Why We Need to Give Creative and Competent Thought to Addressing Global Poverty

Psalm 41:1 says “Blessed is he who considers the poor.” In his commentary on the Psalms, Derek Kidner points out: “The word considers is striking, in that it usually describes the practical wisdom of the man of affairs, and so implies giving careful thought to this person’s situation, rather than perfunctory help.”

Tim Keller draws out the implications of this in Ministries of Mercy: “God requires not only a significant expenditure of our substance on the needy. We are obligated to spend our hearts and minds as well. . . . We are to ponder the condition of the poor and seek ways to bring them to self-sufficiency. This takes a personal investment of time and of mental and emotional energy. God looks for a willing, generous heart, which freely helps those in need, and what we give with our hands is not acceptable without it (2 Cor 9:7).

So we are to be eager, not begrudging, in helping the poor and we are to give thought to how to do this in a way that helps bring them out of poverty over time, rather than merely doing a few things here and there.

Both of these are related. For if we are eager to help others, including the poor, this implies that we will give careful consideration to how we do it, even creating plans and generating ideas and initiatives to serve with insight in ways that help over the long term. And it means, when possible, we will ultimately seek to address root causes rather than give relief only — as important as relief itself is, all on its own.

Job is an example of this. In chapter 29 he mentions how he not only provided relief to those in need, but also “broke the fangs of the unrighteous and made him drop his prey from his teeth” (v. 17). As Keller points out in his article The Gospel and the Poor, the prophets also denounced “corrupt business practices (Amos 8:2-16), legal systems weighted in favor of the rich and influential (Deut. 24:17; Lev. 19:15), [and] a system of lending capital that gouges the person of modest means (Lev. 19:35-37; 25:37; Ex 22:25-27).”

So we should both seek to provide relief and have a view towards helping the poor become self-sufficient, ultimately seeking to address the root causes that keep people in poverty.

Lots could be said here about the various factors involved here and how to go about this, but I will mention one thing that is not commonly mentioned, at least in the church.

Many attempts to help alleviate poverty (whether in Africa, the US, or elsewhere in the world) have often been based on an inaccurate understanding of economics. As a result, they have often failed to have a last impact, and sometimes have hurt more than they have helped.

Consequently, I would argue that one of the most important things we can do if we are going to make an effective contribution to the solutions for global poverty is gain a correct understanding of economics. There is more that we need to do, of course, but gaining a right understanding of economics is critical for knowing how to direct our efforts rightly. A right understanding of economics, I would argue, is part of considering the needs of the poor (Psalm 41:1).

One of the most helpful books for this is Thomas Sowell’s Basic Economics. Sowell’s classic is one of those rare books that helps put all the pieces together. And it’s helpful not only for thinking correctly about global issues, but also issues in our own country (which was his primary purpose in writing it; the sub-title of the first- edition was A Citizen’s Guide to the Economy).

I first came across Basic Economics in a bookstore in about the year 2000. It was shortly after that I made my first trip to Africa, where many of the things I encountered illustrated the economic principles Sowell discussed.

For example, in the country we were in, the government controlled the tea industry and the zinc industry (zinc was used to make the roofs for the houses). This was supposed to make tea and zinc more affordable. Instead, it actually increased the price and decreased the quality. Sowell’s book shows why this is so — namely, because the government monopoly on these items eliminated competition, and thus the incentive to keep prices down and quality up. The nation would have been better off if the government did not seek to control these industries, but instead allowed companies to be free to produce tea and zinc as they chose, thus enabling competition to keep prices down while preserving quality.

Now I’m back in Africa and encountering similar poverty — though not necessarily to the same degree as on my prior trip (which was to a different part of the continent). I think a lot in general about “what can we do about this? How can we help more, and in a way that makes a long-term difference?” And when I’m here, it gets me thinking about it even more.

Anyway, Sowell’s book is very helpful because the only long-term solution to poverty is economic growth — which comes through business and entrepreneurship. Foreign aid can be helpful, but businesses create goods and create jobs — and keep producing goods and providing income through the jobs year after year. Thus, business is the best long-term solution to poverty.

Yet, as Sowell illustrates, certain economic policies make it harder for businesses to start and grow. Furthermore, some of these policies that hinder economic growth actually seem sensible at first. And that’s why it’s so important to educate ourselves on economics — so that we aren’t guided in our thinking and initiatives by stage-one solutions that actually hurt more than they help, and so that we don’t advocate such solutions when they are promoted by others. We have to think beyond stage one.

When it comes to economics in general, here are two very helpful and easy to read books:

When it comes to economics and global poverty, here are some of the most helpful books I’ve come across:

And here are some books I look forward to reading when I get the chance:

October 15, 2010 | Filed Under Economics, Social Good | 10 Comments 

Comments

  • http://www.zealfortruth.org Colin

    Economics in One Lesson is single-handedly the greatest introductory economics book ever written. Buy it. Read it. And understand it.

    Christians need to become aware of how economic theory works and Hazlitt’s book is the first place I would suggest going.

  • staffaction

    Great post, Matt.

    And solid book recommendations. Some other books by Easterly are also worth reading: The Elusive Quest for Growth and What Works in Development?

    For those who want to dig deeper, Douglass North’s Institutions, Institutional Change, and Development is one of the best (though a bit dry).

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  • Champ Rhodes

    Our church has seen the need to develop sound economic thinking in our work in Ethiopia. Fortunately, many of the organizations we are working with are doing so as well. Watching the PBS special “God in America” I as struck with how the Evangelicals have been engaged in many solid, right causes (anti-communism, pro-life) but have not taken a thoughtful, biblical stance on economics over the past 60 years. Interestingly, we fought against threat to religious freedom posed by communism in the 50’s but did not fight against its equally destructive threat to economic freedom. Praise God that today many evangelicals are seeing this and attempting to get a right mind to go along with a right heart towards the poor at home in America and abroad. Good post, Mr. Perman.

  • JJ

    Hear, hear! Great post…one thought that I have is that even our terminology reflects an incorrect view of economics. You’ve used the term (and I’ve used similar language, because it’s convenient) “alleviate poverty”. In reality, the only way to do this is to create wealth. Poverty is the absence of a thing…technically it can’t be alleviated. But “alleviate poverty” sounds so compassionate, while “create wealth” sounds so greedy and unspiritual and materialistic. Yet it reflects the reality that offers economic hope to the poor. I know it’s only a technicality (I fully agree with the substance of your post) but I wonder if it would be a step in the right direction for helping the church do better thinking about helping people who are stuck in poverty -er- unable to create wealth.

  • http://www.aiddata.org Jonathan Chan

    Matt,

    Good thoughts. However, as a neophyte development professional, I’d be cautious of drawing too many inferences from Sowell for the developing world. He covers the basics quite well, and gets across the point that incentives matter, but the complex mixture of corruption, violence, disease, and natural disaster that we find in many areas needs to be accounted for in ways he doesn’t. I think the basic message is still on point, but we’d be kidding ourselves to think that neo-classical economic theory will save the day.

    As a riposte to Easterly, I’d encourage you to check a couple of short articles (http://bit.ly/bd76JV, and http://bit.ly/dvvTuL) by Owen Barder. Both Bill and Owen are important voices for the development community, and their dialog makes us all smarter.

  • Champ Rhodes

    JJ,
    I actually polled some folks in our church about the two terms recently. And the results were a rejection of the term “create wealth”. Terms like “material development, opportunities for enterprise, etc,” seemed more agreeable. But I strongly agree with your premise and think we should continue to re-order the language.

  • Jay

    One thing that I have thought about is the level of influence that entertainment has on the American economy. I like alliterations so this is the one that came about from my mind rummaging…Education leads to Entrepreneurship which leads to Efficiency which leads to Entertainment which leads to Economic growth.

    The beauty of this is that Education is less of an investment than it ever has been thanks to the internet offering free resources. Entrepreneurship results from creativity. This creativity leads to Efficiency which allows us to maximize our work and reduce our time invested in working. This brings about our desire for Entertainment. Entertainment is tough to define but includes everything from sports to books. We can see by the American economy, that Economic growth is fueled by Entertainment.

    Anyhow, that was just a thought that I had. It needs to be refined and developed more but I thought that was a good way to start thinking about ways to help developing countries to battle poverty.

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  • Matt Verhoog

    I’ve read “When Helping hurts” and recommend it to everyone on the subject.