The Only Way for Poor to Escape From Poverty

by Barry Asmus & Wayne Grudem

Source: FOX News.com

This week’s World Economic Forum would do well to remember that there is only one effective solution to the poverty of poor nations. It is the only solution that has ever worked or will ever work. In addition — and this is important to those who value the teachings of the Bible — this one solution is consistent with the moral teachings of the Bible about productivity, property, government, and personal moral values.

The only way any nation has ever escaped from poverty is by gradually producing its own prosperity. 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.

The only way any nation has ever escaped from poverty is by gradually producing its own prosperity.

Chile began to move out of poverty in the 1970s by growing abundant fruits and vegetables for export.

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 that is 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). 

Is there any role, then, for charitable gifts? Yes, certainly.

Charitable gifts of things like food and medical care are important today because they meet urgent needs. But we must remember that 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's teachings support 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 (Deuteronomy 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 (Leviticus 19:9-10). In fact, the manna from heaven (celestial "foreign aid") ceased on the first day the people of Israel ate the produce of the Promised Land (Joshua 5:12). There is no thought in the Bible that poor people or poor nations 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 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? Because human actions have complex motivations, the answer is multi-faceted and includes multiple changes in three areas, changes that can only be implemented by heroic leaders in the poor countries themselves: 

1. The only economic system that will lead to national prosperity is a free market system with effective rule of law, not a welfare state or socialism or communism.

In addition, to keep the market genuinely "free" (in other words, based on voluntary transactions), government must punish crimes like theft, fraud, selling defective goods, violation of contracts, and violence.

2. 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. (3) 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 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 (Matthew 22:37-39). However, if we are talking about how to solve world poverty, the solution can only come through increased economic productivity within poor nations themselves.

Barry Asmus is a senior economist with the National Center for Policy Analysis. Wayne Grudem is a professor at Phoenix Seminary in Arizona. Their book, "The Poverty of Nations: A Sustainable Solution," was recently published by Crossway Books.