Dr Greg Bahnsen - Economic Ethics: Free Market (Part 2)

We come to part three in our series on economic ethics. In my first exhortation we talked about the better than gold standard which is found in the law of God, which we will use as an objective criterion for making economic decisions and judgments about economic morality. The second part of the series dealt with private property as a God given right and therefore the reputation of socialism, which in its essence demands the universal and compulsory communalization of property, that is the denial of private property and putting all means of production and ownership in the hands of the community. Today we come to a third basic element of economic morality and that has to do with the free market which, as you'll see in your bulletin, I consider the disciplined allocation of scarce resources and we take as our text Matthew 25 a parable that's taught by Jesus in verses 14 to 30 Hear now the word of God. For it is when a man going into another country called his own servants, and delivered unto them his goods and unto one he gave five talents to another, two to another, one to each according to his several ability and he went on his journey straightway. He that received the five talents went and traded with them, and made other five talents. In like manner he also that received the two, gained other two but he that received the one went away and digged in the earth, and hid his Lord's money. Now after a long time, the Lord of those servants cometh, and maketh a reckoning with them. And he that received the five talents came and brought other five talents, saying, Lord, thou deliverest unto me five talents. Lo, I have gained other five talents. His Lord said unto him, well done, good and faithful servant. Thou hast been faithful over a few things I will set thee over many things. Enter thou into the joy of thy Lord. And he also that received the two talents came and said, Lord, thou deliverest unto me two talents. Lo, I have gained other two talents. His Lord said unto him, well done, good and faithful servant. Thou hast been faithful over a few things I will set thee over many things enter thou into the joy of the Lord. And he also that had received the one talent came and said, lord, I knew thee that thou art a hard man, reaping where thou didst not sow, and gathering where thou didst not scatter. And I was afraid and went away, and hid thy talent in the lo, thou hast thine own. But his Lord answered and said unto him, thou wicked and slothful servant. Thou knewest that I reap where I sowed not, and gather where I did not scatter. Thou Oughtest therefore to have put my money to the bankers, and at my coming I should have received back mine own with interest. Take ye away, therefore, the talent from him, and give it unto him that hath the ten talents. For unto every one that hath shall be given, and he shall have abundance. But from him that hath not, even that which he hath shall be taken away and cast ye out, the unprofitable servant, into the outer darkness. There shall be the weeping and the gnashing of teeth, and thus far the reading of God's word. I needed a pencil to complete this morning's exhortation. And so I found one, but it was broken. And so I figured I'd better go out to the store and buy another one. I went to the store figuring in this day of high prices, there used to be a day when you could buy a pencil for 5 cents. You remember those days, 5 cents a good number two lead pencil. But not anymore. 25 cents is about as good a price as I can find. But not on the day I wanted to complete today's sermon. No, on that day I couldn't find pencils anywhere. There was only one dealer in town, only one stationery store in town that had pencils. And it turned out they only had one. But that's all I needed was one. So I picked it up and I took it to the counter. I said, how much will this be? And the man said, that will be $14. I said, that's not fair. I need this pencil. And $14 is an unjust price for this pencil. This pencil shouldn't be worth more than 5 cents. I was willing to pay 25 for my inconvenience. I would have gone as high as maybe half a dollar. But $14 is preposterous. It's outrageous. It is absolutely wrong of you to do this. The man said, I'm sorry, that's my price. It's $14 or I keep the pencil. I said, no, it won't be that way. And I took out my gun and I said, I want this pencil for 50 cents because 50 cents is fair. You didn't pay more than 10 cents for this pencil. You're going to make a five time markup. Four time markup, actually, when you subtract what you paid, and that is perfectly just. And therefore I'm taking the pencil. Here's your 50 cents. And if you don't like it, that's just too bad. In this world where pastors have to write sermons, it's not fair for us. To be deprived of our pencils. Now that's a facetious story. But in that story, I hope you begin to see the point about the free market. Would it be right for a man to demand a price that he thinks is right, even though the one who is supplying the goods or it might also be services? In another instance, should the person who's supplying the goods or services not have any right to determine what he or she wishes to charge for them? Pencils are amazing things, you know, you stop to think about it. You have to. I don't know how pencils are made. I couldn't make a pencil if you forced me to. Somebody is a very smart person to be able to get that lead in the middle of the wood. I don't know how they do that. I respect them for their ability. I mean, they're worth the 25 cents or whatever we pay for them. I'm sure just for the ingenuity of a person to put a lead in the middle of a piece of wood like that, and to paint it so nicely, and to put an eraser on the top and put a nice brass band around it to hold the eraser. I mean, it's just amazing the way they do that. But you know, in order to do that, it requires cooperation, an amazing sense of helping one another. Being disciplined not only to seek your own profits and well being, but to be willing to help others seek their profits and well being as well. You see, the wood comes from one place and the graphite comes from another. And the ability to join those two is from another. And then there's the person who makes the brass band and the person who forms the rubber eraser. And then there's the person who delivers these to the store. How is it that it's amazing to me when you stop thinking about it in this complex world where people hate one another and people are so greedy, it's amazing that there was even one pencil to be found in my facetious illustration. It's amazing that there are pencils, amazing that they get to stores, amazing that they get distributed at all. How does it happen? It happens through the wonders of what we call the free market. Where people negotiate for goods and services and entrepreneurs, as we call them, foresee that there will be a need in a society. And they try to join together their scarce resources to meet that need, to anticipate the market and to maximize their own welfare thereby. Now this, what we call the free market, has for years been coming under a great deal of public abuse, a great deal of Rhetoric has been expended upon deploring the greed and the competition of the free market. When as a matter of fact, I believe that if you study biblical economics, you find the free market is a God given privilege, a God given right. It's something which in fact mitigates the greed and mitigates the opposition between people and allows for the building of the kingdom of God. Now, if I can accomplish that much in one sermon convincing you of these things, then believe me, I will have done a morning's worth of work. Let's begin our analysis of economics by considering what might happen to that pencil if the government were to become economic involved in its selling. I have here an ingenious little story that was told by an officer of the Monsanto Company. He was illustrating the effects on his company of US Federal involvement in their productions. Although they don't make pencils, he uses a pencil as an illustration and I thought you might enjoy this. His story goes like this. It all started when the OSHA carcinogen policy went into effect. The graphite in the pencil lead always contained a residue of crystalline silica. Tests showed that the silica produced tumors, so the material became regulated as a carcinogen. There was no alternate for pencil, so exposure had to come down to almost zero. Workers had to wear protective clothing. Then came the epa, which had policies requiring drastic reductions in emissions and effluents. Control technology was expensive and only the largest manufacturers could afford it. This caused a flurry of lawsuits in the 1980s when only three pencil makers were left in the country. See, already the story is beginning to have its bite. Right? What he's saying is the government comes in in an effort to protect us against things that we should be able to protect ourselves against. In an effort to do that, runs smaller producers out of the market. Okay? Now, one of these three companies eventually went out of business because it couldn't afford stringent workplace and pollution control requirements. Then foreign manufacturers threatened to dominate the pencil market. The government allowed the two remaining US Pencil firms to merge. See, they had to get permission to do their own business to merge so they can compete with the foreign manufacturers. Enter the Consumer Product Safety Commission. It seems that rubber erasers could be chewed off and could choke small children. Sharp points of pencils were dangerous. The paint used on pencils contained residual solvents. Finally, a legend was printed on the pencils to read, this pencil could be hazardous to your health. But this didn't affect consumer habits. They continued to buy them. There were other potentially harmful uses, such as stirring coffee. This led the FDA to declare that harmful substances could be dissolved out of the pencil in into the coffee, thus violating food additive laws. The one company trying to salvage its business tried making pencils without paint, without erasers, and with only soft leads. But consumers were outraged and their sales declined. The company faced financial ruin because of the large sums needed to purchase new control equipment. Some wanted to ban pencils entirely under the Toxic Substances Control act, but the government decided that pencils were necessary, especially since they were used to write new regulations. So the government bailed out the pencil company with a large guaranteed loan, you see. But eventually, to protect the pencil business, the government nationalized the pencil business and then put a huge tariff upon any foreign manufacturer trying to compete in our United States market. It's comforting to know, after all, that society is being protected against. The danger of that was so obvious we didn't even notice it for many years. There are still those who complain about paying $17 for a pencil, but you really can't put a price on health and safety. Wonderful little piece of farce, of course, to point out what happens when the government decides to enter the free market and to take away the freedom that the market originally had. Now can we as Christians, I mean, I'm setting before you here the wonders of the pencil and my little stories about the pencil to give you something concrete to think about. Do we wish to support the idea of a free market where prices are determined by forces outside of the government, or do we want to have the idea of government control of our economy? Now, somebody might think, what on earth does that have to do with a church sermon? What is that doing in the place we're supposed to be worshiping God? Well, it so happens that the word of God speaks to these issues. And the refusal of some people to speak to them as Christians to say, well, of course we're neither capitalist or socialist, we don't have any opinion on these things, is really a refusal to let God speak in that area, a refusal to say what God says about free market or socialist economies. And any refusal to say what God says is of course, a talking back to God. It may be silence, but it's nevertheless talking back. For it's saying, God, no, we won't have anything to say here. This is dangerous. I mean, you have to have a great deal of economic smarts to be able to talk about these things. Well, I'm going to do my best this morning to avoid my lecture mode and to make it very clear to you that there are simple, elementary issues involved here, and that if you will be committed to them, you'll be much closer to pleasing God, not only in your attitudes, but in the way you live. And that is always important for a Christian. Economics is the systematic study of how man acts to maximize his perceived well being. It's just that simple. Economics studies how men behave when they try to maximize their well being, when they try to get ahead, if you will. Now, again, this is perceived well being. I might have a neighbor who thinks his well being is sitting in a hammock and drinking beer all afternoon. He thinks that that's the best thing that could happen in his life. And anything that allows him to do that maximizes his well being. I may not think that is in fact the ideal of well being in this world, but economics is the study of how he tries to achieve his goals and I try to achieve my goals. It's the study of how man chooses between available alternatives and attempting to increase his welfare. Now, given that the biblical starting point of economic analysis is at the beginning of the Bible, In Genesis, the third chapter, please turn to Genesis 3:17, 19. We are accepting it, I trust, as a common sense premise that all men seek to get ahead. That is, they seek to maximize their welfare and to minimize their losses. They try to make themselves happy. They try to give themselves what they think is best for themselves. And in Genesis 3:17, after Adam and Eve have fallen into sin, God now comes and he curses our first parents. And he says, and unto Adam he said, because thou hast hearkened unto the voice of thy wife, and hast eaten of the tree of which I commanded thee, saying, thou shalt not eat of it. Cursed is the ground for thy sake in toil shalt thou eat of it all the days of thy life. Thorns and thistles shall it bring forth to thee. And thou shalt eat the herb of the field. In the sweat of thy face shalt thou eat bread till thy return unto the ground. For out of it wast thou taken, for dust thou art, and unto dust thou shalt return. God begins the curse on the human race by telling Adam that from this point on, the earth will no longer easily yield its fruit. No longer can Adam and Eve expect all of their desires to be met. Now the earth is cursed. Now, hard work now, Adam would have worked before the fall, don't misunderstand. But now it's going to be toil. A very special Hebrew word that indicates that it's going to be in agony that Adam forces the earth to give up its fruit. So he can finally support his needs and his desires. God has cursed the earth and no longer yields its fruit easily. Man must sweat to eat. And thus the world is characterized by scarcity, to put it very easily. Nature is stingy. Nature is stingy in a way that it would not have been if man had not fallen into sin. Nature no longer gives man everything he wants with just a minimum of administrative care. Now man must work hard to get minimal satisfaction of his needs. And so the Bible teaches that we cannot acquire what we need, we cannot acquire what we desire in this world without work. It's a kind of demonic economics that thinks we can turn stones into bread. Remember, that's what Satan wanted Jesus to do, turn these stones into bread. And we'd like to sit around and do that. We'd like to sit in our hammocks out in the backyard and just think, well, I can just have money by thinking it into being, or I can have a new car just by wanting it, or I can just make a phone call and deliver some kind of stereo system to my house. No, that's demonic economics. Things do not come except through calculation. Hard work, the application of toil to some need in this world, that's an economic principle, but it's an ethical principle as well. Paul tells us in second Thessalonians 3:10 that if one does not work, then he should not eat. That it's wrong to think that you can just sit around and have your needs supplied. You need to go out and apply yourself. Obviously he's talking about the able bodied here. There are exceptions to that general principle. But you see what the rule is. The rule is that you must apply yourself. You must work. The sweat of the brow is necessary to get those things that you need and those things that you want. Now, since all men are in that condition, nature is stingy. We all have wants that aren't being met. And so we have to work hard to maximize our welfare in order to increase our own productivity, in order to increase our own wealth. Thereby we need a division of labor, don't we? Just think about that pencil again. If I had to write my sermons and my lectures with a pencil, it so happens that I use a pen. But I could make the same point with the pen. If I had to make the pencil, you would never get a sermon. You would never get a lesson from me. You might get one from memory or something, but the idea of a prepared written note so that I can speak to you, if it depended on my making, the pencil wouldn't be done. Because I don't know how to do it. But you see how easy it is. I go into a store, I put down a quarter, I get the pencil, I can write my sermon. And when I write more sermons, that means I can hold down a steady job. When I hold down a steady job, then I can get more money. And when I get more money, I can feed my children and my wife. And we can also do things that we enjoy doing. So you see, my productivity and welfare is increased by division of labor. Some people make pencils. I write sermons. Now I write sermons. And I try to encourage you and through you, my society to be more honest. And therefore, the people who make pencils should have a fair wage from their employer and so forth. And so my preaching sermons helps them as well. Indirectly. And on and on we could go multiplying the illustration that when everybody does what hopefully he or she is best at, and we cooperate with one another, we maximize each other's welfare. We all get ahead by helping one another and engaging in trade with one another. You notice that trade is necessary for this to work. The production of a pencil is not going to do this man any good unless somebody buys it. And I can't buy it just at any price I want. I have to buy it at the price that he sets. And the sermons that I preach, they have certain, you know, I have a price that I put on my labor too. If somebody says, we want you to preach that sermon on the free market for 10 cents. And I say, well, I'm sorry, I'm not in the mood to contribute my, my labor. I need to be paid better than that. It'd be wrong for the pencil manufacturer to tell me I've got to do it anyway. Just like it'd be wrong for me to say, you've got to give it to me for 50 cents, even if he wants a dollar for it. So we've got to cooperate, We've got to engage in trade. I have something, he wants something. In fact, there's a lot of people out there that want something and they can only get it by exchange with one another. Now this forces men to cooperate. If they want to increase their wealth to get ahead, they have to recognize a need for one another. Isn't that interesting? The free market, which has been accused of being a force of atomizing our society. So every individual goes his own way and just really doesn't give a frit about anybody else and just does whatever he wants. Just stomping on other people and just getting himself ahead in Life at the expense of others. That's impossible in the free market. It's quite possible in a planned economy. But it is impossible in the free market. Because in the free market, people give their goods and services only when they freely want to. A man will not get ahead if he acts that way. He must live as though he needs others and they need him. And consequently, economic scarcity forces competition through trade, through the division of labor, and restrains the evil of individuals. They can't be as selfish as they might otherwise be. And that means that those who have skills or resources to offer on the market have to act as servants of others. You say, now, wait a minute, wait a minute. Here's a farmer that has this machinery, he has this land, he has this skill. He could grow corn, but he doesn't have to grow corn. He doesn't have to be the servant of others. Well, if he doesn't, he pays a price, doesn't he? For, you see, there is a certain price on corn today. And the farmer who will not grow the corn doesn't gain those resources. He doesn't gain that money, if you will. You say, well, so maybe he doesn't want any money. Well, that's always the problem, you see, because there's nobody in this world, in the real world where men live, that has everything he or she wants. And because nobody is in a situation where they can just take the status quo and never change again, since that's completely unrealistic, the farmer always pays a price for, for instance, his inefficiency or his unwillingness to work. The farmer, if he will not trade, if he will not grow the corn and trade the corn, forgoes the profits that he would have had, which profits he needs, by the way, to buy the video recorder he wants to watch at night. Now, again you say, well, what if the farmer doesn't care about watching video? Well, he may not care for that. The illustration may have to be adjusted for each individual. But every individual wants something and he cannot get it unless he engages in trade. Free market. If he does not use the resources at his disposal to increase his welfare, he cannot then change the status quo and come closer to getting more of what he wants. And so, again, my point is that the free market forces not just competition but cooperation. It makes us think, what do others want? What can I give them so that they will pay me and then I can get ahead? Now, here's another aspect of this situation. All of this having to do with scarcity. The fact that the earth will not give up its yield willingly and easily shows us the need to. For a market, for trade, for cooperation, a division of labor. But another aspect of this is, as the economists put it, at zero price, demand for goods and services will always exceed supply of them. It may be due to the sinfulness of man, it may be due only to the stinginess of nature, but it's always true. Let's think about that again. At zero price, that is, if everything were free, if everything in this world were free, if all goods and all services were free, the demand for goods and services would always exceed the supply of them. I hope you can see that that's an unavoidable truth. It's virtually a logical truism, especially if you know human nature. Okay, let's assume that, just to jump to the most obvious illustration here, that if everything's free, then I want everybody to be my slave, right? If everything's free, that means your labor is free. And I want it because it's free. I want everybody to work for me. Everybody in the whole world. I want everybody to do what I want them to do. Now, you may think, well, you can't manage that many servants. Well, so what? I want them anyway. They're free, and I want it. There's only one problem. There's another person in this world that wants all of the people in the world to serve him. And so again, at zero price, the demand for goods and services will always exceed the supply. Because we don't have two worlds full of people. We only have one world full of people. And when one man wants all of it to himself, then you see, the demand is going to be greater than the supply because there will be another person who maybe he doesn't want the whole world. Maybe he just wants 10% of the people to serve Him. But there's not 100% plus 10% in the world either. So when everything is free, given the nature of man and the scarcity of nature, when everything is free, it will always be the case that the demand in the marketplace is going to be greater than the supply. And so what happens, since there's not so much abundance that goods can become free? Since there is scarcity, the fact that there is a greater demand than supply causes prices to be applied to goods and services through trade. We've already said scarcity forces trade cooperation, right? But you see that trade assumes a price, and supply and demand are going to set that price. You know, that supply and demand. All you women, do you buy Christmas cards, right? And you buy Christmas cards in the middle of November, you pay a good healthy price for them. But if you go on January 2nd to buy Christmas cards, you'll find that you'll get them at 50%, if not more off the regular price. But you see, on the 2nd of January, there's not a terrific demand for Christmas cards, but there's a terrible supply. And so to mitigate that situation, the merchant discounts his prices so that he can increase the demand. Because you all want Christmas cards at a lower price. We all would want Christmas cards at a lower price, wouldn't we, rather than a higher price. And so you see, this is how the price structure works in the free market. There's a flexibility depending upon perceived value, depending on the supply, depending on the demand, these sorts of factors. Now, some people have thought that supply and demand should not determine prices as they do in a very natural sense, even as I've explained it. But that rather, maybe labor should determine the price of something. A lot of work that goes into something should cost a lot. This is called the labor theory of value. And it's a discredited or rather classical, but nevertheless discredited economic theory. And if you want a very concrete illustration to see how it just won't work, consider the price of an uncut diamond on the open market today. Over against the Timex watch. Now, which took more time humanly. Now, God made the diamond over centuries, you may think, but humanly, which took more time, the uncut diamond or the Timex watch? Well, the diamond could have been just an outcropping from the earth. You don't have to imagine somebody going way down to a mine and spending three weeks finally getting out this little chip stone. It could have come very easily. And yet for all of the minimum, or if you will, for the minimum of labor and the maximal labor that went into the watch, the. The diamond is still going to be valued more highly. Labor does not determine value, nor does subjective valuation determine it. We cannot impose our own subjective valuations as the absolute price of goods. Just imagine a picture of a child, your own child. Now, how do you value the picture of that child? What if it were the only picture of Johnny graduating from high school? Well, you might put a premium on that sort of thing. And since you put a premium on that, if for some reason were it have to be sold, you might expect somebody else should see how valuable this is. But it's not valuable to them because Johnny's not their Johnny, it's your Johnny. And that graduation means nothing to them. They probably wouldn't care to buy the picture at all. You see that, don't you? Subjective valuation cannot be imposed as an absolute price. Price is determined by the interchange of subjective valuations, supply and demand. How great a demand is there? What kind of supply is there? How can we get along? The genius of the free market is that it allows flexible pricing of scarce resources based on calculation, prediction, differing valuations, supply and demand. As I said in the title of this morning's exhortation, the free market is a disciplined enterprise. A disciplined enterprise where people have to be wise, they have to be cooperative, they have to seek their welfare at the same time as the welfare of others. Scarcity therefore causes us to make choices. If you haven't been following real well so far, let's come to this point. Scarcity forces choices. Since I can't have everything, I have to choose what I'm going to get and how I'm going to get it. Scarcity causes us to make choices. And these choices are going to be calculated to, in one way or another, increase my welfare and minimize my loss. That doesn't mean everybody's money hungry. It doesn't mean everybody's trying to acquire things. I might live a lifestyle where I think the way I can be happiest is by helping others. But even if that's what my lifestyle is going to be, I have to make choices. How I can best help others, how I can get more money to give to others. So every individual person will choose his life's goals, but the free market is necessary to maximize them. Scarcity causes welfare, maximizing choices to be made. Who then should make the decisions about prices and trade? That's the decision. I mean, that's the question that's before us. Who, under these circumstances, should make economic decisions? You should recognize that man's universal economic condition of scarcity plus his need to choose between limited resources and satisfying his unlimited desires will exist regardless of who operates the market. You're still going to be scarce when it comes to as much wheat as we may want or as many diamonds as we may want. The scarcity will be there. Men will still need to choose between their limited resources and how to satisfy their unlimited needs. Now, who should set the prices? Who should govern the market then? It seems to me there are only in principle, two choices here. One, scarcity should be controlled by profit management, which I'll explain momentarily, or scarcity should be controlled by bureaucratic control compulsion. We live in a scarce world. Nobody's going to get around that. All the talk in the world is not going to change the fact there's not enough wheat and diamonds for everybody. So who should control the decisions on price? Should profit orientation, where you have the cooperation of the free market, where individuals decide what it's worth to them to buy or sell? Or should some bureaucracy somewhere, which we usually call the state, should the state compel us to buy and sell at the prices that we do? Let's go back to the pencil that I had to have for this morning's sermon. I told you the story in such a way that I went into the store and when the man wouldn't sell it to me for the 50 cents that I thought was the top price, I pulled out a gun and compelled him to take the price. Wait a minute, wait a minute, wait a minute. He wasn't compelled to take the price. I mean, you were just robbing him. Well, yeah, but that's what robbery is, right? Compulsive trading. It's true. Whenever I get into an economic transaction and I use the threat of violence or some form of compulsion over you to get what I want, I am depriving you of your sovereignty over that item. Now, let's go back a couple of weeks to our message about private property. What does private property mean? It means thou shalt not steal. And when I take something from somebody at a price that he's unwilling to accept, then I'm stealing it. Now, what if the man in the store said, okay, since you've got a gun and my hands are up, take the pencil, take it, go. I don't want to be shot. I say, see, now there's a wise man. Here's the price. Your life over against his pencil. It's an economic transaction perfectly just. Right? Wrong. Because I deprived him through the threat of violence, of sovereignty over his own goods, that is, I deprived him of his private property. Oh, let's change the illustration. Not only do I take the pencil, but I put the 50 cents down on the counter. I say, there, you've been compensated. Does that change it at all? No, because he wanted $14. He may have been insane to want that. He may have been greedy to want it, but it was his right to want it. And if I force him to give me the pencil at gunpoint and still give him 50 cents, it's robbery. Nonetheless. Now let's change the illustration. One more point, and I hope you'll begin to see the crunch of socialist economies. What if instead of pulling out a gun and telling him he'll take 50 cents or else I tell him you'll take 50 cents or I'll call the government to get come and pull out a gun on you. Does that make it all of a sudden moral and right? Is it any less theft when I use the government as a form of organized compulsion to get the price that I want in the market? No, it's not any different at all. And if the government should cooperate in that little threat, the government is guilty of theft. It takes from that man $13.50 of perceived value against his will and transfers it to me. And therefore, whenever the government enters into the marketplace and compels prices upward or downward, compels working conditions one way or another, whenever the government interferes in contracts and free trade, the government inevitably must favor one sector of the economy, even if it's an individual. One sector of the economy over the other. The government inevitably must take sides and become a respecter of persons. The government therefore becomes just a compulsive form of injustice. Scarcity will either be controlled by a profit management where everybody perceives value in their own way, enters into trade freely because they think it's to their advantage, or trade will be entered into by compulsion in profit management. I want you to notice that both parties will deem the transaction to their own profit. Inevitably, in a free market, in a capitalist economy, both parties profit from a voluntary exchange. And that's because they both exchange what they see as less desirable for what they take to be more desirable. And again, we must resist the idea that what is less and more desirable is uniform or universal for everybody. But okay, my son goes into an ice cream store. He has 50 cents in his hand. And the guy who sells the ice cream has the ice cream cone in his hand, right? Allegedly, the man who sells the ice cream would rather have the coins that are in my son's hand than the ice cream that's in his own. But my son would rather have the ice cream cone than the coins. And so by making this exchange, they both profit. They. They both get more of what they want. You say, but what if your son had all the ice cream he ever wanted and didn't have to go and buy ice cream? What if his parents always get the freezer stocked with ice cream? Well, then in that situation, he wouldn't be willing to pay 50 cents, would he? But it would be a voluntary choice. He'd say, I don't need to pay 50 cents here. I get it for free at home. And so although my son wants the ice cream, he doesn't have to pay for it. But his refusal to Enter in the transaction is such that he'll maximize his own welfare. I'll get the ice cream and the 50 cents by not dealing with this man. So you see, nobody's hurt. Nobody gains in a free market transaction at the expense of another person because it's always voluntary. Those are our two choices. We've said an awful lot about economic theory. What. What does the scripture say about this? In the passage before us this morning In Matthew, the 25th chapter, I want you to notice that Jesus is using a parable to teach something about the kingdom of God. He's giving us a parable that really talks about maximizing our spiritual abilities. God gives every one of us talents, which ironically, is also the name for a type of currency or money. The story is about talents as currency, but its application is to talents, which means our abilities. God gives every one of us opportunities and abilities to serve him in his kingdom. And if we maximize them, then we are rewarded. And if we don't maximize them, we're not. Now, how does God teach this lesson, though? He teaches it in terms of an economic story. Although the point is not directly about economics, there is an assumed ethic, an assumed economic ethic in the story, or else it doesn't make any sense. For instance, you'll notice that God does never teach us truths about the kingdom using adultery as the illustration. God never gives a story about an adultery and says, now look, you should be like that adulterer. Now, of course I don't want you to commit adultery, but I want you to do whatever the story is about. That doesn't work, does it? You can't teach a good lesson using a bad illustration. Bad illustrations don't illustrate good things. And consequently, when Jesus uses this illustration, he had to be approving the economic story that was the foundation for his teaching the spiritual truth. What is the economic story? The story is about a servant. Well, three, actually. Two of them take money and they go and specifically trade it. Trade it and come back and have more. They have doubled, if you will. They have traded for profit. And the response of the master is, well done, good and faithful servant. It is a form of fidelity to the master. It is good and right to engage in free trade from for the purpose of profit. On top of that, I want to remind you of Matthew, the 20th chapter, verses 1 to 16, which we don't have time to read, but I can summarize for you. We looked at it two weeks ago. We have here a case of a man who needs laborers for his vineyard, and he goes out at the very beginning of the morning, six in the morning, and he gets people to come in and he promises them a price. And then he goes out again at 9 o', clock, as I recall, and at 12 o' clock and at 3, and then an hour before closing, roughly 6 in the evening. And he gets people, he makes a contract with them to pay them a certain price. And lo and behold, at the end of the day, all the workers find out to their chagrin that they're all getting paid the same price, that the man offered the same amount to the guys who would work an hour as he offered to the men who would work 12 hours. Well, as you might expect, there's a labor dispute. Now, the people who work 12 hours want to go to the union and say, this isn't right, this isn't fair. And the point that we need to pick up from this is Matthew 20:15, where we have the landowner saying, is it not lawful for me to do what I will with mine own? It's a rhetorical question. What he's asserting is it's lawful for me to make a free contract. If these want to work 12 hours for that price, they didn't have to. I didn't make them my slaves by compelling them to work for me. They freely accepted the terms that I offered them and I have the right to do what I want with my money. I can offer the same terms to somebody else even though they work only an hour. Is it not lawful? The answer is yes, it is. And so we learn two things from these economic parables. It seems. Seems to me we learn that first of all, free trade for the purpose of profit, exactly what the Lord requires of his servants, that is faithfulness in the eyes of God. And secondly, that when we engage in trade, we have the right to do with our own what we will. That is the right of free contract, if you will, what is called free commerce, or more popularly today, free trade, the free market. I have the right to decide to work or not to work, to offer this amount for the work, to not offer this amount for the work, because it belongs to me. Private ownership implies the free market. Therefore, the approval of trade for profit and the right of free contract is taught in the New Testament. And as such, Christians must support the free market economy over against planned interventionist economies such as the socialist model. Now, when I say the free market, I don't mean to suggest that the market is totally free or autonomous. What can be traded on the free market are only legitimate goods and services by the Free market. I mean that legitimate goods and services must be contracted for in a free contractual arrangement where it's offered at the price that the seller wants and it's purchased at the price that the buyer wants. But they have to be legitimate objects of trade. You cannot trade sexual services on the market. Why not? Libertarian civil assets? Well, because God says so. God says that's not a legitimate good or service that can be traded for. And when God says so, that settles the issue for a Christian. And if there's some problem with that logic, I'll explain that later to you. But for us, the market is free with respect to legitimate goods and services. Now, in our own day and age, we have those who unfortunately do not accept the very obvious about ownership, private property, the need for free trade. There are those who wish to destroy price flexibility by intervention of the government. The intervention of the government comes in a number of forms. And I really don't have time to tell you all that I wanted to this morning about that. The government intervenes to make prices higher. It intervenes to keep prices from going higher. Seems a bit schizophrenic, doesn't it? But that's what the government does. Why does the government sometimes want prices higher and sometimes want prices to be kept from going higher? Because the government is an agency of compulsion. And politics is the act of getting the compulsion to work for you. And so when dairymen have enough clout with their congressmen to have laws passed to keep milk prices up and to keep competition out of the market, then that compulsion is applied for the benefit of dairymen and for the disadvantage of parents with children that need the milk. And when another company feels that they need to be protected, let's say, against Japanese motorcycles coming into our country, because after all, we should support American goods, right? That is in the alleged name of patriotism, which means in the name of lining my pocketbook. I don't want to compete against the more efficient and better motorcycles that come from a foreign country. Then I use my clout to get my congressman to compel people to buy my motorcycle or to pay a tax, a higher price for going for the foreign competitions model. Minimum wage laws are another way the market is intervened again in the name of helping young people and poor people get a decent working wage. What the government does is they bolster the price for work that is not worth that price in the perceived thinking of the employer. And so when a person comes in who cannot do something that is worth the price being demanded, although he could do something lower than that price the person has, the person who owns the company, the person who hires people, makes the decision on good economic terms. This person that's applying for the job is not worth this amount, and so I won't hire them. That person could have a job, you understand, at a lower price. But since the government says you must pay this price for nothing, the person is out of work. So in the name of helping people, the government intervenes, plays favorites, if you will, and ends up hurting the very people it's trying to help. Unions are given the right by local governments legally to preclude competition. The government is intervenes in the marketplace and helps one sector of the economy, but I hope you see, hurts the other sectors of the economy, especially those who are willing to barter, bargain for their labor. On an open market, prices could be bid down for labor, and therefore those lowered prices would be passed on to us. So we live in a society where the government, in the name of goodness to others, intervenes in the economy and ends up doing badness to everybody. This is inevitably the case in an interventionist society where the government intervenes in the free market. Nobody really is helped, and those people who are helped in the short run are helped at the cost of favoritism. Now, the Bible tells us that it is wrong for the government to favor the rich or the poor. It's wrong for the government to do things which are going to give an advantage to one side or the other. The the government is to protect the free trade and the cooperation between all people. It is not to enter in for the sake of one or the other factors or factions in a society. When it does enter in, coercion is inevitable. My problem with interventionist economy is not simply that it doesn't work, it's that it's immoral. The golden rule says, do unto others as you'd have them do unto you. How would you like it if you owned pencils and I came into your store and I said, look, you sell it to me for 50 cents or I'll get the government to throw you in jail. Is that the way you want to be treated? Is that the way you want others to deal with you when you have some valued good or service that you're bargaining for on the market? Coercion is the end of an interventionist economy. Favoritism, coercion, and ultimately the destruction of the market anyway. And consequently, as Christians, we must recognize the right of free ownership and free contract. And if we don't, in the end, how will we deal with God? God told these economic parables to make a point about his own ownership of everything and the way he dispenses it. He said, is it not right for me to do with my own what I will? Dare any of us go before God and say, look, you may think salvation will be offered on certain terms. You may think you own this, but you see, right is right, and we believe all of us should be saved, or we should all be saved on minimal terms. We don't think exacting discipleship should be called for. We shouldn't be humiliated and have to confess our sins. We don't think a blood atonement should be required. But you know what the response will be? On the Day of judgment, God will say, is it not right for me to do with mine what I will? Those who deny the free market are, logically, those who should deny the sovereignty of God. The free market, then, is not just an interesting topic for a college classroom. It turns out that the free market is, in essence, at the very heart of the Christian faith, ethically and theologically.