"He is before all things, and in Him all things hold together." ~ Colossians 1:17

Sunday 10 January 2010

Re: Ethical Equivalence - no Ponzi Scheme

P.S.: The Ramsay Model also demands that there is no Ponzi-Scheme. This involves the artificial creation of value, through promising to pay somebody if they enlist several more people in the scheme. The promise never reaches fruition, and the person at the apex of the pyramid benefits from the contributions of everybody underneath him (everybody else is left with nothing).

God's Law is a Ponzi Scheme that works. Our utility does in part rely on sharing our investment with other people, and hoping that they will follow our example and sign up to the programme. However, the promise of payment is never rescinded. When Christ comes back, the scheme reaches its completion, and all those in it receive the payment of eternal life in Heaven.

Ethical Equivalence Through the Law of Love

Two strands of ethical thought exist, both within Christian theology and secular philosophy: deontological ethics, which values the adherence to moral codes, and consequentialism, which values the effect of actions rather than their intrinsic worth. The former is often associated with the likes of Kant, whilst the most famous variation of the latter is utilitaianism.

These two systems of thought are not, by definition, dichotomous. The divergence of an action's intrinsic goodness and its consequences only comes about when a moral law, when applied to a given situation, may yield less-than-best consequences. In reailty, such situations do in fact abound. The most frequently cited is the scenario of a person harbouring Jews in Nazi-occupied Europe, who is asked by a Nazi investigator whether or not she is in fact harbouring Jews. She is faced with a dilemma: if she adheres to her moral code, which stipulates that lying is wrong, she knowingly facilitates murder. Conversely, if she does her best to generate the optimal outcome, that is, to protect the Jews, she must break her moral code and lie.

Does our Christian code of values ever contradict itself in such a way? I will attempt to show that God's law is perfect, and is only contradictory when it is distorted; such distortion occurs through the selective incorporation of Godly principles into a human, sinful frame of reference.

I begin my argument with a premise: before sin, deontological and consequential ethics were identical. There was only one law: not to eat the forbidden fruit. To obey this law was both good in itself, because it conformed to God's commandments, but was also consequentially optimal, for it maintained a state of perfection. It was only after the fall that actions and consequences fell out of synchronisation.

God's law is still perfect, because God never solicits us to do evil. There can never be a situation in which God commands us to apply a certain principle that obligates us to break another. I argue that such contention only occurs when God's law is made subservient to a human system rather than master over it. In other words, God's law only works perfectly when it is held up as the highest authority. If this is indeed so, then if we ever face a situation such as that of the Jew-harbourer, we must appeal to God's supremity.

Such situations, however, are surely inevitable. Yes. But only because we live in a fallen world. The Law can never be upheld, because all have sinned and fallen short of the glory of God. There is no one righteous, not even one. However, the penalty of sin was paid for not by its culprits, but by Jesus Christ. Through the crucifixion, a New Covenant, one of Love and Grace, superceded the condemnation that would have otherwise fallen on us. The wages of sin is death, but the gift of God is eternal life through Jesus Christ our Lord. Therefore, there is now no condemnation for those who are in Christ Jesus.

When we are presented with a conundrum between actions and consequences, we must invoke God's Law: one of grace, and one of love. For this reason, Love is the most important commandment - through it, the rest are fulfilled! If we live by love, we receive God's grace, and therefore the law is fulfilled through Christ's payment of sacrifice. There are often handy get-outs: for example, silence (a device used by Christ himself) can often allow us to avoid
both lying and revealing the truth. However, in general, if we are in harmony with his law, we will be within his divine authority.

In fact, all trade-offs, which are the essence of the economic problem, are the result of sin. Immediate pleasure versus long-term good. The basis of an investment decision. The crux of any collective action problem. The problem of free-riding. Carbon emissions and climate change. Fast food and obesity. Loans and debt. Idleness and unemployment. However, the former part of any trade-off - the immediate pleasure - is never bad in itself. Driving your car, eating a chocolate bar, taking out a loan, going on holiday - are all permissible in themselves. It is the balance that is important. I have blogged on this balance many times. Suffice it to say that when this balance is defiled, the consequences are deleterious. A prime example: we are commanded not to be idle, and yet also to take rest through the Sabbath.

The quest for the ideal balance leads us closer to God. In Heaven, to serve God is also the strategy that bears the most fruit, and indeed this mechanism is available to us on earth, so long as we live by Love and thereby receive Grace. Seek first his Kingdom and his righteousness, and all these things will be added to you as well.

In economics, according to the Ramsey Macroeconomic Model, humans maximise their utility by smoothing out their consumption over time. However, because humans are selfish, they value present consumption over future consumption and so discount any future earnings. Because human beings are selfish, the imbalances above tend to favour immediate utility over long-term good.

Moreover, agents maximise their utility subject to the transversality condition, which says that time is finite. In other words, it makes no sense to perpetually save (and thereby sacrifice present consumption for future consumption), because eventually we die. Unless we have a massive binge on our death bed, all of the utility of our savings go down the drain unless we consume them eventually. It is important to remember that not only quantity matters: the longer you save, the more you gain, because even with a constant interest rate, the effect is
cumulative.

This applies to Christianity through the idea of sacrifice. In economics, human beings sacrifice, but only for the sake of future utility (in reality, this rational simplification does not hold, because people's actions are often governed psychologically, by emotions, which do not abide by such calculations). To follow the Law of Love, we must live in a state of continual surrender. By doing so, we reconcile deontological and consequential ethics. Why? Because we live forever. We have no transversality condition. By storing up treasures in Heaven, we in fact maximise our total, intertemporal utility, no matter how large our discount factor!

This introduces and interesting debate on 'hedonism', which I will not fully indulge, but will abbreviate. The question posed is the following: if we benefit from it is sacrifice, how can it indeed be sacrifice? My answer is that Sacrifice is God's commandment, and therefore will be rewarded. This is indeed a sign that we are living according to his commandments! In other words, the cost of sacrifice is the result of a fallen system, of which we are no longer bound, thanks to Christ. Our sacrifice, whilst involving earthly discomfort, should in fact delight us! We should revel in it, knowing that the tesing of our faith builds character. Through Christ, Paul learnt to be joyful in any situation, hungry or full, in prison or free. He loved those persecuted him, and he thanked God for putting him in jail. The key to happiness: Delight yourself in the Lord, and He will give you the desires of your heart - which, not coincidentally, will inevitably be delight in the Lord.

Finally, in the Ramsey model, equilibrium can only be reached through a unique 'saddle path' of adjustment. Any digression from this path will lead to either of poverty trap that violates the Euler equation (if too much is consumed in any given period) or a disequlibrium that violates the transversality condition. This again relates to Christianity: the Bible tells us that few find the path to Christ, and moreover, that Christ is the only way to God. We cannot alter this rule. (NB: more on the 'Ponzi-scheme' condition as it applies to Christian evangelism at a different time)

We can see, then, why God's ultimate sacrifice allows us to have eternal life, and conversely, why the prospect of eternal life allows us to respond with a life is sacrifice. How's that for perfection.