Friday, November 19, 2010

Christianity and “The New Normal”

In the aftermath of what is frequently being referred to as “The Great Recession,” many Americans have been asking 1) when does the recovery really get going; and 2) what can be done to jump start the economy? People want to know when things will get back to normal. While pastors and most Christian leaders are not economists, and their message is not fundamentally an economic one, they have an interest in these concerns for many reasons. They share in the grief of church members and friends who have lost jobs or otherwise suffered because of the economic downturn. They also have struggled with shrinking budgets, as church members who have lost jobs, made decisions to put more of their money into paying off debt, or otherwise have less disposable income have cut back on charitable giving while also reducing other personal expenses. When will things get back to normal?

What if they don’t?

The expectation of a return to normal is reasonable, as doing so would follow the same general pattern of every recession experienced in the United States since World War II. The typical recession and its aftermath follow a pattern resembling the letter “V.” A downturn during which the nation experiences some amount of economic pain is eventually followed by a movement upward, with the economy getting back to where it was at the start of the recession. Generally, the sharper the downturn, the more rapid the recovery will be. Economists sometimes speak of a “double dip recession,” which more resembles a “W” because there are two downturns, but the same principle applies. Things eventually get back to where they started, and further economic growth can move the nation forward from that new starting point.

However, some economists are suggesting that this typical pattern does not apply to a recession such as the financial sector based global downturn that has just occurred. A normal recession represents a period of adjustment in the business cycle, but the recent one is not so much an adjustment as it is a reset. This is because much of what was “normal” was actually artificial, in that it was built on illusory wealth. Those of varying public policy philosophies can debate the mixture of political and monetary policies that led to the housing bubble and the explosion of easy credit, but it is almost universally agreed that those policies ultimately created pent up demand based on housing values and other forms of wealth and credit that were not real. Because the prosperity was artificial in the first place, it cannot really be described as “normal.” Once the housing bubble burst, and the artificial effects of the bubble disappeared, that illusory wealth was gone – and it is gone for good. As a result, a return to normal will not include the artificial prosperity created by the financial bubble. Rather, in simple terms, it will be a return to previous levels, minus whatever amount of economic effect was not real in the first place. While this most directly impacts the housing sector – people built and bought houses based on assumptions about their values that proved to be incorrect and illusory – it affects essentially all other sectors of the economy, as well. People made a whole array of purchasing and credit decisions based in large part on false beliefs about the value of their real estate assets. This generated a difficult to determine amount of economic activity that will not be returned, because it was never normal in the first place.

Economists talking about the new normal argue that the recovery will not look like the traditional “V.” Rather, it will look more like the Nike swoosh. The economy has stopped declining sharply, but the recovery is only slight in comparison.

I first began hearing talk of this “new normal” a little over a year ago as the recovery was just starting. While it will take time before we can know for sure, what we have seen over the last year would tend to corroborate this view.

If this turns out to be the case, it has enormous economic, political, social, and cultural implications, not the least of which is the fact that many of the millions of jobs that disappeared during The Great Recession will never return. Wages for those with jobs can also be expected to remain static. We live in a complex, highly regulated society that has built an enormous infrastructure, both public and private, based on generally optimistic assumptions. Basically, there is an unspoken assumption that prosperity will generally increase over time in order to pay for and maintain all of the legacy systems we have created – entitlement programs, pension benefits, health care and education system infrastructures, the military, transportation systems, and so forth. These complex systems can for the most part adapt to temporary downturns expected of our normal business cycle, but a more permanent reduction is an entirely different matter that will cause considerable pain.

As an example, a large part of the stimulus package adopted in the first days of the Obama administration went to prop up state Medicaid and education programs, with the assumption that the states needed temporary assistance before an improved economy refilled their fiscal coffers. The weak economy has left these states with an increased dependence on further Washington bailouts, as the delay of what would have been painful choices now appears to be yet more draconian as state revenues continue to lag in most parts of the country. At this year’s meeting of the National Conference of State Legislators, an aide to the President implored legislators to contact their congressmen about pushing through further aid. Indeed, without a robust recovery, agencies of state governments, most of which have constitutional requirements to balance their budgets, will eventually have to perform their work on smaller budgets and with less resources. Before Christians become too smug in their criticism of government for falling into this situation, they should be careful to look to see if they have created local church and denominational infrastructures that have put them at much the same risk.

Now for the Bad News

This new normal could not have come at a worse time for the United States. This reset of the economy hastens the impact of other factors weighing on the economic future of the country. These factors increase the strain on scarce resources while also slowing productivity growth:

Demographics. Increasing life spans in combination with declining birth rates are resulting in aging populations throughout the western world. For years, analysts have warned of the changes that will come with the retirement of the baby boomer generation, but other factors contribute to this, as well. In the United States, due to improved health care, people over 100 years of age comprise the fastest growing segment, in percentage terms, of the population, while birth rates would not be sufficient to sustain our present population if not for immigration growth. This changing population demographic will increasingly strain resources, particularly in health care, while also reducing the percentage of people actively engaged in the labor force.

Traditionally, demographic charts have resembled pyramids. At the base one finds a large number of children. At the top, there is a relatively small population of centenarians. In the western world, increasingly, due to declining birth rates and increased longevity, these charts look more like rectangles. In Russia, the pyramid is already starting to invert.

If these trends continue in the United States, there will not be enough people of working age to support the menu of services and entitlements that society demands.

Entitlements. As federal, state, and local governments face the prospect of reduced revenues for existing programs, they also should be preparing for increased reliance on Social Security and Medicare programs, as well as issues related to the underfunding of public employee pension plans. Changes in Social Security tax rates adopted in the 1980’s provided the program with a surplus for the years since, but those surpluses have gone away, and, in addition, excess funds in past years were used to purchase treasury bonds in order to fund the general budget, meaning that those monies supposedly held in a “lock box” now in fact represent a liability for the federal government. The underfunding of public employee pensions at all levels of government is an underappreciated looming crisis that may ultimately cause people to wish for the good old days of the housing meltdown. With an ever growing federal deficit, the idea of federal insolvency, which once seemed to be the worry of alarmists, is becoming more of a possibility.

Education. The American education system has for years been a cause of concern, and ever increasing education expenditures have not delivered much in the way of tangible results. As the world moves from a primarily industrial based economy to a largely technology based one, our education system is not really well prepared or even structured for this changing world. Much of our science and technology expertise comes from overseas, but Chinese and Indian engineers may be more likely to stay home as their own countries become more developed and offer greater opportunities. Meanwhile, vocational type training also does not meet the nation’s needs for skilled tradesmen, and our system of secondary education is mediocre, at best. Entrenched interests make the kind of fundamental restructuring needed by our system extremely difficult.

Americans have traditionally regarded access to education as the key to economic opportunity for the poverty stricken, but this idea is being undermined by the demise of inner city public education systems. Inner city schools, which, in addition to poverty, must respond to a whole range of social pathologies resulting from the ever decreasing numbers of students possessing the advantages of intact family structures, have largely responded to those pressures by reducing academic standards. This only serves to widen the gap between advantaged and disadvantaged students. At a point in time when science and math education provides the primary key to advancement in a technology driven global economy, large numbers of American students will not qualify due to the lack of academic rigor. Not only does this portend badly for those individual students, it also undermines the economic competitiveness of the nation, reduces the pool of potential workers in many key fields, and deepens the problems of a dependent class.

There are no easy answers to the problems raised by these various factors. Even with the best political leadership making the best policy choices, the future will be painful for many. No one really expects the leadership of either major political party to rise to the occasion, so the future will likely hold more pain than that. When a preliminary report of findings related to federal budget concerns by a commission appointed by President Obama were released in November, Democrats responded with anger while Republicans remained silent rather than offer any public support. This suggests a continued bipartisan tendency by American political leaders to pass the buck rather than face difficult and potentially unpopular issues. Under a worst case scenario, the nation could become insolvent and dissolve into unproductive chaos as it tries to maintain its regulatory hold while being overwhelmed by an unsustainable debt and tax burden. Given more hopeful assumptions, the United States may meander along, no longer driving the world’s economic engine due to the strain of legacy costs on its productive resources.

What has this to do with Christianity?

Jesus Christ lived, was crucified, and rose from the dead less than a century after Julius Caesar crossed the Rubicon and became the first of the Roman emperors. As Christianity spread throughout the Empire, believers were subjected to much persecution, and the Apostle Paul was executed by the Emperor Nero. Still later, John the Apostle was exiled to the Isle of Patmos with the intention that he should die there.

In spite of this open hostility, Christianity continued to spread, and its acceptance in the Empire increased. Around 320 A.D., the Emperor Constantine claimed conversion, and Christianity became a nationally accepted religion. Increasingly, Christianity became culturally identified with the Empire.

However, by this time, Rome was beginning its long slow decline, and by the start of the fifth century, it became apparent that it would fall.

It was in that context that Saint Augustine wrote The City of God. Because Christianity had become so closely linked with the Empire, its adherents had the looming sense that the fall of Rome also meant the fall of Christianity. Augustine’s book was intended to contrast the City of God from the cities of man. The City of God is eternal, while the cities of man are temporal. Although Christianity had grown up during the period of the Roman Empire, the Empire was not responsible for the Church’s founding, and it was not the source of Christianity’s power or authority. Regardless of what happens with earthly kingdoms, the Kingdom of God will last forever.

It is not uncommon for Christian churches in the United States to have both American flags and Christian flags in their sanctuaries, but these are allegiances that should not be confused. Certainly, American Christians should be thankful for religious freedoms acknowledged by the First Amendment and for the generally benevolent attitude of the public and the government toward the Christian enterprise. However, never should the church imagine that her continuance depends on any earthly regime. The Church’s one foundation, the song goes, is Jesus Christ her Lord, not the Declaration of Independence. The apostles and prophets, not the founding fathers, provide the Church’s message and authority. The Gospel, not The Constitution, is the power of God that leads to salvation for everyone who believes.

Certainly, the decline of the United States would be painful, both economically and emotionally for all who love home and country. But, the eternal condition of our lives and souls is not at stake. Furthermore, while Christianity has diminished in Europe and is now declining in the United States, it is growing exponentially in many parts of the Third World. Thus, we can sing with Luther:

Let goods and kindred go;
This mortal life also.
The body they may kill;
God’s truth abideth still.
His Kingdom is forever.

The Path Not to Follow

Unfortunately, the contemporary American church is not well prepared for this moment in time. The liberal churches, having turned to philosophical naturalism and its attendant academic fads, have jettisoned much that is transcendent and enduring in historic Christianity. Meanwhile, many evangelical churches, while continuing to include the right beliefs in statements of faith buried somewhere on their websites, now emphasize a type of ministry that seems designed to get people to add Christianity to their lives as a means of becoming more fulfilled while retaining their cultural commitments.

These efforts at relevance have come at a tremendous cost. If the culture is passing away, there is not much future in making people more at peace in it. Christianity has ultimate answers to the big questions and subjects: God, sin, forgiveness, heaven, hell, death, suffering, justice, and mercy. Answering the ultimate questions is what makes Christianity relevant in a world of banality and triviality. Sadly, churches have tried to appeal to the contemporary audience by attempting to prove that we can do banality as well as anyone else. Perhaps better.

Some Christians do even worse. Thumbing through the pages of a Christian book catalog recently, I discovered two new books claiming to have suddenly discovered that the book of Revelation has warned us about this financial mess, which supposedly indicates that the antichrist and Armageddon are on the horizon. Their message: don’t be left behind. This is horrible theology and even worse pastoral practice. Certainly, we do not know the timing of Christ’s return. We know that the Bible promises a Crown of Life to those who believe, but there is no mention of a special prize for the one who figures the end times out. In any event, we should be encouraging believers to faithfulness to the Gospel in this world, not encouraging them with false hopes of escaping it.

The outline of the future that I have presented is pessimistic. Whether it is realistic or not remains to be seen. Regardless, there is optimism and hope in Christ, whose Kingdom alone is forever.