Christian Economics: Student's Edition
[Updated: 7/16/18]
Then Joseph said to the people, Behold, I have this day bought you and your land for Pharaoh. Now here is seed for you, and you shall sow the land. And at the harvests you shall give a fifth to Pharaoh, and four fifths shall be your own, as seed for the field and as food for yourselves and your households, and as food for your little ones. And they said, You have saved our lives; may it please my lord, we will be servants to Pharaoh. So Joseph made it a statute concerning the land of Egypt, and it stands to this day, that Pharaoh should have the fifth; the land of the priests alone did not become Pharaoh's (Genesis 47:23--26).So Samuel told all the words of the Lord to the people who were asking for a king from him. He said, These will be the ways of the king who will reign over you: he will take your sons and appoint them to his chariots and to be his horsemen and to run before his chariots. And he will appoint for himself commanders of thousands and commanders of fifties, and some to plow his ground and to reap his harvest, and to make his implements of war and the equipment of his chariots. He will take your daughters to be perfumers and cooks and bakers. He will take the best of your fields and vineyards and olive orchards and give them to his servants. He will take the tenth of your grain and of your vineyards and give it to his officers and to his servants. He will take your male servants and female servants and the best of your young men and your donkeys, and put them to his work. He will take the tenth of your flocks, and you shall be his slaves. And in that day you will cry out because of your king, whom you have chosen for yourselves, but the Lord will not answer you in that day (I Samuel 8:10--18).
Egyptians in Joseph's day believed in a sovereign Pharaoh. They believed that he was the link between heaven and earth. So, God brought a famine, and when it was over, they had sold their lands to this supposed god walking on earth. From that time on, they were taxed one-fifth of their income.
The people of Israel in Samuel's day believed that they needed a king who was comparable to the kings in the covenant-breaking lands around them. God told Samuel to warn them against establishing a king. Biblical law had made a provision for such a king, and had placed him under tight restrictions (Deuteronomy 17). But that was not good enough for the people of Israel. They did not want a restricted king. So, God told Samuel, Obey the voice of the people in all that they say to you, for they have not rejected you, but they have rejected me from being king over them (I Samuel 8:7).
Today, in the nations of the West, total taxation is in the range of 50% of national income. In order for the West to return to the tyranny of Pharaoh's regime, there would have to be a 60% tax cut. In order for them to return to the tyranny is described by Samuel, they would have to have an 80% tax cut. Yet Christians live comfortably in these regimes, and in the case of the United States, they have always had a numerical majority politically. They impose a system of tyrannical taxation that is beyond the wildest dreams of the tyrants of the biblical era, and yet they regard themselves as living in free societies. The extent of the political delusion of modern Christians dwarfs the delusion of the Israelites in the days of Samuel.
How did this happen? It happened because Christians have abandoned any faith in the morally binding nature of Old Testament law and Old Testament history.
Point one of the biblical covenant is God's transcendence, but also His presence. It asks: "Who's in charge here?" How does this apply to the state?
The first commandment says: I am the Lord your God, who brought you out of the land of Egypt, out of the house of slavery. You shall have no other gods before me (Exodus 20:2--3). God made it clear that their time in Egypt was a time of slavery. They had lived under the rule of a Pharaoh who was regarded by the people of Egypt as a god. The result was tyranny. God made it clear that to worship another god is a violation of His standards. This was also an implied warning: if they worshiped such a god, they would find themselves back under slavery.
The modern welfare state is a substitute god. No politician refers to the state as divine, but states around the world have created humanist educational systems that deny that God has any relevance in history. They have exiled God from the universe. They have substituted the impersonal God of evolution for the God of the Bible. They have substituted the heat death of the universe, when all life dies, for the final judgment. That will take place tens of billions of years from now. So, God neither began history nor ends it in judgment. He is therefore irrelevant to history. In the United States, it is illegal to teach anything else in tax-supported schools.
Modern man is surprised when he finds himself under the threat of tyranny: administrative law. He then redefines tyranny as if it were freedom. This is what teachers in state-run schools told him when he was in high school or college.
Point two of the biblical covenant is hierarchical authority. It asks: "To whom do I report?" How does this apply to the state?
Economic planning is an inescapable concept. It is never a question of economic planning versus no economic planning. It is always a question of whose economic plan.
The primary economic agents of planning are individuals who possess assets. God made them responsible as His stewards. This is the heart of the dominion covenant. Their actions in planning for the future are carried out within the framework of trade. They exchange goods and services with each other. The institutions of the market economy have developed in terms of the right of individuals to own property, which means the right of individuals to disown property. Individuals' plans are coordinated through the market's pricing system.
The socialists' view is that the state owns all property, and therefore agents of the state should do the economic planning. This is planning by bureaucrats. It is planning without the guidance of free market prices. This system is called socialism. Karl Marx described it as a system in which the means of production are owned by society. He never defined exactly how society would do the planning apart from civil government. He regarded civil government as a temporary way station in between capitalism and Communism. But he never did explain how Communism would allocate resources. He proposed a religion of revolution, and he justified this religion of revolution in the name of the utopian future that he never described.
There has never been a society in which the government has owned all of the means of production. This is an inconceivable society. Without private property, and without private exchange, there can be no prices. Without prices, central planners have no way of knowing what to produce, in what quantities, or with what quality. They don't know how to distribute economic output. They are flying blind. This was first discussed in detail in a 1920 essay by economist Ludwig von Mises: "Economic Calculation in the Socialist Commonwealth." This article made it clear that socialism is impossible. Even in theory, it could not possibly work. That is because there is no price system to guide the planners. This article was dismissed as irrelevant by socialists and Communists until the Soviet Union finally disappeared on December 25, 1991. Communist economics had been abandoned by China's Deng Xiaoping in 1979. Today, there are few socialists. They finally gave up.
While full socialist economic planning is now almost universally dismissed, both in theory and practice, virtually all national civil governments and almost all economists still favor partial government economic planning by bureaucrats. The system of economics promoted by John Maynard Keynes and his disciples favors government intervention into the economy whenever there is a recession or a depression. He called for massive national government deficits, which means money borrowed from the private sector or else created out of nothing by the central bank, as the way to raise employment and productivity. He never explained why money owned by investors would not do this in private capital markets, yet somehow it would do this when the government sold government bonds to these investors, and then spent the money.
Point three of the biblical covenant is ethics. It asks: "What are the rules?" How does this apply to the state?
The Bible is clear that any level of taxation at 10% or above is tyrannical. All Keynesian economists recommend taxes well above 10% for the national government, plus equally large levels of taxation by state and local governments. The level of taxation around the world today is tyrannical. The Bible makes this clear. Yet Christians have voted in favor of government welfare programs and government armaments that require taxes far above those identified in the Bible is tyrannical. Christians have overwhelmingly supported a redefinition of the eighth commandment: You shall not steal except by majority vote.
Christians no longer take seriously the story of Joseph in Egypt and the story of Samuel and Israel. They believe that these stories have no relevant judicial and economic lessons for people who live in the New Testament era. Nevertheless, prior to the First World War, which began in August 1914, no Western civil government had a level of taxation anywhere near the level promised by Samuel to the rebellious people of Israel. World War I launched the era of tyrannical taxation in the West. The voters in Europe approved of this level of taxation after 1914, and they still do.
Western voters vote for tyranny in the name of economic welfare, yet then they believe fervently that they live in freedom. They have been blinded by their commitment to theft by taxation. They have been blinded by their commitment to the idea of a messianic civil government. They believe that the state can heal. It can make poor people middle-class, and it can make middle-class people upper-middle class. All it takes is government economic planning. All it takes is a level of taxation over twice as high as what Pharaoh imposed on Egypt, and four or five times as high as what Samuel had warned Israel against.
Point four of the biblical covenant is sanctions. It asks: "What do I get if I obey? Disobey?" How does this apply to the state?
The Mosaic law is quite clear as to what constitutes justice: the rule of law. 'Do not pervert justice; do not show partiality to the poor or favoritism to the great, but judge your neighbor fairly (Leviticus 19:15). A similar law was announced to the people of Israel at the first Passover. There shall be one law for the native and for the stranger who sojourns among you (Exodus 12:49).
Welfare state economics denies the legitimacy of this principle. The defenders of the welfare state promote what they say is fairness. They promote what they say will produce greater equality. They do not preach equality before the law. They preach equality of results. To gain equality of results, it is impossible to have equality before the law. You get your choice: equality before the law or equality of results. You cannot get both at the same time. This is because people have different capacities, skills, ethics, and all the other attributes which make for differences in earning power. If the civil government redistributes pre-tax income so as to achieve greater equality of income after taxes, it has to violate the principle of equality before the law.
When politicians and bureaucrats interfere with the operations of the free market, they substitute state central planning for individual planning in the market. The price system is not allowed to guide individual planners when they make their plans. Instead, planners have to consider government regulations and government tax policies before they decide what they should produce, in what quantities, and at what price. This system of planning substitutes the coercive power of government bureaucrats, who cannot be fired for incompetence, in favor of planning run by profit-seeking entrepreneurs who will lose money if they fail to predict customer demand accurately. Bureaucrats are not allowed to keep any profits for themselves. They also do not suffer from any losses that their plans produce. In contrast, entrepreneurs, meaning business owners, make money by accurately predicting the future, and they lose money by inaccurately predicting the future. Who is motivated to do a better job of forecasting? It is obvious that private entrepreneurs are, not government-protected bureaucrats who cannot be fired.
Point five of the biblical covenant is inheritance. It asks: "Does this outfit have a future?" How does this apply to the state?
Whenever we see any institution taking over the welfare functions of the family, we also see an institution that will soon claim the right of inheritance of families. Inheritance is always related to welfare functions. This is true for the family, true for the state, and true for the church.
Throughout the world, civil governments fund education. They also fund retirement and old-age health expenses. These are functions that for millennia have been performed by families. These interventions by civil governments are assaults on family authority. They substitute impersonal written bureaucratic regulations for personal love and responsibility within families. They substitute a compulsory system of income taxed from the general public and then distributed by bureaucrats to special-interest groups rather than a voluntary system of income and savings provided by the heads of households for family members.
The modern welfare state imposes estate taxes--death taxes--on the wealthy. These are the people who provide most of the productivity in society. These are also the people who pay the highest estate taxes. Their children are not allowed to inherit all of the wealth accumulated by the parents. Politicians exempt the broad majority of taxpayers from this death tax system. They do not apply the inheritance law to all members of society. Politicians use civil law to discriminate against the wealthy, and they do so in the name of benefiting the average voter.
This is theft. The modern welfare state is the greatest engine of theft in the history of man. Christians vote for it. Most Christians are not wealthy, and most Christians do not care anything about the Bible's doctrine of equality before the law. They pay no attention to biblical law. They vote for politicians who promise to redistribute wealth from the rich to the state, officially on behalf of poor people. Christians who live in historically incomparable wealthy societies such as the United States do not acknowledge the legitimacy of this principle of state wealth redistribution when applied to foreign aid: funds sent from their national civil governments to foreign national governments. There is not much foreign aid in any nation's budget, but almost all taxpayers are opposed to it. What they demand that politicians do to the wealthy, they also demand that politicians not do to them in the name of helping foreign populations.
The modern welfare state hopes to become heir to the capital of the wealthy. It is a false hope. Wealthy Americans will not allow this to happen. There has been a loophole ever since the early 1900's. In the United States, they have persuaded politicians to allow them to establish tax-exempt charitable foundations. Then they leave most of their money to these foundations. These foundations pursue the social goals of the rich, and they also have on their boards of trustees the sons and daughters and grandsons and granddaughters of the rich who created the foundations. So, the enormous quantities of money that the tax collectors hope to collect from the rich and the super-rich will wind up in the bank accounts of the tax-exempt foundations that are created by the rich and super-rich in order to escape the confiscation by tax collectors.
According to the standards set forth in the Old Testament, we live in tyrannical societies. The level of taxation that is considered normal by the vast majority of voters in Western nations was identified by the Old Testament as tyrannical. No civil government in peacetime should be allowed to collect taxes equal to the 10% collected by the church from tithing members. Christian voters do not see it this way. Most of them do not tithe to their local congregations. Instead, they hand over far more money to tax collectors. They regard this as liberty.
Christians have refused to take seriously the specific warnings about taxation that are provided in the Genesis account of Egypt and the account of the creation of the first monarchy in Israel. Christians enjoy these stories as historical narratives, but they do not regard them as judicially binding today. Christians dismiss biblical law and biblical narratives as having been annulled by the New Covenant. Then they find themselves operating under secular messianic states whose politicians and bureaucrats claim the ability to plan the economy, as if they were God. They are not God. Neither was Pharaoh. Neither was King Saul.
We know where this is heading. We have seen it before.
Then King Rehoboam took counsel with the old men, who had stood before Solomon his father while he was yet alive, saying, How do you advise me to answer this people? And they said to him, If you will be a servant to this people today and serve them, and speak good words to them when you answer them, then they will be your servants forever. But he abandoned the counsel that the old men gave him and took counsel with the young men who had grown up with him and stood before him. And he said to them, What do you advise that we answer this people who have said to me, 'Lighten the yoke that your father put on us'? And the young men who had grown up with him said to him, Thus shall you speak to this people who said to you, 'Your father made our yoke heavy, but you lighten it for us,' thus shall you say to them, 'My little finger is thicker than my father's thighs. And now, whereas my father laid on you a heavy yoke, I will add to your yoke. My father disciplined you with whips, but I will discipline you with scorpions' (I Kings 12:6--11).
In response, Jeroboam began a tax revolt. The kingdom of Israel was divided. Rehoboam kept only one other tribe along with Judah: Benjamin. The other ten tribes went with Jeroboam. Jeroboam was a bad king theologically, but when it came to taxation, he was a better king than Rehoboam.
Today, Christians live under the rule of humanistic Rehoboams. The counselors of these kings are very much like the counselors of Rehoboam. They imagine that there are no biblical limits to taxation and central planning. They imagine that they can use scorpions to afflict the citizenry. But the citizenry has the right to vote, and the citizenry is willing to accept these levels of taxation only because they believe in this maxim: Don't tax you. Don't tax me. Tax the guy behind the tree. At some point, the public will finally figure out that they, collectively speaking, are the guys behind the tree. But until that time, they will not resist politically the level of taxation that they suffer under today.
Ideas have consequences. Bad ideas have bad consequences. Immoral ideas have bad consequences. This is a very bad idea: You shall not steal except by majority vote.
I hope you will take a stand intellectually against this idea. I hope you will organize locally to prevent this idea from being applied to your community. At some point, the national governments will run out of money to pay the obligations of the modern welfare state. At that point, there is going to be a great default, and there is going to be a great transformation of the political order across Western civilization. Let us hope that Christians will finally learn not to trust the modern welfare state, which is messianic to the core.
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