Nine big ideas from economics that can help you live as a good steward every day :
1. For everything you do, there is something you are choosing to leave undone. Attending one church means you cannot attend another one at the same time. Giving your money to the poor in one nation means that you will not be giving it to the poor in another. There are lots of good things we could be doing, but we cannot accomplish them all simultaneously. Choose carefully, and choose prayerfully.
2. The anticipated social benefit of any policy proposal must be seriously weighed against every likely social opportunity cost. Where either positive or negative externalities arise, carefully designed and implemented public policy has the potential to nudge suboptimal market outcomes toward more socially preferred ones. However, policy action should be undertaken only in instances where the anticipated social benefit exceeds the possible social opportunity cost. Careful and wise stewardship of our resources demands it.
3. Actions speak louder than words. The nature of a person’s true values is expressed in his or her actions, not in words. Just like ‘rational expectations’ means that the public will learn about the Bank of England through its actions over time, people will learn what you value most highly from observing your actions too. Economists sometimes call this idea – that we can learn what is in someone’s heart from observing his or her actions – “revealed preference.” Be known for your fruits, not merely for big talk.
4. Markets move precious resources from less-valuable to more-valuable uses. When new business ventures succeed, consumers are signalling that they really like the ways in which entrepreneurs are using society’s resources. And when products like McDonald’s Arch Deluxe or Coca-Cola’s Surge soda fail, consumers have signalled that they would like McDonald’s and the Coca-Cola Company to stop squandering society’s precious resources making things few of us want. Markets continually transform resources from unproductive uses to productive uses. Do your part by letting your purchasing habits reflect what you hold in the highest moral regard, and encourage others to do so as well.
5. Job creation is rightly viewed as a cost, not a benefit, of any initiative. People are precious, valuable resources – at least as precious as any other of God’s creatures. And when they are doing one job, there is some other activity they are not doing instead (e.g., staying at home with loved ones, going to school, working in another job). Finding mere busywork for people is not an appropriate use of their creativity, talent or ingenuity. Instead, society should be more concerned with channelling individuals into their most highly prized uses – just like any other valuable resource.
6. Free international trade is a proven way to help the world’s poorest people. Free trade by both rich and poor countries gives the poorest people access to employment and market opportunities that they would not have otherwise. Protectionist measures designed to defend the poor, while noble, do nothing but guarantee the impoverishment of the world’s most destitute. Dislocations caused by changes in trade are temporary, can be offset by wise complementary economic policy, and are small compared to the large gains to be had through trade.
7. Hope for a better future may require temporary discomfort today. University is not easy or cheap, but a university education holds great promise for the future. Chemotherapy is not easy or comfortable, but the treatment brings the promise of remission. Growth and change require temporary inconvenience. We cannot be so focused on remaining comfortable today that we miss out on the hope that tomorrow holds.
8. Corrupt governments keep the poor down. When a government can take anything it wants from its citizens, there is no incentive to work hard to create anything. Christians should continue to work for economic freedom and social justice throughout the global community.
9. Sunk costs are sunk. You cannot relive yesterday. Yesterday is gone. Begin living each day anew, and live each day as faithfully as God’s grace enables you.
These ideas are adapted from ‘Economics in Christian Perspective: Theory, Policy and Life Choices’ by Victor V. Claar & Robin J. Klay (InterVarsity Press, 2007)