Science in Christian Perspective

The Christian Far Right and 
Economic Policy lssues
THOMAS E. VAN DAHM
Professor of Economics
Carthage College
Kenosha, Wisconsin 53141

From: JASA 36 (December 1984): 28-35.

This article examines the position of the Christian Far Right (CFR) concerning three economic policy issues-the monetary standard, welfare activities, and deficit finance-as explicated in CFR literature. In each case the CFR position is set forth, including the arguments employed in support of the position, and the CFR case is evaluated in terms of quality of the reasoning, economic content of the arguments, and treatment of the Bible. Application of these criteria reveals serious shortcomings in the CFR analyses of these three policy issues.

The emergence of the Christian Right as a political force has been astonishingly rapid. Not surprisingly, therefore, those Christians among us who stand outside this movement often find ourselves without an adequate knowledge of where they stand on particular issues and, at least as importantly, exactly why they hold the views they do.

While many adherents of the Christian Right have not carefully thought through the relationship between their faith and their views concerning social, political, and economic issues-they have no monopoly on this weakness there has been considerable effort on the part of certain individuals and organizations to articulate a reasoned defense of right-wing views from an evangelical Christian point of view. My purpose in this article is to present and evaluate the thinking of some of these theoreticians as applied to a few specific issues of economic policy. I shall concentrate on the views held by one faction of the Christian Right, namely, those who maintain that the social role of the state should be truly minimal. This faction I have labeled the Christian Far Right (CFR).

By thus limiting the scope of this article to a small number of economic policy issues, I am omitting consideration not only of the CFR writings on other economic subjects but also their considerable work in noneconomic topic areas such as education, science, and the family. Nevertheless, the article should provide a useful general introduction to the nature and quality of reasoning employed by the intellectual leaders of the CFR in their numerous books, pamphlets, and other publications.

Most notable among the theoreticians of the CFR are those associated with Chalcedon and its offshoot, the Institute for Christian Economics. Chalcedon was founded and is still headed by the Rev. Rousas J. Rusbdoony, lecturer, prolific writer, and administrator. This organization was designated the "think tank" of the Christian Right in a recent Newsweek article.¹ Founder and president of the Institute for Christian Economics is Dr. Gary North. The points of view of the two organizations are indistinguishable; and the same authors, including Rushdoony and North, appear in the publications of both organizations. Accordingly, let us refer to them collectively as the Chalcedon group.

Although the economic policy views expressed in Chalcedon group publications may be taken as representative of CFR views, it must be pointed out that not all CFR adherents would accept all of the biblical/theological and economic arguments developed by Rushdoony and other Cbalcedon group writers to support their views. Unfortunately, however, there does not exist, to my knowledge, any alternative well-reasoned evangelical Christian defense of the far-right stance concerning economic policies. We shall therefore regard the arguments of the Chalcedon group as "standard," for purposes of this article, bearing in mind the existence of these disagreements.

Before turning to specific economic policy issues, let us examine the general position of the CFR concerning the proper economic role of the state, since the CFR view in this regard strongly conditions its positions on particular issues. The CFR view may be reasonably summarized as follows: the proper economic function of the state is to maintain conditions conducive to a free-market economy, i.e., to enact and enforce rules supportive of private property, freedom of enterprise, freedom of contract, and the profit motive. According to CFR writers, particularly those of the Chalcedon group, the Bible clearly and explicitly teaches that not only is the free-market economy totally compatible with God's will but it is the only economic system acceptable to God.²

Romans 13:4 is the basis for much CFR writing on the economic role of the state: "for he [who is in authority] is God's servant for your good. But if you do wrong, be afraid, for he does not bear the sword in vain, he is the servant of God to execute his wrath on the wrongdoer. " This verse Rushdoony interprets as follows: "Civil government is ordained to promote good by providing conditions for its welfare by punishing criminals and preventing crime."³

Many CFR adherents also take the position that any government activity not specifically required in the Bible is forbidden. Combining this position with their restrictive interpretation of Romans 13:4 yields this conclusion: "The only functions allowed to the state by the Bible are defense of its people and punishment of criminals. To go a step beyond this is forbidden."⁴ Other CFR writers are willing to concede a somewhat broader role to the state than this, however, as we shall observe.

Despite their general "no" to state activity in the economy, the CFR spokespersons go considerably beyond this point in their discussions of particular economic policy areas, basing their conclusions primarily on their interpretations of specific Scripture passages. In the remaining sections of this article we shall examine the CFR position on three economic policy issues-the monetary standard, welfare activities, and deficit finance-not only presenting their views but also making an attempt to evaluate their supporting arguments.

Is there, in practice, any kind of monetary system which will meet both God's requirements and the demands of economic stability? The CFR thinkers are confident that the answer is "yes" and that this system is one which is based on the gold standard, having these characteristics:

1. The monetary unit is defined as a specified weight of gold (e.g., one dollar equals .05 ounces of gold).

2. The treasury buys and sells gold at this price without restriction.

3. Gold coins may be melted down by their holders.

4. Gold may be freely exported and imported.

5. Non-gold money may be exchanged for gold money, and vice versa,
at the option of the holder.

6. All money is either in the form of gold coins or backed, dollar for
dollar, by gold.

The first five requirements are sufficient to define the gold standard" as it existed in most of the Western world for several decades prior to 1933. Under this kind of regime the monetary system could include non-gold money that was not completely backed by gold, so long as this money was redeemable in gold at the option of the holder. But many CFR thinkers, including those of the Chalcedon group, believe that this kind of monetary system is inadequate; they insist that the only system acceptable to God is one in which the value of the money in circulation exactly equals the value of the nation's monetary gold, i.e., circulating gold coins plus the gold "backing" for nongold money.⁵

Why is it so important to these CFR thinkers that money be thus tied to gold? There are several parts to their case. The first is that the Bible demands that money be "wealth," or commodity. Chilton expresses the argument thus: "Throughout the Bible, money is spoken of as weight. The [biblical] law specifically commands that financial transactions be made in

Thomas E. Van Dahm is a Professor of Economics at Carthage College, having previously taught at Southern Illinois University (Edwardsville), Hope College, Augustana (Illinois) College, and Central (Iowa) College. His BA is from Hope College, MA and PhD from the University of Michigan. He has published a number of articles, principally explorations of the relationship between Christianity and economics, as well as a textbook in monetary economics.

terms of honest measurements of weight." ⁶ He cites Leviticus 19:35-37 as evidence.

These two quoted sentences are substantially correct-individually-but together they provide no support to the argument that money should be by weight today. The first sentence merely relates to a historical fact having no necessary applicability to today's world. Throughout the "Bible times" era transportation was by foot or animal power; but one does not therefore argue that Christians should eschew the use of motor-driven vehicles. And the second statement, too, is hardly controversial. However, taken together, they tend to mislead because the word "weight" in the Leviticus passage clearly refers not to money but to that which is exchanged for money. Thus the Leviticus passage is not relevant to the issue of whether money must be commodity in order to meet God's requirements.

The second reason for these writers' high regard for the gold standard is based on the belief that there are certain laws of economics analogous to the laws of the physical sciences.

What we call physical laws . .. are simply the outworking of "'s eternal decree and continual providence. And the same is true of economic laws.... Man-whether individual anarchist or totalitarian state-cannot transgress God's laws without suffering the pre-ordained consequences, in this world and the next.⁷

One of these "laws of God" is that the only kind of monetary system that has long-run viability is the one described earlier, in which the quantity of money is tightly linked to the quantity of monetary gold. Thus, to these CFR adherents, this strict version of the gold standard is not merely a desirable but optional belief; it is a necessary element in the faith of a true Christian. In fact, in this astonishing paragraph Rushdoony goes so far as to assert that denial of the biblical requirement of the gold standard is tantamount to atheism:

A minister ... stated emphatically that gold was an arbitrary and meaningless symbol and that, if men agreed to make wooden tokens the legal tender of a nation, it would be as well or better than gold. This minister ... was, without intending to be one, implicitly an atheist. He was denying that there is any fundamental law order in economics or any other spheres, any God-given framework of laws that governs every aspect of creation.... God either governs in every sphere of creation or He governs in none, because the creation is then an independent existence and its own saviour. The question, are there valid laws of economics ... is then a question with reference to the existence of God.⁹

I have not found in CFR literature an explicit statement of the biblical basis for the CFR belief in this "monetary law," but the reasoning apparently follows this pattern: (1) God opposes dishonesty and fraud; (2) only commodity money and fully-backed money are honest, while all other types involve theft and fraud; (3) therefore God commands that the nation use only commodity and commodity-backed moneyin practice meaning gold coins and gold-backed money.

The first premise hardly needs either explanation or defense; but the conclusion depends crucially on whether, in fact, non-commodity money really does involve dishonesty and fraud, as the second premise alleges. Let us, therefore, examine the CFR arguments on this point.

The following quotation presents the fraud argument with reference to paper money:

Paper money derives its value from the fact that it originally represented certain quantities of the money commodity, normally gold and silver. A paper bill was originally a demand claim ... on a specific weight and fineness of a specific money metal.... The paper is valued because the metal it represented is valued.⁹

Therefore (the argument goes) when the state removes the precious-metal backing from, say, a $20 bill, the holder, still under the impression that he or she has title to the $20 worth of gold or silver supposedly backing the bill, has clearly been defrauded by the state.

Creation of checking-deposit money by banks in connection with their lending activities also entails fraud, according to North:

When hanks create credit ... they charge interest on loaned funds which have been created by fiat. There are no gold and silver reserves backing this money, yet the banks profit by lending it. It involves fraud, and it is therefore immoral.¹⁰

How much validity is there in the argument that, because it consists of unbacked, irredeemable money, today's "managed" monetary system involves fraud? In answering this question it is important to bear in mind the fact that, in order for an action to involve fraud, there must have been misrepresentation. However, it is extremely doubtful that many citizens today feel themselves to be victims of misrepresentation when they accept, say, a newly-issued dollar bill. The issuer of this bill, one of the Federal Reserve banks, neither states nor implies that gold either backs or will be offered in exchange for that bill. An examination of any piece of United States paper money will verify this statement.

While the original basis for the acceptability of paper money undoubtedly was the confidence of the holders in their ability to obtain gold or silver in exchange for the paper if they so desired, this basis is surely of minimal significance today. United States money has been unrelated to gold for nearly a half century with no noticeable effect on its domestic or international acceptability.

As to bank money creation: again, there has been no misrepresentation, i.e., no claim that such money is backed by, or redeemable in, gold or silver, so fraud cannot have occurred. The fact that "banks profit by lending it," (i.e., the bank-created money) is irrelevant to the fraud question. Certainly banks profit by lending-or hope to-but so do borrowers by borrowing!

These CFR writers also allege that the issuance of noncommodity money involves theft. Referring to the situation in which the state "manages" money rather than allowing its quantity to be determined automatically as it is under the gold standard, Rushdoony states: "Money management is confiscation of private wealth by the state."¹¹ Theft is also involved, according to him, in the issuance of checkbook money by banks:

Banks "create" money ... by the unilateral action of simply recording a loan and a deposit on their books.... [Such] "loans" mean an element of robbery in that they reduce the value of all money units previously in existence.¹²

Rushdoony is mistaken, in the first quotation, in alleging confiscation" because the state, as such, no longer issues any new money other than coins. With some minor exceptions, all United States paper money now in circulation is issued by the twelve Federal Reserve banks, which, although controlled by a Presidentially-appointed board that is answerable to Congress, are owned by (private) member commercial banks. Contrary to popular belief, the Feredal government never prints money to pay its bills. The other major class of money, checkbook money (or "demand deposits"), comes into existence in the course of lending and investing by commerical banks, as Rushdoony points out, and also by certain other private depository financial institutions. Thus, the state is not engaged in theft by money creation.

According to CFR writers, the Bible clearly and explicitly teaches that not only is the free-market economy totally compatible with God's will but it is the only economic system acceptable to God.

Rushdoony's argument that bank lending constitutes robbery because it reduces the value of all other monetary units is not valid either. The value of a unit of money is reduced only if the price level rises, causing this unit (along with all other units) to lose purchasing power. While it is true that bank money creation may result in a rise in the price level, this outcome is not inevitable. The result depends primarily on the relationship between the rate of growth of the money supply and the rate of growth of the nation's output. If money grows at a more rapid rate, prices tend to rise; if output grows at a more rapid rate, prices tend to fall. So, since bank-money creation does not necessarily cause the price level to increase, Rushdoony's "robbery" conclusion cannot be accepted.

Thus, having failed to demonstrate that non-commodity money issuance involves fraud and theft, these CFR adherents have no foundation for their claim that deviation from the "gold standard law" is inherently immoral.

The third reason for their allegiance to the gold standard is the belief, expressed by North, that

Government prints the (unbacked] notes in order to increase their expenditures, while avoiding the necessity of raising taxes.... The state's actions are motivated by the philosophy that government can produce something for nothing, that it can create wealth at will merely through the use of the printing press. Government attempts to usurp the role of God by becoming the creator of wealth rather than remaining the defender of wealth. ¹³

North offers no evidence for his assertion that the state maintains a philosophy "that government can produce something for nothing." (It is, in fact, difficult to conceive of something as amorphous as a state having a philosophy!) A more serious flaw in this passage, though, is the very first clause. As was stated a few paragraphs above, the government simply does not finance its expenditures by printing paper money. And, finally, the notion that the government is attempting to fool the public into believing that it (the government) has the divine attribute of ability to create wealth ex nihilo is impossible to take seriously.

In the fourth place, the gold standard is necessary, according to these CFR writers, because the issuance of unbacked money, whether by governments or by banks, is "inflationary. " There is a definitional quirk here which must be noted: CFR writers, following the usage of economists of the Austrian School (e.g., Ludwig von Mises, Friedrich von Hayek) do not define inflation in the usual way, i.e., as a persistently rising general price level, but as an increase in the nation's stock of money. Consequently:

If the general price level remains constant because of additional paper money being inserted into the economy, then by definition there is monetary inflation going on.¹⁴

Is this sort of thing inherently bad? According to North and the Austrians, yes, because the price level, under conditions of economic growth, ought to decline.

As a disciple of the Austrians, North asserts, in addition, that inflating the money supply with non-backed money inevitably generates price-level increases over the long pull because the "inflationary" process, once initiated, is addictive and leads to continued increases in the money supply.¹⁵

The only solution, once the process has begun, is depression. "The suffering imposed by depression is unfortunate, but it is the price which must be paid for survival. if the consequences of runaway inflation are to be avoided, then this discomfort must be borne."¹⁶

This is authentic Austrian economic doctrine. All that must be said here is that these are mere assertions which are based on assumptions considered questionable by most economists and have not been empirically supported.

Finally, failure to maintain a gold standard and turning instead to some form of managed-money system leads to all sorts of dire consequences, in the view of some CFR thinkers. Here are some of their predictions:

I . ". . . dishonest money introduces a false weight into every monetary transaction in a society, so that radical corruption and injustice prevail."¹⁷

2. "... money management produces communism."¹⁸

"Gold and silver, hard money, are conducive to economic stability and prosperity; managed money spells controls leading to dictatorship and economic cbaos and collapse."¹⁹

4. "Money management ... involves not only the confiscation of wealth and of economic liberty, but of political liberty as well. The state gains in power beyond the control of the people."²⁰

5. "Money management produces progressively worthless money
together with concentrations of power."²¹

6. "Money management ... creates nationalism and fragmentation ... and the more it [money) is debased, the weaker its [international] flow. The result is a collapse of the economic internationalism which gold and silver foster."²²

7. "Either we destroy the fraud of unbacked paper currency and unbacked bank credit, or the fraud will destroy us-morally, economically, politically, and spiritually."²³

It is difficult to know whether all of these prophecies are intended to be taken at face value. In any case, they are indicative of the gravity with which the problem of money is perceived by CFR writers.

The second economic policy area to be discussed, government welfare activities, does not have precise boundaries; but we can define this area adequately for our purposes as those activities of government which are designed to alleviate the economic condition of people who are poor. This definition neither expresses nor implies any judgment as to whether some or all of the people covered under programs of this sort really deserve to be poor, whether the government ought to involve itself in this area at all, and whether such programs are, or can be, successful. It also excludes programs designed to improve the conditions of particular disadvantaged groups-such as victims of racial discrimination, mentally retarded people, disabled veterans, and so on-because not all people in such categories are poor.

The means used to accomplish the goal of welfare activities are varied and include cash grants, vouchers for the purchase of designated goods or services, direct provision of services, and grants of commodities; and the direct intent of a particular activity might be to provide goods and services needed for a "decent life" or to equip the recipient vocationally, socially, or physically to earn his/her own living and to "cope" in other ways.

Not surprisingly, CFR spokespersons are generally opposed to government programs designed to deal with poverty. In the first place, their general principles concerning the role of government in economic affairs would imply this position: the state must not deviate from its Scripturally-required functions of maintenance of order and freedom. If God had intended the state to perform charitable functions, He would have specified this intention somewhere in the Bible. "The New Testament teaches that the individual and the church are responsible to aid the poor. This is never said to be the responsibility of government."²⁴ Furthermore, the state must not attempt to enforce private charity either, according to Chilton:

Charity is personal, though not purely "voluntary," since biblical law commands it-but on the other hand, those laws are not enforced by the state: the Bible mandates no civil penalties for failing to obey the charity laws.²⁵

Besides citing the absence of any scriptural mandate for governmental welfare activites, CFR writers offer several specific reasons for their opposition to them. One is that such activities involve violations of the Eighth and Tenth commandments. With reference to the Eighth, according to Rushdoony:

Theft is accomplished by indirect and legal means, i.e., by passing a law which steals from the rich, the poor, or the middle-class, for the benefit of a particular group, The state then becomes the agency whereby theft is accomplished, and a pseudo-moral cover is given by legal enactment.²⁶

Redistribution by means of taxing income receivers in order to provide money to those unable to earn an income (due to old age or incapacity, or even temporary inability to obtain employment) would thus fall under the heading of theft forbidden by the Eighth Commandment.

In Rushdoony's view, the Tenth Commandment is also violated by the public provision of welfare:

If all desiring and taking by force or by law what is our neighbors' is strictly against God's law, it follows that the organization of such covetousness into a system is the creation of an anti-God society. A welfare economy-socialism, communism, or any form of social order which takes from one group to give to another-is thus lawlessness organized into a system.²⁷

It is apparent that, in Rushdoony's mind, the important distinction is not between "desiring" and "taking" or even between "by force" and "by law," but rather it is between "our own" and "our neighbor's." Nothing will justify the taking of anything from one person and giving it to others not even a tax-supported welfare program-without the express consent of the former. In CFR writings government welfare programs are not distinguished from outright theft or, rather (in their view), from other forms of theft.

The names for the society whereby men can covet everything that is their neighbors'may vary: socialism, communism, a welfare economy, rugged individualism, fascism, and national socialism are a few of the names common to history. Their goal is the same: under a facade of morality, a system is created to seize what is properly our neighbors'.²⁸

A second specific reason for CFR opposition to government welfare programs is that such programs undercut the proper role of the family and the church:

The family bears the major responsibility for financial (and other) aid and no other institution or group must usurp this responsibility. ... When we are too quick to call for aid to the unfortunate from some non-family agency, we undercut the responsibility of families to care for their own.... God wants to build responsible relationships within families, and the church's responsibility in caring for needy members grows out of the fact that it is our larger family.... But any appeal to the larger family must be only as a last resort.²⁹

This is an excellent prescription-for an agrarian community consisting solely of dedicated Christians. It is totally inadequate, though, for an urbanized and thoroughly secular society such as ours. Families and churches simply do not have the resources to deal with natural and economic disasters which sometimes strike particular locations.

The reader may also wonder about those "unfortunates" who are not affiliated with any church. What is to be their fate in cases where no family aid is forthcoming? Here is one CFR answer:

We are to care for our own who are helpless, The New Testament nowhere calls upon Christians or the Church to assume the burden of the material support of the world.³⁰

If aiding the poor is beyond the scope of the state's permitted functions and if the boundary of Christian concern extends only to "our own, 11 evidently the non-Christian poor, here and elsewhere, are to be left to their own devices.

This position is not acceptable to all CFR thinkers, however, Professor Ronald Nash, a scholar whose views on the economic role of the state place him in the CFR camp at least in this area, would permit the government to come to the aid of the truly destitute. However, the only reason he offers in support of this opinion is somewhat strange:

Friedrich Hayek, an outspoken critic of statism, insists "There is no reason why in a free society government should not assure to all protection against severe deprivation in the form of an assured minimum income.³¹

CFR spokespersons are generally opposed to government programs designed to deal with poverty.

There is no explanation as to why welfare administered by the county welfare department is more corruptive than that administered by, say, the Salvation Army. Nor why free canned goods provided by the church are less likely to create a dependency pattern than a government-financed job training program.

Finally, government welfare programs are to be condemned because they are based on an improper source: a misguided sense of guilt. Basing his analysis largely on Rushdoony's Politics of Guilt and Pity, Gary North claims that our increasing prosperity generates guilt feelings in our minds. Unconsciously, we feel that we must somehow "pay" for these benefits when we see the rest of the world living in far less affluent conditions, so we eagerly embrace government programs which are designed to aid the poor as one way of atoning for our prosperity. But this attitude is unnecessary and wrong because the "Bible teaches that a godly moral order leads directly to an outpouring of economic, political, military, and familistic blessings,"³³ so we deserve all our blessings. Compassion for the poor, in other words, is mainly a sign of a misdirected conscience.

The theology behind the notion that individuals or nations are blessed because they "deserve" it is effectively criticized by Wogaman:

[The] early Protestants would have objected strongly to the implicit self-righteousness of the laissez-faire idea of deserving. Ultimately, the Protestant reformers would have said, what we desenw is damnation! It is only by the grace of God that we have the possibility of real fulfillment as human beings; to speak of "deserving" so casually implies that we are capable of saving ourselves.³⁴

If, despite all of these reasons, the nation nevertheless persists in tolerating the provision of welfare by government programs, it will suffer terrible consequences. Nash hints at this idea thus:

... a growing number of theologically conservative protestants ... insist that the Christian's undisputed obligation to demonstrate love for the needy is an integral part of justice.... It is unlikely that all proponents of this position understand the extent to which their views enslave them to the state.³⁵

Rushdoony holds that the "state's intrusion into the realms of welfare and education leads to the bankruptcy of people and state,"³⁶ although he does not spell out the details of the process through which this is to take place. Moreover, he carries to the extreme the logic of his view identifying welfare and other legal income-transfer programs with theft in this statement: "If [a man] can legalize and 'justify' seizing his neighbor's wealth or property, he will then legalize and justify taking his neighbor's wife."³⁷

As in the case of the monetary standard, we note that the CFR thinkers believe that not only is there a proper stance for the state to take in this policy area but that failure to follow this biblically correct route will result in the imposition of God's punishment on the offending nation in the form of such misfortunes as enslavement to the state or national bankruptcy.

Before dealing with this question we must define a few terms. Briefly, a deficit, in this context, is an excess Of expenditures over revenues during a specified time period. The deficit may be financed by borrowing, by creating money, or by a combination of the two. In practice, our national government utilizes only borrowing, as we noted earlier. Deficit finance,³⁸ therefore, is the operation of the national government under deficit conditions.

A deficit position in the national government budget could be due to one or more of these factors:

1. Political opportunism: instituting vote-getting government programs which require additional expenditures while refusing to pass (votelosing) tax increases to finance them.

2. Recessions, which will throw a balanced budget situation into a deficit or increase the size of a current deficit because tax receipts decline while expenditures increase on welfare, unemployment compensation, and farm crop price supports, etc., when the economy slumps.

3. Deliberate action to improve a lagging economy, i.e., to reduce unemployment or stimulate growth, by reducing tax rates and providing various tax incentives to encourage private spending and/ or by increasing government spending on goods and services and income-transfer programs.

Examples of all three of these can be found in our experience over the past two decades.

No self-respecting economist would defend the first of these three reasons. The second reason we usually deplore officially but, when we give the matter some thought, we generally acquiesce. We realize that a recession period is a poor time to increase taxes merely to fight a deficit: higher taxes would tend to aggravate the slump. Reducing government spending, too, while keeping taxes constant, would result in increased unemployment, reduced incomes and, hence, declining business sales-hardly brilliant methods of fighting a recession!

The deficit-maker which causes the most controversy is number 3, the deliberate deficit or increase in the deficit level. How can this be defended?

"Supply-side" economists might reply that what looks like an impending deficit will turn out quite differently. Their reasoning is that tax-rate cuts provide the incentive and means for more business investment in machinery, physical plant, and the like, thus increasing output, the capacity to produce a greater volume of goods and services, and additional incomes. As a result, tax receipts, which are tied to income, also will rise, thus gradually eliminating the deficit-sort of secular "bread upon the waters" mechanism.

Other economists will answer that same question by saying that the deficit does not matter a great deal under the indicated circumstances and that the benefits of an increase in employment and output, which the tax reduction and/or increase in government spending will produce, far more than outweigh the "evils" of a rise in the national debt and the slight downward influence on business investment in plant and equipment caused by the "crowding, out" effect of the rise in government borrowing.

Economists do not, as a rule, worry much about moderate deficits as such; but they recognize that, if the Federal Reserve permits an expansion of the money supply in order to enable the Treasury to market new issues of its securities to finance the deficit without making it difficult for private borrowers to obtain credit, the outcome may well be a higher rate of inflation.

The CFR case against government deficits, however, at least on the surface, does not depend on any economic or political arguments. Rather, the case is built on certain Scripture passages which express moral laws which deficit finance is said to violate.

One of these passages is Romans 13:8a: "Owe no one anything, except to love one another." This verse is cited by North, who labels it a "general principle [which] may legitimately be transgressed under certain emergency situations. "³⁸ He then quotes this passage from Rushdoony:

The believer cannot mortgage his future. His life belongs to God, and he cannot sell out his tomorrows to men, nor bind his family's or country's future. This means that long-term personal loans, deficit financing, and national debts involve paganism.⁴⁰

Clearly implied in the quoted passage is this premise: deficit finance mortgages a nation's future. Rushdoony evidently assumes this to be true; but we must examine it because, if it is not true, this particular indictment of deficit finance fails.

First, bear in mind that nearly 90 percent of the national debt-the result of previous deficits-is owed by the Federal government to the individuals and institutions of the nation; and, of course, the institutions are, in turn, ultimately owned by individuals. Thus, in contrast to the true mortgage case, the -nation as a whole is not significantly in debt to outside parties by virtue of the national debt.

Secondly, there is always a risk of default associated with ordinary mortgage loans. In the case of Treasury securities, though, default risk is considered by the investment community as virtually zero. With its power to tax and even to issue money, the Federal government experiences no difficulty in meeting scheduled interest payments and redeeming each securities issue as it comes due.

Finally, mortgage payments reduce the purchasing power of the debtor. Is this also true of the national debt? is it in this sense that deficit finance "mortgages the nation's future"? The answer to both questions is "no." Recall that most of the debt is domestically held. Thus, interest payments on, and redemptions of, government securities transfer money from taxpayers to holders of government securities. While this transfer process is far from a negligible element in the whole national-debt issue, the important point here is that, being largely domestic, these transfers do not significantly reduce the wealth or purchasing power of the nation as a whole.

Surely one attribute of a responsible debtor, individual or institutional, is strict adherence to the contracted schedule of payments. A second major CFR criticism of deficit finance, at least as currently practiced, is that the Federal government does not live up to its responsibility in this regard. This is implied by North when he cites Psalm 37:21a-"The wicked borroweth and payeth not again"-as the basis for his indictment of the Federal government for failure to reduce the size of its debt. "From a biblical standpoint, this is utterly corrupt,"⁴¹ he writes.

North seems to have confused two concepts: the total national debt and the individual debt issue. Observing the (obvious) failure of the total debt to decline, be then apparently deduced that the Treasury has not been meeting its debts as they have come due. This is not a valid deduction. When an issue of government securities comes due and the Treasury is not in a position to reduce the total debt, it customarily issues new securities to replace those that are maturing. Each holder of that maturing issue has the option of redeeming the securities for cash or purchasing newly issued securities to replace them-there is no compulsion involved-and most holders choose to purchase the new ones. Thus, paradoxically, the Treasury is continually "paying off its debt, piece by piece, but the total does not shrink.

Finally, a different basis for criticism of deficit finance is offered by Rushdoony: the government's motive for borrowing:

Debt rests on covetousness, a desire to possess what our neighbor has....

The covetous man or nation goes into debt to gain added power, purchasing power, prestige, resources, and other forms of visible might. The result is indeed an increase of power, but it is short-term power. . . .⁴²

While it is undoubtedly true that a covetous attitude predisposes an individual or society to desire to go into debt, it is not logically permissible to stand the argument on its head and claim, as Rushdoony does, that the reason for a nation's incurring a deficit is covetousness. In the opening paragraphs of this section several reasons for governmental borrowing were offered. There seems to be no reason, in the absence of any supporting arguments, even to accept covetousness as one reason for deficit finance.

As to the consequences for the nation guilty of the sin of deficit finance, CFR authors foresee serious trouble. According to Rushdoony:

The result ... is short-term power purchased at the price of long-term disaster.... The eventual outcome of a debt-economy, for men and nations, is bankruptcy.⁴³

Conclusion

The foregoing three "case studies" do not begin to exhaust the variety of economic policy problems to which the CFR authors have addressed themselves. However, the purpose of this article will have been accomplished if the reader has gained a better understanding not only of the views of the Christian Far Right concerning these issues but also of the intellectual underpinnings of these views and, by extension, of the approach employed by CFR thinkers in their analyses of economic policy issues generally.

It should be evident that the three CFR analyses examined above contain serious deficiencies in logic, in economic content, and in treatment of the Bible,⁴⁴ deficiencies which, by their nature, carry over to their analyses of other economic policy issues, and, in all probability, to noneconomic policy issues as well. While CFR theoreticians are to be commended for their zeal in attempting to analyze complex social issues from a Christian standpoint and for their reverence for the Bible, the weaknesses in their methodology and grasp of modern economics greatly reduce the potential usefulness of their treatment of economic policy issues.

³ Rousas J. Rushdoony, The Politics of Guilt and Pity, Nutley, New Jersey: The Craig Press, 1970, p. 3M.

⁴David Chilton, Productive Christians in an Age of Guilt Manipulation, Tyler, Texas: The Institute for Christian Economics, 1981, pp. 145-46. Italics in the original.

⁵E.g., North, op. cit., pp. 151-56.

⁶Chilton, op, cit., p. 34,

⁸Rushdoony, op. cit., p. 235. 

⁹North, op. cit., pp. 12940. 

¹⁰Ibid., p. 41.

¹³North, op. cit., p. 32. Italics in the original. 

¹⁴ibid., p. 151.

¹⁵ibid., chapter III: "Inflation, the Economics of Addiction.' 

¹⁶Ibid., p. 40. Italics in the original.

¹⁷Rousas J. Rushdoony, The Institutes of Biblical Law, Nutley, New Jersey: The Craig Press, 1973, p. 470.

²³North, op. cit., p. 43.

²⁴H. Edward Rowe, "The Poverty Problem: Christian vs. Humanistic Solution," Applied Christianity, 11 (January, 1973), p. 29.

²⁶Rushdoony, Institutes, p. 452, 

²⁷Rushdoony, Institutes, p. 640. 

²⁸1bid., p. 649.

²⁹Chilton, op. cit., p. 42. Italics in the original. 

³⁰Ollowe, loc. cit., p. 30.

³¹Ronald Nash, "The Economics of justice: A Conservative's View," Christianity Today, XXXII (March 23,1979), p. 29.

³³Gary North, "Political Masochism," Biblical Economics Today, III (February-March, 1980), p. 1.

³⁵Ronald Nash, Freedom, justice, and the State, Lanham, Maryland: UniVeTsity Press of America, 1980, p. 62.

³⁸Often the term "deficit spending" is used to describe this situation. However, this term implies that the cause of the deficit is excessive government spending; but the deficit could as well be considered caused by insufficient tax revenues. I am reminded of a cartoon in which the wife says to the husband, in connection with a checking-account balance crisis, "You say I'm overdrawn; I say you're underdeposited!"

⁴⁰Ibid The quoted passage is from Rushdoony, Politics, p. 249. 

⁴¹Ibid:, P. 11.

⁴²Rushdoony, Politics, p. 205

⁴³1bid.