Review: The Poverty of Nations: A Sustainable Solution
My rating: 3 of 5 stars
I’m not an economist. I’ve read precious few books on economic and political systems. But I try to listen in on the major conversations of the day, and a debate over the proper shape and role of the free market is definitely one of them. It’s hard to imagine a time when it won’t be. So I’m not a complete neophyte when it comes to the major topic of Wayne Grudem and Barry Asmus’ The Poverty of Nations.
But in this review it will be difficult to stick with what I (am supposed to) know, theology, because this book doesn’t contain much. That’s not necessarily a problem; I expect books on some topics—say, the history of vinyl—to be fairly thin when it comes to the use of the Bible. This book actually does use the Bible a great deal, but this brings me to one of two criticisms:
1. Grudem and Asmus’ use of the Bible is of the prooftexting variety; the Bible is used to buttress points I hear other conservative economists make. Biblical theology doesn’t seem to set the tone of the whole work.
This, again, is not necessarily a big problem (remember Vinyl: A History?). And Grudem and Asmus’ prooftexting is actually quite good, I’d say. Some biblical corpora, like Proverbs, lend themselves readily to the good kind of prooftexting—and on precisely this topic of money.
2. But I couldn’t shake the feeling that Grudem and Asmus wax too rhapsodic* about the virtue—a word they use often—of a free market economy which Scripture doesn’t clearly demand. And they don’t give sufficient weight to the culture-shaping power of consumerism. John Frame talks about that level of perception where you just feel something is wrong, but you haven’t put your finger on it—until, perhaps, you read a book review. I’d like to find that review. This isn’t it. I just don’t like to hear such strong resonances between a biblical book and godless conservative radio talk show hosts.** Both are too doctrinaire for me, a fundamentalist of all people.
That’s because I find both going beyond the reach of special revelation. The godless conservative radio talk show hosts do so more obviously; their arrogant, fault-finding, name-calling spirit is itself a sign that their positions ought to be viewed with some suspicion. But Grudem and Asmus go beyond the Bible, too (though without the nasty spirit). They speak with a great deal of confidence about what nations ought to do, but that confidence is not clearly sourced in Scripture.
I’m afraid that puts me in the awkward spot of believing that, overall, their advice is good but that their tone ought to be moderated and their Bible ought to be more integrated. I do believe that if poor nations followed the program in this book, those nations would see positive results. And I certainly can’t offer a better program. And the truths of general revelation—what policies actually work in this world—definitely ought to have their say. But let’s be open about it when we go beyond the warrant of Scripture and let our experience talk. Let’s call the free market system what it is: prudence, and not what it isn’t: a divine mandate. When God had a chance to set up the details of an economy, He didn’t demonstrably set it up along the lines recommended in Grudem and Asmus’ book. I’m not a theonomist, but I think this point ought to give modern American conservative Christians political pause.
I’d like to come through now, however, with what I consider to be a major redeeming point, an effective argument against at least some of my criticisms: the book is not about individuals so much as nations. On the level of individual actions to help the poor, they recommend a book I have found helpful, Corbett and Fikkert’s When Helping Hurts—and then they never (as I recall) talk about that kind of help for the poor again. But their book isn’t about helping the poor on an individual level, but on a corporate one.
Their book is aimed at leaders of nations now struggling in never-ending poverty. And, judging from their own comments on the matter, it does seem that they’re making a unique contribution here. Namely, they are enumerating the socio-cultural factors that are to blame for poor nations’ continued poverty. Corruption and bribery obviously belong on that list. But so does a failure to establish clear property rights, for example. I believe they’re right to conclude that God endorses property rights by (rock-solid) implication in the sixth commandment, “Thou shalt not steal.” And I really learned something when they pointed out that, without clear property rights, people have no collateral against which to borrow capital and begin businesses. They also have to keep capital tied-up unnecessarily in saving for any disputes that might occur over who owns what. And if they have no capital, they’re likely to lose their property in a dispute.
They also made the point that without the rule of law, massive disincentives are created for anyone to bother to do well in business—and therefore create jobs for other people. If you do really well making widgets, the local magistrate is likely to slap massive regulatory fines on you in order to benefit his nephew, who also makes widgets. Nations who don’t have or enforce good laws inject so much uncertainty into the market that it’s hardly worth trying to get ahead.
The authors repeat one thing over and over again: the way to wealth for poor nations is through an increase in GDP. They must focus on producing “goods and services of value.” This line probably appears 100 times in the text, and it has a way of sticking. It sounds right to this non-specialist. Massive aid doesn’t really help; it gets lost in bureaucratic pockets. But if people will start businesses that raise capital and allow for the hiring of local workers, the country can start to rise.
There was much insight here, and I found myself imagining leaders of poor nations actually getting hold of this book and using it to lead changes in their nations. It’s possible. Grudem and Asmus do mention the role of individual Christian salvation, but it bears very little weight in the book. They seem to think that a nation can achieve massive cultural transformation by the proper arrangement of incentives and disincentives. Maybe, maybe.
LESSONS FOR ME
I learned a great deal from the book. For example, I’ve always wondered why exactly food and other consumer goods shortages happen in socialistic economies. It’s because of the information transmission role that the free market plays. There is so much information flying around naturally through the free market system that the socialist has to somehow master and guess at, and can never do so. For example, the super market manager who buys too many pencils and can’t get rid of them all in time for the fiscal year to end or whatever and therefore chooses next time not to buy so many and lowers the price of the ones that he bought, influencing the prices around him. No central planning committee can possibly know, let alone track, all that location-specific information. That was especially the case before the existence of computers. How could they possibly know what prices people are willing to pay for given goods all over their nation? The socialist system, I would guess, would work on protecting the prices of the things produced by the people with the loudest and most powerful voices, reducing incentives for other people to produce other goods and causing shortages of what people truly want.
Also, this book helped me understand how it is that poor countries can have comparative advantages even in a world market in which the big countries would seem to have all the advantages stacked up neatly on their sides already. Those poor countries can still specialize in something. They gave the illustration of a doctor who could make $100/hr. doctoring all day but who winds up having to spend four hours a day typing. He can type at 120 words per minute, it just so happens, and the secretary he’s looking at hiring can only type at 60 words per minute. He’s got an advantage over her in this: it’s going to take her eight hours a day to do all the typing she needs to do. But if he pays her $15 an hour—$5/hr. more than she made in retail sales—he therefore increases his daily personal GDP by $400 minus what he’s paying this secretary, $120, for a total increase of $280. Not only is he paying someone else a salary, but he is upping his own overall profit and his service to the community. Likewise, rich nations should stick to doctoring and poor nations can make $5 an hour more, as it were, switching from retail sales to typing—there is something they can do. Who knows what advantages they might develop as time passes.
I listened to an audio version provided by Christian Audio. Obviously, I didn’t have to say anything fawning. The audio quality was quite good, and the reader’s tone fit that of the book quite well. Coincidentally, a beloved Christian brother generously gave me a copy of this book. It probably is a better (analog) read than listen, but both formats together worked well for me.
*They are so rhapsodic that they call socialism “immoral,” not just bad policy. I’m not necessarily opposed to that. Historically speaking it seems to be demonstrable, but they fail to note what I consider to be a pretty important point when you’re writing a book this long about economics: why would socialism be attractive to anyone? When someone can’t think of anything nice to say about an opposing viewpoint, even though a lot of smart people hold that viewpoint, they’re being too doctrinaire and/or rhapsodic.
**One other resonance I heard (and to be clear, Asmus and Grudem do not have the nasty spirit of many talk-show hosts): the authors list some of the reasons that the United States has been able to maintain itself as a representative democracy for so long, and one they mention is the right to bear arms. They interpret this as a limit on government power because people are able to fight back against the government—in principle, at least, because the government is not able to confiscate all the firearms in the country. I really do wonder if this is feasible any longer. I wonder if it ever was; I just don’t know. But now it’s really hard to imagine any militia forming that could outgun the U.S. military. No militia is likely to have fighter jets. It’s not just guns that a modern army needs. This is a minor point, but I felt it was an example of how the rhetoric of the Tea Party may be driving some of the positions in the book. For a little more on this, see my review of Republocrat.