The Only Solution to World Poverty
30 January 2015
This is a guest post by Wayne Grudem and Barry Asmus. They are the coauthors of The Poverty of Nations: A Sustainable Solution.
There is only one effective solution to world poverty. It is the only solution that has ever worked or will ever work. It is evident from the history of every wealthy nation today, and it is consistent with the teachings of the Bible about productivity, property, government, and personal moral values.
After extensive research in both economics and biblical ethics our conclusion is this: poor nations must somehow produce their own prosperity, and it is possible for them to do this.
As we explain in our recent book, The Poverty of Nations: A Sustainable Solution, there were no wealthy nations for most of human history. Then in the late 1700s (the Industrial Revolution) some nations began to produce more, much more. Their factories produced more goods and their farms produced more food. Their per capita income doubled and quadrupled and kept on increasing. Britain was the leader, producing textiles (especially cotton) far faster, cheaper, and better than anyone in the world. Many other manufactured products followed, and soon other nations in Europe and North America also began to produce their own prosperity.
The same pattern has continued in the modern era. Japan grew from being a poor agricultural economy in the early 1900s to the world’s second-largest economy in the late 20th century by manufacturing cars, computers, TVs, cameras, steel, and ships. South Korea went from being one of the world’s poorest nations in the 1950s to the twelfth richest nation today by manufacturing products like TVs, cars, and microwaves. Chile began to move out of poverty in the 1970s by growing abundant fruits and vegetables for export. India is experiencing rapid growth through information technology, medical technology, and customer services such as telephone help lines. China is growing by producing millions of small manufactured goods. Every nation that has escaped poverty has done so by producing its own prosperity.
No nation has ever escaped poverty by means of foreign aid. Foreign aid given through the governments of poor countries usually does more harm than good because it entrenches corrupt rulers in power, fattens their personal bank accounts, and foments civil wars over control of the big prize: access to the nation’s treasury and all the aid money. Forgiveness of a poor nation’s debts is not the answer either because it is just more foreign aid carried out by a two-step process (first the loan, then its cancellation).
Charitable gifts of things like food and medical care are important because they meet urgent needs, but they are addressing the symptoms (hunger and sickness) rather than the cause (the poor nation is not producing enough of its own food and medical care).
The Bible supports the idea that nations must produce their own prosperity. When Israel came into the Promised Land God did not promise them perennial donations of riches from other nations but hills filled with iron and copper (which they would have to dig and refine) and fields of vines and fig trees (which they would have to tend and harvest each year). God’s blessing of prosperity would come by productive work (Deut. 8:7-10). Even the poor had to work for what they got by gathering the gleanings that were left at the edges of the fields (Lev. 19:9-10). There is no thought in the Bible that poor nations or poor people were to become dependent on donations from others year after year.
Abundant natural resources are not the answer for poor nations today because many African and Latin American nations have immense resources but they remain poor, while nations such as Switzerland, Japan, Taiwan, and Singapore all lack significant resources but have become wealthy by creating productive economies. They have produced their own prosperity.
But the key question remains: What must a nation do to become more productive and move from poverty toward increasing prosperity? Our research has discovered 79 factors that will lead a nation to prosperity or, when lacking, trap it in perpetual poverty. These factors fall into three broad categories: 1) a nation’s economic system, 2) its government, and 3) its cultural beliefs.
The only economic system that has ever produced national prosperity is a free market system, not a welfare state or socialism or communism. Our book explains in layman’s terms how a free market works and why it is morally superior to every other economic system. However, a free market can only be truly free when it includes widespread access to private ownership of property, effective rule of law, a stable currency, increasing specialization in the workforce, free trade both domestically and internationally, and allowing people to keep most of the fruits of their labor (through low taxes). But a free market system alone will not bring prosperity unless a nation also has the right kinds of government and cultural beliefs.
A government that leads to prosperity is one in which leaders are not acclimated to systemic corruption but are committed to using their power for the benefit of the people as a whole. The government must also protect citizens against crime and safeguard important human freedoms.
At a deeper level, there must be good and wise cultural beliefs. We believe the Bible is the best source of such beliefs. To become truly productive, a society must share a widespread belief in not stealing, telling the truth, working productively and diligently, conducting business transactions so as to benefit both parties, using time wisely, and developing the earth’s resources with wisdom, not with superstition or fear.
We do not believe, however, that material prosperity is the most important issue in the world, for Jesus taught that love for God and love for neighbor are the two greatest commandments (Matt. 22:37-39). But if we are talking about how to solve world poverty, the solution can only come through increased economic productivity within poor nations themselves.
Poverty is a complex problem and any genuine solution must address multiple factors. We urge leaders in poor nations to thoughtfully consider the 78 factors that we enumerate and explain. Our book provides poor nations with realistic hope because it makes specific recommendations that will liberate people in poor nations and enable them to become more productive, as God intended them to be.
Barry Asmus (PhD, Montana State University) is a senior economist at the National Center for Policy Analysis, a non-profit organization dedicated to promoting private sector, market-based solutions to economic growth and development. Named by USA Today as one of the five most requested speakers in the United States, Asmus has been writing and speaking on political and business issues for over 25 years. He has twice been voted the Outstanding Professor of the Year and has received the Freedom Foundation at Valley Forge Award for Private Enterprise Education. He is the author of eight books including Crossroads: The Great American Experiment (coauthored with Donald B. Billings), which was nominated for an H. L. Mencken Award.
Wayne Grudem (PhD, University of Cambridge; DD, Westminster Seminary) is research professor of theology and biblical studies at Phoenix Seminary, having previously taught for 20 years at Trinity Evangelical Divinity School. Grudem earned his undergraduate degree at Harvard University, as well as an MDiv from Westminster Seminary. He is the former president of the Evangelical Theological Society, a cofounder and past president of the Council on Biblical Manhood and Womanhood, a member of the Translation Oversight Committee for the English Standard Version of the Bible, the general editor of the ESV Study Bible, and has published over 20 books, including Systematic Theology, Evangelical Feminism, Politics—According to the Bible, and Business for the Glory of God.