Considering How the Economy Functions

During our pastors’ meeting to discuss Nehemiah 6, Tim Rice relayed this information from a discussion with a former CFO of Publix.  It is helpful to understand a large economy, the issues that face our nation, and therefore how to wisely choose a candidate (there are NO perfect candidates, sadly).  I am not savvy enough to reproduce the diagram, so I’ll wing it.

For Profit Business => Owners, employees & dependents => Not for Profits => NFP employees & dependents => Poor, unemployed & dependents

The foundation of an economy is For Profit Business (FPB).  Those profits support the owners, employees and their dependents.  I know in this day, the idea of making profits seems barbaric. But profits are how a business stays in business and therefore support all those dependent upon them. Those businesses and people provide the funding for NFPs, both public and private.  The government is the public NFP which is funded by taxes.  The public NFPs are churches and social agencies that are funded by donations.  The more profit generated by the FPB, the more resources that are available to the NFPs. A government that wants to see revenues increase, wants to see the NFPs do well, not stifle them. It is simply increasing the pie, so the slices of the NFPs increase as well.

There is an inverse relationship between the public and private NFPs.  The more the government takes in taxes, the less that private NFPs end up receiving.  The employees and their dependents are dependent on how well the NFPs do, which is a result of how well the economy (read For Profit Business) does.  The poor and unemployed (and their dependents) rely upon the NFPs until they work for either the FPBs or NFPs.

If the public NFP expands too much it will crush the FPBs under its weight.  Private NFPs will not survive if there are too many of them, or the government gets too big.  Private NFPs benefit from FPB, but don’t hinder FPB.  Public NFP (the government) depends upon FPB, but can also hinder FPB by demanding too much for its entitlement programs.  The FPB is able to employ fewer people, so more people need the services of NFPs. This means there is a limit to the growth of the government since it is supported by the FPB side of the economy. It serves the poor and unemployed, but they can be the center of the economy.

There is another part of this equation.  Civil morality => Security <=> Economy

The economy funds our security, and our security protects our economy lest another nation come and steal our wealth.  So, the security of the nation depends on the economy. As the economy shrinks, so does our security (objectively and subjectively), and the biggest part of the economy is the FPB.  One part of the public NFP is defense.  Our taxes provide for our security.

Civil Morality (not the same as religious morality, but is a more common grace morality that non-Christians are capable of) is comprised of such things as courage, self-sacrifice, diligence and delayed gratification.  These character traits are necessary for both a sound economy (good employees are diligent) and security (courage and self-sacrifice are essential to a voluntary armed service).

The decay of civil morality means that fewer people work hard, reducing the profit of FPBs and therefore the incomes of employees (and therefore tax revenues).  This means less money for security.  The decline of civil morality also hurts security because fewer people have the character traits required to willingly serve in difficult times.

Civilizations will crumble by either a lack of civil morality or the over-expansion of public NFP which restricts the FPBs.

Voters have to stop thinking about what is in it for them (selfishness is a sign of the decline of civil morality), and choose politicians who limit the growth of the public NFP and support the civil morality.  Progressive politicians tend to remove restraints on behavior that undermine self-control and self-sacrifice which therefore undermine civil morality (and therefore both the economy & security).  Progressive politicians tend to expand the public NFP thereby crippling the economy.  Social conservatives preserve the civil morality that is essential to our long-term security and economic growth.  Fiscal conservatives limit (even reduce) the public NFP to expand the FPB and reduce the poor, unemployed & their dependents.

BTW: Party labels are no guarantee that a candidate is either a social progressive or conservative, or fiscal progressive or conservative.  Obviously there can be a disconnect between a person’s claims and reality- particularly when it comes to their private morality.

2012 Update: The last 4 years have been interesting as class warfare continues, and we see the rise of entitlement and laziness. Occupy Wall Street is a movement that seeks to flip the FPB and public NFP as the main engine of society. They don’t understand how a healthy economy works. We are witnessing the economic implosion of Europe for this very reason: the public NFP is too large and the people lack the civil morality necessary to grow an economy. We face the pressure to become like European economies, even though we are watching them endure greater crises than our own. It is imperative that we have elected officials who “get this”. The only way we can is if people in the voting booth make wise decisions based on self-sacrifice, delayed gratification, diligence and courage instead of greed, laziness, selfishness and a sense of entitlement.