This post is a continuation of the previous post below. There, I talked about the lack of knowledge of the general population in the area of economics. I ended by stating that I would continue with a brief reading list. Before perusing this list, you may want to read the previous post to get an idea of where I am coming from.
I do have a few of caveats concerning this list: 1) This list is not to suggest that any and every thing said by each of these is absolutely without error – this is not a wholesale endorsement of any or every of these writers and their work 2) some of these writers are Christian of one stripe or the other, and some are not. Ultimately, I do believe that real truth is only to be found in God, its author. Therefore, real truth on earth can only be ascertained by those who faithfully believe in Him. However, this does not mean that unbelievers are not capable of getting glimpses of this truth or teaching it to others. An absolute atheist may be able to calculate the distance between the earth and sun, but have no comprehension of the maker of the earth and sun. 3) I have not myself read all of these. In fact, there are a great many that I have not. However, I am familiar enough with most of the authors to comment. I will try to comment on these issues where appropriate.
Henry Hazlitt
The first place that I send every person I can to get an overall, simple, easy to read explanation is to a book entitled Economics in One Lesson by Henry Hazlitt. (I have absolutely no idea what his religious views, if any, were) This is a relatively short work made up of numerous, relatively short and easy to understand essays on a variety of topics including some of those listed above (minimum wage laws, etc.) His "one lesson" is essentially what I have written about in the previous post, but in his words it is stated thusly: "From this aspect, therefore, the whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists of 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.
He then goes on to do just that, tracing the consequences of various policies and ideas for all groups. I can not recommend this work highly enough. If you never read another work on economics in your life, please read this one.
Clarence Carson
Another writer who is not known to the major portion of the general populace, but who is worth seeking out is Dr. Clarence B. Carson. Dr. Carson was from small town rural Alabama, received an education from Auburn University and Vanderbilt University, taught at both high school and college level, and wrote numerous books and countless articles. His main area of study was history. However, in this he developed an interest and aptitude in economics. Dr. Carson’s most important contribution to this field was, in my opinion, his book The War on the Poor. This book was written in the late 1960s during the peak of President Johnson’s "Great Society" program. Carson demonstrated, both theoretically and with empirical evidence, that all these programs aimed supposedly at helping the poorer people actually causes them harm. (Again, this is Hazlitt’s ‘one lesson’ of economics.) Thus, the so called "war on poverty" of LBJ was actually a "war on the poor." This work is mostly unknown and overlooked. I think it should be essential reading in our classrooms today. Dr. Carson also wrote a book entitled Basic Economics. This is more an overall view of economic thought with the various economic theories explained. I do believe Dr. Carson was a man of faith, though I am uncertain his denominational affiliation.
Gary North
Dr. Gary North is a controversial figure for numerous reasons. I will very briefly mention them here, but without any personal bias. Dr. North is a very conservative Christian with ties to certain minority wings within the reformed Christian right. This alone, of course, makes him at the very least a little suspect to those anywhere to the left of Jerry Falwell. However, the biggest problem within the circles he has run in seems to be in-fighting. All points theological and otherwise are firmly marked out and anyone within those circles who steps outside the lines then becomes outcast, or makes the others outside their own lines out to be the outcast. North has probably been on both sides of the "I’m the real reformed Christian" arguments.
As an example, North had strong ties with Dr. R. J. Rushdoony - probably the most important man in the circles in which he runs. He even became Dr. Rushdoony’s son in law. However, North and Rushdoony eventually had a falling out from which they apparently still had not mended at the time of Rushdoony’s death a few years back.
Dr. North is also noted for his sensationalism which is sometimes a bit over the top. He was one of the louder voices forecasting the Y2K disaster. He even personally staked his own professional reputation on his being right about the pending doom stating essentially that if he was wrong about it then no one should ever listen to anything he had to say again. Many of his followers spent tons of money preparing for the disaster. Of course he turned out to be wrong. Of course he keeps on opining on a variety of topics and of course a large contingent of his followers were unswayed by his inaccuracy.
Although I have never met nor spoken to the man, I know several who have had direct contact with him. My understanding is that there can be a lack of Christian love, humility and charity in his personality.
All the above is simply expanding on my caveats that I started with. I know Dr. North is a Christian and I do not question the sincerity or orthodoxy of his faith for one minute. However, I would be very uncomfortable totally aligning myself with his name.
That said, Dr. North has done a tremendous amount of work in the area of Biblical economics (which seems to be his area of special expertise.) If we ignore him because of the above stated reasons we may be missing out on some thoughtful insight. Some of Dr. North’s books include his being publisher of a series of books called Biblical Blueprints. In addition to being the publisher, he was the author of several of the volumes. Pertinent titles in this series include Inherit the Earth: Biblical Principals in Economics; Honest Money:Biblical Principals of Money and Banking; In the Shadow of Plenty; Biblical Principals of Welfare and Poverty (Written by George Grant). In addition to this series, Dr. North has written An Introduction to Christian Economics and Coined Freedom: Gold in the Age of the Bureaucrats. Finally, Dr. North’s lifelong project has been to produce an economic commentary on every book of the Bible. This is a very ambitious project and will likely not be completed. However, he has produced several such commentaries. Dr. North also writes numerous newsletters and has various websites he either runs or contributes to.
I have read several of his works and find them to be solid in the area of economics and would recommend them. This is not a wholesale endorsement of everything he has ever said, nor even of the theories of economics laid out in these books. However as part of forming an overall understanding of economics from a Christian perspective, Dr. North is very valuable.
I would absolutely recommend Honest Money as being almost as indispensable as Hazlitt’s work.
David Chilton
David Chilton was a theological writer who produced one of the greatest comentaries on the book of Revelation ever written. He was also for a time closely associated with Dr. North. (I think they ended in a theological squabble.) While he was working with Dr. North, Chilton produced a book entitled Productive Christians in an Age of Guilt Manipulators. This book was a biting, somewhat sarcastic response to a book published previously by Ronald Sider entitled Rich Christians in and Age of Hunger. Sider’s thesis was that it is a disgrace that there are Christians (mostly American) who are rich while the world is full of poverty. His solution, of course, was government programs. He attempted to use scripture to justify this position stating that God is always on the side of the poor and against the rich. Chilton demolishes this thesis biblically.
Because of his sometimes caustic wit, this book is often looked down upon as negative. However, if one can read through the biting humor, one can learn quite a bit about biblical economics here. Chilton’s book is not anti-poor, nor anti-charity. It is anti-forced governmental solutions to these problems. If you are somewhat sympathetic to his views, this will be one of the most entertaining books on economics you will ever read. If you are not sympathetic to his views, I would not recommend reading this until you have had a full cardiac exam.
Ludwig von Mises
Mises was, as far as I know, not a Christian. I am not even sure I understand exactly where he is coming from. Mises did not necessarily see some form of moral correctness or superiority of the free market, honest money system. He simply saw very clearly that the outcomes of this system were always superior to the outcomes of any form of planned or managed economy. On the one hand, therefore, he wrote from an empirical standpoint. We can study the theories behind the various economic systems and come to definite conclusions. We can then study these systems in practice and see these outcomes.
On the other hand, Mises was, correctly I believe, doubtful of the ability of the economist’s ability to empirically study a specific effect of a specific economic activity. That is because unlike with the physical sciences, economic factors can not be isolated in a laboratory type setting. We can not, for instance, hold all things constant while varying minimum wage, then measure the effects of the minimum wage. This is impossible. The economy is dynamic, not static. The whole economy is constantly changing. How can we therefore, amidst all this change, measure the effects of minimum wage? However, minimum wage can be shown very definitely in theory to have a negative impact. We can look at the overall economic policy of a nation and determine if it is sound or not theoretically. We can then look and see if our predicted effects are generally coming about in the economy.
The system of economics that Mises is associated with is called the Austrian School of Economics. This line of thought is not necessarily religious. However, the economic theories on paper are quite similar to what some see as the biblical system of economics (sound money, limited government intervention, etc) Because of this, Mises and his crowd were known to at least cross paths with Rushdoony, North, and their crowd.
Mises wrote tremendous volumes. I mentioned several of them previously. Human Action, The Anti-Capitalistic Mentality; Socialism; The Theory of Money and Credit are among his most widely read works. Much can be learned about Mises and the Austrian School from the Ludwig von Mises Institute located in Auburn, Alabama. They also have a website. It may be worth researching.
Murray Rothbard
Rothbard was a student of Mises. He was not a Christian, though apparently he had a great deal of respect for the Christian tradition of the West. Of interest are his book America’s Great Depression and his magnum opus Man, Economy, and State. He wrote many others as well as countless articles and essays.
His America’s Great Depression absolutely demolishes the myth that the depression was caused by the free market and that the nation was rescued by government intervention. The actual truth is that the depression was caused by government intervention, made longer and deeper by further government intervention, then masked by yet further government intervention which continues to this day.
Other writers who may be of varying interests include Dr. George Grant, Thomas Sowell, Llewellyn Rockwell and others. Do some internet searches. Also, the standard historical read for economics students would be Adam Smith’s The Wealth of Nations (1776).
Generally speaking then, I would recommend the following:
Start with Hazlitt to get a simple, easy to read, easy to understand introduction into general economic thought. Next read Carson’s Basic Economics to get a broader, overall view of the study of economics, followed by his The War on the Poor. From there, if you are still interested, read some of North, et al Biblical Blueprints series, at least the ones that are economic in nature. Particularly Honest Money is a must. From there, go where you may, including possibly some of the others listed above, or others I have not listed.
Tuesday, May 6, 2008
The Dismal State of Economic Knowledge
I guess about half of what I have posted on here is about how I do not have time to post!!! Unfortunately, I don’t. I have attempted start regular posts on a variety of topics (music, etc.) but have been unable to do anything regular at all. So, I’ll just give up any pretense at regular posting, and just come and go as I can!
The one thing that the nation needs is a religious revival. Every area of life is corrupted by sin, and can only be redeemed by true religion. It has happened before, both on this continent and abroad. It can happen again. If it does, we can expect to see every area of life show signs of redemption. If it doesn’t….well….I’m afraid to speculate.
Religion, faith, God, etc. encompass every single area of life. One area of life that definitely needs redeeming right now is education. Specifically, I am thinking of the level of knowledge and understanding by the general public of economic issues.
In a way, economics is like religion. That is because, like religion, it is universal. That is, economics covers every area of life as well. Every thing you do or do not do, every decision you make, all things in all areas of your life are really ‘economic.’ And since they are done under the One True and Living God who created and governs all things, they are all ‘religious.’ It might seem that if religion is all encompassing, and economics is all encompassing, then either 1) religion and economics are the same thing or 2) religion and economics are competing things. However, this is not necessarily so. To perhaps misuse the amended rules in Orwell’s Animal Farm that stated that while all animals are equal, some are more equal than others, we can argue that while religion and economics are both universal, religion is more universal than economics. Economics is ‘universal’ in that every thing you do is economic or has economic ramifications. However, it does not get to the heart of the meaning and purpose in life – not to mention life’s origins and conclusions. Religion is more broadly universal. But, in relation to our day to day life, what we see, do, act upon, etc. economics can and should be considered universal.
The idea that economics, properly viewed, is in this sense universal, was apparently the view of Ludwig von Mises, one of the leading economists of the twentieth century. While he wrote voluminously on the topic, with such book titles as The Theory of Money and Credit, Socialism, The Anti-Capitalistic Mentality, etc., his most famous work is his overall thesis on economics entitled Human Action. What is economics? Broadly speaking, the study of economics can be defined as the study of human action. Broadly speaking, then, using the term "the economy" is simply a way of speaking about the totality of all human activity. When we say that America’s economy is strong, what we are saying is that by and large, the people’s use of their time and talents is being utilized in a way that is generally beneficial to all. (there are always exceptions, of course) When we say that America’s economy is weak or struggling, we are really saying that people’s use of their time and talents is not being efficiently harnessed for the good of all. This may be for any number of reasons. However, I do believe that if our citizens had a better overall understanding of economics, then by necessity our economy would tend to be strong, rather than struggling.
I know when you think of the word ‘economics’ the first word that pops into your head is ‘money.’ Even Mises of Human Action fame, also wrote, as we said, The Theory of Money and Credit. But, ask yourself, what is money? The answer is that money is really only a medium of exchange. Money facilitates ‘human action.’ It is nothing more, and nothing less. Money is one of the means utilized by humans to allow themselves the most productive use of their time and talents, by dividing their time and talents into usable portions (e.g. dollars) to be traded to others for useful portions of their time and talents.
While every single thing we do is economic, the level of understanding of economics in twenty-first century America is disgraceful. I can not think of a topic that more people know less about than economics, while at the same time people think they know a lot about it. Yet, (other than religion) it is the most widely relevant subject there is.
It is at least partly because of this abysmal understanding of economics that our nation’s ‘economy’ is going in the tank. People do not understand the basic principle of what money is, where it comes from, and how it operates. They do not understand that as far as humans can control such outcomes (which is only so far), as a general rule those who have the most money are the ones who have the most talent and energy, or have used their level of talent and energy in the most useful and productive ways.
They also do not understand (and this is vitally important) that activity by the government, aimed at supposedly improving the ‘economy’, have never and can never actually work. Two caveats are due here. First, the economic interests and security of a people is aided by government when government sticks to what it is suppose to do. Therefore, the preceding comment is not to be taken as a call to anarchy. Property and liberty are at great jeopardy when there is no government. In fact, protecting life, liberty, and property (or even more broadly, the pursuit of happiness) is in fact the very purpose of government. When government does this, and only this, a nation can prosper. It is when government oversteps its boundary lines and tries to do all sorts of things above and beyond this, even including ‘spurring the economy,’ that real actual harm is done to the economic interests of the nation.
The second caveat is that often times what government does ‘for’ the economy does have an immediately obvious and observable positive impact. However, this is usually discriminatory (it ‘benefits’ one group of people at the expense of others), and is always temporary. The end result is always that more harm is done to the whole of society than could ever be justified by the temporary gain by a few. In the long run too, it is usually the early ‘beneficiaries’ who ultimately are harmed the most. And of course, this is usually the poorer among us.
To consider some examples of the above think of government action such as welfare payments, minimum wage laws, rent controls, price controls, public works projects, work week regulations, tariffs to protect industry, pro union legislation, windfall profits tax, and on and on. These are all economic intrusions by the government, are all aimed either at helping the lower classes or conversely ‘soaking’ the rich. They all can have immediate, obvious benefits to some group (I make $5 an hour and the government magically makes $7 an hour the legal ‘minimum’ wage – I get a $2 an hour, or $4160 per year raise – great, right???). However, all of these intrusions in the end are impossible to accomplish, hurt the overall economic system of the nation, and in the end, hurt the very people they intended to help. (Consider the worker who got laid off because he was only worth $5 an hour to his company and not $7)
What inevitably happens though, and this is why I believe our economy is possibly on the brink of disaster, is that our leaders pass such laws as these and more; they may or may not have a temporary, limited positive impact; then the longer term, wider impact is negative – economic indicators grow worse. The response of our leaders is always the same. It is not to repeal the damaging laws. Instead it is to pass yet more of the same. This does two things. First, it may (or may not) ‘spur’ the economy, or some portion thereof temporarily. Secondly, though, it makes the situation even more precarious. Economic indicators eventually take a down turn again, and the government responds with more of the same.
The long term impact of this is that of visibly perceived wealth and greatness of a nation, propped up on a horribly shoddy foundation. To use religiously charged language, it is a house built upon the sand. You know what happens to such houses? Eventually they fall, and "great is that fall."
In essence our economy is stacked up on phony money generated by phony government action. To put it in individual terms that are easy to understand, consider that you or I could live an apparently wonderful prosperous life if we had several credit cards with no or very high limits. We could spend and spend. We could also finance fancy cars and large homes, high class vacations, etc. To all the world we look rich. But one day, citi and Capital One will come calling, as will the auto financiers and the mortgage company. If we live like that there are only three possible outcomes: 1) we fall and fall hard 2) we repent of our economic sin, tighten our belt, sell off what we can and pay down our debts and begin living responsibly if it is not too late or 3) we get lucky and die before the fall, leaving it to our children and grandchildren to pick up the pieces.
Our politicians and their in-house economists are banking on number three. One of the leading economists of the last century even admitted it. When asked about the long term effects of his economic plans, John Maynard Keynes stated, "In the long run, we are all dead." That is the type of people who are planning and running our economy.
In summary, I believe our nation needs first and foremost a religious revival. Secondly, and on the heels of this revival, we need a revival of knowledge and understanding – especially in the universal area of human action known as economics. Until this happens, we will continue to get more of the same and this skyscraper built on sand will eventually fall.
To perhaps prime the pump a bit, the following post will contain a few suggested readings.
The one thing that the nation needs is a religious revival. Every area of life is corrupted by sin, and can only be redeemed by true religion. It has happened before, both on this continent and abroad. It can happen again. If it does, we can expect to see every area of life show signs of redemption. If it doesn’t….well….I’m afraid to speculate.
Religion, faith, God, etc. encompass every single area of life. One area of life that definitely needs redeeming right now is education. Specifically, I am thinking of the level of knowledge and understanding by the general public of economic issues.
In a way, economics is like religion. That is because, like religion, it is universal. That is, economics covers every area of life as well. Every thing you do or do not do, every decision you make, all things in all areas of your life are really ‘economic.’ And since they are done under the One True and Living God who created and governs all things, they are all ‘religious.’ It might seem that if religion is all encompassing, and economics is all encompassing, then either 1) religion and economics are the same thing or 2) religion and economics are competing things. However, this is not necessarily so. To perhaps misuse the amended rules in Orwell’s Animal Farm that stated that while all animals are equal, some are more equal than others, we can argue that while religion and economics are both universal, religion is more universal than economics. Economics is ‘universal’ in that every thing you do is economic or has economic ramifications. However, it does not get to the heart of the meaning and purpose in life – not to mention life’s origins and conclusions. Religion is more broadly universal. But, in relation to our day to day life, what we see, do, act upon, etc. economics can and should be considered universal.
The idea that economics, properly viewed, is in this sense universal, was apparently the view of Ludwig von Mises, one of the leading economists of the twentieth century. While he wrote voluminously on the topic, with such book titles as The Theory of Money and Credit, Socialism, The Anti-Capitalistic Mentality, etc., his most famous work is his overall thesis on economics entitled Human Action. What is economics? Broadly speaking, the study of economics can be defined as the study of human action. Broadly speaking, then, using the term "the economy" is simply a way of speaking about the totality of all human activity. When we say that America’s economy is strong, what we are saying is that by and large, the people’s use of their time and talents is being utilized in a way that is generally beneficial to all. (there are always exceptions, of course) When we say that America’s economy is weak or struggling, we are really saying that people’s use of their time and talents is not being efficiently harnessed for the good of all. This may be for any number of reasons. However, I do believe that if our citizens had a better overall understanding of economics, then by necessity our economy would tend to be strong, rather than struggling.
I know when you think of the word ‘economics’ the first word that pops into your head is ‘money.’ Even Mises of Human Action fame, also wrote, as we said, The Theory of Money and Credit. But, ask yourself, what is money? The answer is that money is really only a medium of exchange. Money facilitates ‘human action.’ It is nothing more, and nothing less. Money is one of the means utilized by humans to allow themselves the most productive use of their time and talents, by dividing their time and talents into usable portions (e.g. dollars) to be traded to others for useful portions of their time and talents.
While every single thing we do is economic, the level of understanding of economics in twenty-first century America is disgraceful. I can not think of a topic that more people know less about than economics, while at the same time people think they know a lot about it. Yet, (other than religion) it is the most widely relevant subject there is.
It is at least partly because of this abysmal understanding of economics that our nation’s ‘economy’ is going in the tank. People do not understand the basic principle of what money is, where it comes from, and how it operates. They do not understand that as far as humans can control such outcomes (which is only so far), as a general rule those who have the most money are the ones who have the most talent and energy, or have used their level of talent and energy in the most useful and productive ways.
They also do not understand (and this is vitally important) that activity by the government, aimed at supposedly improving the ‘economy’, have never and can never actually work. Two caveats are due here. First, the economic interests and security of a people is aided by government when government sticks to what it is suppose to do. Therefore, the preceding comment is not to be taken as a call to anarchy. Property and liberty are at great jeopardy when there is no government. In fact, protecting life, liberty, and property (or even more broadly, the pursuit of happiness) is in fact the very purpose of government. When government does this, and only this, a nation can prosper. It is when government oversteps its boundary lines and tries to do all sorts of things above and beyond this, even including ‘spurring the economy,’ that real actual harm is done to the economic interests of the nation.
The second caveat is that often times what government does ‘for’ the economy does have an immediately obvious and observable positive impact. However, this is usually discriminatory (it ‘benefits’ one group of people at the expense of others), and is always temporary. The end result is always that more harm is done to the whole of society than could ever be justified by the temporary gain by a few. In the long run too, it is usually the early ‘beneficiaries’ who ultimately are harmed the most. And of course, this is usually the poorer among us.
To consider some examples of the above think of government action such as welfare payments, minimum wage laws, rent controls, price controls, public works projects, work week regulations, tariffs to protect industry, pro union legislation, windfall profits tax, and on and on. These are all economic intrusions by the government, are all aimed either at helping the lower classes or conversely ‘soaking’ the rich. They all can have immediate, obvious benefits to some group (I make $5 an hour and the government magically makes $7 an hour the legal ‘minimum’ wage – I get a $2 an hour, or $4160 per year raise – great, right???). However, all of these intrusions in the end are impossible to accomplish, hurt the overall economic system of the nation, and in the end, hurt the very people they intended to help. (Consider the worker who got laid off because he was only worth $5 an hour to his company and not $7)
What inevitably happens though, and this is why I believe our economy is possibly on the brink of disaster, is that our leaders pass such laws as these and more; they may or may not have a temporary, limited positive impact; then the longer term, wider impact is negative – economic indicators grow worse. The response of our leaders is always the same. It is not to repeal the damaging laws. Instead it is to pass yet more of the same. This does two things. First, it may (or may not) ‘spur’ the economy, or some portion thereof temporarily. Secondly, though, it makes the situation even more precarious. Economic indicators eventually take a down turn again, and the government responds with more of the same.
The long term impact of this is that of visibly perceived wealth and greatness of a nation, propped up on a horribly shoddy foundation. To use religiously charged language, it is a house built upon the sand. You know what happens to such houses? Eventually they fall, and "great is that fall."
In essence our economy is stacked up on phony money generated by phony government action. To put it in individual terms that are easy to understand, consider that you or I could live an apparently wonderful prosperous life if we had several credit cards with no or very high limits. We could spend and spend. We could also finance fancy cars and large homes, high class vacations, etc. To all the world we look rich. But one day, citi and Capital One will come calling, as will the auto financiers and the mortgage company. If we live like that there are only three possible outcomes: 1) we fall and fall hard 2) we repent of our economic sin, tighten our belt, sell off what we can and pay down our debts and begin living responsibly if it is not too late or 3) we get lucky and die before the fall, leaving it to our children and grandchildren to pick up the pieces.
Our politicians and their in-house economists are banking on number three. One of the leading economists of the last century even admitted it. When asked about the long term effects of his economic plans, John Maynard Keynes stated, "In the long run, we are all dead." That is the type of people who are planning and running our economy.
In summary, I believe our nation needs first and foremost a religious revival. Secondly, and on the heels of this revival, we need a revival of knowledge and understanding – especially in the universal area of human action known as economics. Until this happens, we will continue to get more of the same and this skyscraper built on sand will eventually fall.
To perhaps prime the pump a bit, the following post will contain a few suggested readings.
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