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Christian Economics in One Lesson: Chapter 4

Written by Gary North on April 25, 2015

Public Works Mean Taxes

For the lips of a strange woman drop as an honeycomb, and her mouth is smoother than oil: But her end is bitter as wormwood, sharp as a two-edged sword (Proverbs 5:3-4).

The author of Proverbs in the first nine chapters contrasts the faithful wife with the strange woman. He uses the metaphor of the strange woman for alluring lies that ultimately betray the person who accepts them. Here is the passage’s underlying message: something can look very appealing on the surface, but the end thereof is bitter as wormwood. Why? Because there is a system of moral cause and effect in history. When someone violates fundamental ethical principles, he will eventually experience negative sanctions. This is also true of entire social orders.

This passage has economic implications. The specific ethical context of the passage is this commandment: “Thou shalt not commit adultery.” But the general ethical context of the passage also applies to this commandment: “Thou shalt not steal.” This in turn applies to government spending. The passage in Proverbs warns us against all versions of the economic error that Bastiat called “the thing not seen” — the true economic cost of our actions.

This chapter deals with public works projects. These are projects that are funded by the state. They are highly visible. They look very productive. It is relatively easy to gain public support for the construction of these projects. On the surface, they look appealing, but the end thereof is bitter as wormwood: higher taxes. But the wormwood goes far deeper than higher taxes, as we shall see. There are several layers of things not seen.

The appeal of public works is the appeal of something for nothing. It is the appeal of the devil’s temptation of Jesus: stones into bread (Matthew 4:3). The voters are told that a public works project will do two things. First, it will create employment. Second, it will create wealth. Whenever we hear such an appeal, we should remember the principle: “There are no free lunches.” This is the underlying reality of the things not seen — plural.

With this in mind, let us return to the familiar five-point model of the fallacy of the broken window.

1. Ownership
I begin with the biblical principle of private ownership. This principle is manifested twice in the Ten Commandments: the prohibition on objective theft and the prohibition on subjective coveting. We are to respect the judicial boundaries of ownership. This has to do with ethics: moral and legal boundaries.

Throughout this book, I am trying to make clear that there are two issues here: judicial sovereignty and economic authority. These are separate concepts. They are also inescapably related concepts. Judicial sovereignty is primary.

(For the rest of my article, click the link.)

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