Sunday, January 12, 2014

How Can Economic Law Help Us Fulfill the Cultural Mandate?

“Economics is a discipline that is merely about the things of this world!”

So goes a common fallacy one hears occasionally from Christians who are suspicious of the notion of an economic science that can be compatible with Christian doctrine. If that were true, studying economics would be perhaps useless at best and downright destructive at worst.

In fact, however, a proper understanding of economics is crucial for our obeying and fulfilling the cultural mandate given to us by God in the first two chapters of Genesis.

The Connection Between Economics & the Cultural Mandate

Christians must bring thoughts about the world and their place in it captive to Christ (2 Corinthians 10:5). We do this by meditating upon his general and special revelation. We find in Genesis 1 that the very first command given to man is what has been variously called the creation mandate or cultural mandate. Even before sin and the fall of man, God told our first parents to

Be fruitful and multiply and fill the earth and subdue it and have dominion over the fish of the sea and over the birds of the heavens and over every living thing that moves on the earth (Genesis 1:28).

In Genesis 2:15, we find that the cultural mandate includes working and keeping the created order. Thus, as David Hegeman in Plowing in Hope explains, the cultural mandate requires filling, working, keeping, and ruling creation.

We are called to do this, however, in our present, fallen, and finite world faced with scarcity. Since our banishment from the Garden of Eden, man has faced a central cultural dilemma: how do we fulfill God’s creation mandate in a world of aggravated scarcity without either starving to death or killing one another?

Read the rest

Tuesday, January 7, 2014

Liberty and Human Flourishing

A new video from the Institute for Faith Work and Economics

This brings to mind a passage from Francis Wayland's Elements of Moral Science. Explaining the way God communicates to us the right to property, he first notes that our natural conscience attests to the rightness of private property. He then writes the following:

Secondly. That God wills the possess on of property, is evident from the general consequences which result from the existence of this relation. The existence and progress of s(ciety, nay, the very existence of our race, depends upon the acknowledgment of this right. Were not every individual entitled to the results of his labor, and to the exclusive enjoyment of the benefits of these results--

1. No one would labor any more than was sufficient for his own individual subsistence, because he would have no more right than any other person to the value which he had created.
2. Hence, there would be no accumulation; of course, no capital, no tools, no provision for the future, no houses, and no agriculture. Each man, alone, would be obliged to contend, at the same time, with the elements, with wild beasts, and also with his rapacious fellow-men. The human race, under such circumstances, could not long exist.

3. Under such circumstances, the race of man must speedily perish, or its existence be prolonged, even in favorable climates, under every accumulation of wretchedness. Progress would be out of the question; and the only change which could take place, would be that arising from the pressure of heavier and heavier penury, as the spontaneous productions of the earth became rarer, from in-. provident consumption, without any correspondent labor for reproduction.

4. It needs only to be remarked, in addition, that just in proportion as the right of property is held inviolate, just in that proportion civilization advances, and the comforts and conveniences of life multiply. Hence it is, that, in free and well ordered governments, and specially during peace, property accumulates, all the orders of society enjoy the blessings of competence, the arts flourish, science advances, and men begin to form some conception of the happiness of which the present system is capable. And, on the contrary, under despotism, when law spreads its protection over neither house, land, estate, nor life, and specially.during civil wars, industry ceases, capital stagnates, the arts decline, the people starve, population diminishes, and men rapidly tend to a state of barbarism (Elements of Moral Science, pp. 232-33). 

Saturday, January 4, 2014

Time Preference and the 4G LTE Network

One occasion advertising agencies hit on a television commercial that reveals a fundamental economic truth (beyond the rather obvious that consumers prefer lower prices and better quality). A commercial advertising AT&T's 4G LTE cell phone network is one such effort. What drives the entire commercial is the existential fact of time preferences: the fact that people would rather have there ends satisfied sooner than later. This principle is so foundational because it is the root of all interest.

The makers of AT&T's "It's Not Complicated" campaign include one commercial that is essential time preference in a one-sentence motto: Now is better.

Have a look:

Friday, January 3, 2014

It's the Intervention

It is government intervention that is holding back the economy. Not a Hansen-Summers secular stagnation, nor another savings glut. So says Stanford economist John B. Taylor. In this he echos what Robert Higgs, John Cochran, and others have been saying for a long time.

As Taylor notes:
In the current era, business firms have continued to be reluctant to invest and hire, and the ratio of investment to GDP is still below normal. That is most likely explained by policy uncertainty, increased regulation, including through the Dodd Frank and Affordable Care Act, about which there is plenty of evidence, especially in comparison with the secular stagnation hypothesis.
As I explain in my book and elsewhere, one of the key sources of economic progress (and I am here merely echoing Mises and Rothbard) is investment capital accumulation. Private property is crucial for capital formation, because if a potential capitalist investor fears he is not secure in his property he will be less willing to restrict present consumption in order to engage in productive investment. He is less willing to save and invest because he estimates that the chances are significantly high that his investment will be lost do to regulation of one form or another. Regulations make it either more costly and, hence, less profitable to engage in productive investment or his investment could even be sunk in a process producing a product that is banned before the project even comes to fruition. Such an institutional environment places a significant damper on investment.