St Paul's Report, Economic and Social Commentary

Preface

This piece is based on Part 1 of a talk given in early May 2009 to help simply explain what is going on in the headlines of the world, to offer some understanding and hopefully prompt thinking and debate. The talk was for anyone who turned up and assumed little prior knowledge
There will be better and alternative views, especially since simplification necessarily means compromise; so some discernment is called for in the reading the colourful language and examples seek to explain boring things in an interesting way. Here are the slides that went with the talk. Several illustrations have been omitted in the writing of this piece as copyright was unclear
I have tried to link God’s word to what is happening, I am not trained in this, others will be far better than me, yet this is a missing link in most of the debate.
I desire to help the voice of the church and followers of Jesus speak into the world of today

Background Reflections

We live in a created world, God’s world; that creation is chronicled in the Bible
Here on the earth God has created us in his image, for his pleasure, we are His stewards of this created world, to serve Him here, to be part of “thy kingdom come”
Our created world is naturally in decay and that decay is also chronicled in the Bible. Taken as a whole the Bible can be read as God’s restoration plan for this decaying world.
1. Most decay is gradual; radioactive decay is a reliable measure giving rise to atomic clocks. Natural decay is slow to start and quick to finish, just think of the sand castle as tide comes in. Decay does not differentiate; whether it is the seasonal rotting of leaves, our aging, our leaders or the rise and fall of empires, like Babylonian, Greek, Roman, British. All have come and gone. History tells us that once something has peaked there is only one way; down
2. Every now and again man interferes with natural decay; in 1945 man interfered with radioactive decay by developing the atomic bomb, marking the ending of WWII whilst ultimately killing 145000 people in Hiroshima, or the discovery of penicillin uses decay for the benefit of man. Both these events could be deemed a breakthrough; millions of lives have been saved as a result (although nuclear weapons continue to be divisive).
3. When decay accelerates downwards (like global warming) or there is a discontinuity (like 911) in the wrong direction it is a crisis.
Despite our desire to simplify our world is complex, connected beyond our understanding, giving rise to intended and unintended consequences; rarely will there be a single cause of anything we observe.
1. Because it is a connected world what happens in one place spreads elsewhere, so a butterfly flapping its wings in the Amazon is speculated to create a hurricane in Asia.
In this connected world more and more things travel with both positive and negative implications

Some obvious

News travels ~ MTV, CNN, instantly on the internet, your phone; so the faces of poverty, famine and injustice are no longer hidden from us. Facebook and YouTube bring it to our desk in real time.
Goods and services travel ~ NZ sells milk to Latin America and buys TVs from China, Indians develop software for Microsoft in Seattle
People travel ~ for jobs, to relocate, for leisure
Technology travels, Microsoft Window
Knowledge travels via Google and Wiki
Fashion travels through global brands like Nike, Huffer, Vans
Music travels so US gangster rap is in Jo’burg and the Congo

Other less obvious

Pandemics travel; AIDS spread by often innocent behaviours. Bird and swine flu, spread by air travel
Drugs travel from Columbia to US increasing crime in Miami; from India to Canada increasing violence in Vancouver
Terrorism and outrage travel to become a global war on terror; pitching Al Qaeda against the West
Another Al, Al Gore galvanises ongoing debate on climate change; so sustainable development becomes an issue for all
Identity travels and so cultures erode and values dilute (hip hop and gangs in LA impact the communities of South Auckland

But isn’t this the connected world of Christ? Look at these Scriptures
1. In Matt 28 Jesus calls us to “make disciples of all nations”,
2. In Acts 1 He says ”be my witnesses…to the ends of the earth”) and
3. John in Revelation (13:7) writes of the coming Messiah “And he was given authority over every tribe, people, language and nation.”
This globalisation is part of God’s plan and we continually struggle to grasp this complex, connected, created world in which we live

A story of gluttony/excess consumption and greed

A modern parody of gluttony is Monty Python’s ‘Meaning of Life’ character Mr Creosote. In a fine dining room at the height of the British Empire he is the epitome of greed. Eating to his fill, being ever tempted until he is offered to finish his meal with a chocolate “mint patty”. He cannot resist. He explodes; the final outcome of greed and gluttony? Death.

GDP, CAD, Lehmans…………..”I just don’t get it”

A simple explanation? Lets look at how a family spends gets and spends its money:
1. A typical family has a number of sources of money, earnings from which tax is paid to the government, savings and borrowings such as credit cards.
2. The same family spends that money on things it consumes (food, clothing, health etc), things that last over time (housing etc) and savings.
3. So money comes in and money goes out
Countries are basically no different, they having money coming in:
1. The people of a country earn money through work and to the extent they spend more have to borrow (from within the country or from other countries) or spend less save the difference. Buying or selling to other countries (exports and imports) affects this balance
2. Countries are connect through their current accounts which show the borrowers and the lender countries, these are essentially equal and opposite
3. Over the last few years the amounts borrowed (and hence lent) have increased dramatically as shown in a presentation slide by W McKibben at the Lowy Institute. It is interesting to note that the developing nations (NIE or newly industrialised economies) are savers. So basically the USA and Europe is funded by China, the Oil States and some of the third world:

And countries have money going out. What countries spending looks like:

This is sourced from various national statistics, is approximate but paints a picture.

Household spending is on the everyday, investment is on things like new housing, plant machinery, computers etc and government spending is on things like salaries, health and education but not benefit payments. Overseas trading is the net of imports and exports, the US and NZ import more than they export
Note that 1% on this graph means: in the US = US$150B, in China = US$44B, and in NZ = US$ 1.3B.

So Americans borrowed money to buy things, to fund government expenditure (things like the Iraq war) and to invest in property, often in the hope of quick gains. Some of Europe followed suit, Iceland, Ireland, UK, Spain to name a few.
The borrowing has come from China and The Oil Countries, so in part the Muslim world has funded the Iraq war!
It looks like Americans borrowed too much and spent it on the wrong things. This looks and feels like gluttony as more and more was borrowed for more and more consumption and speculation.

So what happened in Sept 2009, a bank called Lehmans was like Mr Creosote had eaten a mint patty! It could have been one of several others banks that failed, Lehmans just were in the wrong place at the wrong time. It exploded because it had got too big and unstable to carry on; it had $Billions of debt but had multiplied those into $Trillions of commitments through writing future financial promises. It was overweight and interconnected to the world, the consequences were unintended but in all likelihood inevitable
The USA is approximately 25% wealth of the world. So the failure started in the biggest country. The failure of this one US bank spread to others in the USA, many were found to have done the same thing, eating at the same trough!
They simply become too large. Why? Greed by at least 3 groups, not understanding their interconnectedness, they all unknowingly conspired to tip the system over, not realising the consequences.
1. They were the Wall Street and European bankers (the Australasian banks are outliers in this, being referred to as “boring” sand safe, which is now a virtue), the politicians and consumers:

Banks lent for poor purposes, the greed of execs was probably the main contributor to poor bank performance being driven by weak, even corrupt, incentive schemes: they received large immediate rewards for growing the banks with no consequence for the subsequent failures
Governments and regulators over time made regulations easier (driven from the Thatcher era thinking), thereby promoting speculation but enjoying growing tax revenues as a result. Most politicians like to grow tax revenues!
People (that is you and me) borrowed for excessive consumption, for buying assets that lost value or for buying now what we should have waited for and many (especially in the US) could not afford to repay the loans. Personal discipline and common sense seems to have been lost in the frenzy.
This explanation glosses over the roles of the credit rating agencies, the “shadow banking system” of hedge funds, financial product derivatives and private equity etc

Warnings were not heeded, We all had money and possessions as our idols.

Banking is based on trust and confidence, when one fails trust and confidence is shaken, when many fail it is a crisis with its own life, it becomes a virus. This virus changed attitude from confidence embodied in greed and excesses to fear and loathing of the perpetrators. It takes years to build a reputation and minutes to destroy it. This is at the heart of what has gone wrong and rebuilding trust, reputation and confidence simply takes a long time to re-establish.
Like swine flu the responses were immediate, growing and wide ranging, From the US the loss of trust went to European banks, who, it turns out, had been even greedier. It then moved through to the everyday, to people in the street. Everybody started to feel less well off, more uncertain, less confident about their future, hesitant,
What does anyone do when in debt, when less confident
1. Stop spending, save what you can, pay off your debt as quickly as possible, hunker down
2. With reduced buying by us factories close in Europe and Asia (apparently 70000 factories have closed in China). What started as a financial issue has created uncertainty and unemployment throughout the world because “we are all in this together”.
How big is the damage? Some headline numbers
1. Approx 30 of world’s largest banks have failed or been nationalised, on top of previous injections major US banks need US$75B further capital injections, bank losses speculated US$2-4T
2. We have moved from millions and billions to trillions.
3. US$50T of wealth lost, (US$7500 for every person on earth) starting with the rich and spreading to everyone either directly or indirectly. People’s savings have been decimated, there are losses in pension savings, investments and house values; people feel and are poorer
4. Unemployment and threat of unemployment affects all, it is especially impacting for new graduates and older people, part time workers, ethnic groups, factory workers in the developing countries
5. Governments are trying to show confidence and do what they think are the right things. Governments are borrowing massively and using various tools to effectively borrow from future generations. Sorry but these generations will have to repay. We are likely to see cuts in government spending into the future and more government in our lives. These are bold but traditional responses; are the levers they pull still connected to make things better or worse?
What does this look like, anecdotally:
1. In Japan 10000 people are living under tarpaulins in Nagoya or overnighting in internet cafes, tent cities grow in California, demonstrations in Paris, London, etc, Iceland effectively bankrupt (the local term being “krappar”, which is self explanatory),
2. Unemployment and the threats of it are like pandemic, 23000 jobs a day being lost in the USA.
3. In NZ unemployment may get to 10%, with 9 day fortnights proposed, less part time jobs, less causal work, 4000 real estate agents gone, more students enrolling and extending, teacher training at all time high and tourism falling. House values down 20%. Very tough cuts in government spending speculated, maybe eventually hitting benefits, health and education
4. In NZ the Salvation Army services demand is up 20-50%, those no longer managing up 30%. Fishing from the Mangere Bridge is now for food not pleasure
5. It is those on the edge that are most affected, the World Bank say 50-100m people are being pushed back into poverty, an additional 2-400000 children will die each year, so the most vulnerable are even more vulnerable. And as the Archbishop of York reminds us we still live in a world where:

A child dies every three seconds due to extreme poverty, almost 10 million children a year.
A person dies from HIV/Aids every 11 seconds.
Approximately 1 in 7 children in the world – 270 million children – have no access to healthcare.
Every single day unsafe water coupled with a lack of basic sanitation kills 5,000 children.
Poor Governance, in countries such as Zimbabwe, has led to malnutrition, a crumbling health system and the outbreak of avoidable diseases, like cholera, claiming thousands of lives.

Where is God in this mess?

God is in every mess we are in, we just tend to lose sight of Him when the going gets tough
Let me finish tonight by pointing you towards some OT scripture which shows that

No matter what we think man has been in this type of predicament before
Scripture is consistent in its views on what happens when we get to this point, we face a choice and how we choose determines the outcome
Each time man can choose to persist with what was or to change, to repent and turn back to God,

We can reflect and learn from the Teacher’s wisdom in Ecclesiastes (summarised from http://www.gotquestions.org/Book-of-Ecclesiastes.html) :

a. The writer is gently trying to persuade us to change/repent and turn to God before we regret it

b. The first seven chapters of the book of Ecclesiastes describe all of the worldly things “under the sun” that the Preacher tries to find fulfilment in. He found that everything was meaningless, a temporary diversion that, without God, had no purpose or longevity.

c. Ecclesiastes 2:11, “Yet when I surveyed all that my hands had done and what I had toiled to achieve, everything was meaningless, a chasing after the wind; nothing was gained under the sun.”

d. Chapters 8-12 of Ecclesiastes describe the Preacher’s suggestions and comments on how a life should be lived. He comes to the conclusion that without God, there is no truth or meaning to life. He has seen many evils and realised that even the best of man’s achievements are worth nothing in the long run. So he advises the reader to acknowledge God from youth (12:1)

e. Ecclesiastes 12:1, “Remember your Creator in the days of your youth, before the days of trouble come and the years approach when you will say, "I find no pleasure in them."

f. He decides to accept the fact that life is brief and ultimately worthless without God. The Teacher advises the reader to focus on an eternal God instead of temporary pleasure and to follow His will

g. Ecclesiastes 12:13, “Now all has been heard; here is the conclusion of the matter: Fear God and keep his commandments, for this is the whole duty of man.”

We can also reflect and learn The Prophets, there are 17 books written by the Prophets, all in the OT, about one fifth of the Bible. The prophets do not try gently, they hit us hard;

a. The prophets speak into times when lots of people lose everything. They might not be defined in the same way as today's recessions and depressions; they were famines, plagues, natural disasters, extravagances and the consequences of military conquest. People suffered and died during these biblical meltdowns. Unlike today there were no governmental safety nets.

b. Prophets expose the reality, bring fear to God’s people, accept that judgment will be passed yet show hope. The first step is to change direction ~ to repent

c. Take the book of Amos He was a shepherd from a small village written about 750BC: just 7 pages in my bible (summarised from World Vision’s Faith In Action Bible from Zondervan):

Amos describes how periods of unusual prosperity can lead to spiritual complacency and ethical laxity which show in idolatry, self indulgence, immorality, injustice, corruption & oppression of the poor. He holds up the mirror
Amos states that true faith is expressed through actions, especially those concerned with social justice. Amos 5:24 but let justice roll on like a river, righteousness like a never-failing stream!
He prophesied that exploitation will be punished, the wealthy will lose all; God will expose them.
God calls his people to turn to him, to repent, because after judgement He will restore his people

Postscript