1. THE CRISIS AND THE KINGDOM E Philip Davis Penge Baptist Church and National Institute of Economic and Social Research

2. Why economics is relevant to Christians – link to Proverbs – Jurgen Moltmann “the neglect of economics is a wound in the side of the church”

3. The notion of humanity The positive (how things are) and normative (how they ought to be) Economics basis of human motivation self interest – not community, relationships (positive) or justice, ethics (normative) Economics is a good diagnostic tool but weak in terms of morality – indeed self defeatingly so

4. Biblical theology also positive and normative, e.g. in terms of the fall and dominance of self interest…but also scope for better choices (the holy) Broader and more rounded view of human motivation – community and relationships Stresses free choice but also responsibility, strong focus on justice Christians need to take a stand on economic issues

5. The financial sector 2007-9 events typical of crises in the past – credit boom, asset price bubble, risk taking, financial innovations poorly understood Economics highlights damage to the economy from bank failure Sees crisis as due to incentives, linked to safety net, too big to fail, “moral hazard” giving rise to disaster myopia (“this time it’s different”) Suggests people will only act in a trustworthy way if it’s worth it for them Acknowledges integrity and prudence needed to run banks, unable to provide a motivation for them, or to explain irrationality of bankers

6. Scripture addresses underlying issues, for example fall corrupted human relationships, also seen in competition among bankers, pride, desire to avoid responsibility. Bible full of examples of irrationality, such as wooden idols in Isaiah… …and also celebrates virtues such as honesty, putting others interests first (Philippians 2) Jesus accepts trade of finance but not its intrusion into relationships with God, money becoming an idol, enticing to pride, selfishness and greed

7. Ways forward should include focus of regulation on rewarding virtues (honesty, prudence, courage, justice) and not just enforcing values (list of rules to circumvent or ignore) Virtues depend on character, character learnt by example (Stephen Green HSBC) – Christians needed in City Not to treat banks as autonomous agencies – idolatry and avoidance of responsibility Reconsider size of banks and role of relationships in finance

8. Household debt Households not obliged to accept offers of debt Economics recognises myopia of individuals – current cohort especially “profligate” Long run damage from inadequate saving Short run risk of default or financial stress Economics can’t explain cause of irrationality

9. Biblically, issue is wealth and consumption became more core to life than relationships with others and God Irrationality of a generation that disowns its creator is unsurprising Warnings about debt as form of slavery (Nehemiah 5) and parallel to sin (Lord’s prayer) Provision for writing off debt in Bible only for poor who were obliged to borrow to survive Those entering contracts voluntarily and able to repay should do so “The wicked borrow and do not repay” Psalm 37 – but also lenders should show restraint in lending, willing extend terms Wider obligation for Christians to care for needy, including victims of their own folly

10. Ways forward should accept credit essential to households welfare, especially mortgage but needs to be linked to law of love (Calvin) – lower loan to value to protect borrowers Justice suggests greater taxation of housing needed to enable low income to afford Consumer credit needs greater regulation – cap on interest rates, credit card maxima linked to income, or restrictions on advertising for consumer credit Church needs to promote “save first” mentality, Proverbs 24:27 “Finish your outdoor work and get your fields ready; after that, build your house.” Christians need to consider whether been absorbed by consumer society – and show mercy to poor (CAP)

11. Public debt Economic distinction of cyclical and structural deficits – latter major cause of current difficulties Bible says we should support state (Romans 13) and latter should help the poor But no support for long term rising debt (Deuteronomy 15:6) – also because burdens future generations, visiting sins of fathers on children Governments running structural deficits mislead people about long run sustainability of debt also, by boosting growth

12. Student debt conditions people to consider indebtedness to be normal, weakens resistance to credit cards etc. Government was right to rescue banks, but also is right to reduce deficit Has to warn public when economic conditions resemble previous crises (“peace when there is no peace”) Like banks, government must not be treated as autonomous, that is idolatry – we must understand issues and hold individual MPs and ministers responsible

13. Summary Wrong to just blame the bankers – households and government also sought to maximise personal utility in the pursuit of self interest, showing greed, selfishness and impatience which was ultimately counter productive – and harmed innocent Particular concern for coming generation – student debt, public debt, priced out of housing Need for virtues to be promoted and relationship element of banking re-established

14. Tempering of pressure for ever more consumption Governments to recognise benefits of balancing budget over cycle Recognise issues of idolatry and resulting structural injustice – and take responsibility for it ourselves Do not allow economic thinking, focused on wealth, consumption and power, to drown out the proclamation of the Kingdom of God, the law of love for God and neighbour and responsible stewardship of resources Church is called to broadcast the biblical approach energetically

15. Forthcoming book “The Crisis and The Kingdom” published by Wipf and Stock, copies available today!