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Evangelicals and Economics

What does the field of economics have to offer evangelicals? The embrace of economics should be more than merely an excuse to put forward naive views about public policy. Instead, evangelicals should embrace the “economic way of thinking”–a rigorous study of the benefits and costs of personal decisions and public policy. That said, the study of economics is frequently limited in scope; thus, evangelicals would do well to learn the economic way of thinking, using a biblical worldview and applying it to topics of biblical concern.

Positive Versus Normative Economics

The distinction between “positive” and “normative” economics is one of the opening topics in most economics textbooks. Positive economics is meant to represent the “what is” portion of economic analysis; normative economics is meant to represent the “what should be” part. Economists make this distinction for a number of reasons. To name two: It is a way to highlight the more scientific (positive) aspects of the field, and it is a useful framework for distinguishing between relatively objective facts and relatively subjective opinions based on those facts. In some circles, the boundary between the two is assumed to be so strict that the field of economics stops where the normative begins. In this view, when one moves from policy analysis to policy prescriptions, one ceases to be an economist and instead becomes a public policy analyst. Although there is some overlap between the two categories, it still serves as a useful dichotomy.

The primary task of positive economics is to determine cause and effect and to enumerate benefits and costs. On the surface, this would appear to be elementary. But, in fact, determining important secondary effects is rather more challenging than one might expect. My favorite example of this is our country’s sugar policies. The government currently keeps the price of sugar artificially high and restricts the foreign competitors of domestic sugar growers with import quotas. The result is a high price for sugar–good news for producers and the politicians they support, but bad news for consumers.

There are less obvious implications as well. First, the term “consumers” is broader than one might first imagine. In addition to higher prices for bags of sugar, consumers are hurt in that any product with sugar in it will be more expensive. Moreover, any firm that uses sugar as an input is harmed and often put at a competitive disadvantage to foreign producers who can obtain sugar at the world price. Second, although jobs are protected in the sugar industry, more jobs are destroyed elsewhere. Those who use sugar as an input may reduce output, shut down, or move overseas. Since consumers have less purchasing power, they will create fewer jobs than they would have otherwise. Third, this policy amounts to a series of wealth transfers–between consumers and producers, and between producers and politicians. The wealth transfer also indicates that no jobs are created on net. In fact, jobs are probably destroyed as we subsidize a relatively inefficient industry. Fourth, corn growers benefit from higher sugar prices since demand for their product–corn syrup, a substitute for relatively expensive sugar–has increased. In fact, corn growers give money to politicians to encourage higher sugar prices. Fifth, and most important, the poor are more greatly harmed by this arrangement since they spend a disproportionate amount of their budgets on higher priced food.

In sum, there are many subtle but important implications to consider about any public policy. Economics seeks to identify such important implications and to educate others in doing more rigorous analysis of public policy. Anyone who advocates policies without knowing its full range of costs is ignorant; anyone who advocates policies knowing but not articulating these costs is disingenuous. Neither is an appropriate option for an economist–or a Christian.

The Role of Human Nature

As a social science, positive economics is also interested in behavioral changes–in particular, those that respond to changes in economic variables and public policy. As such, it necessarily draws inferences about behavioral changes from observations about how the world functions and from presuppositions about human nature.

For example, unemployment insurance (ui) serves to provide financial support for people who are between jobs. The efficiency argument for this policy is that it is sub-optimal for highly skilled people to be forced to take the first job made available to them (such as an engineer delivering pizzas). The efficiency argument against this policy is that some people will take advantage of the program. In a word, some will treat ui as a safety net; others will treat it as a hammock. Some of the qualitative effects of this program are not debatable–for better or worse, subsidizing unemployed people will increase the frequency and duration of unemployment periods–but it turns out that the quantitative impact of this policy is a function of human nature. It then follows that one’s normative views about ui are influenced by an understanding of the qualitative effects and a prediction of the size of the quantitative effects–as well as normative beliefs about human nature, the desirability of the end, and the appropriateness of the means to the end.

In a more general sense, another example is the field of Public Choice economics. Among other things, this school of thought studies the behavior of agents in political markets. In the early 1960s, it began to apply the observation that people act in their “self-interests.” As such, its proponents brought into question the dominant paradigm that public- sector officials typically act in the best interests of society. Instead, we now recognize that those in political markets may pursue their own agendas and, in fact, may harm the general welfare. The upshot: the possible, if not probable, divorce between the theory and practice of government activism.

The bottom line is that economists study how people behave in certain settings and draw conclusions based on their assumptions about human nature. Christians also have a keen interest in this topic–both theologically and practically. Likewise, our beliefs about sin consistently and vitally inform our views on public policy.

Going Beyond Economics

All in all, economists tend to avoid normative prescriptions. However, by definition, their analysis has implications for the policies they would recommend. Given that either the benefits or costs of public policies tend to be relatively subtle, the economist who brings them to light will influence normative opinion and debate. In particular, with respect to government policy, benefits tend to be obvious while costs are relatively subtle. Moreover, public proponents of activism tend to trumpet benefits while downplaying or ignoring costs. As such, when economists shine a brighter light on the questions at hand, they tend to bring a relatively sober, and often unwelcome, analysis of the potential efficacy of government activism.

Evangelical economists certainly have an interest in “the economic way of thinking.” In general, all evangelicals should as well. In the pursuit of loving God “with all of our minds,” it is vitally important to think through social problems, personal decisions, and policy prescriptions thoroughly. In other words, evangelicals should learn to think as economists do.

All of that said, evangelicals bring four variations to this theme. First, we have a more consistent and explicit concern about the impact of human nature than the standard economist. Second, we have a different range of general interests. In addition to public policy, we are very much interested in the costs and benefits of personal decisions–of sin and holiness. And in analyzing public policy, we are more likely to focus on non-economic factors such as stigma, culture, tradition, and most important, the policy’s impact on people’s eternal destiny. This is particularly relevant in trying to help the poor, since “help” should be defined more broadly than merely redistributing income. Third, we probably dig more narrowly and deeply in the realm of important public policy issues. We are concerned with fewer issues, but are presumably more passionate about those issues (e.g., dealing with poverty, fighting the oppression of others, good stewardship of the environment).

Fourth, and most important, evangelicals are fundamentally concerned about the more normative aspects of economics and public policy. In particular, over and above efficiency and effectiveness, we are concerned about whether the proposed means to the desired ends are appropriate. As such, Christians bring normative beliefs to bear–from culture, tradition, and hopefully, from Scripture–on their conclusions. For the rest of the essay, I will focus on this last issue: Are the various tools of government appropriate from a biblical worldview?

Means and Ends

Christians can make two mistakes in choosing godly goals: to be lukewarm toward that which God would have us be passionate (e.g., defending the rights of others and the integrity of the Gospel) and to be passionate about that which one should avoid (e.g., gluttony, sexual immorality). In a sense, these can be divided into sins of omission and commission. We typically focus on the latter because they are easier to detect in others, if not in ourselves–but both are important.

That said, Scripture is clear that choosing appropriate means to godly goals is also crucial. For example, God told Abraham that he would have a son. After many years had passed, Abraham reasoned correctly that God had not specified the mother of the promised child and then incorrectly took matters into his own hands, agreeing to Sarah’s plan for him to father a child through Hagar. Thirteen years later, Abraham was told by God that Sarah would give birth to the promised child, Isaac, and Abraham finally realized the error of his earlier choice. Another vivid example is King Saul who, instead of completely destroying the Amalekites as God had commanded, saved the best of what God had condemned–to sacrifice it to God! As a result, Saul was condemned for his rebellion and arrogance, and he lost his kingdom to David. Both Abraham and Saul used reasonable logic and had the best of intentions, but, apparently, earthly wisdom and reasonable motives are not enough. In a biblical worldview, the means do not justify the ends.

As we noted earlier, economists try to avoid such normative issues. Secular policy analysts often fail to recognize the means/ends question at all. Sadly, questions about appropriate means are usually omitted in the policy analysis of Christians as well. Is it all right to tax the rich to give to the poor? To tax the poor to give to the rich? To tax the industrious to give to the lazy? Why or why not? Will the policies be effective? Are the desired outcomes godly? Is the method–government’s forcible redistribution of wealth–appropriate? The questions are often unanswered–or even unasked. But a biblical worldview calls Christians to question the appropriateness of the means and the ends, as well as the effectiveness of policy proposals. Of course, the applications go well beyond taxation. Returning to our country’s sugar policies, is it appropriate to advocate the use of government restrictions to redistribute income from various groups to sugar farmers?

Let’s apply these questions to the favorite political topics of the so-called religious Left and Right. Aside from the efficacy of governmental welfare efforts, should a Christian advocate the use of force by government to redistribute wealth from one party to another? Aside from the ability of the government to regulate behavior in social morality issues, is it appropriate for Christians to advocate the use of force to reduce the freedom of others engaging in voluntary behaviors? (And if the answer is yes, at what point should the government quit reducing freedoms?)

In fact, given that the government uses force, the burden of proof should be placed on those Christians who want to make the case for government activism. If one looks at God’s character and plan, it is clear that He has designed us to have immense free will. In what cases is it appropriate for Christians to advocate reductions in that capacity? If one studies the substance and style of Christ’s ministry, it is difficult to make a positive case for advocacy of government activism by Christians. Are the tools of government activism Christ-like?

Although developing a formal case is well beyond the scope of this essay, it turns out that it is very difficult to make a biblical case for Christian advocacy of government activism except in cases where the government is using its monopoly on legitimate force to protect those whose rights are being directly violated. It is in these matters of justice–arguing for another’s rights, preventing one from harming another–that we can find the strongest biblical foundation, shine the brightest light in the world, and bring the most glory to God.

A Consistent Christian Philosophy of Government

As evangelicals, our worldview begins with God and His word. We are responsible for understanding Him better, loving Him and others more effectively, and understanding the relevance of His word for our daily lives. This includes the study of politics and calls to government activism. Thus, an ad hoc embrace of government activism is not sufficient; we should have a consistent Christian philosophy of government. That said, the field of economics has much to offer. The call here is to embrace the best of both worlds. Evangelicals should learn to think as do economists on positive issues, understanding the intricacies of the qualitative and quantitative impact of policy proposals, and we should rigorously and consistently apply scriptural principles to evaluate means and ends in order to form our normative conclusions.