Economics As If The Bible Mattered

Avatar

Chris Dierkes

Chris Dierkes (aka CJ Smith). 29 years old, happily married, adroit purveyor and voracious student of all kinds of information, theories, methods of inquiry, and forms of practice. Studying to be a priest in the Anglican Church in Canada. Main interests: military theory, diplomacy, foreign affairs, medieval history, religion & politics (esp. Islam and Christianity), and political grand bargains of all shapes and sizes.

Related Post Roulette

16 Responses

  1. Avatar Bob Cheeks says:

    Let’s see if I have this right? The Soc/Dems don’t have a clue what they’re doin’ so I should urge them to do it deeper and harder?

    The one thing about being a third world country with nukes is that you’d think very few would be stupid enough to bother you?Report

  2. Avatar Clint says:

    1. since economics is inherently a form of moral philsophy, do i need a stronger phrase for the old-fashioned moral hazard such a proposal would create?

    2. i prefer the indispensable robert samuelson’s take from today on the ineptitude of the dismal science: http://www.washingtonpost.com/wp-dyn/content/article/2009/07/05/AR2009070501587.htmlReport

    • Avatar Chris Dierkes in reply to Clint says:

      Clint,

      The Samuelson article is very good–thanks for sending it along. I read Ferguson’s book and it’s very good. If you like those check out this link in the article which is a review of a book by a Nicholas Taleb protege that blows apart finance theory. That adds weight to Samuelson’s point.Report

  3. Avatar E.D. Kain says:

    Well, if I am not mistaken, this falls in line with the concept of “balance sheet recession.” It reminds me of a recent South Park episode in which everyone is too afraid to spend because they’ve all racked up so much debt. So Kyle pays off everyone’s debt with his no-limit credit-card so that everyone can regain confidence and start shopping again.

    And so to this post I might ask – if you place value, perhaps moral, or perhaps purely pragmatic – on the renewal of thrift in this country, how can you advocate debt-forgiveness? Wouldn’t people who accrued debt only to have it forgiven learn only that their unthrifty behavior will be rewarded in the long run and that they can, in fact, get things for free?

    I agree that the surest way to bolster consumer spending and to get the economy going again would be to pay off everyone’s credit cards. Everyone would be liberated from their bad choices and free to make them again. Growth would ensue. But I’m not sure that would be a very wise long-term move, not to mention it would reward some so much more than others. If someone has $40,000 in credit card debt then they likely also have $40,000 in goods and services more than the person who only has $4,000 in credit card debt. Paying off both cards is mightily unfair to those with only $4,000 and even more so for those with none at all….Report

    • Avatar Chris Dierkes in reply to E.D. Kain says:

      Not exactly–although that was one of my favorite South Park episodes ever. Especially the whole Jesus imagery: “He saved us from our debts!!!” Classically brilliant as per those guys usual.

      The issue for me is not to get back to spending–that was my critique of Krugman and Stiglitz over-focus on aggregate demand. They are Keynesians arguing for a neo-paradox of thrift. I think they are missing the biosphere for the trees.

      iow, I think this crisis calls for a radical re-do on the basic morphology of our economic existence. One thing would be a shift away from consumption to production though not necessarily old 20th century big heavy industrialization. Two: cities taking the lead in forming autonomous self-regulating, self-producing areas of economic uplift. That will require disconnecting from the now parasitic global financial system (the electronic herd as Friedman called it).

      So it’s the scale and the “direction” if you like of the economic connections that is not being discussed. Everything is built around national GDP numbers, which homogenizes regional/urban distinctions.Report

  4. Avatar Chris Dierkes says:

    So both Clint and ED brought up the obvious counter-argument about moral hazard, so that deserves a response.

    1. We already have something far worse than moral hazard. A hazard is a warning signal right? What we have now is immoral actual destruction. If all we ever talk about is moral hazard it fails to recognize how awful the current reality is. The turbulence and chaos of the global system is now inherently hazardous and worse in places that hazard is being realized in real time.

    2. But even that still doesn’t totally answer the critique. My other reply is contained in my response above to ED. A jubilee would have to be coupled with a different learned economic order. Economics as oikonomia–the nomos (rule/law/custom) of the oikos (household).

    We need an economic position that is built around the real creation of wealth for the household (or individual) not through the market. A person has to dedicate their entire lives essentially to learning/studying/working that arena to get the market. It’s not for the quote unquote “regular” folk. And we can not speculate assests in lieu of doing that hard work (i.e. housing bubbles).

    Otherwise this whole stimulus package will both not work and creating more bubbles going forward. We have lost an ability to judge real value/wealth. That is the heart of this entire problem. They are other corollaries to that, but that’s the basis. Our compass is broken.

    And just trying to patch up the holes and keep going with this broken machine will only lead to real potential social breakdown in the future.Report

    • Avatar Chris Dierkes in reply to Chris Dierkes says:

      For what it’s worth, point #2 (a different economic vision) is interestingly there (although somewhat implicit arguably) in the Biblical text of Leviticus. There its more related to the worship of God who freed the slaves–hence no permanent slavery of their own people. And God gave the land so the land must itself be free at points, since humans are guests on God’s property.

      Obviously that’s not the prime worldview today. But the notion that there must be some intrinsic mechanism for release of large scale debts makes a whole lot of sense to me. Things need to come to rest for a time. The Jubilee is related to the Sabbath and Sabbath laws.

      Today it would more likely be called ecological economics–harmony with nature more than God’s covenant. Our economic ecology is all wrong. And just focusing on the details of this or that mistake, while helpful, if that is all the focus becomes on, obscures the underlying issue.Report

    • Avatar Clint in reply to Chris Dierkes says:

      I am not someone who believes in economic pain for the sake of pain (that as consumers responsible for partaking in irresponsible debt, this recession ought to serve as a wake-up call to alter consumptive/greedy/credit-requiring habits). However, I also believe in the creative destruction offered by the market. While many commentators have discussed this cycle in regard to businesses that have been considered “too big to fail” (George Will comes to mind), I don’t understand why this same destruction ought not befall households and individual economic actors. Note, I don’t this is a good progression for redemptive reasons, but rather as a practical solution to financial crises that confront us. I am not certain why the current problems are worse than the moral hazard that debt cancellation would cause. The term moral hazard refers to the absence of restraint (moral and otherwise) that results from diminishing risk.
      Chris, perhaps you could explain the biblical origin of Jubilee as it relates to individual debt? I have read extensively about Jubilee as a justification for the cancellation or forgiveness of third world “odious” debt run up by dictators on a national level, but I think my lack of Christian knowledge is undermining my understanding of this call for individual debt cancellation. Also, how do other religious traditions fit into this proposal? Would the tension between debt and Islam urge the cancellation of debt or responsibility by debtors?Report

      • Avatar Travis in reply to Clint says:

        The problem with the widespread economic destruction of households is quite simple: it’s a recipe for societal destabilization.

        If the choice is between the creative destruction of the credit card and subprime lending industries and the creative destruction of millions of American households, the choice seems obvious.Report

      • Avatar Chris Dierkes in reply to Clint says:

        What Travis said.

        It would have to be twinned with an alternate credit industry. Local credit regimes and the end of fiat money (debt-creation) money.

        In this regard The Jubilee background is instructive. Originally the Israelites practiced tribal subsistence level farming. Village life basically. Based on tribal elders, family clans, etc.

        Then with the rise of the monarchy and the rentier class, agriculture became commodified. Seed came to be owned by merchants (not unlike our current agri-patening mega-business driving out individual yeoman farmer types) and large collectives of fields owned by lords (proto-feudalism basically). Villages were largely in wage slavery or a kind of sharecropping scenario. They had to borrow to get the seed during planting season (when supply was scarcer hence higher prices, hence higher debts plus usurious rates) and then had to pay off at harvest time when supply was abundant and demand lower and therefore a glutted market with depressed prices.

        The vicious circle never ended. EXCEPT if there would be some counteraction on behalf of the mass of poor. Otherwise the game is fixed. Unless the debts are canceled. As it is not just a matter of them stupidly getting involved in bad deals but the entire economic system predicated on them being forced to have to enter a debt slavery cycle.Report

        • Avatar Chris Dierkes in reply to Chris Dierkes says:

          Check this passage out 1 Samuel Chapter 8 (Samuel responding to the people’s request for a king):

          10 So Samuel reported all the words of the Lord to the people who were asking him for a king. 11He said, ‘These will be the ways of the king who will reign over you: he will take your sons and appoint them to his chariots and to be his horsemen, and to run before his chariots; 12and he will appoint for himself commanders of thousands and commanders of fifties, and some to plough his ground and to reap his harvest, and to make his implements of war and the equipment of his chariots. 13He will take your daughters to be perfumers and cooks and bakers. 14He will take the best of your fields and vineyards and olive orchards and give them to his courtiers. 15He will take one-tenth of your grain and of your vineyards and give it to his officers and his courtiers. 16He will take your male and female slaves, and the best of your cattle* and donkeys, and put them to his work. 17He will take one-tenth of your flocks, and you shall be his slaves. 18And in that day you will cry out because of your king, whom you have chosen for yourselves; but the Lord will not answer you in that day.’Report

          • Avatar Chris Dierkes in reply to Chris Dierkes says:

            The parallel today is that since the 1970s we have entered another technological paradigm (informational economy). Our educational system however is still built to the industrial era, and therefore not sufficient numbers (except for well to do) of people received an education requisite to the demands of the contemporary economy. As a result they were left instead with low-paying service jobs which disaggregated vertical supply chains to horizontal global ones, thereby diminishing the power of unions.

            Meanwhile their productivity of the average worker was rising but s/he was not getting a sufficient share of that productivity. The earlier New Deal synthesis/social contract was built to the previous industrialization era. No new social contract has arisen to replace the previous one. Without a up to date social contract that will give an adequate portion of the gains from increased productivity to the general populace, we are headed to a reckoning.

            Credit can be achieved by business to business credit. Banks could work as facilitators of that process but banks should basically be public utilities/credit consulting companies. Not debt-creating monopolies.

            As a sad historical irony in our case, the Jubilee was apparently never actually practiced. The game is otherwise pretty fixed.Report

  5. Avatar Aaron Armitage says:

    I don’t think the proposal is to pay off everyone’s debts, but to cancel them. If that happens, the credit card companies simply go bankrupt (as they deserve) and much of the current financial sector will either go away or be profoundly restructured. This will probably require even more public money, but for once it’ll be worth it. Even if the newly freed debtors all desire to repeat their spending on credit, they won’t be able to. Such credit as re-emerges will be based on repayment rather than the servicing of interest, and investment rather than consumption.

    I understand your point about unfairness between those with large debts and those with small or no debts, but at some point we just have to assume that God knew what He was doing when He gave the Law.Report

Leave a Reply

Your email address will not be published. Required fields are marked *