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David O. Mckay Lectures

From Poverty to Prosperity

Dr. Haynes, chairperson of the International Business Management Department in the School of Business, has been teaching at BYU-Hawaii since 1994. She earned her doctorate degree from Purdue University, with an emphasis on consumer economics. In addition to BYUH, she has also taught at BYU in Provo, Utah; Coastal Carolina University, Myrtle Beach, South Carolina; Shanghai International Studies University, Shanghai, China (as a senior Fulbright lecturer); the University of Indonesia, Jakarta, Indonesia (as a senior Fulbright lecturer); Christopher Newport College, Newport News, Virginia; and Purdue University, West Lafayette, Indiana. Her current topics of research in process include "Entrepreneurship & Microenterprise Profitability in Developing and Transitional Economies." She is also currently the Book Review Editor for the Journal of Microfinance.


It is an honor to share thoughts with you the very week that Brigham Young University Hawaii turns fifty years old. During this time developments around the world have enhanced many lives. Robert Chandler's research in the 1960s cultivated new varieties of rice that increased Asia's rice production by 66% (The World Food Prize). Advancements in computer technology have increased efficiency in many areas of production. During the past fifty years the mode for typing term papers has moved from manual typewriters to electric typewriters to mainframe computers and now to increasingly faster personal computers, all of which have made the lives of university students easier. The first document I ever typed on a computer was my dissertation. It was a cutting edge mainframe with word processing so primitive that instructions had to be typed in for each underline, indentation and quotation mark. A host of other advances have enhanced lives.

However, some things have changed very little over the past half century. One of these things is the living standard of the world's poorest. The real value of output per person in the ten poorest countries has remained virtually unchanged over the past 40 years.

Real Value of Output per Person in World's Ten Poorest Countries
(Constant 1995 dollars)

            1960                                                                               2003

       $97 - $231                                                                      $91-$ 234

Source: World Development Indicators, World Bank

Over half of the world's population lives on less than two dollars a day (World Bank). The living conditions of these individuals are often wretched, such as this crowded Manila neighborhood built on stilts above raw sewage with rickety planks in place of sidewalks. Odor and contamination permeate everyday life.

Here in Laie we wash our cars and water our grass with water fit to drink while over 40% of the world's population lacks access to improved water or sanitation facilities. Besides contributing to almost 2 million deaths per year, lack of access to water takes a tremendous toll on the productivity of the living (WHO, 2004). The World Health Organization estimates that the time spent hauling drinking water exceeds 40 billion work hours each year in Africa alone. This is the equivalent of 20 million full-time workers (2004).

Fifty years ago at the founding of this institution David O. McKay (1955) said that its alumni would have an impact "towards the establishment of peace internationally." Abject poverty is a recognized obstacle to this peace (Wolfensohn, 2003). Part of the fulfillment of President McKay's prophesy may be the role you can play in moving individuals from poverty into prosperity. Indeed the very education you are receiving here will be the vehicle for bringing some of your families out of poverty. However, your potential impact in alleviating poverty extends far beyond your immediate families and far beyond the Church of Jesus Christ of Latter-day Saints. Elder Glenn L. Pace (1993) wisely said, "Building the kingdom and improving the world are not mutually exclusive."

Defining Poverty and Prosperity

Traditionally poverty has been viewed as a lack of basic necessities. In recent years, a subtle but substantive refinement in definition has gained support. Influenced heavily by the work of Nobel laureate Amartya Sen (1985 and 1999), the current definition is an inability to provide oneself with basic necessities (Prendergast, 2004). This focus on capabilities allows a more comprehensive understanding of poverty than can be captured in consumption levels alone. As a result the values of self-esteem and freedom in conjunction with the long-standing goal of sustenance have become integral parts of poverty discussions (Goulet, 1971; Todaro, 2003; Srinivasan, 1994).

Sustenance refers to basic physical necessities. This concept is easy to understand but hard to measure. How much and what types of food are necessary? When does the "niceness" of a dwelling become more than adequate? While cases of starvation are clearly associated with poverty, drawing a line of demarcation between poverty and adequacy often seems arbitrary.

Perceptions of poverty vary greatly by our exposure. One man's dream of wealth may be another man's view of poverty. A few examples illustrate the difficulties of measuring poverty.

1) A few years ago I took a small team of students to Manila to interview several hundred individuals. They lived in neighborhoods without indoor plumbing. A typical block had a pump from which water was hauled home. Further treatment was needed before the water was safe for human consumption. Bottled water was available, but at a price beyond the reach of these families.

We used two approaches to measure the poverty status of our respondents, the income approach used in government poverty statistics and a standard-of-living index based on a series of questions including, "Do you have access to safe drinking water?" (Yunus, 1999). Few residents of advanced economies would consider hand pumping, hand carrying and then boiling water "access to safe drinking water." Over 90% of the individuals we interviewed answered, "Yes."

2) During a class discussion of poverty two students said, "According to our text book we come from a poor country, but we never felt poor. We always had plenty to eat. Everyone we knew had plenty to eat. There were always fish in the sea and fruit and vegetables growing. We've never been cold or hungry. Were we actually poor? " Poverty measures based on income alone fail to include the impact of non-market or home production on living standards. They also fail to allow for differing cultural values placed on material consumption levels.

As great as the challenges of measuring sustenance are, charting progress toward the goals of self-esteem and freedom is more difficult. This does not diminish their importance. Feelings of worthlessness and entrapment contribute to a sense of poverty. A few statements from the thousands interviewed in the World Bank's recent "Voices of the Poor" project illustrate the importance of self-esteem and freedom:

"For a poor person everything is terrible. . . . we are afraid of everything; we depend on everyone. No one needs us. We are like garbage that everyone wants to get rid of"

Blind woman from Tiraspol, Moldova 1997 (cited in Narayan, 2000, p. 65).

"Poverty is lack of freedom, enslaved by crushing daily burden, by depression and fear of what the future will bring" Georgia 1997 (cited in Narayan, 2000, p. 37).

"[Poverty] is like being in jail, living under bondage waiting to be free"

A young woman, Thompson Pen, Jamaica (cited in Narayan et al., 2000, p. 236).

If poverty is an inability to provide necessities, then prosperity, at least materially, is an ability to provide oneself with more than necessary. Poverty and prosperity span a wide range from utter destitution to vast riches, self-esteem and freedom. Clearly many are already prosperous, some highly prosperous. The gap between the standard of living of the highly prosperous and the poor is basis for much debate. Our purpose today is not to sit in judgment on the prosperous or the poor, but to find the means to eliminate poverty.

The gravity of the issue is clear. 2004 Nobel laureate Edward C. Prescott said, "I think the question, 'Why isn't the whole world rich?' is the most important question facing economists" (cited in Glenn, 2004). President Gordon B. Hinckley believes that "the Lord does not wish to see His people condemned to live in poverty . . . . He would have the faithful enjoy the good things of the earth" (2001).

How are we doing?

In the 1997 McKay lecture my colleague Bruce Kimzey reviewed the stock of world resources and the demands placed on them, concluding that with wise use humanity's needs can be met. In Doctrine and Covenants 104: 15-18 the Lord states,

And it is my purpose to provide for my saints, for all things are mine. But it must needs be done in mine own way; and behold this is the way that I, the Lord, have decreed to provide for my saints, that the poor shall be exalted, in that the rich are made low. For the earth is full, and there is enough and to spare; yea, I prepared all things, and have given unto the children of men to be agents unto themselves. Therefore, if any man shall take of the abundance which I have made, and impart not his portion according to the law of my gospel, unto the poor and the needy, he shall, with the wicked, lift up his eyes in hell, being in torment.

This passage plainly conveys that 1) earth's resources are more than adequate to meet mankind's needs, and that 2) realizing this state of excess depends on choices made by men on earth. If this is true, the root of poverty must lie in our use of the earth's resources. We have counsel regarding the Lord's "own way." Still in this world of imperfect men and women, each acting as "agents unto themselves," the goal of widespread prosperity has been achieved only in pockets of time among pockets of very righteous people ( Book of Mormon, Moses 7:18, 4 Nephi 1:3). Today, by any reasonable definition, poverty afflicts a significant portion of the world's population.

How can we move this world of imperfect men and women toward a state of widespread prosperity? I am convinced that efficient use of the earth's resources is necessary if we are to achieve prosperity for all. Efficiency eliminates waste, allowing us to accomplish as much as possible, given the available resources. There are two relevant aspects of efficiency:

1) First, we must be productive. We must use resources in ways that maximize output if we are to have prosperity. Consumption is limited by the amount produced. The importance of making full use of our resources and opportunities is clear in the chastisement of the unproductive servant in the parable of the talents ( King James Version, Matthew 25:14-29, Luke 19: 12-25).

Elder J. Richard Clarke (1980) also spoke of the need for productive effort when he said, "Adam learned, as part of his first lesson by the Lord on economics, that the earth was to be subdued and dominion gained by sweat, by brain and brawn. . . . To work below our capabilities creates a deep hunger in ourselves and enormous waste in society." I suspect that the hunger to which he referred may be as much physical as spiritual. Elder Clarke (1980) also said that when we are productive enough to provide more than basic necessities, we may gain the, "Economic freedom [that] comes from the surpluses we create." There can be no surplus if we are not productive.

This aspect of efficiency implies that we waste earth's resources when we fail to use them effectively. We will never be prosperous if we do not produce abundantly.

2) A second aspect of efficiency deals with the distribution of resources and goods across a population. Just as we waste resources by allowing them to be idle instead of productive, we also waste when output is not distributed in ways that maximize the well-being of society. This type of waste is known as allocative inefficiency.

Achieving allocative efficiency requires us to direct resources to their use of highest welfare-enhancing value. This is easier said than done. Our systems for distribution are far from perfect and the relative welfare-enhancing value of options can be difficult to assess. As a result we find situations as incongruous as the current estimates that malnourishment afflicts 850 million people world wide (World Hunger, 2005) at the same time that ninety-six billion pounds of food are wasted in the U.S. annually (National Center, 2001) and sixty percent of the adult U.S. population is overweight or obese (American Obesity). It may seem clear that society would be better off if these folks would eat less and transfer food to those who are starving. The culprit is not solely greed, but often obstacles faced in communication and distribution. Still, given the suffering associated with abject poverty, it seems safe to assume that alleviating poverty would enhance well-being to a greater extent than most alternative uses of resources.

Approaches to alleviate poverty

Most poverty alleviation programs are tied closely to these efficiency goals, focusing either on increasing total output or on redistributing consumption goods from the rich to the poor (Bigsten, 2003). However, a combination of the two, that of redistributing inputs in ways that enhance the productivity of the poor, seems distinct enough to produce a third category that captures both aspects of efficiency. Let's look more closely at each of the three approaches.

1) Increase output, enhance growth

Closely aligned with the efficiency goal of productivity is the approach of reducing poverty by fostering economic growth, or increasing output. The growth approach is rooted in the reality that output limits consumption. Growth is essential to alleviating poverty when current output is insufficient to provide necessities for all. President Marion G. Romney (1981) emphasized this when he said, "How can we give if there is nothing there? Food for the hungry cannot come from empty shelves. Money to assist the needy cannot come from an empty purse."

Some falsely assume that work is not necessary. President Harold B. Lee (1973) referred to these as the seekers of the "loaves and fishes." Brigham Young (1998) was also clear on the issue, stating, "We will have to go to work and get the gold out of the mountains to lay down, if we ever walk in streets paved with gold . . . . My faith does not lead me to think the Lord will provide us with roast pigs, bread already buttered. . . . He will give us the ability to raise the grain, to obtain the fruits of the earth, to make habitations."

The potential for allocative inefficiency is the drawback of a growth-oriented approach. A focus on economic growth alone does not address distribution issues. The poor will remain poor if they have no connection to the rising output. It is not uncommon for the living standards of those at the bottom-end of the economic ladder to gradually rise with economic growth, but this is not automatic and there are examples to the contrary.

Nevertheless, numerous scriptural accounts tie prosperity to diligent effort ( Book of Mormon, Ether 10:22-29, 2 Nephi 5:11, Alma 4:6). For example, the gradual process of achieving prosperity through increased productivity is described in Mosiah 21: 16:

"And it came to pass that they began to prosper by degrees in the land, and began to raise grain more abundantly, and flocks, and herds, that they did not suffer with hunger" ( Book of Mormon).

2) Redistribute consumption goods

A second common approach to reducing poverty centers on redistributing goods across a population. This is what comes to mind when reference is made to "helping the needy." Redistribution entails a transfer of income or goods from the prosperous to the poor, reducing the gap between their living standards. To the extent that real suffering is reduced, this approach satisfies the demands of allocative efficiency and provides sustenance. However, if total production is low enough, poverty would still exist even with a completely equal distribution of goods and income. Howard W. Hunter (1966) referred to this as "poverty equally divided."

Redistribution is the basis of many government and private sector programs. Perhaps the most common examples are seen every day in individual voluntary acts of charity and kindness. We see such generosity at all economic levels, from the wealthy giving vast amounts, to the poor reaching out to help those who are even poorer. Bob Gay (2004), who currently serves as a mission president in Africa, made reference to the choice between generosity and greed, saying, "The great lesson that I have learned in business. . .is this: We can trade our lives for gain or we can work for gain and give life to others. . . . In business we are either about taking life or giving life." Andrew Carnegie, one of the richest men of the U.S. industrial revolution, gave away 90% of his fortune based on his belief that "the man who dies rich, dies disgraced" (cited in Doing well and doing good, 2004).

The global outpouring of support for victims of the recent Asian tsunami provides another example of generosity toward the poor. The relief effort also illustrates the reality that redistribution can be an essential means to preserve life, the most precious of our productive resources. How many additional lives would have been lost in the tsunami aftermath without the rapid transfers of water, food, medical care and other essential consumption goods? Few have concern over providing for others who cannot provide for themselves.

However, there are significant drawbacks to redistribution of consumption goods as a means to relieve poverty. Without enabling individuals to provide for themselves, dependence remains, as expressed by a poor person in Dahshour, Egypt, "The poor person who gets help is even more vulnerable, because the day may come when the charitable person may stop helping. Then what would become of him? He expects this to happen and worries about it" (cited in Narayan et al., 2000, p. 154). Perhaps the most severe criticism of the redistribution approach is that it primarily treats the effects of poverty rather than prevents or eliminates poverty.

Another weakness in the redistribution approach is its negative impact on production. Individual incentives for productivity are diminished both among those of high income, who would not enjoy the full fruits of their labors, and among those of low income, who are provided with necessities regardless of effort. One example of this drag on production is beggars. Evidence indicates many beggars are truly destitute and unable to provide for themselves, yet others choose begging as a profession (Gossling, 2004, Kameluddin, 2004). Concern exists over increasing evidence not only of professional begging, but also of child trafficking and maiming to enhance their effectiveness as beggars (International Labour Organization, 1998). Professional begging is not only a tragic waste of human productive capacity, but also increases the risk of cynicism in the prosperous, possibly reducing their generosity toward the truly destitute. The Doctrine & Covenants gives counsel regarding the greedy among the rich and poor as well as to the truly destitute:

Wo unto you rich men, that will not give your substance to the poor, for your riches will canker your souls . . . Wo unto you poor men, . . . whose bellies are not satisfied, and whose hands are not stayed from laying hold upon other men's goods, whose eyes are full of greediness, and who will not labor with your own hands! But blessed are the poor who are pure in heart, . . . (D&C 56: 16-18).

The scriptural injunctions to share with the poor are so numerous that Elder Russell M. Nelson (1986) said, "Few, if any, of the Lord's instructions are stated more often, or given greater emphasis, than the commandment to care for the poor and needy." However, we also have counsel to care with understanding and wisdom. Elder Glenn L. Pace (1993) addressed the tension between the positive impact of redistribution and its negative incentives when he said, "We cannot bring everyone to the same economic level. To do so would . . . foster dependence rather than independence. . . . The solutions to poverty are extremely complex, and the balance between too much aid and not enough is very elusive. Our compassion can lead to failure if we give aid without creating independence and self-reliance in the recipient. However, there is a state of human misery below which no Latter-day Saint should descend as long as others are living in abundance. Can some of us be content living affluent life-styles while others cannot afford the chlorine to purify their water?"

3) Promoting Self reliance

A third approach to poverty alleviation combines redistribution with output growth. The redistribution is not a transfer of consumption goods but a transfer of inputs and training that enhance the productive capacity of the poor, developing in them the ability to provide for themselves. Marion G. Romney (1982) describes this as "helping people help themselves" rather than simply "helping people." I refer to this as the self-reliance approach.

Fostering self-reliance meets the demands of both productivity and allocative efficiency. If we foster the productive capacity of each person, a higher total output is possible and it would be spread widely across the population. President Howard W. Hunter (1966) said that the best way to wage a war on poverty is by fostering prosperity and self reliance.

Education is a frequent focus of self-reliance programs. In third Nephi unequal educational opportunity is presented as the basis for continual inequality between the rich and poor: "And the people began to be distinguished by ranks, according to their riches and their chances for learning; yea, some were ignorant because of their poverty, and others did receive great learning because of their riches. . . . And thus there became a great inequality in all the land" ( Book of Mormon, 3 Nephi 6:12, 14). By providing educational opportunities to those who could not afford it otherwise, BYU-Hawaii with its partner the Polynesian Cultural Center has been a vehicle for reducing such ignorance "because of . . . poverty. " Another example is the Academy for Creating Enterprise in the Philippines, a school founded by Steve and Betty Gibson to teach entrepreneurial skills to poor Filipino returned missionaries.

As critical as education is, promoting self-reliance includes far more. It also includes removing numerous other barriers to individual progress, such as limited property rights (De Soto, 2003), limited access to capital (Yunus, 1999), inferior technology and host of institutional barriers. A few examples illustrate the variety of approaches that help individuals overcome these types of obstacles.

Microfinance programs help the poor gain access to capital by providing very small loans to cover the cost of equipment and inventory needed to start a small business. A loan of $35 might double a household's income by allowing someone to buy two buckets, a pole and fill them with a first load of fish to sell. Enterprises funded by these loans have increased the welfare of 274 million individuals over the past few decades, prompting the United Nations to declare 2005 the International Year of Microcredit (Daley-Harris, 2004).

CFW Shops in Kenya offer a creative solution to distribution failures that have caused great suffering. Scott Hilstrom was stunned to learn that every day 25,000 children die from diseases that could be treated by medicines costing less than fifty cents. He verified that in Africa these preventable deaths were due not to the price of drugs, but to a flawed distribution system plagued with crime and poor security. Many of the poor could afford $.50 to save a child's life if they could just access the drugs. As a result of Scott's efforts a rapidly growing, carefully designed, micro-franchise network of pharmacies now sells a small range of drugs in Kenya. These drugs treat the diseases that cause 70-90% of childhood deaths (Child and Family, 2003). Since opening its first shop five years ago, CFW has grown to serve 240,000 patients per year and it expects to serve 2.5 million patients annually through 500 microfranchises within two years (Child and Family, 2003). These locally owned franchises are financially sustainable while providing previously unavailable medicine at affordable prices.

The Welfare and Humanitarian Program of The Church of Jesus Christ of Latter-day Saints is wide in scope, yet its varied parts all center on increasing the productivity of the poor and preventing poverty among the prosperous. From the Perpetual Education fund to wheelchair distribution to vision treatment, the focus is helping individuals overcome barriers to their own productivity.

Many of the scriptures admonishing care for the needy could refer equally as well to helping the poor become self-reliant as to redistribution of output. For example, the D&C 104:16, 18 statements regarding the poor being "exalted" and the rich being "made low" are often referred to as rationale for a redistribution of goods. President Harold B. Lee (1973) offers an interpretation of the passage that clearly supports self-reliance. President Lee (1973) defined the exalted state of the poor as being "lifted up to pride and joy to success" and then said, "The rich being made low isn't communistic; it isn't socialistic. It means that those who have leadership, who have skills, who have means, who are willing to contribute, can be put to work with the one who is in need" (1973). These photos illustrate President Lee's words. Through the humanitarian organization, Tabitha Cambodia, those with means to help, worked with this family to build a stable home that will not wash away in the rainy season, enabling a family to move toward self-reliance and beyond the necessity of rebuilding a relatively fragile dwelling each year.

One caution is that the self-reliance approach to poverty alleviation is not a quick fix to an immediate need. Developing self-reliance takes time. It can be easier to give output than to help someone develop self-reliance. Elder John A. Widtsoe (1940) spoke clearly on the necessity of focusing our charitable inclinations in ways that foster self-reliance when he said, "The need of caring for the poor, necessary and beautiful as it is, is less important than the attempt to find ways and means to enable the poor to provide for themselves, and to raise the standard of living of all to meet their natural wants properly."

Elder Russell Nelson (1986) described the process in this way, "Measures of relief are at best temporary. . . All people cannot be brought to the same living standards. . . . . To care fully for the poor, we must help the poor to change. . .[to] gain a new appreciation of who they are and of their eternal worth. Righteousness, independence, thrift, industry, and self-reliance become personal goals. . . . In time, in the Lord's "own way," the poor will no longer be poor."

When we reach that state, we will live in a world of prosperity. The self-reliance approach to poverty alleviation is not simply a treatment to offset the effects of poverty, but can lead to a state in which there is no poverty.


There is theoretical and doctrinal support for all three approaches. However, the self-reliance approach alone addresses both productivity and distribution concerns as well as promoting widespread sustenance, self-esteem and freedom. It offers the most direct hope of eradicating poverty. It also requires the best that is in us as individuals, both diligence in our efforts and generosity in providing not what is easiest to give, but what others truly need. A well-known adage of Chinese philosopher Kwan Su can be adapted to illustrate the three approaches to poverty alleviation. Kwan Su said "Give a man a fish to eat and he will have a single meal. Teach him how to fish and he will eat all his life" (cited in Hinckley, 1969). Redistributing output is giving a man a fish. It provides for his immediate need. Promoting economic growth would compare to increasing the number of fish in the sea, resulting in a greater likelihood that each man, including the unskilled and ill-equipped, would catch a fish. The self-reliance approach includes not only teaching a man to fish, but also helping him to foster the fish population while gaining access to things like nets, poles, boats, and fishing licenses. This approach leads toward prosperity for all.

When I first visited developing countries I was overwhelmed by the extent of poverty, both the degree of suffering and the massive numbers of individuals who knew no other life. How could I or anyone put a dent in it? I have learned that in the end, poverty is alleviated person by person, though programs can be a vehicle through which they travel. The issue is not one of limited global resources, but of our waste or wise use of them. President Thomas S. Monson (1988) spoke to all when he said, "Today, in lands far away . . . there are those who suffer hunger, who know want and are acquainted with poverty. Ours is the opportunity and the sacred privilege to relieve this hunger, to meet this want, to eliminate this poverty."

Speaking specifically to students at this school, Gordon B. Hinckley (1969) said, "This is one of the purposes of your education, to carry from this institution a knowledge of skills which will improve the status of people and their capacity to provide for their needs. . . . Your people need your help and your leadership in building toward a new glory, toward the making of a greater people; . . . not selfish, but generous in giving of their abundance to the less fortunate of the earth."

Thank you.


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