Samuel Gregg — Economics, Politics, & Moral Philosophy
Director of Research, The Acton Institute, Australia
Historically speaking, [when] people ... are able to connect themselves to networks of productivity, what you see is increases in wealth and better-quality lives for everyone, not just the elites in the very wealthy segments of society, but also the poor and the lower-middle class.
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Dr. Samuel Gregg is director of research at the Acton Institute. He has written and spoken extensively on questions of political economy, economic history, ethics in finance, and natural law theory. He has an MA in political philosophy from the University of Melbourne, and a Doctor of Philosophy degree in moral philosophy and political economy from the University of Oxford, where he worked under the supervision of Professor John Finnis.
He is the author of several books, including Morality, Law, and Public Policy (2000), Economic Thinking for the Theologically Minded (2001), On Ordered Liberty (2003), his prize-winning The Commercial Society (2007), The Modern Papacy (2009), and Wilhelm Röpke’s Political Economy (2010) as well as monographs such as Ethics and Economics: The Quarrel and the Dialogue (1999), A Theory of Corruption (2004), and Banking, Justice, and the Common Good (2005). Several of these works have been translated into a variety of languages. He has also co-edited books such as Christian Theology and Market Economics (2008), Profit, Prudence and Virtue: Essays in Ethics, Business and Management (2009), and Natural Law, Economics and the Common Good (2012). His forthcoming book is entitled Becoming Europe: Economic Decline, Culture, and America’s Future. He has also written on the thought of St. Thomas More.
He publishes in journals such as the Harvard Journal of Law and Public Policy; Journal of Markets & Morality; Economic Affairs; Law and Investment Management; Journal des Economistes et des Etudes Humaines; Notre Dame Journal of Law, Ethics and Public Policy; Evidence; Ave Maria Law Review; Oxford Analytica; Communio; Journal of Scottish Philosophy; University Bookman, Moreana, and Policy. He is a regular writer of opinion-pieces which appear in publications such as the Wall Street Journal Europe; Foreign Affairs; National Review; Public Discourse; American Spectator; Australian Financial Review; and Business Review Weekly. His op-eds are also widely published in newspapers throughout Europe and Latin America. He has served as an editorial consultant for the Italian journal, La Societa, as well as American correspondent for the German newspaper Die Tagespost.
In 2001, he was elected a Fellow of the Royal Historical Society, and a Member of the Mont Pèlerin Society in 2004. In 2008, he was elected a member of the Philadelphia Society, and a member of the Royal Economic Society. He is the General Editor of Lexington Books’ Studies in Ethics and Economics Series. He also sits on the Academic Advisory Boards of Campion College, Sydney; the La Fundación Burke, Madrid; and the Institute of Economic Affairs, London; as well as the editorial boards of the Journal of Markets and Morality and Revista Valores en la sociedad industrial.
Open Markets and Economic Growth
If you want to understand why some countries are rich and others are poor, how some countries rise out of poverty and why others are stuck where they are, you need to understand networks of productivity. You need to understand that if you look at examples like the Asian tigers, Singapore, Malaysian, Thailand, Korea, mainland China, Taiwan, what do these countries all have in common? They’ve gone from poverty to relatively high levels of standards of living, precisely because they’ve opened themselves up to trade, opened themselves up to markets, and have also incorporated market-like institutions within their own cities; things like property rights, things like rule of law. All these things lead to wealth creation, but you must have the connectiveness to open markets. Otherwise, wealth growth is going to be very slow.
The Value in Finding a Comparative Advantage
The Asian tigers, Taiwan, Singapore, Malaysia, Thailand, Hong Kong, they’re a wonderful example of how markets open up countries to find the comparative advantage. When a country finds its comparative advantage, like many of these countries did, they are able to produce a good faster, more efficiently, and at cheaper prices. That makes them competitive in the global economy. It also provides jobs for people in these countries, who otherwise would not be able to have those types of jobs.
Globalization and Poverty Alleviation
In the 18th Century, pretty much everyone, except a very small segment of society, was poor. Everyone. Imagine that. Everyone is poor.
Then, what happens? We have industrialization and we have what some people would describe as the first age of globalization. And what you suddenly see from about the end of the 18th Century onwards, increases in wealth. Society, as a whole, starts to get wealthier. People start to live longer. People start to have better-quality life. People start to do things and travel, that they had never been able to do before. And this happened in a very quick period of time.
And the answer is free markets, the answer is property rights, the answer is rule of law, and the answer is global free market. That is what happened during this period of time, and that explains why so many people escaped poverty in a relatively short period of time, compared to their ancestors, who had basically lived the same type of lifestyle for hundreds of years.
So, what you see, historically speaking, is that when people – all people, rich and poor, from all around the world – are able to connect themselves to networks of productivity, what you see is increases in wealth and better-quality lives for everyone, not just the elites in the very wealthy segments of society, but also the poor and the lower-middle class.
The Zero Sum Game Fallacy
The Zero Sum Game is one of the great economic fallacies. It assumes that if one person gets rich, it must mean that someone else gets poorer. That’s reliant upon a static view of wealth. It’s like a pie; the idea that there’s just one pie, and the pie can’t grow.
In market economies and dynamic, open economies what you’ll find is that the pie grows. This is very important, because what that means is that everyone can start to get out of poverty.
The Zero Sum Game Fallacy and the View of the Human Person
One of the big fallacies, economic fallacies that flows from the Zero Sum Game is the way that you start to think about people. You stop thinking about them as potential creators. Instead, you start thinking about them as just mere mouths. What that means, of course, is that you start looking at human beings and seeing them as a burden, rather than something that can be inherently created. And that leads to population control policies.
Millennium Development Goals and Population Control
Many people have heard of the Millennium Development Goals, which are supposed to be realized by 2015. But what many people don’t realize is that one of the goals inclusive to that is, of course, the control of population. They’re very explicit about this. It means that to realize this, we need to somehow limit the growth of population. And the means by which they do so, unfortunately, includes, for example, abortion.
And this manifests itself in all sorts of very strange ways. For example, it manifests in what many people call “the daughter deficit.” Because in many developing countries, when people have to choose what type of children they’re going to have, be it a boy or a girl, for all sorts of cultural reasons, they will choose boys; which means that in many developing countries, there’s a huge imbalance in the gender ratio between boys and girls.
Rule of Law and Economic Development
The rule of law, I think, is best understood by considering its opposite, which is the rule of men. The rule of men is when you have the rule of force, the rule of power, the rule of arbitrary, subjective opinion. The rule of law means that there are stable, reasonable laws that apply to everyone, regardless of their station in life. And this is extremely important for all sorts of reasons. But it’s also important to remember that the origins of the rule of law, in many respects, go back to Christianity, because Christianity said that no one is above God. Everyone is subject to the divine law.
When people work this out in terms of the legal system, what it meant was that everyone is subject to the law, regardless of their station in life, regardless of whether they’re a peasant or the emperor. This is important because it limits arbitrary behavior. Limiting arbitrary behavior is extremely important if you want to have a growing economy.
Perhaps there’s no other place in the world where the rule of law is more important than in developing countries. Because in many developing countries, you really don’t have rule of law. You don’t have contracts enforced. You don’t have property rights recognized. You don’t even have property deeds recognized. You have corrupt judges, you have people who have judges sitting in on their own court cases who happen to be their brother or their sister.
In other words, rule of law is essential if you want to have a functioning economy. You cannot have a functioning economy without secure property rights. You cannot have a functioning economy unless contracts are enforced. You cannot have a functioning economy if government officials can act in an arbitrary fashion.
In many countries today, we don’t see free markets. What we see is what many people call “crony capitalism,” which means that you have economic growth, you have entrepreneurship, but much of the growth occurs in sectors of the economy that are controlled by the government or by business close to the government.
And what’s really damaging about this situation is that the poor get hurt, because they are locked out of the mechanisms of productivity in these particular situations. What’s even worse is that they can’t break into them. They also have no protection from those who are powerful in crony capitalist systems, because they have the financial resources and they certainly don’t have the political power, either.
So, for poor people, crony capitalism is not what you want. Crony capitalism is not the same as free markets. And the difference is that free markets need and require rule of law. Crony capitalism throws rule of law out the door.
The Importance of Trust
Trust is very important. Because if people don’t trust each other, then we end up having to contract everything, which means that you need a very big legal apparatus to be able to enforce everything. Every time I wanted to go buy a newspaper, I’d have to sign a contract. Every time I went to a mall, I had to sign a contract, if I was buying something. If we don’t have trust, you’re left with enforcement mechanisms which are not very effective, in the long-term, in maintaining the market economy.
Christianity and a Proper Understanding of People
The real mystery, the real mystery of economic development, I would argue, is essentially Christianity. Why? Christianity contains a view of human beings as creators. It has a strong sense of the importance of property – not just for economic reasons, but also for the moral reasons that we know private property changes the way people view themselves and other people in their entire lives.
We also know that Christianity transforms people’s vision of themselves and of other people. So, this is very important; because when we come to think about things like economic development, we’re very tempted to think, “Well, maybe the UN has the answers,” or “Maybe some obscure economist writing 60 years ago has the answers.” Well, maybe there are some answers there. But we should not be reticent to go back and look into our tradition, this 2,000-year tradition of Christianity, which has the antecedent 2,000 years of Jewish reflection upon these issues.
Within this 3,000-year tradition, we have marvelous insights into the dignity of the human person, of even institutions and ways of resolving problems of poverty. But above all, it gives us the ultimate reasons for why we should be concerned about these issues, because gospels tell us we need to love our neighbor as our self. We need to see Christ in the person of the poor.
So, it’s not just a question of resolving little problems that upset us. It’s not just a question of more efficiently arranging things. It’s about living out our vocation as Christians.That’s why we’re concerned about the poor, not because we’re trying to build utopia but because they are our Christ in front of us. We need to see Christ in front of us and in the eyes of the poor, and then look back in through our tradition to understand why we help the poor and the best ways of doing so.
The Economic Modernization and Religious Decline Myth
The idea that there’s a correlation between economic modernization and growth and religious decline, decline, is simply an outdated sociological theory. If you look at countries like China, if you look at countries like Korea, what you tend to find, actually, is the exact opposite. The opening up of markets with economic modernization, with engagement with the world, what you find is increasing levels of religious practice, particularly when it comes to Christianity.
Sixty years ago, Korea was essentially a nominally-Buddhist country. Today, it is probably between 30% and 40% Christian. There are now more Presbyterian Christians living in South Korea than there are in the entire United States.
The Cause of Religious Decline---Not Rooted in Economics
If you want to understand religious decline in Ireland and Western Europe, the answer is not to be found in economics. Too often, we try to look to economics to explain everything, both our successes and our failures. But that’s just wrong.
The religious decline in Ireland and many other places in Western Europe has got nothing to do with economic globalization. It’s got everything to do with the spread of secular ideas in the sense of there is no truth, there is only subjective morality. I am the arbiter of my destiny. I am the one who is the cause of everything.
It also has to do with the rise of liberal Christianity, which is essentially a form of Christianity that makes no demands on you morally or in terms of your faith. And in this sense, what you start, I think, to see is this idea that to be modern means that you have to detach yourself from religious practice and belief.
All of those things are very important understanding the rise of secularization and the decline of religious practice. But notice that none of them have anything to do with the economy.