zero-sumWhy do liberal and conservative evangelicals tend to disagree so often about economic issues? This is the second in a series of posts that addresses that question by examining 12 principles that generally drive the thinking of conservative evangelicals when it comes to economics. The first in the series can be found hereA PDF/text version of the entire series can be found here.

In my first post, I covered the first four principles (#1 – Good intentions are often trumped by unintended consequences; #2 – Our current economic and historical context must be taken into account when applying Biblical principles; #3 – To exploit the poor, the rich need the help of the government; #4 – We love economic growth because we love babies). In this post I want to consider points #5 (The economy is not a zero-sum game) and #6 (Poverty in America is more often a matter of personal choice than structural injustice).

5. The economy is not a zero-sum game.

In a zero-sum game, one person’s gain (or loss) is exactly balanced by the losses (or gains) of the other participants. If the total gains of the participants are added up, and the total losses are subtracted, they will sum to zero. It’s similar to dividing a pumpkin pie between five people: someone can only get a larger slice if someone else’s portion is smaller.

Many progressives in America, including far too many (though not all) liberal evangelicals, believe economics is a zero-sum game. They believe wealth, like a pumpkin pie, is fixed and that “there must be one winner and one loser; for every gain there is a loss.” This may be true in some economic systems, but it does not apply in free markets.

Jay W. Richards explains why free enterprise does not require that there be an economic loser for every economic winner:

One reason people believe this myth is because they misunderstand how economic value is determined. Economic thinkers with views as diverse as Adam Smith and Karl Marx believed economic value was determined by the labor theory of value. This theory stipulates that the cost to produce an object determines its economic value.

According to this theory, if you build a house that costs you $500,000 to build, that house is worth $500,000.

But what if no one can or wants to buy the house? Then what is it worth? Medieval church scholars put forth a very different theory, one derived from human nature: economic value is in the eye of the beholder. The economic value of an object is determined by how much someone is willing to give up to get that object. This is the subjective theory of value.

As Richards goes on to explains, to say “economic value is subjective” is not to say “everything is relative.” Economic value is not ultimate value. Your ultimate value in the eyes of God is not the same as economic value. What is subjective, as Christian scholars discovered in the Middle Ages, is that the pleasure that people derive from different goods is subjective and arises from variability of human opinion, so that different people esteem goods differently.

To understand what this means, let’s return to Richard’s example of the $500,000 house:

As the developer of the house, you hire workers to build the house. You then sell it for more than $500,000. According to the labor theory of value, you have taken more than the good is actually worth. You’ve exploited the buyer and your workers by taking this surplus value. You win, they lose.

Yet this situation looks different according to the subjective theory of value. Here, everybody wins. You market and sell the house for more than it cost to produce, but not more than customers will freely pay. The buyer is not forced to pay a cost he doesn’t agree to. You are rewarded for your entrepreneurial effort. Your workers benefit, because you paid them the wages they agreed to when you hired them.

The reason conservative evangelicals champion the free market is not because it guarantees everyone wins in every competition, but rather, as Richards notes, because it allows many more win-win encounters than any other alternative.

6. Poverty in America is more often a matter of personal choice than structural injustice.

There’s an old joke about a man who went to see his doctor because he was suffering from a miserable cold. The doctor tells the man, “Go home and take a hot bath. As soon as you finish bathing throw open all the windows and stand in the cold air.”

“But doc,” protested the patient, “if I do that, I’ll get pneumonia.”

“I know,” said the doctor, “I can’t doing anything about a cold. But I can cure pneumonia.”

Conservatives are a lot like this doctor. While many liberal evangelicals believe that the main cause of poverty is structural injustice, many conservatives wish it were the main cause. After all, we can do a lot about structural injustice, but there’s much less we can do about changing personal choices.

As it relates to economics, structural injustice could be defined as occurring when outside forces unjustly limit some person’s opportunities to enact their morally legitimate plans. A prime example of this is the Jim Crow laws that mandated racial segregation in many parts of the U.S. between 1876 and 1965. This particular form of structural injustice created conditions for African Americans that tended to lead to inferior economic opportunities and limited the routes of escape from poverty.

Structural injustices still exist and must be opposed (as we’ll discuss in point #7). But it is either naïve or dishonest to pretend that these types of injustices are as pervasive and dominant in 2014 as they were in other eras. We should recognize that the victories we’ve achieved over injustice, many of which are due, in part, to the work of liberal evangelicals.

Conservative evangelicals do not deny that structural injustice can still play a causal role in poverty. But we believe that the primary causals factors tend to be related more to personal choices, broadly defined, than to outside forces acting unjustly to keep a person impoverished.

Implying that some people “choose” poverty strikes many people as absurd and callous. The claim has a whiff of “blame the victim” insouciance to it that is unbecoming of a Christian. But when it comes to poverty, effective compassion requires that we be hardheaded realist. That is why we must ask, “Is it true that poverty is primarily caused by personal choices by individuals and families?”

The answer, based on decades of empirical evidence, seems to show that poverty is indeed mostly caused by the layered choices made both by individuals and their parents. Before we examine this point, though, let’s consider what we believe to be true of poverty by applying what I call the “North Dakota Test.”

The unemployment rate in North Dakota is currently 2.7 percent, well below the natural rate of “full employment” (which in the U.S. is around 5.5 percent). In some parts of the state you can make “$15 an hour serving tacos, $25 an hour waiting tables and $80,000 a year driving trucks” – well above a “living wage.” Now imagine we take an average able-bodied adult that is living below the poverty line and move them to North Dakota. We also give them a car to drive, an RV to live in, wipe out their current debts, and provide them with cash equal to 3 months living expenses.

After 90 days, would that person still be living in poverty? If they would not be, then the reason for their poverty was likely structural, whether the cause was benign (e.g., they live in an area with no available jobs) or unjust (e.g., they can’t get a job because of discrimination). If they would still be in poverty after that time, then the reason is likely due to conditions that were caused by personal life choices.

Currently, the poverty rate in North Dakota is 11.2 percent — the seventh-lowest rate among the states and almost 4 points below the national rate of 15 percent. That rate includes all people, including some that are not able to work. But what about those who are? Why does a state with relatively low structural economic barriers have any poverty at all? The reason, say conservatives, is likely because choices they’ve made in life (drug use, out-of-wedlock pregnancies, dropping out of school, etc.) prevent them from escaping their condition.

Many liberal evangelicals hear the claim that poverty is largely due to “personal choice” and assume that conservatives are saying that the poor are on their own and have only themselves to blame. But that is not the case — at least it’s not true of most conservative evangelicals. We believe that we have an obligation to aid the poor whatever the reason for their poverty. We also believe that to truly help people we must accurately diagnose the problem.

For instance, as Ron Haskins and Isabel Sawhill of the liberal Brookings Institution pointed out in their book Creating an Opportunity Society, young adults who put education, work, marriage and parenthood in the right order — first finishing high school (or college), then getting a job, then marrying, and then having a baby — face very low odds of poverty. If we really want to help people escape poverty, we should help not only to choose the right path but to become the type of people who can make choices that will save them from economic tragedy.

Unfortunately, this article is already too long so I don’t have the space to explain how conservatives believe we should help those whose poverty is caused by unfortunate life choices or how the choices of parents create a cycle of poverty. I do intend, however, to write about that subject soon and outline ways we can change these choice structures (such as through programs for parenting and early childhood intervention). Stay tuned.

***

In future posts, we’ll cover the remainder of the 12 principles:

7. The best way to compensate for structural injustice is to increase individual freedom.

8. Saddling future generations with crippling debt is immoral.

9. Social mobility — specifically getting people out of poverty — is infinitely more important than income inequality.

10. Jobs that lead to human flourishing are the most important part of a moral economy.

11. Free markets are information systems designed for virtuous people

12. Free markets are the best way to serve free people.

 

Recent posts in this series: Part 1

 

Flourishing Faith: A Baptist Primer

Flourishing Faith: A Baptist Primer

In Flourishing Faith, Dr. Chad Brand shows how by examining key issues of the history and theology of political economy: work, wealth, government, and taxation with its various implications.


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  • http://www.rossbemmett.com/ Ross Emmett

    The differences between these viewpoints are actually pretty well captured by Thomas Sowell’s A Conflict of Visions book. Liberal evangelicals focus on the hope of human potential captured in the Eschaton. Conservative evangelicals focus on the constraints of a fallen world. Most of your principles emerge from the constrained vision; most of the liberals’ views emerge from the unconstrained vision. The interesting theological economic questions lie in the ways careful thinkers try to embrace both visions.

  • Roger McKinney

    Concerning #5, I just finished a paper by Yale economist Nordhaus on “Schumpeterian Profits.” He estimates that innovators capture just 2% of the total financial benefit of innovations. The public gets the other 98%. Innovation is the biggest positive externality in life, far bigger than the common negative externality of pollution.

    On #6, I think some poverty can be structural. As I have mentioned, the corruption of the political process through corporate campaign contributions raises barriers to entry for new firms, which cuts down on the number of good paying jobs. And Fed policy benefits the rich at the expense of the poor.

  • Bill Hickman

    “Why does a state with relatively low structural economic barriers have any poverty at all? The reason, say conservatives, is likely because choices they’ve made in life (drug use, out-of-wedlock pregnancies, dropping out of school, etc.) prevent them from escaping their condition.”

    I wouldn’t leap so quickly to the “personal choice” explanation of poverty in North Dakota. We don’t have to construct a thought experiment to figure out why it persists, we can look it up. Reservation poverty in North Dakota is actually a great example of a structural economic problem:

    http://www.nrcprograms.org/site/PageServer?pagename=airc_res_nd_standingrock

    “The predominant minority group in North Dakota is Native American. Native Americans are vastly underrepresented in the labor force in North Dakota with unemployment rates ranging from 20.0 to 71.0 percent in 2005.”

    http://www.workforce.nd.gov/uploads%5Cresources%5C831%5Cworkforce-economic-context-report.pdf

    • http://Culture11.com Joe Carter

      You raise a great point (and one that I admit I hadn’t thought of) about reservation poverty.

      However, I think much of that too can be explained by personal choice. At the link you provided, the tribe’s website notes, “As a matter of principle, the Standing Rock tribes never complied with the Indian Reorganization Act of 1935 and therefore do not receive their full share of government funding.” Living on that reservation is probably like living in a dying small town. So why do they stay? Part of the reason are, I’ll readily admit, due to structural problems (e.g., education).

      But I think this is another case where people have to take responsibility for their own actions. I’m in favor of trying to stay rooted in an area in which you have strong cultural ties — unless it traps you in poverty. The tribe should find ways to encourage their young people to get an education, get good jobs, and then find ways to give back to their community.

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  • DrewL

    I’d like to start a series called “What Talking-Point Conservatism Should Know About Economic Realities of Postindustrial America.”

    Most of what Mr. Carter writes for point six has been proclaimed for several decades by conservatives whose belief systems are largely immune to falsification from empirical reality. For my series, I’ll just assemble some quotes from some “radical” thinkers (actually all well-respected conservatives) who recognize Mr. Carter’s “Poverty is a Personal Choice!” explanation should have been retired decades ago.

    Ross Douthat:

    “Honesty from conservatives would begin by acknowledging that policies championed on the right — mass incarceration in response to the post-1960s crime wave, Bain Capital-style “creative destruction” in response to Carter-era stagnation — have often made it harder for low-income men to find steady work and stay out of prison, and made women understandably wary of marrying them. Then this honesty would continue with a concession that certain kinds of redistribution — especially if tied to wage-earning — might help make men more marriageable, families more stable, and touch off a virtuous interaction between the financial and the personal.”

    http://www.nytimes.com/2014/01/26/opinion/sunday/douthat-more-imperfect-unions.html

    David Brooks:

    “Neo-conservatives had a more culturally deterministic theory…They argued that the abandonment of traditional bourgeois norms led to social disruption, especially for those in fragile circumstances. Over the past 25 years, though, a new body of research has emerged, which should lead to new theories. This research tends to support a few common themes. First, no matter how social disorganization got started, once it starts, it takes on a momentum of its own. People who grow up in disrupted communities are more likely to lead disrupted lives as adults, magnifying disorder from one generation to the next. Second, it’s not true that people in disorganized neighborhoods have bad values. Their goals are not different from everybody else’s. It’s that they lack the social capital to enact those values. Third, while individuals are to be held responsible for their behavior, social context is more powerful than we thought. If any of us grew up in a neighborhood where a third of the men dropped out of school, we’d be much worse off, too. The recent research details how disruption breeds disruption.”

    http://www.nytimes.com/2012/02/14/opinion/brooks-the-materialist-fallacy.html?_r=4&nl=todaysheadlines&emc=tha212&

    Arthur Brooks:

    “Expanding the Earned Income Tax Credit or, better yet, crafting more straightforward wage subsidies for the working poor would support poor families’ budgets without making them costlier to employ. Either approach would strengthen work incentives rather than undermine them. [AEI's Michael] Strain makes another intriguing proposal involving relocation vouchers. Using a mixture of direct payments and low-interest loans, the government could help cover costs for chronically unemployed Americans to move to areas with more plentiful opportunities. Obviously, not everyone will pick up and move, however generous the voucher. But at a time when economic conditions vary wildly between regions, the opportunity is a powerful one.”

    http://www.commentarymagazine.com/article/be-open-handed-toward-your-brothers-1/

    AEI’s Kevin Hassett, advocating a variety of structural interventions for the long-term unemployed:

    “The impact of long term unemployment on the lives of unemployed Americans and their families is about as negative as anything economists study. It is clear that something terrible happens to individuals as they stay unemployed longer, but that this negative effect is not responsive to normal policy interventions. Accordingly, it is imperative that we think outside the box and explore policies that reconnect individuals to the workforce.”

    http://www.aei.org/files/2013/04/24/-hassett-testimony-on-long-term-unemployment_155831757059.pdf

    The Ethics and Public Policy Institute’s James C. Capretta:

    “An effective conservative critique of existing policies starts with the acknowledgement that a strong social safety net is a must in a modern, market-based economy, and that the safety net built here in the United States, though flawed, has contributed substantially to improving the conditions for the poor…The panoply of governmental support programs—Medicaid, Food Stamps, the earned income tax credit, housing vouchers, school lunch programs, and many more—substantially raise the living standards of those who otherwise have very low incomes…Conservatives must also make the case that helping families build better lives for themselves and their children cannot be done by a distant and impersonal federal government. The complexity of the social ills plaguing low income communities requires direct, hands-on intervention. That means states, local governments, and non-profit organizations working together to help families escape from the forces that are holding them back.”

    http://economics21.org/commentary/emerging-conservative-effort-help-poor

    I would hope the economic views of “conservative evangelicals” would be more attuned to what conservatives now almost universally recognize: poverty is not just an individual problem best addressed by moralizing sermons on responsibility. There are cultural, social, structural, cognitive, and yes, individual dimensions of poverty that would require any effective response to be far more holistic than what conservatives of past generations recognized.

    • http://Culture11.com Joe Carter

      Most of what Mr. Carter writes for point six has been proclaimed for several decades by conservatives whose belief systems are largely immune to falsification from empirical reality.

      Actually, my views on this were shaped by growing up in poverty, being around people in poverty, and talking to people who are still trapped in poverty. Unlike some of my fellow conservative think-tankers, my views were shaped by “empirical reality” and were not simply something I came up with while gazing out my office window at the Potomac River.

      But let’s look at some of the folks you quoted.

      My friend Ross Douthat says that “mass incarceration in response to the post-1960s crime wave, . . . have often made it harder for low-income men to find steady work and stay out of prison.” I know Ross fairly well and I don’t think for a second that he’d say being arrested for a crime a person actually committed was anything other than their “personal choice.” In fact, I suspect he is saying pretty much what I said above: “We believe that we have an obligation to aid the poor whatever the reason for their poverty.”

      And I suspect you didn’t really even read either David Brooks or Arthur Brooks statements since they both support my claims.

      David Brooks says, “People who grow up in disrupted communities are more likely to lead disrupted lives as adults, magnifying disorder from one generation to the next.” If you read part #3 you’ll see I say something very much like that. In fact, I plan to write an entire series of posts based on that one point.

      Likewise, Arthur Brooks points are completely based on the idea that a person has a personal choice about getting out of poverty — if they are willing to accept help. (By the way, there is nothing in Brook’s statement that I disagree with.)

      There are cultural, social, structural, cognitive, and yes, individual dimensions of poverty that would require any effective response to be far more holistic than what conservatives of past generations recognized.

      Which is exactly what I said. The personal, however, trumps all of the other dimensions. If we don’t address the person reasons for poverty (especially those shaped by parents) then nothing we do will change anything. That is the one indisputable empirical lesson we’ve learned from the 50 year War on Poverty.

      • Drewl

        If you agree with A. Brooks, then please point me to your recognition of a “dysfunctional job market” that fails to meet the needs of some portions of the population, then show me your call for government-interventionist income subsidies (“handouts”) to close the wage gap, and perhaps your call for government programs to assist low-income people in relocating. Also, please show me where you defend the moral imperative of federally-run social safety-net programs, since you don’t disagree with him that “there is nothing inherently wrong with safety-net programs, be they SNAP, housing support, or Medicaid. ”

        If you agree with Douthat, again, show me where you argue for “certain kinds of redistribution” warranted by a globalized “Bain Capital-style” capitalist system. Shouldn’t liberal evangelicals know that your brand of conservative evangelicalism endorses certain kinds of redistribution?

        If you agree with David Brooks, show me where you recognize a lack of civic and social capital in some neighborhoods that can sabotage even the best “personal choices” to overcome one’s given position. Also please provide me an account of how “personal choice” can overcome generationally-cyclical poverty that “magnifies disorder” for every generation. Tell me how the children of low-income parents can simply make better choices about their emotional development as infants, the number of books they are read and words they hear before kindergarten, the number of hours their parents spend away from them working low-paying jobs, or how they can simply “choose” to opt out of a “social context more powerful than we thought” that works against their graduating high school and accumulating an employable set of skills.

        You don’t seem to realize you can’t have it both ways. You either need to concede that Brooks, Brooks, and Douthat are right in dismissing certain core tenants of talking-point conservatism, or you need to proudly defend your talking-point conservatism and label them wrong to give up the dream. Right now you simply seem in denial that there are significant disagreements between your vision and theirs.

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  • Stephen Peele

    amen

  • Stephen Peele

    nice job

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