I ‘Left’ the Global Poor to Serve the Global Poor

Ian Tormo on Unsplash

I went to graduate school to help the poor.

I wanted to study economic development—to determine what causes poverty among the global poor and what can be done about it. More than any other field within economics, development seems to exist for the sole purpose of making the world a better place for those most in need.

But after my first year of graduate school, I became a macroeconomist. Rather than study the forces directly affecting the poorest of the poor, I now study abstractions like the global financial system. The main actors in my research are not the global poor, but the global wealthy—bankers and financiers investing unimaginable sums of money, with no consideration at all for how their money-slushing affects farmers in Malawi.

When I told one of my professors I wanted to study macro, he sharply told me, “How are you ever going to help anybody?” Then he turned and literally walked away. He was an expert in poverty intervention; I would become an expert in Wall Street intervention. In his eyes, and perhaps in the eyes of many Christians, I had sold out.

Meanwhile, back in 2008, the once-obscure market for American subprime mortgages took down the global financial system, leading to a collapse in global economic activity unseen since the Great Depression.

The financial crisis had U.S. roots, and yet it shook the whole world. Developing economies lost about 8.5 percent of income growth. That meant that farmers in Malawi and Mongolia and all over the developing world were on average 8.5 percent poorer than they would have been had the global financial system not collapsed. If not for the U.S. crisis, the economy of Madagascar would likely have grown by 7 percent, but instead it shrank almost 5 percent; in Madagascar, bank losses on American mortgages took away 12 percent of the incomes of 20 million people.

To serve the poor, we need experts in poverty intervention like my professor. But that’s not all we need.

To serve the poor, we need experts in poverty intervention. But that’s not all we need.

If the U.S. financial system can be made slightly more stable by limiting some forms of risk-taking—well, no farmers in Malawi will ever notice directly. But well-designed and effective macro and financial policies mean the whole world will be better off. To answer my professor, good macro policies will help everybody. Including the global poor. Maybe even especially.

Not Beyond Reach

It’s not easy. Mitigating catastrophes is hard. Preventing financial crises is probably impossible. Policies to stabilize the global financial system and the global economy are tricky to get right. But much is at stake.

Especially because sometimes good macro policies are not beyond our reach. Sometimes we know exactly which policies will help and which will lead to a state of chaos and fear.

My dad emigrated from Venezuela when he was young. Venezuela is now one of the most unstable countries in the world. Poverty rates exceed 76 percent. The economy is about 40 percent smaller than it was three years ago. Inflation has reached 80,000 percent per year—which is an almost meaningless number—what do prices even mean at that rate?

While the full story of the Venezuelan economy is complex, the outcome was perfectly predictable and avoidable. Venezuela became increasingly—and unnecessarily—dependent on oil revenue to finance government spending. Oil prices collapsed. The government printed unending amounts of money to finance its spending. The currency’s value collapsed, and prices skyrocketed. The government imposed price controls, which led to shortages of basic necessities like food, water, and diapers. Black markets flourished, and official markets seized up. Now only the richest of the rich can afford food and medicine.

This was an avoidable crisis for 30 million people. No amount of poverty intervention strategies would have stopped it. But good macro policy would have.

This was an avoidable crisis for 30 million people. No amount of poverty intervention strategies would have stopped it. But good macro policy would have.

Renewal at Multiple Levels

When Israel returned from exile, it needed both micro interventions and macro institutions. The people needed Ezra to call them to personal holiness, Nehemiah to organize economic activity, and Esther to establish macro-level policies that would allow Israel to do those things without getting slaughtered. Rebuilding Jerusalem required spiritual, economic, and political renewal at multiple levels.

Like Israel, Venezuela needs multi-pronged renewal. They need disaster relief. They need private enterprise. They need health services and distribution networks for food. They need churches to provide material and spiritual care for the people. And they need better high-level institutions.

But if they get those things without a responsible economic policy, they’ll be back in the same dilemma.

Economic policy matters. For the care of the poor, for the providing of jobs, for the development of the earth, for the advancing of God’s kingdom—economic policy matters.

As Christians, we should all be grateful for my professor, whose life’s work is understanding the on-the-ground minutia of poverty. We should also be grateful for good policy at high levels. That’s another way that Christians can go and do likewise.