For people of faith, compassion for the poor is a non-negotiable. Compassion alone, however, doesn’t help the poor. In fact, many poverty programs exacerbate the very problem they were intended to solve. So how do we ensure that we not only mean well, but also do good?

We have to learn to think economically . Don’t worry. At its base, economics isn’t supply/demand charts and complicated math. Rather, the “art of economics,” as Henry Hazlitt puts it, “consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

Debt Forgiveness in Developing Nations

Debt, death and the dictator by Samuel Gregg, The Washington Times , June 5, 2006

Samuel Gregg, director of the Acton Center for Academic Research, writes about the need to hold the leaders of developing nations accountable for the funds that they borrow and for the responsible stewardship of their nations' resources.

A Theory of Corruption by Osvaldo Schenone and Samuel Gregg

There is no greater scourge that affects the proper functioning of any economic system than corruption. Tragically, corruption is pervasive in developing nations. It is found often on the part of public officials who delay the issuance or processing of public documents unless a monetary inducement is offered. This monograph offers a theological and economic examination that puts into question many of the uncritically accepted assumptions held about corruption.

Banking, Justice and the Common Good by Samuel Gregg

The art of creating, managing, loaning, and investing money has always been fraught with moral hazards. Unfortunately, the widespread habit of viewing banking in a less-than positive light has contributed to misunderstanding of a human activity that not only contributes to human prosperity, but also creates a sphere of endeaver in which people can genuinely pursue virtue.

Ignoring unintended consequences (and inevitable trade-offs) of actions is one of the most common ways in which a well meaning program can actually do harm. Some other common fallacies are:

• The nirvana fallacy , in which a system like capitalism is contrasted with an unrealizable ideal rather than with its historical or actual alternatives.

• False extrapolations , such as the claim that human population will increase exponentially and without end, thereby exhausting the earth’s resources.

• Assuming that “rich” and “poor” are static categories rather than categories through which many individuals pass during their lifetimes.

• The zero-sum game fallacy , in which a dollar gained in one place means a dollar must be lost someplace else.

• The many-headed materialist fallacy , in which trade never involves the creation of wealth, but is merely the exchange of some pre-existing material resource.

Each of these mistakes is easy enough to see through in the abstract, but also easy to forget in practice. Remember them, however, and you’ll be immunized against a lot of economic misinformation, even if you never take a course on economics. More importantly, you’ll be much more likely to advocate policies that not only have good purposes, but also good results.

Jay Richards, Director of Institutional Relations, Acton Institute

Learn Economics to Better Understand Poverty

Christians are called upon to form unique bonds of solidarity with the poor, the destitute, and the lonely, and to help those who cannot help themselves. Christians do not interpret in narrow or materialistic terms the Lord’s commandment to love the poor. Moral and spiritual poverty are, in many senses, more crippling than a dearth of material goods. Nonetheless, throughout the centuries, Christians have sought to give effect to the Lord’s exhortations to help the materially poor by engaging in a variety of charitable activities. Pagans in the Roman world (where life was notoriously cheapened) were astounded not only by the reverence for life displayed by Jews and Christians but also the care offered by Jewish and Christian communities to the materially underprivileged. We know, of course, that the effects of sin will not be fully reversed prior to the Lord’s final coming. Nevertheless, Christ calls upon his people to minister to those who suffer any form of undue deprivation now.

Yet, if we are to understand poverty properly, it is surely true that, among other things, a grasp of economics must first be acquired. Not all poverty proceeds directly from economic deprivation, but we will fail to comprehend completely the causes of poverty and its persistence without such an understanding. The Christian who wishes to comment and act responsibly – rather than in an emotivist manner – when dealing with such issues surely requires some knowledge of essential economic theory.

Samuel Gregg, Economic Thinking for the Theologically Minded , (2001, University of America Press). Dr. Gregg is director of research at the Acton Institute.

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Essential Reading

Economic Crisis in Africa: Moral Challenges to the World Community
by Jozef D. Zalot

The Poor May Not Be Getting Richer
But they are living longer, eating better, and learning to read
By Ronald Bailey, A World Connected

Africa Needs Freer Markets, And Fewer Tyrants
By Franklin Cudjoe, Imani Ghana

How Globalization Conquers Poverty
By Johan Norberg

The Free Market
By Murray Rothbard, The Library of Economics and Liberty

Recommended Reading

“Eager for Treasure, Not Trash: Charities Sort Through Piles of Donated Goods, Some of Which They Can’t Use”
By Michael Alison Chandler

“Most people have no clue what’s involved with taking a garbage bag of stuff and getting it to the person who needs it,” said Lindy Garnette, executive director for SERVE Inc., a Manassas-based nonprofit that operates a 60-bed homeless shelter and food bank.

How Development Economics Has Changed
Cato Online Policy Report

Globalization and the Christian’s Response
Father Piero Gheddo, Acton Institute’s Religion & Liberty

“Avoiding False Idols”
by Marvin Olasky

“Strange Brew: Churches push for “fair trade” coffee”
by Jordan Ballor

“Catholic Social Teaching on the Economics of Immigration”
by Andrew M. Yuengert, Associate Professor of Economics, Pepperdine University

Catholic social teaching and the economics literature take very different approaches to immigration policy. This article is both a rereading of the economics of immigration in light of Catholic social teaching, and a rereading of Catholic social teaching on immigration in light of the economics literature. Catholic social teaching provides a normative framework for immigration policy that is strikingly different from the secular framework within which economics currently operates.

“On economic reasoning, faith and the rise of the welfare state”
by Father Piero Gheddo.