Monday, June 27, 2011

Go Noles!

It's always good news when a major national blog (Instapundit) highlights research from a fellow FSU faculty member. And, by the way, were you aware that tropical storm/hurricane activity has been at recent historically low levels in the past few years? (Just as a word of warning, go back to the mid 1980s and observe that it was also in a period of low hurricane activity. It was in that "low" period that Tallahassee last got slammed by a major hurricane.) So if you standing at Spot X on the Gulf or Atlantic coast, the "average" level of activity may not be much comfort to you if the one storm that hits the U.S. that year is heading in your direction! (For that matter, my wife and I survived the 1983 tropical storm that came up the Gulf of California and rained destruction on Tucson, Arizona). In economics it's called not confusing ex ante expectations with ex post realizations.

Saturday, June 25, 2011

Bonhoeffer Part 2: The First Myth

MYTH: Because Dietrich Bonhoeffer's two visits to the United States were in conjunction with the liberal Union Seminary, we can view Bonhoeffer as a typical, early 20th century modernist liberal in the Union Seminary mold. (By the way, I am using the term "liberal" to describe a theological, not political viewpoint.)

I’m not sure of the protocol on blogging when you want to make a point by referencing a lot of material in another source. Metaxas’ depth of research on Bonhoeffer’s letters about the modernist theology that he saw in the United States at Riverside Church (Harry Emerson Fosdick) and at Union Theological Seminary is extraordinary. So I’ll err on the side of intellectual property rights and say “read the book” while quoting just these two summary passages regarding Bonhoeffer’s second visit to the United States.

On his earlier visit, Bonhoeffer had been warned that the Broadway Presbyterian Church, just down the road from Union Seminary, was a hotbed of “fundamentalism.” But Bonhoeffer was dissatisfied by the theology of worship at Riverside (p. 333), and he wrote about a sermon was centered around not the Bible but rather the philosophy of William James:

“The whole thing was a respectable, self-indulgent, self-satisfied religious celebration. This sort of idolatrous religion stirs up the flesh which is accustomed to being in check by the Word of God….The tasks for a real theologian over here are immeasurable. But only an American himself can shift all this rubbish, and up till now there do not seem to be any about.”

So Bonhoeffer ventured forth into forbidden territory. He’s what Mextaxas reports that he wrote when he attended Broadway Presbyterian Church:

“Now the day had a good ending. I went to church again. As long as there are lonely Christians there will always be [church] services. It is a great help after a couple of quite lonely days to go into church and pray together, sing together, listen together. The sermon was astonishing (Broadway Presbyterian Church, Dr. McComb) on our ‘likeness with Christ.’ A completely biblical sermon --- the sections on ‘we are blameless like Christ,’ ‘we are tempted like Christ,’ were particularly good.” In perhaps a second part of that letter or another letter, he said of Broadway Presbyterian Church “This will one day be a center of resistance when Riverside Church has long since become a temple of Baal. I was very glad about the sermon.”

The key part, I think, in this puzzle (at least for those who have been taught to see Bonhoeffer as a “modernist”) is the phrase “Word of God.” Bonhoeffer was out of step not only in the Upper West Side of Manhattan but also in Germany, where he was a rebellious “academic grandson” of Friedrich Schleiermacher. According to Metaxas (p. 136-137) Bonhoeffer wrote to his more typically 20th century German liberal brother-in-law:

“First of all, I will confess quite simply --- I believe that the Bible alone is the answer to all our questions, and that we need only to ask repeatedly and a little humbly, in order to receive this answer. One can’t simply read the Bible, like other books. One must be prepared really to enquire of it, only thus will it reveal itself. Only if we expect from it the ultimate answer, shall we receive it. That is because in the Bible God speaks to us. And one cannot simply think about God in one’s own strength, one has to enquire of him. Only if we seek him, will he answer us….

“If it is I who determine where God is to be found, then I shall always find a God who corresponds to me in some way, who is obliging, who is connected with my own nature. But if God determines where he is to be found, then it will be in a place which is not immediately pleasing to my nature and which is not at all congenial to me. This place is Cross of Christ. And whoever would find him must go to the foot of the cross, as the sermon on the mount commands.”

Here are three closing thoughts. First, many of those who read this passage will find it beautiful, even powerful, but may not understand how much of an outsider these views made Bonhoeffer in the world of "establishment" German and American Christianity in the early part of the 20th century.

Secondly, it was mind-boggling humbling to read Mextaxas’ historical narration, knowing how it would all end, and to follow day after day the Dietrich Bonhoeffer who never ceased studying the Bible and praying: in life, in prison, and on the doorstep of death.

Finally, does it bother you to read the thoughts of a passionate Christian such as Bonhoeffer describing sermons and theology of Christians (Christians who are probably in most of our hymnbooks) as "idolatrous" and “rubbish” and comparing a famous Christian church to a “Temple of Baal”? I know it did me. In our culture there are strong constraints against being judgmental, and those cultural constraints have become a part of our religious identity. We don’t want to be seem as being judgmental of other Christians. Was Bonhoeffer out of place, or is it our reluctance to call out bad theology that is the outlier?

Friday, June 24, 2011

Mark's Friday Links

1 ) It surprises me the number of people today who want to march under the banner "progressive" when the actual time in America in which self-proclaimed "Progressives" were in power included such abuses as Jim Crow segregation and eugenics. Probably the height (or depth) of the Progressive Era support for eugenics was in forced sterilization laws. Here is an article on attempts to provide compensation for some of the still-living victims of that program. (Hat Tip to Instapunidt).

2 ) Not exactly a link, but here is a headline from this morning's Wall Street Journal: "Airbus Caps Week With Record Order." It seems that while one of America's biggest and most successful employers and exporters, Boeing, is having to spend energy, time and resources fighting our own government over Boeing's right to optimize their production model by building things in that strange foreign country known as South Carolina, Boeing's biggest rival (Airbus) is spending its energy, time, and resources, you know, building and selling airplanes.

UPDATE: Here are some from Doug

This is a really interesting non-economic perspective on immigration by President of Asbury Theological Seminary Timothy C. Tennent. The video is a short 5 minute talk and well worth the time.

I've started reading this really good book on hospitality called Making Room. The book begins with this fantastic quote from Henri Nouwen, "If there is any concept worth restoring to its original depth and evocative potential, it is the concept of hospitality."

Here is a fantastic new podcast on "benevolent autocrats" by William Easterly. Normally I am not a fan of sarcasm; however, I find Easterly's sarcastic bent to be funny. It's definitely worth listening to if you're curious about the growth miracles in China, South Korea, Singapore, etc.  

Thursday, June 23, 2011

Meditation 1: Freedom

Truth can become stale but meditations can bring fresh revelation. In that spirit I'm looking forward to bringing my attention to important truths about Christianity that we ought to keep fresh. Freedom. Last I considered freedom in this blog post about the Passover Feast. The Jewish people remember the Lord who led them out of Egypt. We remember Jesus who led us out of spiritual slavery. But, there is a difference between being free and staying free.  That is the subject of this meditation. We cannot obtain freedom on our lonesome. When we try on our own we feel confined and get depressed at how much bondage we may still experience. This verse from Romans 8 (The Message) spoke to my heart:

"Those who think they can do it on their own end up obsessed with measuring their own moral muscle but never get around to exercising it in real life. Those who trust God's action in them find that God's Spirit is in them ---living and breathing God! Obsession with self in these matters is a dead end; attention to God leads us out into the open, into a spacious, free life."

To live a free life we need correct focus. In some ways this is a question of magnification. Consider the heroic stories of faith from Hebrews 11. These people did great things because they magnified a magnificent God. That is, they paid less attention to themselves and more attention to God. My meditation is simple: We remain free when we magnify God more than ourselves and our problems.

Tuesday, June 21, 2011

Bonhoeffer Part 1: No. It's. Not.

I wanted to structure my reviews of Eric Metaxas' Bonhoeffer: Pastor, Martyr, Prophet, Spy around several ways in which this book upended what I had previously been taught about Dietrich Bonhoeffer. But first, I thought I really needed to write this introductory post.

As long as I've followed the life of Dietrich Bonhoeffer, and thought of him as one of my heroes, I've noticed that there is a tendency, by many people, including me, to read Bonhoeffer's story into our own situation. Liberals opposed to the Vietnam War and Evangelical Christians upset over denominational positions on gay pastors have all veered towards the : "This is what Bonhoeffer was going through" narrative. If you want a particularly distorted example of this type of thinking, read this. But as I said, I have not been immune myself. Here's an example: on more than one occasion I've been asked my opinion of putting an American flag in the front of a church. I'm against that, and sometimes openly, and sometimes to myself, like the antiwar protestor and the PCUSA Confessing Church activist, I think of Dietrich Bonhoeffer and his struggles leading up to the Barmen Declaration.

Folks, It's Not the Same. No. It's. Not.

Here is what would be the same thing. Let's say our next President, because he may not be "O," let's call him or her "X," convinces Congress to essentially disband and grant him emergency dictatorial powers, and his "government" in rapid succession, does the following:

1 ) Forces the merger of all American Protestant denominations into a single denomination called the American Evangelical Church, to be headed by a bishop chosen either by the President or by his lackeys.

2 ) Issues a proclamation that any protestant pastor in the new American Church who can be shown to be "-------" where "-------" could be Republican, Democrat, of a certain percentage of Jewish, Armenian, or Scots Irish blood, is hereby excommunicated.

3 ) The new Bishop lays out plans to remove certain books from the Bible and to retranslate others more to the liking of the President, making it illegal to publish any other versions of the Bible. He proposes for pastors to make oaths in the church directly to the President; to remove all crosses from churches and replace them with the flags of the President's political party, to decide who can teach in seminaries, and who can hold meetings in any church in the country, and so on and so forth.

This is what Dietrich Bonhoeffer was facing, and this was only in the first year or so, before things got really bad. I really think that we in America have drunk the Kool-Aid of Arendt's idea of the "Banality of Evil." Maybe I'm wrong, but I don't think Bonhoeffer believed in the banality of evil. I think that Bonhoeffer saw early on that Germany was suddenly being ruled by people who were Nucking Futs and that things were going to get very bad very fast. Lest we forget, within a decade these same people were holding dancing contests on the corpses of people they had just murdered and making hand bags out of human skin.

I think that it is incumbent upon us to remember when we think that we can't see the screen door close on George Bush or Barack Obama fast enough, that even on their very worst, most terrible day, living under the American political party not of our choice is not even in the same universe of mental derangement that was recognized by Dietrich Bonhoeffer. And that lays out the foundation for the three myths of Dietrich Bonhoeffer that I want to explore:

Myth # 1) Because Dietrich Bonhoeffer's exposure to religion in the U.S. was largely through Union Seminary and its modernist, liberal Protestant worldview, Bonhoeffer was also a typical modernist, liberal, protestant.

Myth # 2) Dietrich Bonhoeffer was a committed theological pacifist who struggled mightily against the temptation to join the plot against Hitler, and at a relatively late date had some kind of spiritual moment in which he fell gasping into the reality of the situation.

Myth # 3 ) Dietrich Bonhoeffer was a saintly person who would never lie, cheat, or steal, nor countenance anyone who would.

Before concluding, let me take away right now one of the most often repeated and horribly wrong narratives about Dietrich Bonhoeffer: "Dietrich Bonhoeffer was killed because he spoke out against the policies of Adolf Hitler." "Wrong" on several counts. Initially, Bonhoeffer and the group responsible for the Barmen Declaration were focused on one and one thing alone: the so-called "Aryan Paragraph" (see my analogy above) in which the new German Church moved to defrock pastors who had "Jewish Blood." It was about this narrow issue, not about the invasion of the Ruhr or the persecution of Jewish lawyers and dentists. Bonhoeffer's unceasing criticism of the "German Church" caused him all kinds of inconveniences, but the Nazis never thought they could get away with throwing him in jail. When Bonhoeffer was arrested, it was largely because of his connections with the Abwehr (military intelligence). The Gestapo hated the Abwehr (the feeling was mutual) and the Gestapo sniffed out some money laundering that Bonhoeffer had done to help Jews escape to Switzerland. However, he was not held nor charged on any capital offense. Bonhoeffer's imprisonment as a capital criminal and his execution was because the failed bomb plot (Valkyrie) against Hitler exposed Bonhoeffer's deep connections with that and other plots to kill Hitler and/or stage a coup. In summary, Bonhoeffer wasn't executed because he stood in the city square and yelled "Hitler is a pig", he was executed because Hitler figured out that Bonhoeffer was part of the Abwehr assassination conspiracies.

Saturday, June 18, 2011

William Parker and the LAPD, Part 2

So what did William Parker do to clean-up the LAPD? Doug and I argue that he operated on two separate but interconnected levels: 1 ) he changed the incentives inside the LAPD to encourage honest behavior and discourage dishonest behavior; 2 ) he personally epitomized and repeatedly promoted personal values of honesty and integrity, both in his police officers themselves and in terms of the community’s view of his police officers.

We can’t go through the whole list of incentive changes here, but some examples are: 1 ) raising the salaries of LAPD officers so that he could be more selective in hiring and so that being fired was more costly; 2 ) rotating officers among different parts of the city so that they would not be attracted into local networks of corruption; 3 ) innovating internal controls regarding spotting and punishing dishonest cops.

In terms of values, Doug and I argue that Parker appealed directly to the long history of religious values of the average Los Angeles resident. He spoke of these values constantly, and he used his association with the TV show “Dragnet” to broadcast the values of the honest LA cop. “This is the city. My name is Friday. I carry a badge.” became the new face of the LAPD.

But what we believe is important to emphasize is that incentives and values are not two disconnected planes of human activity. Parker succeeded because he wove incentives and values together to promote a rapid change from the previous equilibrium. In just a handful of years, he demolished the previous stereotype in which LA cops were the corrupt, lazy louts as depicted by Raymond Chandler and created a new face of the LAPD: the honest, hard-working, value infused Joe Friday (as depicted by Jack Webb). To give just one example, consider the costs of being fired from the L.A. police force for corruption. As depicted in Buntin's book L A Noir , in the 1930s and early 1940s such an officer would have had little trouble finding roughly equivalent new employment. But what did Parker do? He raised both LAPD salaries and the officers social stature. He attracted young men that would be raising families and coaching Little League and going to PTA meetings. Being fired now meant a bigger monetary hit plus the shame associated with being identified as a dirty cop. In an early “Dragnet” Joe Friday rants about the scum of the earth that would be a corrupt policeman (but note carefully, that in this episode, the corrupt cop was an impostor.)

Friday, June 17, 2011

Friday Link II: If You Are in the Center of the Road, You Are Likely to Get Run Over

When I worked in the United States Senate, I developed what I've found to be an unusual dislike for self-proclaimed "moderates". I observed that the senators with an ideology, whether "conservative" or "liberal" were most likely to be acting to further that ideology. In other words, their constituents got what was advertised in the election. For example, at one point in a fit of historical amazement, New Yorkers elected Jim Buckley (William F. Buckley's brother) as a senator. He voted exactly as he had campaigned, and was one of the most principled senators I had the privilege to observe. Sen. Buckley was defeated after one term as New Yorkers returned to their more liberal traditions. I suspect Jim Buckley wouldn't have it any other way. Senator Birch Bayh was a similar example on the opposite side of the political spectrum. In my estimation, it was the "moderates," the "centrists," the "liberal Republicans" and "Conservative Democrats" that you had to watch with suspicion. I realize that this is a broad generalization (obviously it was not the case that no liberal Republican or conservative Democrat had principles) , but because this picture is contrary to what many people suspect, I wanted to put it out here for discussion.

Sometimes I have viewed columnist David Brooks as an embodiment of everything I distrusted in this fashion. His columns seem to have the "if only we could get all the smart, reasonable people together" mentality that I thought brought disaster upon disaster to the US in the 1970s. So imagine how stunned I was to see his column today in which he takes to task exactly this "establishment" class for the scandal that was Fannie Mae.

(Thanks to Hot Air for the tip to the link.)

It's Friday: Here is One Link

One thing that we've noticed in Doug's Theory of Moral Sentiments Readings Group is that Adam Smith endorses the day to day functioning of commerce more than he ever idolizes "Big Business." In that light, this commentary by University of Chicago economist Luigi Zingales on the current American political situation is interesting. A "median" voter position right now might be enthusiasm for markets but distrust of "big business." (It should be noted that Zingales is the co-author of a book titled Saving Capitalism From the Capitalists).

I have a couple of reactions to this sentiment. Many of the respondents may frame their worries in terms of business abuses in the market. I am more worried about firms that are able to manipulate the government in order to protect their position in the market: what is currently known as "crony capitalism." Secondly, this distrust of "business" leaves open the question of the entrepreneur. I have a feeling that most Americans like the idea of somebody who creates wealth from an innovative product or service. When that entrepreneur is an outsider, then two streams mentioned by Zingales would seem to mesh. But what happens in those cases where the innovator is an established entrepreneur...someone already "big"? Then I think we see the kind of love/hate relationships that Americans currently express towards Microsoft, Nike, Apple, Google, and Facebook. We buy a lot of iPhones (Steve jobs wasn't working out of his parents garage when it was introduced) , but we are always keeping a wary eye on the "bigness" of these companies.

Finally, this kind of discussion perpetuates the idea that "the opposite of the government is 'the market'." As I'm know people get tired of hearing me say: the opposite of "the government" is voluntary activity. Sometimes this is the market, sometimes it could non-profit collective organization. In either case, firms and non-profits struggle to find the boundaries of the market and their own, preferred hierarchical or cooperative organizational boundaries. This is one of the hallmarks of the new institutional economics studied by people such as Williamson, Coase, Buchanan, Davis, North, and Alchian. Firms (and even non-profits) compete in the market, but within the firm or non-profit there are institutions and institutions help to shape behavior.

(Note: thanks to NRO for the original link to the Zingales article)

Thursday, June 16, 2011

Bonhoeffer Part 0

OK, I said I wasn't going to write on Bonhoeffer until I had finished, but I couldn't resist this one tidbit. To the Presbyterian Church (USA) The Barmen Declaration (Theological Declaration of Barmen) by the German Confessing Church against the Nazi-dominated "German Christian" heresy is one of the most important statements in our tradition. It has been elevated to the status of an official "Confession" in our Book of Confessions. The author of the Barmen Declaration was theologian Karl Barth, who was also an opponent of the rationalist theological liberalism that had dominated Protestantism at the turn of the 19th/20th centuries.

On a seemingly separate topic, the PCUSA continues with its Social Gospel, Prohibitionist strains by "requesting" that the independent Presbyterian Foundation refrain from investing in certain types of stocks. You may have heard the fracas that erupted a few years ago when we came close to disinvesting in some companies that did certain types of business in Israel (that would have been a truly shameful blot on our denomination, in my humble opinion---never mind the irony that a denomination that honors the Barmen Declaration wanted to punish Israel, but that's another story). One of the categories of stocks that has successfully been placed on the boycott list is that of tobacco companies.

Well I guess that I shouldn't be surprised that Barth, that "neo-orthodox" opponent of empty liberalism had this to say about how the Barmen Declaration came to be written:

According to Metaxas: "The principal author of the Barmen Declaration was Karl Barth, who claimed to have produced the final version 'fortified by strong coffee and one or two Brazilian cigars'." Bonhoeffer also shared Barth's appreciation for a good cigar.

Barth and Bonhoeffer: Neo-orthodox, anti-Nazi, pro-cigar. What's more do you need to call them modern prophets of the Church?

Tuesday, June 14, 2011

Pastor, Martyr, Prophet, Spy

I thought I might post something now about Bonhoeffer, the 2010 biography of Dietrich Bonhoeffer by Eric Metaxas, but I don't know where the start, and I'm only a third of the way through. This book will upend so much of what you thought you knew about Bonhoeffer. I will try to revisit this after I've soaked it in more.

Sunday, June 5, 2011


My pastor, Bill Bess, always says that every Presbyterian elder ought to have at least one good sermon in his/her head. He followed up on that by asking me to preach on Biblical models of economics today. For better or worse, here is my potentially one (good or bad) sermon.

A Sermon Prepared for the First Presbyterian Church, Havana, Florida, June 4, 2011, by Mark Isaac, Ruling Elder, substituting for Bill Bess, Teaching Elder.

I was born in a home for unwed mothers. Before you crank-up your sympathy, my parents were married. Like many of the GI Bill generation, they bought a house in the suburbs of Oklahoma City, and my Mom’s doctor believed that the best obstetrics facilities in the area were at the Home of Redeeming Love, a home for unwed mothers run by the women of the Free Methodist Church. The facility was already in transition (my birth certificate reads Deaconess Hospital) but the history of the Home of Redeeming Love, stretching back decades, is fascinating. The women of the Free Methodist Church founded and ran the facility for young women who had no access to good natal care because the shotgun didn’t fire and they were abandoned by their families. Initially out in the country, the women of the Church plowed the fields to raise crops both for the Home and for sale for cash.

The story of the Home of Redeeming Love is illustrative of part of the so-called Social Gospel movement in American Protestantism. Although we toss around terms such as “old time religion” we often forget that by 1900 the mainline Protestant churches, including the Presbyterian Church, were heavily influenced by a century of German theological rationalism and materialism. Biblical concepts such as the bodily resurrection of Jesus Christ were viewed as campfire fables invented by church leaders who were decades removed from Jesus of Nazareth. Now if your theology strips out all of the supernatural components of the New Testament, what is left of Christianity? Well one thing that is left is the body of teachings of Jesus as a guide as to how we ought to conduct our daily life both personally and in our communities. The latter focus became a dominant theme of the American and British Social Gospel throughout the late 19th and early 20th century. Among the good results of the Social Gospel were institutions such as the Home of Redeeming Love, the Salvation Army, the YMCA and YWCA, and countless hospitals. (By the way, the American Economics Association was founded as part of the social gospel movement).

But the Social Gospel broke into two strands. One stressed what Christians could do directly to lift the burden of off those who were suffering (the Home of Redeeming Love) and the other stressed what Christians could do to get the federal government to accomplish similar ends. The best example is the famous Methodist Board of Temperance and Prohibition. Temperance was a program of the community helping individuals make good choices; Prohibition was the drive to use the federal government to make those choices by force. In many American Protestant churches, the Prohibition branch eventually won out. (Our own Presbyterian denomination purged our seminaries of traditionalists. Interestingly, these traditionalists, branded with the nickname “Fundamentalists” not only disagreed with the modernists with regards to the bodily resurrection of Jesus, they also believed that it was none of the church’s business to enlist the government to tell a man or woman that they could not settle down with a pleasant single-malt Scotch before bedtime.)

By the 20th century, although alcohol Prohibition was eventually deemed a failure, many of the major Protestant denominations bought into the idea that the government is the primary agency for caring for the poor. This has been codified by our own General Assembly, and no year goes by without some agency of the PCUSA weighing in on minimum wages, health care, smoking, and so on and so forth. Our stated clerk even recently took sides in the partisan fight over collective bargaining in the State of Wisconsin.

If we are going to talk about what economics means in terms of Heaven on Earth, we need to go back and find out more about what the Old and New Covenants were teaching before, during, and after Jesus’ ministry.

First, there is no question that in the Old Testament there is a dual recognition of the right to private property and the responsibility of the owners of that property to act justly and to care for the poor. In the former category are the prohibitions against stealing, against moving boundary markers, and the parts of the law code dealing with damages done to the property of others. In the latter category are the tithing requirements, the various debt forgiveness passages, the commands for honest weights and measures ,and numerous restrictions against unjust lending practices, especially to the poor.

Leviticus 23:22: And when you reap the harvest of your land, you shall not reap your field right up to its edge, nor shall you gather the gleanings of your harvest. You shall leave them for the poor and the sojourner. I am the Lord Your God.

When we get to the Acts passages, there are some interpreters I have heard, and you probably have too, that suggest that the early church moved in a different direction, abolishing private property. This is clearly not the case. In the the Ananias and Sapphira story, Peter makes clear that the land was theirs to sell or not. This story is about the sin of lying to the community. What is suggested is that the Jerusalem church was a diverse collection of both wealthy individuals and people whom we might consider refugees, living in a world of violent oppression, in which the order of day to day life was clearly in peril. In this world, the wealthy people sold their property to provide funds to care for the poor. “They gave to anyone as he had need.” However, note that, as we will see in a minute that this does not mean some kind of Stalinist/Maoist collectivization of all among all: it becomes clear that “the poor” refers to groups such as widows, and, I suspect, orphans.

I wonder where they got this idea of caring for the poor?

Mark 10: 17-22. And as he was setting out on his journey, a man ran up and knelt before him. “Good teacher, what must I do to inherit eternal life?” And Jesus said to him, “Why do you call me good? No one is good-except God alone. You know the commandments: Do not murder, do not commit adultery, do not steal, do not bear false testimony, do not defraud, honor your father and mother.” “Teacher, all these I have kept from my youth.” Jesus, looking at him, loved him, and said to him, “You lack one thing. Go, sell all that you have and give to the poor, and you will have treasure in Heaven; and come, follow me.” Disheartened by the saying, he went away sorrowful, for he had great possessions.

It is at this point that I wish to turn to a Presbyterian Pastor who gets remarkably little attention in these days: John Calvin. We Presbyterians don’t like to talk much about Calvin. Look around any large city and you’ll see Presbyterian Churches happy to advertise their aerobics classes and high school pancake breakfasts. Putting a lot of John Calvin on the church marquee probably wouldn’t be good for attendance. But we must, at this point, confront a key part of our Reformed Faith: which has been tagged with the horrible phrase “The Total Depravity of Mankind.” The doctrine of the Total Depravity of Mankind most certainly does not mean that we are all sociopaths, incapable of doing good, even sacrificial things. It means something completely different. What it means is that there is no part of our lives that we can put in an imaginary box and say “I do not sin in this part of my life.” It means that even when we are doing what we think of as “good” we remain subject to sin.

I John 1: 8-10 : “If we say we have no sin, we deceive ourselves and the truth is not in us. If we confess ours sins, he is faithful and just to forgive us our sins and to cleanse us from all unrighteousness. If we claim we have not sinned, we make him a liar, and his word is not in us.”

So let us see the operation of sin in the economics of the early church:

Acts 6: 1 – 7: “Now in these days when disciples were increasing in number, a complaint by the Hellenists arose against the Hebrews because their widows were being neglected in the daily distribution. And the Twelve summoned the full number of the disciples and said: “it is not right that we should give up preaching the word to serve tables. Therefore Brothers, pick out from among you seven men of good repute, full of the Spirit and of Wisdom, whom we will appoint to this duty. But we will devote ourselves to prayer and the ministry of the word.” And what they said pleased the whole gathering, and they chose Stephen, a man full of faith and the Holy Spirit; and Philip, and Procurus, and Nicanor, and Timon, and Parmenas, and Nicolaus a proselyte from Antioch. These they set before the Apostles, who prayed and laid their hands upon them.”

As Calvinists, we can see the operation of sin even in this most noble of institutions: the distribution to the poor. Either the Hebraic Jews really are discriminating against the Greek-speaking Jews, or the Greek-speaking Jews are bearing false witness against the Hebraic Jews. It doesn’t matter, because in midst of this sin God works His will and the church office of Deacon is born, ordained with specific responsibility to care for the poor.

Now it would be nice to continue on with the evolution of economic institutions in the early church in Jerusalem. But we simply don’t know more, because the Christian Church in Jerusalem was decimated with Jerusalem’s destruction by Rome.

Instead, we turn to a different early Christian tradition: the churches begun by Paul and the other church-planting apostles around the Mediterranean. And we see here something new:

Acts 16: 13- 15 And on the Sabbath day we went outside the gate to the riverside, where we supposed there was a place of prayer, and spoke to the women who had come together. One who heard us was a woman named Lydia, from the city of Thyatria, a seller of purple goods, who was a worshipper of God.

When we read the popular history of the Roman Empire, we see very little of merchants, traders, and manufacturers, what we would call the “Middle Class.” Rome was ruled by landed oligarchs and a major source of its “wealth” was plunder from military campaigns. In the midst of this were people who did the ordinary: making goods, trading, etc.. It is important to note that these people were not the respected merchants of Geneva or Amsterdam. Even though trade and manufacturing could provide what was probably a good standard of living, only a few of these folks would be candidates for the Roman Senate: they were equally likely to be slaves, freed slaves, women, illegitimate children of the agricultural or military class, or people living in or emigrating the flyover provinces: The Oklahomas and Nebraskas of the empire. Recent scholarship, which might embarrass some Christians inclined towards liberation theology, suggests that outside of Jerusalem, Christianity became a religion that spread primarily through this proto-middle class of merchants, traders, and artisans. What we continue to see are short but repeated references in Pauls’s letters to his congregations raising money for the poor ---perhaps the poor in the local community but also perhaps the relatively more oppressed Christians in Jerusalem. This suggests that the economic system in Jerusalem, described in the earlier Acts passages, was probably some kind of survival system that was sustainable only with subsidies from the Mediterranean churches, and thus not exported elsewhere in the early church. There’s little reference to this kind of survival communalism in the churches of the epistles.

I hate to say it, but in terms of the Bible, that’s pretty much where we stop. The problem for us is that there’s simply no transition theology to a capitalist world in which the church has ceded to the government the office of primary care for the poor. I suspect that most of you in the congregation today are like most of my students: you cannot conceive of a world in which the Presbyterian Church renounces the government as the primary office of care for the poor. You can’t imagine lines forming to plow fields for unwed mothers. We are like the Jews after the time of the Judges, who, against God’s warning, have merged the identity of God’s people with the coercive power of a centralized government. I suspect that the Home of Redeeming Love, now Deaconess Hospital, is well entwined with Medicare, Medicaid, and so forth. In this, I believe we have before us a very good model for the decline of the Presbyterian Church , the UCC, the Episcopal Church and so forth. If your theology has rejected the supernatural and simply focused on the government as the agent of the material, once that social agenda has been accomplished in the New Deal and the Great Society, what need is there to be a Presbyterian on Sunday morning? The answer from the collapse in our membership from 4.25 million to 2 million in my adult lifetime says that the answer is “not much.”

At the risk of being repetitive, our scripture from Acts demonstrates a fundamental paradox of our Reformed faith: we are called to do good, to bring the Kingdom “on Earth as it is in Heaven.” But we must bathe ourselves in the humility that, acting with the best of intentions, we might “miss the mark,” what the Bible calls sin. Therefore, in a world in which our government educational system does a good job for the well-off but a horrible job for the poor, in which the government has been completely ineffective in preventing a dramatic rise in children born out of wedlock (what the Bible would certainly consider fatherless children or “orphans”) I cannot imagine that the Old Testament prophets wouldn’t be screaming that we are differentially hurting the poor and most vulnerable of our society, that we as a society will suffer the consequences of this sin, and that we ought to be thinking about doing something different. I personally believe that the model for this “something different” can be found in the earliest Calvinist communities in Switzerland, but that is a story for another sermon.

Thursday, June 2, 2011

More Unintended Consequences

Mayor Bloomberg of New York, hardly known as a conservative or libertarian firebrand, has ignited a controversy by claiming that some people voluntarily enter homeless shelters simply to receive rent subsidy vouchers that are only available to shelter residents. The New York Times takes a look, and finds some evidence that this is true. This is an important unintended consequence not simply because people may be gaming the system, but also because, assuming that shelter resources are scarce, like anything else in our economic world, then these resources are being diverted away from people who may much more in need.

Wednesday, June 1, 2011

Would You Like Staples With Your Copies?

Extending Doug's discussion on the EITC and the minimum wage, in the comments on my May 12th post on the minimum wage, I was in a good discussion with Brandon V., and I mentioned that I couldn't figure out why it was legal for middle class and upper class "kids" (actually young men and women who years before would have been in the workforce, but that's another blogpost entirely) can work for free in "internships" but it's illegal for a young man or woman from the inner city who wants to build up a skill set to work for a training wage of $5.00/hour. Interestingly, over the past three weeks or so that same idea has cropped up on several different websites.

I recall that in Oklahoma, state Prohibition lasted longer than federal Prohibition, and one of the reasons it was finally repealed was the state actually started enforcing the law. Maybe the only way to get a training wage is for the Obama Administration to start shutting down internships for the well-to-do.... to enforce the minimum wage law across the board.

Minimum Wages and the Earned Income Tax Credit (a first cut)

Mark has written a number of recent blog posts on the minimum wage and living wage laws. The positive and negative consequences minimum wages are well-known to economists: 1) Minimum wages increase wages for those currently employed at minimum wage and 2) Minimum wages have a host of negative unintended consequences. Here is a list of various unintended consequences that have been researched by economists:

Negative Employment Effects (This is well reviewed here) - Because firms compete against each other in the market place they must keep prices low and quality high. When minimum wages increase there are increases in the cost of doing business. Thus, in order to keep prices low in the face of competition certain strategies such as outsourcing, loading more responsibilities onto less people, or substituting technology for labor become desirable. In any case this means that less low-skilled labor will be hired. Luminary and economic Nobel Prize winner Paul Samuelson once wrote in 1973,
"What good does it do a black youth to know that an employer must pay him $2.00 per hour if the fact that he must be paid that amount is what keeps him from getting a job?"
To this point, former colleague and excellent labor economist Dave MacPhearson has a working paper showing that much of the unemployment amongst African Americans can be attributed to the recent increases in the minimum wage. This has especially impacted African American teenagers at 40% (versus 25% for other teens).

One proposal to help improve the employment of low skilled teenagers is a sub-minimum wage "training period". This would allow firms to benefit from the labor of teenagers, screen those teens who show the most promise, and then retain those teenagers at a higher wage after the training period. From the standpoint of teenage benefit they have the opportunity to obtain skills and develop a good track record. In light of the next unintended consequence a "training period" at a lower wage may not be a bad idea.

Altered Opportunity Cost - Because there is greater reward for those working in low-skilled jobs under a higher minimum wage this has been shown to increase the opportunity cost of staying in school. Neumark and Wascher (1995) show increased minimum wages cause more high school drop outs. Some suggest that this unintended consequence only underscores the need for compulsory education laws. I'm not against compulsory education; however, I would ask the question of what kind of education (I believe we overlook the importance of vocational education in the U.S. ---this is a topic for another post).

Overall, no economics research (known to me) show the minimum wage has reduced poverty.

The studies are more numerous than these and are well summarized in this massive literature review (here and also in book form here). Nevertheless, the minimum wage continues to appear desirable because well intentioned people continue to desire a wage that secures a basic level of welfare for all workers. This desire is not unfounded. But, what policy could obtain the goal of helping the poor without all the nasty unintended consequences? The Earned Income Tax Credit.

The EITC is a cousin of the Negative Income Tax (NIT). There is a good summary of the negative income tax on Econ Library. The basic idea is that people receive a "wage subsidy" to supplement their income. The size of that wage subsidy is determined by two components: the initial threshold and the rate of the tax subsidy. The initial threshold determines what someone would earn if they worked zero hours. The downward slope determines the size of the wage subsidy at each unit of income (i.e. the subsidy gets smaller as income gets larger, but, at what rate does the subsidy decrease?). Where the NIT is a strictly decreasing slope the EITC increases, decreases, and is flat over different ranges of income (see below from Tax Policy Center)


Because the EITC targets independents and people earning less than a certain amount of money there are fewer problems with helping the poor. While the minimum wage disproportionately benefits teenagers, teenagers who file taxes as dependent would not qualify for the EITC. Also, while a higher minimum wage (or living wage) might induce a stay at home Mom or Dad into the labor force the EITC may not. This is because if their spouse earns a certain level of income they would not qualify to receive the EITC.

At this point you may be saying, "The EITC sounds like a better policy than an increase in the minimum wage, but, how would you fund such a thing?" That's a really good question, especially with the national debt rising to great heights. But, funding is not problematic when you view the EITC expansion as a replacement of, rather than an addition to, other programs. I came to this idea independently, but, it turns out it is not original. In Greg Mankiw's best-selling economic textbook he reports that 79% of economists agree that the government should restructure the welfare system along the lines of a negative income tax.

The rationale for restructuring the welfare program along these lines stems from at least a few observations. First, there would be lower administrative costs to distributing money via the EITC. Second, the EITC provides an incentive for employment that welfare does not. Third, unlike the so-called backward hustle (talked about in the documentary Waging a Living and written about at the Mises Blog) the EITC does not punish people for promotions.

Hiding in My Room, Safe Within My Womb, I Touch No One and No One Touches Me*

I have long admired the writings of Jonathan Adler of Case Western University, an expert on environmental regulatory law. In this article, he dissects the so-called "precautionary principle." I am sure that this will be required reading in the Economics of Sustainability class. A surprise to me is that Cass Sunstein, currently serving as a top-level advisor to President Obama on regulatory issues, is such a harsh critic of the precautionary principle. He calls it "deeply incoherent". Both Adler and Sunstein are lawyers but they are making the fundamental economic argument that there is no such thing as cost-free doing nothing. "Doing nothing" incorporates the opportunity costs of not doing something else, so doing nothing can not, in any meaningful sense, be equated with "doing no harm." If I stay in my home every day to avoid all the risks of the outside world, I might, for example, die in my house during a fire, tornado, hurricane, or airplane crash. Deciding whether to leave my house necessarily involves imputing some kind of probabilities to these events (which are certainly non-zero) and probability assessment is antithetical to (at least the most extreme versions of) the precautionary principle.

*For post-baby boomers: Lyrics from "I Am A Rock" by Paul Simon.