I wish I understood economics

Studying International Politics and Development Studies, I quite often have to interact with economics. Most of the time it’s very basic, so I quite enjoy it. But then I will be doing some reading, as I was just the other day, and I’ll come across something like this….…and I thank God I am an Arts student. In case you are interested, that equation is meant to show something about how the domestic policies of country i effect inflation over time period t.

But I really do wish I could understand economics, then, perhaps, I could grasp the true significance of the following:

• The estimated cost of the US War in Afghanistan: $225,502,000,000
• The estimated cost of the US War in Iraq: $677,805,000,000
• Total cost of US wars since 2001: $903,307,000,000 [1]
• The US budget for Iraq in the 2007 financial year: $4,988/Iraqi. This is triple Iraq's per-person GDP. [2]
  
  
• In 2009, the US government will:
  icrease spending by 22%
  spend $30,958 per household
  tax $17,576 per household
  borrow $13,392 per household
• More than 43 cents of every dollar Washington spends in 2009 will have been borrowed
• President Obama would permanently keep annual spending between $5,000 and $8,000 per household higher than it had been under President George W. Bush
• The Obama Administration has been predicted to accumulate more government debt than every President in American history from George Washington to George W. Bush combined.
• By 2019, the US government will spend almost $800 billion as net interest on debts [3]
  
  
• The US has the widest gap between rich and poor of any industrialized nation. [4]
  
  
• Total debts of the developing world in 2006: $2.7 trillion
• Total official development assistance in 2006: $106 billion [5]

[1]

http://costofwar.com/
[2] http://zfacts.com/p/447.html
[3] http://www.heritage.org/research/budget/wm2595.cfm
[4] http://web.archive.org/web/20020604053519/http:/www.observer.co.uk/comment/story/0,6903,706484,00.html
[5] http://www.globalissues.org/article/26/poverty-facts-and-stats

Economic Justice

1.4 billion people, or one quarter of the population of the developing world, live on less than $1.25 a day. [1] The poorest 10% accounted for just 0.5% and the wealthiest 10% accounted for 59% of all the consumption. [2] Most of us, hopefully, are aware of the state of poverty in the world, whilst also constantly exposed to the decadence of our own cultures. This disparity must surely cause us to question the system in which we are operating which allows such injustice.

The capitalist system holds as the highest good the right of the individual to own property. Libertarian economist, Murray Rothbard, argued that, “It is wrong and criminal to violate the property or person of another, even if one is a Robin Hood, or starving, or is doing it to save one’s relatives, or is defending oneself against a third man's attack.” [3] Thus, we see property rights prioritised even over the right to life or security. It is a system such as this which permits the disproportionate distribution of wealth.

Socialist views, on the other hand, prefer state ownership in order to promote egalitarianism. Famous revolutionary Che Guevara observed that, “Socialism cannot exist without a change in consciousness resulting in a new fraternal attitude toward humanity, both at an individual level, within the societies where socialism is being built or has been built, and on a world scale, with regard to all peoples suffering from imperialist oppression.” [4] Whereas capitalism is based on an assumption that everyone is selfish – something I would say is true due to the Fall – socialism rests on the understanding that people may come to value others above themselves. I believe this kind of transformation can only come from God. As such, a socialist system is doomed to failure, unless everyone recognises Christ – an end that will only be achieved with Christ’s return.

Catholic theologian Thomas Aquinas argued that private property rights are necessary to human life on the basis of pragmatics – they allow for human nature and maximise efficiency. But he also held that “man ought to possess external things, not as his own, but as common, so that, to wit, he is ready to communicate them to others in their need”. [6] Thus there is a public aspect to privately owned property so that, “In cases of need all things are common property, so that there would seem to be no sin in taking another’s property, for need has made it common.” [6] Private property, when upheld as the absolute, leads to economic injustice. Rather, it must be seen as a means to an end if it is to be of any benefit to the world’s most needy, to whom we owe both charity and justice.

However, there should be no poor among you, for in the land the LORD your God is giving you to possess as your inheritance, he will richly bless you, if only you fully obey the LORD your God (Deut. 15:4-5)



[1] 2008 World Bank Research by Martin Ravallion and Shaohua Chen
[2] World Development Indicators 2008, World Bank, August 2008
[3] War, Peace, and the State, 1963
[4] Afro-Asian Conference in Algeria, February 24, 1965
[5] Summa Theologica, On Theft and Robbery

Originally written for the economics edition of iCU (Melbourne Uni Christian Union Newsletter)