds to these accusations.

If you are well familiar with American history you will recognize that the gist of D'Souzas arguments are well done, although short.  They would probably not convince someone on the Left because they are short answers and  the accusations against America deserve  longer, more careful responses.  Furthermore, history is more complicated than that one view of America is right and the other view is wrong.

Nevertheless, the movie is a good introduction to the answers to those accusations and hopefully the beginning of helpful dialogue.

Some important things to consider.
First, all the indictments of America are actually indictments against all of humanity.  There isn't an empire in world history that isn't guilty of all or most of the accusations made against America (maybe couched in slightly different terms).  Most world empires are far worse than we have been.

Human beings, the world over, are nasty creatures - prone to treat their fellow humans with cruelty and evil.  This sad fact is true of every society that I have heard of.  And as we saw after World War II, evil runs through every human heart.  Part of the American genius was to recognize this human weakness and write into our Constitution and laws safeguards against evil and power hungry humans.  We are forgetting this at our peril today and allowing too much power in the hands of the President at the expense of Congress.  Too much power is in Washington compared to the states.  And too much is in the hands of large businesses who are accountable to few, and certainly not the voting public.

Second, America is guilty of many sins - including some of those described in the movie.  What those critics of America forget, and the movie reminds us, is that these are not uniquely American faults.  Those who would criticize America alone for these faults are ignorant or hypocritical.  Nor should we expect that America will be a perfect nation now or in the future.  Searching for such perfect has led many people down many terrible roads.  Communism and the Nazis come to mind.

The high point of the movie for me as an American and as a Christian was in the description of Saul Alinsky's methods.

One of Alinsky's methods to help refashion America was to polarize the country and to not allow for forgiveness or reconciliation.  Sound like where we are?  People are more and more nasty to each other, the two major parties are moving further and further apart.  Yet when I talk to ordinary people who claim to be Liberals or on the Left, or who don't like Conservatives, it's amazing that we have so many things in common and so many similar goals.

Yes, there are hard core people on the Right and the Left who won't move at all.  But can I hope that those more in the middle can at least talk to each other and not see each other as evil monsters?  Perhaps we can love each other in spite of our differences and find solutions to benefit the entire country?

As Christians reconciliation is our task.  (See NT Wright's book Surprised by Hope)  We are heralds for a God who has gone to and is going to great lengths to reconcile a nasty, sinful human race to himself and then to restore and transform this world for them.
  

As Americans let's reconcile and forgive each other -- or at least talk to each other!  As Christians, let's do the same.  For the future of our nation and for the sake of the kingdom of God.