R&L: Since obtaining your doctorate in economics from Yale, you have held positions as a research economist for the Federal Reserve Bank of New York, as a professor at Bates College, and now as a professor at Pepperdine University. Based on all of your study and these varied experiences, what would you say is the single greatest economic challenge facing the world today?
Yuengert: Over the last decade or so, most of the countries in the world have officially embraced the idea of free markets, at least to some degree. This is a remarkable turnabout, but what we have found is that free markets do not exist in a vacuum. They require a set of political and cultural pre-conditions: the impartial rule of law, a culture of impartiality in government, honesty, justice, and public spiritedness in business. We have found that it is not enough just to free up markets and safeguard property rights. Market exchanges are exchanges between real people, and property rights are guaranteed by real people, whose virtues and vices matter. These virtues cannot be legislated.
I would say that our biggest challenge is to understand how these political and cultural foundations for markets can be nurtured in societies which already have them, and developed in societies that lack them. This will be no easy task—large government initiatives will not bring these virtues about, because they are developed in the most personal ways—in the family, in religion, and in the local community.
R&L: How does or should Christian faith and practice address and alleviate this economic challenge, if at all?
Yuengert: Christians, and all people of faith, can address this problem by simply living out their faith in every aspect of their lives. At every level of society, in whatever jobs they have inside or outside of the workforce, Christians must be leaven. We should embrace the duties of our station in life—butcher, salesman, entrepreneur, politician, bureaucrat—and seek to carry them out as well as we can. We should accept the limits that our moral code places on us, even if this makes our lives difficult or even puts our livelihoods at risk. Christians shouldn't be deterred by the challenges of living out the gospel in the workplace. We shouldn't lie. We should befair and generous to our bosses, our coworkers, our employees, our customers, and our communities. There is a certain kind of moral entrepreneurship that is brave enough to tackle the simultaneous challenges of being both successful and good in a very messy world. And when we can't be both, we need to be willing to settle for being good.
R&L: In your opinion, has the church done a good job overall understanding economic life and its theological implications?
Yuengert: From my reading of Catholic Social Teaching as it has developed thus far, I would have to answer a qualified 'yes.' John Paul II, in Centesimus Annus, sums up the current teaching. Markets are remarkably good at meeting those human needs that are 'solvent,' that are backed up by cash, and there is a moral obligation to bring into 'the circle of exchange' those who are left out of markets through poverty or ignorance. In spite of the good things the Pope says about markets, though, he still insists that market outcomes are not above evaluation and oversight by the state. Not everything that comes out of market interactions is necessarily desirable. A libertarian view that puts market outcomes beyond question by government is rejected by Catholic Social Teaching.
I've always been appreciative of the discretion exercised in the social encyclicals. Although the Popes (and especially bishops) occasionally give specific advice about particular policy challenges, for the most part they offer a set of very helpful principles, and leave the application of those principles to others, to lay people, whose expertise and vocation is in the details of economics and politics.
R&L: Could the church make any improvements in this area?
Yuengert: I think the church can improve in two ways. First, the church needs to think more carefully about the common good. I like the idea of the common good—it is the purpose of a group of persons, whether they are a family, a club, a church, or a nation—but I find that it becomes less real as it expands from the common good of my son's Boy Scout troop to the common good of the nation, or even to the universal common good of the world community. The Pope refers regularly to the universal common good, and I'm just not sure what it is. I worry that using a term like universal common good may distract us from paying proper attention to the very real common goods that are within our reach. Just like someone may love humanity and hate actual people, I worry that we may think too much about the universal common good and neglect the common goods we pursue with our neighbors.
The second way I think the church can improve is to talk more about the virtue of prudence. Prudence is the virtue that bridges the gap between the general moral principles taught by the church and their application in very uncertain, difficult circumstances. It is the virtue of the laity, and of the entrepreneur. It is not enough to know the principles of morality—we must be able to apply them without clear guidance. Prudence is a sort of moral entrepreneurship—it finds a way to make good things happen amid the messy, difficult challenges of everyday life.
R&L: What has been your general impression of how the clergy understand business?
Yuengert: I keep hearing about how clergy do not appreciate businesses, but the clergy I know seem to appreciate the challenges of business pretty well, even if they do not fully understand them. If they are good pastors, they know and interact with businessmen every day, and rely on their help to run their churches. Most can only grow to appreciate business through their experience of parishioners; their academic training is for the most part devoid of economics and is based on theological approaches which are hostile to business. The further away from parish life a priest gets, the less in touch with the moral challenges of business he is.
R&L: Are there any economic issues that the clergy absolutely must be aware of? If so, what are they?
Yuengert: Most clergy would benefit from a well-taught microeconomics course. They should learn the nature of society's allocation problem, the strengths and shortcomings of markets, and develop a richer view of government and its role for good and ill. Most importantly, a clear view of markets can help clergy understand the concept of subsidiarity more fully—the idea that government should not intervene to solve problems that can be solved at a more local level. Markets help society to decentralize decision making and reduce the burden on central governments. The flip side of this is that they place greater responsibility on individuals, families, and other smaller communities to take control of their individual and common life. The issue in government policy is not simply how many goods and services are delivered to individual citizens; who makes the decision, and has control over the outcome, matters immensely.
R&L: Some contend that a market-based economy is patently unjust. Others view the markets as neutral, a mere tool that can be used morally or immorally. Which is it? Or are both understandings of the market insufficient? Why?
Yuengert: I certainly reject the idea that markets are by their very nature unjust. Exchange isn't by its nature evil. Some exchanges between consenting adults are good, and some are bad, either for the parties who freely exchange or for those third parties affected by the exchange. Markets for cocaine, prostitution, and gambling are bad—these are exchanges that are either bad for the people involved or bad for others. Of course, my judgment that they are bad does not automatically lead to a judgment that these exchanges should be banned by governments. Government can do more harm than good by banning all immoral exchanges.
I also reject the other extreme, that markets are completely beyond anyone's evaluation, that they are like the weather— beyond our criticism because beyond our control. The promotion of market institutions is the business of government, which should evaluate their desirability, and regulate them to ensure competition. I think that market exchange is almost always good, and that interference in markets is often counterproductive, and I vote for politicians who share my views. This does not eliminate the fact that markets, because they are part of our common life as a nation, are the business of government, a part of our common good.
R&L: Are governmental regulation and law the best means to prevent individuals from abusing the freedom they have in the marketplace?
Yuengert: It is not the best, in the sense of being the first line of defense, but it has an important supporting role to play. The best safeguard against fraud, theft, and injustice in markets are the virtues—the cardinal virtues of justice, temperance, fortitude, and prudence, and the theological virtues of faith, hope, and charity. Government cannot possibly make up for the lack of these virtues—for a lack of trust among those who buy and sell, who work and employ.
Government has an important supporting role to play. First, it should be broadly supportive of religious culture, which nurtures the virtues. It can do this without establishing any particular religion, so long as it allows religion into the public square, and stops attempting to erase all vestiges of religious expression in public life. Second, the law is a backup and support for honesty and justice in the marketplace. People are not always perfect and sometimes abuse the freedom they have. Wise laws can help us to be virtuous amid temptation—they can be teachers of virtue.
R&L: Lord Acton believed that liberty must exist within a moral framework. Would you agree? Why or why not? Could the same be said for markets?
Yuengert: I could not agree more. One of the themes of John Paul II's pontificate has been that true freedom must be obedient to truth or it is not really freedom at all. Although the cultural ideal today is that human beings can create their own reality and define for themselves the meaning of their lives, it is simply not true that humans are free to be whatever they want to be. The framework of truth about the human beings is provided by the virtues, by the moral law, and by the drama of our fall and redemption. We are free to live up to our humanity, and be happy. We are also free to ignore the truth about ourselves and reject the moral law as a restriction of our liberty, but that way leads to unhappiness and slavery to our own passions. As C. S. Lewis writes in The Great Divorce, we are free to drink or free to be thirsty.
Market exchange also needs a moral framework, because it is a human interaction. There is a truth about healthy human interaction that applies to exchange also. Parties to exchange ought to respect justice and exhibit genuine good will toward each other. Men who are at every opportunity willing to exploit each other and harm one another will not make good partners in exchange; businessmen know that they will not keep their customers if their customers do not trust them.
R&L: How do economics, liberty, and religion intersect with each other, if at all? What is the key point of intersection between these three?
Yuengert: I think the key link between these three is our creation in the image of God. We have been given a job to do by God—fill the earth and subdue it. We receive this job in some mysterious way as stewards of God, as co-creators, and in the fullness of redemption, as his children. True freedom is, I think, synonymous with 'responsibility,' or stewardship. We are free to do God's work in creation, as his partner. We can reject this responsibility, but when we violate his calling to us, we work against our created nature. We shouldn't expect fulfillment that way.
Our created nature as responsible stewards is what is behind John Paul II's emphasis on the right of economic initiative in Centesimus Annus. Widespread abridgement of this right, which happened under communism, leads not only to economic stagnation, but to a moral sickness, a sort of despair among those who are not allowed or able to take responsibility for their own development.
R&L: You have done some extensive work in the area of immigration. What is at stake here from a Christian and economic perspective?
Yuengert: From a broadly Christian perspective there is the biblical duty to respect, even to welcome, the foreigner. Catholic Social Teaching expresses this as a duty to respect the right to migrate, which is an aspect of the right to economic initiative.
The right to migrate is not absolute—it's not like the right to life, for example. It is simply a claim that we have a duty to take the interests of immigrants into account in our policy debates. The very real strain of immigration on state and local government finances, and its effects on U.S. workers, should be weighed against the very real and very large benefits of immigration to migrants themselves. For example, close to thirty billion dollars a year is sent to Latin American households by immigrants in the U.S. Isn't this relevant to the policy debates of a generous people? At the very least, it should factor into the policy equation, even if at the end of the day we find the benefits to immigrants and ourselves are not worth the costs.
R&L: It seems that the academy has similarly disdained the Christian faith as either antiquated or downright harmful to scholarship. How do you integrate your faith with your economics scholarship in a meaningful way amid such a hostile environment?
Yuengert: I haven't figured out this challenge to my satisfaction. I'm not sure that my faith has changed my scholarship, or that it should. The best I can do is to describe the nature of the secular environment in which economists work. In my experience most economists are not overtly hostile to religion. They are indifferent really. Economics is concerned with the 'facts' of the economy: prices, exchange, interest rates, etc., and it is not clear how religious faith might affect the way one explains these things. Any appeal to religious authority or religious sources of knowledge would be greeted with suspicion and derision by economists, as a threat to objectivity. It certainly would be counterproductive, since most economists do not accept religious authority or inspiration.
There is a way to allow faith to inform economic research that is acceptable in the discipline. It can be a source of inspiration for theories, which must then be tested in the same way as other economic theories are. Economists don't think very carefully about where theories come from, so long as they are measured against other theories and against data in some systematic way. Lately, economists have been open to more complicated views of human behavior—that people are not always selfish, or that they are not completely rational, for example. I think believing economists can draw on the insights that religion offers about human nature, engage the discipline on its own terms, and make a difference.