Free Markets, Envy, and Olasky’s Law
Wednesday, July 8, 2009
In a recent interview, the architect of compassionate conservatism, Marvin Olasky, discusses how evangelicals should think about free markets, what constitutes true justice, and when bad charity drives out good.
Editor’s note: Marvin Olasky is the provost of King’s College in New York City. He is the author of many books, including “The Tragedy of American Compassion,” an influential critique of the modern welfare state. Olasky is considered one of the intellectual architects of “compassionate conservatism” and is one of the country’s foremost evangelical thinkers and writers. He recently delivered a lecture at the American Enterprise Institute on social justice, free markets, and evangelicals. Afterwards he sat for an interview with American.com editor-in-chief Nick Schulz.
Nick Schulz: It’s fair to say that the reputation of the free market system has suffered some blows lately with the financial crisis and general economic crisis. Why, in your view, should evangelicals believe in relatively free markets?
Marvin Olasky: I don’t think evangelicals should believe in the free market in the way that evangelicals believe in Christ. But the free market does two things well. Ever since the Garden of Eden, we only earn our bread by the sweat of our brows, so it’s good to have a system that leads people to sweat more than we otherwise would in ways that are useful for their families specifically and human flourishing generally. It’s much more just for families to benefit from hard work than for officials to benefit, which is what happens in a command economy.
The second benefit arises because ever since that time in the Garden we’ve lived in scarcity. Market prices for scarce goods are great ways to get information about what those products are worth. So free markets are good provokers of hard work and providers of information. Those two things are worth a lot.
NS: There are some market critics who would say, “Well, one of the problems with markets is that they are in tension with intact families. For example, markets put pressures on families who, say, have to have both parents going out and earning an income.” What’s your response to that critique?
Compassionate conservatism, in some ways, was a euphemism for a Bible-based understanding of how to help the poor—and free markets have shown themselves to be the best way historically to help the poor.
MO: Those questions about the effect on the family are real. In Japan, which adopted free market systems but did not have a Biblical base, corporations move around their managers and, because of the cost of real estate and traditions of education, many fathers live away from their families, with enormously destructive social consequences. In the U.S., corporations find it easier to move individuals than families, and family obligations sometimes do interfere with business activities. But corporate execs with some foresight will be strongly pro-family, because children learn in their families about virtues such as honesty. If they don’t learn that, economies fall, as we saw in last year’s crash. Overall, if you don’t have people largely living by Biblical principles, a free market economic system will crash on the reef at some point.
If we have financial rules that emphasize investing for the long-term, companies will become more pro-family. We should have much more of a distinction between short-term and long-term capital gains: We should eliminate capital gains for stocks held over a long period of time. We should also have a much higher tax allowance for children and should be family-friendly in other ways so that fewer moms are forced economically to work full time.
NS: You’re thought of as the intellectual architect of “compassionate conservatism.” What is the compassionate conservative view of the system of free enterprise?
MO: Of all the German-Austrian economists, the one who made the most sense to me was Wilhelm Roepke, who wrote a book called A Humane Economy. He comes out of the European Christian tradition. He saw that markets aren’t going to work very well over the long term unless you bring to them a biblical ethic of honesty and compassion.
Compassionate conservatism went wrong in the Bush administration when it became confused with offering a governmental pot of gold.
Compassionate conservatism, in some ways, was a euphemism for a Bible-based understanding of how to help the poor—and free markets have shown themselves to be the best way historically to help the poor. Industrialization can often lead to harrowing transitions with dire poverty for the first generation, but it’s poverty that leads to affluence for the next generation, and that’s better than being stuck in a rut decade after decade. I’m enormously grateful to my grandparents, immigrants to America, who had it tough but who made possible a better life for me and my children. Compassion does not mean avoiding difficulty, it means helping people to have productive difficulty.
Also, compassionate conservatives do not look to government to solve the major social problems. You recognize that the government can actually often cause more problems, and if you use government it should be in a jujitsu way to reduce the size of government. Compassionate conservatism went wrong in the Bush administration when it became confused with offering a governmental pot of gold. Instead of decreasing the size of government, this form of compassionate conservatism would increase it—and it’s only one step from there to purportedly compassionate liberalism.
NS: Since you’re talking about government, there’s all this discussion in Washington today about a “New New Deal.” A lot of your earlier work was on compassion and justice before, during, and after New Deal era growth of government. What lessons are there today from that period of growth of government that we should be mindful of?
MO: The primary lesson: when you expand the role of government you end up driving out a lot of charity. Gresham’s law is that bad money drives out good. I learned from the Depression that bad charity drives out good.
NS: Call it “Olasky’s Law”?
MO: Ah, immortality. But there were two ways to go in 1933. The revenue of charities was going down, because people had less to give and needed some of that to stay alive themselves, but the needs were going up. FDR and company could have said, “How can we help these struggling programs?” Instead, they set about to create a whole new structure, a structure that competes in many ways with private charity. From then on, people didn’t just ask, essentially, “I gave at the office, why am I gonna give here?” They could also ask, “I paid my taxes, why should I contribute here?” It’s completely logical for liberals to talk about helping the poor but to give little to charity: they want government to be the giver.
Biblically, it is wonderful to help those who have been unjustly treated, but if you subsidize the wicked you are acting unjustly.
One problem, for the most part, is that government does it worse, and that’s inevitable, because we don’t want government to take into account the big questions of character and ethics. We really don’t want the government deciding, on the basis of a person’s beliefs, who gets the money. Church groups could ask—and some of them did it very well, some of them did it poorly—the basic question: will money given to this person be used in productive or destructive ways? They could ask that question because they were very much involved in asking about beliefs. Government cannot ask those questions and I don’t think we want government to ask those questions, because then you get into questions of religious freedom and so forth. By its very nature government is going to be less effective than groups that can ask those questions and be discerning.
NS: One of the most interesting parts of your lecture, in my view, was the linkage of the notion of “justice” with “righteousness,” and why considerations of righteousness may cast some doubt on the merit of entitlement programs. Now, righteousness is not typically something that’s talked about among a lot of folks who discuss social justice. Could you explain more this notion of righteousness and why it is so important to any fruitful concept of justice?
MO: It’s important because God clearly thinks it’s important, since so many biblical passages link justice and righteousness. Righteousness is not a term we use very often these days, but it’s not a bad term to describe the difference between single moms who heroically find a way to work hard and take care of their children, amid great difficulties, and those who do crack. A system that treats both of them the same is discouraging righteous living and thus working against justice. Biblically, it is wonderful to help those who have been unjustly treated, but if you subsidize the wicked you are acting unjustly.
NS: In your discussion of poverty, you talked about material poverty and then what you called “relational poverty.” Can you define that for our readers?
We hear about greed and not envy because it’s the journalists who do the writing and broadcasting.
MO: I’ll tell you about a typical case from around 1900 in the files of the Associated Charities of Boston. There was a depressed elderly widower who applied for help. Associated Charities didn’t simply give him some money to get him out of the way. Instead, a charity agent asked about the widower’s family background and eventually found a brother-in-law who had not seen the old man for 25 years but said he’d take care of him. The old man reunited with his late wife’s family. Here’s the conclusion of the case record: “If there had been no careful investigation, the man would have received some bread but would have remained alone.” So materially, in terms of basically keeping him alive, he would have been helped—but he still would have been in relational poverty. Organizations like the Associated Charities of Boston, to their credit, cared about both material and relational poverty.
NS: You pointed out in your lecture that the failure of the family has public costs and quite significant ones. How should be think about what the state ought to be doing to address that?
MO: Well, the state should not tax a married couple where both work more heavily than two single people living together, let’s say. That’s a discouragement of marriage. The state should not require organizations to treat pairs of individuals the same as married people. Since there are enormous social advantages with marriage, particularly involving the raising of children—and when people don’t have children societies crumble—the state should discriminate in favor of marriage. It should not say to other entities that it’s illegal to discriminate in favor of marriage. There are a whole lot of complications in terms of societal mores and questions of same-sex marriage and so forth. But basically, if you look at marriage having the enormous social benefits of producing and raising children, the state should favor that and the state should not keep other organizations from favoring it.
NS: I’m curious about your thoughts on questions of inequality and material inequality. And in particular questions of trend one way or the other, the rising of income inequality. Should this be a concern?
MO: As long as everyone is on the same airplane, it should not matter a whole lot that someone’s in first class and someone’s in coach: You’re all going to get there at basically the same time. One of the problems we have as human beings is a tendency to engage in envy, which is essentially wanting to steal from another—not a good thing. At the same time, we are in better shape as a society if we are not set up in a way that overly excites envy. So inequality can be a problem given human sin, and there’s plenty to go around in all of us, including rich and poor. If inequalities become huge you tend to have problems for one of two reasons. Reason number one: you may no longer have a plane in which everyone is aloft. It’s a problem socially if people are stuck in place. Secondly, there can be a problem of perception: if the extremes become too great or if the affluent are seen as acting callously toward the poor, then you can have all sorts of social problems.
Recognize that the government can actually often cause more problems, and if you use government it should be in a jujitsu way to reduce the size of government.
So, theoretically the existence of inequalities is not a problem at all. If you had equality, that would be a problem, because you’d be stealing from people who are more productive. Gross inequality may be a problem if there’s no opportunity for the poor to rise and if people move from thinking “I’m gonna work hard” to “I’m gonna get it from them.” It’s always vital for those who are affluent to have some charitable concern for others, both for principled and pragmatic reasons. If they are vicious and act as if they are a different species from the poor, cross-class antagonism grows.
NS: We seem very comfortable talking about greed as a problem. Envy is not something that is discussed as much and yet it’s an enormously destructive sin. Why is it in our culture we seem more comfortable talking about greed than envy?
MO: In the mid-’90s I was spending some time in Washington and talking about compassionate conservatism with lots of different people. There were times that I went to some fancy dinner parties, and sometimes I was the entertainment. Two groups of people were typically at these parties: Fat cats who made the parties possible and were financing organizations, and journalists. The interaction was fascinating: many members of each group tended to despise the other group and at the same time to kiss up to members of the other group. The rich folks saw the journalists as leftists and kinda nasty: “They’re out to get me.” Some of them also thought that if the journalists were so smart they’d be rich. Yet, at the same time they thought, “I better kiss up to them because they can say nasty things about me.” Meanwhile, some of the journalists despised the rich folks because, “I’m smarter than them but I’m living in a rat infested place. That’s not fair, that’s not justice.” They scorned the wealthy but at the same time envied them their wealth.
We hear about greed and not envy because it’s the journalists who do the writing and broadcasting. Like all of us they notice the splinter in someone else’s eye but not the log in their own, so they write about what they see as the greed of the fat cats, and they don’t write so much about envy. If the wealthy could write they would probably write more about envy, but they’re not the ones doing the writing. Very few people write about greed and envy as two sides of the same coin. Both emphasize taking from someone else what the taker has not earned. They are both, to use that biblical expression, wicked.
Image by Dianna Ingram/Bergman Group.