#100 Takers Are Not Makers

The Christian Economist

#100 Takers Are Not Makers

Conquerors (takers) seldom beat their swords into plowshares and become economic producers (makers).
So, the Taliban will probably not build a sustainable economy.

 

Early in your study of economics, you probably learned about opportunity cost.  I advise my students to have only one dating relationship at a time.  And, since they’re in my 8:00 econ class, they can’t take another class at that time.  I don’t know if I’ve ever had a student who wanted to take two 8:00 classes.  At the macroeconomic level, this is often called Guns or Butter.  Your government can give you guns or butter, but not both.  President Biden said as much recently, when he ordered US troops to make a hasty and ill-advised withdrawal from Afghanistan.  He complained about the price.  Economists know that he was trading guns – that is, the money that was being spent in Afghanistan, for butter, which means more domestic spending.

And, actually that’s my topic today.  I’m asking whether the Taliban, who now command Afghanistan, can change from guns to butter, or in Old Testament terms, can they beat their swords into plowshares?  Probably not.

Conquerors Disdain Commerce

Let me turn to one of my favorite economists, Thomas Sowell.  In his book, Wealth, Poverty, and Politics, he writes, “Great conquering peoples are seldom also great commercial or industrial peoples or great international investors.  Great historic conquerors like the Spaniards, the Portuguese, the Russians, the Ottoman Turks and the Mongols under Genghis Kahn and his successors tended to disdain commerce and industry.”

The economic driver of Afghanistan is poppy seeds that make opium and is refined into heroin.  Afghanistan is the world’s largest produce, making an estimated 80% of the world supply.  It constitutes about 11% of the country’s GDP .  A good measure of a countries potential wealth is the percentage of the workforce engaged in agriculture, making food.  In the US, it was 90% in 1800, 60% in 1900 and 2.5% today.  That’s means 97.5% of the workforce is free to make other products and services.  In Afghanistan 44% of the workforce is directly involved in agriculture and 60% is involved along the entire food supply chain.  The indigenous farmers who grow the poppies will continue to do so, but the average family makes $500 in US dollars each years, compared with a soaring $69,000 compared to the US.  In the global information age, 8.3% of the Afghani population is on the internet.

Do you imagine that the Taliban has the ability to make cars, computers, or even shoes at globally competitive prices and quantities?  I sincerely doubt it.

The Biden Administration is hoping the Taliban will take a seat at the United Nations and join the developed world.  I sincerely doubt that will happen.  But, I’ll leave the political realm to others, and try to stay on the economic theme today.

Do People Change?

Not very much.  My long-time consulting partner is a specialist in DISC, which says there are four types of people, as shown on this diagram.  D’s bumper sticker of life is “Don’t waste my time.”  I’s is Let’s get acquainted.  S’s want to take their time and work together, and C’s want to study the situation.  Purveyors of DISC say that you can measure a person’s response to their environment at the age of six or 60, the results will pretty much be the same.  Folks who study Myers-Briggs, or the Enneagram or any type of personality indicator, all say the same thing.  Psychologists say that a person’s personality is pretty much fixed by the age of six.  Sorry, parents, if that’s discouraging for you.  But if your child is older than six, his or her view of the world won’t change much.  It only changes because of a life-altering event, like the death of a family member.

Will the worldview of the Taliban change?  I sincerely doubt it.  In podcast #89 Antirust and the Fallen Nature, I quote a famous person telling me, “You can change what people think, but you can’t change what they believe.”  Christians agree.  When a person accepts Christ, we don’t believe we do it, we give most of the credit to the Holy Spirit who prepared the person for salvation.  Even then, a person’s outward behavior may change, but their personality remains pretty much the same.  I worked for a former alcoholic who stopped drinking after he accepted Christ.  He still had addictive behaviors that made him a difficult person to work with and even to socialize with.

No More Wars

Ginger and I were touring Ft. St. Louis on the French Island of Martinique.  Our very good guide told us about the long history of battles over the island.  The English fought the Dutch who fought the French, and eventually the island stayed under the control of France before winning its freedom in 1946.  At some point in his long discourse about the battles, I turned to Ginger and asked, “Why did it stop?  Are men no longer fallen?”  I unpack more of this in podcast #47 Economics and World Peace.  The brief answer for today is that men are still fallen, and they still covet what others have.  But they’ve figured out they can get that wealth through economic trading, instead of plundering.  That’s why Franci Fukuyama wrote The End of History and the Last Man in 2006.  He said that history tells us when one country knocked off another, and that humans had changed from military to economic wars.  He was mostly right.  One other side-note: That’s why slavery is not as popular as it once was: Paid workers are more productive than slaves.

Back to Thomas Sowell, writing in Wealth, Poverty and Politics, where he explains why Spain was made rich by the gold it plundered from Central America in the 16th and 17th centuries, but then became poor.  “Spain lagged behind other contemporary Western European countries in such human capital as both craft skills and scientific advances. Moreover, the disdainful attitudes toward productive work that developed in Spain under these conditions were negative human capital, as was the mass export of human capital by the expulsions of Jews and, later, Moriscos, both of whom had skills largely lacking in the general population of Spain.”

Even today, a Spanish family makes $2,000 less each month than an American family.  I asked my students last week, “How many of you would be attending Dallas Baptist University if your family made $2000 less every month?”  The multiplication of that $2000 throughout the economy provides growth that makes the US the richest country in the world.  That’s because we produce.

Sowell contrasts Spain’s disdain for work with the economies of Scotland and Japan, who rose dramatically by acquiring the human capital of other cultures.  One of my most common phrases in this genre is “Policies that Promote Production” is all that separates rich from poor countries.  It’s the title of podcast #27.

Afghanistan will remain poor under the Taliban, because they don’t know how to produce, and they don’t want to.

Easy to Take, Expensive to Hold

President Obama was caught on a live mike talking to Dmitry Medvedev of Russia saying “Tell Vlad, I can be more flexible after the election.”  Okay, a few questions arise.  First: How did he know he was going to win the election?  When he uttered that phrase on March 26 of 2012, the polls favored Mitt Romney.  Second: The liberal media spent 18 months accusing President Trump of Russian collusion, but no one produced an audio tape of him referring to Vladimir Putin as “Vlad.”  Third, and this is the most important.  What he meant was that he would allow Russia to take 7% of

Ukraine and Crimea, and the US would not intervene.  10,000 Ukrainians were killed in the take-over.  That’s the student population of South Dakota State University, to give you some context.  I have an interest in the Baltic countries, because I have taught there for the last six summers, before Covid.  One of Ginger’s favorite stories of international intrigue is the dinner with my Eastern European MBA students.  A student from Ukraine saw the Russian soldiers unloading from a plane with their weapons.  Another student, whose father was an officer in the Russian army, had a different viewpoint.  Ask Ginger if you are fortunate enough to meet her in person.  In the Baltics, they say that they might get a ten-minute warning before being bombed by a Russian plane, because they are so close to the Russian border.  So Russia took 7% of the Ukraine and Crimea without NATO interference, so I asked, “If President Obama and NATO are not going to stop Putin, why doesn’t he take the Baltic States?”  The best answer I got from an Eastern European political specialist was, “Land is easy to take, but expensive to hold.”  He was referring, of course, to the immense cost of holding Eastern Europe during the Cold War.

You see, fallen people have figured out that they can enrich themselves via economic warfare, without holding the land.  That’s why, as an economist, I make the prediction that most of the wars of the future will be economic and cyber, and physical weapons will be used less.  I didn’t say they would become obsolete.  I’m only saying that a Christian economist would accept that the fallen nature of humans has not changed.   They still covet what others have.  In previous centuries, they went to battle to control the land.  Now, they realize it’s more important to control the economy and the cyber space, than to control the land and the people.

Government’s Don’t Produce

The Taliban is about the figure this out, but I’m not sure the left in America will.  I have repeated in these podcasts many times, “The government has no money.”  It only takes money from productive sources and redistributes it to non-productive sources.

Mark Hendrickson from the Institute for Faith and Freedom at Grove City College wrote about this in the Epoch Times this week in an article titled “We Need Each Other: An Economic Perspective.”  He writes,

“The major retardant to economic progress has been the all-too-ready willingness of humans to use violence against their fellow man. Humans always have had two basic options for how to interact with societies other than their own: peaceful trade or violent conflict. Monarchs, emperors, khans, dictators, and so on often have used their subjects as sacrificial pawns in their self-aggrandizing desire for conquests, whereas the subjects’ interests would have been better served by peaceful trade.”

He continues to explain what every sophomore in my class knows: Economics is not a zero-sum proposition.  That one person’s gain must be another person’s loss, i.e., that there are always winners and losers. To those who believe the zero-sum myth, violence and aggression are brutally logical. If the other has something you want and you are stronger, then you attack, defeat, and seize what you want.

Quoting Mr. Hendrickson again, “The logic of peaceful trade is diametrically opposite to the logic of enrichment via aggression and plunder. Economics shows peaceful, voluntary transactions to be positive sum—i.e., both sides gain.”

He has just described consumer and producer surplus that I unpack in podcast #18 titled Love Your Neighbor.  The Christian Economist summary is “If you love your neighbor, you will provide products and services they demand and produce consumer surplus.  If you love yourself, you will make a profit while doing so, which economists call producer surplus.”

How Economics Avoids Wars

Coming out of World War II, Europeans were trying to avoid World War III.  So they formed the European Steel and Coal Community in 1950.  Why coal and steel?  Because those are the chief products used to make munitions of war.  The Shengen agreement in 1985, allowed people to cross borders without passports, and what we now know as the European Union was officially codified in the 1993 Maastricht Agreement.  The Eurozone, where 19 countries use the same currency, was established in 1999.

I assume you’re getting the point: Close economic relations avoid wars.  Thomas Friedman says “No two countries with a McDonald’s have gone to war since opening the McDonald’s.”  It’s called “The Golden Arches Theory of Conflict Prevention.”  Whether it’s specifically true is not important.  The concept is true: Countries who trade, tend not to go to war with one another.

Will the Taliban beat their swords into plowshares?  I sincerely doubt it.  I have stayed on the economic theme today, and it’s only because I’m running out of time that I won’t discuss the violence that is concomitant with their Muslim practices, which are a critical worldview driving their conqueror bent.  But I don’t have time for that today.

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