It’s Wrong To Be Ignorant of Economics

A transcript of the Lew Rockwell Show episode 363 with Shawn Ritenour.

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ROCKWELL:  Well, good morning.  This is the Lew Rockwell Show.  And it’s great to have as our guest, Dr. Shawn Ritenour.  Shawn’s a professor of economics at Grove City College.  He’s a contributor to their Center for Vision & Values.  He’s an associated scholar of the Mises Institute; done many things, published many papers.

But today, Shawn, I want to talk to you about your textbook, which is called Foundations of Economics: A Christian View.  And I think this has been a pretty successful textbook but in my view it ought to be a lot more successful.  Tell us, in your view, why people ought to be making use of this book, whether they’re homeschoolers or it’s Christian schools or really even people on independent study.

RITENOUR:  Sure.  Thank you very much.  I want to also thank you for having me on your program.  This is an honor and a treat.

I would guess the reason I think that the book should be used is related to the reason why I wrote the book.  My vision for starting a book of this nature was to help people, say, intelligent high school students, but primarily introductory college students, and the general public, for that matter, to understand good, sound economics.  And so I wanted to write a good college-level introductory treatise from a Misesian praxeological perspective.  So when people read this book, they are not going to get a sort of house of cards built on arbitrary assumptions.  They’re going to get realistic economics that’s applicable to the real world because it’s built on the reality of human action.  And so that’s the main vision in terms of the economics in the book.

And I wanted it to be readable.  There’s so many books out there.  There are really good books that are really sound — say, Rothbard’s, Man, Economy, and State – are excellent but they’re at a pretty high technical level for introductory audiences.  And so I sort of wanted to do for Rothbard, in a way, what Rothbard really intended, with his book, to do for Mises, which was provide a more popular, more introductory version of the book.

But then I also wanted to show to my students that I was teaching in Christian colleges and universities — show that there is no conflict between sound economics and sound Christian doctrine.  So often people will be confused and think, well, economics is dealing with the things of this world; it’s somewhat tainted; that economists assume that people are greedy or selfish or just care only about themselves; that when we talk about human action and the actions of individuals, we presume that the people care only about themselves and not anybody else, not their family, not their friends, which, of course, is simply not the case.  And so I wanted to sort of provide my readers with an understanding that not only is there no conflict between sound economics and Christian doctrine, I would say that good economics grows out of sound Christian doctrine about the nature of the creative order and the nature of man.  And so that was sort of the main reason I wanted to write this thing.

And it sort of grew out of my own experience because when I was a college student, I took a couple of economics classes and really loved the subject but I wanted to make sure that this was really a discipline worth devoting my life to and it wasn’t something that just was fun puzzle solving.  And it was through reading Mises’ Human Action, or really beginning to read Mises’ Human Action, and then seeing how his causal-realist praxeological approach fits very nicely with the understanding of a man being made in the image of God and, as such, being a rational actor, that that really sort of confirmed in my mind that this is — economics is something worthy of study.  And therefore, I wanted to try to communicate that enthusiasm for the discipline from that perspective that I shared as well.

Then on top of that, I think readers, again, Christian readers are going to — I want to show them why economics should be important to Christians in the sense that there is the creation mandate or the cultural mandate to be fruitful and multiply, to have dominion, to fill the earth with people, and yet, to do it in a fallen world of what I call aggravated scarcity.  So how do we do that?  Well, economics is what helps us fulfill the material aspect of that calling.  And so we ignore economics to our peril.

And then, also, Christians understand that the glory of God is shown in his works.  And part of his works are the economic laws that he built into the created order.  So, all of these things are benefits that one can get from reading a book like mine.

And finally, just one more thing, too often issues of economic policy are divorced from Christian ethic, specifically Christian ethic of property.  And so I wanted to make sure that when we talk about economic policy, be it price controls or taxation or inflation or what have you, that we keep the issue of private property and the Christian ethic of property in the minds of the reader because it’s easy — I see this a lot, even amongst people that otherwise seem to be thoughtful Christians.  It seems somehow they — if we want to do something good, we want to help the poor, well, we want to help the poor, and wanting to help the poor somehow is enough to justify a whole host of intrusions into the marketplace and constraints on private property.  But people need to remember that the ends never justify the means.  And God calls us to do good, not just to obtain a good end, but to do so using means that are ethical.  And so we have to remember the ethics of property when we think and try to evaluate, fully evaluate economic policy.

So those are sort of the aspects of my book that I think would be reasons why the Christian college students and homeschoolers and parents and just the intelligent layman should read and benefit from my book.

ROCKWELL:  You know, Shawn, what you run into is not just a problem with Protestant Christians.  I know so many Catholics think, just to take one example, that there’s no economic law.  They don’t believe in economic law.  So, that there should be a family wage; that every worker should be able to earn a high enough wage so it can support a family without his wife working.  Certainly, a nice idea.  But if the government just mandates that, there will be no down side because whatever the state — of course, this is a view among far more than just Christians — that if the state just mandates something and thinks there shouldn’t be any downside, there won’t be any downside.  So just to say a mega minimum wage for everybody, on a Christian basis, it will have no problems with it, only good.  And to say that there are economic laws is to somehow question God.

RITENOUR:  Yeah, that’s exactly right.  You run into that all the time, the idea is that government is like Pharaoh: So let it be written, so let it be done.

[LAUGHTER]

ROCKWELL:  Yeah.

RITENOUR:  And the idea that part of what God has put before us that there is the created order that he has created and there is reality that we have to deal with.  And so we can’t simply say that we want to achieve something we think is a good idea.  We’re butting our heads up against economic reality, day in, day out.  I mean, we can’t just do that.  And if we continue to try to do that, it just makes things worse and worse and worse.

And what I find is, too often, what we have a tendency to do — I mean just people in general — we have a tendency to identify something that we think is a nice idea, like you said, the idea of every person being able to earn a wage that would guarantee his family a particular level of living.  That’s a good idea.  And if everybody could achieve that, that would be great.  But what will happen is we transform somehow in our thinking the idea of something that is a nice thing into a matter of justice or a matter of a moral requirement.  And that’s when I think it’s very important that we recognize that there are moral constraints that we have to put on our thinking.  And one of those restraints is private property.  And then we also have to recognize that it is just not really right and good to ignore the reality that God has created.

ROCKWELL:  Also, of course, always ignored in this sort of formulation is the rights of the poor businessman, the employer.

RITENOUR:  Yeah.

ROCKWELL:   He has no right to his property.  It’s OK to order him around on penalty of putting him in a cage to forcibly make him give his property away in a way that he wouldn’t choose voluntarily to do it.

RITENOUR:  Oh, exactly.  Just a week or two ago, I gave a lecture to a group of students at Case Western Reserve University to the Young Americans for Liberty on the minimum wage.

ROCKWELL:  Uh-huh?

RITENOUR:  And made the point that, you know, people routinely will talk about, say, the big company, the big, bad employer who is the only employer in the area that can exploit workers and then pay them an extremely low wage.  But people forget that — I mean, they use that word “exploit” because it’s very loaded language.  But people forget that workers exploit employers also.  They exploit the opportunity that there’s a guy here who has a company who needs to hire workers to get the job done that he wants, and so these people are going to use that opportunity to get money from him for working.  In other words, they turn the wage contract in this act of exploitation when, in reality, both parties are benefiting and both parties are benefitting each other.  And in a sense, if you want to use the word “exploitation,” you have to at least recognize that workers are exploiting their opportunities also.

[COMMERCIAL BREAK]

ROCKWELL:  You mentioned earlier about some Christians feeling that economics was no good because it assumed that everybody only had a money interest in life.

RITENOUR:  Yes.

ROCKWELL:  Not that we wouldn’t like to have more money.  Nothing wrong with that.

RITENOUR:  Sure.

ROCKWELL:  But talk a little bit about how Austrian economics disagrees with the neo-classical view of that.

RITENOUR:  Oh, very good.  Yeah, I mean, that’s one thing I noticed early on in my studies, where you have economic theory built on the idea of utility maximization.  And there is sort of — what should one say — a tip of a hat to subjective value and personal preferences.  But then the assumption sort of is that a utility maximization is something that is very closely related to monetary maximization, the maximization of income and money, our pecuniary interest drive, everything, almost sort of the humble economics view.  But one of the things that I really enjoyed about the necessity perspective, when I read Human Action and then read more of the literature, was this understanding that we don’t need to presume that people are narrowly selfish to derive the laws of economics.  All we need to recognize is that people act to achieve their preferences.  And those preferences could be varied.  There are certainly people that I could identify from my own past experience that did seem selfish and did seem to be driven primarily by a monetary income.  But I know a host of people whose preferences are certainly not consumed with money.  But they act to do what’s better for their family.  They act to do just what they think is right and what’s better for their neighbor.  They engage in charitable acts.  And these are also actions based on their preferences.  And so it’s just a much more full and richer view and, therefore, realistic view of humanity, which is why I think the necessity and vision of economics is it’s better because, in that sense, it’s more truthful.  It’s more reflective of reality.  But then it’s also more useful because you’re not locked into this sort of artificial model and artificial way of looking at the economy.

ROCKWELL:  You know, even Mises himself, when he asked Margit Sereny to marry him, he said, “I’m going to write much about money in my life but I’m not going to ever have much of it.”

RITENOUR:  That’s right.  Yes.  That was a —

ROCKWELL:  He knew.  I mean, the choices he made —

RITENOUR:  Yes.

ROCKWELL:   — the positions he was taking, the ideas that he was espousing, he knew that he was not going to be ever rolling in dough.

RITENOUR:  Right.

ROCKWELL:  He could have been much wealthier.

RITENOUR:  Oh, yeah.

ROCKWELL:  Rothbard, too, and other people like this.  But they chose a different path.

RITENOUR:  Yes.  That’s right.  In fact, I think there’s a charming story in her memoir about him keeping on, I think, I want to say, like, a housekeeper or something, when everyone agreed that she was past peak efficiency, but they just didn’t want to let her go because they just didn’t think it would be the right thing to do.

ROCKWELL:  How about finishing up for us, Shawn, with taking one of the parables in the New Testament and maybe making an economic point.  I mean, for example, the great one about the vineyard owner hiring the laborers at various times during the day and deciding to pay them all the same, and what the workers’ reaction was.

RITENOUR:  I use that actually in my book where I sort of lay out the Christian view of property and its implications for economic policy.  This is the parable that Jesus told where a vineyard owner needed workers to work the vineyard and he hired people in the morning.  And then he needed more workers and went out and got some more that he hired in the middle of the day.  And then he hired some more right towards the end of the day.  And when it was time to pay them off — which was customary, you pay the wage at the end of the day — everybody got the same wage.  Everybody got the same amount of money.  And the people that worked all day long were kind of put out about this.  They said, “Well, look, we worked all day long and then we’re getting just the same as these other guys that worked a lot shorter period of time.”  And the vineyard owner said, “Well, isn’t this what you agreed to work for?”  And they said yes.  And he said, “Well, I did you no injustice then.  If I want to pay these people the same amount, what is it to you?  I’m making the decision because it’s my property.”

Now I always think we have to be very careful.  Jesus is telling a parable.  The primary —

ROCKWELL:  It was, of course, about salvation, right?  I mean, yeah.

RITENOUR:  It was about salvation, so he’s not trying to give an economics lecture.  But the point I make in my book, which I think is a valid point, is that the moral force of the parable, which he’s trying to teach about the kingdom, hinges upon the morality of the private property.  In other words, if somehow the economic principle of being able to have exclusive use to your property doesn’t hold, then that parable doesn’t teach with the same force what Christ was trying to teach with it.  So I do think that there is an implication there.  Even though that’s not the main goal of the parable, I do think it’s pretty clear that for the moral force of that parable to hold, it’s has to be legitimate for the owner of the vineyard to contract with his workers as he sees fit.  And if he decides to pay everybody the same wage, it’s perfectly legitimate for him to do so because it’s his vineyard and it’s his property.

ROCKWELL:  Well, Shawn Ritenour, thanks for coming on the show today.  Thanks for talking to us about your book, Foundations of Economics: A Christian View.  We’ll, of course, link to it and we’ll link to your Mises archive and all your other writings.

Congratulations on what you’re doing at Grove City.  Jeff Herbener, too, of course.  That’s the reason there’s such a great economics department there.  So thanks for being part of that.

And thanks for all you do for the Mises Institute.  You were a great student at Auburn University, and we loved having you around.  And I don’t think anybody is surprised that you’ve gone on to great achievements.  So it’s great to have you on the show.

RITENOUR:  Well, thank you very much.  You’re too kind.  And as I said, it’s a thrill and honor, so thank you.  Thank you for all your support.

ROCKWELL:  Bye-bye, Shawn.

RITENOUR:  Bye-bye.

ROCKWELL:  Well, thanks so much for listening to the Lew Rockwell Show today. Take a look at all the podcasts. There have been hundreds of them. There’s a link on the LRC front page. Thank you.

Podcast date, April 16, 2013

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