Well, after writing about principles and politics, there is probably another question I should answer.
What exactly do I believe about economics?
That’s actually harder to answer than I thought. But I feel obligated to answer it…whatever that answer turns out to be.
I have been challenged a number of times lately on my economic writings. I’ve even been accused of being partners with Bernie Sanders and AOC. Good Grief!
And I think there may be some serious misunderstandings on what I am saying or “preaching”…and that I don’t understand reality. So it is time for me to set the record straight about what I actually believe when it comes to economics.
Am I a capitalist? Yes.
A free-market guy? Absolutely.
A fiscal conservative? I certainly think the government should stop spending money it doesn’t have…that’s a no brainer.
But none of those descriptions quite gets there when it comes to my core economic beliefs.
And after everything I’ve written lately about the K-shaped economy, billionaires, wealth inequality, inflation, government debt, housing affordability, wages, bankruptcies and the financial condition of American families, I think I owe you a better explanation.
So here we go…
- I believe in private property.
- I believe people have the right to work, earn money, start businesses, invest, take risks, succeed, fail, accumulate wealth and enjoy the fruits of their labor.
- I don’t believe being wealthy makes someone a bad person.
- I don’t believe being poor makes someone a good person.
- I don’t believe everyone is entitled to the same economic outcome.
- I think 90% of all taxes should not exist, especially income, property, and estate taxes.
- I absolutely don’t believe in crony capitalism…I despise it.
So that should settle part of it. But here’s where it gets more complicated.
The “free market” isn’t my religion
I believe strongly in the free-market system. But I don’t believe that everything produced by a free market is therefore automatically good, right or moral.
A market can tell us what something is worth to a buyer. It can tell us where investors believe they can make money. It can reward innovation, hard work, efficiency and risk. It can produce extraordinary prosperity.
But the market absolutely can’t answer this question:
“Is it right?”
That’s a different question. And increasingly, that’s the question I’ve been asking myself.
I don’t have a problem with rich people
I’ve written quite a bit lately about billionaires and wealth. In 1989, America had 66 billionaires. Today we have 989.
I’ve shown the enormous increase in wealth held by the top 1% of Americans. I’ve compared it with the wealth held by the bottom 50% of Americans.
I’ve written about the K-shaped economy and the dramatically different economic outcomes experienced by Americans at opposite ends of it over the last 6 decades.
But I want to be very clear about something…
My problem isn’t that somebody got rich.
If you invent something, build a company, work your butt off, invest wisely, take risks and become fabulously wealthy…Good for you. Seriously, I’m glad for you.
What interests me, and quite honestly worries me, is something else.
If an economy becomes enormously wealthier over several decades, but the benefits of that prosperity become increasingly concentrated among a relatively very small, almost minute, portion of the population, I think we’re entitled to ask:
Why?
And:
What happened to everybody else?
Those aren’t socialist questions. They’re real questions. And the numbers deserve honest answers.
“The economy is doing great!”
I’ve become increasingly skeptical of that sentence. Not because GDP doesn’t matter. Not because unemployment doesn’t matter. Not because the stock market doesn’t matter. They all matter. But I’ve spent a lot of time lately looking at something considerably closer to home.
The American household.
That makes me ask:
- Can a family afford a house?
- What does their mortgage payment look like?
- What happened to their grocery bill?
- What happened to their debt?
- What happened to their savings?
- What happened to the purchasing power of their paycheck?
- How much money is left after the bills are paid?
You can show me a beautiful GDP number. But if millions of families are sitting at their kitchen table wondering how they’re going to pay the electric bill, I don’t think GDP gets the last word…or any word for that matter.
An economy exists for people. People don’t exist to make the economic machine statistics look good.
And then there are the poor
This is where my economic beliefs run directly into my religious beliefs. I am a Christian. I can’t read the words of Jesus Christ and conclude that the condition of the poor doesn’t matter.
I can’t read King Benjamin asking, “Are we not all beggars?”, or Jacob warning about wealth, pride and neglect of the poor, and then convince myself that poverty is somebody else’s problem.
It matters…Morally.
But…and this is a very important “but”…recognizing a moral obligation doesn’t automatically answer the political question.
If I have a Christian obligation to help another person, does that automatically give the federal government authority to take property from someone else, or from me, and fulfill that obligation for me?
No, it doesn’t. And that’s where part of “economics” gets difficult.
I can believe simultaneously that property rights matter and poor people matter. Those aren’t contradictory principles. The difficult part is figuring out how to honor both.
Crony capitalism isn’t capitalism I’m interested in defending
There’s another distinction that matters to me. If somebody becomes wealthy because they created something people voluntarily wanted to buy, that’s one thing. If somebody becomes wealthy because government gave them special treatment, protected them from competition, subsidized them, wrote regulations in their favor or handed them taxpayer money…that’s something very different.
I believe in a free market. I don’t believe in a market where government picks the winners and the winners return the favor in campaign donations. Call it crony capitalism, corporate welfare, political favoritism or whatever you want. I don’t consider that a genuinely free market.
Government doesn’t get a magic checkbook
Then there’s the national debt…over $40 trillion.
I’ve spent considerable time recently trying to understand whether we can grow our way out of it, inflate our way out of it, or actually pay it off. The numbers aren’t pretty. And underneath all those calculations is an incredibly simple principle…Eventually somebody pays.
- Government can borrow money.
- Government can print money.
- Government can tax.
- Government can move costs around.
- Government can push costs into the future.
- Government can disguise costs.
But government cannot make-up their own mathematics…the real numbers don’t lie.
If Washington spends more than it takes in year after year after year, there will eventually be consequences…a day of reckoning will come. And it doesn’t become responsible fiscal policy because the president doing it happens to be someone you or I voted for.
Which brings me right back to principles
Maybe my economic philosophy isn’t really very complicated after all.
- I believe in agency.
People should have considerable freedom to make their own economic choices—and responsibility for those choices.
- I believe in property.
People have a legitimate right to the fruits of their labor and to acquire, own and use property free of government threats.
- I believe in stewardship.
What we possess doesn’t eliminate our responsibility toward other human beings, particularly those who are struggling.
- And I believe in justice.
Government shouldn’t use its power to enrich favored people or corporations. Powerful private interests shouldn’t be able to purchase politicians and government power. And neither government nor private institutions should casually violate the rights of individuals simply because doing so produces an outcome somebody considers desirable or profitable.
Maybe that’s capitalism. Maybe it’s classical liberalism. Maybe an economist has some fancy name for it…I really don’t care. Because I’ve just spent an entire article explaining why I don’t want any label determining the principle…I want principles determining the system.
And maybe that’s the simplest way I can explain what I believe about economics:
I believe in a free-market economy bounded by moral principles.
The market is extraordinarily good at answering:
“What works?”
Economics can help answer:
“What will this cost?”
But neither one gets to answer the final question:
“What is right?”
For that answer, I need a higher power than economics. I use God for that.
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