How to Avoid a Recession

Compare this as an analogy. You are sitting in your agrarian home with a stockpile of wheat. This is your food. You know that a famine is coming. What do you do? Do you say, “Well, let’s eat all our wheat now, because there won’t be any more later”? This is idiotic. What you do is tighten your belt, ration the wheat, eat less, and grit your teeth while plowing on (literally). 

Similarly, when the nation is facing a recession or worse, the government should not go on spending like there is no tomorrow. It has been far worse than this before. Our current economic woes are nothing compared to the Great Depression. The problems happened when government soared it to take control, slapped a wage-price freeze, and everything disappeared. More government control is a sure way to ensure that our economic woes last as long as possible, and are as bad as possible.

What the government should do is drastically cut spending (as in, all pork barrel spending, special projects, etc.), and then cut taxes. The government should cut spending by about 50%, and then cut taxes by about 30%. These are just round figures, of course. Everyone should be paid their wages, but all excess spending should be cut. Of course, in my opinion, that also means that government should get out of schooling, Social Security, and welfare. However, that doesn’t look very likely in the near future. What they can do is to halt excess spending in the short-term projects, thereby tightening their girths.

The problem here is that many people, seeing a recession coming, think that government should get bigger so as to solve all the problems of the people. Government becoming bigger is called tyranny. It will always result in more control and less accountability. Government does not have a good track record of solving economic problems by becoming larger. Every time that happens, the economy goes down the tubes. 

Whatever one thinks of R.J. Rushdoony (and I am no theonomist), he certainly got this one right: unbelievers hate freedom, because they do not want the responsibility that goes with it. They want the credit when things go right. However, they do not want the blame when things go wrong. So is it with government and with individuals. Freedom requires responsibility. It also requires constant vigilance, lest those freedoms gradually be eroded. I am not saying that our woes can all be solved by cutting taxes. The ultimate problem is human sin, to which the solution is the gospel. What I am saying is that there is a measure of wisdom that the government needs to exercise right now if the economy is not going to melt down completely.  

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17 Comments

  1. S. Welch said,

    June 21, 2008 at 10:08 am

    Thanks, Lane for the simple lesson on recession. How appropriate in light of what we see happening. My fear is that come November, we may see very difficult days. As Americans, especially those in the church, we will be to blame for whatever things we face. I am not a doomesayer or a pessimist, (my eschatology will not allow for it), but the Lord may be taking us through bitter days to teach us to fear him and not our politicians. How I pray that the Lord would raise up a generation of godly men to lead our nation. But until fathers lead their homes and men lead in the church, there will be little change within the culture.

  2. Bruce said,

    June 21, 2008 at 10:26 am

    I like to comment on politics… which is generally why I stay far, far away from the opportunities. I have a college degree in that area specifically. And I studiously avoid the topic when talking face-to-face with most people. So now I’ll comment!

    In the last decade I have lost 100% of my “confidence in princes.”

    There comes a turning point for most people who are looking for, praying for, working for changes due to crisis problems that seem obvious to him–the point I’m talking about is that moment when one suddenly realizes that any more contributions TO the system will not support necessary change, and will actually serve to make the “comeuppance” worse than it would be if change for the better occurred right then.

    This is a frightening moment. What do I do?!? Resigning from the process seems… like a betrayal; you can feel all the disapproving stares, all the incredulous people who say, with utter incomprehension: “THAT’S just un-American!” as if that was somewhere just north of child-abuse in the catalog of sins-that-are-crimes.

    But, if I keep at it, I know I am committing a worse betrayal–I am violating my own conscience. Even if I am wrong, God must bring me into judgment.

    Relevance? The collapse, at this point, is as inevitable as the Fall of Rome; as sure as any consequences must follow, short of a biblical prophecy and divine oath. Most folks are junkies, the State is the pusher. If you haven’t determined yet that you will accept almost anything, endure almost anything EXCEPT being turned into a serf, you are already either hooked, or else following the misdirecting bells and whistles.

    The chains are coming out, and unless one knows that, and means to avoid them at all costs, he will meekly accept them as inevitable when, to his surprise the link is snapped as he looked the other way.

    Christians are already citizens of a better city, an alternative Kingdom. It has been very liberating to me to content myself in that identity, and in my “pilgrim” status in this world. I don’t take a “care less” approach about the State, and its depredations. In fact, I take great comfort in the fact that my relation to it is precisely that of the first century church to its state-apparatus.

    If one hasn’t noticed that shift, since “our fathers brought forth this land, conceived in liberty,” etc., if one is still after “reclaiming America” and electing hucksters to lead, especially through the “unitary executive,” one simply does not realize how alien are his own thoughts, and the thoughts of most Americans, to those of the founders. This approach to government is perfectly parallel to modern evangelicals in liberal churches. They think their problems will be solved if they can only get back to the “conservative” church they grew up in, when in reality the true conservatives were persecuted by their grandparents.

    Fixing the systemic problems facing the nation today would require a sober look in the mirror. It would require a reversal, back-tracking, in a word: repentance. “Secular repentance” would be better than no repentance, but this is not going to happen–not until a crisis. It didn’t happen in Germany until WWII was over. It didn’t happen in South Africa until apartheid was gone. It is not going to happen in the USA until after the scapegoating.

    Keep your head down, Prov. 22:3, and your hopes up, Lk. 9:23-27. The answer is not “theonomy.”

  3. Sam Conner said,

    June 21, 2008 at 10:57 am

    I think that there is a significant role for an intrusive “civil magistrate” in an economy that is as complex and interconnected as ours, for the simple purpose of maintaining order. The present economic problems are significantly related to human sin in the credit markets, something that governments can restrain to some extent. Lower spending and lower taxes in the past decade would not have avoided the present problems. We probably need “bigger” government in the area of regulation and oversight of markets.

  4. Sam Conner said,

    June 21, 2008 at 12:02 pm

    An example of the value of more government oversight and regulation of financial markets can be found in Richard Bookstaber’s “A Demon of our own Design: Markets, Hedge Funds and the Perils of Financial Innovation”

    http://www.amazon.com/Demon-Our-Own-Design-Innovation/dp/0471227277/ref=sr_1_1?ie=UTF8&s=books&qid=1214066636&sr=1-1

    My point is not to praise government for its own sake, but to note that there are useful, common grace functions that governments can serve under God beyond the kinds of elementary matters such as military defense and local public order that tend to dominate the thinking of believers in limited government. Financial markets can significantly impact the “real economy”, as at present (I think that the Great Crash of ’29 and the subsequent descent into Depression are another instance of this; the prior decades were an era of limited financial regulation), and the maintenance of economic order through intelligent financial regulation seems to me a sensible function of God-ordained governments over complex economies. The “low tax/low spending” mantra of economic conservatives also strikes me as sensible, but in recent decades this has been coupled with a financial deregulation agenda that has certainly contributed significantly to the present crisis. In fact, what we have had is lower taxes coupled with higher spending and financial deregulation. That has been toxic, but I think the excessive spending has not been the principal problem. “Smaller government is better” is not strictly true. It matters which functions are smaller and which larger.

  5. Roy said,

    June 21, 2008 at 12:40 pm

    Got a (form) letter from Paul Kooistra today. Plea to the team supporters.

    Said that things are tough on mission field. Dollar doesn’t buy what it used to. Takes more dollars today than last year to purchase same necessities.

    Said this problem involves complex economics. Stuff like rising oil prices, repercussions of globalization, etc.

    But not a single word much less single sentence regarding gov’t (read voting citizens) disregard for “Thou shalt not steal”. Nothing about the (apparently novel) idea that scorning God has, surprise, economic consequences. Not even a remote hint suggesting that defecit spending might possibly displease God.

    Tempted to reply to Koostra that when church refuses to preach whole counsel of God unpleasantness follows. Of course the missionaries are finding their support dollars don’t get the respect they used to get.

    Complexity, fooey. Theonomy, schmeonomy. Forget labels. If (thinking) Christians can respectfully struggle thru issues such as deaconesses (Greenbaggins blog shows they can), they can also wrestle with practical issues.

  6. greenbaggins said,

    June 21, 2008 at 12:58 pm

    You’re absolutely right, Roy. It is very disappointing to me to see that the church is not seeking to be prophetic in its critique of the government. Should the church ignore sin when the church sees sin? I think not. We don’t want to become the government, and yet we have dual citizenship in America and in heaven. All too many people think that the two have to be hermetically sealed from each other, and that simply is not what the separation of church and state means.

  7. June 21, 2008 at 3:17 pm

    Lane,

    Not everyone is a right-wing Libertarian. I wish all the people who, with a wink-wink, plead for the church to “be a prophetic voice” to the state would stop for a moment to consider the fact that not all believers agree on what we should be asking the state to do (or stop doing).

    How would you have liked it if at GA, under the guise of not “ignoring sin where we see it,” the PCA had proposed to ask the government to stop the War on Terror, or free trade, or free-market capitalism?

    My guess is that that is not the kind of “voice crying in the wilderness” that we want our church to be.

    In a word, we can’t invoke separation of church and state when one side advocates something we don’t like, but then change our tune when we want the state to agree with us.

    The goose and the gander and all that….

  8. Roy said,

    June 21, 2008 at 6:27 pm

    Jason, bro,
    plead your case. Open your guidebook and prove it. You have the floor. Ie, I did not kid when I said Christians can wrestle with practical issues. Are we not committed to obeying God? Are we not committed to hearing Him? (If not, then, of course, there’s some prior work.)

    Put still another way, I concur with your assertion that the Bible speaks to issues such as methods of war and economics. Further, that book insists that we not only err, but court disaster when we scorn its word on those issues every much as the issue providing the springboard for these posts.

    Are we willing to do the sweat work necessary to work out its principles in practice? Are we willing to recognize that some folks, even Christians, will both a) not do that work, and thus bring sadness, and b) not reach the same conclusions (as illustrated by many parallel issues, eg, cov’t theology) but be wrong in not doing so?

  9. June 21, 2008 at 7:33 pm

    Roy,

    I don’t have to “prove” anything. The burden of proof is on those who insist that the Bible furnishes us with the kind of economic- or foreign policy that can be legitimately held forth “prophetically” to the state.

    And you misunderstand my position when you say that you agree with me that the Bible addresses these issues in detail, and that all we need to do is put in the “sweat” to decode its politics.

    My view is that the Bible is the account of the creation, fall, redemption, and consummation of all things. But if it’s economics or foreign policy we’re interested in, then we should go to the local library and read the experts.

  10. Sam Conner said,

    June 21, 2008 at 8:20 pm

    The Bible is of course also an instrument for the redemption of the elect, a means of grace; JJS assuredly agrees.

    There are questions in my mind about the validity of “libertarianish” thinking that attempts to ground free market economics and laissez-faire capitalism in Revelation. Those things may be objective goods (they are certainly more efficient ways than the alternatives of organizing production), but it is not clear to me that they are established by Scripture.

    For example, in my (limited) understanding of christian free-market thinking, private property rights are grounded in the Sinaitic Covenant — “thou shalt not steal.” But it seems to me that the 2nd Table of the Commandments do not establish human rights per se. Rather, they elucidate social implications of God’s rule over His people. They are about God’s rights, not ours. “Do not steal” is not about protecting the property rights of creatures, but about respecting God’s sovereign distribution of material goods. Don’t appropriate to your own use what God has Sovereignly assigned to someone else. I think that every one of the other commands of the 2nd table can be understood in similar ways, and a God-referential understanding of these commands seems to me preferable to a man-referential understanding.

    But God also ordains governments and the means by which their expenses are paid. Is taxation “theft”? That’s Ayn Rand, not Holy Writ, it seems to me.

  11. Darryl Hart said,

    June 21, 2008 at 8:37 pm

    And pork-barrel spending is hardly kosher.

  12. Vern Crisler said,

    June 21, 2008 at 10:11 pm

    #10
    Actually, “taxation is theft” was Frank Chodorov’s big thing.
    Vern

  13. June 21, 2008 at 11:16 pm

    I agree with you, Lane, that the government should stop spending as if there were no tomorrow (since it’s our money, after all). But I disagree with you that we are facing a recession, or worse. Yes, there has been a slight slowdown in economic growth, but a recession is usually defined as two consecutive business quarters of negative growth – and that hasn’t happened.

    But the liberal media want to keep repeating the “recession” lie since, for them, everything except the speed of paint drying (and maybe even that!) has to be President Bush’s fault. I think most of the media recession talk is due to Bush-hatred, if anything.

  14. Zrim said,

    June 23, 2008 at 11:27 am

    If the Bible doesn’t tell us how to live our best life now, what makes anyone think it has one word to say about recession, etc.? My hunch is that the dividing line is less between heaven and earth and more between that which is crass and unsophisticated and that which isn’t. But the genius of propserity gospel is that it can lurk just as much behind tutored punditry as it can cheesy smiles.

    This is why I get so queasy when religionists venture out into waters not in the purview their expertise, like economics, history or politics. Instead of seeking to be prophetic in critiquing government (whatever that means), more of them need to take the above advice to dust of their library cards. I know it’s not sexy, but the right thing seldom is.

  15. Roy said,

    June 23, 2008 at 12:45 pm

    Do you think, Zrim, that one needs a non dusty library card to understand “Thou shalt not steal”?

    OK, I grant that sometimes it may take a degree of expertise to recognize the ins and outs of the theft. Cf, eg, Jason’s points in 7 above, or Sam’s in 10. But theft still remains condemned by God.

    My burden is simple: thinking Christians (especially those with dustless library cards or who, as I do, possess in their own library technically sophisticated books on economics, law, gov’t, etc) ought include the Bible in their reading. The church ought urge these folks to use their gifts.

  16. July 11, 2008 at 2:02 pm

    [...] how this classical Reformed doctrine of the Creator-creature distinction might come to bear on contemporary discussions concerning the relationship between ideology and theology, cult and culture… It seems to me that while many would maintain in theory the Creator-creature distinction, in [...]

  17. Sam Conner said,

    August 25, 2008 at 10:43 am

    Regarding the question of “whether we are in recession or not”, this link may be of interest. It’s timely though belated with respect to the date of this thread:

    http://www.econbrowser.com/archives/2008/06/is_this_a_reces.html

    A premise of the original post is that the government has a measure of responsibility for the condition of the economy (at the very least, to not make things worse), but I think that the specific policy counsel may be unhelpful. In my simpleminded non-economist understanding, the conventional view is that deficit spending is justified during recession in order to moderate employment declines and their recessionary effects. If this is right, a policy of major spending reduction now might prolong and deepen the recession that we evidently are in (unless, perhaps, the spending cuts were primarily “external”, for example simply cutting off the wars we are waging right now). I suspect that spending restraint at this moment is not the wisest policy.

    But on the longer term, yes, government should live within its means.

    Regarding the continuing concern over taxation, it’s not clear to me that this is founded in Biblical evidence. Samuel prophesied to Israel that the king they wanted for themselves would tax them oppressively, and ultimately this seems to have happened (Solomon’s heavy yoke). But there’s no prophetic word in Scripture against this kingly “theft” of private property, even though the king himself was under the Law, and other transgressions of the Decalogue are reported to have been punished by God (David’s, for example). The New Testament is similarly silent on the subject of the evils of taxation. But there are commands to submit to established government authorities, specifically on the subject of payment of taxes. I think that the “taxation is theft” meme is much more “of man” than “of God.”


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