A new entry in this genre is Mere Economics by economics professors Art Carden (Samford University) and Caleb S. Fuller (Grove City College). They call upon their long experience in teaching to produce a book that admirably argues that a free, truly liberal society works much better than most people realize and that coercive policies meant to improve society bring a host of unintended effects.

Carden and Fuller write from a Christian perspective, borrowing from C.S. Lewis for their title and working scriptural passages into their text at many points. Their religious convictions do not detract from their message, which will appeal just as much to non-Christians and religious skeptics. The book’s Christian foundations may give it added force with the many Americans who have absorbed the idea that capitalism and Christianity are at odds. The authors show that to be completely mistaken.

Tradeoffs

The book covers all the fundamentals of economics: scarcity, exchange, opportunity costs, investment, entrepreneurship, money, profit, and loss. Here is a sample of the authors at work:

Exchange is a nifty way to tackle a problem at the heart of economics: scarcity. We can always do something with more. Alas, limited time and materials mean we must choose…. Saying yes to more of one thing means saying no to more of another. We can’t make an omelet with the eggs you just cracked into the waffle batter.

That sounds pretty obvious and uncontroversial, but not to everyone. The authors continue:

We hear you saying, “Doesn’t economics teach us to focus on omelets and waffles for ourselves?” We should reach for the transcendent rather than the merely material. Economics preaches love of appetite instead of love of neighbor.

That is just what many people, especially Christian socialists, think: Economics is a sophisticated cover for avarice, so don’t bother listening to economists and their jargon. Carden and Fuller have no doubt heard that many times from students, college colleagues, and others. They reply this way:

Economics doesn’t tell you what to value, only that there are trade-offs. Even good things (e.g., feeding the homeless across the street) cost something (e.g., feeding the homeless across town.)

Well said, and probably sufficient to keep all but the most adamant opponent of economic analysis reading.

Improving Lives

The central question of the book is what conditions make it possible for humans to flourish. Unquestionably, people live far better today than they did in the past. Kings and queens lived without comforts that today’s poor enjoy. For nearly all humans, life is no longer the Hobbesian state of nature: solitary, poor, nasty, brutish, and short.

The authors point to some compelling data, such as the dramatic decline in the time-cost of acquiring staples of life. For instance:

In India, the time cost of daily rice fell from 7 hours in 1960 to less than 1 hour today. In Indiana, it has fallen from 1 hour to 7.5 minutes. Notice too that the gains going to the relatively poor (Indians, 6 hours) are far larger in absolute terms than those accruing to the relatively wealthy (Indianians, 52.5 minutes.)

So, it’s not the case that the poor are getting poorer while the rich get richer, as we so often hear, but rather that everyone is getting richer. The lot of the poor has been rapidly improving, and the authors take pains to make sure their readers understand how and why this is occurring. It was not because of government actions, but instead because of the work and innovations of free people who figured out how to make better use of scarce resources, earning profits for themselves while creating new and/​or less expensive goods for everyone else.

There are, however, several conditions that must be met for that to happen. For one thing, property rights need to be secure because people are not inclined to devote their time and effort to investments if it’s probable that others, including government, will take their property from them. The “Green Revolution” that so reduced the cost of rice and other foodstuffs would never have occurred under a state-controlled economy.

But the word “profit” triggers opposition in many minds. Profits, they believe, are the result of exploitation. Capitalists put profits before people, they claim. Carden and Fuller explain that profits (and losses) are crucial in making the best use of resources. They write:

We could make cars virtually indestructible, and we could force car companies to earn losses doing so. The “people before profits” people probably wouldn’t lose any sleep over it, but they should. Safer cars require more wires and engineers that are now unavailable for other things, like smoke detectors, medical devices, and anything else our neighbors value. The Smith family has a safer car, but they skimp on the costlier smoke detectors. It’s not clear if they’re safer on net. No one’s first impulse connects safer cars with house fires, but economics helps us see connections that aren’t apparent.

Thus, the profit and loss system enables producers and consumers to optimally balance the various goods and services they desire. It should be appreciated, not condemned.

What about helping the poor? Many Christian socialists (and other varieties) argue that we must have a host of government programs to alleviate the suffering of poor people. We should be Good Samaritans, not profit maximizers. Carden and Fuller understand the good intentions underlying that view, but they point out that trying to do good deeds is complicated, often producing unintended consequences such as what James Buchanan dubbed the Samaritan’s Dilemma: the beneficiary becoming dependent on charity instead of pursuing self-reliance. Carden and Fuller write, “The Samaritan Dilemma suggests that we need wisdom, not just good intentions in dealing with the less fortunate, lest we unintentionally make them worse off in the long run.” That, they show, has often been the case.

Unintended Consequences

This brings us to a crucial part of the book: the authors’ many demonstrations of the ways in which apparently well-intentioned government programs turn out to have adverse consequences for the people they’re supposed to help. For example, nearly everyone agrees that it’s good to help people who have disabilities, so why not have a law forbidding employment discrimination against them? The United States did that with the Americans with Disabilities Act (ADA). Trouble is, the ADA has had unexpected negative consequences for the disabled. Carden and Fuller write:

The ADA, it turns out, decreased the employment of disabled men of all working ages and reduced the employment of disabled women under age forty. Mere economics explains why. Begin with the fact that most discrimination lawsuits originate from employees who claim mistreatment. Most suits aren’t from applicants alleging that they weren’t hired for reasons of disability. Now, put yourself in an employer’s shoes. It starts looking risky to hire someone with a disability.

The wrong sort of help actually hurts. Here’s another instance where the instinct to make things better by passing a law ends up doing harm: laws against “price gouging” after a natural disaster. Isn’t it just greedy for companies to charge more for necessary items after a disaster? Shouldn’t officials punish that kind of behavior? No, the authors argue, because higher prices are important in signaling that lots of things must change if we are to alleviate the effects of the disaster as soon as possible. As they explain:

Counterintuitively, high prices in the short run are the cure for high prices in the long run. Higher prices after a natural disaster tell people to flood the area with supplies, which they do. When the supplies flood in, prices come hurtling back to earth.

Similarly, readers learn that minimum wage laws, rent control laws, antitrust laws, child labor laws, and others do more harm than good. That includes taxes that are supposed to make companies and wealthy people “pay their fair share.” Carden and Fuller show that taxes don’t usually have the effects that politicians claim they will. The new taxes may be imposed on businesses, but they stick to consumers and workers, such as the United States’ luxury yacht tax of the early 1990s that caused lots of job losses among the people who built yachts.

Readers also get a good education in the reasons why our representative government so often does things that benefit well-organized interest groups at the expense of consumers. The authors ably explain that democracy often works against the interests of ordinary people because of the rational ignorance of voters, coalitions of “Baptists and Bootleggers” (i.e., altruists joining forces with the self-interested), and so on.

Economic Freedom and Morality

In an uplifting paragraph near the book’s end, the authors argue that everyday economics and everyday morality are “bidirectional.” They write:

A commercial society’s institutions are the wind beneath these virtues’ wings. Want to love your neighbor as yourself? Respect his private property rights. Want dishonesty and deception penalized? The profit and loss system and the common law tradition are surprisingly good at it. Want industriousness rewarded and sloth punished? We know of no better system than market competition. Want wise and prudent use of society’s scarce resources rather than intemperate waste? Then you need to understand that profit and loss accounting helps us maximize value and minimize waste.

Readers with an open mind will find a lot to think about, arguments they probably had never encountered before. And the authors make the book easy to comprehend and use: no abstruse jargon, no mathematics, no graphs, but lots of readily checked links to supporting as well as opposing writings.

Mere Economics is an estimable effort at spreading the word that economic freedom dovetails with morality. I would suggest giving copies to anyone you know who has embraced the notion that we should jettison capitalism in favor of socialism.