Thursday, November 20, 2008

Economic Sense

I'd call this kind of sense common, but it doesn't seem to be. In an interview with Walter Williams, John J. Miller asks an intelligent question: "Why are so many well meaning, intelligent people seduced by socialism?" Williams reciprocates with an equally intelligent answer: "People are attracted to socialism because it sounds caring - they look to the hoped for results, not the process. "I'm not against charity," says Williams.
Reaching into one's own pockets to help a fellow man in need is praiseworthy and laudable. I think reaching into someone else's pockets to help your fellow man in need is despicable and worthy of condemnation.
For an example of the latter, Burton W. Folsom, Jr. in New Deal or Raw Deal? explains how FDR's economic policy jailed people for lowering prices, and that at one point Roosevelt proposed a 99.5% tax rate to all incomes over 100,000. Because people in this income bracket generally own, operate and start businesses, this "compassionate" policy would have killed said businesses, inadvertently annihilating countless incomes under $100 - but the WPA wasn't just going to pay for itself.

According to Williams, article 1, section 8 of the U.S.Constitution lists roughly 21 things that government can do (providing life meaning and purpose, by the way, is not among them). If Congress limited itself to these mandated functions, our government would spend 600-700 billion dollars a year, not trillions. Nor would it be in the bailout business, because in a free market, businesses failing are just as important their succeeding.

What perturbs me most in economic discussion is the assumption that if one is for a free market (as I am), then one must not care about the poor. It's not a question of whether or not one cares about the poor (a Christian, at least, has no choice on that score.) The question is which system has the potential to lift the most people out of poverty. While wealth redistribution and third-world grants may sound caring, in reality, we might as well cut out the middle man and build African dictator's French villa's for them. Who should we listen to on this? Progressive biblical scholars, bishops and theologians, or Nobel Prize winning economists?

Muhammed Yunus' experience teaching in India led to a crisis in his economic principles. "What good were all my complex theories when people were dying of starvation on the sidewalks and porches across from my lecture hall?" So he went back to the drawing board.
The poor taught me an entirely new economics. I learned about the problems that they face from their own perspective. I tried a great number of things. Some worked. Others did not. One that worked well was to offer people tiny loans for self-employment. These loans provided a starting point for cottage industries and other income-generating activities that used the skills the borrowers already had.

I never imagined that my micro-lending program would be the basis for a nationwide "bank for the poor" serving 2.5 million people or that it would be adapted in more than one hundred countries spanning five continents. I was only trying to relieve my guilt and satisfy my desire to be useful to a few starving human beings. But it did not stop with a few people. Those who borrowed and survived would not let it. And after a while, neither would I.
Let that be your picture of entrepeneurship. Socialism sounds caring, but look beneath the surface: It isn't. The free market sounds uncaring, but look beneath the surface: Mixed with the compassion exhibited by Muhammed Yunis, it can be.