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by Tom Rose

...[I]t shall come to pass, if thou shalt hearken diligently unto the voice of the Lord thy God...all these blessings shall come on thee... But...if thou wilt not hearken unto the voice of the Lord thy God...all these curses shall come upon thee.– Deuteronomy 28:1-2, 15

A recent study of 75 countries¹ showed a strong correlation between the standard of living enjoyed by a people and the degree of bureaucratic red tape that is required by civil governments before a business firm is allowed to start doing business in the marketplace. The study showed, in short, that the richer, more affluent countries provide relatively easier and less-costly entry barriers, while the poorer, less-developed countries (LDCs) erect time-consuming costly barriers to entry into the marketplace.

A sampling of government requirements from the 75 countries surveyed showed various country-by-country contrasts from which we can draw some very helpful insights. The governmental requirements to do business in each country were divided into three categories:

1. The number of legal procedures that are required to start doing business.
2. The number of days needed to go through the various legal procedures.
3. The total financial outlay of all out-of-pocket costs for licenses and other fees. To make comparisons meaningful between various countries with drastically differing standards of living, this category was measured as a percentage of each country's per-capita Gross Domestic Production (GDP). (I will explain this through some examples shown below.)

First, let us look at the average data for all 75 countries surveyed:

1. The average number of mandated legal procedures for the 75 countries was 10. That is, each aspiring business entrepreneur, on the average, had to progress through ten separate steps to gain governmental approval to legally open the doors of his business.
2. The average number of days required to go through the mandated steps for the 75 countries was 63 days.
3. The average per-capita financial outlay in all countries to progress through the various legal hoops was 34% of GDP. To explain: The figure of 34% for the 75 countries surveyed means that the financial outlay to legally start up a business uses up, on average, more than one-third (34%) of the total annual value of domestic goods and services produced by one person. In other words, a figure of 100% would mean that the required legal hoops cost a full year of an average person's economic output. Thus, a figure of 34% means that the legal cost is over 4 months of one person's total GDP! Of course, in many countries there are also numerous off-the-book bribes and under-cover payments that are customarily paid before getting a legal go-ahead to start business.

Now that we understand what the average figures are, let's look at some individual countries for the purpose of drawing comparisons:

–Canada has the fewest legal procedures required with only 2 needed, and the fewest number of days needed at 2 also.

–Bolivia has the most legal procedures required at 20.

–Mozambique at 174 days needs the longest time to get all the legal procedures approved; making for a wait of almost six months!

–Egypt has the greatest total entry cost at a percentage of per-capita GDP at 216%. What this means is that a business entrepreneur in Egypt has to endure a cost of more than two years of a person's GDP to legally start a business!

–New Zealand has the lowest percentage cost of GDP for starting a business at 4/10 of one percent.

It is instructive to note that the richest (most economically developed) countries in the world have the lowest percentage cost of per-capita GDP for legally starting a new business. In contrast, the poorest (least economically developed) countries have the highest percentage cost of per-capita GDP--six and one-half times the cost of the richest countries! To gain a better perspective, please review the data given in the following chart:

The above data largely explains why less-developed countries (LDCs) tend to remain constantly in the economic doldrums. This data also points the way toward solving the persistent problems of long-term economic stagnation and high levels of unemployment that plague LDCs and which, in turn, generate poverty, poor health, and social unrest.

What is the answer? The answer is relatively easy to give, but would be a bitter pill for civil rulers to adopt, because doing so first requires a drastic change in a country's world-and-life view. People in positions of power and influence would find it necessary to voluntarily give up some of the existing political/social perks which artificially raise their own incomes far above the income of the average citizen. The workable solution is simply to make it easier and less costly for would-be entrepreneurs to do what they do best--that is, to freely serve the needs of other individuals in society in the hope of earning a profit. God has gifted many individuals in every society with a natural or learned ability to provide desired services to the public, at the entrepreneurs' own risk, with the hope and expectation of earning future profits.

This entrepreneurial spirit is what makes the wheels of economic progress go round and round in free societies, but it is an economic reality that has largely escaped the notice or interest of most government rulers the world over! The reason is two-fold. First, the political/social elite in every country are accustomed to enjoying very high levels of income that is largely the result of the aforementioned political and social perks which favor the upper classes at the expense of the common citizens. Few civil leaders are sufficiently munificent and interested in the welfare of the common people that they would be willing to forego such benefits. Second, and just as important, every civil government in existence is based on and operates on edicts which are enforced by the threat of legal punishment. Therefore, civil rulers tend to lean towards the idea of mandating this or that, but tend to be strangers to the concept of voluntary cooperation between sellers and buyers in the competitive marketplace. Thus, civil rulers generally do not put much trust in accomplishing good in society through the non-coercive practice of voluntary persuasion found in free market economies.

The persistent problem of widespread economic stagnation and poverty experienced by the people in less-developed countries is nothing more than the long-term economic result of the failure of civil rulers in LDCs to follow God's Word as found in Deuteronomy 28 concerning national blessings (vv. 1-14) and national curses (vv. 15-68). Note an important point: the list of curses is much longer than the list of blessings!

The World Is Governed by God's Law of Cause-and-Effect

In short, to translate chapter 28 of Deuteronomy into economic terms, we come up with this spiritual/economic advice: If the civil rulers of LDCs really desire to foster beneficial economic progress for the good of their citizens, they must embrace God's higher moral law and apply it to their country. The legal statutes, customs, and social institutions of their country must be changed so that powers wielded by civil rulers will be limited to the proper biblical sphere and role of civil government. That is, the laws and whole social structure of their country must simply serve as guarantors of biblical law and order so as to foster peaceful economic exchange between free and self-responsible individuals. This is the ideal to strive for, rather than having a cumbersome political bureaucracy which allows civil rulers to grow fat in positions of power by feeding off of the common people through bribes and the selling of political favors. Moses, as God's prophet, phrased the issue succinctly when he stood before Pharaoh some 1400 years before Christ and cried, "Let my people go, that they may serve me!" (Ex. 8:1).

God put mankind in a world ruled by His law of cause-and-effect. If civil rulers will obey God's law and limit themselves (Ah, that is the problem!) to wield only those just political powers granted to them by God--that is, to simply protect the individual right of each person to stand as a self-responsible individual before God--by protecting each person's God-given right to engage in free economic production and exchange, then God will bless their country with peace and bountiful economic prosperity. This is the cause-and-effect promise of Deuteronomy 28. If God's law is embraced, rich economic blessings will follow; but if God's law is not embraced and put into practice, the long list of Deuteronomy 28 's curses cannot be avoided.

Many secular-minded economists fail to recognize that there is a spiritual basis to what is called "economic science." But, in truth, the sequence of economic cause and effect in God's created universe always moves from a spiritually oriented cause to an economically expressed end. In short, we find this sequence: Good morals produce an atmosphere of individual freedom coupled with self-responsibility which, in turn, produce rich economic blessings. Debased morals unerringly and ultimately produce the loss of people's individual freedom and self-responsibility before God which, ultimately and inescapably, produce social chaos and the many economic curses found in less-developed countries. This explains the crucial importance of moral leadership and limited civil government to the well-being and prosperity of every country in the world. Economically advanced countries ignore this inescapable cause-effect sequence at their peril. Alfred Edersheim, in writing about the evil rule of Athaliah, Queen of Judah, in the Old Testament states:

Indeed, this is one of the lessons which throughout make the history of Israel typical of that of the Church, and in a sense of all history, and which constitute its claim to the designation of "prophetic." In it events move, so to speak, in step with the utterances of the God of Israel. No direct or sudden interference seems necessary; but in the regular succession of events, each deviation from Divine order and rule, each attempt to compass results by departure from God's law and word, brings with it, not success, but failure and ruin.²

Since World War II our country has wasted multi-billions and billions of American tax dollars (coercive levies that fall on ordinary people) through so-called "foreign aid" programs that have only served to enrich favored political elites in foreign countries and to build tyrannical socialist regimes throughout the world. These same "foreign aid" programs have also subsidized certain large international American corporations which have excelled in "milking" their special-interest ties with U.S. political leaders. (Yes, our country also has many hidden special-interest elites who feed off the common people!) The long-term result has been the creation of such bureaucratic governmental institutions as the U.S. Export-Import Bank and its related entities, the World Bank, NAFTA, the WTO, and other socialist/fascist entities. All of these serve to destroy the God-given freedoms of the common people, both here and abroad. And all of this is the direct result of the failure of civil rulers, not only in the LDCs but also here in America, to adhere to God's biblical law. In short, too many ungodly laws implemented by civil rulers actually run counter to God's higher law.

Economic systems don't develop in a vacuum. They are the cause-effect result of underlying spiritual forces which impact, first upon man's theological views, next upon man's philosophical views, then on his political views, which gives birth to the economic system. The sequence is shown in the diagram below²

John Eidsmoe, in the foreword to a new reprint of Thomas Cooley's 1880 book, The General Principles of Constitutional Law of the USA, issues a warning which both the people and political leaders of LDCs as well as America might well take to heart:

If one were to say that State-worship is the official religion of the United States today, one would be guilty of exaggeration. But not by much.

Increasingly, Americans today look to the State as the supreme authority, the ultimate lawgiver, the grantor of all rights and privileges, the cure for all ills, the solution to all problems, the source of all blessings, the guarantor of all security, even the arbiter of right and wrong. In return, the State increasingly demands of its citizens their absolute loyalty, their unquestioning obedience, and ever-growing portions of their wealth for sustenance.³

Read the above quote again! The mentality of America, once the "home of the free and the brave," is gradually becoming more and more like that of the godless civil rulers in LDCs. This is, at heart, a spiritual problem, and if it is not soon reversed, the effect will eventually be the same! Unless we return to God's spiritual truth in America, we will suffer from the very same economic maladies that the LDCs suffer from. The line of cause-to-effect always works from the spiritual to the economic, not the other way around. The spreading of economic largess all over the world, through coercive government mandates, has never been the solution to economic poverty in the LDCs or at home, and it never will.

The best help we can provide in eliminating poverty in less-developed countries is, once again, to serve as a shining beacon of a biblically based free-enterprise system at work. We must eliminate the wasteful and expensive practice of spreading tax-based American "foreign aid" all over the world. And we should, in the process, return the coercive tax-levies to the American people, to whom the money really belongs.

Doing this will drastically reduce the spread of statist socialism throughout the world while, at the same time, reducing the ability of political elites in LDCs to manipulate and convert American "foreign aid" payments so they can continue living at the expense of their common people. Eliminating the "legal theft" of foreign aid will also bring to an end the long-term government subsidies to American corporations (a form of legalized theft via government decree). And ending these corporate subsidies would also serve to dissipate one of the major incentives that corporations have to lobby the Congress for continued special-interest handouts of tax dollars. As a result, the great and vastly expensive "Kublai Khan edifice" that has been built in Washington, D.C., through many years of special-interest lobbying, would receive a mortal blow, to the benefit of taxpayers throughout these United States of America. The true practice of biblically-based free enterprise here in America would then, by example, stimulat e its acceptance by peoples all over the world.

[© 2001 Tom Rose]

Tom Rose is retired professor of economics, Grove City College, Pennsylvania. He is author of seven books and hundreds of articles dealing with economic and political issues. His articles have regularly appeared in The Christian Statesman, published by the National Reform Association, Pittsburgh, PA; the Chalcedon Report, published by the Chalcedon Foundation, Vallecito, CA; and in may other publications. For ten years he wrote a weekly syndicated column published by newspapers such as The Santa Ana Register (CA), The Indianapolis Morning News (IN), The Manchester Union Leader (NH), The Gazette-Telegraph (CO), The Odessa American (TX), and others. He and his wife, Ruth, raise registered Barzona cattle on a farm near Mercer, PA, where they also write and publish economic textbooks for use by Christian colleges, high schools and home educators. Rose's latest book is Reclaiming the American Dream by Reconstructing the American Republic, published by American Enterprise Publications, 177 N. Spring Road, Mercer, PA 16137. Phone: +1 724 748 3726; Web: www.biblicaleconomics.net

Endnotes

1. Steve H. Hanke, Slow Starters, Forbes (30 April 2001): p. 34.

2. Alfred Edersheim, Old Testament Bible History (Grand Rapids: Eerdmans Publishing Company [1876-1887], 1980), 7:10.

3. Tom Rose, ivil Government: A Distributor of Higher Law, chap. in Free Enterprise Economics (Mercer, PA: American Enterprise Publications, 1988), p. 7.

4. Thomas Cooley, The General Principles of Constitutional Law of the USA, with a Foreword by John Eidsmoe (n.p., 1880; reprint, Bridgewater, VA: American Foundation Publications, n.d.)

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