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ECON 101

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What is the role of government in our economy? Should we tax the wealthy higher and raise the minimum wage to induce “fairness”? What is the solution to poverty?


Recently I was asked by a website to join an esteemed list of contributors, most of whom are smarter and more well-known than me, offering their thoughts on these and other economic questions facing the country.

With folks representing the Cato Institute, Club for Growth, and Stanford University, as well as names like Dinesh D’Souza, Grover Norquist, Star Parker, and James Taranto having already answered the site’s questions, I was wondering what it is I could possibly contribute to the conversation that hadn’t already been said?

That’s when it dawned on me that often debates about the future of the country immediately jump to the conclusion of our worldview, when we should be arguing the premise .

For example, we argue small government vs. big government, when the real argument is why someone is for small government or big government. Drawing this distinction is more important than ever before, because there is a debate within conservative circles about whether small government and freedom can occur in a vacuum apart from addressing the moral issues or the condition of the culture.

And the answer to that question is absolutely not.

You cannot have small/self-government without first having a moral people capable of governing themselves, and you cannot have a moral people without the sort of spiritual awakening in a culture that preceded this republic in the first place. It’s no coincidence the more we collectively turn our backs on our spiritual heritage, the immoral the culture becomes, and thus the bigger government gets. For if men will not be ruled by God he must be ruled by other men, otherwise there’s no higher authority we can call upon to settle our disputes and disagreements with one another. The more we need the rule of man, the bigger the government gets. The more we submit to the rule of God, the smaller the government gets.


With this in mind, I decided to answer their questions from a worldview standpoint rather than attempt to discuss tactical economics with those who know a lot more about it than I do. If we cannot challenge the premise of the Left’s belief system we cannot deconstruct it, and if we can’t deconstruct it we certainly will not be able to defeat it. Currently, we are not challenge the Left’s premise, we are venting about the conclusion/application of their premise.

This is why “our guys” almost always end up in a Scrooge vs. Robin Hood debate. We look like misers, and they look like the champion for the downtrodden. Which would you rather be? Instead, we need to frame the debate about what’s right and what’s legal, not what’s fair or warm fuzzy. Read below and see if I was able to apply my line of reasoning to their questions.

What Causes an Economy to Prosper?

The most prosperous economies are those that truly understand the role of government. As it is stated in our founding document, The Declaration of Independence: there is a God, our rights come from Him, and the only purpose of government is to secure and defend those God-given rights. To put it another way, government is to encourage (not do) good and punish evil. Of course, government in and of itself is not a moral agent, and usually inflicts the most horrors on humanity when it attempts to be, so it needs another institution to define for it what is good and what is evil. That is the role of the church and the family. These clearly defined spheres of jurisdiction between cultural institutions are what produce the proper balance of liberty and morality, thus allowing for the most prosperity.


What Role Should Government Play in an Economy?

The biggest misconception is that we're having a debate about the role of government in America today, when we're really having a debate about what authority or moral ethic are we going to govern ourselves by. The answer to that question then determines the role of government. For example, cultures that abandon the Judeo-Christian moral ethic, as ours is currently doing, end up growing government because something must fill the God-shaped void (justice, law, education, validation, charity, etc.) in the society. And that something ends up being the state.

What Kind of Tax System is Most Effective?

The tax and monetary system that was in place in this country prior to 1913 (prior to the confiscatory federal income tax and the printing of a fiat currency) helped encourage the greatest growth of human freedom and prosperity the world had ever known. Since abandoning that foundation we have increasingly become a debtor nation/people. I may have gone to public school and not the Von Mises Institute, but even I'm smart enough to know to go back to what worked before.

How do High Taxes on the Wealthy Impact an Economy?

Every job I've ever had came from a rich person, so I'm not sure how punitively punishing the very people who provide jobs will create more of them.

What is the Cause and Solution to Poverty?

The greatest way to combat poverty is to first recognize what causes it in the first place – sinful human nature. Sometimes that sinful human nature manifests itself as a robber baron who exploits the community's natural and human resources, thus making it harder to impossible for his fellow man to maximize his God-given talent so he can provide for himself and his family. Sometimes that sinful human nature manifests itself in the wrongful choices individuals make that puts them at risk. Either way, this is the reason why God gave the church the primary role of distributing charity in human society, because ultimately the church has the moral message to confront the evils that cause poverty in the first place. When an amoral agent like the state intervenes instead, the best it can do is apply a band-aid to a flesh wound. It can treat the symptom, but it lacks the prescription to become the cure. Then, after a while, it becomes an enabler of the very thing it's trying to fix, just like it is today.


What Role do Workers’ Unions Play in an Economy?

Human history has shown that whenever power is concentrated in the hand of a few, or just one, corruption is bound to take place regardless of the belief system of the one(s) power is concentrated in the hands of. That's why historically unions played a vital role as a check and balance on unfettered corporate power. Obviously unions have also struggled with the same fallen nature manifested as corruption that corporatists have. Nowadays, unfortunately, unions do not primarily serve the needs of their workers but are more or less a funding stream and campaign platform for the Democrat Party. So while union have a seat at the table, the workers are worse off.

How Does a Minimum Wage Requirement Impact an Economy?

How can a government know what the minimum wage should be? Can anyone even support a family on the minimum wage? Here is the reality: real wages in this country have declined in relation to the rate of inflation/debt since these sorts of government schemes to contrive equality began. Our wages nowadays do not have the buying power in a consumer-driven economy they once had, which is one of the reasons we carry so much debt. Just about every major purchase a family makes these days is made on credit. These schemes are actually harming the very people they purport to help, because they're operating outside the natural laws of economics.

Let me give an example. Suppose a movie theater owner has calculated the job of popcorn attendant is worth $5/hour based on his business model and the current job market. In other words, based on finite, objective standards.


However, the government comes in and mandates he pay a minimum of $10/hour for that job instead. The movie theater owner doesn’t just cut into his own profit margin to cover that increased cost out of the kindness of his own heart, but rather jacks up the price of popcorn to pass along his cost to the consumer. Now the market tethered by competition is no longer setting the price, but government artificially is.

That sounds well and good until you and I go to buy popcorn the next time we’re at the theater, and we’ll still making the same amount of money we were making before the price got jacked up. Since we can’t go back to our bosses and demand a raise to cover our popcorn habit, right away our buying power is diminished by this government intrusion into a consumer-driven economy. Not to mention so is the popcorn attendant’s, because on his night off when he takes his date to the movies he’ll notice he’s making more money, but now this date is costing him more money, too. In other words, his minimum wage “increase” is at-best a revenue-neutral transaction once the arbitrary consumer price increase offsets the arbitrary minimum wage increase he got from Uncle Sam, meaning at best he’ll break even.

This partially explains why the explosion in government since 2007 has led to a reduction in American wealth to 1992 levels. We’re buying goods and services at 2012 prices with a standard of living that is 20 years old.


Why do People Disagree About the Truth?

Without an agreed upon fixed standard everyone becomes wise in his own eyes. Everybody believes their truth, which means somebody's truth isn't true. The fixed moral standard that once served this country well and made it the freest and most prosperous nation on the planet was the Judeo-Christian moral tradition. Since we have abandoned it the culture has become more immoral, government has grown uncontrollably, and many once treasured institutions and associations in this country have become corrupted. That pretty much settles the argument on what truth is actually true as far as I am concerned. Now the question is whether or not there is enough humility remaining in this culture to admit we've deviated off the path and ask for directions back to the main (or narrow) road.

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