Review of “The Poverty of Nations” by Wayne Grudem
The Poverty of Nations: A Sustainable Solution, Wayne Grudem and Barry Asmus. 2013. Wheaton, IL: Crossway.
Reviewed by Winnie Fung, Wheaton College (IL)
How can poor nations come out of poverty? This is an age-old question that academics and policymakers alike have sought to answer. In their book The Poverty of Nations: A Sustainable Solution, economist Barry Asmus and theologian Wayne Grudem integrate free-market principles and biblical values to address global poverty at the national level.
They focus first on the types of economic systems (Chapters 3-6), then on government laws and policies (Chapters 7-8), and finally on cultural values and beliefs (Chapter 9) that can help a nation overcome poverty.
The authors state the goal of the book outright: “To provide a sustainable solution to poverty in the poor nations of the world, a solution based on both economic history and the teachings of the Bible” (p.25). This is a tall order, but the authors are able to remain focused on the parameters they set forth for themselves at the beginning of the book, engage creatively and meaningfully with the views of other economists and development historians, as well as argue convincingly for the importance of the values and beliefs of a system, including moral and spiritual convictions, which are often ignored in discussions about economic development and growth.
Asmus and Grudem are clear about the parameters of the book: It addresses poverty not at the personal or community level, but at the whole-nation level. The book suggests solutions that can be and must be implemented from within a nation, by its own leaders. This means the focus is not on what rich countries can do to help the poor (e.g. by removing tariffs and quotas on products imported from poor countries, or by restraining from commodity dumping on the world market), but on what a poor country can do for herself (regardless of what rich countries do). This also means that the authors are less interested in exploring the causes of poverty per se. For instance, even though colonialism in the past may have led to what Acemoglu and Robinson (2012) call “extractive institutions,” which in turn depress a nation’s economic development, Asmus and Grudem do not believe “looking to the past and blaming colonialism does much of anything to solve the current problems, all of which have complex causes” (p.89). “The crucial question for today is, what can a poor country do now, looking forward” (p. 89, emphasis added).
Asmus and Grudem’s proposed solution is that poor nations need to produce more goods and services in order to escape poverty (Chapter 1). This goal of increasing production is reiterated again and again throughout the book. The idea is simple: as the standard measure of wealth is GDP per capita, a poor country needs to increase her GDP by producing more goods and services. This goal may be a no-brainer at first. Doesn’t a poor person get wealthier by working more and making more money? Simple though this goal may be, one can appreciate why the authors spend one chapter to defend this goal when one considers that the intended audience of this book is the ordinary reader, not the professional economist (p.31). To the ordinary reader, it is important to point out that the transfer of goods from one person to another does not increase GDP; neither does the printing of money. Only by producing more goods and services can one increase GDP.
….Basic Economic Principles, Economics and the Bible, Poverty