P. T. Bauer’s Dissent on Development, Revised Edition (1976) is considered the number one authority on development economics; it is that branch of economics which deals with the development process of Third World, low-income countries. It can be technical at times in its processing of data and statistics and interpretation, but the ultimate goal is to develop ideas by which the Third World can be elevated by economic growth, from poverty to ever-increasing wealth and better living standards. I got this book for myself; for my own economic growth. I am no economist, but it is not hard to extract and apply principles of economic growth personally to my own household which Bauer applies internationally to poor countries and people groups.
CHAPTER 1. In this chapter, Bauer issues his first blast of dissent into the economic world: he attacks the idea of the “cycle of poverty.” It is the idea that the rich are rich, because they’re rich; and the poor are poor, because they’re poor. In other words, the idea of economic fatalism is what he is criticizing; an idea that has been around since the Puritans, that some are predestined to be rich and others to be poor; the same idea pervades the Hindu caste system. Bauer has good news for the poor: you don’t have to remain poor if you change your ideas and habits (p. 38). Bauer repeatedly argues that the “cycle of poverty” myth is propagated by liberal politicians with a socialist type of agenda, who are bent on issuing out foreign aid programs to Third World nations. He criticizes these intellectuals and politicians for inaccurately painting a picture that the poor are caught in a “cycle of poverty”; and there is nothing they can do to get out of their paycheck-to-paycheck existence. Therefore, say the “cycle of poverty” people, the least we can do is provide them with some government-based foreign aid programs.
Bauer can be very technical and statistical; and can therefore be pretty dry, and boring. However, he has his moments where he will say one sentence; and it is golden with economic wisdom. In the Introduction he says his book “explains why those who have achieved prosperity so often fail to find the happiness or even the contentment naively expected of material progress” (p. 27). Amen! That is something that only a Biblical, faith-based experience of Christian spirituality can deliver on. Nevertheless, he proceeds to explain the processes of material progress, because, as is noted later, “The advantage of economic growth is not that wealth increases happiness, but that it increases the range of human choice“ (p. 202, quoting Sir Arthur Lewis, The Theory of Economic Growth, p. 420). The more money you have, the more choices you have, the more power and abilities you have to do what you want. For me, this affects my choices in what I want to do as a husband, father, and potential independent revival minister. But even as I explore how to make friends of the “unrighteous mammon” of money in a righteous manner (Luke 16:9), I must take heed to the Parable of the Sower: “The one who received the seed that fell among the thorns is the man who hears the Word, but the worries of this life and the deceitfulness of wealth choke it, making it unfruitful…as they go on their way they are choked by life’s worries, riches and pleasures, and they do not mature” (Matthew 13:22; Luke 8:14). Of these worries, and riches, and pleasures:–we must not be deceived. Wealth, if guided by faith in the Bible, can be very useful (Deuteronomy 8); but if handled irresponsibly or without faith, it leads to materialism and apostasy.
The “cycle of poverty” in a nutshell is this: poor people live a paycheck-to-paycheck existence; they are always just getting by, just making it, just paying their bills; they go to their job, go to work; and get a paycheck; but they are not able to save money or look to the future to do something with those savings. Therefore, these people need help: they need government aid programs; its the least we can do to help them.
In so many technical words, Bauer criticizes this whole picture and says, “Yeah, yeah…POOR PEOPLE NEED TO INVEST what little extra savings they can set aside. In time, with patience, it will yield returns for them; and they will have a good chunk of change to use for say, furthering their educations, getting job certifications and new skills, getting higher paying jobs, saving more money, and investing more money.” In order words, the poor need to not despise the day of small beginnings (Zechariah 4:10); if they are faithful with a little money in saving and investing, then God will bless and prosper them, and they will be faithful with much money (Matthew 25:21). Incremental, step-by-step investing is what Bauer is talking about; he doesn’t mention stocks though, because he is directly talking about Third World people investing in the farms they are working on (cash crops); but obviously the practical application for poor Americans is to invest in the stock market. In my case, I would want to use a stock broker, because I don’t want to get caught up in the worry, and the technicality of playing the market with charts and graphs. The fear of the risk of losing on an investment must be set aside; faith in God for financial increase; and detachment from your possessions which you are going to sacrifice for investment purposes: these must all play their own part. Faith and risk and detachment from material possessions: all Biblical, Christian principles. Better to give extra money away to a stock broker than to spend it on a movie, a burger, a vacation, or a trip to the bowling alley. Start investing in stocks now! Your family’s future depends on it! To the man who doesn’t invest, the voice of conscience will someday rail on him: “Well then, you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest!” (Matthew 25:27). Bankers, stock brokers; money, stocks–same thing…just modernized. We don’t know what the interest rate of the bank was that Jesus was referring to. It was probably very high.
Bauer says that when a Third World culture comes into contact with a wealthy Western business culture it leads to economic growth. He says, “This development usually elicits a higher economic performance: more EFFORT (at the expense of leisure), more productive SAVING and INVESTMENT” (p. 39). Less entertainment, more investment–seems to be his equation for economic growth. Frequently, this order of economic growth ideas repeats in this chapter: 1. Hard work. 2. Saving money. 3. Investing money. If anything, this is basically how Bauer thinks about economic growth; incrementally, bit by bit, even for the poorest men on the face of the earth in Third World countries. If they can do it, then surely the poorest working men in America can too. I guess this is a “cycle of economic growth!” Hard work, saving, investing; hard work, saving more, investing more; hard work, saving a lot, investing a lot, etc, etc. Stewardship. “Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things!” (Matthew 25:21). But always remember: it’s the Lord’s money.
CHAPTER 2. In this chapter, Bauer attacks government aid and especially foreign aid through government taxation and distribution. But don’t be deceived: there is plenty of direct, personal economic applications that you can derive and conclude from reading. Although Bauer is studying economic growth from an international scope; particularly the progress of Third World countries, this highly educated Capitalistic economics professor always spills out economic principles that are sound, solid, logical, and personally useful. He makes the case that he is expressing the dissenting or unpopular view that Socialism (government aid programs) are NOT necessary or even to be taken for granted in the elevation of the poor to greater wealth. In fact, to rely on the government for your economic future is similar to 1984, to Marxism, to limiting your career choices based on what the government gives you by way of jobs. The Employment Security Commission (ESC) comes to mind. Section 3: “Determinants of Development” contains the often-quoted passage on pages 78-79, where bad economic attitudes are listed as the REAL CAUSES for the plight of the poor:
1. Lack of interest in material advance.
2. Resignation (giving up) in the face of poverty.
3. Lack of initiative, self-reliance, and responsibility to provide for your family.
4. High leisure preference.
5. Lassitude (lack of energy; sometimes affected by working in the heat).
6. High prestige of the contemplative life (cp. St. Francis of Assisi, Hindu gurus).
7. High prestige of mysticism.
8. High prestige of renunciation of the world rather than economic achievement.
9. Acceptance of a preordained, unchanging universe.
10. Emphasis on performing duties and not achieving economic results.
11. Lack of assertiveness about one’s personal rights.
12. Lack of curiosity, experimentation, and interest in change.
13. Believing supernatural forces are controlling your destiny (economic fate).
14. Environmentalism; and not conquering nature to use it for man’s needs.
15. Belief in reincarnation:–which decreases economic effort in the present life.
16. Acceptance of being a beggar; and lack of shame in receiving charity.
17. Opposition to women working a job outside of the house.
As I already addressed in my article “Rules for Economic Growth,” if we do the opposite of these anti-development attitudes, then we will be on the path of economic growth: that is, to be VERY interested in material advancement; to not get discouraged during ebbs or low points in your economic life; to have high energy and initiative for job searching mixed with a desire to not only provide for your family, but to see them flourish; to responsibly restrict spending money on fun and entertainment, and only spend what is reasonable on such things; to live a MIXED LIFE (one that blends both the active life and the contemplative life):–so that you don’t become a lazy, unproductive spiritual guru on the one hand–but neither a workaholic, super-rich Ebenezer Scrooge on the other hand (from A Christmas Carol), totally consumed by materialism and the love of money. I think the early Methodists did a good job at living the mixed life; especially in the area of generosity, which is a way that productive, hard working, and even prosperous Christians can exert the virtue of renouncing some of their possessions for entertainment, and instead giving large amounts of money to the poor and needy for Jesus.
Economic predestination does not need to be applied to yourself. No Christian should say to himself, because Jesus said, “Blessed are you who are poor, for yours is the kingdom of God” (Luke 6:20) or “the poor you will always have with you” (Matthew 26:11)–that because Christ said these things, that you yourself should draw the conclusion that you should always be poor if you plan on being blessed and going to Heaven. That is not what Jesus means. What it does mean, though, is that in the world, God will see to it that there is at least always someone who is poor, so that the virtues of charity and generosity can be exercised by those who are not poor, and faith in God as a Provider can be exercised by the poor. Also, you do not have to remain poor in order to go to Heaven. Salvation is by repentance and faith in the cross (Romans 3-4), not by remaining poor. What Jesus means is this: “It is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God” (Matthew 19:24). In other words, like the apostle Paul, all Christians should live by faith in Christ, when he said, “I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want. I can do all this through Him who gives me strength” (Philippians 4:12-13). And not to trust in money, in investments, in assets; not to misplace your faith in your skills and experience, your education, your job, your retirement plan, your savings which moth and rust can destroy, which thief (and government) can break in and steal (Matthew 6:19)…but to be detached from all of these things inwardly, and be willing to GENEROUSLY GIVE THEM ALL AWAY immediately at Christ’s command, unlike the rich young ruler (Matthew 19:16-22), and unlike that miserable old miser Mr. Scrooge. The circumstances of poverty and wealth, I believe, are carefully under God’s sovereign control in each and every one of our lives. It does not matter that we remain in an unchangeable economic condition–whether permanently rich or permanently poor–what matters is that we live by faith and obedience to Jesus and the Bible. And if we are rich, then as rich Christians, God will test our faith; and if we are poor, then as poor Christians, God will test our faith. But I believe every Christian husband and father should seek economic growth and upward mobility to provide for his family, to serve the church, and to be a charitable influence in the world for Christ and the Gospel, always acknowledging his wealth would be eaten up, destroyed, and stolen, if he were to lose his faith in God as his Provider (see Deuteronomy 8). He must remind himself daily, that it is “God who gives him power to get wealth” (Deuteronomy 8:18); and not only himself, his abilities, and business talents.
When Christians go to work at their jobs, they should serve their masters as if they are serving Christ. But ultimately, Christ is their Master, and they must bear this in mind for the long-term (Ephesians 6:5-8). If you are living by faith in Christ, then the Spirit of Jesus will lead you and guide you in career advancement as well as economic growth and financial wisdom in all areas (Acts 16:7-9). While Christians should work hard, and be productive, excellent employees, they should also bear in mind that all these things are transitory, passing, and may only last a couple of years, until the Spirit of Christ leads them elsewhere, to more prosperous places of employment (James 4:13-15). Remaining flexible and available to the guidance of the Holy Spirit, and the Bible, in the daily stuff of life, is an essential attribute of living by faith. Don’t enslave yourself in Egypt. Let God lead you to the Promised Land: just know that He will bring you through the desert to test your heart. While eternity and our standing with Christ in justification by far exceeds in importance to the state of our temporary economic conditions:–still…Biblically speaking, “Anyone who does not provide for their relatives, and especially for their own household, has denied the faith and is worse than an unbeliever” (1 Timothy 5:8), because at least the pagans try to do that; the Christian differs in that he sets his priority on “seeking first the kingdom of God and His righteousness,” and then from the outflow of a godly life, God will provide all these economic needs by adding them unto him (Matthew 6:32-33). It is the husband or father’s primary responsibility to be the breadwinner in the family; and even to work outside of the home. It is the wife and mother’s primary responsibility to keep house and train the children (Titus 2:4-5); but in a tough economy like this, Christian men, don’t let your “PRIDE TO PROVIDE” get in the way of your wife doing some work-at-home jobs on sites like ratracerebellion.com, sykes.com, and flexjobs.com. All of which can enable her to fulfill her Biblical role as a housewife; AND her Biblical role as the Proverbs 31 woman, who was a work-at-home mom (vv. 11, 13, 16-19, 27, 31). And hey, you yourself might want to work at home too…I know I want to.
A spirit of personal independence is important for economic growth. If you want to have better job opportunities with greater pay or benefits, then you are going to need the freedom to move anywhere, to any city or state that would help you in your economic endeavors. Bauer says that subjection to state control over your job is “subjection of the individual to authority. Such a development discourages self-reliance, personal provision for the future, sustained curiosity and an experimental turn of mind…also…restrictions on occupational and geographical mobility inhibit the establishment of new [business] contacts, the spirit of experimentation and the opportunities to set up new enterprises. Mobility and experimentation promote material advance in familiar ways, including the erosion of attitudes and customs adverse to material progress” (pp. 84-85). While there is no concern in the USA or the UK for state control over economic mobility (or freedom to move for better jobs, etc), there may be reason to beware of social or family control over such mobility. Family ties, whether mentally healthy or not, can prevent would-be upwardly mobile adults from moving away from their relatives; keep them in an economically stagnant region, and not moving to a different place with plenty of great job opportunities. This might pose a real problem for young adults with authoritarian family structures. Authoritarian state or family “planners seem more interested in controlling people’s lives than in liberating their minds or augmenting their resources” (p. 92).
On page 95, Bauer begins Part 2: “Foreign Aid” in which he argues against the wasteful spending in taxing Western countries and sending millions of dollars to the governments of Third World countries like India, who usually end up misspending the money, or not using it in a manner that the donors thought it should be used. The charitable philanthropists, in the USA and UK in government positions, are often deceived, and betrayed by the trust they place in these Third World leaders. Their heart-strings are pulled when they see the starving faces and slums of these poor countries. So, they send millions of dollars of “foreign aid” in hopes that the government officials of these countries will also charitably and philanthropically help the poor; but often, they don’t. They pocket the money for themselves and spend the rest on their armies or “freedom fighters”! This especially goes for Algeria, Ghana, India, Indonesia, Tanzania, the United Arab Republic, and Zambia (p. 130). It’s government thievery or swindling at worst; and at best, it’s at least a betrayal of trust. Also, it makes these Third World leaders feel embarrassed, shamed, and patronized by the rich leaders of the West. It demonstrates how weak their countries are; and how strong the donor countries are; and so, it hurts their pride as leaders, and they grow to resent the people giving them the foreign aid, because they feel patronized; and yet, they don’t hesitate to pocket the money for themselves! It’s just a mess. You might think, one Third World country might misuse foreign aid, but that doesn’t speak for all of them. But Bauer says over the years since World War II, the stats don’t lie: there are very few Third World countries who have seen nationwide economic growth as a result of foreign aid: namely, Taiwan, Hong Kong, Japan, and Israel; and this was only because they adopted the capitalistic work ethic of the West (pp. 132-133). As far as the Third World is concerned, these four countries are the exception to the rule.
One breakthrough that Japan took advantage of was they remained humble and teachable and paid for technical advice on how to think more capitalistically. He says, “The Japanese government drew readily on foreign technical instruction and advice. The expenditure was financed from their own funds and proved very productive” (p. 104). (In personal application, I think it would be wise for the poor in the USA to pay a financial planner for technical instruction on personal economic growth and investing; but prior to that, I would suggest studying David Bach’s The Automatic Millionaire; and learn to think for yourself a bit in this area). Most Third World countries that receive foreign aid from America or rich countries in Western Europe:–their leaders misspend the money; and neither do the people have enough of a capitalistic work ethic to experience personal or nationwide economic growth. Plus, many Third World leaders lean towards communism; and automatically hate the capitalist countries of the West; not to mention the radical Muslim countries of the Middle East. Finally, Bauer concludes, the stats show that foreign aid is simply not necessary for Third World countries to experience national economic growth over time: a strong work ethic is. He says, “Many underdeveloped countries have advanced very rapidly over the last half century or so without foreign aid…in the Far East, Southeast Asia, East and West Africa, and Latin America” (p. 97). “The prime determinants of material progress are people’s economic aptitudes (skills, talents, abilities, performance)” (p. 100)–“population growth, material progress, and motivation are also clearly interrelated, with motivation the decisive independent variable” (p. 125).
“Going to college and getting a degree” is a long-standing tradition in America; and this idea has been preached to the Third World as part of the gospel of economic growth. However, oftentimes, when Third World countries build themselves universities, there is high unemployment for their graduates, because once they are out of college, and start to search the job market, they get dismayed at how low the demand is for the skills they acquired with their degrees. Engineering grads in India are an example (p. 104). However, I think the same problem exists in America, to a certain level. The vague idea of “going to college and getting a four-year Bachelor’s degree” is actually not really good enough advice. The advice to the young should be: “seek education and skills for yourself where there is an abundant demand for prosperous jobs”:–whether that involves going to a specific college, acquiring a specific degree, a specific internship, and specific skills, etc. should be entirely determined by the research the young man or woman has done in discovering where new jobs are being created; perhaps by going to career counselors, career centers, and studying books like The Top 100 Fastest Growing Careers in the current year; because from year to year these change. That way, by prioritizing personal research of in-demand jobs; the young high schooler is not going to be misguided into thinking that if he desires to be a musician, an animator, an astronaut, an English teacher, a dancer, or philosopher; and that if he gets degrees in these things, or if he gets a communications degree, because it involves topics that he is interested in, and he could get good grades and a nice GPA, that this will automatically resolve any problems for him finding a satisfying good-paying job during his job search after college.
Not so! Unless he does the research himself; and looks to acquire the skills and education for a job he not only likes, but is IN DEMAND in the society, in the stats, in the books, and he has gotten his feet wet in some volunteer interning, and has proved by personal experience that such-and-such job types really are in-demand:–then he is taking the wiser approach to higher education, and not wasting thousands of dollars and precious time. Such an approach is much wiser than just telling your kids: “Go to college and get a Bachelor’s degree, because then you will be able to get a good job.” Such a sentence is far too simplistic to prepare kids for the competitive, complex, technical, developing job market in America. I personally know several people who currently have Associates or Bachelors degrees; and are working minimum wage $8-$10/hour jobs; and they’ve been out of college for over 5 years! This is not because they are lazy, but probably because they haven’t researched the job market enough, and have not prepared themselves to acquire those specific skills, and specific education, for those specific in-demand jobs. These are key phrases, specifically: skills, education, in-demand jobs, high-demand jobs. If a student does not put an emphasis on such things, then it is no different than him going to a diploma mill, and receiving a certificate that says “Bachelor’s Degree” with nothing else on it. How would that help him in the job market? It’s just a piece of paper. He’d be swindled by the higher education racket!
Bauer argues that people should not have more children than is reasonable. In fact, he argues for poor families to have few children, and instead lay the emphasis on pursuing a better home (pp. 125-126). To a degree, I can see why that would apply in cases of extreme poverty in the Third World, but I also think that idea has been abused or exaggerated in America and the West. While starvation can result if the parents procreate at a rate that is faster than their income-earning is able to keep up, I think the threat of starvation in the USA is much less, when especially food stamps or EBT cards are available during tough times, and also decent modest houses can be acquired through rent, without having to attain to living in a MANSION or small CASTLE-like house. And I think that is truly an anti-Biblical concept anyway. Scripture plainly says, “Be fruitful and multiply” and “Watch out! Be on your guard against all kinds of greed; life does not consist in an abundance of possessions” (Genesis 1:28; Luke 12:15). But I do think there is a real danger for poor, economically unproductive people to just keep on having more and more kids; it could lead to unnecessary financial anxiety, strain on social relationships in the family, and the ever-present fear that a social worker might threaten the parents with the incapablity of providing for their children.
I think the reasonable thing a poor Christian couple can do, is to pace themselves with regard to procreating children, at the rate of their economic growth:–for example, if they observe that in these years they are making more money than they were a few years ago, they might reasonably consider trying to have another child. But then there is the issue of the upwardly mobile Christian couple who are going through an economic transformation: who were formerly living in abject poverty, and subsisting on a paycheck-to-paycheck lifestyle; but who are now approaching a lifestyle that could be called “lower middle class”: personally, I would probably disagree with Bauer on this point, and would advise such couples to seek a modestly sized house that is decent, comfortable, and liveable; and to continue being fruitful and multiplying children (Gen. 1:28). Bauer, on the other hand, would probably preach extreme child limitation (family planning/strict birth control), and the pursuit of an American dream home mansion house. I think an idea like that would be totally anti-Biblical; but I think this idea is tragically widespread among the middle class in America, and I also think it produces bad parents, who put more emphasis on their house and materialistic attitudes, than they do on building healthy, meaningful relationships, or even spiritual instruction for their four, five, six, or seven children. Normally, what happens is that the middle class family gets a mortgage, pursues an American dream home; stops procreation at two or three kids, and does not emphasize kids, children, relationships, or spiritual instruction from parent to children. And I think this is a real attack on the family from a pop economics viewpoint. Our children are the greatest treasures we have; they are our future, not merely our houses (or sadly, in some cases, mansions). Psalm 127:3-5: “Children are a heritage from the Lord, offspring a reward from Him. Like arrows in the hands of a warrior are children born in one’s youth. Blessed is the man whose quiver is full of them. They will not be put to shame when they contend with their opponents in court.” When a warrior goes to battle, the more arrows in his holster the better! If a soldier who uses a bow-and-arrow only has two or three arrows; that’s nothing compared to the man who has seven arrows! This Scripture speaks of the godly man’s children being “a good gift, and a great support and defence to a family…[the father]…knows how to use them for his own safety and advantage…children of different capacities and inclinations may be several ways serviceable to the family” (Matthew Henry’s Commentary). But only the children of one’s youth, whom he has personally trained and taught to trust in him; and love him with their free will. Such reliable children would serve as a strong and happy testimony for their father’s integrity against any of his enemies in court.
Voluntary Charity Is More Righteous Than Foreign Aid. Bauer says, “Foreign aid is taxpayer’s money compulsorily collected; it is outside the area of volition and choice. Indeed, contributors not only have no choice but quite generally do not even know they are contributing…The moral obligation to help the less fortunate cannot be discharged by entities such as governments. It can be discharged only by persons who are prepared to impoverish themselves and weaken their material position relative to others in order to help their poorer fellow men. Those wishing to help underdeveloped countries can easily write a check in favor of the governments or missions, schools or hospitals operating there” (pp. 126-127). I have a few thoughts on that. 1. I agree with Bauer as it relates to giving money to governmental leaders in foreign countries. 2. I would, however, remain an advocate of food stamps or EBT cards, Medicare, Medicaid, and other forms of governmental financial aid that we have here in America:–however, I don’t think extremely low income levels should be made to prevent relatively poor people from getting help with outrageously high or rare medical bills. 3. I also support things such as the Employment Security Commission, a government-sponsored place where unemployed people can go to find job opportunities; however, I have been in places like this, and I think they could do better at giving people a wider array of job leads.
In the Appendix, Bauer has some final thoughts on investing that I thought hit the nail on the head with regard to investing for economic growth:
INVESTING WISELY and EXTREMELY CAUTIOUSLY. He says that just because you have convinced yourself that saving money and investing money are key elements of economic growth:–it does not mean that you will have success with it. Especially when it comes to investing, which can be very perplexing, technical, and risky:–it requires strict discipline, study of books, and supervision, to get it just right so that it results in economic growth. Leaders of Third World countries which do not seek advice on investing do not usually have success with investing the money that foreign aid donations provide them with…they are usually very reckless, wasteful, and gullible investors that hardly ever get a profitable return on their investments (pp. 136-137). As the Chinese saying goes, “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” The application to foreign aid: it is not good enough to give money to the poor so that they can invest it and get a return on their investments; YOU MUST TEACH THEM TO INVEST WISELY AND CAREFULLY. Otherwise, they will get frustrated and disheartened if they fail at investing. See David Bach’s The Automatic Millionaire for sound investing advice (especially with index funds); and also consider consulting a Certified Financial Planner to help you meet your financial goals in life. Bauer considers it wasteful and counter-productive to spend investing money on your house and possessions (p. 138); he maintains the quicker path to real economic growth is to use the investment returns on things that would lead to higher-paying jobs and increase your income level in the long-term; that is, certifications, etc, that lead to higher paying jobs, are a much more worthy thing to spend money on received from an investment return than a hot rod, a boat, or expensive home improvement items. Furthermore, he says, “Investment is too general and vague a concept or category to furnish worthwhile criteria for development policy” (p. 142):–in plain terms, don’t be loosey-goosey with the words “investment” and “investing”; get a SPECIFIC handle on the conditions of what kinds of investing REALLY ARE going to yield RETURNS and a REAL INCREASE OF INCOME for you in the future. I’ve got some studying to do, but I’ve heard from multiple sources that a careful and disciplined practice of investing with index funds and mutual funds (bundles of stocks) over many, many years are the most likely to yield financial returns in the long run. To use the word “investing” in other ways might obscure what it is you are trying to do; and what your financial goals are. People say things all the time like “invest in gold” or “invest in your community: become a Walmart employee”; and this kind of language just obscures what a responsible investment is. Also the jibe that, “Wall Street is no different than Las Vegas,” with the idea that playing the stock market is no different than buying a lottery ticket or using a slot machine in a casino. These kinds of gambling experiences can definitely occur with stocks, but THEY CAN BE AVOIDED if you are studied up, supervised, taught right, conscientious, extremely cautious, and careful about the funds or stock bundles you are truly “investing” in. That’s real investing.
CHAPTER 3. International organizations like the United Nations are led by social reformers with a Socialist or even Communist persuasion; they are convinced that the poverty of Third World countries is to be blamed on the rich Western countries, such as Great Britain and America, for colonizing the world. “Colonialism,” as they call it, directly prevents the people in these countries from experiencing economic growth. The evidence for this, however, is vague; and is mainly assumed or asserted in speeches and books; or provoked by the jealousy of the poor against the rich; or used by the social reformers as a political ploy to guilt-trip Westerners into giving to 3rd world governments for foreign aid:–a sort of Robin Hood concept: “rob from the rich and give to the poor”: only the government acts as Robin Hood, so it comes by forceful taxation, not by free will offerings (p. 158)…those who are upwardly mobile are thereby hindered in their personal economic growth by high taxes…the extent of this is not discussed. But the colonialism concept is mainly used as a means of guilt-tripping Westerners into supporting foreign aid. Bauer rightly observes that “it is untrue to say that colonial status is incompatible with material progress” (p. 148): take, for example, the 13 original colonies of the United States, all of which were colonies of England. They materially progressed all the while under the colonial status of England; but eventually they progressed to such a degree that they became bold enough to create “minutemen,” and stand up to the king, which started the Revolutionary War. Colonialism, therefore, is not essentially an inhibitor of economic growth: on the contrary, if the colonizers, such as England or America, are encouraging free market Capitalism for all the members of the country, their colonization is probably CONTRIBUTING to the economic growth of these colonized countries, without which, would still be filled with tribal warfare, and utterly primitive economic conditions (pp. 151, 153). On page 163, Bauer however does blame some of the rich: the Socialist government leaders in these Third World countries; and particularly the stupid economic laws they often make which inhibit Capitalism; and inhibit the poor from experiencing a “rags-to-riches” lifestyle for themselves.
CHAPTER 4. Communism’s “sacred texts” are Karl Marx and Friedrich Engels’ The Communist Manifesto and Vladimir Lenin’s Imperialism: The Highest Stage of Capitalism:–both are intellectually depraved forms of economics; and both are used to manipulate the poor into thinking that a totalitarian government is their only hope for economic salvation. Communism also takes on a messianic view of the government: where the State becomes the hand of “god,” and the dictator is “god”; practical atheism becomes the operative view; and religion is generally outlawed, so there are no divisive ideas in the society (p. 176). Manufacturing plants in China have fulfilled the Communist ideal under the leadership of Mao Zedong (d. 1976): “Made in China.” George Orwell’s 1984 depicted what it would be like if this happened in the UK. “Industrialization” is a key concept for the Communist. They believe, generally, that if the Third World countries are going to become richer, then they need to create societies populated with “industrial proletariats”:–or, poor assembly line workers in manufacturing plants. However, Bauer says, there are several errors in this way of thinking. 1. Most Third World cultures do not have a hard working ethic, like the Chinese. 2. Even though Communist China has fulfilled the vision of Marx and Lenin, Hong Kong nevertheless adopted Capitalism, which shows that it is not Communism that has caused China to grow economically, but the strong work ethic of the Chinese people. 3. China would be better off now if it were to accept Capitalism entirely, like Hong Kong. 4. Most Third World cultures have a poor farming culture; and they have become accustomed to living that way for centuries: so, to all of a sudden have Communist governments come in, and build manufacturing plants, and expect a productive “industrial proletariat” working class to be built out of tribal farmers, is quite a stretch of the Communist imagination. 5. When a totalitarian government has control over the economic lives of its citizens, there’s not much room for personal advancement in such a system. That is, if the government says you have to be a $10/hour assembly line worker, then you have to be, or you’ll be out of a job, or worse: have to go to jail and be disciplined. If you aspire to be paid $15 or $20/hour as a more skilled worker, then the government might not let you do so, because you have to do what they say.
In his evaluation of the literature, Bauer says that Communist economists generally measure the economic success of a country based on how many manufacturing plants it has, and how efficiently they are producing products. Bauer disagrees entirely with this method; and states, “The richer countries are usually (but by no means invariably) the more industrialized ones largely because the higher rate of development and the presence of manufacturing industries reflect their possession of valuable resources (including capital, skill, attitudes and experience); the presence of manufacturing is not simply the cause of the prosperity” (p. 172). To reiterate, Bauer believes the cause of prosperity is:
1. CAPITAL, or saved-up money that is disposable for investment purposes in a company (that is, stocks, index funds, and mutual funds).
2. SKILLS learned in the workplace; and put onto your resume for future job opportunities.
3. ATTITUDES towards work: especially a very strong work ethic, and
4. EXPERIENCE: or, actual years of experience on the job, or accumulated lucrative skills and job experience, to put on your resume.
How do the Communists snag the people into their Commie trap? The same way that Saul Alinksy’s Rules for Radicals proposes for community organizers: get all the poor people united by making them very angry at the rich establishment, and overthrow their influence by rioting, striking, intimidating socio-economic and political speeches, violence, and voting Communist. Che Guevara (d. 1967) spread Communism in South America this way. “Exploitation” is the Commie catch-phrase they use against the Capitalist Westerners. Any profit that is earned from a return on an investment in a Third World country, say in cash crops, is seen in the eyes of the Communist as Western “exploitation” of the poor Third Worlders who don’t know how to manage stocks and investments as savvy as Westerners do. So, the Communist maneuver is to get the people angry at the foreign Capitalist investors, rather than to teach the poor how to wisely invest in a productive and Capitalistic manner (p. 168). The end result: rich totalitarian Communist leaders at the top; and everyone else living in poverty as “industrial proletariats” in Communist manufacturing plants, like Communist China.
CHAPTER 5. This chapter is entirely devoted to critiquing Gunnar Myrdal’s Asian Drama (1968), a very long book which calls for a totalitarian communist-like takeover of southeast Asia, especially Malaysia and Thailand. This region is incredibly poor and rural; and Myrdal thinks the only way for this poor, tropical region to see visible economic growth is through government force: central planning. To Myrdal, this is the fastest way that the region will see economic growth. Bauer, of course, disagrees; being a good capitalist, Bauer states, “Higher incomes reflect primarily such abilities and aptitudes as readiness to perceive and exploit economic opportunity [good profitable job and investing opportunities], capacity to hard work, and willingness to save and invest” (p. 195). The majority of the people in this region have a horrible work ethic, because of the traditions and attitudes passed down through their culture. Myrdal’s forced communist ideal won’t change those attitudes:–instead it would be met with resistance. Yet Myrdal persists with his communist ideal; and attacks the character of the rich in the region. Bauer replies, “Why should it be inequitable that the Chinese in Malaysia and Indonesia, or the Indians in Burma, or the Europeans in south Asia should earn higher incomes than do the indigenous populations, when they work harder, often face great hardships, and incur risks far from their countries of origin?” (p. 197).
Bauer defends the hard working, risk-taking men who grew from poverty to wealth over time; yet Myrdal says they are uncharitable, and accuses them of stealing from the poor—without explanation. Then he follows up with his idea of communist government economic planning for everyone: no rich, no poor: just totalitarian leaders at the top and everyone else under government employment. Bauer concludes later, that poverty is widespread in southeast Asia, because “the population does not wish to change its ways” (p. 220):–a huge theme repeated by Bauer: ECONOMIC REPENTANCE FROM LAZINESS AND ANTI-CAPITALISM is a key concept for helping the poor realize that they can change their plight—if they would just become hard working capitalists: more than anything, it’s a matter of personal financial ideals.
Myrdal seems to attempt to become Lenin all over again, but in a different area of the world. He cites the Soviet Union and communist China as ideal communist examples to follow. They are supposedly successful countries, which after turning to communism, grew from poverty to wealth, and saw nationwide economic growth because of their communism. Bauer sobers the reader, “After half a century of severe hardship and mass coercion living standards in the Soviet Union are extremely low – almost unimaginably so by Western standards – in housing, clothing, and consumer durables”; in the footnote, he reminds us about their labor camps[1] (p. 204).
The whole discussion seems to imply that wealth cannot be attained without political or government influence. Bauer reminds us that “the Nonconformists in Britain”[2] “attained considerable prosperity without political power”; however, he leaves a sobering footnote: “preoccupation with material prosperity…diverts time and energy away from other activities” (p. 217). Christians may rejoice that hard work and financial progress can make them into independent men who don’t need to get tangled up in government politics—but becoming a workaholic or a money-mad investor are extremes that must be avoided, lest we turn away from Christian spirituality and mysticism; our holiness deteriorates; our work-life balance disappears; we have no family life; and have no good, quality Christian friends. Jesus asked, “What shall it profit a man, if he shall gain the whole world, and lose his own soul?” (Mark 8:36). Nothing! Working hard and earning wealth is not an end in itself (Ecclesiastes 2:17); your “spending money” should be used as a means to a Christian end; and a meaningful godly lifestyle, in which holiness, and Christian love, and the glory of God reach their maximum financial output; and Biblical good works are fruitful. Ask yourself: how would Jesus spend your money? 1 Timothy 6:17: “Command those who are rich in this present world not to be arrogant nor to put their hope in wealth, which is so uncertain, but to put their hope in God, who richly provides us with everything for our enjoyment.” A man cannot serve both God and money (Matthew 6:24): if a Christian plans on living holy, then he must use his money in a Biblical manner, or he can only expect God’s displeasure. No matter how wealthy we become, we must continue to praise Jesus and keep His commandments (Deuteronomy 8:10-11, 18).
CHAPTER 6. In this chapter, Bauer critiques the United Nations (UN) and a conference they held in 1964 called the United Nations Conference on Trade and Development (UNCTAD). He basically says the UN is a communist organization that plans on taking advantage of Third World leaders to advance communism (p. 267). It’s an international extension of what Myrdal was arguing for southeast Asia in chapter 5. The first page of the chapter has a footnote: “Sections 4 and 5 of this essay are more technical than the general level of discussion in this volume; the nontechnical reader may wish therefore to omit them.” I wish I did! But I was too curious; I wanted to know all of Bauer’s arguments. In the processes that he goes through in explaining and evaluating the technical rhetoric of the UN’s economic ideas, he basically concludes their arguments are vague, devious, ambiguous, and meaningless (pp. 250, 259, 269); and in the end, that their economic documents “must be judged to be mere fiction or political propaganda” (p. 271). The UN states that there are “restrictions” on the terms of trade—whatever that means—in the Third World countries, and these “restrictions” prevent the people from economic growth. Therefore, the people must turn to the UN for help; the UN will guide them into the future; the UN is their savior; it will plan out their careers, their livelihoods, it will answer all their fears with economic progress: with commie manufacturing plants.
There are other extremely technical things that are just plain hard to follow, that I was tempted to think I was wasting my time with the chapter. For example, Bauer tries to explain the UN’s circular reasoning in the following way. This might serve to show you how difficult it really was to read this chapter: “The usual complaint is, of course, that in the aggregate their incomes grow less fast. The commodity terms of trade of the underdeveloped world will deteriorate if the ratio of the rate of growth of the aggregate incomes of the developed countries to the rate of growth of the aggregate incomes of underdeveloped countries is less than the ratio of the income elasticity of demand of the underdeveloped countries for the exports of the developed countries, to the income elasticity of the aggregate demand of developed countries for the exports of underdeveloped countries; and they will improve if the relationship between these ratios is the converse” (pp. 249-250). He ends this sentence with a footnote and what looks like an algebraic formula. So…did you get all that? Good. I have no idea what Bauer even meant. And on we go…
Notable things that Bauer remarks on: 1. Investing is not the only factor necessary for financial progress (p. 237); a strong work ethic and career advancement seem to be more essential (p. 260). 2. Crude oil (petroleum) companies are highlighted as a lucrative industry (pp. 244, 250, 254, 259)…something that makes me think it would be good to invest stock in companies like Exxon, BP, Chevron, ConocoPhillips, Valero, Marathon, Sunoco, Hess, etc. 3. Up-to-date market research is necessary for financial success in the business world (p. 256). 4. The importance of having business contacts for networking, getting new financial ideas, etc.—this makes me think of four things (p. 262-263, 265): (1) Being willing to talk about jobs and financial progress with friends. (2) Build connections on LinkedIn, which could lead to better paying job leads, or ideas for new financial goals. (3) Getting a Certified Financial Planner to give you new ideas about how to set financial goals for yourself. (4) Reading books on successful financial planning like David Bach’s The Automatic Millionaire.
CHAPTER 7. In this chapter, Bauer addresses the issue of governments having financial advisors for their presidents. In the case of Gunnar Myrdal and W. W. Rostow, Bauer offers a technical economist’s critique. Regarding these and various other economists, he says, “They literally do not know what they are talking about”—ramblings of ignorance “behind a façade of quasi-mathematical language” (pp. 289-290). Bauer, as you may know, was an advisor to Margaret Thatcher. His accusation is based on the books these advisors have published, which are often not based personal research and statistics of economic reality; they are also too vague, ambiguous, and abstract.[1] Bauer states that if you are going to be a good financial advisor who gives useful directions to people on how to achieve economic growth, then a working knowledge of economic history is absolutely necessary: medieval feudalism, the Industrial Revolution, the Great Depression, the economic history of the Soviet Union, etc., are all necessary for a knowledgeable analysis of technical economic concepts (p. 279). He also accuses these economists for being confusing; he insists that if they are going to give clear financial directions for success, then “trite elementary propositions” need to be used more frequently (p. 286). Think of King Solomon and Proverbs chs. 10-31: this is exactly what Bauer is saying governments need: they need Solomon-like financial advisors.[2]
CHAPTER 8. Bauer admits that the branch of development economics is amorphous, and at times, very limited in what we can know about it. The desire to reach out for more financial knowledge and our willingness to achieve more money can only help us. Bls.gov, LinkedIn.com, and Glassdoor.com all came to mind as I was reading this chapter. It becomes necessary to have as much information about profitable job opportunities as possible to be able to make accurate and profitable decisions. While Bauer has a level of respect for some of the causes for financial progress mentioned by Adam Smith’s The Wealth of Nations (1776),[3] he thought that Smith was not specific enough. Bauer rejects the economic growth theories of John Maynard Keynes’ The General Theory of Employment, Interest and Money (1936) and his followers Roy Harrod[4] and Evsey Domar.[5] He concludes they are too generalized, ambiguous, vague, and unclear (p. 296). Bauer finishes his book with the argument that the greatest factor in financial progress he knows, by personal observation and technical economic study—is that personal business contacts with friends who are richer than you—has an almost automatic financial transforming effect on the poor. It brings all the causes for financial progress together into one basket. Bauer, in speaking of poor countries coming into relationship with richer countries, says, “The connection in underdeveloped countries between comparative material prosperity and external contacts is not surprising. These are the channels through which human and material resources, skills and capital from developed countries reach the underdeveloped world. These contacts open up new markets and sources of supply and bring new commodities, wants, crops and methods of cultivation to the notice of the local population. They also engender a new outlook towards material possessions and the means of obtaining them. And perhaps most important, they undermine customs, attitudes and values which obstruct material advance. Again, in poor countries the sectors in contact with richer communities also attract groups and individuals from the local population most responsive to economic opportunities. Such matters obviously greatly affect economic performance in underdeveloped countries, especially in the early stages of development” (pp. 300-301).
Admitting the limitations of my own personal knowledge of economics and how to obtain greater job opportunities, I have to rely on God and His treasures of wisdom. There is a temptation in the carnally minded man, when, after he has obtained a great amount of financial wisdom, in the natural, earthly, and technical sense, to only rely on logic and reason when he steps into the realm of action and financial decision-making. But it is in this area that God exerts controls and even judgments over our lives. It may be easy, for example, to an economically educated person, to just seek to take advantage of profitable job opportunities—without regard to Biblical morals, the guidance of the Holy Spirit, faith in God, etc. So, if we feel that there are better jobs awaiting us in a certain geographical location, we must reason, if we are to be Biblical Christians, in the same way as the apostle James: “Now listen, you who say, ‘Today or tomorrow we will go to this or that city, spend a year there, carry on business and make money.’ Why, you do not even know what will happen tomorrow. What is your life? You are a mist that appears for a little while and then vanishes. Instead, you ought to say, ‘If it is the Lord’s will, we will live and do this or that’” (James 4:13-15). I will quote Matthew Henry at length on this point, because he was very illuminated:
“II. We are cautioned against a presumptuous confidence of the continuance of our lives, and against forming projects thereupon with assurance of success, James 4:13,14. The apostle, having reproved those who were judges and condemners of the law, now reproves such as were disregardful of PROVIDENCE…Serious reflection on our words and ways would show us many evils that we are apt, through inadvertency, to run into and continue in. There were some who said of old, as too many say still, We will go to such a city, and do this or that, for such a term of time, while all serious regards to the disposals of Providence were neglected. Observe here, 1. How apt worldly and projecting men are to leave God out of their schemes. Where any are set upon earthly things, these have a strange power of engrossing the thoughts of the heart. We should therefore have a care of growing intent or eager in our pursuits after anything here below. 2. How much of worldly happiness lies in the promises men make to themselves beforehand. Their heads are full of fine visions, as to what they shall do, and be, and enjoy, in some future time, when they can neither be sure of time nor of any of the advantages they promise themselves; therefore observe, 3. How vain a thing it is to look for anything good in futurity, without the concurrence of Providence. We will go to such a city (say they), perhaps to Antioch, or Damascus, or Alexandria, which were then the great places for traffic; but how could they be sure, when they set out, that they should reach any of these cities? Something might possibly stop their way, or call them elsewhere, or cut the thread of life. Many who have set out on a journey have gone to their long home, and never reached their journey’s end. But, suppose they should reach the city they designed, how did they know they should continue there? Something might happen to send them back, or to call them thence, and to shorten their stay. Or suppose they should stay the full time they proposed, yet they could not be certain that they should buy and sell there; perhaps they might lie sick there, or they might not meet with those to trade with them that they expected. Yea, suppose they should go to that city, and continue there a year, and should buy and sell, yet they might not get gain; getting of gain in this world is at best but an uncertain thing, and they might probably make more losing bargains than gainful ones. And then, as to all these particulars, the frailty, shortness, and uncertainty of life, ought to check the vanity and presumptuous confidence of such projectors for futurity: What is your life? It is even a vapour that appeareth for a little time, and then vanisheth away, James 4:14. God that wisely left us in the dark concerning future events, and even concerning the duration of life itself. We know not what shall be on the morrow; we may know what we intend to do and to be, but a thousand things may happen to prevent us. We are not sure of life itself, since it is but as a vapour, something in appearance, but nothing solid nor certain, easily scattered and gone. We can fix the hour and minute of the sun’s rising and setting tomorrow, but we cannot fix the certain time of a vapour’s being scattered; such is our life: it appears but for a little time, and then vanisheth away; it vanisheth as to this world, but there is a life that will continue in the other world; and, since this life is so uncertain, it concerns us all to prepare and lay up in store for that to come.
III. We are taught to keep up a constant sense of our dependence on the will of God for life, and all the actions and enjoyments of it: You ought to say, If the Lord will, we shall live, and do this, or that, James 4:15. The apostle, having reproved them for what was amiss, now directs them how to be and do better: “You ought to say it in your hearts at all times, and with your tongues upon proper occasions, especially in your constant PRAYERS and devotions, that if the Lord will give leave, and if He will own and bless you, you have such and such designs to accomplish.” This must be said, not in a slight, formal, and customary way, but so as to think what we say, and so as to be reverent and serious in what we say. It is good to express ourselves thus when we have to do with others, but it is indispensably requisite that we should say this to ourselves in all that we go about. Syn Theo—with the leave and blessing of God, was used by the Greeks in the beginning of every undertaking. 1. If the Lord will, we shall live. We must remember that our times are not in our own hands, but at the disposal of God; we live as long as God appoints, and in the circumstances God appoints, and therefore must be submissive to Him, even as to life itself; and then, 2. If the Lord will, we shall do this or that. All our actions and designs are under the control of Heaven. Our heads may be filled with cares and contrivances. This and the other thing we may propose to do for ourselves, or our families, or our friends; but Providence sometimes breaks all our measures, and throws our schemes into confusion. Therefore both our counsels for action and our conduct in action should be entirely referred to God; all we design and all we do should be with a submissive dependence on God.”
This article was completed on 3/22/15.
6 months after it was started.
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[1] Gunnar Myrdal’s An International Economy and Max Millikan and W. W. Rostow’s A Proposal.
[2] See Gary North’s Wisdom and Dominion: An Economic Commentary on Proverbs (2007, 2012)—formerly God’s Success Manual.
<http://www.garynorth.com/WisdomAndDominion.pdf>
[3] Book III, ch. 4.
[4] Harrod, Roy F. (1939). “An Essay in Dynamic Theory.” The Economic Journal 49 (193): 14–33.
[5] Domar, Evsey (1946). “Capital Expansion, Rate of Growth, and Employment.” Econometrica 14 (2): 137–147.
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[1] http://en.wikipedia.org/wiki/Gulag
[2] That is, the ejected Puritans: such as Richard Baxter, etc.
J. B., Founder of WesleyGospel.com:
