HOPE FOR AFRICA

HOPE FOR AFRICA

I have written before that God obviously has great compassion for the poor.  This is all through Scripture.  I just finished a book that I believe gives more optimism for the poor of Africa.

Dead Aid is by Dambisa Moyo, a Zambian born woman who has a Ph.D in economics from Oxford.  The first half of the book decries foreign aid.  This is not too unusual, many people do.  But she goes further.  She says foreign aid hurts Africans.  Okay.  You ask what do I see as optimistic in that.  The good news is in the second half of the book where she offers a menu of marvelous suggestions that would help the poor.  Peter Collier, an expert in this field, says that Moyo’s ideas have to be taken seriously.  If the generous people of the world would abandon foreign aid and switch to her suggestions, great and good changes could come to Africa.

WHAT IS WRONG WITH FOREIGN AID?

                -During the past 50 years over one trillion dollars have passed from rich countries to Africa with very little to show for it.

                -Between 1970 and 1998, while aid was at a peak, poverty in Africa rose 11% to 66 percent.

                -Sub-Saharan Africa has 50% of the world’s poor.

                -One in seven children in Africa die before the age of five.

                -Africa is the only continent where life expectancy is less than sixty years.

                -Aid fosters corruption and corruption disrupts rule of law, which is one of the foundations of a prosperous economy

                -foreign aid foments conflict

                -aid reduces savings and investment

WHAT ARE SOME SOLUTIONS?

                -Create capital markets within African countries.

                -Put less emphasis on infrastructure (this has been done unsuccessfully for decades) and more emphasis on breaking down man-made disincentives: corruption, bureaucracy, and excessive regulation. 

                -Improve the business environment.  In Cameroon it takes 426 days to get a business license as compared to the United States’ 40 days.  Starting a business in Angola takes 119 days, whereas starting one in South Korea takes 17 days.

                -Use rich natural resources to advantage.

                -Increase trade by reducing tariffs.  The average tariff is 34% on agricultural products from other African countries.  China has used free trade to lift hundreds of millions of people out of poverty.

                -Use microfinance to create millions of small businesses through small loans.  These loans go directly to poor.  They do not pass through the government.  They are repaid over 95% of the time.

                Many of the prescriptions in Dead Aid for economic health are unabashedly market based.  We have tried the welfare approaches and they have been a miserable failure.  They have reduced incentive, increased dependency and propped up national leaders who are bad for their countries.

                Dead Aid is not technically a “Christian” book but Christians will love it.  In it we find hope for the poor of Africa.

SARAH PALIN VS BARACK OBAMA IN 2012

What if Barack Obama ran against Sarah Palin for President in 2012?  I have done an exhaustive survey – two people.  The first voted for Obama in 2008 but is quite disenchanted and he said that he would vote for Palin in this imaginary race.  The second voted for McCain last time but would vote for Obama because Palin is an ideologue.

MY DISCLAIMER

I am not a huge Palin fan.  In a Republican primary I would very likely not vote for her.  I hope she does not run.

FIVE REASONS TO VOTE FOR PALIN IN THIS CONTEST

1. Yes, Palin is a conservative ideologue.  Obama is a liberal ideologue.  Which is better for the country, conservatism or liberalism?  Conservatism encourages freedom, personal responsibility, human flourishing, and substantial opportunity for the poor to rise out of poverty.  Liberalism squelches freedom with regulation, creates state dependency, diminishes human flourishing, and hurts the poor.
2. Honesty.  Palin is honest about her idealism.  Obama is not honest about his liberalism.
3. Who will work with the whole government?  As governor of Alaska Palin consistently worked with the Democrat minority.  Obama has worked with the minority about as little as any president in 100 years.
4. As Christians, we want to minimize abortion.  Palin is pro-life and would work to stop abortion funding where possible.  Obama is strongly pro-abortion.  A Palin presidency would save hundreds or perhaps thousands of babies.
5. Conservatives help the unemployed get jobs.  Liberals help the unemployed get a government check.

Our economy is on an unsustainable path to bankruptcy.  It was started on that path by George W. Bush.  But most of the push down that path has come from Barack Obama.  Palin, much more than Obama, would reverse that course.

THE FOUR MEN WHO CAUSED THE RECESSION

1 & 2 BARNEY FRANK (D) AND CHRISTOPHER DODD (D)

Frank is head of the House Financial Services committee and Dodd is chairman of the Senate Banking Committee.

These two men used their substantial power to press banks to make subprime loans to lower income people.  The result was that people got mortgages who could not afford them.  This led to a massive default rate and the mortgage meltdown that started the dip that led to the recession.

Are you doing a low-income person a favor if you saddle him with a huge debt that he cannot pay?  Of course not.  As a Christian my heart breaks for the poor people badly hurt by these loans.  Frank and Dodd ought to be ashamed.  They acted like they were helping but they were hurting.

Subprime loans are made at interest rates below the rates the market dictates.  This is one more instance where the poor would be better off if markets where not interfered with and government intervention had not happened.  (I am not saying government should never interfere – just that it interferes too much.)

Much of the pressure for banks to make subprime loans came through Freddie Mac and Fannie Mae, two private financial institutions with government backing.  Their irresponsibility was seen for many years prior to the recession.  In 2002 and again in 2003 the Bush White House tried to get legislation for greater regulation of these two entities.  Both times the regulation was blocked by Democrats.  Again in 2006 they tried.  This time Republicans got the bill out of committee but did not have the votes to pass it on the floor.  Fannie and Freddie went recklessly on.  For more on this, watch the video.

3 & 4 GEORGE BUSH (R) AND HENRY PAULSON (R)

The mortgage problem was serious and should have caused a dip on or economy.  But our economy was strong and this should have been nothing more than a dip.  BUT enter George Bush and Henry Paulson.

Bush did the one thing a leader should never do.  He panicked.   He said things like “… our entire country is in danger.”  Paulson persuaded Bush that disaster was looming if he did not do something.  Bush passed bailout dollars for banks, Fannie Mae, Freddie Mac, AIG and car makers.  At this point we can say that these measures did not help.  Government spending seldom does.

The public observed this desperate behavior and followed the administration into panic.  It is no surprise that the recession followed.

FINAL THOUGHT:  Okay I admit it.  It is a little over the top to blame the recession on just four men.  But it is not exaggeration to say that these four men played a huge role in what followed..

WHO SHOULD PAY INCOME TAXES?

What percentage of American adults do not pay income taxes? In 2006 it was 40%. This year it will be 43% and next year it will be 49%.

I do not think the very poor should pay taxes but, this concerns me. We are getting perilously close to a tipping point where 51% are saying to 49%, “You pay the bills, friend.” (Another 11% pay less than a thousand dollars per year.) In Federalist Paper 10 James Madison expressed concern about the violence that the majority could force upon the minority. Alexis de Tocqueville called it “tyranny of the majority.” But common sense alone seems to suggest that a majority of nontaxpaying citizens should not be allowed to tax the minority.

When polled, 66% of Americans said that everyone should have at least some tax liability.

As a Christian, I surely do not want to impose difficult taxes on the very poor. But my inclination is to establish some minimal income tax so that at least 70% or 80% of our adults pay something.

On the other hand, if I were supporting my family on $30,000 per year and someone came to me and said, “Good news. Your tax burden is only $300,” I think I would respond by saying, “Where am I going to get $300?”

Scripture seems to tug us in both directions. Lev. 14:21 talks about the required offerings for cleansing of lepers. If the leper is poor, the offering is reduced. Lev. 27:8 also talks about a price reduction for the poor. In both of these cases the obligation of the poor is reduced but not eliminated.

The Bible also sites times when debts are forgiven, for the poor and nonpoor alike (Dt 15:1,2.) Also owners of vineyards and fields are to leave food for the poor. My research was not exhaustive, but it is interesting that I did not find instances where Scripture gave total relief to the poor regarding institutional obligations, such as offerings or taxes. Nonetheless concern for the poor permeates Scripture. In Dt 24:12, 13 we are instructed that if we give a loan to a poor person, and he gives his cloak as collateral, but he needs that garment for comfort, then we are to return the cloak to the borrower.

We do not want to be insensitive to the poor, but all things considered, I think more than 51% of us need to pay some income taxes. As Christians, though, we need to be careful that we reflect God’s compassion for the poor.

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Most of the data for this post comes from two sources.
1) An interview with Arthur Brooks in World Magazine, Jan 16, 2010.
2) An article in the Wall Street Journal by Adam Lerrick, Oct. 22, 2008.

SCRIPTURE AND POVERTY

Most Christians study Scripture from time to time. Usually the study focuses on a verse, a word, or a chapter, but on occasion, it could be an entire book. Sometimes believers need to look at God’s Word from 30,000 feet. We need to get the big picture.

When we do this, we see things like: God is extraordinarily patient with his people.

Another theme we observe from the broad view is that God cares passionately about poor people. This theme is everywhere in the Bible, both old and new testaments. Because it is so prevalent in Scripture, this subject, which obviously relates to economics, will often be a part of this blog.

I will often differentiate between two types of poverty. (1)Poverty in the United States is one thing. (2)Extreme poverty in developing countries is quite a different thing. (see NOTE 1) Those suffering from extreme poverty often live on a few dollars per day for an entire household. They sometimes go to bed hungry. Even if they are fed for a day, they do not know where tomorrow’s food will come from. Their health options are minimal and sometimes they endure terrible injustices at the hands of governments or powerful people.

Poverty in the U. S. is different. 97% of the U. S. poor have at least one color TV in the home. Two or more cars are owned by 30% of American poor households. 76% of poor households have air conditioning. PLEASE do not misunderstand me. I am not being cynical and implying that these folks are not really poor. They are poor. I would not want to change places with them for one day. My point is that American poverty and extreme world poverty are two different things. As I write future blog posts I will often make it clear that I am speaking of one or the other.

According to the World Bank, one in two people living in developing world countries in 1981 were living in extreme poverty. By 2005 that ratio had dropped to one in four. (see NOTE 2) Most of the improvement came in Asian countries where free market capitalism boosted the economy at a rapid rate. When economies prosper, poverty diminishes and nothing makes economies boom like capitalism. There are a number of evils that are often blamed on capitalism and I will take them up in future blogs.

Some authors aptly describe a problem, but their solutions might be wrongheaded. (see NOTE 3) So it is with Ron Sider. His book Rich Christians in an Age of Hunger does a marvelous job of showing how dire worldwide poverty is, even though his solutions can be, and often are, criticized.

For now we can be pleased that extreme poverty is declining. Nonetheless there are still 1.4 billion people in developing countries living in extreme poverty. That is a staggering number that should move the heart of every Christian.

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WE ARE ALL BUSY so I will try to keep my posts short. After a post I may have NOTES for those that are interested in a bit more detail.

NOTE 1. Extreme poverty is often referred to by that name, “extreme poverty,” so I will do likewise. I will try to think of a name to describe the type of poverty we have in the United States. Nonextreme poverty does not sound good because it seems to minimize the suffering of those people. I am open to suggestions for a name for that group.

NOTE 2. World Bank data is from this world bank web article:
http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/0,,contentMDK:21882162~pagePK:64165401~piPK:64165026~theSitePK:469382,00.html


NOTE 3. Another example of this phenomenon is Ayn Rand. Her novels show the sad effects of stifling individuality and freedom. But her solution, called objectivism, is horribly selfish and inappropriate for Christians.