Economics 101

Why Economics Is Important for Weeding Out Corruption

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It’s important for Christians to understand basic economic principles. It’s also important for Christians to understand the economics of public life, the decisions made outside of markets and inside politics, because all choices bring costs, regardless of the arena in which those choices are made.

Defining the Economics of Politics

The “economics of politics” is a discipline known as public choice. It is important for Christians to understand public choice theory because it can help us create more flourishing by understanding human nature in a way that gives us insight into corruption.

In an article for the Online Library of Economics and Liberty, economist William Shugart describes public choice as:

“Politics without romance.” The wishful thinking it [public choice] displaced presumes that participants in the political sphere aspire to promote the common good.

Public choice theory relies, knowingly or not, on two fundamental Christian principles:

1. We are fallen sinners (Gen. 3, Rom. 3:23). Taking a job as a public official doesn’t override the temptation to sin and indulge ourselves at the expense of others.

2. Individuals are the source of all action. When God created us, he created us as unique individuals, with our own distinct gifts, motivations, and tastes. We were not created as a state or culture or town or a city. We are born, we act, and we are motivated by our individual preferences.

Shugart elaborates on this second insight by saying, “The individual becomes the fundamental unit of analysis.” Individuals are the organic decision makers, not abstract groups like “the people,” “the community,” or “society.”

The challenge of public choice, Shugart writes, is

How to model the ways in which the diverse and often conflicting preferences of self-interested individuals get expressed…when decisions are made collectively.

This, then leads us into politics and the reason it has little ability to stem corruption.

What Motivates Corruption

Markets are tough disciplinarians. They weed out greed and corruption and harness selfishness into service. If you are not serving your customers with lower prices and better quality, you will eventually fail.

Politics has no mechanism for weeding out corruption and greed because there it has no profit/loss constraint. Re-election, not profit, becomes the motivation. Powerful special interest groups form and pressure politicians with votes and money to serve their small, localized interests.

Public choice theory reminds us that all these decisions come at a cost. When politicians vote in favor of one group, they do so at the expense of another. The result is the increasing formation of powerful interest groups and well-paid lobbyists whose job it is to sway political agents to their narrow interests.

So what can we do? Christians can be aware of the issues surrounding interest group politics and the dangers of the cronyism it produces. The only way to have a lasting, positive impact is if we count the costs in all decision-making, and ensure that we are an active part of a culture which can bring about positive change. Public choice theory can help us think through all these things.

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