crisis.jpgLast Fall we started to hear the rumblings of concerned economists who seemed to have woken up one morning to a housing and credit market poised to collapse. Since that time, housing values have drastically fallen in many states, foreclosures have become common place, the dollar has fallen, gas prices have risen, J.P. Morgan and the Federal Government have had to buy out the nation’s fifth largest investment firm in order to prevent global investors from losing all confidence in the US market, Bush has signed a $170 billion dollar stimulus package, and many top economists are predicting that a serious recession will begin this year. For the next six months to five years we can expect that the health of our economy will be front page news, and quite grim news at that. Fears over the coming (or current according to some economists) deep recession are the source of tremendous anxiety for many Americans. As people have shared with me their concerns about the economy and expressed a belief that our nation is about to be crushed by a subprime mortgage crisis, it has forced me to question what a biblical response to this news should be. While it is true that certain people will really suffer in this recession, could an economic collapse be just what our nation needs?

The first thing that has to be said about the economic crisis is that some people will really suffer. Jobs will be lost and homes will be foreclosed upon. People will be hungry in our own neighborhoods. But none of this should be a surprise or source of fear for the Church. Since the beginning of the Church it is been the task of believers to care for the oppressed, for those in need (James 1:27). If anything, the news we are hearing ought to be a call to remember our obligation towards the poor and needed, a call to build or revitalize church foodbanks and ministries to the poor. I’m not just speaking of the homeless here, but anyone that needs assistance. But as we are helping those in need, we shouldn’t be shocked if we discover that (in American at least) there really aren’t very many people who need our help. For the most part, life will go on as usual in our country, except we won’t be able to afford as much stuff. To understand this point, we need to get a bit of a handle on what caused this recession in the first place.

Two US markets are in the process of crashing, the housing and credit markets. In a nutshell, here’s what happened: in order to spur economic growth, many very respectable banks allowed people with very poor credit to take out very large home loans. These loans were subsidized by other creditors, investment firms, investors, and so on. Once the home owners could not afford to make their payments, all the potential money that was to be made on interest from these home owners (who purchased houses at inflated prices) vanished. Since these loans were initially subsidized by the web of banks and investment firms that make up our credit industry, the entire industry has been dramatically shaken, leading the Federal Government to offer short term loans to firms so that they won’t go under. Together, property and credit make up 78% of our GDP; thus the collapse of these markets will have a tremendous impact on our entire economy. From all the signs, the strength of our economy has been built upon credit and consumption: consumers who have been lead to believe that they have a right to own a house, even if it means getting hundred of thousands of dollars in debt at a dangerous interest rate; and creditors whose entire livelihood comes from borrowing money to lend it to others.

Nothing, I believe, points to the fact that our economy is based upon people living beyond their means better than our government’s solution to this recession: give everyone money and ask them to spend it. As one economist as put it, “Government aid is being aimed, mistakenly, at maintaining unsustainably high rates of personal consumption. Yet that’s precisely what got the United States into this mess in the first place — pushing down the savings rate, fostering a huge trade deficit and stretching consumers to take on an untenable amount of debt.”

In other words, the American economy has been built upon people who believe that they have a right to consumption, even if it requires excessive debt. Now that many people are not able to pay their debt, the credit industry is struggling, so the only way (according to the government) to solve the problem is give people more money so that they consume more and keep the cycle going. But, as you can probably imagine, this panacea can’t last long. In Stephen Roach’s New York Times article on the economic crisis, he proposes a solution that seems strikingly responsible and even, Biblical: “A more effective strategy [than the government’s stimulus package] would be to try to tilt the economy away from consumption and toward exports and long-needed investments in infrastructure.”

If our country’s economy has been built upon a system of consumption and debt which is fundamentally opposed to the call to stewardship we find throughout Scripture, is a recession that forces people to stop consuming as much junk really a bad thing? If the most “suffering” people will have to do will be to cut of their $80-a-month cable and drive less, should we get caught up in the sky-is-falling hysteria which surrounds us?

If this recession becomes serious, it is quite possible that the worst that will happen will be that many people will have less money to spend on stuff they didn’t really need in the first place. For example, my wife and I live relatively cheaply (to California standards). We don’t have cable, we don’t go out to eat much, we eat burritos and peanut and butter sandwiches for most meals, we don’t buy DVDs or music often, our video games are usually paid through Amazon rebates; we own two, 12-year-old used cars; we live in a cramped studio apartment; and we don’t often buy new clothes. For several years of our marriage we were bellow or very near the poverty line. And yet, I can think of lots of things in my life that I could very comfortably live without. I don’t need Netflix, videogames, iTunes, Threadless, special coffee, olives, a cell phone, or a ton of other things. If the economy collapses, the reality is I have many things in my life that I can get rid of, things that are simply nonessential. And if I am honest with myself, I can admit that I won’t suffer. I might selfishly morn for all the stuff that I can’t play with because I’m broke, but I won’t suffer.

As believers who are called to stewardship, maybe we should embrace this recession as an opportunity for our nation to move from consumption through credit to living within our means. At the very least, I hope that we will take this opportunity to aid those who will actually have needs in this crisis while holding each other accountable to remain content as we are forced to live with a little less comfort, remembering Christ’s Words:

Therefore do not be anxious, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or ‘What shall we wear?’ For the Gentiles seek after all these things, and your heavenly Father knows that you need them all. But seek first the kingdom of God and his righteousness, and all these things will be added to you.” Matthew 6:31-33


  1. Hear, hear!

    I think that the American dream, as well as the Protestant work ethic, together combine to convince us that it’s OK to live beyond our means.

    Simplify, says I….

  2. I just listened to a very old lecture from Francis Schaeffer were he described consumerism as living “ash heap lives.” He talked about how so much of our time and money is spent on things that end up in ash heaps (the dump).

  3. I had a financial fear for my future because I was scared of paying for stuff. But this blog has really helped. It makes me think of all the things I won’t need that I have at my parents house right now. Cable t.v. being one of them.

  4. Hey gents,

    Sorry for the shameless plug, but I am beginning a series on my blog on the issue of Christians and pop culture (coming at it from a slightly different angle), and I’d welcome your input.


  5. @Alan – If you were really honest with yourself, you would admit that you really do need Threadless. Even as I will admit that I need Threadless to be cheaper, like, all the time instead of just during sales.

    Still, I get your point and though I do love to consume, it’s not that hard to live without new books etc. if that’s what finances dictate (and maybe even sometimes when they don’t).

  6. Does anyone have an opinion on how we should spend the money we are going to get from the Federal Government this year? Say, hypothetically, if a person can afford to pay his/her bills and has no other needs, would it be right to spend it on some luxury (a brand new this or that) since we are being given money with the expectation that we will put it to good consumption to help the economy. Just curiouse, because we are called to honor those in authority. Also, while we may not agree with how they are trying to help the economy, I doubt any of us are going to refuse this opportunity. And if anyone does I’ll take it for you. But how should we look at spending this?

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