The Economics of Patrick Henry’s Proposal for Tax-Supported Clergy

Mark L. Movesian’s post on the Virginia Statute for Religious Freedom of 1786 brought to mind Patrick Henry’s failed 1784 proposal, A Bill Establishing A Provision for Teachers of the Christian Religion.

Henry styled the bill as serving practical, even worldly, purposes. Nothing about the duties of persons to God or about the truth of Christianity. Instead Henry asserted that civil benefits flow from Christian teaching. He argued “the general diffusion of Christian knowledge hath a natural tendency to correct the morals of men, restrain their vices, and preserve the peace of society.”

While a part of the morals corrected and vices restrained likely would for Henry inure to the benefit of the person who is corrected or restrained, the bill did not aim merely to promote personal self-improvement. Rather, for Henry, corrected morals and restrained vices confer a broader social benefit, to wit, advancing “the peace of society.”

To be sure, while a person might flourish personally by accepting the ethical demands of the deity, society would also benefit from a person learning not to steal, or learning not to hurt others, or refraining from defrauding others even when one might get away with it.

In Henry’s preambulatory theory, Christian teaching supplies public goods to society. He does not of course formulate his argument using modern economic terminology. Few modern politicians use the terminology either. Nonetheless, Henry motivates the purpose of his proposal in recognition that voluntary provision of public goods tends to undersupply those goods relative to the social optimum.

In response, Henry proposes a traditionally-recognized means to correct the suboptimal provision of that public good (although by no means the only way to overcome the problem): have the government subsidize those who supply the good.

Henry writes that the social benefit of Christian teaching will not be realized “without a competent provision for learned teachers.” By “competent provision” Henry pay for clergy sufficient to sustain good ministers in effective ministry.

Without sufficient financial support for clergy, Henry’s argument suggests, individuals who would otherwise be effective Christian pastors might not have the resources to become pastors at all. And even if they still became pastors, because of their “want of education” due to the lack of sufficient financial support, those pastors might not have “such knowledge” as to be able to provide as effective a ministry to their flock as they would have had they received better training. And even if they received fully adequate training, without sufficient pay for their work in the church, they might not be able to devote themselves fully to ministry because of the need to work outside the church simply to supply their daily needs.

For Henry, paying pastors through the voluntary contributions of their congregations implied fewer pastors overall, and a greater proportion of poorly trained and distracted pastors, relative to the social optimum. And poorly trained and distracted pastors resulted in flocks that behaved with less moral restraint than when led by better-trained, better-focused pastors. And more people with less moral restraint impose costs on society at large.

Henry does not, however, propose a flat transfer to churches. His proposal allows taxed individuals to choose which church receive their taxes. Also of note is that his proposal includes an “opt-out” provision for folks who do not want their money going to any church. (In that case the money goes to the Virginia state government’s general fund to be used for schools.)

Because taxpayers designate which church receives their taxes, Henry’s proposal preserves competition among the different churches. The more congregants a minister attracts to his church the more congregants designate their taxes for the church, and the church’s revenues increase.

Henry’s bill nonetheless avoids price competition among churches. It thus avoids the resulting underprovision of the public good that would result from ecclesiastical price competition. Because everyone must pay the same tax no matter which church they designate for their tax, putative congregants cannot save money by joining a low-cost/ineffectively-pastored church relative to joining a high-cost/effectively-pastored church.

This is a crucial aspect of Henry’s proposal given the nature of public goods: Because churches generate public goods in Henry’s theory, the socially-optimal supply of Christian teaching must be greater than what would be supplied if left up to the voluntary contributions of a congregation. Congregations would naturally tend to ignore the positive externalities generated by increasing the amount or quality of teaching in their own church. (And we’re ignoring that ecclesiastical services are subject to the distorting effects of being a club good within a church itself.)

So by imposing a religious tax that congregants must pay no matter which church they attend, but at the same time allowing people to select which church they support financially, Henry’s proposal preserves the value of theological competition among the churches while producing a greater supply of the public good relative to what would be supplied if clergy were paid solely by voluntary contributions.

To be sure, there is a lot in Henry’s theory that can be contested. Not least James Madison’s objection in his Memorial and Remonstrance that government provision for clergy would induce “indolence” and “ignorance” among the clergy rather than increase the supply of effective pastoral teaching as Henry claimed. There is also the issue of the distorting effect on Christian self-understanding when churches are culturally valued for the worldly benefits they provide rather than for the truth they preach.

Nonetheless, what is fascinating about Henry’s argument is that it draws on a familiar modern framework – arguments that today motivate demands for government subsidies in numerous policy areas – but Henry applies it to a policy domain distinctly unfamiliar to modern Americans, the domain of ecclesiastically-supplied public goods.