Jay Richards: Money, Greed & God

but a lot of times I'd like to give you a taste is the argument that I have developed in this book money greed you got money Green Gunners written out of frustration motivated I grew up in Texas went to a small liberal liberal arts college in Texas as an undergrad about the sides actually of Evangel and this was in the 1980s when the Soviet Union had not yet collapsed and we were at the height of what was called the Cold War and in some ways you could think of the 20th century as a battle between two fundamentally different ways of organizing societies on the one hand you called the the command economy a kind of political economy in which the state more or less controlled social life the state in its strongest form owns the means of production in its most radical form it reached actually in the early 1920s in the Soviet Union there's literally no private property after the Bolshevik Revolution in Russia but that was its most extreme form it was modified slightly up a few years later after several million people died of starvation and they realize that's not gonna quite work but for decades all of the officially smart people not only in the West but in Western educated people that then went back home to places like Vietnam in China this idea of a command economy in which the economy is run by you know a technocracy of officially smart people was a more scientifically rational and efficient way of organizing things and so this is what most officially smart people thought was the wave of the future and they certainly thought that in the 1970s there was on the other hand this idea that wasn't necessarily kind of well thought out philosophical idea necessarily that that is sometimes called capitalism but it's not my favorite word and the reason is because the word capitalism came from Karl Marx it is a socialist word it's not a word that if you read Adam Smith the famous or a father of modern economics wrote a book in 1776 he's a Scottish moral philosopher his books called The Wealth of Nations yet news hoard capital is I mean it didn't have the word talked about a natural system of Liberty if you read the American founders they didn't have a word capitalism they didn't say anything about that sort of thing what happened especially in what you will call the Anglosphere so the english-speaking world England Great Britain in the cup countries that were like the United States originally British colonies a system essentially a rule of law in which you have a government that does certain narrow circumscribed things but not everything does some things in Hong Kong for instance which is the British colony many of the it was a British protectorate and many described it later is that the British they ruled in Hong Kong by a method called benign neglect in which there was a government that maintained the rule of law it had banking laws laws against fraud people got locked up if they killed each other they stole from somewhere someone or something like that so the government was functioning and a core competence didn't left society above that more or less free to engage in economic activities individuals and businesses we're sort of free to engage in economic activity voluntarily and so like we call that capitalism but I would just call that generally a free economy a free society it's not Anarchy it's not everybody getting to do whatever they want to do is this a society in which you have the rule of law and limited government and economic freedom and that was the 20th century was a sort of competition between these two ways of organizing society and it was both a test at one time and its height half the human race was subject to the experiment of a command economy primarily socialist and communist and the other half was was not and then there's other countries of course that didn't fit in either category so what happened well as late as the 19th late 1980s we were told that the socialist and communist experiments were robust and that they were likely to be able to compete with countries in the United States in fact I mentioned to some faculty at lunch that the CIA in 1988 said that the Soviet economy was just as powerful and just as capable of creating wealth as the American economy the Soviet Union collapsed a year later it collapsed okay it was an utter disaster in almost every kind of way in which you would evaluate a society this is what I grew up in going to college I read the Communist Manifesto my freshman year I was a Christian but I didn't really understand how to apply the Christian faith to the ideas of the day then and the idea of a Christian worldview in which you think through the implications of Christian theology and you apply it to everything from art and history and philosophy to economics so I read the communist manifesto I ended up breathing at five times first semester of my freshman year and became convinced that Christians ought to be socialists now here's the argument not very impressive now that I'm giving it to you but the arguments more persuasive when it's an impression it was essentially this Jesus cared about the for Jesus talked a lot about the poor Jesus expects us to be concerned about before socialists talk a lot about the poor therefore Christians should be socialist that was kind of the argument that's not right all that robust didn't do you know once you kind of laid out but that was the idea was what kind of the attitude that I had in my head fortunately I kept reading economics so that by the end of my senior year reading people like the American economist Thomas Sol Milton Friedman Friedrich Hayek the great Austrian economist I became convinced that of the live alternatives of the alternatives of things that humans can actually bring about this side of the kingdom of God that the free economy is by far the best of the alternatives and a command economies and communists and socialist economies don't do anything like what the people that proposed them actually would want them to do they in fact usually lead to poverty and despair and oppression so that was just sort of the conclusion having studied this for several years but I had a dilemma my senior year in college I read a book called Atlas Shrugged by Ayn Rand I don't know how many I won't ask for a raise of hands that's sort of like you know asking how many of you play Halo or something we're supposed to be studying nobody's gonna admit to having to you play Halo right here hand one might not he admits it probably read a minor into it so you know but this is something especially for college age boys right that where I went to college with reading nine rands like intellectual pornography I can't believe the stuff she's saying here and so I supposed to be studying for German my senior year and I was reading this thick book called Atlas Shrugged by Ayn Rand Ayn Rand if you don't know who she is she's probably not even allowed here is she now that I think about it she was the english-speaking world's leading advocate and most widely-read advocate of capitalism in the 20th century she was also a vicious anti Christian atheist who embraced selfishness as a virtue I'll talk about that a minute fact she has a book called the virtue of selfishness and so I had read ran my senior year just as I'd come to conclusion a free-market economy was the way to go and I get this woman who's the leading proponent of it saying that selfishness is a virtue capitalism is based on selfishness and greed and that's a good thing right it's not that and so it was like these two tracks in my mind one was that the economic evidence persuaded me that the free economy was the way to go the other was that it seemed morally unsavory had a very hard time resolving this dispute in my own mind as it happened I graduated from a college start went off to graduate school the Soviet Union collapsed and I decided okay the debate is settled I mean insofar as an argument can be settled by the facts of history this one was settled so in the early 1990s nobody actually even wanted to talk about this stuff everybody agreed I mean everyone across the political spectrum agreed that free-market economics was the way to go that it was the way of the future well we had a financial crisis in 1987 another financial crisis in 1997 rather dot-com bubble in 99 and 2000 and then a financial crisis in 2008 and all the same arguments that were being made in this 1970s and 1980s about the virtues of socialism and the vices of capitalism re-emerged completely unchanged and so what I discovered speaking on other topics like a book I had written with an astronomer called the privileged planet was that Christian college students had the same dilemmas that I had and I thought word had been long settled in the 1980s and so that's why I actually got into this issue but I realized most people don't want to study economics and the reason is because most people that go to college have you have a macro course here I don't know what like the first econ class that anybody takes it Evangel is it called macroeconomics okay that's the one I had and that's the one that most people have now I that's done here but I'll tell you that macroeconomics is actually created by a cabal of cigar smoking men to prevent people from liking economics that's what it's for it's to turn you off so that you know they'll have like a private club in a private language I mean I'm kidding but it doesn't tend to a dear people to economics unless you're really into mathematical formalism and you want to say how can I apply it to the human race right and when in fact I think the economics is one of the most exciting ideas that is possibly you could possibly sort of spend your time with now why do I say that what is economics about well no here's the prior question what is one of the most remarkable thing in all of creation it's the human person it's the human being uniquely made in the image of God no one else no other entity is described in that way not angels not stars not galaxies nothing just us we are made in the image and likeness of the Creator unique hybrid of the material and the spiritual what is economics about economics is a study of the interactions of human persons and the ways in which we buy and sell and exchange goods and services and information frequently in the context of scarcity and so it's the social reality that is over and above all of what we are as individuals and so it should be really interesting because it's about us it's about our actions it's about our purposes how we provide for other people and create value for each other so that's how I want you to think about economics don't think of it as an academic discipline first of all think of it as a domain of God's creation so just like God has created a world that has its own internal logic to it it's also a complex world think of God this sort of creation is a a set of interacting and overlapping spheres all right and so what by spheres what I mean is that there's sort of domains that you can be studied by themselves so you can study chemistry and you can learn the periodic table the elements and you can learn the internal logic of chemistry it touches physics it touches biology but it has its own internal it's own rules right it's a well understood discipline the periodic tables filled out there's no empty spaces in it anymore that's because there's a it's a domain of God's created order that's rational and discoverable and you can study it on its own that's how the economic realm is but we don't often think of it that way but I want you to think of this reality this domain that God didn't create directly he created human beings in the world directly and then human beings under certain conditions come together and over time these people called economists have studied and discovered certain things about that realm about that domain of reality the economic realm has its own internal logic it has rules and then just as chemistry has rules the economic domain has rules that can be discovered and can be figured out and can be used to make predictions and that can't be legislated and overridden you don't have the power to change what prices do in a context of scarcity you don't have the power no legislative body has the power to change the relationship of supply and demand all right so that's the idea if you get that then you've actually already you're already about 80% of the way there in terms of thinking about this issue as a Christian if it's a reality it's outside us it describes a domain of God's creation and it's had as its own internal logic that can be discovered then the only remaining question is what's it like what's that part of reality like what do we need to know about the economic realm in order to act in such a way that we help rather than hurt people I mean you would know that this was true in any other domain but when it comes to economics we often think well this is a particularly problem for us as Christians is we think well economics isn't really about anything it's just ethics right I don't need to know anything about prices or there's nothing to know there I know how I feel I know what my moral intuitions are and so I'll just read those off and then I'll just support policies that seem to fit with my moral intuitions the problem is that the economic realm has a reality if you attach it to a bad understanding of economics you can actually support a Paul for good reasons that actually hurts people so this is the dilemma that for me I felt like look most people aren't going to study economics and if they do most college-educated people aren't getting past that macro class and you very often don't get the tools of economic reasoning that would allow you as an important person and an informed Christian to think about economic issues clearly so I wanted to do is write a book that sort of provided the tools for that but without actually having to give somebody a graduate degree in economics so here's what I would say if we're thinking about this issue as a Christian we want to we want our economic understanding to be a part of the Christian worldview what is what our goal to be it's the only best way of describing it is essentially this what we want to do is we want to integrate the descriptive truths that is those things that are just true and can be described in the economic realm and the theoretical insights that kind of insights and ideas that economists have with the normative principles of ethics and the relevant truths of theology if we do that well we bring that into our into our understanding of reality then we've got a robust Christian worldview that allows us to think clearly about these issues well so the the sort of pretense of this book of any Green God was immense my argument that really most of the problems that we make most of the errors that people make when they're thinking about economics are actually not the result of just simple ignorant or refusal to accept reality and it's not the result of dark hearts it's not the result of bad moral intuitions it's a result of intellectual myths that are like speed bumps things that we think the economic realm is like that prevent us from thinking clearly about it and so the intellectual misconceptions are missed by myth here I don't mean that in a kind of a the fancy literary sense of you know I mean myth in the sense of not true and in fact the opposite of a truth something that you think is true that is a sort of conveys a confusion so in the book it's actually eight really simple eight myths they correspond to eight questions and it's impossible to do justice to all eight in one's 45 minute talk so I don't want to do is just give you example examples of four of them so that you see what it is I'm talking about so what's it what's the first myth first Miz what I call the piety myth there's a wonderful book called economics in one lesson that was written in the 1950s by a guy named Henry Hazlitt it's a great book it's actually more than one lesson but I mean that's a good title right you'd read that and and he makes this point right at the beginning in the book he actually defines what he calls the art of economics in this way I said the art of economics consists in looking not merely at the immediate but at the longer effects of any actor policy it consists in tracing the consequences of that policy not merely for one group but for all groups so there's what he's saying is if you master the art of economics whenever anybody says something that has to do with economics so I'd say well let's raise the federal minimum wage to $100 an hour and then everybody will be rich if you've mastered the art of economics you don't say boy you're a nice person you say this oh and then what will happen and you don't just ask the question you actually follow up by thinking about what will actually happen if we do that as it says if you do that if you develop that intellectual discipline to trace and anticipate the consequences of policy not merely for one group of a for all groups you will have mastered the art of economics notice he didn't say the science of economics I mean let's assume that there's a science of economics that's rigorous and that can use mathematical formalisms and make predictions he's talking something more like a craft a skill that you get down in your bones like learning to play golf right as long as you are focused on all the 28 different details that you have to remember in order to be able to hit a golf ball you never hit the golf ball it's only when you get it down in your bones and it's in your muscle memory that you learn to do it the same way to learn the art of economics you've got to get so used to doing this it's so reflexive about doing it with everything that you do it automatically and you don't say let's focus on what you meant to do you say let's focus on what's actually gonna happen now this is a real problem I think it's a difficulty for Christians and the reason is because we understand something about the moral life but he knows that the the story of Jesus at the temple with the disciples and he's watching various people publicans and sinners go forward and give their out of their wealth ostentatiously give offerings and he notices one humble widow who gives two mites right so she shuffles over and gives an essentially two copper pennies and Jesus calls her out and what does he do he calls her out he says that woman has given more than everyone else does Jesus not know arithmetic is he not able to add what's this point his point is that everyone else gave and when they were giving they were both getting the benefit of everybody seeing them give and they're also giving out of their wealth so it wasn't terribly significant when she gave she was actually having to humiliate herself because she had so little to give she was it's an embarrassing amount and also she's giving out of her poverty and so it was sacrificial right so in other words her gift was more significant because she gave out of her poverty because of what she didn't why she did it not because of the economic value of the gift God cares in the moral life about the internal in the external aspect of our acts that in other words God cares both why we do something and what we do both of those things are a unity when it comes to the moral assessment of an action if I give my wife for instance one day she gets three dozen roses from me with a very nice handwritten note and it's not a birthday and it's not our anniversary and we haven't had a fight or something right and you're a friend and you think this is amazing I can't believe Jane just sent you three dozen roses what your husband is amazing right and I might like to have her friend think that now but what if you're my friend and you just happen to know something you know that I like to go on golf outings and now you've been on three full weekend golf outings already this year and I want to go on a third one over the Veterans Day weekend and I haven't raised it to my wife yet and so just before I asked her about being able to do this I send her three dozen roses now what's just happened in your minds the whole act has changed right so the external is exactly the same three dozen roses but it's gone from being a gratuitous act of love random act of kindness to an attempt to manipulate my wife to grease the skids alright why I did it is really that it's the morally significant fact at that point that's true in ethics it's not true in economics it does not matter why you support a policy it does not matter why a member of Congress signs a bill and votes for a bill the effects of that policy are the same either way every member of Congress could support a bill unanimously 435 members of the House hundred members of the Senate send it to the president who signs it and they could all have a different motivation so it would be five hundred five hundred thirty six people including the president all different motivations well those motivations have any effect on what that policy actually does to people no it can't it's blind to that this is the problem is that we have a hard time recognizing that the external effect of policies is actually the morally significant thing when you're talking about policies you don't want to focus on what your motives are you want to focus on what it's actually going to do to people in fact if you think too much about your good motives that can distract you from actually mastery in the art of economics let me give you a couple of examples of this it seems so obvious right it's essentially focus on consequences rather than your intentions when you're thinking about economics this is not rocket science right this is way easier than anything actually learned in economics so why don't we do this we don't do it precisely because of the unity of the moral act let me give you a couple of examples rent control rent control is a policy that is was widely popular in the 1960s and the basic idea I doubt those rent control in Springfield I didn't check this but I'm sure that there's not but there it's exist in various forms in large municipalities still in the United States new New York City has it in a kind of mongrel mongrel form there's still a version of it in in Berkeley California of course and some places like to hat right but the basic idea of rent control is that a city councils noticed you have large cities limited amount of space and a huge demand for housing and so what's gonna happen limited supply increased demand price goes up right and so city councils look and say you know what's happening is that housing is getting priced out of that sort of realm in which lower-income people can afford housing and so if this keeps happening there's people aren't gonna be able to afford basic rental property and they'll have to move someplace else and so City Council's around the world thought okay well let's make it illegal for landlords to charge more than a certain price and so then that will keep the price down where people can afford it right is that makes sense to you and so you just put a legal ceiling on the price of housing all right now if you haven't mastered the art of economics you might think that yeah makes sense you just help you just keep the price down and people can afford it but let's say you've mastered the art of economics what do you do you same thing what's gonna happen right you guys I just said this five minutes ago come on yeah and then what will happen well you can figure out what will happen just by thinking about it from the perspective of the landlord so imagine you own a ten-story apartment complex with nothing but one-bedroom apartments and it costs you $800 a month just to maintain those one-bedroom units all right and the city has now told you that it is illegal for you to charge more than five hundred dollars for those apartments per month eight hundred dollars a month to maintain it you can only make five hundred dollars legally what do you do alright so think about it what do you do get cheaper material I try to reduce your costs right that's exactly that's one of the things so remember the building is already built and so you're gonna try to reduce cost so you're gonna keep not maintain it as well as you would right so you cut costs that's one thing you do yeah I'll tell you the other two things cuz we already actually know what people do has all been done you transition that property from rental to condominiums so you turn it into you just sell it essentially right so it's no longer subject to rent control this happened to my wife in our first apartment in Seattle so you turn it into condominium you sell it the second thing you do is you can turn it into commercial property so it's not it's not residential property more make a storage unit or store or grocery store or something like that or third you reduce your main maintenance costs and so that you don't actually lose money now what what happens if you do that and over about a 10-year period it ends up being a slob right can end up being condemned so what's the effect of this think about it so apartments that before were available but prices were going up or turned into condominiums they're turned into commercial property or they're they are turned into slums that eventually condemned what is the effect of that it's to reduce the supply of housing precisely where the rent control was focused so the purpose of rent control is to keep the housing available the effect of it was to create a shortage precisely the where it was supposed to create an abundance why is that it's because the this they can't you can't control the city couldn't control the supply and demand simply by manipulating and fixing the price the prices represent the underlying supply and demand of the good in question that's just a reality it's an external to a city council it's an economic reality and so by its just specifying an arbitrary price above which people are not allowed to charge they're automatically going to produce the scarcity every economist understands this every economist understands this but City Council's continually do these kinds of things now I like that illustration because it's pretty easy to get it's also a good example of how failing to focus on economic realities can lead you to commit to a policy that does exactly the opposite of what you were planning to do and it doesn't matter how well meaning the city the City Council is we give you one more super depressing example because that one was it nearly depressing enough right the 1980s most of you guys were not yet born I can see that some of you were probably born they still in the 80s but in the 1980s this pre-internet which I know is impossible to believe there was a time when you had to use paper card catalogs it was horrible I'm so glad were past that but in the 1980s we didn't have access to instant information what was happening around the world and we people were wearing these really cool Adidas and Nike kind of stretch workout uniforms I had a really nice one now if you see it now it looks like the guy that's coming to break your legs because you're back on a loan but they were cool then everybody's sort of wearing this very inexpensive sports clothes and tennis shoes and we suddenly discovered that almost all of these things were made in Asian countries and factories that look to us like sweatshops and so pictures started showing up and I could move Jane Fonda was if she was a sponsor for something and it turned out that the product she was sponsoring was made by children in sweatshops in Asia nobody liked this I didn't like it I was at a kid at the time but it was sort of angered that these call these clothes we were wearing were actually made by children in somewhat unsafe conditions and factories in Asia and so it was enough of an outcry that a member of Congress I won't name him because he's actually from this part of the country introduced a bill called the child labor deterrence Act and the child labor deterrence act the purpose of the Act was to make it illegal for American companies to do business with factories that employed children was that just that simple all right now what's funny about this bill is if you look a lot of people think this bill actually went through Congress and actually was passed into law and then this Act actually was passed into law it never did it actually never really got out of committee it was debated but American companies were so petrified it was going to become law that they acted as if well it's gonna happen so let's just go ahead and implement policy so they cut off their contracts with a lot of these these textile factories and garment factories in Asian countries now what's interesting about this fact so you can assume that the Act actually took place because it had these the same effect what's interesting is that UNICEF actually did a study in 1997 so the discussion of the Act started in 1990 1997 UNICEF which is a division of the UN did a study these Asian countries and garment industries to see what it actually happened as a result what they discovered is that about 50,000 kids then in 1990 had been working in these factories in 1997 were no longer doing that all right now what are you gonna say right now if you've mastered the art of economics what happened right and now you to think about it okay so they were working in textile factories it's say you're a 13 year old kid right and you were in a very impoverished Asian country at a very early stage of economic development and it is now impossible for you to work in that factory do you go to the local parochial schools you go to local Country Day School at that point no I'll tell you what the UNICEF study said it said those kids that were working in the garment industry in 1990 by 97 about 50,000 of them were overwhelmingly doing one of three things rock-crushing Street hustling prostitution now no one in the united states of america or in US congress but let's get those kids out of those t-shirt factories and into the brothels nobody got that that's what happened though how did it happen it happened because they did not attend carefully to the real economic details we have child labor laws in the United States but they came online at a particular point the American Founding and even as late as 1919 hundred over half the country in 1900 we're still working on farms and so kids my even my mom and my grandfather right they were expected to work on farms ethic like the main reason people had kids actually in many parts of the country who says they needed farm labor but at one point our country got to a certain level of per capita income which a social consensus developed it said you know given circumstances all things being equal kids below a certain age ought to be in school and then we implemented child labor laws that were appropriate to that but imposing those kinds of policies on countries at much earlier stages of development and in much more desperate economic circumstances has utterly destructive consequences all of which could be understood simply if people in positions of power and mastered the art of economics now that's the piety myth it's the last one I'll leave you with it's most depressing one let's move on to the second method greed myth which I kind of mentioned a minute ago on is talking about ein Rand this was the biggie for me as I told you in the 1980s because of this idea had gotten from Rand and there was actually a movie that came out in 87 called Wall Street and the main character was a guy played by Michael Douglas and his character name was Gordon Gekko we had really subtle stuff right Gordon Gekko it's actually a sequel to Wall Street they came out three or four years ago it's actually he's actually a pretty good movie it starts so he is a real odd story stereotypical Wall Street trader traded in real estate you know were these stiff light-colored suits he carried a big a big cell phone that weighed about 50 pounds I remember and and so he gets arrested he ends up going to jail and the second Wall Street actually starts with him getting out of jail 130 years later or something like that but in Wall Street the movie there's a scene near the end in which he's in a stockholders meeting is this big auditorium and people are talking and he's really mad and I don't even wear the details now but he gets them held of the microphone he stands up and he gives us impassioned speech that becomes this famous speech known as the greatest good speech and here's what he says he says greed is good greed is right greed works greed cuts through and captures the essence of the evolutionary spirit greed in all its forms has marked the upward surge of mankind it's a kind of a weird moment the movie because you're thinking oh is this the climax or it's not really very exciting but this is became a kind of famous and weirdly celebrated scene in the movie but when you watch it you might think okay so ridiculous caricature I mean nobody's actually like that if you know about the movie you know it was produced by a guy named Oliver Stone who's a well-known kind of anti-american leftists that you would expect to create a character like Gordon Gekko right unfortunately some of the leading champions of capitalism make arguments very much like this this is an rands argument and I I return to Rand again and again I wrote about her in this book I wrote about her in a later book in 2013 I'm working on a book right now called free to create and so in some ways if she seems like a caricature in a foil that it's not fair to argue with and except that she's wildly popular still I was in a Hong Kong a few years ago and there's a lot of english-speaking people in Hong Kong walked by a bookstore and thought what are people reading in Hong Kong so I walked in the book shore went right up to the checkout stand you know where all the popular books are and there was a new book by Richard Dawkins of course and right next to that Atlas Shrugged by Ayn Rand so she's not I mean she's not a kind of made-up cartoon this is actually her argument but this is what she says in this book the virtue of selfishness she says capitalism and altruism are incompatible their philosophical opposites that cannot coexist in the same man or in the same society now altruism normally what it means it's from the Latin word Altair which means than other and so an altruistic act is an act in which you act for the benefit of another and so when you hear that if you're Christian you think something's seriously messed up here right if capitalism is actually incompatible with altruism well too bad from capitalism right I mean that's the actually the answer if you read R and some of the things she says are quite as crazy as they sound because she defines words weirdly and so was she defined as she defines altruism is acting for the benefit of the other at your own expense okay if you define altruism that way and then altruism can only ever be a zero-sum game it's only an act that you do support something for someone and it harms you right and so that that one bad definition leads to just a mess of bad ideas in her literature she had just looked up the real definition who solved it saved us a lot of trouble but a lot of people when they hear about Rand they think well wait she's not the only one that made this argument didn't didn't Adam Smith make this argument in the wealth of nations in 1776 this is kind of the argument that capitalists have been making all along right it's not actually true and so I want to show you his any if any of you read Adam Smith salary at least heard of Adam Smith I'm sure but most people have not read The Wealth of Nations because it's a big thick book in which he's talking about pin factories and stuff like that right it's not just engrossing sort of things and so what most people know about Adam Smith is a couple of quotes they know that he said something about the invisible hand and most people have an impression he said something about how selfishness is good all right so what I want to show you the only complicated part of my talk tonight is how Adam Smith had a very profound and important argument that we all need to understand and that it wasn't anything like Iran's argument it had nothing to do with the idea that selfishness is a virtue so let me give you the two juicy quotes that everybody hears from Smith in fact these are quoted in practically every economics textbook ever written here's the first one so what for the wealth of nations and Smith says stuff like this all over the place so it's not from the benevolence of the butcher the brewer the Baker that we expect our dinner but from their regard to their own interest all right so think about it for a second you don't expect that we're gonna get our dinner from the butcher the brewer and the Baker because their benevolent because but because they regard their own interests first quote second one is this everyone has heard that Smith describes the market as an invisible hand it's so far as I can tell he only ever uses this phrase two times and all of his extant works and this is one of them he's talking about what he calls men of Commerce here says in spite of their natural repeal fishness and rapacity businesspeople are led by an invisible hand and thus without knowing it or without intending it without knowing it advance the interest of the society all right so what's he saying greed is good or the selfishness is a virtue it's not he's actually saying something really I think really significant and quite subtle here's the basic idea here's a couple of points I just give you a little bit of background the first is this so for Smith Smith was a moral traditional issues that probably a deist it's a Scottish moral philosopher as part of the Scottish enlightenment he's also influenced by stoicism so he was very much a moral traditionalist that believed in virtue and discipline and modesty and this is kind of traditional moral ideas who never have said that greed and selfishness were virtue in fact he over and over describes it as a vice as a bad thing as a morally bad thing never say anything like what I'm Rand said the second point is this mere self-interest is not the same as selfishness every time you take a breath every time you take your vitamins every time you take a good advice every time you take a class that helps you graduate you act in your own self-interest is that bad it's that bad thing is that well it's a necessary evil that I have to breathe now we should didn't have to it makes no sense in fact if your parent you spend 18 years trying to teach your kids basic self interest would you please brush your teeth would you please put shoes on before you walk out in the tick-infested grass right it's like you trained your children to do this you're not training them to be selfish right there were bodily beings that have basic needs we exist in particular times in places we have needs that have to be met if people don't learn to meet them if you don't breathe for yourself they count troublesome it would be if other people in the Department of Health and Human Resources had to call you and tell you in debrief it makes no sense right it's the created order is such that things work out best if people attend to those things in which are their direct interest now if you read Smith that your self-interest is not your narrow like focusing just on yourself it refers essentially to that domain of things over which you have interest and over which you have some control right so for me my self-interest includes not just myself but my friends my family my fellow church members the people that are around me my business my co-workers that's all a part of my self-interest those are things I am interested in and so notice Smith is saying look we don't expect that the butcher and the brewer and the Baker they don't have to be visualizing world peace probably the butcher is just thinking my daughter needs braces right but what happens in a market if he needs braces the nice thing is that in a market within which you have the rule of law right the butcher can attend to his self-interest if you worry about getting money for his daughter's braces but what does he have to do to be able to do that he has to provide meat that you will freely buy and to try to do it better than his competitors that's Smith's point is that a market channels people's legitimate self-interest over which they're likely to be concerned into socially beneficial outcomes and that's subtle but do you see how different that is from rands argument right the channels so as I notice the golden rule itself assumes something like this the golden rule assumes that if you have a properly formed conscience you can use what your legitimate self-interest is as a guide to determine how you ought to treat other people there's okay what would be you remember your conscience has to be properly formed for this whole thing to work trick done work otherwise you can say okay how would I like to be treated what would be in my best interest and you can use that as a guide on how to treat others that only makes sense if there is a legitimate domain of your interest all right so that's the first point the second point is this so imagine right now the butcher of the brand their maker are just just merely self-interested imagine if instead they're actually selfish in greedy that's in a second point notice that that previous quote I gave you he doesn't say business people ought to be selfish and or patients he says in spite of their natural selfishness and opacity his point here is that even if the butcher is greedy even if the butcher would like to steal from you there's laws against that he'd like to give you really kind of rotten meat that might work once and then there's AG review on Yelp and he doesn't get to do it again right and so even if he's selfish the best way for him to fulfill this selfishness is still to do something that benefits other people that's Smith's argument it's important it's subtle and it's a really important one why is this important because that's what you want in a system fit for fallen human beings one of the options is not a bunch of entirely sanctified people right what what economic system is best for entirely sanctified people who cares right I mean we don't get to have that what we have is actually actual people following people maybe a furious is a Wesleyan school maybe there's a few that are really sanctified I'll grant it out all right but what you want is an economic system appropriate to ordinary human beings one that's fit for other human beings isn't going to be much good now that is a very important a very significant argument and I stress as me because people very often don't get it because they read ein ran back into him all right so what's the greed myth the greed myth is the idea that capitalism the essence of capitalism we're the essence of the free enterprise is greed all right but as you just saw that's not at all the case Smith's argue which i think is a good one is a market economy right in which you have the rule of law and then the sort of free exchange channels people's legitimate self-interest and even their vices to some degree into socially beneficial outcomes or at least more socially beneficial outcomes than all of the alternatives what socialism do what does that incentivize you to do it doesn't incentivize people to try to serve their customers it incentivizes people to curry favor with the government officials who give out the favors and that's what it incentivizes you to do and that's in fact what people do all right now that is by far the high point so if you're thinking okay if he gives me one more nuance I'm gonna totally explode that's all over it's all downhill from here all right so the peyote myth greed myth the zero-sum game myth what's the zero-sum game myth does your sum gain myth is through the idea look if one person gets rich does that mean somebody else is gonna get poor all right if Paul makes a dollar doesn't that take a dollar from Peter somewhere most of you guys were pretty young in 2008 when during the financial crisis but there was this thing called the Occupy Wall Street in which hundreds of people descended upon this little Park near Wall Street in lower Manhattan called Zuccotti Park and it looked like if you just watch the news there are a million people involved in Occupy Wall Street Zucotti Park is like three of these rooms put together it's tiny but you get a lot of cameras it looks like a sort of international event and it didn't actually accomplish anything at all but it did introduce this idea to the American lexicon of the 99% in the 1% in the idea of the 99% 1% is that there's one percent of the population that has all the wealth and then it leaves the 99% the rest of us and like I don't know relative squalor or something like that now I'm not talking about the problems with the financial crisis then bailouts those are real problems but I'm once you should see the idea the idea is that there's one segment of the population that takes all the wealth and leaves the rest of us in squalor that's the idea of a zero-sum game right then you were involved in any comic game in which one person wins and one person loses now there's three kinds of games like this this is basic ideas from game theory a zero-sum game is like a win-lose game it's most of the games that we play are like this win lose or zero-sum game it's just a game that by the rules to have a winner somebody has to lose most of our sports games basketball soccer football chess checkers are all like this now some of these games you can have a tie but in that case you don't get winners and losers all these games if there's a winner there has to be a loser that's just the way the game is set up so that's 0 summer win lose now think about the two other kind of logical possibilities here you've got the 0 summer win lose gain second option would be the lose-lose game now losers game is a game where everybody that plays ends up worse off as a result of having played it who's up for that let's do that there are not many games like this a nuclear war in a confined space would be the best example right like Westra should not have played that right so that's the second option now what's the third option win-win so it's a game what is a win-win game is what win-win game is not a game and that's it have to be a game in which everyone that plays ends up equally well-off for a game to be win win it simply means that everyone that plays over the long run ends up better off than they would have been if they had not played so the comparison in deciding if an arrangement is win lose or win win right it's not to say well did I end up as well off as you did and to say did I end up better off then I would have been right so what you're comparing is yourself in the actual world having played the game with your counterfactual self having not played the game right there was a time my wife and I had left Seattle and come back and she was working on a graduate degree in to come I'm working in Seattle so we rented a house she like in the middle some place between Tacoma in Seattle on this bluff overlooking the Puyallup valley and so on one side of this street it was this amazing view that went on forever and then on the other side where we had rented a house all you saw was the sides of the houses on the other side street right and so I was driving a Volkswagen Passat with a skid on the side or I hit a post and the guy crossed the street had a bright orange Lamborghini all right and at the time I was actually working on this book I thought you know what's he doing then he end up with a Lamborghini he's not smarter than me and I immediately realized that's totally the wrong perspective that's the that's in what I need to say wow I can't believe I live in a society where it's no big deal but I had this really nice car what I was really compelling myself to him that's the wrong way to think about these things but you want to know is am I in an economic arrangement in which I'm better off as a result of being in it then I would have been otherwise now once you get that then the question is you can actually figure out the nature of a free exchange is win-win just by thinking about it I learned this actually in the sixth grade he didn't figure it out until I was 40 unfortunately but I did learn the lesson grew up in a city actually very much like Springfield in Texas 150,000 people mostly hot but we'd have ice storms and snowstorms it would come in from the Rockies in New Mexico and we'd know about it the day before and we never had snow days I don't know why this was and so apparently the teacher had heard what was gonna happen and so our teacher this class when I was in the sixth grade we of course had to stay in because there was an ice storm outside during recess and so she got out a basket of toys that she had got from the dollar store and passed them all out to us one at a time so everybody got one of these little cheap toys and there was a silly putty egg and some Barbie trading cards and paddle ball and stuff like that past the toys out to everyone and so everybody had a different toy said now I want you to look around and look at your toy in compared to what everybody else has and grade it between one and ten how much you like the toy so he did that you know and he looked around so I wrote down what what you know it's just totally up to us totally subjective and she said okay now call out what you have and I want to add up the totals we all did this right two three five everybody gave him the number she added up the total when she wrote it on the board so that's a number and it's like the sum total of our subjective feeling about our toy acquisition or something right said okay now in the first round of the game you can freely trade with anyone else in your row all right so I didn't count at the time so assume we were in five rows of five kids here to simplify so that would mean each of us had four potential trading partners for the first trade all right so you get the idea all right so we looked around and it's not a lot happened at this point there's only you know four other trading partners but some things changed hands and once it settled down then she said okay now write down how much you like the toy you have in your hand so we all did it again she had us call out our numbers again she added up the total and she wrote it on the board now what do you think happened number went up right same toys nothing new added to the system number went up right second round this is why I remember this event all these years later she said now you can freely trade with anyone else in the classroom now you can imagine the pandemonium at this point you've got 24 potential trading partners on the first trade and who knows how many different types of trades that you could make doing this total chaos lots of people changing him toys multiple times it finally settles down after about five minutes she says okay now write down how much you like the toy between one and ten we did it again she had to call out the number she added up the total she wrote it on the board what happened number one way up now what is happening how is this possible same stuff remember there was a set of rules and it was implicit here but there was a rule of law so she said you can freely trade with anyone else in the classroom or in your Oh in other words really trade means you can't threaten a little girl behind you that you're gonna clock her on the playground if she doesn't give you the paddle ball right the trade only happens if you both agree to it right in other words it's not going to happen unless both of you perceive yourselves as better off as a result of having done it that's by definition win-win every one of you engages in this type of inner economic exchange every single day and you've probably never reflected on it until just now it wouldn't happen on both sides unless both sides perceived it as beneficial what the trading game did is it simply set up a system of rules that maximizes from opportunities for doing this so the very logic of free exchange if it's genuinely free is a win-win game even when nothing new is added to the system that's what's weird about this notice stuff which in this case toys plugged in at the beginning and then a system of rules for voluntary exchange and then free and some sort of subjective decisions and that's the first thing I mentioned this morning in Chapel that this is how if you once you see that you realize that economic freedom is a sort of golden mean between statism on the one hand or the coercive power the state dictates everything in anarchy on the other hand in which people just do whatever they want to do in which case the strongest are going to to win every single time all right so free exchange is by definition win wins there's no reason to assume that economic freedom is a zero-sum game and then the final myth that might seem like it has to do is just like the zero-sum game method subtly different it's what I call the materialist minute the good zero-sum game myth is a myth about the nature of trade the material's myth is a myth about the nature of wealth and it's essentially the belief that wealth is not created but merely transferred that wealth is like that cherry pie the Platonic ideal of the cherry pie here the crisscross top alright and so if you think of a pie if somebody gets too big of a slice that leaves less for everyone else and we've talked this way we talked about people getting more than their fair share right the idea is that the economy is this finite amount of stuff and the best you can do is to distribute it equally and equitably by making sure the slices are all exactly the same you do this with a pie obviously right if you're gonna invite seven friends over for cherry pie and you haven't sliced it up until they get there are you gonna cut a quarter of the pie for yourself of course you're gonna just do eight little slices if you want a quarter of the pie what do you do you do that beforehand and then you slice up and hope nobody adds it up right I don't know what but they're none the worse but that's the that's how PI's work right that is not how free economies work we know that's not how it works and it's not how it works for different economies trading with each other right Japan was in utter ruins after World War two we had bombed it to oblivion it's utter disaster it was fairly well developed it didn't enjoy economic freedom and political freedom and then we had just bombed it to oblivion in 1945 they were producing radios and then cars that competed with the best that the United States could produce a few decades later and we benefited Japan got richer and we got richer too they didn't get rich by extracting wealth from us all right that's how economies actually work give it up up and down their depressions and recessions but over time economies grow we know this this is not it's sort of a point of dispute oh I don't like pie flew away there and forgotten about that where are we here there it is the pie does grow here right but of not it's not actually how they grow all right now you might think this is so obvious why would we need to discuss it but remember I talked about the 20th century being this experiment between two different ways of arranging society if you read the communist manifesto is written by Karl Marx and Friedrich Engels in 1848 they make the pie argument that I just made more or less here's what they said in the communist manifesto here's the basic argument all right their argument is that what they called capitalism so this was the system that came out after feudalism the kind of industrialization that he was seeing in England and Europe that Marx called capitalism he said capitalism will sow the seeds of its own destruction by its own logic it will destroy itself and the reason is what actually happens economically and so he described the two classes of people the the bourgeois or the owning class the capitalists the people that owns the mean own the means of production the guys that owned the factories stuff like that right in the tools and there and then the proletariat the workers who are paid wages to work in the factories that's the simplest way to put it all right and so here's the idea think that this is a sort of southern England in 1750 right and what this this pie chart describes here is not the number of people it represents the amount of wealth in the hands of these different classes all right so the labourers are in the red think of them as 99 percent of the population all right the 99 percent and in 1750 let's say they own 70% of the total wealth in the economy and then the capitalists are in the kind of light blue up there and they own you know it's 20 percent or something like that of the economy what Marx and Engels argues they say this is what happens the capitalists hire these workers the proletariat in factories let's say you've got a textile factory and you make shirts and so you make you pay them as little as you can to make shirts for you and then you take the shirts and you sell them on the market you try to sell them for more than they cost to produce right if you can do that then you make a profit but Marx had this theory called the labor theory of value and so he thought falsely the something is simply worth exactly the amount that it costs to produce it so if you charge somebody for more than it costs to produce you're exploiting them you're splitting both the workers and the customer you're getting a surplus value nevertheless Marx and Engels said they said well the capitalist does is he takes that profit that's her post I owe you and he reinvest it in his capital equipment so he makes the workers more productive and so by doing that you won't have to have as many workers and you can fire some of them you can pay the remainder even less money but they'll be even more productive and then he can sell the shirts and make more profit and take that profit and reinvest it and then this cycle will continue and by continuing like this what will happen is that the wealth in the economy will get slowly transferred like this from the capitalists from the owning class or from the labourers to the capitalists in the owning class and there's the red so remember that's 99% of the population owning less and less of the wealth and then 1% of the population owning most of the wealth and then what happens at this point you know what's gonna happen at this point you get a revolution of course the workers suddenly realized what happens they rise up they confiscate the means of production they liquidate the capitalists and then there is a temporary stage called socialism in which the state owns everything on behalf of the people right and it looks like that right that's actually great but it comes off differently now in the Marxist theory this was a temporary stage it's the state ownership of the means of production all private property temporarily until people cease to be attached to their belongings and then a new socialist man will emerge and at that point the state will wither away and a communist utopia will exist in which everyone is free to do what he wants and so he says a man can fish in the morning and read in the afternoons and smoke in the evenings right this is this is communism this is what it was supposed to be never got to that stage always got stuck at this stage why because the theory was flat wrong on the facts when Marx and Engels wrote the communist manifesto in 1848 they predicted that the wages of workers should be going down the wages of workers in the factories a few miles away at the time we're going up that's impossible on Marx's theory makes absolutely no sense the reason economists all know why this is is because workers who have equipment and are more productive their labor is more valuable right and so if you have a fancy combine or a fancy tractor your labor is worth far more than if you have a cheap little hoe right or a shovel right Marx's theory said exactly the opposite what actually happens in economies like this is it's not not a utopia what actually happens this is the market realities the pie grows it gets larger this isn't sort of a prospect that Marx imagined you assumed the owning class could only get rich off the backs of the working class right now I know this is not the most impressive PowerPoint animation you've ever seen but it's I hope it gets the point across why does this matter what this means is that there are economic Arrangements in which people can get fabulously wealthy not by confiscating wealth from other people but by creating wealth for themselves and others and others right the late Steve Jobs did not get rich stealing iPods from homeless people it's not how it works right it's not how it works he participated in a process in which wealth is created that was not there before now this is the weirdest and most counterintuitive thing imaginable to many people it should not be counterintuitive to Christians I mentioned this very briefly in passing this morning I'll spend two minutes more on it this evening economists as economists can explain and/or can describe what under what conditions economies grow but they have a hard time when it comes to just the mere economics when you're just describing the surface details of accounting for how this is possible economists talk about land labor and capital right stuff like that they very rarely talk about creativity and ingenuity now they do account for they know that they're entrepreneurs that do these things but they have a very hard time actually reckoning with it I spent the last three years reading the literature on entrepreneurship the entrepreneur is the person who collects wealth takes risks using that wealth to create a provide a service and if he or she succeeds actually can get wealthy and and help other people in the process but entrepreneurs are hard to account for in economics is you can't predict what they're gonna do at a time alright well if you're Christian this is the kind of thing that you probably should have expected all along what's I mean you get this on the first page of the Bible God creates the world in these six mysterious he's got a workweek like we do weirdly unlike our workweek and our the day in which the Sun and the moon are doing these things god what does he do starts things off in the beginning God created the heavens and the earth and the first thing he says is let there be light he separates the light from the darkness and then that light and darkness circumscribed his days and then there's an evening and a morning the first day in that order it's always evening and morning and that he creates different things by after creating these things that he calls forth living things from the waters and the land and then on the sixth day what happens it's very repetitive and then God says let you know let the earth bring forth and then there's an encore on day six the pattern gets broken and then God speaks to himself in the plural it says let us make man in our image after our likeness and then God creates them male and female and then what does he do he immediately speaks to them both a blessing in the command be fruitful and multiply and fill the earth and subdue it and have dominion over the fish of the sea and the birds of the air and every creeping thing that creeps along the earth God commands and blesses us before the fall connects our economic activity and our fecundity as human beings giving birth and bearing children these things are connected now if you said okay so all you had was that one Verte let's say you just had that first page of the Bible and nothing else and you were trying to figure out what it meant to be made in the image of God what would you think it meant what do you know about this God so far you know well he creates things he exists he saw sovereignly calls things into existence he exercised his freedom and he exercised his creativity now obviously we don't have that but it would stand to reason that at the very least this image of God had something to do with that creative freedom that this God that were reading about exhibits and so to be made in the image of God minimally I would argue is to have this capacity for creative freedom now we don't create like God does we don't call things into existence out of nothing Thomas Aquinas said God grants two creatures the dignity of causality in other words unlike the Muslim world view God doesn't hoard causality all to himself he creates a world and he creates a world of creatures that that can themselves create they have real agency he doesn't hoard that among themselves we can't create things from nothing but we can takes and create fiber-optic cables and computer chips for which silica is the basic ingredient that's the idea so what we would want when it comes to economics is we want an economic system that's appropriate to our dignity that channels both are legitimate self-interest and our vices like selfishness and maximizes our opportunities for creating value for ourselves and others as creatures made of the image of God and I would submit to you that the only economic system appropriate for that is free enterprise thank you very much

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Keywords: University, God, Student, School, Admissions, Athletics, Academic, Curriculum, Bible, Freedom, online, Scholarships, Affordable, Best, CCCU, Jay Richards, Money, Finances, Lecture, Debate, Poverty, Philosophy, Economist, Free Enterprise, Christopher Hitchens, Intelligent Design, Free Market, Jonathan Witt, William Dembski, James Robison, Buillermo Gonzalez, Greed, Privileged Planet, Hobbit Party, Southwestern, Theological, Evangel, Calvin, Union, Princeton, Biola, Apologetics, Acton Institute, Ben Stein

Id: J3iFxn3fxos

Length: 64min 43sec (3883 seconds)

Published: Wed Nov 30 2016