How should Christians think about economics, capitalism, and government policy?

Mark Turman: [00:00:03] Welcome to Faith and Clarity. I’m Mark Turman. We’re glad to have you back with us as we explore topics that help us to understand God’s world through his spirit and perspective and how we can be more a part of it. Today, we’re going to be talking about something that you wake up to every day, jobs, business, groceries, gas, inflation, tariffs, things that are coming up on the horizon like taxes. Uh, we hear in the news almost every day something about words like sanctions. Um, lots of conversation these days, if you like Shark Tank or other shows about made in America versus made proudly uh in China. Uh, stock markets, retirement, social security. What we’re talking about today is economics. And economics in one way or another touch us every single day. And because we’re in an election year, uh, seems like we’re always in an election year these days, but the economy is always top of mind uh for what’s going on uh and what’s going to happen in an election. Uh, so we hope in our conversation today, we can equip you with some economic skill, some understanding and uh some hope about where we’re headed in the goodness of God. Uh, my partner for conversation today is Dave Arnot. He is the recently retired professor of economics and management at Dallas Baptist University, spent 30 years, 30 more than 31 years there. He’s also known on YouTube as the Christian economist. And today is beginning a new season in his life, uh as Dean of Turning Point USA’s prep your program, uh located in Fort Worth. He’s the author of five books, including the most recent one, biblical economic policy, and he loves to talk about the intersection of Christian faith and economics. And we’re going to get him to talk with us about a number of things today, probably more uh to talk about than we have time for. But Dave, welcome to the Faith and Clarity podcast. We’re glad to have you.

Dave Arnott: [00:02:06] Mark, it’s good to be with you.

Mark Turman: [00:02:08] Well, let’s just jump right into it. I know you love this topic and uh, I’ve talked to some of your former students. They talk about how they just loved being in your classes and uh their excitement kind of has uh inspired my excitement around just diving into economics again. Uh, as I shared with you before we started recording, uh I really struggled with this in college and uh really eager to just understand how economics works. So, let’s just start off with a definition. What is if I’m a freshman in your class or a new student in Turning Point USA and I walk in and say, Dave, what is economics and what are some of the basic principles that every Christian needs to understand? How do you get me started?

Dave Arnott: [00:02:52] Yeah, I would walk into the classroom at Dallas Baptist University for 31 years and not even say hello at the first class. I’d walk up to a student drinking coffee and say, how much did you spend for it? She’d say $4. I’d go across the aisle and say, if the price of coffee goes up this semester, will your classmate drink more or less? And the student thinks a second and says, less. I said, you understand the law of demand, one of the most important concepts in economics. And then I say, look, we’ve all been practicing economics our entire lives. Now let’s learn about it. And what we do is take those very basic ideas and put them on diagrams and charts and it starts with simple things like the cost of coffee, and then you get into taxes and tariffs and you get into all kinds of interest rates, but it starts at those very basic ideas.

Mark Turman: [00:3:41] Well, and I guess kind of what you’re talking about even with coffee and the students, it kind of starts with both uh demand or need and desire. We start we start talking about the basic principle of demand. It’s like, well, what do human beings have to have on a daily, weekly, monthly basis in terms of material goods, right?

Dave Arnott: [00:04:01] Yeah, but I should have given you a definition. That’s what you asked for, Mark. It’s the production and distribution of goods and services in a scarce environment. So, we produce and we distribute. There are goods and services, the environment is scarce. So we have those five concepts going on. And if the price of coffee went up, you’re welcome to guess it became more scarce. There was probably more demand than supply, so the price goes up. And students would ask me quite often, well, what about the stock market? And I would jump through this trap door to say, well, if the stock market goes up today, that means there’s more demand than supply of stocks. And if it goes down tomorrow, there’s more supply than demand of stocks. And everything is hinged on on supply and demand.

Mark Turman: [00:04:42] So let’s talk, we talked a little bit about the the demand side. Let’s talk about the supply side uh as it uh has the idea of, hey, God put human beings into creation with the ability and the responsibility of producing, uh which has to do with supply. Talk about that for a minute. Um, particularly what is triggering my mind right now, Dave, is just uh the idea of scarcity, Yeah. um, contrasted with what in many places the Bible talks about God’s uh abundant supply. So kind of put those things together for me.

Dave Arnott: [00:05:18] In Genesis 1, God created a perfect world. You don’t you only get to Genesis 3 before you find the fall. That’s the key to economics. And we as Christians understand the Christian worldview, creation, fall, redemption, some people will add restoration. But we go back to those first two. God created the world and it was perfect, but then fallen humans messed it up. We are still in a fallen state. So the question that a Christian economist asks all the time is, what’s the biblical way to produce and distribute goods in a fallen world? Because we are fallen. And so then how do we distribute them? And those are the questions that we ask and we find answers in the Bible. I mean, the Bible has answers for these things. Now, the word economics is a Greek term that means management of a household. The word economics does not appear in the Bible, but there’s a lot about the household that does and there’s a lot about demand and supply of goods and services in the Bible. So that’s where we get our assumptions. So I’ve often been asked Mark, what do you mean Christian economist? I said, well, economics is a social science. All social sciences are about behavior and they all make assumptions. So what is our assumption? It is that the world is fallen. In this time period, Christ has been here, he’s coming back. In the meantime, how do we distribute goods? And there’s answers in the Bible for how we distribute goods.

Mark Turman: [00:06:41] Yeah, but it’s it just seems like it’s so critical that you understand that perspective of fallenness. That’s right. Um, because uh, we see so many of these conversations and it is kind of just fundamental struggle on um on an economic level or on a needs level of how does everybody get what they need at a reasonable level, um, and uh, how do we accomplish that? And there’s just this constant tug of war, sometimes something even much more than a tug of war about uh how to meet uh the needs of everyone in an environment that is no longer perfect and is always struggling with elements and uh situations of scarcity. Yeah. Um, so as we so there’s at least three ideas floating around already at the beginning of our conversation. There’s the idea of need or demand, the idea of production and supply that uh we get to be a part of along with God and and with the created order. Uh and there’s this idea of fallenness. Is there is there another one or two that we better keep in mind before we go further in this conversation of just kind of basic principle?

Dave Arnott: [00:07:50] Excuse me, Mark. Yeah, that’s a good introduction. I mean, I was attending a CEO summit at Liberty University and just happened into an office of a fellow economist. And since we’re both Christian economists, I said, well, we explain scarcity by the fall because we are Christian economists. I said, you’re in Virginia, I’m from Texas. At the University of Virginia and the University of Texas, how do they explain scarcity? And he looked at me and he says, they don’t. Mark, this is a great advantage for a Christian who knows his worldview and knows who where his assumptions come from. Because if you take it from a state university, they will explain scarcity, but they won’t explain where it came from. Why are things scarce? They are scarce in this time period in intermediate between when Christ was here and Christ is coming back. So if we understand demand and supply and those are controlled by scarcity, we’re a pretty good distance along in understanding Christian economics.

Mark Turman: [00:08:43] So if if we were learning this in a secular uh school like University of Texas or somewhere like that, uh what what do they miss or what do they lose if they can’t have a significant explanation for scarcity?

Dave Arnott: [00:09:00] Almost all economists measure the outcome. Look at the Wall Street Journal today. The first three headlines are about economics. One is about Amazon laying off workers, the other is immigration over supplying the labor market. The third is about deflation in China. The first three articles in the Wall Street Journal today are all about economics. But they are measuring the outcome. They’ll say, what happens if you raise or lower taxes? What happens if you raise or lower the supply of labor? What is the outcome? Economists always almost always measure it that way. A Christian or anybody who believes in a greater being believes that there’s a greater being who said what’s right and wrong. And so in economics, we call that positive versus normative. The regular economist measures it by the positive outcome. We say normative. In other words, what did God intend? Should taxes be higher or lower? Should tariffs be higher or lower? Should immigration? And so we ask that question. So we’re asking a very different question than the regular economist is.

Mark Turman: [00:10:04] I love that that question or that statement of normative that that that’s a great way, uh a beautiful way of describing, okay, well what did God originally intend? That should be the standard, that should be the thing that we’re trying to pursue even in an awareness of fallenness and that we’ll never get perfect uh until Jesus comes again and all things are restored. Um, but that doesn’t mean we give up the standard, the normative of what did God desire, what did he intend for how things were supposed to operate. So, tell me if I’m on the right track. If we just generally understand economics as the science, the social science that relates to the ecosystem of how all of these pieces uh fit together to meet the demands that human beings have. That’s right. Uh and it’s and it’s a big ecosystem, right?

Dave Arnott: [00:10:58] That’s right. In the Jim Denison forum this morning, I read it five days a week. And in the Jim Denison forum this morning, he was making that point about another issue. What was God’s creational intent? He went on to something else, but he and I think the same way. I am I stay with economics. Jim goes to all of culture and I stay in my lane, but he’s much broader than I am. A brilliant guy by the way. When I was doing my podcast, I did one a week for 200 weeks and I’d write 1500 words a week and then do about a 12-minute podcast. Jim Denison does 1500 words a day and he quotes everybody from the Apostle Paul to Aquinas to Aristotle to John F. Kennedy. I tell all my students, read the Denison forum, but did I get off? What was your question by the way?

Mark Turman: [00:11:46] Yeah, no. Yeah, thanks for the uh testimony and the endorsement of the daily article. And uh we’d love for people to sign up for that. Uh that’ll be listed in the show notes. Uh you can find it at Denisonforum.org. Uh the daily article. Yeah, we we are blessed to have a unique founder uh who can write about all kinds of things that happen in the news, in economies and in other places. Um, so Dave, I heard you say in one of your podcasts that the intersection of Christianity and economics is what you call freedom. What do you mean by that?

Dave Arnott: [00:12:20] Yeah, God intended us for it to be free, but in a fallen world, we can’t be free. But we want to be as free as possible. And that’s what Christians say. We believe that God is just astounding. The greatest being who ever existed, God, gives Mark Turman and Dave Arnot the freedom to accept or reject his invitation of salvation. That’s just so powerful. If we believe that, we believe he wants us to have as much freedom as possible in our production and distribution of goods as well. We can’t have perfect freedom because it’s a fallen world. So if you put this across a spectrum, the Christian economist would say, we want as much freedom as possible in a fallen world. Others, now we’re getting to supply and demand by the way, because I’m a supply sider and that’s what we say. We should be free to supply the environment. Demand demand siders say, no, we should control the demand side of the equation. And but so Christians believe that we want to be free. God wants us to be free.

Mark Turman: [00:13:26] Okay. So, uh that makes me think and and this is this let’s chase this rabbit down the trail a minute, uh especially as it relates to what you mean by being a supply sider. Um, talk about um the biblical view and the dignity of what it means to actually be a producer, a contributor in the world, um, that really kind of goes back to that creation narrative of Genesis 1 and 2, um, that it really doesn’t start off with God saying, hey, go and be a consumer of all these things. It really starts off with being a producer, a manager of what God has created that will supply all of your needs and and more. Yeah. But talk about, talk about the dignity that God is giving us there as part of being people who bear his image, being people who can produce and contribute.

Dave Arnott: [00:14:25] Yeah. Maybe two years ago, the best book I read was by Carl Truman. It was called The Rise and Triumph of the Individual Self. And he’s a philosopher, I’m an economist, but I thought the book was great. He came to my university to speak and I was able to ask him a question and he said, you know, we used to be known by what we produced. And this is an exercise I’ve done in my class. I have students tell me, what does your name mean? And so some of the easier ones are plumber and farmer and Smith and Miller, right? Those are somebody who at one point ran the mill or they were a Smith or they were a farmer or a plumber. And we were known by what we produced. And Carl Truman made this fascinating point. So often today we get our identity by what we consume. So it’s what university you went to, which cowboy games you attended and where your seats are, what kind of a car you drive, what kind of clothes you wear, what kind of food you eat, where you vacation. Carl Truman made this fascinating point. I’m an economist. I’m supposed to understand this, but I learned it from him. We should gain our dignity and our value from how we produce, either as a plumber or a farmer or a Smith. We should not have our identity in what we consume.

Mark Turman: [00:15:37] Yeah. Yeah, and that’s not something you hear much in our culture at all these days. Um, we’re struggling in massive ways with uh how to form an identity, uh what is it, how does that relate to our spiritual identity in Christ? Yeah. Um, and but it also goes to a significant portion of our identity being formed by our giftedness and our capabilities, right?

Dave Arnott: [00:16:02] Right. And that and that’s normative. Um, in the way God wired us. Is that am I on the right track with you?

Mark Turman: [00:16:08] Yeah, that’s right. We were left two great with two great commands.

Dave Arnott: [00:16:11] To love the Lord your God with all your heart, soul, mind, and spirit, and to love your neighbor as you love yourself. Being the Christian economist, I stated it this way. If you love your neighbor, you will provide her with products and services she demands. If you love yourself, you’ll make a profit while doing so. So this is a in a free market, both parties can gain at the same time. In a closed market, one gets richer while the other gets poorer. Maybe the greatest economist of the 20th century was Milton Friedman. And he said, almost all economic myths stem from the zero sum fallacy, meaning for somebody to get rich, someone else has to get poor. That is not true in a free market. In a closed market, it is, say in socialism, one person gets rich while the other gets poor. But the amazing thing about a free market is if we have unlimited suppliers and unlimited demanders, people have choice, freedom we talked about, and both parties can get rich at the same time. In economics, we call when people get rich by consuming, we call it consumer surplus. Producers have producer surplus. Now, everybody knows that Walmart sells products at a higher price than they buy them. You don’t have to teach that. What they don’t know is if you have a choice to choose from Walmart or Target or General Dollar General, when you make that choice in a free market, the consumer gets richer also. And that’s what the beauty of this thing. I mean, how can you take two fallen people and they make an exchange and both get richer? They can only do that in a free market. So now you’re back we’re back to your question of me, why freedom? That’s why. Both parties can get richer.

Mark Turman: [00:17:52] Okay. Yeah, and that’s just, yeah, that takes some pondering to realize how that actually works. But it it it it’s a great segue into the next thing I wanted to talk about, which is uh we’re we’re seeing even more in our country and in our culture, the push and pull of uh what we call economic systems. We we talk about economics as being this ecosystem that involves individuals, businesses, corporations, governments, um, and forces that we’ll talk about some of those forces in a minute, particularly things like inflation. Um, but uh, you know, there’s an interesting conversation that is emerging and has been emerging in our culture seemingly for a while, uh often manifested in political individuals around capitalism versus other economic systems. Uh, New York City just elected a mayor who is on record as a quote-unquote democratic socialist, uh which many people are getting their minds around, well, what does that mean and what will that look like if he’s able to be successful in some of his uh ideas. Um, but talk about uh you mentioned socialism as it as it compares to to capitalism. Communism is another one. Um, is is any of these economic systems biblical and particularly in this case, would you say capitalism is in is inherently biblical in some way?

Dave Arnott: [00:19:21] It’s not either or. It’s across a spectrum from free market capitalism to socialism. Every country can be portrayed across this spectrum and the best way to do it is something called the Index of Economic Freedom. It’s online, you can look it up. They’ll rank every one of the 192 countries of the world across this spectrum. So from free market capitalism to socialism, Christians tend to be quite a ways on the free market capitalism end of the spectrum because of your first question of me about freedom. And Winston Churchill said that capitalism distributes wealth equally. Socialism distributes, I’m sorry, capitalism distributes wealth unequally. Socialism distributes poverty equally. And that’s pretty quippy, but but it is quite true. And so the outcome is that when a socialist environment, you can’t give. That’s the problem. Look, socialism says from each according to his ability, to each according to his need. Think about it. If you only get what you need, how do you give? There’s nothing left over. One of my fellow Christian economists named Ann Bradley calls it leftovers. If you have no leftovers, you can’t give. This is how we know that Jesus was not a socialist because he kept the Old Testament law to give. He had to make a profit or he couldn’t give. Think about how miserable the world would be if there was no giving. Well, I’ve just explained socialism to you and that will happen to some degree in New York City. Again, they won’t go all the way to this end, but they’ll move so far to that end that people will will move. One of my podcasts is about moving and it starts with Moses moving from Abraham, got the wrong Old Testament person. Ur of the Caldeans to the promised land. He moved to better land. Today, people are moving to better land, meaning from California, Illinois, and New York to Texas, Tennessee, and Florida. Why are they moving? Because there’s more economic freedom in those states. And so people will vote with their feet, just as they will vote with their feet, as I said earlier, between Walmart and Target. They will make choices when they have choices.

Mark Turman: [00:21:36] Because based on not only their needs, but what they consider to be the most advantageous way of addressing those needs, right? Um, whether that’s a store or a different region of the country where they think there’s more opportunity and more ability to not only meet their needs, but actually have some leftover as profit. Um, so let me chase that down a little bit of a biblical theological trail. How do people in your understanding misuse passages like what we see in the book of Acts where it says that people brought some of their resources and then those were distributed to people uh according to their needs. And I can hear I can hear a a Christian who subscribes to a socialist uh approach to economics would say, see, there it is, uh the church is to be socialist in nature. Uh how are how is that thinking not appropriate to those passages?

Dave Arnott: [00:22:36] Yeah, first there was private property. So it’s free market capitalism. If if they gave it, they had to own it. So first they started with a free market capitalist system because they owned the property. Second, they gave it. So now we’re back to just what I said two minutes ago. If you don’t have extra, you can’t give. It had to be their extra. They can’t give of their need, they give of their want. And the third is, uh so it was voluntary. And that’s where we come to the freedom idea. They chose to give. And the third point is after that, they continued to meet in people’s houses. That means they continued to own them. So the story is free market capitalism through and through. It starts and ends with free market capitalism. They owned it, they gave it, they continued to own some. They didn’t give it all. They continued to own some. So it had to be a capitalist environment in that scripture.

Mark Turman: [00:23:24] Okay, so take that another step forward for me from the standpoint of uh the biblical call to generosity and where where and how does generosity uh fit into uh a biblical economic system?

Dave Arnott: [00:23:41] Yeah, we are free to give and and Christians are commanded to give and we should, but we have to have something to give before we can give. And so that’s why free market capitalism more closely matches the Christian worldview of giving because you have to have something to give.

Mark Turman: [00:23:58] Okay. So is that is that to say that generosity, the the multiple calls of generosity within the Bible, even sacrificial generosity, Right. is part of the biblical way, part of God’s way of acknowledging the the the fallenness of creation and the fact that because we’re fallen and we continue for a time to live in this fallen economic system, one of the ways that God compensates for that is by calling us into expressions of generosity uh that grow out of our ability to produce generally profit or excess supply.

Dave Arnott: [00:24:39] Yeah. Let me draw a few little circles here, concentric circles and see if this makes sense. I read a book called Strong Towns one time and the guy was making the point that you should give more be more flexible with taxation at local levels. Let me start with this middle circle. It’s my wife and I. We are perfect socialists. Her money’s my money, my money’s her money. From each according to ability, to each according to its need. That’s what our marriage is. The next circle out, we have seven grandkids and there’s five adults among those seven, so that’s 12. We are somewhat socialist with them, but not perfect socialist, but we’re a little more, we’ll give to them. The third out is our group of 10 in our home group at church. When they have needs, we give to them, but they don’t have our checking account. Then you’ll go to the whole church, which is a large church, then it’s the city, the school district. As these circles get bigger, we become more free market capitalists. As they become smaller, we become more socialist. So I will almost always vote for what the city and the school district wants because I’m participating in that and I have the freedom to determine how that’s used. But when we get to international and even international, no, then the fallen nature takes over and and you can’t control it anymore and that’s not biblical. But marriages are social socialism in a biblical sense. Well, that’s hard for me to say, Mark, but it really is true.

Mark Turman: [00:26:10] Yeah. Yeah, and so it it kind of moves back and forth in different environments for sure.

Dave Arnott: [00:26:15] Yeah. Yeah. Yeah.

Mark Turman: [00:26:17] Yeah, and and you know, I mean I think about that from having counselled, you know, a good number of couples about to get married about how they handle their lives and that in a marriage context, if you don’t approach your material goods and your material needs uh as well as your supply with that kind of a mentality, then you’re setting yourself up probably for conflict. Right. Um, because in the normative environment of marriage, it’s we become one and we we work to the mutual benefit of each other. And so, uh if you don’t if you try to segregate that off, you’re likely headed for conflict. Um

Dave Arnott: [00:26:55] That’s what I see, Mark, when people take it to the wrong level. They say, well, if you and your wife are socialist, shouldn’t the whole community be? No, no, because that denies the fallen nature. Yeah, they put it in the wrong context. That’s the whole problem. Yeah.

Mark Turman: [00:27:09] Yeah. Yeah, that’s that’s really important. We’re commanded to care for the poor. Well, who’s we? To me, we is the church. It’s not the government. See, the church can give without taking. The government must take before it can give. And it must steal money from us and taxes are stealing. Why do Christians allow taxes? Because the purpose in the Christian worldview of taxes is to push back against the fallen nature. So Christian economists support the government extracting money from us for things that push back against the fallen nature, like police and military and jails and judges and so forth. And so one of my fellow Christian economists named Art Linsley said this very carefully. He said, the church should do good but not punish evil. The government should punish evil but not do good. And I know as a theologian, you’re thinking through the Bible and you may have an exception for me, but in general, Art Linsley was true, was right. What who should care for the poor? The church is called to care for the poor, not the government.

Mark Turman: [00:28:18] Yeah. Yeah, and and yeah, and I want to get to that in an even deeper way in just a moment because but I I did hear that statement in uh one of your uh I can’t remember if your writing or or YouTube, but that’s a really profound thing to think about and I’ve been in many conversations over a decade or more in which people said, you know, if the if the church was doing its job, uh then the government would not have to be in the business of entitlements. Right. Um, if if we were

Dave Arnott: [00:28:46] And I’m not ready Mark to argue today whether we forfeited our duty or the government stole it from us. I’m just saying that at this point, we’re at the wrong place. The government is doing things that the church is in church was intended to do.

Mark Turman: [00:28:58] Right. Yeah, and and we have some sense that they’re eager for that in that way. Dave, thank you for the great conversation. We want to have you back again on Faith and Clarity to talk about more economic issues and maybe some other things as well. And uh we look forward to that. Thank you for being a part of this. I want to just thank our audience as well. If this has been helpful to you, please rate, review us and share this with others. You can find more resources from us at Denisonforum.org and we look forward to seeing you again on Faith and Clarity. God bless you. Have a great day. Right. Yeah, and and yeah, and that’s a that’s a big topic. We could talk, we could spend a whole podcast on that concept in and of itself.

Dave Arnott: [00:29:42] Well, I’ll try to do it in one minute then. Abraham Kyper, the Dutch theologian, uh who actually became prime minister at one point, his idea was called sphere sovereignty. He said, God is sovereign over all, but he assigns different spheres, different jobs. So the individual has a job, the family has a job, the church has a job, the the government has a job. My point is at this point in American society, we’ve got those all mixed up. We have violated Kyper’s idea of who does what? Who’s supposed to care for the poor? Who’s supposed to care for the widow? Seems to me that the church is supposed to.

Mark Turman: [00:30:19] So, so in uh modern uh language would we say God created lanes or spheres? Yeah. And we need to remember certain people need to run in certain spheres, certain lanes. Uh but when we start having everybody zigzagging across all of the lanes trying to claim different responsibilities that really don’t belong to them, then we end up with levels of chaos.

Dave Arnott: [00:30:42] Yeah, that’s well stated, Mark. Yep.

Mark Turman: [00:30:44] Yeah. Okay. So let’s let’s go down some of the um more personal ways that these things might start showing up in our life, which is um we obviously know that from the 10 Commandments and before and after the 10 Commandments, we had God telling us, here’s some parameters uh for how you live your lives, how you do your economic life with each other. Uh obviously in a conversation like this, the sins of coveting or envy that lead to the sin of both stealing and lying, uh come into play. Talk about how those things are disruptive to building healthy economies.

Dave Arnott: [00:31:24] Yeah, healthy economies are ones where people make free choices as we talked about and where they own their own goods. The World Economic Forum, which just finished its meeting in Davos, Switzerland, one of their phrases is, you will own nothing and you will be happy. Okay, so for those of you who had to read Animal Farm in high school, you’re starting to think, let’s see, everybody’s equal but the pigs are more equal than the others. That’s what the World Economic Forum is saying. If they say you don’t own it, hey Mark, somebody’s going to. Somebody will own it. And so that is so devious for them to say that that you will own nothing and you will be happy. There’s lots of scripture that talks about ownership. I mean, as you quoted the eighth Commandment, don’t steal. That assumes ownership. If you didn’t own, you couldn’t steal. So it assumes that there’s stealing. And covetousness, don’t covet. That’s a violation of socialism. They want goods that others have and that is covetousness. And so I think those two are very clear in the Bible and very clearly support relative free market capitalism. And you know, I had this scale up here a little bit ago from socialism to capitalism. I said, we don’t want to be fully on either end because if we’re fully on the socialist end, that means the government owns everything and there’s one supplier. If we’re fully on the capitalist end and there’s no rules, they will take each other over and there will be one supplier. See how on both ends you end up with the fallen nature taking over. And so that’s why we want to stay closer to the free market capitalist end, but don’t go all the way. We had some of that during the robber baron days of 100 years ago when Rockefeller was trying to buy an oil company and they wouldn’t sell and suddenly there was a fire. Okay, well that should be against the law. I mean, if the government should do more and Mark, I tell my students, you might turn on your recorder because your very conservative professor is about to say, the government should do more. Okay. What they should do more of is maintaining competition. Because if we maintain competition, then there’s freedom and people have choice. Then there’s both consumer and producer surplus at the same time.

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Mark Turman: [00:34:48] Okay, so that again, great segue into this conversation about where government fits into this economic system. Where does it fit into the ecosystem of how these pieces work together? One of them we’ve called out is to create environments where people can be safe, where evil can be constrained, um, where uh at least some level of justice can be brought about for people who um uh are either being violent or they’re being corrupt in other ways. Um, talk about how the role of government in an economic sense is to is to in some way create fair market rules or even socialist rules, but to create reasonable rules and then to create accountability or to hold people accountable so that the economy can actually work. Uh am I thinking about it the right way?

Dave Arnott: [00:35:43] Yeah. The short answer is the government should do less. Netflix has a series called The Crown, which I don’t not much interested in the monarchy, but the writing is really good. And if there’s one phrase they have Queen Elizabeth saying more than any other during the entire series, she says, sometimes the best thing to do, the hardest thing to do is nothing. The government should do less in the economy. They should be less involved. If you picked up a newspaper from the 1920s, there would be nothing about the government being involved in the economy. They weren’t. The economy and the government were separate. But now we have this phrase, it’s the economy stupid, or people always vote with their pocketbooks. They shouldn’t be. The government should have much less to do with the economy. They should set rules as you said, and most of those rules should be for open competition. And then that pushes against the fallen nature. See, socialism favors the fallen nature, competition pushes against it. But wife and I having this discussion the other day, there was some fraud going on in Minneapolis politics or something and I I turned to my wife and said, you know, they have almost zero fraud in for-profit companies. Walmart, Target, General Dollar General to use our examples. There’s almost no fraud because their purpose is to make a profit and to serve others. You can’t have fraud because if it’s fraud, that raises the price at Target and people go to Walmart. If there’s fraud at Walmart, it raises the price and they go to Target. It’s a self-regulating system. It pushes against the fallen nature, whereas socialism or crony capitalism actually also, when you have your friends getting feeding at the trough of the of the government in Washington DC, then you have put your finger on the scale and it’s not free competition. It’s not fair competition.

Mark Turman: [00:37:38] So if I’m hearing you right, it means that the the government is empowered or should be empowered on a limited basis Yes. to to create and to maintain a fair playing field where uh appropriate or what I would say healthy competition is allowed to play out. It’s it’s kind of like they

Dave Arnott: [00:37:56] It’s kind of like they’re the referees in the football game. It goes back to Art Linsley’s statement. The government should punish evil. Well, Rockefeller burning down his opponent’s oil refinery was evil. They should punish evil, but they shouldn’t do good. The church should do good but not punish evil. And so the government has got way out of their lane in trying to do good. Uh if you look at the US debt clock, it’ll show that we have now have a debt of $38 trillion. The reason is because we’re not following a biblical model. The number one expenditure is healthcare. We spend 1.7 trillion this year on healthcare. Second is social security, 1.5 trillion. Third is interest on the debt at 1 trillion. So we’re up to 4.2 of the 5.3 trillion we will spend this year, the federal government is not biblical. They should not be doing those things. And that’s where we go back to Abraham Kyper saying, who’s sphere is this or Mark, you called it, who’s lane is this? There’s plenty of evidence that healthcare should be done by the church, that social security should be done by the family, and that interest shouldn’t be at all. It’s stealing. It’s stealing from the next generation. I mean, I have students in the classroom right next door who are 18 years old and they’ve never voted. Yet each of them has debt of $110,000. If you’re an American citizen and you’re 17 years old, your share of that 38 trillion is 110,000. Well, that’s taxation without representation. We fought a war over that one time. But it is so unfair that it’s just not right. And so we have those three items. If you want to go back to that, that would be fine because that’s where I was a few moments ago. Those three are not biblical.

Mark Turman: [00:39:41] Okay. Yeah, so what I’ll chase some of those down as as in a moment as we have time, but uh I want to bring this around to um the seemingly daily conversation about uh any given president’s ability to weigh in on these matters. Uh so we elect a president, they’re there for four, maybe eight years, and it seems like uh in the last 100 years, we have developed what many call the celebrity president. Um, and we seem to have decided that the president is the chief economic officer uh of the country and some people might even say of the globe. Um, what from your perspective, what influence can a president and and his administration really have on an economy in a four-year period?

Dave Arnott: [00:40:35] Yeah, first stay out of it as much as they can as I said, but the second is created environment. And that’s what’s going on now as you and I are recording this. The Trump presidency has given people a lot of confidence. See, in economics, we have some numbers. I call them the Trinity. Any economist should have these three numbers in his or her head all the time. GDP growth, inflation, unemployment. Those are numbers. Confidence, we’re not very good at measuring. Yes, there are confidence measures, but they’re not very good. And so the president should set an error of saying, look, we’re going to lower regulation, we’re going to lower taxes, we’re going to stay out of the economy. If they stay out of it, it will do better. So they should stay out of the economy to the extent they can and encourage people to express their freedom.

Mark Turman: [00:41:21] Okay. And so if they design as many policies around that uh over a four-year period, especially uh staying out of the economy’s way is what I hear you saying and letting the natural forces of supply and demand in a scarce environment, let them play out while at the same time maintaining, you know, uh as much as possible a fair playing field.

Dave Arnott: [00:41:45] That’s right. And there’s long lags on these and that’s the problem with a four-year presidency. Uh they have to do it quickly to get reelected and that’s kind of absurd to try to do. Going back a few years, uh Reagan was the one who’s mostly responsible for the end of the Cold War. So we could reduce our expenditure on military. In economics, we call this the exchanging of guns for butter. And so in the Clinton administration, the following one after Reagan, we were able to reduce military expenditures. We changed guns for butter and the economy did really well. There was a point there in the late 1990s where actually we were not going into debt. But that’s because we exchanged guns for butter. So Reagan gets most of that credit. Clinton did fine, but again, there’s really long lags on some of these effects.

Mark Turman: [00:42:30] Yeah, because we we sometimes forget that we’re talking about a country that uh has 335 million people, a part of a uh a part of an 8 billion dollar or 8 billion uh person planet. Um, and they these I mean these are huge things that uh take a long time to move the needle on in a lot of ways and they’re very, very complex, very complex and almost every policy that gets created has unintended consequences, right?

Dave Arnott: [00:43:01] Right. Right.

Mark Turman: [00:43:02] Um, and and that’s kind of what I wanted to talk about a little bit now. You’ve already raised the topic a little bit, but I remember Dave being in college and uh being required to read an article, the title of which I’ve never forgotten, which is, will entitlement programs kill America? Um, so we are often cheered, often criticized for uh entitlement programs like social security. Um, and we are also sometimes cheered, sometimes criticized for things like investment in foreign aid. Uh talk about those a bit more from a biblical perspective and how we might do better uh at addressing the demands that that these things were created to try to somewhat attack.

Dave Arnott: [00:43:50] Well, let me go back to those three I had earlier, the three largest expenditures of the government. So the first one is healthcare. I think that maybe the best economic story in the New Testament is a man was going from Jerusalem down to Jericho and came upon a man who had been beaten by robbers. Well, he used his own oil, his own wine, his own bandages, put the man on his own donkey, took him to an inn and said, if you need more money, I’ll give you more money on your return trip. If I’m counting right, that’s six resources that he used. That’s how the free market capitalist reads that story. The socialist reads the story that coming upon the man injured on the road, he rushed into town, he roused some Roman soldiers, they went door-to-door exacting a tax and forcing people to give them money so they could have public oil and public wine and public bandages and public donkeys and public ends. And they said, if you need more money, we’ll rouse the soldiers again for tax. Well, obviously, the first telling of the story was accurate and that’s why Jesus told it that way. Because he said, the church is supposed to take care of healthcare. And people who are listening to this all over America, think about the largest hospitals in your town. And I’ve done this with my students many time. They’re born at either Baylor or Methodist, Baylor which is Baptist or Methodist or Presbyterian or St. Luke’s or St. John’s or St. Mark’s or Mount Sinai. You notice what’s what’s similar about all those names? The church was providing healthcare. So maybe we had this right as recent as 30 or 40, 50 years ago. And then the government stepped in in an unbiblical way and that’s why we’re spending 1.7 trillion this year on that one. Now, the second one is social security. There’s lots of scripture that say the family is supposed to take care of people in their old age. And that’s why social security is not working because it is not biblical. And again, the third one that I mentioned was was uh interest on the debt. Yeah. So that didn’t answer your question. Take me back to it again, Mark.

Mark Turman: [00:45:51] Okay, well, yeah, so um this goes back to the idea that we’ve we’ve started to look to the government to solve too many of our problems and and it is it is not equipped to do so. Right. Um, and so that throws the economic system off when you try to take something that should be private and make it public in terms of the government’s responsibility if if if I understand the conversation correctly.

Dave Arnott: [00:46:18] That’s right. And the reason Jesus said, the poor will always be with you was because he knew we couldn’t get it right. He knew we were fallen humans and we were going to mess up and we were always going to have the poor. Now, as Christians, we should be grateful for that because we are to serve the poor and it gives us somebody to serve. That’s our privilege, that’s our right to serve the poor. But again, if we could get it right, there wouldn’t be poor. It’s just we can’t.

Mark Turman: [00:46:43] Yeah. Okay, so given the reality that we can’t get it right, how do we make it better? How do we how do we get to the place closer to the place where the church is taking care of the sick and the family is taking care of the aging? How do we how do we practically move toward those biblical realities?

Dave Arnott: [00:47:05] Yeah, that’s right. We start in small ways and your church is probably doing this and my church is as well. We are providing care for the poor. Uh we need to do more of it. We just need to continue to do what is right. Uh see again, economists will say, well, what’s the outcome? Christians or anybody who believes in a greater being would say, no, what’s normative? What’s the right thing to do? Our church should be doing this. Now, there are people who are called to serve in Senate and Congress and to serve as judges and mayors and county commissioners. They have a greater role and they can make those decisions. Mark, it’s hard for you and I to make those decisions. We can influence them to the extent we can. But the call has never been negated for us to care for the poor right in front of us. Uh and as I mentioned in our small group, I was visiting with my prep your students the other day and there’s three of us on a panel and I mentioned that somebody in our our group needed a little help and we helped them. And the guy next to me said, oh, so if all of America was like that, there’d be no homeless. I said, yeah, I hadn’t thought about it that way. You’re right. If the church was doing its role, there wouldn’t be homeless. Yeah.

Mark Turman: [00:48:15] Yeah. Yeah. And so many so many ways that we could we could infuse some Christian principles into the decisions that we’re making, right? Uh we we would probably get to a better place.

Dave Arnott: [00:48:27] Yeah.

Mark Turman: [00:48:28] All right, we’ve got a we’ve got a few more minutes, so I want to try to drill down into some of the relevant topics that are right in front of us in the news all the time. Uh, what do we need to know about this big evil monster in the economy called inflation that just seems to be the um the barometer of almost everything in the short news uh stories that we see. Help us understand the role and the reality of inflation and how we need to look at it.

Dave Arnott: [00:48:58] And it should be the number one thing that we look at. The Federal Reserve Bank was formed in 1913 with one mandate, sound money. That means control inflation. Somewhere around 1965, they had their second mandate, which was to control unemployment. And I’ve often said, you can’t serve two masters. You will love the one and hate the other or hate the one and love the other. The Federal Reserve Bank has two masters who counter each other. They can’t do both at the same time. So old fogy Christian economists like me think we should return to the original mandate which is to control inflation. From the Christian standpoint it is because inflation is regressive, meaning it harms the poor more than the rich. Now when you first hear inflation, you think, well, the more money you have, the more it gets inflated away. Doesn’t it hurt the rich more? No. The rich first have advisors that tell them, inflation is coming and so you should put your assets in equities, meaning stock, real estate, gold, they have protection. The poor, first they don’t have any assets to invest and they have to buy on the daily market, diapers and milk. And so it hurts the the poor more. Inflation is harder on the poor than it is on the rich. And that’s why we think it’s such a curse. Now, the Fed’s goal is 2%. Recently it was during the Biden administration, it got up to nine. That’s just criminal. I mean, that that is just so hard on the poor. Recently it was down to three. Today as you and I are talking in late January, it’s 2.7. They’re kind of celebrating that, but I think, well, hold it, you’ve missed it by 35%. If my students at Dallas Baptist University missed their grade by 35%, would they be happy? And so we should not be happy with 2.7. Two is the goal and that’s where it should be. Milton Friedman said it’s the tiger that eats the economy inflation. And it is and it eats the poor more than the rich.

Mark Turman: [00:50:58] So is it inevitable? Is in a fallen world with fallen economies, is inflation just a reality that we we can try and should try to contain but can never eliminate?

Dave Arnott: [00:51:11] Yeah, and and we should ask why 2%? Why not zero? Uh it’s the same reason I’ve said to my students, if you have a checking account, I hope you don’t let it get down to zero. I hope you keep six or eight or 10 or $50 in there in case you make a mistake. That’s the reason we have the 2%. As I said, the lead headline in the Wall Street Journal this morning is that there’s deflation in China. I don’t think we’ll ever have deflation. It’s very difficult because when you go into deflation, we don’t have many tools for bringing the economy back. For inflation, we do have tools, right? And so if we leave it at two, if it gets to two and a half, three and four, we have some tools for bringing it down. 2% is our cushion. And that’s why we should have 2%. And the poor can do well at 2%. That’s fine. We’ll live with that. In a fallen world, you’re right. In a perfect world, it would be zero, but it’s not a perfect world.

Mark Turman: [00:52:05] Right. Okay. All right. That gives us a little bit more handle on it. Uh time for a couple more questions before we wrap up. Um, we have been hearing for a year, uh this term called tariff uh has become popular in our mindset. President Trump has said it is a favored tool uh and he has used it widely. Um, just tell us about how tariffs are a part of the economy. Are are tariffs a good thing? Are they biblical? Are they moral? Are they amoral? Uh how do tariffs fit into the current experience of the economy?

Dave Arnott: [00:52:42] Yeah, I have a presentation called tariffs and the Christian worldview. Uh and this gets me in trouble with my conservative friends sometimes because President Trump is wrong about this. Tariffs are a tax. They are a regressive tax. They’re harder on the poor than on the rich. The poor buy more tariff goods based on their income than do the rich. So it’s like President Trump has sent a federal person to stand the end of stand at the end of the counter at Dollar General and say, no, you’ll have to pay another 5%. That is what happens. Now, it took a while for that to get into the system. Early on, it was paid by perhaps the producers in let’s say China or maybe the distributors, but it did get to the consumers and it will. Tariff is a tax. That’s the definition. I’m not making it up. A tariff is a tax that harms the poor more than the rich. What he’s tried to do is protect our consumers. So if we look at China and the US, China has low tariffs on our stuff coming in, so they have rich consumers, right? They have rich producers because those producers in China can send the goods here. What do we have in the US? Rich consumers, like my students at the university because they can buy at Dollar General and Dollar Tree. We have poor producers like General Motors, they have trouble sending their goods to China. See, so much of economics, people will say, there’s no perfect answer, there’s just tradeoffs. Tariffs favor producers in the US and harm consumers. China has low tariffs, so they have rich consumers and poor producers. I said it backwards. They have rich producers and poor consumers. In the US with without tariffs, historically we have not had tariffs. Matter of fact, this is about the best time to be alive before the Trump administration for tariffs. They’re extremely historically low. So we have rich consumers but poor producers. It’s one or the other. You can’t have both.

Mark Turman: [00:54:38] Okay. Yeah, so this seems like we’re just going to be in this world for as as long as uh President Trump continues to favor this tool. Um, but to your point, it’s like the girl buying the coffee who buys it for $4 and then meets a guy at the end of the counter that says, there’s a surcharge you’re going to have to pay to get your coffee.

Dave Arnott: [00:54:58] Yeah, that’s right. Tariffs are a tax. They are. Yeah.

Mark Turman: [00:55:01] And the US government was funded by them until 1913. Taxes were not allowed until 1913. But it was hard on the poor. Yeah. Yeah.

Mark Turman: [00:55:10] Yeah. Okay. So, weigh in for a moment and tell us, why is it so hard to buy a house these days, especially for first-time buyers?

Dave Arnott: [00:55:17] There’s not enough supply. Yep, simple as that. There’s not enough supply. Uh the reason there’s not enough supply is because communities have decided, we don’t want small houses, we want big expensive houses so that in 25 and 30 years, that neighborhood doesn’t turn into a slum. So it’s mostly restrictions on builders, forcing them to build big expensive houses. See, when people say there’s not enough, not enough on the market. Well, what what do you mean? That that just can’t be true. Uh a friend of mine who once said the governments are markets are smart, governments are dumb. Markets are smart, governments are dumb. So it is governments that has caused the decreasing supply of homes because they want them bigger and better. The market will do what demanders want except for the government gets in their way. That’s why there’s too low supply. Uh again, President Trump’s talked about trying to lower the interest rate on homes. No, no, that doesn’t do any good. You have to increase the supply, just like that student drinking coffee. If the coffee supply increases, the price will go down. If the supply of homes increases, the price will go down. So if the government’s going to do anything, they should reduce the restrictions so that the market can be supplied with more houses at lower cost.

Mark Turman: [00:56:41] So if if given the freedom and a reasonable amount of time, the supply will increase um and it will it will create an environment where homes are more available. That’s right. Um is that okay? But you but you have to let the market do its work, right?

Dave Arnott: [00:56:57] That’s right. The market has been constrained from doing its work because they want these big expensive houses in all the neighborhoods.

Mark Turman: [00:57:03] Okay. All right. Two more questions and then we’ll be done. First is, this is a a question that I don’t think anybody ever seems to talk about, but I wanted to get your opinion. That is, we went through this massive experience called a COVID pandemic. Yeah. And we basically in many ways shut the whole world and all of the economies, uh the worldwide economy, we shut the whole thing down. Yeah. Um, isn’t it reasonable to say that it’s going to take a substantial amount of time for the economies of the world to recover and that we’ve done a lot in that direction, but we we still have a ways to go or am I just being too short-sighted in that assessment?

Dave Arnott: [00:57:50] Well, the United States, which produces 23% of the world’s GDP, recovered very quickly. And I have said, I think this will go down in history as a gold star for the Federal Reserve Bank because they did what they were supposed to. Now, I’ve got plenty of criticisms for the Fed at other times, but in this specific questions you have asked, the economy stopped and then it came back brilliantly. I mean, we’re just astounded to look at the numbers. If you look at a graph, it’s just astounding. The graph of GDP growth goes like this and this and this and it goes straight down, but then it comes straight back up. And so I congratulate the Federal Reserve Bank for over supplying the market with money and bringing us back very quickly. Now, I’ll criticize the government for closing down not only the economy, but the country. That’s one of my podcasts I talked about that. We we call it the economy. It’s not the economy, it’s our life. We were stopped from going to church, we were stopped from going to theaters, we were stopped from going to the grocery store and to hospitals. That’s not the economy. That’s our life. But that’s a separate issue. Again, I think this is a gold star for the Federal Reserve Bank.

Mark Turman: [00:58:55] Well, that’s good to hear and good good to to build on. Uh so anyway, last question. So this is our 250th birthday year as a nation. Um, as you look out going forward from where we are right now, what’s your single biggest concern economically and what’s your single greatest hope economically?

Dave Arnott: [00:59:18] Yeah, my concern is what we talked about is that government has been taken over this sphere of the economy and they should get out of it. That’s my concern. But people have grown accustomed to it. I mean, expectation theory is one of the most strongest motivators if you look at motivational theories, what do you expect? And they expect the economy to bail them out. And that’s absolutely wrong. I wish we could get over that, but I don’t think we will. That’s the negative. On the positive side, uh Angus Deaton won the 2013 Nobel Prize in economics and he teaches at Princeton. His book is called The Great Escape. Now, for our generation, Mark, that’s when Steve McQueen jumped the motorcycle. Remember the great escape? Yes. He means how did humans escape poverty? The Old Testament, the New Testament, almost everyone was poor. Why do we live in an era today in which relatively people are so rich? How did humans escape poverty? And that’s what his book is about. The very first line, maybe the line that I quote the most. Angus Deaton, the great escape, he says, life is better now than any time in history. The Dave Arnot extension is, it’s going to get better. Do you know why I think it’s going to get better? Because I was just down the hall with 34 Turning Point USA prep your students. Over my 31 years at Dallas Baptist University, I’ve had over 5,000 students who were bright, made in the image of God, creative people who are going to make the world better. I am very confident that things are going to get better.

Mark Turman: [01:00:46] Yeah. Yeah, and and we have a good and sovereign God who cares deeply about all of us and about the way we live our lives and the way we do our economies. And so the more we keep looking to him and literally living by his truths and principles, the better off we will be. Um, and we hold that hope always and we hope to see that in even greater expressions in the coming generation for sure. And we have some sense that they’re eager for that in that way. Dave, thank you for the great conversation. We want to have you back again on Faith and Clarity to talk about more economic issues and maybe some other things as well. And uh we look forward to that. Thank you for being a part of this. I want to just thank our audience as well. If this has been helpful to you, please rate, review us and share this with others. You can find more resources from us at Denisonforum.org and we look forward to seeing you again on Faith and Clarity. God bless you. Have a great day.