Economics 101 & Public Square

Cronyism Impacts More than Inequality – It Affects Your Relationships, Too

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[He] shows no partiality to princes/Nor regards the rich more than the poor/For they are all the work of his hands[.]

– Job 34:19

As described in Job 34:19, God created each of us in his own image with unique gifts and talents. In the past few months, we have often discussed income inequality and cronyism, but it is worth revisiting the way the consequences of cronyism bear out across the market and relationships.

Diverse Skills, Diverse Incomes

We are designed with a particular set of gifts. We are created in God’s image, and just as snowflakes have no match, neither have we.

This set of talents comes with the responsibility to use our abilities to glorify God and serve others in a way that only we can. Our unique skills allow us to make a special contribution to the world we live in, not just in the church or on the mission field, but through our work.

In economic terms, we are comparatively advantaged to serve others effectively by focusing on the production of things that we can produce most efficiently and avoid engaging in the production of goods or services for which we are costly producers.

Comparative advantage dictates that I be an economist, not a professional singer. I love to sing, but am not naturally gifted, so the time and energy I might have put into becoming good enough to serve others through singing would have been wasted.

This diversity of gifts allows us to serve others through market exchange. By pursuing my gifts with excellence, I am not only awarded an income, but I am allowed to serve others. Because skills and talents are different and value in the market place is subjective, incomes will be different.

Income inequality, thus, is inseparable from a fallen world in which scarcity abounds.

The Wrong Kind of Inequality

Income inequality may result from subjective valuation on the market, as described above, but it may also be derived from unfair exacerbation of the natural level of income inequality. Cronyism is one of the biggest sources of the wrong kind of inequality.

As described in my chapter of For the Least of These: A Biblical Answer to Poverty, some ways inequality stems from cronyism include:

…not letting business fail when they deserve to fail (bailouts); protecting some businesses from competition (subsidies and tariffs); or letting some businesses succeed over others through protective legislations (licensing and other regulatory requirements).

These are all ways in which producers secure cronyist privileges at the expense of others. Often, this kind of protection keeps alive an improper use of resources that is not actually rewarded on the market, and many times it will be an offshoot of relational leveraging.

Those without the advantage of strategic relationships not only lose the initial benefit on the protectionist measures, but they suffer economic losses because of unfair advantages.

The Consequences of Cronyism

As I’ve described in another post, cronyism is theft. We are taking the ability of people to use their God-given gifts and talents in the service of others when we engage in cronyism. We rob them of the ability to do “a job with pride, satisfaction, and excellence.”

The fallow ground of the poor would yield much food, but it is swept away through injustice.

Proverbs 13:23 could easily be a description of cronyism. The poor are harmed disproportionately by cronyism because they lack the power and connections to achieve similar outcomes. By rewarding unfair posturing, we hurt individuals, and we hurt society. When we show partiality to the rich and affluent, we violate God’s rules on economic and relational levels. We are called to encourage flourishing, not stifle creativity.

This can happen on a micro or a macro scale. The news is saturated with examples of lobbyists securing regulatory privilege for well-connected firms, and our grocery budgets are affected daily by prices driven up by subsidies.

But on a relational level, the effects of partiality are more subtle. Nepotism or exclusivity and cliques or gossip are harder to measure, but the rules that God made to apply in economics also apply in relationships. They may manifest themselves in the market or in the office.

Preventing Cronyism

As Christians, how can we be proactive to prevent cronyism from occurring in our spheres of influence? A few thoughts come to mind:

  • We need to encourage those around us to foster the gifts God has given them. How can I build someone up today?
  • We need to check ourselves to prevent unfair preference from being given to those we find more appealing or from whom we think we may benefit. Am I “sucking up” to someone for my own gain?
  • We need to take care to prevent policies and regulations that favor one small group at the expense of others. How can I help raise awareness of unfair privilege and regulation? Am I being called to take further actions to prevent cronyism?

How else can Christians be proactive against cronyism? I’d welcome your thoughts.

Leave your comments here

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