Economics 101 & Theology 101

How Can We Practice Better Stewardship?

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Stewardship is a big topic in churches and other Christian circles. Understanding economics can help us practice better stewardship, but exactly how can we use concepts like trade and “comparative advantage” to become better stewards?

How Does Trade Make Us Better Stewards?

None of us is able to produce all that we need to survive. We are dependent on trading with other people for our food, shelter, and transportation.

IFWE Senior Research Fellow Art Carden explains how in his most recent article for Forbes.com. Here’s Professor Carden:

As Matt Ridley discusses in his excellent book, The Rational Optimist, trade–like new machinery–frees up people’s time and energy for other things. Specialization and exchange, according to Ridley, created the free time that allowed us to create new ways of doing things. Adam Smith famously said that the division of labor is limited by the extent of the market. When we have more extensive markets, we have more extensive trade and a finer division of labor. When we have more trade and a finer division of labor, we are able to produce more output of all kinds: more goods, more services, more leisure.

This is of particular relevance to us as Christians as we seek to steward our resources well. The Parable of the Talents (Matthew 25:14-30) teaches that we will be held accountable for how we care for what God has entrusted to us. Jesus promises in Matthew 25:29,

For to everyone who has will more be given, and he will have an abundance. But from the one who has not, even what he has will be taken away.

There are very real consequences for how we use, or neglect to use, these resources. Our resources extend beyond purely material goods. God has given his children gifts, skills, and opportunities to further his kingdom. Gains from trade give us additional goods, services, and leisure time to use these gifts and talents in service of God’s kingdom.

How Does Comparative Advantage Make Us Better Stewards?

A person has a comparative advantage in producing a particular good when he uses his unique talents to produce that product at a lower cost than anyone else. The Library of Economics and Liberty explains,

The magic of comparative advantage is that everyone has a comparative advantage at producing something. The upshot is quite extraordinary: Everyone stands to gain from trade.

The opportunity to trade with others whose gifts and talents differ from our own generates higher incomes for others. It also gives those we trade with the opportunity to do other things with their saved time. As Professor Carden shows in this video, we trade with others whose comparative advantages differ from our own. He offers an example:

To use just one example, I could mow my own grass, in which case the world would be better off by one mowed lawn. In a world where I can trade with specialists, I’m able to earn money teaching economics and writing articles, which I can then use to hire someone to mow my lawn. The grass still gets cut, and the world is better off (presumably) by a few economics articles and lectures.

Understanding our unique skill sets helps us become better stewards by knowing how best to use our scarce physical, mental, and emotional resources.

What is your unique skill set? How can you use your comparative advantage to be a better steward? Leave your comments here

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