Over the next week we’ll be running pieces multiple pieces on political economics. The chief question we are addressing is “What duties a Christian magistrate has to the poor?” In today’s post, Dylan Pahman of the Acton Institute is giving a classical liberal answer to that question. Tomorrow we will be running a response to the same question written by a Christian socialist.

“My picture of man,” said the German Ordoliberal economist Wilhelm Röpke,

is fashioned by the spiritual heritage of classical and Christian tradition. I see in man the likeness of God; I am profoundly convinced that it is an appalling sin to reduce man to a means … and that each man’s soul is something unique, irreplaceable, priceless, in comparison with which all other things are as naught.

This conviction animated his support for classical liberalism and free market economics. And so it does for me. Thus, I believe the duty of the Christian statesman (or stateswoman) to the poor requires defending human rights, supplying urgent needs, reducing barriers to market entry, and guaranteeing access to the institutions of justice, seeking realistic, gradual reform as possible and prudent.

Jesus inaugurated his teaching ministry by declaring it the fulfillment of the prophecy of Isaiah to “preach the gospel to the poor” (Luke 4:18-19; cf. Isaiah 61:1-2). That, first of all, means all of us. Corrupted by sin and death, we are prone to error and temptation and helpless to save ourselves. Through his incarnation, life, death, and resurrection, Jesus Christ liberates us from the poverty of separation from God, slavery to sin, and domination by death. Thus, we ought to be skeptical of our own capabilities but hopeful about what we can accomplish through God’s grace.

Second of all, however, it is clear that Jesus also gave special care to the materially poor and socially marginalized, wanted his disciples to do the same, and warned against the spiritual danger of riches. He did not teach that wealth is inherently evil, but as wealth grants us greater opportunities, it also opens us to greater temptation. As Acton put it, “power tends to corrupt.” This applies to any power, whether political, economic, social, or spiritual.

The early Church fathers emphasized that generosity from the rich would help alleviate poverty. In turn, the poor would pray for the rich and thus both would serve each other. This is good and still true but also dated. In our own time, developed societies like the United States have escaped the Malthusian trap—our economies are not zero-sum affairs. One person’s wealth does not necessarily mean another’s poverty. In the last 200 years, we have become exceptionally good at creating new wealth. This has been a boon to the poor, but it has also presented new opportunities for corruption.

The state’s raison d’être is to ensure justice in society. Social justice renders to each person, community, and sphere of society its due. On a national level, laws should be concerned with protecting the rights and freedoms due to all people, rich and poor alike, by virtue of their human nature. On a more local level, particular contexts must be given their due, since each person is unique and society is inherently diverse. For example, minimum wages (if they should exist at all) should be limited to the most local government bodies. When it comes to the problem of poverty, national governments must avoid one-size-fits-all, top-down social engineering.

Due to the demands of justice and our propensity to sin, higher levels of government must only become involved when local governments seek their help, in accordance with the principle of subsidiarity. Furthermore, states must not violate the sovereignty of institutions and private providers of social services, such as families, religious bodies, businesses, and charities, following the principle of sphere sovereignty. In this way, the state practices its own asceticism, becoming stronger through its own self-denial and making room, i.e. freedom, for other communities. This importantly includes religious liberty, so that the Gospel can be freely spread and grace received and dispersed throughout society like leaven in a lump of dough (Matthew 13:33). This affirmation of limited government for the sake of liberty is the basis of classical liberalism.

When it comes to poverty today, however, the most important thing is not aid but opportunity. The source of poverty is the lack of jobs profitable enough to provide for the needs of oneself and one’s dependents. We are all made to work (Genesis 2:15-16), so this privation is not just material but also spiritual. It is an affront to people’s dignity when there isn’t sufficient work available to meet families’ needs. Public social safety nets are essential emergency measures, but they produce no new wealth. They only redistribute the wealth already in an economy (a zero-sum game). They should not be regarded as good enough for the Gospel to the poor.

Jobs are what the poor need, and jobs are created by businesses. People settle for bad jobs only when good ones aren’t available. Thus, eliminating barriers to market entry ought to be of primary concern to the Christian statesman, combatting the unjust inequality created by closed markets. Barriers to entry include onerous occupational licensing and patent laws, high corporate taxes, zoning laws, overregulation, and subsidies. These things close markets to new competitors because, even though it might seem against their interest (except for subsidies), large, established firms are more likely to benefit from them and lobby for them (which is called rent seeking). They can afford higher taxes and the compliance costs of complex regulation. Newcomers often can’t. Furthermore, due to occupational licensing, patent trolling, and zoning, would-be entrepreneurs often need the state’s permission just to try to compete in the first place, requiring more fees and months, even years, of waiting—time and resources that many do not have. Subsidies, lastly, distort markets in favor of established firms and economies in favor of established markets, inefficiently diverting the resources of society to them. Such barriers obstruct people’s ability to create new wealth for the common good and fulfill the divine mandate to “be fruitful” (Genesis 1:28) according to the likeness of God.

In free markets, properly understood, these barriers are kept to a minimum, increasing competition and wealth creation. The more businesses there are looking for workers, the more demand there is for labor. Thus, not only will there be more jobs, but wages will be higher as well. It should be no surprise that the decline in American entrepreneurship has coincided with wage stagnation. Beyond wages, an additional benefit of increased competition is that it also drives down the price of consumer goods, thus lowering the cost of living for everyone as well. Free markets help the poor—and everyone else—in terms of production (labor), distribution (wages), and consumption (lower cost of living).

All of this is fine for developed economies, but we should not forget the struggles of those in the developing world either. Our love for our neighbors must favor those close to us, but it must not exclude those far away, especially in our contemporary, globalized world. The poor in developing countries often lack access to the basic institutions of justice, such as rule of law and private property or justice in the courts and access to markets. While some of these things overlap with the foregoing, others are fundamental to it. Thus, these institutions ought to be continually guarded at home and promoted abroad. Regarding this last point—access to markets—promoting international trade is one way nations can cooperate with one another economically, serving one another’s needs and giving more people in the developing world a seat at the table as equals rather than mere beneficiaries of aid, which at worst can be paternalistic and economically damaging.

That said, we must also avoid the pitfall of idealism. Basically all modern economies are mixed economies. They contain webs of lower economies, which themselves are webs of various local, national, and international markets, all with varying degrees of openness. Comparing Silicon Valley to the U.S. markets in healthcare, construction, or cable illustrates the wide variety that can exist in a single economy. The Christian statesman should work to reduce barriers to market entry, thereby increasing opportunity for upward economic mobility. However, realistic progress requires gradualism. The goals of politics should be justice and liberty, but they will never be defended or improved apart from prudence and patience.

Thankfully, last I checked the Gospel had something to say about those virtues as well.

Dylan Pahman is a research fellow at the Acton Institute for the Study of Religion & Liberty, where he serves as managing editor of the Journal of Markets & Morality. He is also a fellow of the Sophia Institute: International Center for Orthodox Thought and Culture. Follow him on Twitter: @DylanPahman.

Posted by Guest Writer

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  • So if everyone should have access to a job, shouldn’t the government guarantee a job to e

    • Physiocrat

      Is working to fill in holes others have dug meaningful work?

      • Does it matter if getting people to work is the higher moral priority? Millions of jobs the market creates are hardly “meaningful”…

        • Physiocrat

          If the result of work doesn’t matter you could easily argue that everyone is in fact in work already since levelling up on World of Warcraft is clearly work and there is no problem of work at all.

          The present economic system does create some really menial jobs however at least they serve a customer in one form or another. Note, the present system is massively perverted, even more than the writer indicates, so don’t take this as an endorsement of it.

    • If everyone should have x, shouldn’t the government guarantee x to everyone?

      • If everyone needs x to survive, then: yes, it should.

        • There are at least two lines of intriguing implications to pursue here. Let’s start with one; how should such guarantees work? If a baby needs breastmilk to survive, should the government gurantee it? If so, how?

          • Government guarantees of natural rights or its defense of natural goods against the vicissitudes of life work in any way the government wants to do them to ensure everyone’s access to basic human goods is unhindered.

            Your breast milk example is not a physiologic reality. You gotta pick a different example, particularly if (assuming you are pro-life) you think the government should compel women to carry their babies to term if there is no threat to their life.

          • I’m not sure what you mean by a “physiologic reality,” other than to indicate that there are potential substitutes for breast milk, like formula. The point of my question, at least as I intended it, had less to do with the specific good supplied than to the responsibility of various agents to supply it. I assume you would grant that there is a physiologic bond between mother and child?

          • Okay, sorry! Did not understand what you were getting with the question. There is a physiologic bond between mother and child, but if that is severed because the mother is dead or has abandoned her infant, the state’s responsibility is to prevent that infant from starving. I think the state ought to find the least invasive, expensive way to do so (e.g. contact relatives first), but if no one can be found, the buck stops with the state. Furthermore, the state isn’t obligated to use breast milk; it can use formula since formula is not inferior to breast milk in a way that would compromise the child’s physiologic needs. However, the state can’t give the baby beer and spicy Doritos because that would compromise that child’s access to basic human goods.

          • What about the responsibilities of the biological father? Let’s assume that the parents were married (or even not; I think the moral responsibilities would still hold).

            I don’t understand why 1) you are talking as if the state has the prior responsibility to provide/guarantee some basic good like food for infants relative to that of the parents and 2) why you, when you grant that the mother has such a prior responsibility, immediately skip to the state when the mother’s provision becomes impossible.

          • I jumped to the state in this case because I took the dad for granted. Sorry, I’m used to dealing with these cases in places where the state isn’t involved and kids starve all the time. He’s on the hook first for the reasons described in the comment above.

          • Ok, but I still think it matters where you locate the primary responsibility, with the parents (or other institutions) or the state. It sounds like to me you have been assuming the latter and that the state just allows via convention the biological parents to go ahead and be the front-line agents of the state’s guarantee.

          • The institution primarily responsible for caring for vulnerable people is family, but the state still defines much of the warp and woof in which families exist by setting the boundaries of law. The state is also the stopgap between its citizens and starvation/exposure when those primary responsibilities to one another fail.

          • I think I basically agree, but I just wanted to make sure we’re not omitting the responsibilities (and rights) of various institutions, particularly the family and the church, for instance, in our thinking about the relationship between the individual and the state. Making respect for those other realities explicit makes a simple formula like “If everyone needs x to survive then the state should guarantee it any way it wants” mean something rather different than on first blush.

          • Fair enough. What I meant by that sentence is that the government is not obligated to directly provide necessary services in order to “guarantee” them and, in fact, ought to be as attentive as possible to the natural institutions in order to ensure its citizens can access natural goods. Sorry for the confusion!

          • “…in any way the government wants to do them…” I don’t think you really mean that. Otherwise if the government decided that it could best guarantee the natural right to sustenance at birth was to separate birth mothers from their children and relocate those children then that would be equally as acceptable as any other policy?

          • No, because a parents’ exercise of responsibility towards their children and nurture of them within a family is a natural good that should only be abrogated if a more basic human good is being deprived (e.g. the child is being starved by their parent).

          • Ok, so you grant that the state’s guarantee of natural goods should be bounded in some sense by other natural rights…such that “in any way it wants” really has to be narrowly constrained by a bunch of other as yet unnamed factors.

          • Well, yeah. That’s inherent in the definition. The fun part is in arguing over which natural goods and rights take priority when they’re in conflict!

          • I’m glad that we have made explicit what is inherent in your definition in this case, because I don’t think such respect for the complexity of individual rights and responsibilities within the context of diverse institutional sovereignty is at all obvious. This is in part illustrated by the common leap from individual rights to the state (usually the federal government) as the guarantor of rights and even provider of goods.

          • So this sort of leads into another intriguing angle of inquiry, which is the definition of “survival.” On the one hand, what is necessary for absolute survival is likely to be a lot less than many are accustomed to thinking; on the other, even granting a somewhat more robust definition of survival greater than mere subsistence, why stop there? Why should’t the state guarantee whatever is necessary not only for mere survival but for actual (and even maximal) thriving/flourishing?

          • I think that the tradeoff between mere survival and thriving/flourishing has to be worked out in the context of individual nation-states. For example, I don’t know where you stand on tax deductions for donations to religious institutions or federal grants and loans being used at Christian universities. I think both represent the American government’s contribution to the common good by indirectly subsidizing religious institutions, thus encouraging actual (even maximal!) thriving/flourishing. But this is in the context of a stable, flourishing Western democracy where there are some excess resources floating around to support such flourishing. I think it would probably be a bad idea if the government of South Sudan decided to do the same before it, say, secured the road from bandits. The degree of flourishing and the common good that the state works towards is a process for everyone to work out together. I think America is prosperous enough to do something about, say, the 20-year difference in life expectancy between Sandtown and Roland Park (neighborhoods 2 miles apart in Baltimore). This sort of discrepancy does not reflect attention to the created order, the natural goods of the citizens of Sandtown, or their flourishing and we should work to ameloriate them.

    • ElrondPA

      As Margaret Thatcher noted, “The problem with socialism is that eventually you run out of other people’s money.” “The government” can’t guarantee providing anything; it can only lay claims on those who actually produce something and redirect those resources through taxation and borrowing. And because the redirection is inherently political, it is almost always less efficient than a market solution.

      There are times when the market fails, as well as individuals who cannot meaningfully participate in the market due to disability and the like. But expansive promises from governments, while they may sound wonderful, inevitably have even more expansive costs both direct and indirect that usually translate into reduced liberty, fairness, and incentive for moral behavior.

      • Human life is precious and sustaining it is costly. I think we can find a way to bear those costs as a society without totally squelching liberty. If that involves higher taxes, so be it.

  • Physiocrat

    Some sane Economics. Your points on reducing barriers to entry are crucial. However the most important part is monetary reform- a return to gold and the abolition of central banks. It’s no coincidence that income inequality starts widening significantly after Nixon closes the gold window.

  • Titus Ambat

    Thank you for the well-written article. I am very much in favor of eliminating barriers to market-entry–and I would add maintaining strong anti-trust enforcement–and eliminating unproductive rent-seeking. Crony corporatism should die. Markets are indeed a strong anti-poverty tool, and I very much appreciate your recognition that submission to the Gospel requires a special attention to the well-being of the poor.

    However, I think a severe deficiency of any call to alleviate poverty primarily through market income, without a strong role for redistribution, fails to account for who the poor are. Perhaps I am misinterpreting you, and if so, I apologize.

    As Matt Bruenig has demonstrated, the 2014 official poverty measure shows who the poor are: 33.3% of the poor are children. 9.8% are elderly. 15% are disabled. 8% are students. 9.8% are those who are voluntarily out of the labor force to care of family. 8.3% are involuntarily unemployed for at least part of the year. 10.2% are fully employed, meaning that they work 50 or more weeks out of the year. 5.7% are Other, which includes people in a variety of different circumstances.

    A tighter labor market, better macroeconomic management geared toward full employment, and well-structured markets with low barriers to entry and high competition may help lower prices, which would help many of these folks raise their standard of living. It may also provide jobs for those children when they are out of school, or keep some of the elderly in employment past 65. But about 65% of the poor not engaged in the market at all–and I am unsure how the classically liberal position helps the 10.2% fully employed poor. Perhaps the 15% disabled population are not truly disabled–that’s certainly been alleged at least, though I’m unsure. But is it the Christian position that an individual should not care for an elderly parent, and instead earn market income, even if that income is not enough to cover care costs for her parent?

    But I think actual engagement with who the poor are in America shows that it is difficult to activate many of these folks into the labor market–and it is unclear if it would be desirable to do so. For these reasons, a robust welfare state, including a universal child benefit to alleviate the moral blight of child poverty, is good and necessary.

    If we are to take special notice of the poor, then we should not allow ideological commitments to rule out those actions that can most immediately help the poor. I am all for better structured markets and lowered barriers to entry. But redistribution must be part of the solution.

    • hoosier_bob

      What specifically do you see as encompassed by maintaining strong antitrust enforcement? Are you suggesting that we interpret the law differently, or are you suggesting that DOJ and the FTC be more aggressive? Moreover, how would that necessarily help reduce barriers for people entering the labor market? As Schumpeter correctly notes, monopolies sometimes serve a social benefit.

      Also, what kinds of alleged unproductive rent-seeking would you propose eliminating? The author identifies patents as a barrier to the poor entering the labor market. Even so, most economic analyses of the patent system suggest that robust patent enforcement leads to economic growth and greater unemployment. For example, Germany is probably the toughest developed country in the world in which to challenge a patent. Is it any wonder that Germany’s technology base is far superior to that of most other European countries? Maybe we could scale back copyright law? Then again, copyright law is not really a hurdle for the poor; it’s more of a hurdle for well-to-do college students whose appetites for music and movies outstrip their monthly allowances from home.

      • Titus Ambat

        I am open to persuasion as to the specific cases of anti-trust enforcement and patent protection. However, the evidence as I currently read it pushes in the direction of more aggressive anti-trust enforcement and a less generous patent system.

        I hope you do not mind me gesturing to links, but they may be helpful in explaining my thinking on these points:

        Anti-trust: https://goo.gl/IaIC9n, https://goo.gl/531slx

        Patent protection: https://goo.gl/8aaXvt. I am unfamiliar with Germany’s system, but thank you for pointing me to them to learn more.

        That said, the type of rent-seeking that I think more directly impacts the well-being of the poor are licensing regulations, which raise the cost of entering professions where the poor can make money, and zoning regulations, which raise the price of housing and make it more difficult for the poor to obtain homes near employment centers. I would be interested in seeing both types of regulations scaled back considerably.

        • hoosier_bob

          OK.

          Regarding antitrust, then, it seems like you’re primarily looking at the DOJ’s and the FTC’s low bar for approving corporate mergers. I believe that the DOJ and FTC often sign off on mergers that are anticompetitive.

          Regarding the patent issue, the author is simply wrong. In many cases, the costs of patent products are high for any number of reasons that have nothing to do with patent protection. In my opinion, it is appropriate for the US to bear heavier prices for drugs because the US FDA’s clumsy regulations are the ones that drive up drug prices. It’s far cheaper to get a drug approved in the EU or Japan. Making patent protection weaker won’t solve that problem. It just means that people won’t develop drugs altogether.