shovel_and_dirt_No2Why do liberal and conservative evangelicals tend to disagree so often about economic issues? This is the fourth 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 here; Part 2 can be found here; and Part 3 can be found hereA PDF/text version of the entire series can be found here.

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

In his recent State of the Union address, President Obama signaled that income inequality will be his domestic focus during the remainder of his term in office. The fact that the president considers income inequality, rather than employment or economic growth, to be the most important economic issue is peculiar, though not really surprising. For the past few years the political and cultural elites have become obsessed with the issue.

That was not always the case. In 1990, a Nobel-winning economist wrote:

One reason that action to limit growing income inequality in the United States is difficult is that the growth in inequality is not a simple picture. Old-line leftists, if there are any left, would like to make it a single story–the rich becoming richer by exploiting the poor. But that’s just not a reasonable picture of America in the 1980s. For one thing, most of our very poor don’t work, which makes it hard to exploit them. For another, the poor had so little to start with that the dollar value of the gains of the rich dwarfs that of the losses of the poor.

The economist who wrote that was none other than Paul Krugman, who more recently said, “the president was right. Inequality is, indeed, the defining challenge of our time.”

The reason for Krugman’s change of opinion has less to do with economics than with political partisanship. In the apparent absence of other real economic problems, some progressives have decided to allow covetousness to drive their political agenda.

That is not a road down which any Christians, including liberal evangelicals, can travel. (For more on this, see: What Every Christian Should Know About Income Inequality)

Because it is often rooted in personal envy or based on concerns about what will happen if envious people don’t get what they want, Christians should be very hesitant about legitimizing the issue of income inequality. Our primary economic concerns should be for the well-being of the poor and for the creation of conditions that lead to greater human flourishing for all our neighbors. Focusing on income inequality does neither. In fact, the focus on income inequality has become a distraction that has hampered our search for solutions to our true economic problems.

Apart from the fact that it is based on immoral motives, Christians should not care about income inequality because relative differences in income tell us nothing about fairness or the just distribution of wealth. What conservative evangelicals care about — and what everyone should care about — is whether people have adequate opportunities to increase their household’s income, and hence, improve their standard of living. While there is no truly adequate gauge to measure such opportunities, we can get a fair estimate based on measurements of social mobility.

Social mobility is the ability of an individual or family to improve (or lower) their economic status. Since it is often measured in income, it is also called income mobility or economic mobility. (I prefer the term “social mobility” because increases in status can often be more important than income as a gauge of one’s standard of living. For instance, a person may make choose to forego greater income in order to accept a job, such a college professor, that has a high social status and increases one’s life satisfaction because of their job.)

The two main types of social mobility are intergenerational (i.e., a person is better off than their parents or grandparents) or intragenerational (i.e., income changes within a person or group’s lifetime). Both are important in determining whether social mobility is increasing or decreasing, though the most significant type is intragenerational. It matters much more that a person is able, within their lifetime, to escape poverty than it is whether they have a higher income than their parents.

What increases social mobility? As an article in the New York Times explains, there are four broad factors that appeared to affect income mobility:

1. The size and dispersion of the local middle class,
2. Two-parent households,
3. Better elementary schools and high schools, and
4. Civic engagement, including membership in religious and community groups.

By contrast, as James Pethokoukis notes, there was little or no correlation between mobility and the sort of stuff that left-liberals might prefer to focus on: taxes (tax credits for the poor or higher taxes for the rich), college tuition rates, or the amount of extreme wealth in a region.

While income inequality has a simple solution (e.g., take money from group A and give it to group B), social mobility is more complex and reliant on social and cultural factors. If we truly want to help all Americans, though, there are a few things we could do: encourage parents to stay together, improve our local schools, and get involved in our communities. Doing that would improve the quality of life for millions of Americans in a way that worrying about the size of our neighbor’s paycheck can never do.

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

I got my first regular job at the age of twelve. Since then I’ve almost always had a job – often more than one at a time. Some of the jobs I’ve had are:

dog kennel cleaner; lawn maintenance; oilfield electrician’s assistant; farrier/horseshoer’s assistant; irrigator’s assistant; fast food worker; limo driver; pizza delivery driver; golf caddie; waiter; babysitter; SAT tutor; telemarketer; carpenter’s; auto parts factory worker; aircraft electrician; aircraft maintenance support equipment repairer/supervisor; ground safety/hazardous materials manager; postal clerk; military recruiter; scuba locker manager; fry cook; U.S. Marine; grocery store sacker; warehouse stocker; blogger; web editor; office furniture mover; security guard; grocery store checker; newspaper advice columnist; director of communications for non-profit organizations; newspaper editor; Information Technology (IT) manager; director of research and rapid response for a presidential candidate; editor; consultant; and consultant.

While the jobs themselves have been radically different, they all share two qualities. First, they were a regular activity that was performed in exchange for payment. Second, they provided a good or service of value to someone outside of my immediate family.

These two criteria are what makes a “job” distinctive from work or a vocation. I’ve been a pizza delivery driver, a babysitter, a fry cook, a waiter, and an SAT tutor for my own family. Those were all forms of valuable work. But it was only when I worked in those roles for payment while serving people outside my own family did it become a job. Similarly, I had a vocation as a writer long before I found anyone willing to pay me for the words I produced.

For most of us, the work we do at our jobs is the primary way we serve our neighbor. It is also a way that we glorify God. As Gene Veith says,

When we pray the Lord’s Prayer, we ask God to give us this day our daily bread. And he does. The way he gives us our daily bread is through the vocations of farmers, millers, and bakers. We might add truck drivers, factory workers, bankers, warehouse attendants, and the lady at the checkout counter. Virtually every step of our whole economic system contributes to that piece of toast you had for breakfast. And when you thanked God for the food that he provided, you were right to do so.

By serving our neighbors, we use our time, talent, and skills in a way that leads to human flourishing. But what exactly do we mean by that term? In a 2003 article on human flourishing, Edward W. Younkins explains the advantages of focusing on human flourishing:

Human flourishing (also known as personal flourishing) involves the rational use of one’s individual human potentialities, including talents, abilities, and virtues in the pursuit of his freely and rationally chosen values and goals. An action is considered to be proper if it leads to the flourishing of the person performing the action. Human flourishing is, at the same time, a moral accomplishment and a fulfillment of human capacities, and it is one through being the other. Self-actualization is moral growth and vice-versa.

Not an abstraction, human flourishing is real and highly personal (i.e., agent relative) by nature, consists in the fulfillment of both a man’s human nature and his unique potentialities, and is concerned with choices and actions that necessarily deal with the particular and the contingent. One man’s self-realization is not the same as another’s. What is called for in terms of concrete actions such as choice of career, education, friends, home, and others, varies from person to person. Human flourishing becomes an actuality when one uses his practical reason to consider his unique needs, circumstances, capacities, and so on, to determine which concrete instantiations of human values and virtues will comprise his well-being. The idea of human flourishing is inclusive and can encompass a wide variety of constitutive ends such as knowledge, the development of character traits, productive work, religious pursuits, community building, love, charitable activities, allegiance to persons and causes, self-efficacy, material well-being, pleasurable sensations, etc.

To flourish, a man must pursue goals that are both rational for him individually and also as a human being.

Because jobs can serve the needs of our neighbors and lead to human flourishing both for the individual and communities, they are the most important part of a morally functioning economy.

This understanding of the role of jobs in the economy is something all evangelicals can agree on. So where do liberals and conservatives differ? There are likely many point of disagreement, but two of the main ones are over policies that distort wages and the creation of jobs for the sake of having a job.

When it comes to jobs, the most common disagreement is over mandated wage policies, such as minimum wages or living wages. Under normal conditions, wages are generally subject to an equilibrium price set by supply and demand. Workers supply labor to employers in exchange for wages while employers demand labor from workers in exchange for wages. Too often, though, progressives tend to favor policies that distort the price of labor. This distortion reduces our knowledge about how labor is valued and about how much is needed.

As Lester DeKoster has written, the “salability” of our work is an important signal about how much and to what extent we have served others through our labor. And as Jordan Ballor explains, the market price of labor communicates something significant that should not be ignored or disdained, economically or morally. “Prices in this fallen world are not sacrosanct in that sense,” says Ballor, “They communicate what is valued, but perhaps not always or often enough what ought to be valued. But neither are prices simply fictions that can be done dispensed with without deleterious effects.”

While intended to improve the lives of workers (e.g., by forcing employers to give them more money) these distortion of signals in the labor market often have unintended consequences that make people worse off (see principle #1 in this series).

A second area of disagreement is the idea that since jobs provides an income and most people need an income to survive, that anything that leads to job creation or prevents jobs from being lost or moved overseas is good in itself. The folly of this type of thinking can be clearly seen in an anecdote about economist Milton Friedman. Friedman recalled traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built.

He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained: “You don’t understand. This is a jobs program.” To which Milton replied: “Oh, I thought you were trying to build a canal. If it’s jobs you want, then you should give these workers spoons, not shovels.”

In America we could create a similar “jobs program” by prohibiting or reducing the use of technology, whether by trading shovels for spoons or computers for pencils. Stated this way, of course, most people recognize this would lead to economic stagnation and decline and a loss of human flourishing. Yet many liberals tend to accept subtle policy recommendations (e.g., government make-work programs, opposition to outsourcing and free trade) that lead to the same outcomes.

Conservative evangelicals, however, recognize that the free market provides the best means for signaling what needs our neighbors have that need to be filled and how much they are valued. For these reasons (and many more), conservative evangelicals prefer to rely on the free market to create jobs and to set prices for wages.

***

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

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 seriesPart 1Part 2, Part 3

Economics in One Lesson : The Shortest and Surest Way to Understand Basic Economics

Economics in One Lesson : The Shortest and Surest Way to Understand Basic Economics

This classic work provides the layman with a clear understanding of the economic way of thinking. A must-read for the beginner!

  • Pingback: What Liberal Evangelicals Should Know About the Economic Views of Conservative Evangelicals (Part 5) | Acton PowerBlog()

  • http://www.naturalspirituality.wordpress.com/ Howard Pepper

    I’m new to this blog, and realize this post is over 6 months old… But in case the author or anyone else is reading, a couple thoughts: This is more detailed and developed commentary on Christian thought and economic principles and policy than I generally encounter online… so am grateful to see it.

    However, even though economics is not my field of study, it still seems superficial enough that it sure seems to me to distort some things. If nothing else, by leaving out key factors. For example, the analysis on why minimum wages or “mandated wage policies” is not at all convincing to me, though much more detail might possibly be. But from long observation, pretty deep knowledge of human psychology and behavior and some knowledge of political and economic theory, it sure seems that a couple factors have to be addressed that are not here. For one, the tendency of employers (and not exclusively large corporations) to seek and often actually “get around” the natural pricing (which is supposedly “right pricing”) of labor… even in the presence of min. wage laws (e.g., domestic exploitation of under-educated or non-English-speaking foreigners, legal or illegal; or foreign exploitation, indirectly suppressing wages here also). I can’t see this situation being improved in the absence of any mandated wage policies, but more likely made worse.

    I could go on but since I’m not sure anyone is still “listening” I’ll stop here for now.

    • http://rdmckinney.blogspot.com/ Roger D. McKinney

      That’s a big topic, but a place to start is with the Church scholars of Salamanca, Spain in the 16th and 17th centuries. Wikipedia has a good intro article. Those Godly, devout men opposed minimum wages for the main reason that they hurt the poor more than they help. Min wages help the few who can get jobs, but the vast majority for whom min wages kill jobs are left with nothing. Min wage is also a severe violation of property rights of the business owner. Econ has proven that the best way to help the poor is through job creation, not job destruction through things like min wages.

      • http://www.naturalspirituality.wordpress.com/ Howard Pepper

        I may look at the Wikipedia article. But I can’t spend much time on this. However, a couple comments in reply: Are you sure and can you show stats that “the vast majority for whom min wages kill jobs…”? I’ve not observed any raises in min. wage actually ending any significant # of jobs. I hear the claim prior to a hike, but don’t see much actual effect after, and haven’t heard if such stats can even be gotten and what they are (too many variables simultaneously to probably get even a good approximation). So it seems to me it’s just pure theory and one that probably doesn’t hold up. (For one thing, who’s putting out the claim?… almost always either affected businesses or the politicians who align with them.)

        Now, I’d grant that prices probably DO rise a little so that the affected businesses can obtain the greater revenue needed (but any setback to workers is less than the gain of the wage increase, it seems clear). And probably SOME jobs are eliminated or hours cut also… but if econ. conditions are fair to good, the job-losers will probably get other jobs…. and at the new higher pay if they were on min. wage.

        So this takes us to your last comment: I don’t know of many credentialed economists who are the ones making claims about min. wages actually hurting low income workers… Again, not my field, but from a distance it appears that for every economist who might claim what you’re saying there are several others who take the opposite position. Am I wrong? If not, are you claiming this is a case in which the minority is right (which often IS valid)? If so, on what basis?

      • http://www.naturalspirituality.wordpress.com/ Howard Pepper

        I replied to this comment a good 24 hrs. ago (or so)… I realize comments are monitored but does it normally take more than a day to appear, if accepted? (And I certainly didn’t break any rules or netiquette guidelines.)