#135 Economics is the Study of Life

By D. Arnott | August 18, 2022
the christian economist dave arnott

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#135 Economics is the Study of Life

During the C0VID pandemic, leaders tried to separate health from the economy.  That is a false dichotomy because Economics is the study of life through the exchange of resources.

During the pandemic, there were arguments about health versus the economy.  First, I’m interested that they called it “the Economy,” when what they were really talking about is life.  Calling it “the economy” cheapened our lives, because that made it sound like we were anxious to get out there and make money, when actually, we were anxious to get out there and live our lives.   

The Loss of Freedom

The demonstration my DBU students have seen me make the most is to cross my arms and state, “The intersection of Christianity and Economics is freedom.”  You see, what we lost during the pandemic was not the economy, it was the FREEDOM to exchange goods and services with our friends and neighbors.  That’s what the economy is.  Economics is the study of life. 

You see, the beauty of economics is that it considers opportunity cost.  If you’re watching this podcast, you can’t watch Joe Rogan at the same time.  Okay, it’s difficult at best.  And that’s the power of economic thinking.  The question that SHOULD have been asked during the lockdowns, was: OK, we GAIN by slowing the spread via the lockdown.  Now, what do we lose?  As it turns out, we lost more than we gained.  Now, I’m the first to admit, that DURING the lockdowns, I was not bright enough to weigh the gains and losses, and I encouraged some patience and diligence.  Others, like Dennis Prager were able to see that the ENDS: Flattening the curve, did not justify the means: Loss of freedom.  

Jeffrey Tucker, writing in the Epoch Times recently made this observation:

The leaders tended to see the economy as a giant casino that its managers can open or close at will with no great consequence. The revenue you lose today you can make up tomorrow.  I will add: It’s kinda like not exercising this week and exercising double next week.  That’s not good for your body, and it’s less good for the economy, or your life, as I’m calling it today.

Back to Mr. Tucker, “It is wrong to separate economics from everyday life. Economics is a human concern that is bound up with the whole experience of life on earth.”  

Economics is the study of life.

 

The Mother Discipline

Economics is the mother discipline of all business, because it studies supply and demand.

Finance is simply the supply and demand of money.

Marketing seeks gaps in supply and demand. 

The two entries made in double-entry accounting: Revenue and expenses, could be called supply and demand.

Management is mostly about the supply and demand of labor.

Business law is based on the economic distribution of arguments.  You may have noticed there are two. 

Information systems studies the supply and demand of information.

Philosophers will say we have a “God-sized hole” in our lives, which could be called demand.  God supplies the demand.  Look, you HAVE to believe in something.  You choose to supply that demand with God, or something else.

The other course I teach at DBU is Strategic Management.  My definition is: Aligning an organization with its environment.  Here’s the Christian Economics view: You’ve aligned your life with something.  Why would you choose something other than God?

The Liberal Arts

You will remember the “get out of jail card” used by the Apostle Paul.  He declared, “I’m a Roman citizen!”  The Romans decided that, if they were going to let ordinary people vote, they needed a liberal education.  So they required them to learn the trivium: It’s just a big word for the number three: Grammar, logic, and rhetoric.  Then you could proceed to the quadrivium, you can guess there are four disciplines.  They are arithmetic, geometry, music, and astronomy.  THEN, you could move on to the other higher disciplines: Theology and philosophy.  I’m really tempted to launch into a sermon about how so many people skip the trivium and think they can jump to philosophy, but that’s a topic for a future podcast. 

I am on the faculty at a liberal arts institution, Dallas Baptist University.  Most liberal arts schools are Christian, although there are some interesting exceptions.  The reason for the confluence of Christianity and liberal arts is that we believe God made a complex world, and we are called to understand all of it.  

What happened during the pandemic was a division of the sciences: Into economics and medicine.  That’s a false dichotomy.  When you’re talking about medicine, you are studying the economics of medicine.  It’s not a stand-alone discipline.  Maybe this helps: There are basically two categories of physicians: Medical doctors think more scientifically.  They break the human into separate systems: Circulatory, skeletal, respiratory, nervous, and digestive.  I know there are others, but I’m in a hurry today.  An Osteopathic Doctor does the opposite.  She looks at the integration of systems.  If I take my sore back to a medical doctor, he will order an X-ray and an MRI.  An osteopath would ask what type of chair I sit in, and what kind of car I drive.  

Are you getting the idea here: Science separates disciplines by its very nature.  Sometimes that’s good.  But to assume economics is a discipline SEPARATE from the others is incorrect.  Economics cannot be separated as a distinct science.  Economics is the study of life.  

The Social Sciences

Hard disciplines, like physics and chemistry are above the water on this iceberg, because they are distinctly measurable constructs.  Soft disciplines, like sociology and psychology, are below the water, because they are concepts, which are more difficult to measure.  When we study social science disciplines, like economics, we study how people respond to incentives.  That’s why one of the seminal books in economics is titled Human Action by Ludwig von Mises.  In social science, we study how concepts below the water are measured by constructs above the water.  In my study of Management and Economics, we have very poor predictive models, compared to my wife, Ginger’s study of drug effectiveness.  

Try to operationalize the trinity: The father, the Son and the Holy Spirit.  I’m always entertained by the phrase, “Christianity comes from the heart.”  Well, that’s an analogy, and it might be effective, but it’s still an analogy.  Or, “God is our Father.”  Well, not medically, but metaphorically, he is.  

You can change economic policy, but you can’t change economic law.  So, we always look at the direction that policies will take us.  I walk across the front of my classroom and tell my students, “Your 8th grade physical science teacher walked across the front of a classroom like this and told you she was pushing the earth THAT way.  Ok, maybe she weighed 120 pounds, so she wasn’t pushing it very hard, but she WAS pushing it that way.  You remember the phrase, “Equal and opposite pressures?”  To assume she was pushing it forward would be absurd.  Unless, you’ve listened to my recent podcast #124 titled The March of Foolish Things, where I cite Senate Majority Leader Chuck Schumer stating that increased government spending will tame inflation.  

So, there ARE economic laws about direction.  Measuring the impact is much more difficult.  In my classroom, I jump through the following trap door: We could measure the economic response to this event, but we’d have to study econometrics, and I’m not energetic enough to do the math.  But we DO know the economic direction of policies. 

Integrators are Best

Estimates are that Aristotle knew 80% of the knowledge known by humans.  Now that knowledge has expanded so rapidly, it’s doubtful that anyone knows more than 1%.  This is where the Division of Labor arrives.  Adam Smith, yes, THAT guy, said that we should divide work.  That’s what has happened in science.  But in today’s podcast, we’re questioning whether we have divided sciences too much.  

Actually, that’s my competence.  I’m called the Christian Economist.  There are many people who know a lot more about Christianity and Theology than I do.  And the economics part: My PhD is in Strategic Management.  I came into Economics through the side door.  There are many people who can draw supply and demand curves better than I can.  There are people who can write and speak more effectively than I can.  My competence is integrating those four disciplines: Christianity, economics, writing, and speaking.  At the nexus of those four disciplines, I make my humble contribution. 

My Worldview guru, Davey Naugle wrote the definitive book on the subject, titled Worldview.  He said, we don’t want businesspeople who are Christian, we want Christian business people.  For business people, you’re welcome to substitute educators, legislators and truck drivers.  His point was: Christianity comes first, as explained in the book The Call by Os Guinness.  He says we have two calls: The first is to BE a follower of Christ.  The second is to DO something.  The DOING must be an outcome of the BEING.  There must be an integration of the two.

That’s the danger of our over-scientific worldview today.  We’re told to leave our religion at home and in the church, and to separate it from our legislation, education, and truck-driving.  That’s not Biblical.  

Quoting Mr. Tucker again, The scholastics of the late Middle Ages knew there was a unity in truth. As a result, they studied everything, always seeking interrelationships between disciplines. It was in this period that the discipline of economics was born, not as a BRANCH of engineering or technology, but as a path to understanding how human lives can thrive and to examining forces at work in the world that makes that possible.  He’s right.  Economics is about more than distributing goods.  It’s HOW and WHY we distribute them.  It’s based on a worldview that integrates disciplines.  We believe that God admires that integration. 

Economics is the study of life.

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