Liberty and livelihood

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MARY REICHARD, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.

NICK EICHER, HOST: Time now to talk business, markets, and the economy with financial analyst and advisor David Bahnsen. David heads up the wealth management firm The Bahnsen Group, and he is here now. 

Good morning, David.

DAVID BAHNSEN: Well, good morning, Nick. Good to be with you.

EICHER: Well, David, really enjoyable Dividend Cafe this week, thank you for doing it. It’s not about the stock market, it’s about what markets mean. And when we say each week we’ll talk about business, markets, and the economy, we are not talking about the stock market per se. We’re talking about free markets, all of the markets where transactions happen, where buyers and sellers come together.

And you argue in that Dividend Cafe, David, that in a culture increasingly defined by cynicism and grievance, that markets may actually be one of the last institutions built on hope. 

What do you mean by that?

BAHNSEN: Well, it’s a comment on incentive structures, for one thing. There are a lot of venues and institutions and domains in modern society where the incentives lend themselves to negativity, to sensationalism, to pessimism.

And the inherent nature of markets, which is where human relationships of exchange take place, where there is risk taken to produce goods and services for the future, where there are the basic processes of human endeavor—what we’re talking about is a market. And what we’re talking about is something that requires a vision for the future. And so there is an intrinsic hope or optimism about the future. 

And my argument is very much that, increasingly, markets are one of the few places that you can find a hopeful optimism.

EICHER: Yeah, and we even see in popular culture almost the opposite picture. You think of the famous line from Wall Street, “Greed is good.” Even if you didn’t see the movie, you know the quote: “Greed is good.”

Why do you think, David, business—and particularly capital markets—have come to be viewed with so much moral suspicion?

BAHNSEN: That movie was made in 1987, and since then bankers and anything that is sort of adjacent to this idea of Wall Street is portrayed as greedy and hedonistic.

But what has not stayed is that portrayal at Wall Street. It’s legal, it’s pharma, it’s business, it’s corporate America. There has to be one eyebrow up because the profit motive has to be viewed in this context of something sinister, of taking something from someone, as viewing customers as people to exploit instead of serve.

It is a very cynical idea, but it’s also totally fallacious and it’s a massive misunderstanding of human nature.

And so I guess, Nick, the world is going to do that, and Hollywood’s going to do that. But Christians need to do better. Christians need to see markets, business, entrepreneurialism, relationships of exchange, as opportunities to serve and to have a positive view of the future.

Now, by the way, some of these endeavors will fail, right? There will be products and services made that don’t really take, that aren’t successful. There will be competitors that beat us and things like that.

But when we talk about investment, whether it’s capital investment or time and energy, which many people listening know all too well from their own labor, from their own small business, family business—when you talk about the heart and soul that you pour into it, this is done because you have a positive view of the future.

And in a time where there is so much negativity, I find this embedded positivity of markets to be something we should be celebrating.

EICHER: Well you know, David, one section of the Dividend Cafe this week that caught my attention was your comparison of markets with politics and media.

Of course, media is a place where I spend a little bit of my time, and you argue that political and media incentives—talking about incentives just a few moments ago, they reward outrage and pessimism. I don’t think that’s true at WORLD, we work for it not to be true at WORLD. But in general, I think there is a truth to that where a lot of media are concerned, and it’s certainly something we have to fight.

While business incentives reward building something better, is that really the dividing line, David? The different incentive structures?

BAHNSEN: Incentive structures exacerbate it. It is ultimately worldview.

And so when you say that you think it’s different at WORLD, I wholeheartedly agree with you, but I agree that it's different at WORLD because I think WORLD is operating from a fundamentally different foundation.

When you have a foundation not rooted to the true, beautiful, and good, then those various incentives are really going to be exacerbated. And there’s no question right now that the incentives in politics are to sell something negative, to sell something that is falling apart, to portray a vision that is so bad that only this new politician can come in and do something.

Media—I think the better way to put it—is that sensationalism is an embedded part of the incentive structure. And sensationalism can be positive or negative, but right now consumer appetite and social media are for a negative sensationalism.

EICHER: Well, David, you gave us a great gift a month or so ago when you talked with us about the ten things you wish all journalists knew about economics.

And I think one of the things that you have talked about makes economics more accessible—it certainly makes journalism more interesting—is your pushback against the reduction of economics to charts and formulas and numbers.

Not that those things aren’t important, you’ve got to have them in order to make macroeconomic measurements, and those things are important, of course. But the human side of economics.

Put that in plain English. What gets lost when we think of capitalism only in terms of GDP and earnings reports and stock indices?

BAHNSEN: This is one of the most important points I’ve made in some time, in my opinion.

I used, in a speech I gave last week at the Acton Institute, an analogy to The Screwtape Letters: that if you were trying to convince people away from markets, if you were trying to dehumanize markets, if you were trying to avoid the distinctly Christian and creational message of markets that I talk to WORLD about, that I have dedicated my life to, that we spend time every Monday morning talking about, that I believe in so passionately—if you were trying to portray a different message, what could you do better than to talk about numbers and theorems and ratios and charts all the time? To take out human experience. To take out the humanity of it, the aspirational nature. 

The way that the Bible talks about markets and business endeavor, there’s numbers, okay? There are things being measured. At the end of the day, in a macroeconomic sense, there is data that tells us employment and wages and labor and, yes, GDP.

But when we reduce it to that, not only are we truncating it, but we are allowing the narrative to be missed.

Econometrics does not capture human action. And the biblical understanding of economics that is most animating and most faithful must always center around the human endeavor.

EICHER: Well, David, here we are headed into Independence Day weekend and America’s 250th birthday.

You know, Abraham Lincoln once called America the last best hope on earth, and you borrow that phrase for the markets.

What should Americans be celebrating about markets?

BAHNSEN: Well, look, the actual day and the actual weekend and the annual festivity—I think that the fireworks and the picnics and the barbecues and all of those things are very, very appropriate. It’s a festive and celebratory time of year.

But when you ask how we should reflect on it—which I don’t think should be reserved for one day per year—and particularly when we think about these 250 years, I really do believe that people have to understand the uniqueness of American independence goes far beyond a tax protest and a successful military revolution.

That embedded in the founding was something deeply philosophical and deeply unique in world history. And it is impossible to fully capture the story of the American experiment without understanding the synthesis of religious liberty and economic liberty. 

These things, harmonized, are the essence of the American experiment.

And so many of us of faith have long resisted any attempt to secularize America. That does go against the American founding and what we celebrate in our independence.

But, Nick, so does going against free enterprise.

There was a unique pioneering spirit that celebrated life, liberty, and the pursuit of happiness, and then a group of people that wanted to go build a better life. 

This is the American dream. 

And the notion that we can protect what we’re celebrating on the Fourth of July without a real focus on economics and economic liberty and economic opportunity, is silly.

EICHER: All right, David Bahnsen, founder, managing partner, and chief investment officer of The Bahnsen Group. He writes at DividendCafe.com and at WORLD Opinions.

David, thank you. Enjoy the holiday-shortened week, and we’ll see you next time.

BAHNSEN: Thanks, Nick. Same to you. Happy Independence Day to all!

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