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Jay Richards: eight common myths about wealth, poverty and the free market

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I have a key that will unlock a puzzling mystery
I have a key that will unlock a puzzling mystery

Have you read Jay Richards’ book “Money, Greed and God?” Because if you haven’t, he’s written a series of articles that summarize the main points of the book.

The index post is here.

Here are the posts in the series:

  • Part 1: The Eight Most Common Myths about Wealth, Poverty, and Free Enterprise
  • Part 2: Can’t We Build A Just Society?
  • Part 3: The Piety Myth
  • Part 4: The Myth of the Zero Sum Game
  • Part 5: Is Wealth Created or Transferred?
  • Part 6: Is Free Enterprise Based on Greed?
  • Part 7: Hasn’t Christianity Always Opposed Free Enterprise?
  • Part 8: Does Free Enterprise Lead to An Ugly Consumerist Culture?
  • Part 9: Will We Use Up All Our Resources?
  • Part 10: Are Markets An Example of Providence?

Parts 4 and 5 are my favorites. It’s so hard to choose one to excerpt, but I must. I will choose… Part 4.

Here’s the problem:

Myth #3: The Zero Sum Game Myth – believing that trade requires a winner and a loser. 

One reason people believe this myth is because they misunderstand how economic value is determined. Economic thinkers with views as diverse as Adam Smith and Karl Marx believed economic value was determined by the labor theory of value. This theory stipulates that the cost to produce an object determines its economic value.

According to this theory, if you build a house that costs you $500,000 to build, that house is worth $500,000. But what if no one can or wants to buy the house? Then what is it worth?

Medieval church scholars put forth a very different theory, one derived from human nature: economic value is in the eye of the beholder. The economic value of an object is determined by how much someone is willing to give up to get that object. This is the subjective theory of value.

And here’s an example of how to avoid the problem:

How you determine economic value affects whether you view free enterprise as a zero-sum game, or a win-win game in which both participants benefit.

Let’s return to the example of the $500,000 house. As the developer of the house, you hire workers to build the house. You then sell it for more than $500,000. According to the labor theory of value, you have taken more than the good is actually worth. You’ve exploited the buyer and your workers by taking this surplus value. You win, they lose.

Yet this situation looks different according to the subjective theory of value. Here, everybody wins. You market and sell the house for more than it cost to produce, but not more than customers will freely pay. The buyer is not forced to pay a cost he doesn’t agree to. You are rewarded for your entrepreneurial effort. Your workers benefit, because you paid them the wages they agreed to when you hired them.

This illustration brings up a couple important points about free enterprise that are often overlooked:

1. Free exchange is a win-win game.

In win-win games, some players may end up better off than others, but everyone ends up better off than they were at the beginning. As the developer, you might make more than your workers. Yet the workers determined they would be better off by freely exchanging their labor for wages, than if they didn’t have the job at all.

A free market doesn’t guarantee that everyone wins in every competition. Rather, it allows many more win-win encounters than any other alternative.

2. The game is win-win because of rules set-up beforehand. 

A free market is not a free-for-all in which everybody can do what they want. Any exchange must be free on both sides. Rule of law, contracts, and property rights are needed to ensure exchanges are conducted rightly. As the developer of the house, you’d be held accountable if you broke your contract and failed to pay workers what you promised.

An exchange that is free on both sides, in which no one is forced or tricked into participating, is a win-win game.

On this view, what you really need to fear as a consumer is government intervention that restricts your choices in the marketplace, or makes some choices more expensive than they need to be (tariffs).

If you care about poverty, it’s often tempting to think that it can only be solved one way – by transferring wealth from the rich to the poor. But that is a very mistaken view, as any economist will tell you. The right way to create prosperity is by creating laws and policies that unleash individual creativity. Letting individuals create innovative products and services, letting them keep what they earn, making sure that the law doesn’t punish entrepreneurs – that incentivizes wealth creation. Fixing poverty does not mean transferring wealth, it means giving people more freedom to create wealth on their own. Free trade between nations is an important way that we encourage people to create better products and services that what they have available in their own countries.

Economists agree on the benefits of free trade

Who could possibly disagree with free trade? Well, many people on the left do. But economists across the spectrum of ideology (university and private sector and public sector) agree on the benefits of free trade.

Harvard economist Greg Mankiw explains what most professional economists agree on.

Excerpt:

Here is the list, together with the percentage of economists who agree:

  1. A ceiling on rents reduces the quantity and quality of housing available. (93%)
  2. Tariffs and import quotas usually reduce general economic welfare. (93%)
  3. Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
  4. Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
  5. The United States should not restrict employers from outsourcing work to foreign countries. (90%)
  6. The United States should eliminate agricultural subsidies. (85%)
  7. Local and state governments should eliminate subsidies to professional sports franchises. (85%)
  8. If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
  9. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
  10. Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
  11. A large federal budget deficit has an adverse effect on the economy. (83%)
  12. A minimum wage increases unemployment among young and unskilled workers. (79%)
  13. The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
  14. Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)

Socialist economic policies don’t work because they are making policies that are based on economic myths. We know that these myths are myths because of economics is a mathematical science, and because we have tried good and bad policies in different times and places. We have calculations and we have experience to know what works and what doesn’t work. If you want to help the poor, you have to respect what economists know about how wealth is created. The solution is not to “spread the wealth around”, it’s to encourage people to create more wealth by inventing things that people freely choose to buy.

Polemics

Mark D. Linville: does Darwinian evolution make morality rational?

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A conflict of worldviews
A conflict of worldviews

Have you ever heard an atheist tell you that naturalistic evolution is an answer to the moral argument? I have. And I found a good reply to this challenge in the book “Contending With Christianity’s Critics“. The chapter that responds to the challenge is authored by Dr. Mark D. Linville. It is only 13 pages long. I have a link to the PDF at the bottom of this post.

First, a bit about the author:

Blog: The Tavern at the End of the World
Current positions:

  • PhD Research Fellow
  • Tutoring Fellow in Philosophy

Education:

  • PhD in Philosophy with a minor in South Asian Studies and a specialization in Philosophy of Religion, University of Wisconsin-Madison
  • MA in Philosophy, University of Wisconsin-Madison
  • MA in Philosophy of Religion, Trinity Evangelical Divinity School
  • MA in Theology, Cincinnati Christian Seminary
  • BA in Biblical Studies, Florida Christian College

Here is his thesis of the essay:

Darwin’s account of the origins of human morality is at once elegant, ingenious, and, I shall argue, woefully inadequate. In particular, that account, on its standard interpretation, does not explain morality, but, rather, explains it away . We learn from Darwin not how there could be objective moral facts, but how we could have come to believe—perhaps erroneously—that there are.

Further, the naturalist, who does not believe that there is such a personal being as God, is in principle committed to Darwinism, including a Darwinian account of the basic contours of human moral psychology. I’ll use the term evolutionary naturalism to refer to this combination of naturalism and Darwinism. And so the naturalist is saddled with a view that explains morality away. Whatever reason we have for believing in moral facts is also a reason for thinking naturalism is false. I conclude the essay with a brief account of a theistic conception of morality, and argue that the theist is in a better position to affirm the objectivity of morality.

And here’s a sample to get your attention:

But even if we are assured that a “normal” person will be prompted by the social instincts and that those instincts are typically flanked and reinforced by a set of moral emotions, we still do not have a truly normative account of moral obligation. There is nothing in Darwin’s own account to indicate that the ensuing sense of guilt—a guilty feeling—is indicative of actual moral guilt resulting from the violation of an objective moral law. The revenge taken by one’s own conscience amounts to a sort of second-order propensity to feel a certain way given one’s past relation to conflicting first-order propensities (e.g., the father’s impulse to save his child versus his impulse to save himself). Unless we import normative considerations from some other source, it seems that, whether it is a first or second-order inclination,one’s being prompted by it is more readily understood as a descriptive feature of one’s own psychology than material for a normative assessment of one’s behavior or character. And, assuming that there is anything to this observation, an ascent into even higher levels of propensities (“I feel guilty for not having felt guilty for not being remorseful over not obeying my social instincts…”) introduces nothing of normative import. Suppose you encounter a man who neither feels the pull of social, paternal or familial instincts nor is in the least bit concerned over his apparent lack of conscience. What, from a strictly Darwinian perspective, can one say to him that is of any serious moral import? “You are not moved to action by the impulses that move most of us.” Right. So?

The problem afflicts contemporary construals of an evolutionary account of human morality. Consider Michael Shermer’s explanation for the evolution of a moral sense—the “science of good and evil.” He explains,

By a moral sense, I mean a moral feeling or emotion generated by actions. For example, positive emotions such as righteousness and pride are experienced as the psychological feeling of doing “good.” These moral emotions likely evolved out of behaviors that were reinforced as being good either for the individual or for the group.2

Shermer goes on to compare such moral emotions to other emotions and sensations that are universally experienced, such as hunger and the sexual urge. He then addresses the question of moral motivation.

In this evolutionary theory of morality, asking “Why should we be moral?” is like asking “Why should we be hungry?” or “Why should we be horny?” For that matter, we could ask, “Why should we be jealous?” or “Why should we fall in love?” The answer is that it is as much a part of human nature to be moral as it is to be hungry, horny, jealous, and in love.3

Thus, according to Shermer, given an evolutionary account, such a question is simply a non-starter. Moral motivation is a given as it is wired in as one of our basic drives. Of course, one might point out that Shermer’s “moral emotions” often do need encouragement in a way that, say, “horniness,” does not. More importantly, Shermer apparently fails to notice that if asking “Why should I be moral?” is like asking, “Why should I be horny?” then asserting, “You ought to be moral” is like asserting, “You ought to be horny.” As goes the interrogative, so goes the imperative. But if the latter seems out of place, then, on Shermer’s view, so is the former.

One might thus observe that if morality is anything at all, it is irreducibly normative in nature. But the Darwinian account winds up reducing morality to descriptive features of human psychology. Like the libido, either the moral sense is present and active or it is not. If it is, then we might expect one to behave accordingly. If not, why, then, as a famous blues man once put it, “the boogie woogie just ain’t in me.” And so the resulting “morality” is that in name only.

In light of such considerations, it is tempting to conclude with C. S. Lewis that, if the naturalist remembered his philosophy out of school, he would recognize that any claim to the effect that “I ought” is on a par with “I itch,” in that it is nothing more than a descriptive piece of autobiography with no essential reference to any actual obligations.

When it comes to morality, we are not interested in mere descriptions of behavior. We want to know about prescriptions of behavior, and whether why we should care about following those prescriptions. We are interested in what grounds our sense of moral obligation in reality. What underwrites our sense of moral obligation? If it is just rooted in feelings, then why should we obey our moral sense when obeying it goes against out self-interest? Feelings are subjective things, and doing the right thing in a real objective state of affairs requires more than just feelings. There has to be a real objective state of affairs that makes it rational for us to do the right thing, even when the right thing is against our own self-interest. That’s what morality is – objective moral obligations overriding subjective feelings. I wouldn’t trust someone to be moral if it were just based on their feelings.

The PDF is right here for downloading, with the permission of the author.

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Bible study: Esther as an example of bravery and God’s providence

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Bible study that hits the spot
Bible study that hits the spot

I’ve been listening to this FREE two-volume series on the book of Esther featuring pastor Alistair Begg. A whole bunch of interesting things stuck out to me, so I’ll write about one of them today.

First, Esther is a Jewish woman whose father or mother died when she was young. She was adopted by Mordecai, another Jew. She was very beautiful, so she was picked to be part of the Persian King’s harem. In fact, she is so beautiful that the King chooses her to be the Queen.

Now there is an enemy of the Jews in the King’s court named Haman, and he manages to get the King to create an edict that says that all the Jews will be killed. Mordecai calls Esther to tell her that she has to stop the King from ordering this edict.

But Esther is out of favor with the King, and hasn’t been asked to come in to visit him for some time. To go in and see the King without being summoned is a capital offense. Unless the King gives permission, she would be killed for intruding on the King. But in the end, she agrees to speak up and say something.

It all gets resolved in Esther chapter 4.

Esther 4:1-17:

1 When Mordecai learned all that had been done, he tore his clothes, put on sackcloth and ashes, and went out into the midst of the city and wailed loudly and bitterly.

2 He went as far as the king’s gate, for no one was to enter the king’s gate clothed in sackcloth.

3 In each and every province where the command and decree of the king came, there was great mourning among the Jews, with fasting, weeping and wailing; and many lay on sackcloth and ashes.

4 Then Esther’s maidens and her eunuchs came and told her, and the queen writhed in great anguish. And she sent garments to clothe Mordecai that he might remove his sackcloth from him, but he did not accept them.

5 Then Esther summoned Hathach from the king’s eunuchs, whom the king had appointed to attend her, and ordered himto go to Mordecai to learn what this was and why it was.

6 So Hathach went out to Mordecai to the city square in front of the king’s gate.

7 Mordecai told him all that had happened to him, and the exact amount of money that Haman had promised to pay to the king’s treasuries for the destruction of the Jews.

8 He also gave him a copy of the text of the edict which had been issued in Susa for their destruction, that he might show Esther and inform her, and to order her to go in to the king to implore his favor and to plead with him for her people.

9 Hathach came back and related Mordecai’s words to Esther.

10 Then Esther spoke to Hathach and ordered him to reply to Mordecai:

11 “All the king’s servants and the people of the king’s provinces know that for any man or woman who comes to the king to the inner court who is not summoned, he has but one law, that he be put to death, unless the king holds out to him the golden scepter so that he may live. And I have not been summoned to come to the king for these thirty days.”

12 They related Esther’s words to Mordecai.

13 Then Mordecai told them to reply to Esther, “Do not imagine that you in the king’s palace can escape any more than all the Jews.

14 For if you remain silent at this time, relief and deliverance will arise for the Jews from another place and you and your father’s house will perish. And who knows whether you have not attained royalty for such a time as this?”

15 Then Esther told them to reply to Mordecai,

16 “Go, assemble all the Jews who are found in Susa, and fast for me; do not eat or drink for three days, night or day. I and my maidens also will fast in the same way. And thus I will go in to the king, which is not according to the law; and if I perish, I perish.”

17 So Mordecai went away and did just as Esther had commanded him.

What Mordecai is saying here is that God is sovereign over the events that are taking place, and that even if Esther makes a free decision to not intercede to save her people, then God will do something else. Somehow, telling her that makes her agree to take the risk and go in to see the King. Even though it is illegal to go in to see the King, she is going to risk her life and do it. And the message there is that God made her beautiful, and placed her in the palace, for exactly this purpose. Her beauty has a purpose.

Before then, she may not have been the most morally pure Jew, nor the most faithful Jew, nor some great authority on theology or apologetics. She was probably keeping her faith pretty hidden. But in that one moment, she rises above being an orphan, above being a harem girl, and above being just a pretty face. God can use anyone – even a silly girl who spends all day in front of a mirror playing with cosmetics – to achieve his ends. She is not Daniel. But today she is getting the call, anyway. It’s on her.

What is the lesson here? The lesson is that even a woman with terrible marksmanship is dignified when she accepts a duel. One minute, she is Jew in name only, hiding her faith, living in a palace, sleeping with a pagan King. The next minute, she is the hero. Win, lose or draw, she is the hero. God can use anybody. It doesn’t mean that you shouldn’t be moral, study theology, and study apologetics, and keep your character clean so you have self-control. It means that any believer is just one step away from glory, no matter what they did in the past. That’s how God rolls.

Further study

If you are interested in the story of Esther, then you should listen to the entire series by Alistair Begg.

The point I am making in this post is in this lecture.

Esther is about two themes: 1) how should a believer in God live in a society where believers are a minority? and 2) even when things look really out of control, God is in control, and is never more than one step away from saving his people.

I have a lot of Christian apologist friends who struggle to go to church, and struggle to read the Bible. The links above will take you to some great preaching on one of the most interesting books of the Bible. Go there, grab the MP3s, and listen to them with no distractions.