CultureWatch

Bill Muehlenberg's commentary on issues of the day…

1. Aaron Downs 12.10.11 / 9am

   Thanks for this Bill. I have been thinking that I need to establish a stronger economic understanding and you’ve provided a gold mine.

   Aaron Downs
2. John Ballantyne 12.10.11 / 10am

   Hi Bill,

   Thanks for providing a great list of good reading on economics.

   Among the Christian pro-free-market titles I would add the following:

   Wilhelm Röpke, The Social Crisis of Our Time [1942] (London: William Hodge, 1950).

   Wilhelm Röpke, A Humane Economy: The Social Framework of the Free Market [1957] (Wilmington, Delaware: ISI Books, 1998).

   Austin Hill and Scott Rae, The Virtues of Capitalism: A Moral Case for Free Markets (Chicago: Northfield Publishing, 2010).

   Ian Harper, Economics for Life: An Economist Reflects on the Meaning of Life, Money and What Really Matters (Melbourne: Acorn Press, 2011).

   Regards,

   John Ballantyne, Melbourne.
3. Murray R. Adamthwaite 12.10.11 / 10am

   Thanks Bill.
   “These protestors in the US appear to not even know what they are protesting about in particular, and seem to be clueless about how the economy functions in general.”
   I think that you could say that about astro-turfed leftist protesters in general. I have known some similarly clueless far-left ideologues in my own experience.

   About capitalism:
   The minds of many, including Christians, have been poisoned by the ideas of Karl Marx and his anti-capitalist rhetoric, i.e. that disproportionate possession of wealth is somehow unjust, and it is the task of the state to rectify this in justice by confiscation of the oversupply in the hands of some and redistribution of the same to the poorer classes – via coercive taxation. Hence the “social justice” rhetoric, and “fleece the rich” taxation schemes we hear about so often from leftist circles.

   Now the Bible knows nothing of such powers given to the state, and such a policy is nothing short of legalised theft. On the contrary, the Bible teaches generosity to the poor on the part of the rich; see Psa.41:1; Psa.112:5; Prov.14:21; 19:17; 22:9; Matt.25:34-39 etc.

   And as for making money work in order to gain more money, the Parable of the Talents teaches quite a few things about Christian use of money, none of which is the least bit consistent with socialism/statism. Let it be clear: the parable deals with money, not talents in the sense of abilities, a modern misconception. The talent was the largest unit of weight for precious and semi-precious metals in the ancient world, about 30 kg. The talents represent, as I see it, the total income for a working life for each respective recipient: the man with five is the very wealthy person; the second the well-to-do, and the last the man on struggle street. The first two put their money to work and gain more; the last deems such ventures too risky and hides the talent away. The point of the parable is that what we gain is assessed as to how it benefits the Lord and Master, Jesus Christ. It is not how much money we possess that incurs condemnation, as if mere possession of wealth is a sin (a socialist falsehood); but how we use that wealth for Christ and His Kingdom is the criterion by which we stand or fall.

   Biographically speaking, some good examples of wealthy capitalists putting their money to good use for the Lord are Henry J. Heinz (1844-1919), founder of Heinz 57 Varieties; and Fletcher Jones in Warrnambool, both devout Christian men. I don’t know if there any full-scale biographies of these men, but their stories deserve to be told.

   Murray R. Adamthwaite
4. Simon Kennedy 12.10.11 / 11am

   Not totally on topic, but not off it either. Christians and non-Christians alike should check out Poverty Cure. It’s a campaign to fight poverty with freedom, entrepreneurship and wealth creation. Sounds excellent to me!

   www.povertycure.org/

   Simon Kennedy
5. Damien Spillane 12.10.11 / 5pm

   Many churches in Oz have fallen for the Fair Trade sham.

   On this see Victor Claar’s “Fair Trade: Its Prospects as a Poverty Solution”.

   secure.acton.org/BookShoppe/main/title.php?id=691

   Damien Spillane
6. Daniel 12.10.11 / 8pm

   Hi Bill
   Yes thanks for these recommendations and as I said a little while ago thanks opening my eyes to a lot of things. To be bluntly honest until recently I fell into the category, of the fool. In more ways than one, but I’ll just mention my ideas of economic structure and how thinks work for now. I found Thomas Sowell way of explaining complex things easy for me to understand, and I am surely pleased for the first time to even slightly grasp how the left and right view, who should have what and how much of it they allowed.
   Just the beginning.
   Daniel Kempton
7. Frank Norros 13.10.11 / 12am

   Hello Bill,
   This list has some intersting books that I will chase up and read. However, I am surprised that The General Theory of Employment, Interest and Money by John Maynard Keynes did not make the list. Keynes propounded a new approach to the determination of the level of economic activity, the problems of unemployment, the causes of inflation, and strategies for budgetary policy. Although he clearly saw a role for government intervention, it was mainly as a regulator. Keynes strongly recognised the need for individual effort and the impact of personal spending and savings. Although his faith in fiscal economics was not as great and Milton Friedman’s, his work nevertheless promotes a capitalist market. Keynes represented a turning point to a new economic approach that largely brought the European governments around to a new mode of addressing the then great depression of the 1930′s. Is there any reason why this work didn’t make the list? Although I do grant that it was published in the 1930′s and uses language some modern readers would be challenged with; and it was also written for fellow economists and not the general public, so admittedly it wouldn’t be to everyones liking.

   Frank Norros
8. Bill Muehlenberg 13.10.11 / 7am

   Thanks Frank

   Was Keynes a famous, influential and noted economist? Yes. Was he a proponent of free market economics and limited government interference? No, which is of course why I did not include him here. Keynsian economics is really the problem, not the solution.

   Try here for starters: www.quadrant.org.au/blogs/qed/2009/09/the-god-who-failed

   Bill Muehlenberg, CultureWatch
9. Steve Swartz 13.10.11 / 8am

   Hi Bill, glad to see that Thomas Sowell gets several mentions. Much of his writing can be Googled and read for free. May I suggest also various works by both R J Rushdoony and Gary North. The former made a career championing the application of Biblical law and principles to all areas of life, not the least of which is economics. The two key laws are the prohibition of theft and the prohibition of covetousness, both of which are prime forces behind present-day economics and governmental policy (not just in Australia or the United States, mind you).

   North writes regularly on the application of the Bible to economic matters; in fact he has been working for a number of years on an economic commentary of the Bible.

   Finally, anyone interesting in the subject of your blog today should read David Chilton’s book, Productive Christians in an Age of Guilt-Manipulators (1981), this being an extended critique of Ron Sider’s 1987 book Rich Christians in an Age of Hunger.

   Now, to the barricades!!!

   Steve Swartz
10. John Flynn 13.10.11 / 11am

    From the Catholic perspective a good place to start for a summary of Church teaching on social and economic issues is the Compendium of the Social Doctrine of the Church. It also has a very detailed index. An online version is available here – www.vatican.va/roman_curia/pontifical_councils/justpeace/documents/rc_pc_justpeace_doc_20060526_compendio-dott-soc_en.html

    John Flynn
11. Bill Muehlenberg 13.10.11 / 12pm

    Thanks John

    Two Catholics I feature in my above list are Novak and Richards.

    Bill Muehlenberg, CultureWatch
12. Daniel 13.10.11 / 1pm

    Murray
    Actually Talents = abilities makes more sense, to me. Because the parable is open to interpretation as far as I can see. God gives you something you can do, so do it for god. And when the people say oh my gosh such talent, we say, thanks be to God.
    Daniel Kempton
13. Bob Day 13.10.11 / 1pm

    The origins of the global financial crisis can be traced back to Franklin D Roosevelt and his National Housing Act of 1934. Basically, this Act began the practice of lending to minority groups and people on low incomes. The market responded with a practice called ‘red-lining’ whereby certain areas on maps were identified as being ‘high risk’. This then led to more government intervention with the enactment of the Fair Housing Act of 1968 and subsequently Jimmy Carter’s 1977 Community Reinvestment Act.
    After this came Bill Clinton’s Community Development Financial Institutions Act and low Income Housing Tax Credit program of 1994 in which the Clinton Administration pressured the banks and mortgage companies to relax their lending criteria so that minority groups and those on low incomes could buy houses. At one point, 40% of financial institutions’ loans were to low income people.
    What caused the catastrophe we saw in 2008/9 however was the added component of ‘new urbanism’ (urban densification) or ‘smart growth’ in many of the large housing markets of the US – California and Florida in particular, and government decreed ‘non-recourse loans’ or ‘jingle mail’. If a property dropped in value below the amount owing to the bank, the homeowner could simply walk away from the property without being liable for the losses. The owner simply mails the keys to the bank, hence the term ‘jingle mail’.
    During the 1990s house prices rose dramatically on the back of this ‘everything to gain, nothing to lose, non-recourse loan’ mentality and new urbanism which basically restricted the traditional supply chain of new homes by curtailing urban growth. The combined effects of mandated lending to low income groups and non-recourse loans, together with skyrocketing house prices caused by restrictions in supply presented lenders with a serious dilemma. Their low income customers couldn’t afford the repayments so all sorts of financial products were developed – sub-prime loans, mortgage insurance schemes (derivitives) etc.
    We have all learnt the hard way that anything not based on economic reality is doomed to failure. So when governments try to defy the immutable laws of the marketplace, expect trouble.
    Bob Day
14. Murray R. Adamthwaite 13.10.11 / 1pm

    Steve
    “…the prohibition of covetousness,”
    Just how does civil statute achieve that? I would have thought that covetousness was an inner moral disposition, out of reach of external statute. To be sure, one could in theory control gambling, one prime form of covetousness, but even then to outlaw it completely would be a political and social impossibility.
    Politics is the art of the possible, after all. We may achieve reform to a degree, but only when there is a general Christian consensus which would support it. There was such in the C19th, when e.g. Lord Shaftesbury pushed through his reforms to child labour, among other things; but there is no such willingness now. Indeed, the climate is building for community supported persecution of Christians.
    When are you Reconstructionists going to get a handle on reality on the ground?
    Murray R. Adamthwaite
15. Murray R. Adamthwaite 13.10.11 / 2pm

    Daniel:
    “Actually Talents = abilities makes more sense, to me.”
    If this is so, then it leads to piece of circular absurdity in Matt.25:15-16. Your reading of the text would therefore be: “each received abilities (= talents on your reckoning) according to his ability (Gk. dunamis)…then he who had the five abilities traded with them and gained five more abilities.” This is nonsense!!
    But apart from this observation a talent (Gk. talanton; Heb. kikar; Aramaic kakar) in the ancient world simply DID NOT mean “ability”. It was a large unit of weight for economic and commercial purposes, and as a measure of wealth, and the disciples would have immediately understood it as such. This widespread notion of talent = ability is a modern one, and is but one example of what in logic and exegesis is called “the anachronistic fallacy”, whereby modern meanings are (illegitimately) imported into ancient (or simply old) words.
    Sorry to make a big deal of this, my friend, but this sort of thing is done time and again, and I get weary of it. The consequent misinterpretation of this parable is thus a prime example of missing the point.
    Murray R. Adamthwaite
16. Murray R. Adamthwaite 13.10.11 / 2pm

    Bob:
    Thanks for your short exposition of the background of the financial meltdown. I agree completely. One of the persistent myths – often perpetrated by the Left – is that Hoover did nothing in regard to the financial crash of 1929, but FDR’s “New Deal” (shall we say “Raw Deal”?) got things moving again. Hoover actually did quite a bit: big spending on public works, bailouts and low-interest loans to failing businesses, subsidies to shipbuilding, to mention some. Yes, a typical socialistic response.
    The difference from FDR was basically campaign rhetoric, and that FDR promised more – much more – of the same. The New Deal did not get America out of the Depression; it prolonged it, and even madee it worse. None other than Paul Johnson makes this point from his own researches. It is not merely a conclusion from so-called “right-wing” literature.
    Murray R. Adamthwaite
17. Tim 13.10.11 / 5pm

    The Bible makes Christian charity so obvious it hardly requires reminder, but Jesus did say “The poor you will always have with you”. Logical enough, considering everyone has different talents, upbringing, choices, family ties, and even plain old “luck of the draw”.
    But forced “charity” stinks (also known as communism, or in stealth form – the welfare/nanny state). It generates distortions (such as unpunishable laziness, and welfare “rights”). So I really can’t see much future for the post-Christian West – until after a fall and repentence maybe. We’re all too busy following Greece…
    Good to see Keynes getting blasted on Culturewatch. This has me looking forward to future articles on this subject Bill.
    Tim Lovett
18. John Angelico 14.10.11 / 12am

    Frank Norros, I am afraid Keynes book is a most turgid load of complication of some relatively simple principles.

    It ranks as the second-least read book on the topic, after Marx’s “Capital”.

    I can’t recall anybody in my classes who managed to read it through, including me.

    I’m sorry to admit that I have choked on the big three: Darwin’s Origin, Marx’s Capital and Keynes’ General Theory; enough already!

    John Angelico
19. Jonathan Sarfati, Ph.D. 14.10.11 / 1am

    Indeed, FDR has been described as Hoover on steroids. But the deceit of the Left includes painting Hoover as a laissez-faire capitalist, ignoring the successes of his predecessor Calvin Coolidge, who genuinely fit that label. See for example:

    Hoover and FDR: big government Presidents who prolonged the Depression
    Remembering Calvin Coolidge: how he rescued America from a Depression

    Jonathan Sarfati, USA
20. Daniel 14.10.11 / 12pm

    Yes talents = abilities makes sense to me. You don’t use your abilities you lose them if you do, you keep them. God keeps them flowing and renewing continuously therefore doubling and tripling.
    Daniel Kempton
21. Wayne Pelling 14.10.11 / 7pm

    My 21 year old daughter undertaking studies in International Studies made the point to me that Marxism does not work. If this was twenty to forty years ago it might have been different.
    Marxism the god that failed. Sorry purloined it from a former member of the British Communist Party.
    Wayne Pelling
22. wayne pelling 15.10.11 / 9am

    Coolidge may have rescued the USA from Depression but Hoover-a Quaker and one time manager of the Sons of Gwalia mine near Kalgoorlie – seemed to have done nothing at the beginning of the Depression. Were not the slum villages that sprang up in Central park, called Hoovervilles?
    Wayne Pelling
23. Michael Watts 15.10.11 / 10am

    Apparently, Milton thought it legitimate to conclude that just as money hidden in the earth loses its value, one’s God-given abilities likewise atrophy if not exercised.

    Speaking of ‘circular absurdity’, Murray’s first post described ‘talent’ as ‘the total income for a working life for each respective recipient’. But you never possess your total income of your working life as a lump sum to invest…:)

    Michael Watts
24. Luke McCormack 15.10.11 / 3pm

    great to cover this topic thanks Bill.

    I would like to add that being pro-free market or free entreprise does NOT mean you must agree with free-trade ideology, nor deregulation of certain sectors, etc.

    they same way a family, a church, a village cares for the common good of all, so too a country should carefully ensure vital farming and industry is not weakened in the name of “free-trade” or “letting the market work it out” as if markets were truly neutral…how can they be? They are run by sinful humans…

    The principle of a free-market assumes there is a reasonable level playing field. Clearly, in most international trading their is NOT an even playing field.

    the same way an individual when trying to negotiate with a large employer does not experience an even playing field.

    So Christian have the unique task of balancing the principle of a free-market with the need to care for our neighbour and ensure it is fair trading. Christians unlike the far Right and far Left make policies that account for effects of original sin.

    If we fail in this duty we may eventually see a another “red whirlwind” as Alexander Solzhenitsyn predicted if the West did not humanise its economic practices.

    Luke McCormack
25. Damien Spillane 15.10.11 / 11pm

    Not just Coolidge. You don’t hear about the recession of 1920-21, because it was handled by Warren Harding laissez-faire style and recovery was quick.

    See “Mister, We Could Use a Man Like Warren Harding”

    So what did Harding do? A “stimulus”? A jobs program? “Targeted” tax cuts? Government bailouts for ailing companies? Nope—he cut government spending sharply and rapidly (by almost 50 percent), began cutting tax rates across the board, and allowed asset values and wages to adjust freely as fast as possible. Harding’s administration, Paul Johnson observed, “was the last time a major industrial power treated a recession by classic laissez-faire methods, allowing wages to fall to their natural level . . . By July 1921 it was all over and the economy was booming again.” The Cato Institute’s Jim Powell offers a more complete summary of Harding’s soundness on economic policy, but suffice it to say that Harding’s traditional approach prevented the depression of 1920-21 from becoming a Great Depression, and in fact set the stage for the roaring twenties.

    www.powerlineblog.com/archives/2011/07/mister-we-could-use-a-man-like-warren-harding-again.php

    Damien Spillane
26. Bill Muehlenberg 16.10.11 / 4pm

    Thanks guys

    As I said, a proper article or two on this would better help frame a debate on the many issues involved here.

    As to the parable of the talents, we need to show some grace here. The truth is, the general rule of thumb in biblical interpretation is to discern the one primary meaning of a passage, while being aware that there might also be various secondary applications to a given text. I even did the same on this passage here: www.billmuehlenberg.com/2011/09/07/why-do-we-hoard-what-we-have-been-given/

    Bill Muehlenberg, CultureWatch
27. Murray R. Adamthwaite 16.10.11 / 9pm

    Thanks for all the replies, folks.
    Bill: I trust you had a safe and uneventful trip home, even if your journey to the U.S. was a sad one. My sincere condolences.

    Daniel: your remark that talents = abilities “makes sense to me”. Perhaps so, as a general truth, but what does it to do with the specifics of the parable? You just trot back at me the proposition you began with, and stick to it, and in the process you sound like a post-modernist, i.e. “it’s true for me”.

    Michael, two points:
    1. What Mitlon might have said in the C17th is irrelevant. Bible background on such things as monetary units, or area measure, or capacity etc in the ancient world were still largely unknown at that time (even the basics of Biblical geography too!), and exegetical fallacies such as I mentioned were at times a feature of Puritan preaching. Much as I admire the Puritans, and would recommend them for exposition and devotion; when it comes to technicalities such as I am dealing with here they should not be followed.
    2. Your observation about “lump sum” is really beside the point. Of course the income is accumulated over the course of one’s lifetime (if you read what I said carefully, that would be clear). A fortiori, one’s entire life must be one of productive service, as and when income arrives in our hand. It is not a “one off” issue.

    Bill: you referred us to you article on Sept. 7th, but as I read that did not have much to say about the specifics of this parable. Of course one must look for the primary intent and meaning of a parable – that is all-important, but that meaning must be built on the solid points of Bible background, and not commit inter alia the anachronistic fallacy, as I mentioned. I could go into several examples which come to mind, but you are probably aware of D A Carson’s book “Exegetical Fallacies”, which I would recommend to readers of this blog.

    Murray R. Adamthwaite
28. Ewan 16.10.11 / 11pm

    Luke McCormack seems to be suggesting (if I understand him correctly) that the free-market doesn’t “account for [the] effects of original sin” so we need to use government regulation to ensure a fair outcome. But this view forgets that people who control government are also affected by a fallen sin nature and are therefore just as prone to injustice and corruption as anyone else. At least a free market system is able to utilise Man’s fallen nature and make it work as a force for good. So human greed is utilised by the market and used as a driver for things like productivity, competition, efficiency, etc.

    Ewan McDonald, Victoria.
29. Frank Norros 17.10.11 / 1am

    Hello Bill,
    I read the Quadrant article from the link, but I disagree with the author. It was Keynesian economic policy that led Britain out of the Great Depression, so I cannot agree that “Keynesian economics is part of the problem”. All economies need regulation to soften the highs and lows. In modern economies with many markets operating and interdependancies, some regulation is required. Absolute free market (laissez faire) would see many internal markets collapse even though they provide a social good (for example, any loss making railway line branches).

    Hence you need some regulation to ensure protection where needed as the free market cannot deliver a desired solution in every circumstance. The main difference between the Keynesians and the monetarists (eg Milton Friedman) is the tool to do so (if I may simplify). Whereas Keynesians see it as the role of the government by using budgetary policy, monetarists prefer the use of fiscal policy (in Australia we see this through the workings of the Reserve Bank) controls.

    In the 1970′s we saw the emergence of stagflation (infation and unemployment rising simultaneously). This was a new phenomena and Keynesian economics, that had worked well since the 1930′s, was not effective for stagflation as it works via manipulation of the demand side. But it should be said that not even fiscal policy on it’s own copes with stagflation. Hence, we end up with a mixture of the two, sometimes with the Reserve Bank actually making decisions contrary to government measures. To an extent, it comes down to which of the two evils you prefer.

    I tend towards the Keynesian side mainly because ultimate accountability for economic outcomes can be directly attributed to the elected government whereas fiscal policy is harder to attribute to elected representatives. We’ve all seen times when Prime Ministers have distanced themselves from unpopular Reserve Bank decisions. But on the other side of the coin, governments can overuse their budgetary powers to channel funds to useless areas (recently cash for clunkers, insulation debarcle, loony greenie ideas, wind farms etc). But this is not a failure of Keynesian economics, rather the manifestation of irresponsible government driven by ideology.

    Frank Norros
30. Frank Norros 17.10.11 / 1am

    Sorry John Angelico, I cannot agree with you. As I said, Keynes’ work is not a read to everyones liking but it is a thoroughly academic and scholarly work written for his peers and therefore subject to academic review and scrutiny in which he proposed a new approach to dealing with the economic issues of his day.

    Unlike Marx’s “Capital”, it was not written to overturn governments and reshape society into a false construct, and unlike Darwin’s Origin of the Species, it was not written to challenge the supremecy of the Bible. I really don’t think the General Theory belongs in the same category.

    Frank Norros
31. Luke McCormack 17.10.11 / 1pm

    To answer Ewan’s comment. When I mentioned the need for policy that “accounts for original sin”, I was trying to allude to one particular example of the application the free-market principle.

    That example; is the irrantional pursuit of free-trade b/w nations as they it were an end in itself.

    In this example, the principle is fine, but in application the result is unfair. Therefore, some measure of government to ensure just trading is required.

    In other words, like any other principle that Christians draw from scripture and tradition, they can not be expected to produce goods or justice every time or in every situation without some amendment etc

    The key to it I think is the way we approach the entire question of economic justice. There is a way of running the economy with human dignity and family unit in mind, unlike the radicals from Left and Right which tend to analyse everthing as though wealth or materials was the basic unit of the economy…the truth is that people (families) are the basic unit of the economy.

    Chesterton’s famous quote goes something like ‘the problem with capitalism is that there are too few captialist’(eg. those with capital).

    To address the tendency of capital accruing in the hands of a few, a co-operative, for example, ensures profit(capital) remains closer to the worker(labour).

    in Mondragon, northern Spain’s Basque region, various distributist, co-op models are in place (quite large actually) and their workers are part paid in shares (happens here to occasionally) and thereby the worker is co-owner and enjoys dividends when he and his mates work harder to ensure the company is a success etc. It keeps labour and capital closer together.

    in these models we see the worker as someone who is a family member, has dignity, and needs a chance to earn capital. Not every dad is going to be an entrepreneur…some will just be fitters, turners and floor sweepers, but they are still made in God’s image with family role to fulfil, and a home they hope to own.

    Luke McCormack
32. Daniel 17.10.11 / 3pm

    Thanks Murray
    Yes I did didn’t I, well granted you make a clever point and it did send me off on a trip reading Mathew 25 at least 30 times over the weekend and talked much with my friends and really looked to see if I’m wrong. And well yes, it is talking about money, but…. Lol…. My revised thought is, the parable means to me, whatever God gives you, money – abilities – understanding – use it for the glory of God, and he will continually renew it.
    Daniel Kempton
33. Jonathan Sarfati, Ph.D. 19.10.11 / 1am

    Luke McCormack still fails to realize that any interference in free buying and selling requires force. And a government with the power to apply such force against the free choices is a tyranny.

    This applies to barriers to free trade as much as any other attack on the free market. What is really unfair are these barriers, since they force consumers to pay more than they would under free trade, so they suffer. So do businesses that would otherwise attract such consumers were they not forced to pay more to protect inefficient home-grown businesses.

    See also Pummeling protectionism: free trade is good for America which applies equally well to Australia.

    Free market capitalism is easily the most Christian of all systems, simply because the only way greed can be satisfied is by pleasing large numbers of your fellow men. In the “mixed economy”, greed can also be satisfied by persuading the government to apply force to prevent competition, both domestic (e.g. licencing laws and other onerous regulations) and overseas (tariffs and other protectionist measures).

    Jonathan Sarfati, US
34. Mario Del Giudice 7.11.11 / 3pm

    Just to throw a new spanner in the works, One form of government intervention that I do like and wish that we saw more of is the purchase of grains to keep in storage in the case of potential future calamity. We see this work successfully in the time of Joseph in Egypt, and it can be seen as a far more useful method of stimulating an economy than insulation or a broadband network that will soon be out of date.
    Mario Del Giudice