Flat Tax & Economic Theology

Here's another abstract for my paper on economic theology:

Since expectations precede action, the fact that the actors implemented new policy (rather than keep the status quo) – i.e. acted – proves that they had an expectation about what the effects would be. And because the pervading uncertainty meant that the effects of a flat tax lacked a solid empirical basis, the expectation could not have been grounded in objective probability. Rather, the decision to adopt was grounded in a faith generated by the theological aspect of a flat tax.

"The Spread of Economic Theology: The Flat Tax in Romania" Romanian Economic and Business Review 1(1) (pdf link)

The underlying point is that there's no neat seperation between facts and values in practice, but we can distinguish between them analytically. This provides a middle ground between accepting that policy advocation (including the flat tax) has a normative element, but this doesn't necessaarily invalidate it. In short, if someone tells you that they're an objective scientist they're wrong. But acknowledging this doesn't make me a phoney.

The best resources on the intersection between economics and theology are Robert Nelson's two masterprieces "Reaching for Heaven on Earth" and "Economics as Religion" (see also his speech "What is 'Economic Theology?'".pdf). I am a student of Larry Iannacone's "Economics of Religion", which should be seen as a complement to the economics of theology. Notice the choice of terms - since Larry takes the Beckerian approach he explains religion, but neoclassical amethodology stuggles to entertain theology (having said that Paul Oslington does a good job). A careful analysis of the Caplan-Iannacone debate underlines the point that the Nelson and Iannacone approaches are indeed  complements.

This also ties into Diedre McCloskey's work on rhetoric, and she states brilliantly the main point:

Nelson takes seriously the newspaper cliche that economics is "mere" religion, voodoo economics. But he drops the "mere". Theology is a serious business
McCloskey 2007:196

Comments

[AJE]

Whereas economics emits the aura of scientific positivism, we have seen the deep threads of theology that govern its basic assumptions and direction. The world is ultimately characterized by uncertainty, and any science can only create modest beams of light into the unknown, yet imaginable. Religious belief is one attempt to create meaning about the world, and economics is another. Both are answering similar questions, and can propose similar answers. Just as deep uncertainty - questions of God, the universe, the afterlife, etc - creates demand for religious prophets to interpret, regime change and economic progress require explanation and suggestion. A major characteristic of an epistemic community is that they'll respond to uncertainty, and provide policy advice as to how to proceed. Scientific apparatus and theoretical reasoning will provide guidance, but ultimately the first foot forward will require faith.