Editor’s Note: On May 27, the Reformed Journal published “We Have to Talk About Economics” by Debra Rienstra. Stephen Smith and Todd Steen, professors of economics at Hope College, offer this response. Following their response, Debra Rienstra adds an additional response.
Debra Rienstra is right—Christians need to talk about economics.
This can happen in blog posts, in books, at conferences, at the dinner table, and yes, even in church sometimes. As two professional economists who each have taught for over thirty-five years, we are always encouraging people to think carefully about economic matters. Our Lord commands us to be good stewards of the resources that he has provided us, and to work to love our neighbor as ourselves in all that we do, including our economic activity. We are excited to hear of Prof. Rienstra’s assertion that she is “reading with interest about economics these days.” We commend this activity to everyone!
We do have substantial points of disagreement with the assertions in her blog post, however, and we hope to express them here in a constructive and respectful manner.
When we read about Prof. Rienstra’s characterization of the field of economics, we cannot help but disagree. The “economic principles” that she suggests we have “imbibed” and that have become “sacrosanct” are not economic principles at all. Economists actually don’t believe that “Growth will fix all poverty. Well, eventually.,” nor do they suggest to always “Trust the market. It’s efficient and can solve all problems,” that the “state is meddlesome, keep it out of the way” and that “Business leaders are gods.” We believe this is a substantial caricature of the field. Perhaps she has some different group in mind, like businesspeople or individuals of a particular political persuasion.
While Prof. Rienstra concedes that “so-called free-market capitalism has created enormous wealth for many,” and some of our lives “are much, much better than in any previous generation,” she asserts that “’the system’ is also ruining the planet and creating massive wealth inequality.” We are not writing to defend capitalism, but we do see the immense increase in worldwide living standards that have resulted from freer markets and enhanced trade. It is a real mistake to underplay how much things have improved over the last few centuries because of growth and the role of market freedoms and trade in that progress. Of course, we must work on growing what is good, and there are negative consequences and externalities of careless growth. Economic growth doesn’t come close to solving all of our economic problems. However, as Prof. Smith has argued in Economic Growth: Unleashing the Potential of Human Flourishing (co-authored with Edd Noell and Bruce Webb[1]) economic growth is nonetheless a moral imperative because, arising from human work, agency, and creativity, it provides the resources for improved material wellbeing.
The core of Prof. Rienstra’s argument against economics (as she describes it) is that the current system “cannot go on like this forever or for everyone. That’s simply a physical fact. Our wealth-o-sphere is outrunning our biosphere.” She asserts that “we must unmask and dismantle the idols if we’re going to save the planet.” It’s here that we have perhaps our sharpest disagreement. Economists as a whole focus on the tradeoffs between different choices that people and nations make, as well as the full costs of such decisions. Politicians and policymakers, businesspeople and individuals, essayists and other analysts often ignore both costs and benefits, while economists delight in making them clear. Insisting on thinking about tradeoffs is one of the most crucial contributions economics makes to social science research. Care for the environment may truly be an existential matter–perhaps even the most pressing issue facing humanity–but societies nonetheless still face difficult tradeoffs in dealing with it.
If improving material well-being for the world’s poor is a legitimate goal in Christian ethical perspective, as we believe it is, there’s an important tradeoff to consider. Poverty itself is associated with pollution, as when poor countries are unable to afford basic improvements in water supply, septic control, and cleaner fuels that richer countries take for granted. Populations in poor countries are therefore often willing to sacrifice environmental outcomes for material progress. That changes over time as incomes rise, improving access to basic needs and spurring education and awareness. Richer countries can afford environmental improvements and cleaner technologies of all kinds. In short, income growth over the long-term is compatible with and arguably essential for environmental improvements, even though in early stages growth may be quite damaging. Thus the path to a sustainable global environment may very well run through promoting growth in poor countries while maintaining sufficient growth in rich countries to sustain environmental research and innovation to share worldwide. (We think there’s a case to be made for continued economic growth in rich countries for the sake of improved living standards, too, but that’s a discussion for another day.)
The importance of tradeoffs in making wise policy decisions is missing in other parts of Prof. Rienstra’s argument. She takes the U.S. Supreme Court to task for “hampering” the Environmental Protection Agency’s ability to protect wetlands, “Of course, because how dare government inhibit business or private owners?” The specific case in question hinged on whether or not the law establishing the EPA in fact authorizes the EPA to have authority over the particular type and location of wetlands at issue. Not allowing regulatory agencies to exceed their authority seems, to us, to be a reasonable principle to maintain in a democratic society. Let Congress re-write the law if in fact it serves the social good to have the EPA regulate more types of wetlands.
Likewise, Rienstra argues that “we fail to hold accountable the gigantic corporations that extract resources and profits out of the earth and shove their ‘negative externalities’ on others.” Well, some of the dirtiest and most environmentally-destructive mining arises in producing the lithium and nickel necessary to make electric vehicles’ batteries. Does Rienstra want fewer electric vehicles and thus more carbon emissions from using fossil fuels? Until we think through the actual tradeoffs involved in reducing mining’s baleful effects while maintaining a transition to a carbon-free economy, statements such as hers do not really help. When considering those tradeoffs, many economists would argue that we should remove current extravagant government subsidization of electric vehicles and impose much higher taxes on all uses of carbon fuels.
Although Prof. Rienstra sees the field of economics as a main driver of the problems she describes, albeit with some exceptions for particular economists that she mentions, we see many signs of good within the discipline. A quick look at the program for the American Economic Association meeting this past January would show a group of people that doesn’t resemble in any fashion the description in Prof. Rienstra’s blog. There is no “stodgy establishment.” Economists are taking on every issue under the sun, with an eye to making the world better. There are also Christian economists out there. In fact, in July a conference of Christian economists was held at Hope College. To see what we are talking about, see [http://christianeconomists.org/2023-ace-conference/].
Notwithstanding our substantial disagreements with Prof. Rienstra, we also find many points of agreement. Economic activity and wealth can become idols. Christians need to work hard to prevent this. And although both of us have been going to church for over 60 years and have never heard this expressed, we would agree with Prof. Rienstra when she says “Yikes” about a church that would suggest that “the Invisible Hand is the Holy Spirit.” We advise anyone to leave such a church immediately. Likewise, we appreciate her passion for her beliefs, as we see that it is connected to a serious Christian faith and a strong concern for God’s creation, which we share.
Hitting the proper targets for economic activity is no doubt difficult. Like Prof. Rienstra’s description of the “doughnut,” we agree that poverty and deprivation must be addressed, while we indeed need to be very careful about “the kind of behavior that goes beyond what the planet can sustain.” Markets, however, give the opportunity for exercising stewardship like no other economic framework. And in the real world, where even democratic governments of goodwill make mistakes about important things (such as determining the inside and outside boundaries of doughnuts), markets’ ability to generate widespread innovation, experimentation, and real information about costs, will be of enormous help. Throughout it all, we want to focus on growing what is good. In a world deeply impacted by sin, this is not an easy task. So let’s keep talking about economics in the church and in the Christian community. We have a lot to talk about. Here we also agree with Prof. Rienstra—we can do better.
Stephen L. S. Smith (Ph.D., Economics, Stanford University) is Professor of Economics at Hope College. He currently serves as the president of the Association of Christian Economists.
Todd P. Steen (Ph.D., Economics, Harvard University) is Granger Professor of Economics at Hope College. He currently serves as managing editor of Christian Scholar’s Review.
Debra Rienstra Responds:
Thank you to Profs. Stephen Smith and Todd Steen for responding fully and generously to my post from May 27, “We Have to Talk about Economics.” I’m delighted that the post got the attention of two genuine experts, and I’m grateful for their respectful engagement.
In the end, I don’t think we disagree substantially at all. My colleagues seem to be misreading a few points in my essay with an eye to defending their field, which I certainly understand. So allow me to respond.
Please note that my main critique is not of the field of economics per se, but of the way its complexities and nuance wind up flattened and distorted in the minds of laypeople, including church people. I do not “see the field of economics as the main driver of the problems” I describe. In my piece, I do summarize Kate Raworth’s critique of the field, noting that Raworth is “critical of economics education—as are a whole group of younger economists who are busy overturning the stodgy establishment there.” I’m glad to hear Smith and Steen confirm that economics is a vibrant field, with Christians players like themselves fully active in the mix. They insist that there is no “stodgy establishment,” but honestly I doubt that. There always is, in every field, including mine.
In any case, as I say, my main critique in the piece is that church people are not paying attention and are thus subject to bowdlerized and distorted ideas. I write, “It’s also disheartening to see how complex ideas get reduced to slogans and then those slogans become entrenched in people’s thinking, including people who create policy and run for office.” When I write that “we have imbibed” economic mythologies and idols, the “we” in question is not the economics professionals, but ordinary people who watch the news, sit in the pews, and vote.
Yes, the principles in my list of idolatries are a caricature of the field. Exactly. That’s the point. Ordinary people do not understand economics well, but here’s the key problem: that very misunderstanding serves certain powerful interests. That’s what most disturbs me. Later in their piece, Smith and Steen acknowledge this point when they note that “Politicians and policymakers, businesspeople and individuals, essayists and other analysts often ignore” the dense calculations economists make about real costs and externalities. This is in the context of Smith and Steen’s argument about necessary tradeoffs. Yes, societies face difficult tradeoffs. But as you say, the true nature of those tradeoffs is often masked deliberately in favor of the powerful.
As for economic growth, we may indeed disagree somewhat there. Smith and Steen outline the need for a kind of strategic growth to address poverty: sure. But I’m not convinced rich countries need continued growth per se. I would like to hear instead how my colleagues would address the ludicrous wealth inequality in rich countries and indeed across the globe, which has skyrocketed in recent decades. As always, the question remains: growth for whom? I ask this sincerely: How do we ameliorate the gross disparities?
I definitely disagree with Smith and Steen in the case of the Supreme Court’s decision concerning the EPA and wetlands. The EPA is not exceeding its authority in providing a definition of wetlands. The EPA is where the actual science professionals work, not on the Supreme Court or in Congress—I think that fact is distressingly evident. The EPA was created in 1970 and charged by Congress to follow the directives of the 1972 Clean Water Act. Why does Justice Alito think he can define a wetland better than the EPA? Or that Congress should? The decision in Sackett v EPA was not unanimous and Justice Kagan’s dissent noted that SCOTUS was once again using the “major questions doctrine” in a legally spurious way.
As for that dirty and environmentally destructive mining for lithium and cobalt: absolutely. It’s terrible. I follow closely the efforts of various organizations to hold these companies accountable, too. And here’s where we probably agree on the need for continued innovation: in battery tech and recycling tech. The dilemma right now is that many companies mining the minerals are Chinese or otherwise unlikely to respond to human rights concerns. Hence Pres. Biden’s efforts to develop supply chains not dependent on China. It’s a mess because it’s happening so fast, but we need to keep working to play this game by better, fairer, more humane and environmentally informed rules. I agree.
However, to imply that because it’s hard and abuses are happening, we should wait to think things through? There is no time for waiting, and that’s the tragedy of it. Or to imply that we might just say, “Never mind, let’s just stick with fossil fuels”—I trust Smith and Steen meant that as a facetious exaggeration. As a solution, Smith and Steen suggest that we remove federal incentives for a clean-energy transition and institute a tax on the use of carbon fuels. But that places the onus on consumers. Instead, why not remove the billions in federal subsidies for fossil fuel companies (anywhere from $10 – $50 billion per year) and tax those companies instead? Fossil fuel companies made $200 billion in profits last year. They’re doing just fine. If we want to use tax incentives, how about inspiring them to refrain from price gouging, leave oil and gas in the ground, and shift their businesses to clean energy? Meanwhile, let the Inflation Reduction Act continue to spur innovation and economic growth in the clean energy sector.
Anyway, these are all quarrels about methods. I’m grateful that Profs. Smith and Steen agree on the big picture: economics is a tool to help provide flourishing for everyone and everything. We also agree that church people are vulnerable, like everyone else, to distorted economic ideas, which is disappointing but everywhere evident. And we agree that we can, and must, do better. I trust that experts like Smith and Steen will continue to help us all “grow what is good.” Thank you once again, good colleagues, for engaging in this discussion.
Stephen L. S. Smith (Ph.D., Economics, Stanford University) is Professor of Economics at Hope College. He currently serves as the president of the Association of Christian Economists.
Todd P. Steen (Ph.D., Economics, Harvard University) is Granger Professor of Economics at Hope College. He currently serves as managing editor of Christian Scholar’s Review.
[1] https://www.amazon.com/Economic-Growth-Unleashing-Flourishing-Capitalism/dp/0844772569
Thank you, Professors Steen and Smith, for a helpful response that counterbalances Professor Rienstra’s post. It contributes significantly and well, in my opinion, to an important and needed conversation on a very important subject.
Thanks for sharing this nuanced, grace-filled, and thought-provoking discussion. Would that all discussions about environmental stewardship were thus.
We need adult ed series on this subject in our churches featuring the Smiths and Steens and Rienstras among us. Thanks for this contribution!
Thank you Drs Smith and Steen – when I read this original post back in May, I remember thinking “yeah, we do need to talk about economics – sure would be nice if this essay had done so. I’m not an economist, just an Average Joe, so I hoped someone better suited than I would write that response. This is it.
A comment re: the response – I find it funny (or not, I guess), that “It’s also disheartening to see how complex ideas get reduced to slogans . . . . .” is quickly followed by a number slogans: “Tax the oil companies”; “leave the oil in the ground”; “shift their business to clean energy”; “refrain from price gouging”. All statements that fail to consider the trade-offs at all – such as: what’s replacing the oil (and don’t pretend that wind and solar are at this moment up to the task); who is most negatively impacted by higher costs to drive to work? Or to heat your home? Or higher cost for groceries or anything else that needs to be transported? There is much talk about how ‘the poor’ will disproportionally bear the cost of climate change; little talk of how the poor will bear the brunt of the cost of the ‘fix’.
There’s a big chunk of “beam in your own eye” in that statement: somehow the progressive argument for a radical transformation of the economy is carefully considered and thoughtful, while those who favor a more measured approach are “reducing complex issues to slogans”. I disagree.
And, one other note, re: “Why does Justice Alito think he can define a wetland better than the EPA? Or that Congress should?” First: Justice Alito did NOT say it was up to him to define a wetland. And there’s a simple reason why congress should be defining it: because that’s how our representative democracy is designed to work and how our constitution lays it out. You can disagree with the constitution if you want and go ahead and try to change it (there is a clearly defined amendment process that you’re welcome to pursue), but them’s the rules. Or, I suppose, you could just say scrap it because it’s out-dated and no longer relevant – if you do, though, you’d best beware if we find ourselves with The Donald as president come January 2025.
Thank you to the writers of both blogs. Since I am certainly not an expert on economics, nor on how different economic forces can be used for helpful change, I appreciate the thoughtful ideas and perspectives given. I wish more issues could be addressed in this give and take format.