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A Review of The Poverty of Nations. By Wayne Grudem and Barry Asmus.

Sep 19, 2013

Crossway, 2013.

If you found great benefit from Wayne Grudem’s 600-page 2010 volume, Politics According to the Bible, you will also be delighted with this important new work. Here the vital issues of political economy are addressed. Why are some nations poor and others wealthy? The answer is actually quite complex, and getting the right response to this question can benefit millions.

This volume offers us tremendous help and insight here. It does not look at individuals and poverty, nor does it focus on church-based solutions to poverty, along with NGOs, micro-financing, and so on. Its main focus is on the nations. Why do some nations grow economically while others stagnate?

The authors offer a theological and economic set of answers to this thorny issue. Given that Grudem is a theologian and Asmus a professional economist, they make for a great team as they tackle some vitally important issues concerning wealth and poverty and how Christians should respond to them.

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They first discuss what methods and economic systems have not worked in bringing nations out of poverty, and discuss how wrong approaches lead to even more poverty and degradation. Thus they look carefully at things like non-free market systems; Western foreign aid programs; government to government wealth transfers; economic loans from international monetary bodies; and so on.

Consider the issue of foreign aid. The authors tell us right away this stark fact: “No poor nation in history has grown wealthy by depending on donations from other nations.” They cite numerous international experts on this. Consider the words of Oxford-trained African economist Dambisa Moyo:

“But has more than US$1 trillion in development assistance over the last several decades made African nations better off? No. In fact across the globe recipients of this aid are worse off, much worse off. Aid has helped make the poor poorer and the growth slower.”

Plenty of other authorities are appealed to in demonstrating just how counterproductive and harmful foreign aid has been. Princeton University economist Angus Deaton puts it this way: “The historical record tells us that it is possible to grow and eliminate poverty without foreign aid; all of the now-rich countries did so. … Aid as we have known it has not helped countries to grow.”

And this makes biblical sense as the authors point out: “Dependence on donations is not God’s ideal for human life on earth. God’s purpose from the beginning has been for human beings to work and create their own goods and services, not simply to receive donations.”

The authors next focus on those systems, methods and factors that do result in the economic advancement of nations. They offer a number of necessary requirements for wealth creation – 78 to be exact. These factors are broken down into four main sections, with plenty of detail going into each.

The first main set of factors has to do with a nation’s economic system. These include a free-market economy; widespread ownership of private property; a stable currency; and relatively low tax rates. The second set of factors has to do with a nation’s government.

This includes such things as: a clear separation of powers; justice is meted out impartially; personal freedoms are protected; the government is accountable to the people; religious freedom for all is in operation; and a police/military that protects citizens against crime and foreign enemies.

The third grouping has to do with a nation’s freedoms. Factors here include the freedom to buy and sell goods; the freedom to work; the freedom of employers to hire workers of their choosing; the freedom of workers to be rewarded for their labours; and so on.

The final grouping of factors has to do with a nation’s values: that individuals are responsible for their actions; that private ownership of property be respected; that marriage between a man and a woman be valued; that the earth’s resources serve man, but are treated respectfully; that a higher value is placed on saving than on spending; and that society gives honour to productivity while discouraging sloth.

All these factors are of course dealt with in some detail in the book’s final 250 pages. The authors show how nations thrive when a good proportion of these factors are at work, and fail to make it economically when they are largely absent.

Let me highlight some of the factors found in a nation’s political system. The rule of law is obviously vital here. Without it basic things such as the enforcement of contracts cannot be ensured. With a properly established rule of law everyone is equally accountable, from workers to employers to the highest government officials.

And the rule of law presupposes a moral authority, derived from higher principles. Belief in God has been the bulwark of guaranteeing our freedoms and rights. Even the king is under God and his law. This is of course the Christian teaching of the state, and the one that has made the West so successful, fair, free and prosperous.

In those nations where the rulers are above the law, corruption, bribery and graft are endemic, and the masses usually remain impoverished. But in nations with a well established rule of law, the rulers themselves are kept in check. Indeed, limited government is crucial here.

As the authors note: “There is always a tradeoff between government power and individual freedom. When government power increases, personal freedom must decrease. … However, when government power is smaller, individual freedom is greater. And when people are free, they are able to try thousands of different ways to increase economic productivity.”

The importance of mediating structures such as church, family, unions, a free press, and voluntary societies serve as buffers between the powerful state and the naked individual. A free and prosperous economy thus depends upon a free and limited political sphere.

As vitally important as healthy and growing economies are, the authors close this very important volume by reminding us that ultimately “material prosperity is a secondary issue” and that right standing with God is of fundamental importance.

But at the same time God is very much concerned about wealth and poverty, and wants us to help those who are trapped in deprivation, hardship and poverty. On an international level, the principles enunciated and detailed in this book will help us to achieve those ends, offering sustainable solutions to these perennial problems.

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3 Responses to A Review of The Poverty of Nations. By Wayne Grudem and Barry Asmus.

  • This article reminds me of one of Vishal Mangalwadi’s presentations through ‘Family Voice’, when he displayed a picture taken in an impoverished country with women carrying water on their heads. He asked a question along the lines of ‘Why are these women still doing this today?’ In other words, ‘Why isn’t there a form of an easier, and larger water supply?’
    He posited that this type of country is largely ignorant of the Bible. The Bible frees those countries that practise Christianity to develop science etc. because God leads them to that point. This is what God calls on humanity to do, and one can only do this as God desires, when aligned with God. A pursuit of God’s world opens up development, and this is patently obvious in the developed world and also perhaps in the presently developing world if we are to accept the reports of growing numbers of Christians in some Asian countries.
    There is also reference in the Bible to how God blesses those countries and people who follow him; although this does not necessarily mean that all Chrisitans and Christian nations will have a totally peaceful and rich life either.
    This is a reminder to all of us Australians to keep our house in order and if necessary, to trim our budgeted spending, to achieve this. For those Christians who have not tried it, ‘Kiva’ giving is a worthwhile way to give if one is into trying to help others become workers and self-sufficient through doing so. The LCA and other organisations have similar ideas too, and it is a great joy to keep up with how these are progressing in helping others.
    Chester Wilson

  • Thanks Bill,
    It is good to see another publication which honours a sincere analysis of the truth about wealth generation and poverty.
    And yet, witness the reaction of ACL and much of the church to the announcement of reductions in Australia’s foreign aid, indicating how little these truths are understood in the church today.
    I would also note an evident clash between “that society gives honour to productivity while discouraging sloth” and much of the modern unions (noted as a mediating structure). How can colluding on the price of labour be seen as a moral good?

    Jeremy Peet

  • My full review is here >> http://wp.me/p2KckS-1mW

    Suffice it to say that it is a much needed corrective to the secular-communitarian-coerced model touted by most when talking about biblical justice.

    David Housholder, US

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