Friday, February 13, 2009

Are We Sure We Want To Go There?

Many of my readers will no doubt be happy to know that this will most likely be my last post on Religion and Economics for a while. Others of you may be thinking, No! Give me more! I must have more! But you probably need to have your heads checked or something. No, I think after this one, my recent line of thoughts on the topic will be played out.

At least until someone else says something at Church that's worthy of a highly-raised eyebrow. Then, my dear Internets, you will be the first to hear about it. Or something.


I mentioned in my last post about a couple of comments that were made in class last Sunday. My first reaction to these comments was to think, "I can't believe they said that! Do they even realize what they are saying?"

And then, I started following out the ramifications of what they were saying, following the white rabbit down the hole to see where it led. And, um... it really did lead to Wonderland; and I don't think the original commenter realized it.

Here's the context. We are discussing the concept of Stewardship. Now, when churches usually talk about Stewardship, it's nearly always a euphemism for handling money, and is often presented in the sense of, "You need to hand more of it over to Us." But this class is a little different; it regards stewardship of the other things--our health and our bodies, our families and relationships, the stewardship of the land, stewardship of our time. All these things are of course given to us by God, and we need to use all these things wisely.

(And incidentally, I do appreciate that when our church does talk about stewardship of money, it really does cover the discipline of money management comprehensively--it's not about making people feeling guilty for not giving more to the church.)

As part of our study, we've been going through the Mosaic Law to see how God commanded the ancient Israelites to handle these things. And there's a lot there: laws on cleanliness and hygiene, on public safety, on land use and land ownership, family law, inheritance law, laws on debt, and on and on. Most people find this stuff pretty dry. I do not. After all, God himself gave these laws to help turn a collection of former slaves into a prosperous, stable, secure, healthy nation. Isn't that a fascinating concept? Wouldn't you think the are things we can discover about the mind of God, and about our own human nature and how we fit in society, by looking at how God told the Israelites to order their affairs?

Well, we got to the concept of the Sabbath Year, which you can read about in Leviticus 25. Basically, every seventh year:
  • All debts were to be forgiven.
  • All fields were to lie fallow.
  • No planting or systematic harvesting could be done. You could gather the food you needed from what grew by itself, but only as you needed it. And anyone else could gather it too as they needed.
And then, every fiftieth year--after the seventh Sabbath year, which came on year 49 in the cycle--you would have a Year of Jubilee:
  • All the rules of the Sabbath year applied--so, basically, you had to go two years in a row with fallow fields. In addition:
  • Any property (outside walled cities) that had been sold during the last 50 years, would return to its original owner (or his heirs). Thus, the land never permanently left its original family of origin.
  • All (Israelite) bound servants were to be released as free people.
So anyway, we were looking at all the things in these passages, when someone started talking about what an economic stimulus it would be if we would just accept these laws today. Specifically, "Wouldn't it be nice if all the banks would just forgive all debts? Just drop them, wipe the slate clean? Wouldn't that cause a huge surge in economic activity, if people suddenly didn't have to worry about their mortgage payments, or car payments, or credit card payments? Here our government is preparing to spend trillions of dollars on economic stimulus; just think of the economic stimulus that widespread debt forgiveness would cause...."

Well, the hair on the back of my neck was standing up at hearing this, but there were several nods of assent and mutterings of general approval around the classroom.

Then one of the braver souls in the class raised his hand, and tried to explain briefly what some of the ramifications would be. Such an action would of course ruin the lenders and depositors, and this would itself hurt the economy. But the near-consensus response in the class came back: well, it might, but the economic surge caused by those people who didn't have to pay their debts anymore would more than compensate for the damage to the lenders....


My first reaction was one of dumbfoundedness.

The way banks operate--the way they have always operated--is to take their depositors' money, and lend it out at interest. When the loan is paid back with interest, the bank passes some of that extra on to the depositors in the form of payments or banking services, and pockets the difference. The money you put in your bank account isn't currently in the bank; most of it went to some guy who used it to buy a car. In a sense, if you have any money in the bank at all, you are the lender. You have lent it to the bank. When you withdraw it, the bank is, in effect, paying off its debt to you.

So if we were to cancel all debts, that, um...

Includes your bank account.

After all, if the bank has lent out your money to some guy so he can buy his car, and then we declare that all debts are null and void, then the bank can't recover your money. So the bank owes you right? But if the bank owes you, then that's a debt, and it got cancelled with all the other debts.

Now, I suspect that many of us, if we were given that chance, would make the trade. Yeah, I'd give up my bank account, and my Fidelity account, and even my 401(k), if I got to burn my mortgage. After all, my mortgage is bigger than all of those things combined. If I made that trade, I'd be in a better financial state afterward than before. So for me to wish for across-the-board debt cancellation would be a little self-serving.

Now suppose I was instead one of those guys that stayed out of debt, kept my consumption to the bare minimum, and saved every penny I could get so that, say, I could provide something to my heirs. Then what? Well, debt cancellation would hit me hard--and would hit me hard precisely because I was responsible.

My wife was considering this point, and came up with an interesting connection: We get in the habit of thinking of God's Forgiveness as a light, easy thing. God has the power just to wish away our sins, right? But no: When a debt is canceled like this, that's not cheap to the one doing the canceling. Someone always has to eat the loss. For someone to forgive your debt, that someone has to be willing to shoulder the consequences of your responsibility, and eat the cost himself. Tonya's note is that this is exactly what Christ did on our behalf. So while we as Christians have the promise that our sins are forgiven, that knowledge isn't something to accept lightly and easily; we need to remember that in order for my sins to be forgiven, someone else had to eat that cost, and that cost was terrible.

Debt cancellation is a serious business. It represents the trumping of mercy over justice; the one who lent his money loses, and the one who spent the money--often irresponsibly--is permitted to get away without paying it back. This is not something to be taken lightly. And when it does happen, the one who is forgiven the debt should approach the event with an air of gravity and thankfulness; not with a sense of entitlement.


Now, thinking on all this raised another difficult thought.

Anyone who reads this blog regularly knows that I'm a committed free-marketer. I happen to think that, for the long-term economic health of a nation--and for the long-term maintenance of the liberties of the people--a policy of government non-intervention in the economy is wise. A few exceptions may be made here or there when non-economic concerns (say, national security) are more important than the economic ones; but by and large, we are better off when people are allowed to make decisions among themselves about their economic activities, without third parties putting restrictions on them that they don't want themselves.

And yet, when I look at the Laws that God gave the Israelites, he did not give them a "free market". God's laws include all kinds of prohibitions, all kinds of restrictions, all kinds of mandates, and all kinds of conditions that don't fit a free market-model in any way. Consider:
  • No land could be sold in perpetuity; it would always eventually revert to the family of the ancestral owners.
  • All outstanding debts would be forgiven automatically in the Sabbatical year.
  • They were repeatedly warned against lending to each other at interest (Ex. 22:25, Lev. 25:36-37, Deut. 23:19-20)
  • There were all kinds of restrictions on what could be used as collateral (Ex. 22:25).
  • There were restrictions on how efficiently you could harvest your crops; this was so the poor could glean the fields after you were done harvesting. (Lev. 19:9-10).
  • If family members got in financial trouble and had to sell either their land or themselves to pay their debts, you had obligations to pay the money and do the redemption. (Lev. 25:25-28, Lev. 25:47-55)
  • If your brother died, leaving his wife childless, you were required to marry her, and father children with her; these children would become the legal heirs of the deceased brother, and would acquire his property.(Deut. 25:6-6).
And so forth. No way you could describe that economy as a "free market".

Now, let's just take a couple of these: the ones having to do with debt. The people of Israel were forbidden to lend to each other at interest. They also couldn't lend for a longer period than the time until the next Sabbatical year. From a purely economic standpoint, what would this do?

Well, it would have a number of impacts. On the plus side, you wouldn't have people going into debt and staying in debt for decades and decades. Every few years, the slate would be wiped clean. But...

A banking establishment like what we have now couldn't exist under these rules. One effect the taking of interest has, is to entice more people actually to lend. If interest rates are pushed lower than what the market will bear, people stop lending money and look for other ways to invest it. And if all debts are automatically going to be canceled when the next Sabbath Year comes around, it means that the payoff term of the debt will be limited to 6 years--or less, if the next sabbath year is sooner than that.

There are no more thirty-year mortgages, that's for sure. If you can't pay off your house in six, you won't be getting a loan to buy your house.

Just gaming out the ramifications of this, it becomes pretty apparent that credit is much easier to come by in our society than it would be if we followed the rules that God gave the Israelites. We can finance much greater sums now. And if we are responsible in paying it back, this allows us a much greater standard of living--I can afford a much more expensive house with a thirty-year mortgage, than I could afford on a five-year mortgage, that's for sure.

What gives? Why didn't God give His people the freedom to make these decisions for themselves, knowing that this freedom--if responsibly handled--would make them more prosperous than they would otherwise have been?

And what does this say about free markets as an economic model? If God didn't give them to the ancient Israelites, is it because there's something inherently immoral about them?

Am I wrong to be a supporter of the free markets?

Tough questions, and I'm not sure I know the answers to them. But here are some further thoughts.


First, it should be recognized that any liberty contains within it the potential for abuse. If you permit a large enough population to do some thing, there will almost inevitably be some people in that population who will use their liberty for destructive ends.

And there are plenty of destructive things that can happen in a free market, if the people choose to use their freedoms irresponsibly. I saw this article lately at TCS Daily, which describes Plato's thoughts on the way Republics destroy themselves:

Read along from an excerpt of Plato's Republic (Book VIII, 550d-566), and see if any of it sounds familiar. It's the tragic tale of a declining republic, a tale of war, money, and politics all gone wrong through a combination of bad judgment and disordered cravings. We begin with moneylenders who have a nasty habit of lending money to people they know will use it irresponsibly, especially to youths whom they encourage to fritter it away on useless luxuries. They prefer that their money be wasted on frivolities; the more of it is wasted today, the more they can charge in interest tomorrow.

But their clients are just as bad, if not worse. By spending others' money on frivolities, they fail to take responsibility for themselves. A group of people recklessly spending other people's money soon becomes a leech on society: a class of those who have ruined themselves burning through borrowed money.

The class of bitter, bankrupt borrowers finds it has a friend—or what looks and talks like a friend—in a group of politicians who promises them honey, served in a silver bowl at the expense of the moneylenders who got them into trouble in the first place. Their alliance only lasts until one of the honey-tongued politicians stirs up the bankrupted class, whips them into a frenzied mob, and makes war against the wealthy class, seizing their money by force. This politician emerges as a tyrant, and the old republic has died.

Say what you will about the purely economic wisdom of the Mosaic Law; but if followed, it would absolutely prevent this scenario. Those irresponsible lenders would quickly discover, every seven years, that they've lost their investments. Those irresponsible borrowers would soon thereafter discover that no one wants to lend to them anymore. And those irresponsible politicians would have to find some other issue to demagogue.

God knows human nature. He knows that we humans do dumb things. While wise, moral, upright people may be able to handle the freedom of a free market, it may be that He decided that there weren't enough wise, moral, upright people around among those former slaves from Egypt, to trust them with a free market.

So their society may well have been poorer, due to the economic effects of these laws, but it may also have been more stable.


Second, I suspect the very concept of wealth worked very differently back then. After all, we moderns think of wealth in terms of money. But money only has value when you can exchange it for the stuff you want. In a semi-nomadic agrarian society living nearly 3500 years ago, there weren't many stores out there. They used precious metals as currency, but it wasn't yet in the form of coin; they measured it out by weight.

But the stuff of value was, well, the stuff.

You had a piece of land, that was in the family for generations. Even when you sold it, it would still eventually return to your family in the Year of Jubilee. This land would have houses on it, which would be built by one generation and handed down to the next. One generation would plant an orchard; the next would plant a vineyard; the next would dig a well, and so forth. Over time this family would come to be known as wealthy--not necessarily because they had amassed a large quantity of gold and silver, but because they had--through careful management of resources over generations--built up large flocks and herds, built several sturdy houses, planted orchards and vineyards, tilled and fertilized large fields for crops, slowly accumulated tools and machines needed for household work (looms, olive presses, etc.); and so forth. The wealth of these families was built up, over generations, by the work that the people did.

And it seems to me that the laws that God gave are designed to preserve this wealth, to prevent it from being lost through bad financial transactions. You can sell your land, but not forever; it will eventually return to your heirs. You had to redeem it if your relatives lost it somehow. You had to produce heirs for your deceased brother, so that his share would not be lost (and so that his wife/wives would have sons to support them in their old age).

Furthermore, the laws appear to be designed to give people who are destitute a fresh start. After all, if you were an Israelite, even if you were dirt-poor, you were descended from someone who was allotted a share of land back when Joshua divided up the conquered territory; so you had a share, somewhere, that you could lay legal claim to. And once you had that land, you could start over, working it from scratch, in the hope that you could one day pass it on to your children; who would improve it, and pass it on to theirs, and so on, with your descendants one day being wealthy and prosperous.


Third, there are some differences between the Old and New Testament worlds. Certain laws that were given by God to the ancient Israelites don't appear to be mandated among the Gentile Christians.

For one example, there are the Kosher laws. When Paul writes to the Corinthians that they should eat whatever was sold in the meat market without raising questions of conscience, I think that's pretty conclusive that some of the old laws about cleanliness in diet are not bound on the Gentile Christians. After all, the Jews were required to butcher their food animals very carefully--making sure to deliver the killing blow in a specific way, and making sure to drain the blood from the carcass completely. Meat not butchered in this way was unclean. But in Gentile meat markets, there was no guarantee that any of this meat was properly prepared; much of it had been used in Pagan sacrifices, and had been butchered any which way but how God had told the Israelites. So for Paul to tell them it was OK to eat without any issues of conscience, means that the Kosher laws did not apply directly to them.

Indeed, the Council of Jerusalem (Acts 15) dealt with exactly the question of how much of the Law was binding on Gentile Christians, and concluded that very little of it actually was. And following up with the letters of Paul, he treats the Law as a "Pedagogus"--a schoolmaster (close, but not perfect translation), designed to train children. When the child was fully grown and fully trained, though, he no longer needed the Pedagogus; Paul's argument appears to be that the role of the Law has been similarly fulfilled, thus we are not required to bind Gentile Christians to obey all the commands of the law.

And indeed, much of the Law appears to be intended specifically for that group of semi-nomadic agrarian ex-slaves who lived 3500 years ago.

Does this include the economic stuff? I mean, even Jesus made reference to the taking of interest, in a non-disparaging context: in the parable of the Talents, the Master of the three stewards berates the third for not providing him a return on his investment. He says that even if the steward hadn't felt confident investing it, he should at least have left it with the bankers and gotten some interest on it. I'd have a hard time imagining Jesus telling this parable like that, if he didn't consider at least some taking of interest acceptable.

So I think it's at least conceivable that the Mosaic Laws on economics can be counted among those laws that were specifically intended to apply to the ancient Israelites, as opposed to being among those that are intended to apply to all people for all time (like, "You shall love the Lord your God with all your heart, mind, and strength").


Where does this leave the Free Market?

Well, I still think it's the system that will produce the most widespread wealth in a society. It tends to be better than most systems at rewarding hard work, innovation, and responsible decision-making; and punishing sloth and irresponsibility. A nation that implements a free market will generally become much wealthier and more economically dynamic.

But like any system made up of humans, it won't be without problems. Given liberties, there will always be people out there who will misuse their liberties, and in the context of a free market, that will bring disaster on them--or on the people around them.

I think the fact that God gave the non-free-market rules he did to the ancient Israelites, should be taken by us as a set of warnings:
  • The full blessings of a free market only accrue to the society made up of wise and compassionate people. Leave out either of those conditions, and the result can be unpleasant. A society can even destroy itself....
  • There are other concerns out there than the purely economic. Sometimes we're better off poorer, at least in the short term, so long as we're keeping our culture strong.
  • God cares about the poor so much, that he was willing to inflict an entire non-free market economy on His people to make sure that they were never left with nothing. So if we wish to enjoy the blessings of the free market, we need to accept some personal responsibility for the well-being of the poor--even if this only involves helping people identify and grab the opportunities that are already around them.
What does my readership think?

1 comment:

Roger Z said...

Dang, Tim, this has to be one of the most interesting concepts I've ever read on a personal blog. I am utterly unfamiliar with any literature even remotely related to what you're discussing here (except from a Liberation Theology perspective): the theology of economics. So I find this utterly fascinating and completely novel to me and thus kind of mind-blowing.

Consider to the implication of political economics- Jesus in some ways encouraged us to divorce Ceasar from God. There is another question then- how are we to reconcile ourselves toward ANY secular economic rationale? But I think that's another question in addition to what you addressed here.

This is cool stuff. Very thought provoking. If you know anyone... well, I've read Michael Novak on this topic, too, but somehow his approach seems different... that has written books on this subject, I'd be interested in learning more. This was a profound thought and I'm glad you decided to add this one last post to your blog!