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Monday, July 14, 2014

Religion, Economics, and Public Policy

At The New York Times Magazine, Binyamin Applebaum writes about David Brat, the economist who won an upset victory against House Majority Leader Eric Cantor (R-VA) in a GOP primary.
On the campaign trail, Brat declared that bankers should have gone to jail and that “crony capitalists,” like Cantor, had undermined the system. “I’m not against business,” he said. “I’m against big business in bed with big government.”
Instead of arguing for any specific regulation, however, Brat said that the system simply needed more virtue. “We should love our neighbor so much that we actually believe in right and wrong and do something about it,” he wrote in a 2011 essay for Interpretation: A Journal of Bible and Theology. “If we all did the right thing and had the guts to spread the word, we would not need the government to backstop every action we take.”
The idea that religion plays a role in economic growth was most famously advocated by the German sociologist Max Weber. In his 1905 book, “The Protestant Ethic and the Spirit of Capitalism,” he argued that Protestant countries developed more quickly because they embraced hard work as a virtue. Over the decades, others have continued to see merit in the theory, including J. Bradford DeLong, an economist at the University of California, Berkeley, who presented statistical evidence for it in a 1988 paper. Even Friedrich Hayek, a professed agnostic, grudgingly acknowledged the role of religion. “Like it or not,” he once wrote, “we owe the persistence of certain practices, and the civilization that resulted from them, in part to support from beliefs which are not true.”
Religion and the study of economics are even more closely intertwined than the article suggests.  The connection involves not just a conservative advocacy of individual virtue, but a liberal advocacy of government action. As we note in our textbook, many of those who attended the 1885 first meeting of the American Economics Association were members of the clergy, eager to use economics to advance the Social Gospel.  Its founding platform said:  "We hold that the conflict of labor and capital has brought to the front a vast number of social problems whose solution is impossible without the united efforts of Church, state, and science." Said founder Richard Ely:
We who have resolved to form an American Economics Association hope to do something
toward the developing of a system of social ethics. We wish to accomplish certain practical results in the social and financial world, and believing that our work lies in the direction of practical Christianity, we appeal to the church, the chief of the social forces in this country, to help us, to support us, and to make our work a complete success, which it can by no possibility be without her assistance.