I've been spending a lot of time lately thinking about and reading about economics. This is because I've come to believe that right action and our capacity to perform it is more often determined by economic factors than anything else. This is true both at the macro-economic and micro-economic levels: whether you're talking about nations or individuals or even churches, it's hard to do the right thing if you simply can't afford it.

As an example, consider a couple of our founding fathers: Thomas Jefferson and George Washington. Setting aside the hagiography that surrounds these figures, it has to be acknowledged that they both had significant ethical problems. Jefferson was the grand idealist: he believed in virtually unlimited freedom, and caught the Republican vision of individual liberty perhaps more than any other of the founding generation. This vision of liberty presented a problem for Jefferson, as he was a slaveholder. How could he claim the rights of life, liberty and pursuit of happiness, when he himself held other humans in bondage? This internal conflict led Jefferson to argue against slavery (at least sometimes) and one of the original complaints in his draft of the Declaration of Independence was that King George had foisted the slave trade on the American people.

Washington, in contrast, was apparently comfortable with slavery until quite late in life. He was a wealthy man who had earned much of his wealth himself, and was strongly inclined to protect that which was his by law and custom. Long after the revolution, when he was president in Philadelphia, he had a slave runaway, and he pursued every option to recover his lost property. In short, he was not the advocate for Liberty that Jefferson was.

However, as he grew older, he apparently became less and less comfortable with the institution of slavery, and when he died, his will freed all his slaves (but not all the slaves owned by his wife--long story), and provided for their continued welfare, education, and support. Jefferson, on the other hand, did nothing for his slaves, because he couldn't afford to. Jefferson was broke, Washington was wealthy. What is interesting about this is that Jefferson's wealth was lost through wild living and Washington's wealth was made through frugality. Early in his life, Washington realized that the mercantilist system by which the planters marketed their crop and got their luxuries through factors in England was bankrupting him, so he swore off it. Jefferson, did not, and died broke.

Good intentions are no match for bad debt.

This plays out at the level of a nation state as well. Let's suppose, for a moment, that we wanted to provide universal health care. I think it's a lovely idea--but how to pay for it? Well, many will point out correctly that both Canada and Europe have managed it. But at what cost? In September, 2004, The Atlantic published a snippet entitled "Alabama, France of the South." This article points out that, if the EU (with it's socially conscious economies) were a US state, it's per capita GDP would place it 47th in the nation. That is, the residents of the EU are on a par, wealth wise, with Mississippi, West Virginia, and Arkansas.

So much for European sophistication.

The sad fact is that Adam Smith always laughs last. When you look at the wealth of nations, a free market system is the best way to accomplish it. Endless taxes, tariffs, protectionism, Unions, Medieval Guilds, mandatory 35 hour work weeks, over-reacting over-reaching environmental regulations, and a gigantic social safety net do not serve to enhance the wealth of your nation. All they do is seek to redistribute smaller and smaller slices of a stagnant pie. There's a reason that the US economy grows at 3-4% and the European economy is glad to get 1-2%, and the reason is that our economy is business friendly. This is why I regard the "Socialism Lite" of the Christian left as untenable.

On the other hand, I'm not comfortable with the laissez faire, support big-business at all costs attitude of much of the Christian right. What is needed is a way to harness the power of market forces to encourage growth while still doing something to make sure that the rising tide really does lift all boats. Currently, America's spectacular growth is benefitting mostly the top 20% of the population. The Middle class is more-or-less keeping up with inflation (and that's about it), and the bottom 20% is worse than stagnant.

Most legislative attempts to solve this problem have proven unhelpful. If you raise the minimum wage, you increase unemployment and contribute to inflation. If you tax the rich, you encourage them to do dumb things with their money and reduce the efficiency of the economy (not to mention reducing government revenue.) If you foster trade unions, you foster quite a bit of overhead, corruption, and lax competition. (The trouble that Ford and GM are in currently be attributed more or less entirely to the rapacious demands of the UAW.)

Ultimately, this is an ethical problem: you don't bind the mouth of the oxen that tread the grain. One solution would be for the truly wealthy (say, anyone who makes over a few hundred thousand a year) to forgo some of their wealth for the benefit of the poor. But somehow, I doubt that will happen.

Which brings us to the only solution that, in my opinion, doesn't try to jigger the system and doesn't create unbearable ethical difficulties: instead of pontificating about the economic value of individuals with undeniable spiritual value, we need to focus on increasing their economic value. How does on do that? In a word: education. Instead of "tax the rich" plans, or increased funding for welfare programs, or whatever the current liberal orthodoxy is, why not focus on education and training programs to raise the value of this bottom 20% of American workers?

Just a thought.