LIBERTY UNIVERSITY
HELMS SCHOOL OF GOVERNMENT
Submitted to Dr. Andrew Barbee
in partial fulfillment of the requirements for the completion of
PLCY 700
Foundations of Statesmanship and Public Policy
by
Joseph Casale
July 19, 2020
Contents
Introduction......................................................................................................................................1
Policies: Definitions and Discussions..............................................................................................1
Fiscal Policies.........................................................................................................................1
Monetary Policies...................................................................................................................3
Key Debates in Fiscal and Monetary Policies.................................................................................4
The Coordination Debate.......................................................................................................4
Economic Equality.................................................................................................................5
Inflation and Interest Rates....................................................................................................6
Employment and Unemployment..........................................................................................6
Ideology 8
Key State Failures in Fiscal and Monetary Policies........................................................................9
Economic Engineering Failures.............................................................................................9
Fragmentation of Governmental Responsibility..................................................................10
Ideological Failures..............................................................................................................10
Biblical Model of Government and Statesmanship.......................................................................11
A Brief Overview of the Biblical Model of Government.....................................................11
An Evaluation of Economic Policy Debates........................................................................12
An Evaluation of Key State Failures....................................................................................14
Conclusion.....................................................................................................................................15
Bibliography..................................................................................................................................17
ii
1
Introduction
The formation of sovereign and independent states during the last few decades came with a
new challenge on how to control national economies. From research and existing literature,
scholars and economists were able to develop several economic systems for this purpose. Of all
the proposed economic models, the free-enterprise system prevailed and has persisted to date.
The free market system is not without flaws because, since its inception, the concept of
economic policy has been contentious and controversial on several occasions. Fiscal policy and
monetary policy are the two options of an economic policy that are the genesis of the multiple
debates, controversies, and past failures of economic growth initiatives. Research studies show
that current economic policy debates are inherently flawed and doomed to fail since they fail to
acknowledge and adequately appreciate the Judeo-Christian heritage, which is the foundational
basis of economic policy values and conceptions.1 Consequently, this research study aims to
contribute and advance existing literature on the current debates and failures of modern
economic policies. By expounding on current economic policy debates and linking them to past
state failures in fiscal and monetary policies, this study will demonstrate that the biblical model
of government and statesmanship outlines relevant principles to direct these debates properly,
and thus avoid failures in the future.
Policies: Definitions and Discussions
Fiscal Policies
A fiscal policy is a strategic macroeconomic tool used by governments in efforts to control
and participate in the national economy in a free-market system. Fiscal policies are general
systems, programs or approaches including debt management, government expenditure and tax
policy that governments use objectively in exercising control over the economic activities of a
1 R. H. Nelson, "Sustainability, Efficiency, and God: Economic Values and the Sustainability
Debate," Annual Review of Ecology and Systematics 26, no. 1 (1995): 151,
doi:10.1146/annurev.es.26.110195.001031.
2
country.2 Ideally, a free-market system should be able to self-regulate such that when the
economic cycle is distorted, the system can restore itself through self-adjustment. However, this
is unattainable in practical settings since the free-market system has, in the past, failed to prevent
economic downturns. Consequently, government intervention was proposed and adopted as an
effective way to prevent or mitigate economic fluctuations. For instance, the US Congress
entrusted the federal government with the primary responsibility of economic growth by enacting
the Employment Act of 1946.3 With this new responsibility, the federal government was
empowered to use all available methods to ensure that high employment, maximum purchasing
power, and production were the main features of the national economy. Fiscal policies enable the
federal government to perform this assigned primary responsibility in addition to economic
stabilization.
There are numerous examples of fiscal policies that are based on different government
activities such as taxing, government spending, or national debt management. The expansionary
fiscal policy is a perfect example of a fiscal policy present in all the economic activities of the
government. In the US context, Congress passes bills to establish an expansionary fiscal policy
allowing the federal government to inject more money into the economy for circulation.4 Once
approved, the government proceeds to utilize the fiscal policy to expand the money supply in the
economy. This process entails tax reductions or increased government expenditure. For instance,
the federal government relied on an expansionary policy derived from the American Recovery
and Reinvestment Act and Economic Stimulus Act to overcome the detrimental economic impact
2 Clarke Cochran et al., "Economic Issues: Taxing, Spending, and Budgeting," in American Public Policy:
An Introduction (Boston: Cengage Learning, 2012), 86.
3 Cochran, "Economic Issues," 84.
4 Kimberly Amadeo, "Expansionary Fiscal Policy and How It Affects You: What Sets Bush, Obama, and
Trump Apart From Clinton," The Balance, last modified January 31, 2020,
https://www.thebalance.com/expansionary-fiscal-policy-purpose-examples-how-it-works-3305792.
of the 2008 fiscal crisis. The government was able to boost economic growth through funding
public projects, extending unemployment benefits, and reducing taxes.
Monetary Policies
In addition to fiscal policies, the government also employs monetary policies to control the
amount of money in circulation. In this regard, the term money is used to denote cash, credit, and
collateral asset. The use of monetary policies is relegated to the Federal Reserve Board (Fed),
which is endowed with discretionary powers to either increase or decrease the amount of money
in circulation.5 The use of monetary policies in US may cause dilemmas and conflicts in three
ways. To begin with, it is highly likely and probable that the interests of Congress, the President,
and the Fed might conflict concerning the use of monetary policies. Secondly, the use of
monetary policy to boost economic growth by increasing the amount of money circulation may
lead to the unintended consequence of inflation. Lastly, when the amount of money in circulation
is reduced, it may cause higher rates of unemployment. It is, therefore, vital to ensure that
monetary policies are designed in such a way that they only serve the intended purpose without
causing any unintended consequences.
A good example of a monetary policy is the US monetary policy, which entails the actions
of the Fed aimed at moderating long-term interest rates, stabilizing prices, and promoting
maximum employment. Some notable actions of the Fed regarding monetary policies entail
controlling the availability and cost of credit as well as capping short term interest rates. These
actions have an immediate, indirect impact that affects the prices of goods and services, currency
exchange rates and long-term interest rates. These actions render the monetary policy capable of
influencing inflation, employment, production, business investment, and household spending.
Throughout history, the US monetary policy has never been constant as new developments are
5 Cochran, "Economic Issues," 85.
factored into the policy. For instance, the US monetary policy in use before the late 1970s could
not be used to influence the exchange rates. This is because the Brenton Woods system used back
then was exclusively based on a fixed exchange rate system.6 However, the fixed system
introduced several systematic challenges prompting the emergence of floating exchange rates,
which were widely used in subsequent monetary policies.
Key Debates in Fiscal and Monetary Policies
The Coordination Debate
The economic policy comprises both a fiscal policy and a monetary policy that are used for
expansionary or contractionary purposes. In addition to having different economic purposes, the
two policies are assigned to different parties, whereby the federal government is tasked with
fiscal policies while the central bank is charged with the execution of monetary policies through
the Fed. Consequently, the issue of coordination has been debated widely as policymakers
attempt to establish what amounts to proper coordination between fiscal and monetary policies in
an economic policy. For instance, the debate on coordination has been manifested in the past,
whereby Fed has increased interest rates even without the approval of the federal government.7
Insights from research complicates this debate further by supporting both sides of the debate with
research evidence. In a research study to compare the effects of fiscal and monetary policies, the
researcher found out that a money-financed increase in expenditures or tax reduction is more
stimulative than a bond-financed increase.8 Fiscal policy supporters have opposed and strongly
criticized this proposition since there exists sufficient evidentiary literature showing that actions
based on fiscal policies have substantial effects on the aggregate demand. The coordination
debate persists and rages on in modern settings as it plays a significant role in formulating
6 Maurice Obstfeld, "Global Dimensions of US Monetary Policy," International Journal of Central
Banking 16, no. 1 (2019): 92, accessed July 8, 2020, doi:10.2139/ssrn.3463172.
7 Cochran, "Economic Issues," 85.
8 Bennett T. McCallum, "Monetary Versus Fiscal Policy Effects: A Review of the Debate," Review 66
(1984): 23, accessed July 10, 2020, doi:10.20955/r.66.9-29.rsy.
economic policies. This is because both policies interact in a complex manner to collectively
affect the economy such that responsible authorities are required to coordinate and determine an
objective economic policy capable of supporting economic growth.9
Economic Equality
In a free-market capitalist economy operating within a democratic regime, economic
inequalities are inevitable. This can be attributed to the most prominent features of a capitalist
economy, such as minimal government intervention, competitive markets, freedom of economic
exchange, and private property, which are well known to exacerbate existing economic
inequalities. A key debate on this topic is focused on efforts to reduce economic inequality.
Supporters of this debate cite the instrumental and intrinsic value of these efforts in addressing
socioeconomic ills caused by economic disparities. Notable socioeconomic issues in this debate
emanate from the negative impacts of economic inequality that subsume economic growth
deceleration, environmental degradation, erosion of social cohesion and trust, causing stress and
illness, undermining democracy, and violating norms of distributive justice.10 On the other side
of the debate, opponents strongly criticize these efforts arguing that an economic policy ought to
primarily focus on the equality of opportunity rather than the inequality of outcomes. In high-
income countries such as the US and the UK, this debate is supported more than it is opposed.
On the contrary, research studies have indicated that this debate should be opposed rather than
supported in developing countries. In support of this assertion, scholars have proposed that
poverty reduction, and not the reduction of economic inequality should be the focus of low-
income countries characterized by elevated levels of poverty.11
9 Antonio Afonso, Jose Alves, and Raquel Balhote, "Interactions between monetary and fiscal
policies," Journal of Applied Economics 22, no. 1 (2019): 132, accessed July 10, 2020,
doi:10.1080/15140326.2019.1583309.
10 E. Peterson, "Is Economic Inequality Really a Problem? A Review of the Arguments," Social Sciences 6,
no. 4 (2017): 165, doi:10.3390/socsci6040147.
11 Keith Payne, "Inequality in Black and White: The Dangerous Dance of Racial and Economic
Inequality," in The Broken Ladder: How Inequality Affects the Way We Think, Live, and Die (London: Penguin,
Inflation and Interest Rates
To promote economic growth, the two vital elements of inflation and interest rates should
be properly addressed in an economic policy. Ideally, the economic policy must establish a
desirable and acceptable rate of interest such that it fosters economic growth while at the same
time keeping inflation under control.12 Inevitably, debates have ensued from efforts to ascertain
what amounts to a proper and acceptable rate of interest for this purpose. In contributing to this
debate, some scholars have proposed the usage of macroeconomic models and data to analyze
the overall impact of previous interest rates. Accordingly, the analysis results would provide
useful insights for use in estimating future rates of interest. This proposition has received
substantial opposition from dissenting scholars who have argued that the validity and accuracy of
macro-based estimates cannot be ascertained due to the uncertainty about the correct
macroeconomic specification.13 In response to these criticisms, some studies have suggested
other methods for estimating interest rates. The methods are designed to either replace the
macro-based methods or complement them. For instance, a finance-based estimate method was
recently proposed to overcome the weaknesses inherent in macro-based methods in efforts to
validate resultant estimates.14
Employment and Unemployment
Even though fiscal and monetary policies are designed to boost the economy, economic
growth should not be pursued at the expense of societal welfare and wellbeing. It has been
proved in the past that this kind of economic growth is more detrimental than beneficial. For
instance, incentives introduced to the American policy during the mid-1960s were able to boost
the economy while at the same time increasing the level of poverty as many poor people were
2017), 146.
12 Cochran, "Economic Issues," 82.
13 Jens H. Christensen et al., "A New Normal for Interest Rates? Evidence from Inflation-Indexed
Debt," Federal Reserve Bank of San Francisco, Working Paper Series, 2017, 30, accessed July 10, 2020,
doi:10.24148/wp2017-07.
14 Christensen, "A New Normal for Interest Rates?" 30.
unemployed.15 Therefore, socialist reforms were initiated, and radicalization gained root and
increased practice in the American society. To avoid similar occurrences, the economic policy
was reviewed to incorporate full employment, which would be indicated by a 4 to 5 percent
unemployment. There have been debates on the role of government in lowering the
unemployment rate to acceptable limits. Some experts have opined that the government can
attain this objective by reintroducing the concept of a federal job guarantee. This suggestion has
been strongly supported by the public who believe that the federal government can collaborate
with local governments to implement a job guarantee program that will rescue thousands of
unemployed citizens out of poverty in addition to revitalizing the economy.16 Despite the
potential benefits and strong support of a federal job guarantee, the government has been
reluctant and speculative in utilizing it. This is because previous economic policies in the US
have adopted macroeconomic guidelines that have rendered worker displacement a prominent
aspect of the US labor market and thus negatively affecting the stability of employment.17
Immigration, offshore production, foreign trade, and technological change are some of the key
topics debated in the past with respect to unemployment due to job replacement.
Ideology
In a free-enterprise system, there are widespread social and political arguments of ideology
concerning the level and nature of government engagement in economic policy. This debate is
grounded on the fact that government involvement can be either productive or
counterproductive.18 A popular ideological debate entails the reduction of citizens' economic
15 Charles Murray, "Incentives to Fail I: Maximizing Short-Term Gains," in Losing Ground: American
Social Policy, 1950-1980, 10th Anniversary Edition (New York: Basic Books, 1994), 155.
16 Mark Paul et al., "A Path to Ending Poverty by Way of Ending Unemployment: A Federal Job
Guarantee," RSF: The Russell Sage Foundation Journal of the Social Sciences 4, no. 3 (2018): 60,
doi:10.7758/rsf.2018.4.3.03.
17 Jennie E. Brand, "The Far-Reaching Impact of Job Loss and Unemployment," Annual Review of
Sociology 41, no. 1 (2015): 361, doi:10.1146/annurev-soc-071913-043237.
18 Cochran, "Economic Issues," 82.
policy preferences for conformance to a single left-right dimension. Supporters argue that with a
unidimensional left-right pattern, it will be possible to address the interests of citizens and
politicians alike in an economic policy. Research studies have rejected this assertion on the basis
that it is impossible to fit all citizens' views into a single standard left-right dimension. In a
survey of economic interventionism and economic egalitarianism across 28 European countries,
researchers found out that only one country provided sufficient proof for a single economic left-
right dimension among voting citizens.19 Another debate on this topic entails the uncertainty and
visibility of government policy. Advocates argue that when the government policy is clear and
unambiguous, it enables medium- to long-term assessments such that economic growth and job
creation is enhanced. In countering this argument, government actors have said it is impossible to
have such a policy since there are multiple unforeseen issues and developments that necessitate
immediate policy review and revisions.20 Failure to reach a consensus on this debate has negative
implications for both supporters and opponents. Supporters, who are businesses and
entrepreneurs, have been unable to make informed and strategic investment decisions while
government actors on the opposing side have barely succeeded in their efforts to enhance GDP
and create job opportunities.
Key State Failures in Fiscal and Monetary Policies
Economic Engineering Failures
Ideally, an economic policy should prevent economic crises and recessions. This requires
government actors to properly link the two economic policy options through a political
compromise to resolve conflicting policy goals.21 In performing this precarious act of balancing
goals, states have relied on economic engineering experiments. These experiments have not
19 Simon Otjes, "What’s Left of the Left–Right Dimension? Why the Economic Policy Positions of
Europeans Do Not Fit the Left–Right Dimension," Social Indicators Research 136, no. 2 (2017): 658,
doi:10.1007/s11205-017-1575-7.
20 Jon L. Bryan, "The Impact of Government Policy on Economic Growth," Management Faculty
Publications, no. 23 (2013): 147, http://vc.bridgew.edu/management_fac/23.
21 Cochran, "Economic Issues," 84.
always produced the predicted outcomes, and in some cases the results are too catastrophic to
initiate an economic crisis. The Great Inflation of 1965 to 1982 is a good example of a case
where economic engineering experiments by government authorities failed terribly to initiate an
economic slump. Before this catastrophic event, all responsible government actors, including
Fed, White House, and Treasury, agreed that unemployment and inflation had a trade-off that
could be manipulated through careful economic engineering.22 Convinced that they had
discovered a New Keynesian model of economics, state actors proceeded to implement their
efforts to reduce unemployment and mitigate the possibility of recessions. The futility of the
New Keynesian model became evident after the first application and persisted for the next 18
years. It has been shown that the New Economics model was erratic in three ways, including
mismeasurement of potential output, reliance on Phillips Curve for trade-off exploitation, and
Keynesian active intervention in aggregate demand.23 By using a flawed and assumptive
economic model, government authorities initiated the Great Inflation that significantly damaged
the American economy as well as other global economies.
Fragmentation of Governmental Responsibility
A second area where states have failed in the creation of effective economic policy entails
the multiple number of government actors involved. Federal and state governments, Congress,
and Fed are some actors who share the responsibility of an economic policy. Even though every
actor is assigned distinct roles and responsibilities, structural fragmentation lessens the degree of
centralized control and coordination over the US economic policy. The Great Financial Crisis
(2006-2009) was a product of this structural fragmentation as it originated from the gigantic
22 Robert L. Hetzel, "The Monetarist-Keynesian Debate and the Phillips Curve: Lessons from the Great
Inflation," Economic Quarterly 99, no. 2 (Summer 2013): 106,
https://www.richmondfed.org/~/media/richmondfedorg/publications/research/economic_quarterly/2013/q2/pdf/hetze
l.pdf.
23 Michael D. Bordo and Athanasios Orphanides, "Introduction to "The Great Inflation: The Rebirth of
Modern Central Banking"," in The Great Inflation: The Rebirth of Modern Central Banking (Chicago: University of
Chicago Press, 2013), 20, http://www.nber.org/chapters/c9155.
credit bubble present in the US housing market. A report by the Financial Crisis Inquiry
Commission reported that the US credit bubble had tremendously grown over a period as several
government actors failed to execute their duties effectively. This report cites poor corporate
governance, government-supported moral hazard, Congressional and executive branch
interference in the mortgage markets, and massive SEC and Fed regulatory failure as the main
causes of the GFC.24 GFC demonstrates the negative impact of the failure of multiple
government agencies and administrations to control monetary, supervisory, regulatory, and fiscal
policies.
Ideological Failures
Fiscal and monetary policies created using scientifically proven economic principles can
generate maximum benefits to the economy. However, the complete application of economic
ideologies is hindered by political factors that have historically influenced economic policies. In
such cases, these policies produce limited benefits, and, in some instances, these modest benefits
are nonexistent due to the catastrophic nature of politically controlled policies. The scientific
reasoning behind Keynesian macroeconomic theory requires an expansionary policy to be used
during recessions while an austerity policy be utilized during periods of economic growth.25 In
many economies across Europe and America, this principle appears only in writing since, in
practice, only the expansionary economic policy has been widely used. This tendency is
politically informed since it allows governments to borrow at any period without any limitations.
As a result, national governments have accumulated financial liabilities due to high national
debts. These unfavorable outcomes have a negative impact on the performance of economy. For
24 Kevin Wilson, "Money For Nothing: When Fiscal And Monetary Policy Fail Simultaneously (Part II),"
Seeking Alpha, last modified August 13, 2018, https://seekingalpha.com/article/4198713-money-for-nothing-when-
fiscal-and-monetary-policy-fail-simultaneously-part-ii.
25 Carlos Encinas-Ferrer, "Fiscal and Monetary Policy in Optimal and Non-optimal Currency Areas: The
Discussion between Austerity and Countercyclical Policy," Procedia Economics and Finance 24 (2015): 211,
doi:10.1016/s2212-5671(15)00649-8.
instance, Fed has been unable to stimulate faster economic growths using expansionary policies
due to sustained negative real interest rates and an ever-escalating balance sheet.26 Similarly, the
failure of the US government to alternate the use of austerity and expansionary fiscal policy as
recommended in Keynesian theory has seen the general national debt rise to 100 percent of GDP.
Biblical Model of Government and Statesmanship
A Brief Overview of the Biblical Model of Government
Throughout history, the Christian faith has played significant roles in the formation and
dissolution of governments. The Roman Empire is an example of past government regimes,
whereby Christian principles had significant influences. The biblical model of government has its
origins in the Old Testament when God instructed Moses on how a civil government would be
formed after the Israelites left Egypt. The Hebrew Republic was a product of these instructions
that God gave to Moses. Found in the Old Testament book of Deuteronomy 16:18-20, these
guiding principles are the foundational basis for understanding the biblical model.27 Due to their
classic and timeless nature, these biblical principles are relevant and applicable to modern
governments. In particular, the biblical model of government and statesmanship can be used to
evaluate the current debates and key state failures concerning fiscal and monetary policies.
An Evaluation of Economic Policy Debates
Several debates on economic policy arise from the competing roles performed by fiscal
and monetary policies. Concisely, the four debates on economic equality, employment and
unemployment, inflation, and interest rates are some of the economic policy debates under this
category. The biblical model of government provides relevant guiding principles that can be used
26 Mickey D. Levy, "Sorting Out Monetary and Fiscal Policies," Cato Institute, last modified February 8,
2018, https://www.cato.org/cato-journal/winter-2018/sorting-out-monetary-fiscal-policies.
27 William O. Einwechter, "The Biblical Model for Civil Government," Chalcedon, last modified March 1,
2000, https://chalcedon.edu/magazine/the-biblical-model-for-civil-government.
to either eliminate or properly direct these debates. From a biblical perspective, the debate on
economic equality should be treated as an argument on economic rights that should be guided by
the principles of love and justice since economic rights reflect the partiality in justice, which
comes when justice is based on love.28 These debates have persisted because political
considerations are singly factored when creating an economic policy. However, the biblical
approach overcomes these inherent limitations by adding a moral aspect as a primary
consideration. Because of the close association between political power and justice, the biblical
principle of love would enable policymakers to eliminate the controversies surrounding these
debates.
Deviation from practicing Christian ethics on economic matters gives rise to the second
category of debates. For instance, the debate of ideology emanates from the numerous and
different schools of economic thought based on worldview considerations rather than biblical
principles. Research studies show that modern economists work in a highly dilemmatic
environment where prevailing secular-humanist and materialistic values replace Christian
ethics.29 This is in addition to the emerging practice of relying on peer approvals to select
methods of inquiry and pursue specific goals. According to biblical principles, this approach
would not succeed since the Bible states explicitly that the Word of God is the foundation for all
knowledge.30 This biblical principle appears in two Old Testament books (Proverbs 8:13 and
Ecclesiastes 12:13) as well as in two New Testament books (Matthew 4:4 and 1 Corinthians
28 Stephen Mott, "The Contribution of the Bible to Economic Thought," Transformation: An International
Journal of Holistic Mission Studies 4, no. 3-4 (1987): 32, accessed July 11, 2020,
doi:10.1177/026537888700400405.
29 Arnold McKee, "Christian Economic Policy and the Role of Economic Science," Review of Social
Economy 45, no. 3 (1987): 256, accessed July 11, 2020, doi:10.1080/00346768700000014.
30 Judd W. Patton, "Economics 101: Is There a Christian Perspective on the Economy?," Bellevue
University's Economic Department, accessed July 11, 2020,
https://jpatton.bellevue.edu/biblical_economics/economics101.html.
1:19-20). From these readings, it is evident that the fear of God is the genesis of all Christian
knowledge, understanding, and wisdom.
The last category of debates egresses from the practice of political power, featuring the
previously discussed coordination debate. Several government actors, including Fed, Congress,
the US President, federal and state governments, share economic policy responsibilities. To avoid
these kinds of conflicts and debates, government actors should adhere to relevant biblical
paradigms when executing their duties. In this regard, a good place to begin would be Isaiah
33:22 and James 4:12, where it is premised that as the Creator and Lawgiver, God has given
inexorable laws governing human behavior, in whatever realm humans may interact.31 Life and
prosperity come from obeying these laws, while disobedience leads to death and infirmities. The
biblical model enhances the interpretation and understanding of the US Constitution, whose
conceptions and institutions of law and civil government were derived from the biblical
perspectives on political society, civil authority, and human nature.32
An Evaluation of Key State Failures
The preceding evaluation of economic policy debates shows that the biblical model of
government outlines pertinent principles that would have prevented key state failures in fiscal
and monetary policy. Had government actors considered the biblical view of human nature, their
economic engineering efforts would not have failed. From a biblical point of view, the
manifestation of human nature is twofold such that on one hand, humans are created in the image
of God, and on the other, humans are sinful. The former aspect enables humans to control the
economic system, while the latter aspect makes humans exploitative and greedy.33 The two
31 Patton, "Economics 101."
32 Daniel L. Dreisbach, "Liberty Under Law Was Always Rooted in Biblical Principles," TheHill, last
modified September 20, 2017, https://thehill.com/opinion/white-house/351540-liberty-under-law-was-always-
rooted-in-biblical-principles#:~:text=The%20most%20basic%2C%20fundamental%20features,Federalist
%2037%2C%20%E2%80%9Cthe%20infirmities%20and.
33 Kerby Anderson, "Bible and Economics," in CHRISTIANS AND ECONOMICS: A Biblical Point of
View (Cambridge, OH: Christian Publishing House, 2016), 5.
aspects of human nature must be considered together since they perform different but
complementary roles. Previous economic engineering efforts were doomed to fail because
advocates and participants were oblivious to the second aspect of human nature. This contrasted
with the biblical intent of mankind since God created humans to reflect him through their loving
service to one another and the rest of the creation.34 It is, therefore, demonstrated that the
economic engineering failures were inevitable since they were dominated by self-enhancing
values rather than the self-transcending values proposed in the biblical model.
The intersectionality of structural fragmentation and ideological differences affected
resultant economic policies significantly to initiate the key state failures. The biblical model
offers useful insights that would have prevented the failures. Structural fragmentation should
have promoted rather than hindered the success of government efforts because the biblical
model, as well as economic theory, recognize that division of labor is a fundamental social
phenomenon.35 This fundamental principle was inapplicable due to the multiple underlying
factors informing the process of policy creation. From a biblical perspective, ideological
differences should not have led to these massive failures if the exercise of power had been
centered on God as the absolute ruler and source of all knowledge and understanding. This is
because policy disagreements are bound to happen when the policymakers are blindsided due to
a lack of greater understanding and awareness of pertinent biblical considerations.36 The
formulation of the New Economics model was based on worldviews, political interests, and
human understanding. In 1 Corinthians 1:19-20, it is prophesized that knowledge acquired from
34 Kevin J. Timmer, "Putting the ‘And’ Back into Genesis 2:15," Pro Rege 41, no. 4 (June 2013): 33,
http://digitalcollections.dordt.edu/pro_rege/vol41/iss4/4.
35 Shawn Ritenour, "Five Ways the Bible and Economic Principles Are Connected," Institute For Faith,
Work & Economics, last modified April 26, 2019, https://tifwe.org/five-ways-the-bible-and-economic-principles-
are-connected/.
36 Robert H. Nelson, "Bringing Religion into Economic Policy Analysis," Energy, Environment & Natural
Resources 37, no. 1-2 (Spring 2014): 57,
https://www.cato.org/sites/cato.org/files/serials/files/regulation/2014/4/regulation-v37n1-2.pdf.
such an approach will turn out to be futile and unfruitful since God is the only true and reliable
source of Christian knowledge, understanding, and wisdom.
Conclusion
From the preceding discussions and analyses, it is evident that there are two major sources
of economic policy debates. The first source entails the dual nature of economic policies,
whereby the two main constituents perform contrasting but complementary roles. The second
source entails the different parties responsible for implementing the two aspects of economic
policies. Notable debates from these sources include economic equality, employment, inflation,
and interest rates, as well as ideological differences. From these debates, responsible government
actors have acquired insights whose implementation proved to be catastrophic. As a result, states
have failed in the areas of coordination, structural fragmentation, and ideological differences. An
evaluation of these debates and failures within the context of a biblical model of government and
statesmanship shows their inevitability since they are grounded on a flawed and assumptive
system. These findings are consistent with previous studies on the same subject, whereby it has
been shown that past economic policies have failed because of ignoring biblical principles upon
which the moral and leadership aspect of the constitution was based.
Bibliography
Afonso, Antonio, Jose Alves, and Raquel Balhote. "Interactions between monetary and fiscal
policies." Journal of Applied Economics 22, no. 1 (2019), 132-151. Accessed
July 10, 2020. doi:10.1080/15140326.2019.1583309.
Amadeo, Kimberly. "Expansionary Fiscal Policy and How It Affects You: What Sets Bush,
Obama, and Trump Apart From Clinton." The Balance. Last modified January 31, 2020.
https://www.thebalance.com/expansionary-fiscal-policy-purpose-examples-how-it-
works-3305792.
Anderson, Kerby. "Bible and Economics." In CHRISTIANS AND ECONOMICS: A Biblical
Point of View, 4-19. Cambridge, OH: Christian Publishing House, 2016.
Bordo, Michael D., and Athanasios Orphanides. "Introduction to "The Great Inflation: The
Rebirth of Modern Central Banking"." In The Great Inflation: The Rebirth of Modern
Central Banking, 1-22. Chicago: University of Chicago Press, 2013.
http://www.nber.org/chapters/c9155.
Brand, Jennie E. "The Far-Reaching Impact of Job Loss and Unemployment." Annual Review of
Sociology 41, no. 1 (2015), 359-375. doi:10.1146/annurev-soc-071913-043237.
Bryan, Jon L. "The Impact of Government Policy on Economic Growth." Management Faculty
Publications, no. 23 (2013), 140-149. http://vc.bridgew.edu/management_fac/23.
Christensen, Jens H., and Glenn D. Rudebusch. "A New Normal for Interest Rates? Evidence
from Inflation-Indexed Debt." Federal Reserve Bank of San Francisco, Working Paper
Series, 2017, 01-39. Accessed July 10, 2020. doi:10.24148/wp2017-07.
Cochran, Clarke, Lawrence Mayer, T. Carr, N. Cayer, and Mark McKenzie. "Economic Issues:
Taxing, Spending, and Budgeting." In American Public Policy: An Introduction,
10th ed., 81-108. Boston: Cengage Learning, 2012.
Dreisbach, Daniel L. "Liberty Under Law Was Always Rooted in Biblical Principles." TheHill.
Last modified September 20, 2017. https://thehill.com/opinion/white-house/351540-
liberty-under-law-was-always-rooted-in-biblical-principles#:~:text=The%20most
%20basic%2C%20fundamental%20features,Federalist%2037%2C%20%E2%80%9Cthe
%20infirmities%20and.
Einwechter, William O. "The Biblical Model for Civil Government." Chalcedon. Last modified
March 1, 2000. https://chalcedon.edu/magazine/the-biblical-model-for-civil-government.
Encinas-Ferrer, Carlos. "Fiscal and Monetary Policy in Optimal and Non-optimal Currency
Areas: The Discussion between Austerity and Countercyclical Policy." Procedia
Economics and Finance 24 (2015), 208-217. doi:10.1016/s2212-5671(15)00649-8.
Hetzel, Robert L. "The Monetarist-Keynesian Debate and the Phillips Curve: Lessons from the
Great Inflation." Economic Quarterly 99, no. 2 (Summer 2013), 83-116.
https://www.richmondfed.org/~/media/richmondfedorg/publications/research/economic_
quarterly/2013/q2/pdf/hetzel.pdf.
Levy, Mickey D. "Sorting Out Monetary and Fiscal Policies." Cato Institute. Last modified
February 8, 2018. https://www.cato.org/cato-journal/winter-2018/sorting-out-monetary-
fiscal-policies.
McCallum, Bennett T. "Monetary Versus Fiscal Policy Effects: A Review of the
Debate." Review 66 (1984), 9-29. Accessed July 10, 2020. doi:10.20955/r.66.9-29.rsy.
McKee, Arnold. "Christian Economic Policy and the Role of Economic Science." Review of
Social Economy 45, no. 3 (1987), 243-258. Accessed July 11, 2020.
doi:10.1080/00346768700000014.
Mott, Stephen. "The Contribution of the Bible to Economic Thought." Transformation: An
International Journal of Holistic Mission Studies 4, no. 3-4 (1987), 25-33. Accessed
July 11, 2020. doi:10.1177/026537888700400405.
Murray, Charles. "Incentives to Fail I: Maximizing Short-Term Gains." In Losing Ground:
American Social Policy, 1950-1980, 10th Anniversary Edition, 10th ed., 154-166. New
York: Basic Books, 1994.
Nelson, R. H. "Sustainability, Efficiency, and God: Economic Values and the Sustainability
Debate." Annual Review of Ecology and Systematics 26, no. 1 (1995), 135-154.
doi:10.1146/annurev.es.26.110195.001031.
Nelson, Robert H. "Bringing Religion into Economic Policy Analysis." Energy, Environment &
Natural Resources 37, no. 1-2 (Spring 2014), 52-57.
https://www.cato.org/sites/cato.org/files/serials/files/regulation/2014/4/regulation-v37n1-
2.pdf.
Obstfeld, Maurice. "Global Dimensions of US Monetary Policy." International Journal of
Central Banking 16, no. 1 (2019), 73-132. Accessed July 8, 2020.
doi:10.2139/ssrn.3463172.
Otjes, Simon. "What’s Left of the Left–Right Dimension? Why the Economic Policy Positions
of Europeans Do Not Fit the Left–Right Dimension." Social Indicators Research 136,
no. 2 (2017), 645-662. doi:10.1007/s11205-017-1575-7.
Patton, Judd W. "Economics 101: Is There a Christian Perspective on the Economy?" Bellevue
University's Economic Department. Accessed July 11, 2020.
https://jpatton.bellevue.edu/biblical_economics/economics101.html.
Paul, Mark, William Darity Jr., Darrick Hamilton, and Khaing Zaw. "A Path to Ending Poverty
by Way of Ending Unemployment: A Federal Job Guarantee." RSF: The Russell Sage
Foundation Journal of the Social Sciences 4, no. 3 (2018), 44-63.
doi:10.7758/rsf.2018.4.3.03.
Payne, Keith. "Inequality in Black and White: The Dangerous Dance of Racial and Economic
Inequality." In The Broken Ladder: How Inequality Affects the Way We Think, Live, and
Die, 134-151. London: Penguin, 2017.
Peterson, E. "Is Economic Inequality Really a Problem? A Review of the Arguments." Social
Sciences 6, no. 4 (2017), 147-171. doi:10.3390/socsci6040147.
Ritenour, Shawn. "Five Ways the Bible and Economic Principles Are Connected." Institute For
Faith, Work & Economics. Last modified April 26, 2019. https://tifwe.org/five-ways-the-
bible-and-economic-principles-are-connected/.
Timmer, Kevin J. "Putting the ‘And’ Back into Genesis 2:15." Pro Rege 41, no. 4 (June 2013),
27-34. http://digitalcollections.dordt.edu/pro_rege/vol41/iss4/4.
Wilson, Kevin. "Money For Nothing: When Fiscal And Monetary Policy Fail Simultaneously
(Part II)." Seeking Alpha. Last modified August 13, 2018.
https://seekingalpha.com/article/4198713-money-for-nothing-when-fiscal-and-monetary-
policy-fail-simultaneously-part-ii.
