Way back in 1986, I was broke and between jobs in New Orleans. Poverty and desperation can make a man’s standards more flexible, and over the course of a weekend, I became one of the last things I would ever have imagined I’d become. I took a job as a business reporter.
There was no escaping the thought that I was sleeping with the enemy.
After all, I had spent the whole of my young adult life fighting big business, starting with my local electric company. Its lethal mixture of incompetence and arrogance had led to the near-meltdown of the nuclear power plant at Three Mile Island.
Now, I faced a choice between that value and a competing one: my dream of becoming a newspaper reporter. After two years of knocking on the doors of the Fourth Estate, this was the first offer I had gotten. It was clear that for a young man with little training in journalism, job offers would be a scarce commodity.
By the end of the weekend, I had agonized over the costs and benefits. On Monday morning, I called the editor at New Orleans Business, and I accepted the job.
I never regretted taking that fork in the road. In the words of American Express, it turned out to be priceless. For me, covering the economic world has been like lifting a curtain, to see what the players are really doing backstage, or like popping the hood of a car, to observe how the engine makes it run. To understand how the world works, I’ve learned, it helps to follow the money.
Along the way, I’ve noticed a funny thing about economics. It has a lot in common with religion. It’s ruled by high priests, who leave us mystified with mumbo-jumbo. They decree long lists of Thou Shalt Nots: Thou shalt not have universal health care. Thou shalt not have higher wages or clean air, because – well, because we just can’t afford them. Economists tell us so.
Also like religion, I’ve seen how economics gets hijacked by one very narrow point of view, a view that’s more about faith than about facts. We hear that point of view so often, in the press and from the halls of power, that we forget it’s not the only one out there. Today’s trickle-down economic orthodoxy has only been top dogma for about 35 years, and plenty of noteworthy economists have had dissenting views, from Keynes to Krugman.
Now, I’m not an economist. I’m a journalist who writes about economists. I cover their trade in the real world, where people and businesses don’t always behave the way that textbooks expect them to.
I’m also a Unitarian, which means I’m programmed to look for the spiritual meanings of things.
So it’s no surprise that I have my own peculiar views about economics. I maintain that economics is underrated by liberals, religious and otherwise, mostly because our airwaves are so full of misinformation. If our levels of reading and writing were as low as our economic literacy, Americans would still be rubbing sticks together to start fires. Instead, we got ourselves the Great Recession.
So my modest goal this morning is to bust a few myths about economics, and to demonstrate, despite what you read in the Wall Street Journal, that the Dismal Science can be a powerful force for transformation and human dignity. In fact, I hope to show that underneath a veneer of mathematics, economics is in many ways a spiritual discipline. It’s a distinctive way of looking at the world and a powerful way to change it.
So here’s the first myth: that economics is mainly about money. Anyone who’s ever taken an intro class can tell you that’s not so. Money is one of the yardsticks they use in economics, but the subject it measures is basically a spiritual one. In fact, it’s one of the most fascinating aspects of being human. The fundamental subject of economics is choice.
It’s about choices we make on every level of society. The original Greek meaning of “economics” is “household management.” Or, as pioneering economist Alfred Marshall put it, “Economics is the study of people in the ordinary business of life.”
Henry David Thoreau knew that. His first chapter of Walden is titled, “Economy,” and in it, he tallies up the expenses and income he got out of building his tiny house in the woods. He wrote, “I have always endeavored to acquire strict business habits: they are indispensable to every man.”
So economics begins at home, with choices as simple as: Shall we go out or eat in? But it doesn’t stop there. Economics includes the choices businesses make: Should we build our new smartphone in America or in China? And it encompasses vast national questions like spending tax dollars on guns or butter.
But not every choice is an economic choice. Economists study a particular subset: the choices we make when our options are limited, or as they like to say, scarce.
As Lionel Robbins wrote in a classic definition, “Economics is the science which studies human behavior as a relationship between given ends and scarce means.”
Jesus said, “With God, all things are possible.” Economists beg to differ. To them, all things are not possible. If our world were a cornucopia, it would have no need for economists. But in the real world, we can’t always have it all. Economics looks at the decisions we make about the resources we’ve got: what we do with them, how much of them we spend and – the most contentious part of all – who gets to share.
What might an economic choice look like at home? Say you get a $5,000 bonus at work. You want to replace your washer/dryer. But you’ve also been dreaming of a Hawaiian vacation. Then again, you need to put something in your kids’ college fund. With $5,000, you can’t do everything. Which will you choose?
We recently faced a stark economic choice here at Wildflower. We were facing a deficit. We had passionate debate over whether to cut children’s religious education or reconsider hiring a minister or make adjustments elsewhere in the budget. We measured our priorities against our limited resources, and we decided that both children’s RE and a developmental minister were top priorities.
Both these stories speak to the spiritual underpinnings of economics. We tend to think of economic choices as material choices. But strip away the statistical trappings, and they’re really moral choices. Where we put our money tells us what we value. Our credit card statements double as road maps to our souls.
The same holds true for a nation. If we invest more of our limited tax dollars in bombs, prisons and tax cuts for the wealthy, we make one statement about our values. If we spend more of it on schools, public health and Mother Earth, we make another. Says vice president Joe Biden, “Don’t tell me what you value, show me your budget, and I’ll tell you what you value.”
Which busts another myth about economics: that it’s neutral, that economists are serenely objective scientists who don’t have their own agendas.
It’s no accident that morality talks about values, and that economics talks about value. If we listen closely to most economic arguments, we find that they boil down to moral judgments. It might be Mitt Romney, dividing American citizens into takers and makers. At the other extreme, it might be Occupy Wall Street, railing against the greed of the 1 percent. Or it might be the fictional Wall Street trader Gordon Gekko, with his mantra of Mammon, “Greed is good.”
“The modern conservative is engaged in one of man’s oldest exercises in moral philosophy,” wrote economist John Kenneth Galbraith, “that is, the search for a superior moral justification for selfishness.”
Economists haven’t always pretended to be value-free. The father of capitalism, Adam Smith, was a staunch Scottish Presbyterian who believed morality was the foundation of free markets. Humans should pursue self-interest, he maintained, but they should also exercise self-restraint. “Society,” he wrote, “cannot exist among those who are at all times ready to hurt and injure one another.”
Smith was looking at 18th-Century Britain, but it could have been 21st-Century America, when he wrote, “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”
Which brings me to some happy news about the Dismal Science. If we quit pretending that economic theories are value-free, that means we can choose which values we want our economy to promote. Instead of helping the rich get richer and the planet get hotter, economics can foster values that Unitarians hold dear: justice and equity, human dignity and preserving the interdependent web of existence.
How can economics do all that? My answer: By tugging on the reins of free markets, to signal the general direction in which we want them to turn.
Let me explain. The free market is the most potent of all economic myths. True believers endow it with supernatural powers, from Adam Smith’s “invisible hand” to Ronald Reagan’s “magic of the marketplace.” Just leave it alone, the story goes, and it will allocate society’s resources in the most efficient way possible. It will make all the big economic decisions, better than meddling mortals ever could.
Trouble is, no such thing as a free market exists, or has ever existed outside the imaginations of economists.
In the real world, markets are not completely free. Like any other game, they have to have rules. If the rules are enforced, they level the playing field, so that no business can cheat by using child labor, selling contaminated food or not paying overtime.
Free markets aren’t always efficient, either. In the real world, they work very well for many things, like putting food on supermarket shelves or smartphones in our pockets. But they’re not so efficient when it comes to vital services like health care.
And they’re downright terrible at providing the backbone of any economy: a stable financial system. Bankers and brokers require adult supervision – otherwise known as regulation. When they get too little, we get a Great Recession. To think that deregulation can cure a recession is like thinking that smoking is a cure for cancer.
Now, don’t get me wrong. The market is a marvelous invention. The godfather of conservative economists, Milton Friedman, was quite right when he wrote, “It has freed the masses from backbreaking toil and has made available to them products and services that were formerly the monopoly of the upper classes.”
The problems arise when we let markets make all our decisions for us. To paraphrase what Jesus said about the Sabbath, the markets were made for man, not man for the markets. If we value stopping climate change or extending healthcare to all Americans, it’s absurd to let markets dictate to us that those things can’t be done.
Of course, no one can give orders to markets. What we can do is offer them incentives, to goose them into getting it done. Show someone a way to make money for doing the right thing, and the marketplace will work out the details.
Says Daniel Dudek of the Environmental Defense Fund, “If we can make conservation profitable, people will find ways to make it happen.”
Let me give an example. Remember acid rain? Back in the 1980s, it was the scourge of eastern forests, thanks to gasses spewing from coal-burning power plants. It’s still around, but over the past 20 years, it’s dropped 59 percent. A big reason is an experiment the Environmental Protection Agency launched in 1995.
It seems like a paradox, but what the agency did was to give electric companies permits to pollute. It issued a limited number of permits, and then allowed utilities to buy and sell them. That’s where markets came in. If one plant installed pollution controls cheaply, it could sell its excess permits to another plant. It could make a profit from cleaning up its smokestacks.
The end result of the wheeling and dealing has been to slash sulfur dioxide emissions nationwide, from 12 million tons to 3 million tons.
Today, we can see similar stories happening all over the business world. Back when I was fighting nuclear power plants, I dreamed of a day when solar panels and windmills could compete. Today, they do, thanks partly to incentives like tax credits and rebates. Pioneers like Whole Foods Market gave consumers a one-stop shop for organic foods, and now giants like WalMart have jumped into the game.
These stories aren’t unmixed blessings. You have to watch carefully whenever WalMart gets involved. But now that the marketplace has discovered them, there’s no question that green technologies and organic acreage are on an economic roll.
Meanwhile, economists themselves are devising ways to account for forests along with factories, to quantify the services nature provides. A young field called ecological economics is charting how consuming less can lead to economic growth. Writes entrepreneur Paul Hawken, “There is no true separation between how we support life economically and ecologically.”
I neglected to mention the most important incentive of all: you and me. Contrary to what you hear from Washington, we are the job creators. Consumer spending accounts for 70 percent of the U.S. economy. No matter how far you cut corporate taxes, companies don’t start hiring until shoppers start shopping.
Likewise, a company can’t make money from social change until consumers are willing to pay for it. Which means that every time we go through a checkout line, we’re voting with our dollars. When masses of us are ready to pay an extra buck for a cheeseburger, that’s when burger flippers will finally be able to join the middle class.
And so I take issue with economic fundamentalists from both sides. Right-wing fundamentalists believe capitalism is inherently good. Left-wing fundamentalists are just as certain it’s inherently evil. In my personal experience, gleaned from 30 years of covering capitalism, it’s neither. It’s simply one of the most powerful engines ever conceived for allocating a nation’s resources and driving social change – both positive and negative. If we’re working for positive social change, we can take to the streets, the courts and the capitol buildings, but we should never overlook the power of the profit motive.
Lastly, economics offers a humbling lesson to starry-eyed visionaries: If change is to endure, it has to make economic sense. An organic grocer won’t survive if his prices are unaffordable. Raising the minimum wage will backfire if it jumps so high so fast that it puts employers out of business.
My point is that spirituality needs economic guidance as much as economics needs spiritual guidance. Our ideals may wander in the clouds, but it’s here on earth that we have to make them real.
As we manage our households, a free lunch is as unlikely as a free market. More often, we face tradeoffs. That’s when economics has a way of illuminating our priorities, as costs and benefits become a source of spiritual discernment. Ask Henry David Thoreau, as he meticulously records that he spent eight dollars, three and a half cents on boards, three dollars and ninety cents for nails. We do not live by bread alone, but at the same time, the practice of economics reminds us that no spiritual question runs deeper than this: How do we earn, and how do we consume, our daily bread?