First-World Wealth; J. Jefferson Davis

John Jefferson Davis FIRST-WORLD WEALTH AND THIRD-WORLD POVERTY "In one world, as in one state, when I am rich because you are poor, and lam poor because you are rich, the transfer of wealth from the rich to the poor is a matter of rights; it is not an appropriate matter for char ity." Such are the angry claims of Julius Nyerere, president of the Af rican nation of Tanzania. 1 His sen timents are echoed by the Third World revolutionary Frantz Fanon: "The question which is looming on the horizon is the need for a redistri bution of wealth. Humanity must reply to this question, or be shaken to pieces by it."2 Are the charges of Nyerere and Fanon supported by the facts? Do we as members of the more affluent na tions have a moral obligation to give Dr. Davis is Associate Professor of Theology at Gor don-Conwell Theological Seminary, South Hamilton, Massachusetts. This article is from the manuscript of a forthcoming book, A Land of Milk and Honey: Bibli cal Foundations of the Free Market.

678 "reparations" to the poor of the Third and Fourth-World nations? Does our wealth cause their poverty? The World Outlook It is useful to recall some basic facts about poverty in the past and present for the sake of gaining historical perspective. As twentieth-century Americans, it is easy to lose sight of the fact that poverty has been the normal lot of the vast majority of mankind for most of recorded his tory. As the economic writer Henry Hazlitt has observed, "the history of poverty is almost the history of mankind."3 Poverty was the order of the day in the ancient world. Greek dwell ings had no heat in winter, no ade quate sanitary arrangements, and no washing facilities. The average Ro man house was little better. Recur ring famines took thousands of lives. In a famine in Rome in 436 B.C., thousands of starving people threw themselves into the Tiber River, so great was their desperation. 4 General and widespread poverty was also characteristic of the middle ages. "Alternations between feast ing and starvation, famines, crime, violence, scurvy, leprosy, typhoid, wars, pestilence and plague were part of medieval life to an extent we can hardly imagine today," wrote histo rian E. Parmalee Prentice. The homes of typical medieval laborers were hovels. The walls were made of FIRST-WORLD WEALTH AND THIRD-WORLD POVERTY 679 boards cemented with mud and fact that "In spite of spiraling infla leaves; there was no sewage or wa-tion, and energy costs, socioeco..

ter supply. The entire family was nomic data now shows that less than crowded into a single room or. per-7 percent of all i Americans live be haps two, together with the family's low the U.S. poverty line, and even animals. 5 this 7 percent live better than 85 The Encyclopedia Britannica listed percent of the ,rest of the world's some thirty-one major famines from population." While it may be true ancient times down through 1960.- that the U.S., with only 6 percent of Famines are still common in the less the world's population uses over a developed countries. In modern so-third of the wor~d's energy, Brookes cialist nations food shortages are still points out that the critics usually fail a recurring problem, as this recent to mention that the U.S. produces 40 headline attested: "Rationing of percent of the world's food, and sup Sugar and Meat in Poland." ports nearly 80 percent of the world's The fact of poverty as the "nor-private charities. 6 mal" condition of the human race Dr. Michael J. Boskin, a professor began to change with the rise of the of economics at Stanford University, Industrial Revolution in the mid-has recently called attention to fea eighteenth century. Through the tures of the government's "poverty benefits of modern science and tech-index" that tend to exaggerate the nology, in the Western industrial size of the problem. While the index nations poverty has been changed is adjusted for inflation, family size from the normal condition of the and location, i~ excludes the actual majority to the abnormal condition cash value of tr~nsfer payments such of the shrinking minority. It is easy as food stamps, subsidized housing, to forget what a dramatic change this and medical care. "Even conserva transformation· has meant for the tive estimates, of the cash-equiva average person. The less developed lent value of th.ese programs result nations are responding to a "revolu- . in a startling d~scovery," writes Prof.

tion of rising expectations" created Boskin, "only: about 3 percent of by the advances of the Industrial Americans live below the poverty Revolution. line."7 If Boskin's analysis is correct, Here in the United States sub-then the "war Qn poverty" in Amer stantial progress has been made in ica is a war that has practically been the effort to reduce poverty to a re-won. sidual level. Warren Brookes, eco-In the world j as a whole, it is un nomic writer for the Boston Herald deniable that there are multitudes American, has called attention to the of poor and hungry people. But even 680 THE FREEMAN November here there are signs ofhope, and well meaning reformers at times inad vertently exaggerate the magnitude of the problem. In a recent issue of Commentary Nick Eberstadt argued that the fig ure of 30 million children dying of starvation each year quoted by World Bank president Robert McNamara was four times too high. The World Bank figures failed to take into ac count local variations in caloric needs. With the World Bank's meth odology caloric deprivation would be ascribed to 48 percent of the popu lation of Taiwan and to 40 percent in Hong Kong, but life expectancy in both places is over 72-about the same as in Finland or Austria. 8 The world hunger situation has shown signs of improvement. In the past 30 years life expectancy in the less developed countries, excluding China, has risen by more than a third, and China's may be up by 50 percent. Since 1950 worldwide per capita food production has risen by about 40 percent, in spite of dra matic population growth. Between 1950 and 1980 the world's arable land area grew by more than 20 per cent, and even more rapidly in the poor countries as a whole.9 These figures do not minimize the tragic proportions of the hunger and pov erty that still exist in today's world, but they do caution against careless exaggerations that in the long run only retard the mobilization of the moral concern necessary to alleviate the problems.

The experience of the modern Asian states of Taiwan, Singapore, Hong Kong, and South Korea dem onstrates that determined and en ergetic societies can overcome con ditions of poverty. These once-poor societies have been notably trans formed in the last 20 years through initiative and hard work. Singapore, a city-state hardly larger than Memphis, Tennessee, and without natural resources, has won 25 per cent of the global backlog of orders for oil rigs, second only to the United States. South Korea is already the world's largest producer of black and white television sets. These Asian states are rapidly moving from tra ditional reliance on the man ufac ture of cheap garments and toys into the high technology areas, offering stiff competition to Japan. lO Their experience shows that poverty can be overcome not through exploiting others, but through initiative, en terprise, efficiency, and hard work.

The Causes of Poverty One popular theory about the cause of poverty might be called the "rob ber baron" theory. According to this theory, if I am rich and you are poor, it must be the case that you have been the victim of my exploitation and oppression. This point of view was popularized by Karl Marx, who believed that the relationship be1982 FIRST-WORLD WEALTH AND THIRD-WORLD POVERTY 681 tween capital and labor was inher ently that of oppressor and op pressed. Now it is certainly the case that the poor can be exploited by the rich. The fact of oppression in human ex perience can not be denied, and it is common enough to make the "rob ber baron" theory plausible. We have heard such sentiments voiced by Ju lius Nyerere ofTanzania in the words quoted at the beginning of this arti cle. It would be a fatal error, however, to believe that all poverty is the re sult of oppression. The "robber baron"

theory misunderstands the nature both of wealth and a free exchange in the market economy, and slan ders the character of those who have become wealthy through personal initiative, insight, and hard work. It is important to understand the nature of wealth in the modern world. Most wealth today is derived neither from exploitation nor from digging material resources out of the ground, but from discovering new ways of producing goods, organizing work, or processing information. As Max Singer and Paul Bracken of the Hudson Institute have observed, "much modern wealth isn't based on things at all, but on ideas, tech niques, information, and other in tangibles, such as new ways of mo tivating people or organizing work." They note that Japan's economic success "is the most dramatic evidence that wealth does not have to be based on natural resources."ll The invention of the computer chip has spawned a whole new industry and created thousands of new jobs.

The computer chip represents a new source of wealth derived not from exploitation, but from human in ventiveness which transformed or dinary sand into: an instrument for processing information faster and more efficiently and in a tinier space. The latest development along these lines is the "seeing eye" or "imager" chip. In a growing number of lumber mills logs are sized up by imager chip cameras linked to computers that control the i cutting saws. The result is five to ten percent more lumber per log. !Again, the gain is the product not of "exploitation," but of human creativity. Both Traders Benefit Notice also that a free-enterprise economy is based on free exchange. The Beatles freely chose to write music and produce records, and mil lions of young people freely chose to exchange their money for those records. One mayor may not like the music of the' Beatles, but never theless it is the ,case that these mu sicians became millionaires many times over not through theft and fraud, but by freely producing a product that millions freely chose to purchase. A genuinely free ex change is not a "zero-sum" or "I win682 THE FREEMAN November you lose" situation, but a relation ship in which both parties benefit.

Unless both parties value what they receive more than what they give up, the exchange will not take place. The teenager valued the record more than the money required to purchase it, and the producer the money more than the record. In a free exchange disturbed by neither force nor fraud, both parties benefit and increase their sense of personal satisfaction. The "robber baron" or "rip-off' the ory of poverty and wealth fails to understand the dynamics of a free exchange economy. Another popular but mistaken idea today is that the wealth of the West ern nations is the cause of the pov erty of the Third-World nations. This contention is simply not supported by the facts. Some of the most afflu ent nations, such as Switzerland and Sweden, never had any colonies. at all. Others, such as Germany and Japan, became wealthy only after losing their colonies. Some of the most economically underdeveloped nations-Afghanistan, Tibet, Ne pal, Liberia-never were colonies of the West.12 And in general, the Third World nations that today are the most economically advanced are precisely those which have had the most extensive contact with the West.

As Professor P. T. Bauer of the London School of Economics has pointed out, "Before colonial rule there was not a single cocoa tree in the Gold Coast (Ghana); when colo nial rule ended, cocoa· exports, en tirely from African -owned and op erated farms, totaled hundreds of thousands of tons annually." In the 1890's, Malaya was a sparsely· pop ulated land of fishing villages and hamlets. "By the 1930's," notes Bauer, "it had become a country with populous cities, thriving commerce, and an excellent system of roads, primarily thanks to the rubber in dustry brought there and developed by the British."13 The fact of the matter is that the colonial system benefited the colo nies as well as the ruling countries. Colonialization brought the intro duction of schools, roads, banking, and business know-how without which much of the former .. colonies' present economic development would have been impossible. Resentful "robber baron" theories applied ·to.the West by Third-World leaders influ enced by Marxist ideology distort the historical record and short-circuit the personal initiative needed for up ward economic mobility in their so cieties.

While scripture clearly recognized that poverty may be caused or ag gravated by external circumstances such as oppression and injustice, it is equally clear that the Bible teaches that individual character is a cru cial factor influencing one's state of poverty or affluence. It is clear that 1982 FIRST-WORLD WEALTH AND THIRD-WORLD POVERTY 683 poverty can be caused by sloth and laziness. "A little sleep, a little slumber, a little folding of the hands to rest, and poverty will come upon you like a vagabond, and want like an armed man" (Proverbs 6:10, 11). "Slothfulness casts into a deep sleep, and an idle person will suffer hun ger" (Proverbs 19:15). The sluggard neglects his own fields and vine yards, and suffers impoverishment as a result (Proverbs 24: 30-34). The scriptures clearly call upon all to assume personal responsibility for their own lives and circumstances, rather than depending on govern ment to provide for their basic needs.

Rather than blaming impersonal environmental and structural con ditions for one's poverty, the Bible encourages the individual to take personal initiative and actively ex ert the effort necessary to better one's personal circumstances. A PersonalProblem In 1966 Professor James S. Cole man stunned the educational world with his massive study, Equality of EducationalOpportunity,perhaps the second most expensive social re search project in U.S. history. The conclusion of Coleman's study was that there was no measurable im pact that public schools had had in eliminating or even modifying com parative achievements among stu dents. This was a stunning blow to one of the basic liberal assumptions which had undergirded U.S. social and educational policy during the 1960's, namely, that spending more money on the public schools was an effective means of reducing poverty. This assumption saw the primary roots of poverty Jin the child's social environment, and the assumption proved to be mistaken. Coleman's results pointed, instead to family values as the prime factor in educa tional achievement. It turned out that the character formation pro vided by a sound family structure, rather than "federal money thrown at a social problem" was the key to motivation and achievement in the public schools~a result that many people have suspected all along.

In 1970 Professor Edward Ban field of Harvard! earned the wrath of much of the academic profession with his book The Unheavenly City. Ban field argued, contrary to the conven tional wisdom,! that the primary cause of poverty in the ghetto is not external but internal, and in partic ular, the self-chosen lifesty Ie of the majority of ghetto inhabitants. The problem according to Banfield is "present orientation," a set of values oriented toward "action" and imme diate gratification, rather than planning, saving, and extended ef fort. Such a value orientation can not be changed merely by bigger schools or better job :training, but only through a more fundamental moral and spiritual reorientation-a "con684 THE FREEMAN version." Banfield's insights under score the fact that poverty is basi cally rooted in a state of mind rather than in external circumstances. The Work Ethic It is intriguing to study modern history and notice how nations such as the United States, Canada, En gland, Germany, the Scandinavian countries, and Switzerland, which were significantly affected by the Protestant Reformation, have en joyed great economic prosperity.

Many factors were at work, of course, but nevertheless the sense of per sonal responsibility encouraged by the Reformation gospel was a pow erful stimulus to economic improve ment. One of the ironies of the modern world is that the "Protestant work ethic" seems best exemplified in non Christian states such as Japan, Sin gapore, South Korea, Taiwan, and Hong Kong. Insofar as these new in dustrial giants of Asia have applied the biblical work ethic they have en joyed remarkable economic prosper ity. This is no confirmation of a doc trine of "salvation by works," but of the simple principle that God can grant temporal blessing to righteous behavior wherever it may be found. When Kim Kyang Won, secretary general to South Korea's president, was asked about the reasons for his country's progress, he replied, "It's the culture of discipline and postponing immediate satisfaction for the future-even for posterity."14 Such character traits have encouraged a national investment rate of 25-35 percent of the Gross National Prod uct, twice the U.S. rate.

Americans of all faiths can learn from the Asian example of diligence and future-orientation. Being the "salt of the earth" in our own society implies the demonstration of such character traits. God's temporal blessings can then be directed not toward needless self-gratification, but toward the meeting of legitimate needs in the wider human commu nity. @ -FOOTNOTESlCited by Charles Krauthammer, "Rich Na tions, Poor Nations," New Republic, April 11, 1981, p. 20. 2Cited by Jim Wallis, "Of Rich and Poor,"Post American, February/March 1974, p. 1. 3Henry Hazlitt, "The Problem of Poverty," Freeman, June 1971, p. 323. 4Ibid. 5Ibid., p. 324. 6BostonHerald American, December 21, 1979, p.A9. 7Michael J. Boskin, "Prisoners of Bad Statis tics," Newsweek, January 26, 1981, p. 15. SNick Eberstadt, "Hunger and Ideology," Commentary, July 1981, p. 41. 9Ibid., p. 43. lOLouis Kraar, "Make Way for the New Ja pans," Fortune, August 10, 1981, p. 176.

llMax Singer and Paul Bracken, "Don't Blame the U.S.," New York Times Magazine, Novem ber 1976, p. 34. 12Ibid. 13p. T. Bauer, Western Guilt and Third World Poverty (Washington, D.C., 1976), pp. 3-5. 14Kraar, op. cit., p. 179.