Trust and Economics

I've been paying close attention to the Euro Crisis for the past few months.  The problem originated with Greece, who had grossly borrowed way beyond Eurozone limits in order to finance expensive projects such as the 2004 Olympics (which, by the way, went tremendously over-budget, as most Olympics usually do).  In order to do so, however, the government cleverly (through accounting gimmicks) reshuffled figures so that it appeared they were in compliance with Eurozone limits.

Currency is fickle because it is merely representational.  A dollar bill is really not worth a dollar.  It is only the representation of a dollar.  When I pass $1.00 to you, I don't give you something worth $1.  After all, a dollar bill probably costs 10 cents to manufacture at most.  But what I give you is something more intangible: a promise that I have transferred $1.00 of trading power to you.  All currency is a transfer of trading powers.  So, when Jesus taught that one can only worship God or Money (although Mammon is probably a more accurate translation for several reasons), he was making a statement on power itself.  We can worship the all-powerful true God that the Scriptures point to or - since we live in a capitalist society and have freedom of choice - we can choose to hoard the power to trade.

But back to the promissory nature of currency.  Now, if I took a sheet of paper and wrote $100 on it, maybe drew a sorry portrait of Benjamin Franklin on it, and then give it to you in exchange for your $100 game collection, you would declare me nuts!  The reason is that you have no faith in my promise that my $100 "note" is really a transfer of $100 of trading power.  In order for a sheet of paper with $100 written/printed on it to be effective in the market, I need a more powerful backer who can assuredly confirm that a $100 sheet of paper is a transfer of $100 worth of trading power.  Thus, the federal government prints the money, and whoever holds a federally-manufactured $100 essentially holds $100 worth of trading power.

But on the international scale, governments have varying levels of trust between each other.  That is why we have exchange rates.  Take the Euro Crisis.  That Greece would hide its debt to fund extravagant spending and still remain in the Eurozone is a fundamental breach of trust between Eurozone nations.  Thus, the markets correctly reacted in kind.  Germany and France made the mistake of underestimating what is really an ethical crisis, thinking that by simply providing an 意思, 意思 stimulus, the markets would be placated and life would go on.  They fail to understand that markets are not forgiving.  As they say, one's reputation is built up over time, and dashed in only a second.  That Citigroup's best days were behind them (i.e. pre 2007) is no understatement.

Similarly, the debt crisis in the USA was just that.  That Congress would betray the trust of its people to govern the country rightly in order to play a dangerous political game essentially, in my opinion, gives China one more ingredient in overtaking the United States as the world's most economically powerful nation. And the housing crisis prior was the textbook example of mistrust in the economy.  At its root is the trust that homeowners would be able to have the means to pay off their mortgages.  When homeowners violate that trust by (1) overextending their budgets or (2) treating their homes as investment properties instead of homes, the stage is set when a few people default, followed by a few more, and then a few more...  Eventually, and rather quickly, the mistrust snowballs and the world is affected.  Let us not be glib anymore - economics and theology are never unrelated.

Of course, trust and mistrust are not painless.  Due to the uncertainties surrounding the USD and EUR, investors have piled into CHF (Swiss Francs), which makes the CHF more powerful, but hurts the Swiss by making everything even more expensive than it already is.  Thus, the Swiss government followed China's example and artificially pegged their currency at a lower rate (although not as ridiculously low as China's rate).  Indeed, perhaps the lesson to be learned is that trust and mistrust have tremendous economic consequences.  Yet, because trust is difficult to quantify (economists have tried but have not satisfactorily done so), it is understudied in economics.  I think, however, that trust should not be quantified because it trust is earned, not consumed. There is a story behind trust.  Most of our parents trust each other, but this trust was not a result of a contractual obligation, nor was it a product of a fiduciary activity (although it is in some cultures).  They trust each other after living parallel narratives for so many years.

But perhaps the greatest testament to trust comes from the Scriptures, which tell a story of a God who is Trust and Faith.  Unlike governments, God is faithful and truly pro nobis.  Governments are for the people insofar as they benefit from the populace.  God, on the other hand, extracts no benefit from humanity.  God's love for humanity, in other words, is purely because of grace.  Think of it - God never really had to uphold his end of the covenant with Israel, especially after Israel broke it so many times.  But in what is really a sh**ty contractual response, he forgave Israel constantly while keeping the covenant going! If anything, humanity is on the side that constantly fails to live up to God's expectations.

God's expectations for his people in terms of trust is probably best summed up in one of Jesus' teachings in Matthew 5:33-37.  Several Levitical laws prescribe that false promises, pledges, or oaths should not be made.  Now, one promises, pledges, or swears an oath as a safeguard against lies.  Oftentimes, like currency, the one promising/pledging/swearing makes the pledge that's backed by some divine or federal entity.  I swear by God, for example, indicates that God backs up my oath and holds me to it.  Of course, the problem with swearing by heaven, earth, Jerusalem, my head and shoulders, knees and toes, is that they must be reliable to all parties involved.  So in today's society where God is declared dead by TIME for five times (and probably five more times in the next decade) swearing by God only adds legitimacy to one's promise, whether that promise is true or not.  In other words, swearing by God enables God to be misused for human purposes, particularly if the person swearing doesn't take God seriously.  That we hear in our hallways, "I swear to God, man..." suggests that the we indeed live in a semi-post-Nietzschean world where "God is dead, and we have killed him."

So what to do?  Jesus doesn't bother playing ethical gymnastics with this issue.  He simply declares, "Let your 'yes' be 'yes' and your 'no' be 'no'."  In other words, what we say should be what we mean.  Hauerwas explains further that Jesus' teaching emphasizes that we are to be truthful people.  Being Christian, in other words, means that we are utterly trustworthy.  Our lives are lived in a trustworthy manner.  We are trustworthy friends, trustworthy citizens, trustworthy consumers...

Trustworthy consumers?  How is that possible?  Perhaps we should begin by asking ourselves what it means to be a consumer.  Every individual chooses to consume some commodity, resource, good or service.  We all consume time, for example.  Economics is concerned about how people are consuming but it is to what end we consume that theology is concerned about. Take noodles, for example.  We all consume noodles or some wheat product.  Why? To eat, to have sustenance.  Why is eating and having sustenance important?  Because eating and having sustenance allows our bodies to have the energy to do what it is purposed to do by God.  Thus, consuming food has a transcendent purpose.  On the other hand, eating too much (overconsumption) does not have that same transcendent purpose, because consuming too much food does not, in any way, contribute to the body being able to fulfill the body's God-created purpose.  In fact, it may even be detrimental to it!

And if we follow the economists in modeling time as a consumable resource, then how we use our time is an exercise in trustworthiness.  How do we use the 24-hours given to us?  Do we allocate them in ways that fulfill the purpose God has intended for the earth?  CNN.com (I think) had an article once where they found that a lot of Americans work overtime, but it wasn't ultimately productive.  We've become a society that somehow prizes quantity of work as opposed to the quality of work.  And because quantity of work takes time, we allocate our time to just doing stuff.  As a result, we risk our health, our family, and even our lives, in an endless quest to "do stuff".  There is a difference between "doing stuff" and "performing work."  The former, to put it very crudely, is pointless.  The latter affirms life.  To put it in Paul Lehmann's terms, it humanizes.

The pointlessness of "doing stuff" is rendered even more so given that when push comes to shove in the end, it doesn't even matter!  Truthful consumption means that we are capable of consuming responsibly in a manner that fulfills God's calling for humanity.  It is a proper affirmation of the call to "dominate the earth and subdue it."  But when we eschew that truthfulness, we skew the call to mean "do stuff with it," thereby condemning creation to pointlessness.  The currency crises of recent weeks is symptomatic of just that.  Investors sought to find some safe haven to stash their cash while maximizing returns, now that the CHF is pegged at 1.2 CHF/EUR.  China's not going to budge on their peg.  The Japanese will also seek to weaken the JPY since they need a weak currency to spur exports, particularly since their country has been wracked by the tsunami.  The USD is not as sterling a choice as it used to be, thanks to political brinkmanship.  But few people are realizing that the deficit here is not financial, but theological.  We live in a world where truthfulness is becoming passé. 

If we, as Christians, are to be faithful in our calling, we can't allow truthfulness to become obsolete.  We can begin by simply letting our "yes" be yes and our "no" be no's.  My experience suggests that even Christians have a hard time doing just that.