Jewish Economic Theory and Practice: Why the Distaste for Economic Liberalism?

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Jewish Economic Theory and Practice Why the
Distaste for Economic Liberalism?

• Corinne Sauer
• (Jerusalem Institute for Market Studies)
• and
• Robert M. Sauer
• (Jerusalem Institute for Market Studies,
• University of Bristol)
• May 2012

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Purpose of the Paper

• Is Judaism the cause of a general distaste for
  economic freedom?
• Conventional wisdom Judaism supports aggressive
  government intervention for shaping an ideal
  society (social justice)
• Look at data on political/economic preferences to
  see if evidence for a general Jewish distaste
  over time
• Compile a list of fundamental principles in the
  Torah related to Economics and see if
  conventional wisdom is correct
• Bottom line Jews are differentially skeptical of
  economic liberalism but one can safely reject the
  hypothesis that Judaism is the culprit

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Structure of the Talk

• Show data related to American Jewish
  political/economic preferences
• Look at data on Israel
• Enumerate basic economic principles in the Torah
• Economic policy implications of those principles
• Consider alternative explanations (Milton
  Friedman)

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American Jewish Voting inPresidential Elections
1916-2008
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Is there a Jewish Affiliation Effect?
Jews Non-Jews
College Degree 58 22
Professionals 28 10
Earn over 85,000 pa 37 13
White, College-educated, urban, middle-aged
Jews Non-Jews
Identify as Democrats 60 39
Supported Democratic Candidates for the House 76 54
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Is it an American Phenomenon Only?Isolating an
Israeli Effect Economic Freedom Index 2009
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Israel and EU15 Over Time
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The Paradox

• Empirical analysis suggests that there is a
  statistical basis for claiming Jews have a strong
  distaste for economic liberalism
• Paradox because Jews have personally prospered
  from the operation of markets for centuries
• The market is color blind. No one who goes to
  the market to buy bread knows or cares whether
  the wheat was grown by a Jew, Catholic,
  Protestant, Muslim or atheist by whites or
  blacks. Milton Friedman (Mont Pelerin Society
  1972)
• MF further noted that Jews are disproportionately
  found working in industries and professions that
  are characterized by free entry

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Does an Anti-market Judaism Solve the Paradox?

• Few Torah scholars sympathetic to classical
  liberalism have studied the anti/pro-market
  bias in Traditional Judaism
• Rabbi Meir Tamari the widespread identification
  of Jewish social thinking with that of socialism
  is the product of either ignorance of the source
  material, or willful distortion.
• More recently, Rabbi Isaac Lifshitz has extracted
  several important areas of overlap between
  Judaism and Economic Liberalism

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Basic Jewish Economic Principles

• Five Axioms of Jewish Economic Theory
• Participation in the Creative Process
• Man is created in G-ds image, work, innovate and
  complete
• Protection of Private Property
• Quite uncompromising, provides incentives to
  participate
• 3) Accumulation of Wealth is a Virtue
• Symbolizes success in creative process,
  patriarchs were wealthy
• Care for the Needy
• A moral imperative for the giver, not because
  inequality is immoral
• Government is Inefficient and Concentrated Power
  is Dangerous
• Mentioned many places in Torah, especially Samuel
  (8 7-18)

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Policy Implications

• A Flat Tax Policy is consistent with the Five
  Axioms
• Set at 10 (maximum 20) no exemptions
• Welfare-to-Work policies consistent with the Five
  Axioms
• Already alluded to in Rambams hierarchy of
  charitable giving
• Suspect that many other market-liberal policies
  are consistent with a proper understanding of the
  Torahs economic principles
• Judaism is clearly not anti-capitalist - does not
  explain the lack of public support for economic
  freedom

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Alternative Explanations

• Milton Friedman, in his address to the Mont
  Pelerin Society in 1972, raised two compelling
  alternative explanations
• European political spectrum became divided into a
  Left and a Right, and only the Left offered a
  place for Jews in public life
• Anti-Semitism produced stereotypes of Jews that
  could be combatted only by attacking the market
  and its emphasis on monetary exchanges

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Conclusion

• Many aspects of Traditional Judaism support a
  capitalist world view Judaism properly
  understood not the source of distaste
• If Friedman is correct about the reasons,
  American Jewish support for free markets would
  increase if the American Right
• Better advertised openness to Jewish political
  participation
• More clearly led the way in combatting
  anti-Semitism (including anti-Zionism)
• In both America and Israel, Jewish spiritual
  leaders need to be educated in Judaisms
  consistency with a free-market agenda
• These steps might help turn the tide and
  eventually see the majority of Jews throughout
  the world joining the struggle for economic
  freedom