Economics 101 & Public Square

Why Eliminating Poverty Requires Economic Development

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In a recent interview with Christianity Today, development economist and New York University professor William Easterly talks about the theme of his most recent book, The Tyranny of Experts. The title of the interview is “Poverty is a Moral Problem,” and discusses how the aid approach of wealthy countries to poor countries has been, and largely continues to be, arrogant and condescending.

The Institute for Faith, Work & Economics has been working in this area and recently released a book on the topic called For the Least of These, which deals with the notion that poor people are worthy of dignity and respect. They bear God’s image as much as anyone. It is good to see a significant voice like Easterly’s also saying poor people are not lesser people in some way.

Easterly is a very thoughtful researcher on this topic, and the article is well intentioned. Its underlying assumption seems to be that if we do aid properly, with humility and respect towards individual rights, we will have better success in alleviating global poverty. This is certainly true when we are called to give short-term aid to the poor.

This bigger point is that eliminating poverty requires economic development. As Hugh Whelchel points out in another post:

This historic reduction in poverty [a fifty percent reduction in last thirty years], for the most part, has not been the result of government redistribution of wealth, the United Nations’ national debt forgiveness, or even Christian charity. It was brought about by the spread of economic freedom.

Easterly would agree, but his article only focuses on aid and misses key points. Lines like “Whenever we violate them, [people’s rights] we set back development” focus on a western response to poverty and seem to imply that better aid will lead to better development. This isn’t always the case.

Rights are incredibly important, and we should seek to protect them. However, a solution to poverty requires more in addition to respecting and protecting rights.

Long-term aid is inherently disrespectful of people’s rights by assuming they are not as capable as others, and aid is not capable of generating economic growth. Peter Greer tells several stories illustrating these points in his eBook, Stop Helping Us: A Call to Compassionately Move Beyond Charity.

Aid can only give people things they are lacking. It can’t spur development and trade. What the poor need is an institutional setting where trade is fostered, rights are respected, and flourishing is possible.

The larger issue is that aid intending to promote long-term economic development is counter-productive. The long-term prescription is to create a world where people no longer require aid. There are different kinds of aid, and emergency aid is certainly a valuable tool to relieve human suffering, but aid as a long term economic development tool is corrupting no matter what form it takes and how humble the approach.

  • Second, such gifts provide incentives to divert resources from productive activities to using them to compete for the free stuff.
  • Third, aid creates dependency. Consider the South Pacific cargo cults, who built life-sized airplane replicas to entice the cargo gods (various militaries and aid groups who flew supplies in on airplanes) to bring more cargo. Aid also creates dependent relationships, as this story about the relationship between Ukrainian and American churches attests.

The best way to protect rights of the poor is to treat them as equals. Not with different aid or a different approach, but as investors and customers, something with which Professor Easterly would agree.

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  • Scott

    True, but don’t you think there are gradients? In the Samaritan Parable, asking the wounded man to enter in as an investor and partner is unseemly. Maybe later more refined methods are available.

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