Popular, but widely believed, economic myths abound in every age. Some are harmless while others are actually dangerous, harming whole societies through the loss of personal freedom and the genuine opportunity to express human creativity. (Consider the human devastation of communism, primarily a failed economic theory.) Christians are not immune to these bad theories. This is often true because Christians sincerely want to address the issue of poverty in light of the major biblical witness about loving justice and pursuing the well-being of the poor.

I have seen the really truly poor, up close and in very graphic ways. My two long trips which took me to a number of places in India in the 1980s have allowed me to see what the poor of the world really face every day. What is needed among the really poor is water, food, clothing and shelter, the basic necessities of life. In India the issue is not better schools and better classrooms, the issue in India  is education in any form at all. But since I was in India in the 1980s the situation has clearly begun to improve. The reasons? Free markets and the rise of an entrepreneurial class, both developments of the oft dreaded globalization of the economy.

The simple fact is that good intentions will often foster many of these dangerous economic myths. As I interact with bright and capable young leaders in the Emergent Church movement I encounter some of these myths when I listen to them speak about solving social issues, especially the issue of poverty. Most of the mistakes these extremely bright people make come from believing the economic myths that are perpetuated by writers and speakers such as Tony Campolo, Jim Wallis, Ron Sider and Brian McLaren. These men are passionate and earnest Christians who are plainly filled with real concern for poor people. They are also very good writers and speakers. But I am convinced that their ideas about economic understanding are positively wrong. The problem is that multitudes of well-intentioned young Christians, and some older ones too, do not understand what these popular writers are actually promoting.

As I listen to the various Christian conversations about wealth and poverty I have sought to understand why my instincts increasingly tell me that these evangelicals are well intentioned but plainly and clearly wrong. This experience led me to take a workshop on economic myths at the Acton University on Thursday.

Dr. Jay Wesley Richards led the seminar I attended. He addressed several of the most common myths in an excellent workshop that revealed the nature and cause of these mistakes.

1. The piety myth. This one ignores unintended consequences and trade-offs because the person believing the myth is an earnest Christian who holds to a form of piety that is inherently bad economic theory. What is missing is wisdom, a tradition often missed by devout people who proof text Scripture in various ways.

2. The Nirvana myth. In this myth you fail to compare solutions to actual examples in history and reality, but rather to an ideal, Child labor debates illustrate this in human history. The desire is for “heaven on earth”,” a good desire, but something that will never happen.

3. The freeze-frame myth. This is a pretty common myth among ordinary Christians. It assume that economic trends will remain the same thus sound thinking should always operate from this assumption. Thomas Malthus, many years ago, illustrated the myth when he saw population growing exponentially and the food source shrinking arithmetically and thus concluded that we would soon see wide-scaled starvation. This myth lingers. One thinks of the present Global Warming debate as an example.

One highly honored Texas scientist suggested just a few years ago that an air-born Ebola virus would wipe out 90% of the human population. He then proceeded to suggest that this would be a good end biologically and environmentally. This is the kind of Darwinian nonsense many accept in the academic community.

4. The zero-sum game myth. This is the most common, and the most foolish, of all the economic myths. And this is the one that most often influences well-meaning Emergent Christians. This myth believes that the more rich some people become the more poor others will necessarily be. It is the math of 1+1=0. But free trade is really a win-win game. In capital producing societies there is no fixed conclusion. Forget the gaps! The problem is not wealth in our society but poverty. More wealth will not remove all poverty, since there are many complex reasons for poverty, but buying into a zero-sum argument will most definitely not eliminate poverty. Bad economic theory does not solve real problems even if the proponents are wonderful Christians. And the best way to solve that poverty problem is not by drawing down or limiting wealth production in the larger society. This debate is one I have routinely had with young Christians who buy into some kind of state-based, government developed, solution to poverty.

5. The materialist myth. This myth says wealth is a fixed amount. In this view economic wealth is like a pie. There is only so much pie and the question is: “How will we cut up the pie?” This myth drives the economic and political thinking of the majority of liberal thinkers in our day and it too is widely accepted, without serious questions, by many young Christians who believe good intentions trump sound economics. The simple economic fact is that wealth can create more pies thus there is more for others as well as more for the wealthy.

What is needed here is a big dose of economic reality. Reality tells us that human beings can and do transform matter into new resources. The problem is not a lack of resources but the most basic of all human sins—covetousness. People envy the success of others, especially if they succeed. This leads them to see taxing the rich more and more, with progressive taxes. By this means they appeal to general envy and argue for a way to control inequities through bigger government. There is one major problem with this form of compassion. It doesn’t work. You can’t plan an economy in this manner. A robust economy is too free and too fluid. When market forces are allowed to freely work, and are not governmentally controlled, real compassion will find better and more creative personal expressions. (The Church has a major role here but often punts the ball to the government since the Church is so busy denying real world human needs and real people who are poor.) Actually, market forces are the very thing that will lift the boats of all people, the poor included. In my view, a flat tax would actually be the fairest tax but progressive (or regressive) myths continue to make this kind of tax seem entirely wrong. Abundant evidence now pragmatically shows that lowering taxes will raise the overall economy. The hard data supports this so strongly that even some liberals have begun to finally admit it. When common economic myths are addressed and rightly understood we can make great progress in improving the economy and thereby improve the lives of all.

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  1. Good Will Hinton June 16, 2007 at 10:48 pm

    John Armstrong on Economic Myths

    I just read one of the best blog posts that I have read in a long time from my friend John Armstrong. Here are a few highlights. I encourage you to read the full post.
    Popular, but widely believed, economic myths abound in every age. Some are harmless whi

  2. ian B June 17, 2007 at 10:49 am

    John, could you explain the myth 1 “The piety myth”, your quick note of it didn’t define it enough for one not at the seminar to understand it.

  3. John H. Armstrong June 17, 2007 at 9:35 pm

    The piety myth believes the answer to questions of serious economic theory and practice is good intentions rooted in compassion and prayer, thus piety. But good intentions do not alone make for good theory, thus the good desire to care for the poor can, and does, get associated with very debatable and bad economic theories that are then connected to biblical texts incorrectly.
    The Bible is not a text on economics, as all would agree. But things like liberty, freedom, private ownership and the right to a society in which virtue is promoted and freedom protected by law are biblical. Socialism and communism break down at this very point, even though some Christians have piously defended them, or some versions of them, as biblical.
    The free market must have respect for law and justice or it too breaks down but it is the best system in that it alone allows for the creativity that is deeply and fundamentally biblical. The fact that people abuse it through corruption only argues for the rule of law, not against the economic system itself.

  4. A. B. Caneday June 18, 2007 at 7:19 am

    Excellent thoughts. I regularly encounter each of these myths among my students in classroom conversations.

  5. jpe June 18, 2007 at 11:47 am

    Is there a role for governmental regulation of business beyond its duty to police the general criminal code?
    For example, is there a role for (a) environmental regulation, (b) assurance of non-discrimination in hiring or (c) workplace safety and minimum wage regulation?

  6. John H. Armstrong June 19, 2007 at 9:17 am

    Yes, there is a (limited) role for government since sin is an equal opportunity problem in every culture. Generally the doctrine of subsidiarity, which I agree with, argues that governments act in our best interest when they are closest to our real problems; i.e., local government always handles local issues much, much better than a government far removed from the actual problems. And the best government is the always the government that maximizes freedom so that people can be creative and glorify God in their real vocations. Government exists primarily to restrain evil (Romans 13) and evil exists in many forms. There is room in classical liberal political philosophy, which is the view of government I embrace, for government to help preserve justice and prevent various harm done to workers. (By the way, classical liberalism is not the same thing as modern political liberalism as we now know it!)
    In your list I would say “yes” to all three questions (very broadly speaking) but with varying qualifications. Environmental regulation is becoming a major tenet of religious faith these days with the global warming hullabaloo. The problem here is not that the environment is warming, but why and what should we do about it?
    Non-discrimination is also a worthy concern but affirmative action may have outlasted its real value. Workplace safety is important too but minimum wage controls tend to actually not benefit the very people they are intended to help. It plays great politically but it is questionable in terms of the real long-term value to the poor.

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