Christianity and Capitalism: Part 2

*Posted by Joe Wooddell

Last week began a seven-part treatment of Jay Richards’s book Money, Greed, and God: Why Capitalism Is the Solution and Not the Problem (All material in quotation marks and most of the material in general for these posts comes from his book). I treated the Introduction, which argues that Christians not only may but should endorse capitalism. I also discussed chapter 1, “The Nirvana Myth,” which argued that given our fallen state, man will never bring heaven down to earth, but that of all the “live options” for economic well-being, free-market capitalism works best. Communism has failed; it killed tens of millions in the name of human flourishing before it finally fizzled out on a large scale. That said, its effects and main tenets are still embraced by many today. Christian believers (and everyone else) should keep their eyes open to such residue.

This week’s topic is chapter 2, “The Piety Myth,” which focuses on our good intentions instead of the unintended consequences of our actions. Before progressing, however, I must disagree with Richards when he writes of “God’s abiding concern for the poor, and his expectation that we share his concern. That’s the message from Genesis to Revelation” (emphasis added). It is a message, but not the message. Rather, the message is that man has fallen and God is restoring him into a right relationship with God through Christ. Richards’s book, however, is still one of the best at explaining basic economics and how to think and act about it.

His central thesis in this chapter is that scripture is full of admonitions to care for the poor, but we cannot simply have a heart for the poor; we must have a mind for them as well. Good intentions do not help if they lead to continued or greater poverty! Several policies aimed at helping the poor often actually end up hurting them long term.

Minimum Wage Laws

For example, “living” or “minimum wage” laws “make it a crime for individual employers and employees to enter freely into agreements for work and wages.” Liberal Christians like Jim Wallis support such laws based on passages like Isaiah 65, “My chosen shall long enjoy the work of their hands; they shall not labor in vain,” and James 5, which speaks of employers withholding laborers’ pay. Neither of these passages, however (nor any others I know of), mandate government price-fixing for labor. The fact is that the poor and unskilled are those most likely to suffer from minimum wage laws since employers might hire unskilled workers for a smaller amount, and such jobs often lead to the “experience and connections” necessary to advance into higher paying jobs. The higher the minimum wage, the less likely employers are to hire unskilled workers.

“Fair” Trade

“Fair” trade is another failed attempt at helping the poor rise out of poverty. For example, when a government or third party (or a good-hearted Starbucks customer) subsidizes coffee growers in third world countries, paying them twice (or more) the market price for coffee beans, those coffee growers continue producing coffee thinking all the while that everything is okay. But when Americans and others who drink the coffee get tired of paying higher prices for “fair” trade coffee, they will switch to cheaper, free trade coffee, and at some point the subsidies to the coffee growers will end, leaving them in a bind. The beauty of the free market is that if prices were left to fluctuate based on supply and demand, coffee farmers could then predict whether they ought to continue producing coffee or not. Coffee has grown in demand, so several other countries are producing it now, and prices have actually dropped (at the time of Richards’s writing). Farmers need to know this without artificial price-fixing, so they can plan for the future. No one has a “right” to continue getting paid artificially inflated prices to produce some product just because he did it last year or enjoys it or doesn’t know how to do anything else. Free markets (and free trade) forces humans to adapt and learn new skills, or move on to work for someone else.

Before you get upset about paying $5 for a cup of coffee, remember that those pennies worth of beans had to be “packaged, preserved, labeled, shipped, delivered, carefully roasted, prepared to extremely high maintenance specifications with expensive equipment,” and then served up hot in a trendy cup at a fancy store. Value increases as the product goes up the supply chain. So while coffee farmers aren’t as well off as Starbucks executives, they’re better off than they would be if there were no Starbucks in the US demanding the beans.

I’m running out of space and time so I’ll be brief on the last two items (and you can buy and read Richards’s book for yourself; I recommend it, even though I don’t know him and receive nothing for promoting it).

Foreign Aid

Foreign aid comes mainly in the form of cash or bulk products like cotton or some sort of grain. When US cotton farmers are subsidized to produce more cotton than the market needs, the government takes it and dumps it into a country that “needs” cotton; but when this happens there is no incentive for that country to produce cotton. Or, if there were cotton producers there, they go out of business; how can local cotton producers compete with free cotton from overseas? Such schemes make us feel good, but they hurt the very people who need help and do not address fundamental problems. For example, many of the neediest countries are corrupt, have horrible property laws, and have little in terms of the rule of law. While it’s not as cool and hip as the “One Campaign” (an attempt to get developed countries to donate one percent of their budget to struggling countries), these countries need help with the hard, boring things just mentioned (rule of law, etc.) as well as advice on developing thrift, discipline, creativity, entrepreneurship, etc.

Government-Run Welfare

Finally, government-run welfare is another way we feel good about ourselves but hurt the people we are trying to help. Aristotle said, “If you want to encourage something, reward it; if you want to discourage it, punish it.” Our government rewards both parents working outside the home (instead of one staying home caring for and perhaps educating the children), it rewards staying single and having lots of kids out of wedlock, it rewards not having a job for long periods of time, and it punishes hard work, entrepreneurship, and wealth creation. It’s all completely backwards. But it makes us feel good to write people checks…with someone else’s money, of course.

So what should we do as believers? We should invest our time, money, and effort in promoting property rights, the rule of law, personal virtues like diligence, thrift, and ingenuity, and the cultural values of trust, an orientation to the future, and the willingness to delay gratification. We should promote the principle of subsidiarity, according to which help comes first from the person himself, then his immediate family and friends, then churches, synagogues, local charities, and community organizations. These individuals and institutions, not the federal government, are the starting points.

On a human level, only wealth creation can alleviate poverty, and government handouts don’t create wealth; they simply force one person to give his own money to another. This is neither prudent nor Christian. Believers should think critically about these things, both at home and abroad, and they should never forget that people need Jesus more than rescue from poverty. All the money and self-sufficiency in the world won’t keep a person out of hell. We ought never to forget to share the gospel first and foremost in every situation. We are trying to balance this at Criswell College with our several Bachelor’s and Master’s programs, including our new undergraduate PPE (Philosophy, Politics, and Economics) minor starting this fall. We hope you’ll come check it out.

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