By David Gushee
The “culture wars” have slotted Christian moral engagement with American public life into a drearily predictable pattern of fighting over issues such as abortion and gay marriage.
But the longer history of Christian public ethical engagement includes considerable attention to economic issues. Modern Christian social ethics were born in the fight over the cruelties of unregulated industrialization in the 19th century. During a time when laissez-faire capitalism in England produced factories in which six-year-old children worked 16-hour days and were whipped when they failed to meet their quotas, activists (many of them Christians) eventually rallied the forces of compassion and justice to demand regulation of the conditions in such factories. It was a long and bitter fight.
Christian ethicist Reinhold Niebuhr, who learned the iron realism of his ethical vision in Detroit amidst similar struggles related to the auto industry, famously commented that powerful groups never give up their power voluntarily. One could similarly add that profitable enterprises never voluntarily concede even a sliver of their profit margin.
Individuals or firms that find a way to game economic systems never voluntarily stop gaming those systems. Corrupt economic-incentive structures are never voluntarily reformed by those who benefit from those structures.
Political systems are likewise always vulnerable to capture by economic powers. Legislators are always vulnerable to domination by those who write their campaign checks or control media in their districts. And even honest government regulators are always vulnerable to the development of undue loyalty to those they regulate. Consider the weak state of mining regulation amid the specter of 29 fresh graves in West Virginia.
This week, a package of financial reforms will be considered by the Senate. The bill uses the power of the federal government in several ways to regulate aspects of the financial industry that, left unchecked, helped to plunge our economy into the Great Recession and destroyed the personal finances of millions of Americans.
The principles underlying this bill ought to gain the support of Christians who take seriously the lessons we have learned in our fight for earlier regulation of unfettered laissez-faire capitalism. The drive for profit must not be destroyed, because it is the engine of our economy; but the means by which firms seek profit must be regulated so that capitalism does not devour itself and its most vulnerable participants.
The principle of accountability means that those who take great financial risks need to bear the responsibility for those risks — and that those who haven’t signed up for such risks should be sheltered from them. Among other things, this means that financial firms must maintain an adequate capital cushion underneath their operations so that failed investments do not fall upon the taxpayer to recoup. No bank or financial firm can become “too big to fail” so that our entire economy depends on a taxpayer rescue.
The principle of transparency means that all transactions must be reasonably public, involving identifiable firms undertaking comprehensible transactions in the light of day.
It also means that consumers — for example, in the credit-card business — are clearly told about all fees and about any pending increases in their interest rates.
The principle of fairness means, among other things, that someone who works hard and manages to set aside a bit more money to pay off a mortgage early is not penalized for doing so. It means that bond-rating agencies should not be paid by the firms selling these debts and thus incentivized to inflate the ratings, unbeknownst to consumers. On this and many other fronts it is the proper role of government to balance the scales when massive companies rig the rules of the game in a way that unfairly abuses the average consumer.
The fact of human depravity requires the rigorous application of these principles of accountability, transparency and fairness. Human beings will act in their self-interest and will be slow to notice and slower to care about the harm done to others as we pursue that self-interest. Collectivities like very large businesses will, as Niebuhr pointed out, be even more obtuse morally due to the diffusion of personal responsibility and the development of a shared ethos that may become completely untethered from core moral restraints.
Citizens, the media, and policymakers must constantly shine the floodlights of review, restraint and accountability into the financial sector to ensure its proper functioning. Of course, those floodlights must also be shone onto the government, its laws, its regulations and the actions of those who enforce them. So it has always been, for government and its emissaries share the same human condition.
But for those who idealize an unregulated market economy, it might be good to remember the lessons learned beginning in the factories of England in the early 19th century.