Families and Markets

The Building Block of a Healthy Market
( [email protected] ) Jul 22, 2003 02:08 AM EDT

This summer, American families will be getting tax relief in the form of a rebate check as part of the recently enacted tax cut. In addition, the act also addresses the "marriage penalty," under which a married couple pays more income taxes than a cohabiting couple earning the same income.

These are steps in the right direction, but they are only steps toward a much more important goal: recognizing the unique and indispensable role the family plays in building a healthy marketplace.

This was the subject of a presentation at the BreakPoint "Christians in the Marketplace" conference this spring. Dr. Jennifer Roback Morse, an economist at the Hoover Institution and the author of Love and Economics, told the attendees that "the market needs the family."

This might sound obvious, but the significance of what Morse said is lost on most economists. To the extent that they take the family into consideration at all, they see the family as a group of consumers. So tax relief for families is good for the market because it gives families more money to spend on goods and services.

This may be true, but it's a very inadequate explanation. When Morse says that "the market needs the family," she means the family's role in molding character and in transmitting morals and values. A culture in which the family is so weakened that it cannot effectively perform these most basic of functions will feel the consequences in the marketplace—as well as, I might add, in its prisons.

The most obvious example of the relationship between the family as moral tutor and the marketplace is promise-keeping. As Morse said, "The market order needs people who will keep their promises," people who are "trustworthy and who can trust." In other words, people who have consciences.

Without conscience there's no reason to believe that the other party will honor agreements. And a marketplace where no one's word is good must depend solely on the courts to enforce contracts. That market cannot operate in an efficient manner—if it can operate at all. Without the goodwill and trust that is enforced by conscience, the energy and resources that would otherwise be devoted to entrepreneurship is spent on keeping a wary eye on the other guy.

The source of a well formed conscience is, of course, the family. It's in the family, first and foremost, that we learn self-control and regard for other people.

In the first two years of life children are taught to pay attention to what others, particularly their mother, think about them and their actions. Later, the family builds upon this lesson and provides conscience with a specific content, like the Ten Commandments and other moral precepts. The family upholds and reinforces these standards. And in this environment, young people learn to be the kind of people that you can trust in a healthy marketplace.

Tragically, the family is under assault. I'll talk more about Morse's analysis of that stress, and how Christians can respond to it, tomorrow on BreakPoint. Tune in, and be sure to call us here at BreakPoint (1-877-322-5527) for a copy of her speech on CD ($10). It's one of the best I've ever heard on this subject.

As Jennifer Roback Morse has shown, the assault on the family destroys the mechanism for informing conscience: Trust is destroyed, and the marketplace just won't work. Abolishing taxes altogether wouldn't fix that.