A brief history of economics

Introduction
Economics aims to determine optimum efficiencies or outcomes from competing wants, which exceed available resources, but overlaps social and political philosophy.

The key determinants for optimum outcomes involve policy assumptions based on the so called laws of supply and demand, the effect of interest rates, aggregates in relation to the circulation of money, the role of exchange rates and how agencies regulate markets.

But policies and theoretical economic models are routinely hijacked by corruptive power and the difficulty of obtaining and interpreting reliable data.
Notwithstanding, the adoption of orthodox economics, supportive of market freedom, but subject to prudential controls and embracing international trading, is suggested by most economists to be an important factor in improved standards of living. But such an advantage may be overstated in lieu of the significant contribution made from the advancement of scientific and technological knowledge.

Early beginnings
Economics was not a word used in indigenous communities, but its application within their non-technological existence was impressive.
Possibly Australian aborigine’s trade between nations represented one of the few really effective free markets. Like indigenous groups elsewhere, they traded ceremonial artefacts, tools, skins, grain and even water rights within respective nations, using interpreters and negotiators to secure trade agreements.
A United Nations approach was employed to ensure optimum outcome from the countries limited resources, so that as crops prospered or game became scarce seasonally in one area it was traded in exchange for goods available in another, just as modern economics champions free trading.

But within the western world complexity was increasing as new scientific discoveries underpinned industrialization, in tandem with the Renaissance, the Protestant Reformation, the age of enlightenment and colonization.

Philosophers reasoned this increased complexity in the management of state affairs could best be served by applying scientific knowledge, based on the assumption markets represented rational outcomes.

The Industrial Revolution
As society became transformed by the mechanised Newtonian world, evident in the mass production of goods and services, philosophers concluded this complexity must conform to laws, yet to be discovered, which, once unearthed would enable optimum policy settings to be determined. 

Scottish philosopher David Hume, who was an influencer of Adam Smith, who wrote “Wealth of Nations”, argued vehemently against the Mercantilists who believed the best way for a nation to gain wealth was to restrict imports and exert total control over exports to maximise gold accumulation in the home country.
Under this system the American colonies were forced to supply all the raw materials for Britain to manufacture into the finished goods which were re-exported to the colonies, at an exchange rate highly favourable to Britain, a significant factor in fuelling a world war.
 
Wealth of Nations
Adam Smith expanded on Hume’s ideas and introduced the term “invisible hand”, to describe how the market made decisions regarding supply and demand. This led him to a rational theory governing outcomes in respect to aggregates for production, consumption, distribution and their effects on markets.
He concluded people generally acted out of an enlightened self-interest so that the market is mostly able to achieve (by virtue of the “invisible hand”) optimum outcomes. He also championed thrift and saving as a virtue maintaining a national savings pool provided the engine room to support investments which flowed on to improve production and ultimately lead to enhanced living standards.
He concluded there need only be a limited role for government; in defence, education, public works and the operation of the law. He sought to align a nation’s currency with the holdings of precious metals, to ensure the government’s ability to depreciate its currency was curtailed. This was the seeds of the so called “gold standard” where a countries external liabilities were always to be matched by a nations central banks holdings of gold.
Smith was also a moral philosopher, who reasoned his economic theories represented favourable outcomes for the nation and for world trade.

John Stuart Mill
The English philosopher and utilitarian, John Mill made a significant contribution, who supported free markets but was amenable to taxes to be imposed on services and was in favour of a flat tax system for everyone paid the same percentage of taxation. 
His book Principles, which was first published in 1848, and, like “Wealth of Nations” was widely acknowledged and accepted well unto the next century. He concluded that economic democracy arising in the form of worker cooperatives was superior to capitalism.  

The Twentieth Century
A significant contributor in the immediate post World War 2 period was Samuelson, whose ideas became widely accepted in the aftermath of the frightful memories of the Great Depression and war. Samuelson reinforced the earlier work of John Maynard Keyes, whose motivating force was how to avoid a repeat of the horrors of the Great Depression. Keyes had lost his fortune on the stock market and set about determining what measures could be taken to reverse recurring slumps in the trade cycle and mitigate against the over buoyant conditions that preceded the inevitable contraction.
What Keyes and Samuelson concluded was that both monetary theory (supply of money and interest rates) and fiscal policy (taxation and spending measures) could be used as tools to overcome the excesses of the trade cycle; if inflationary pressures persist taxation and interest rates can be increased , whilst stimulatory measures can be employed to reverse contraction. The idea was also for governments to build surpluses in times of stability which could be employed in the event of contraction or external shock.
Keyes recognized the pivotal role of investments, and the effect of the investor multiple which represented a multiple of many times consumption which it sought to satisfy. Keyes was a supporter of government regulation, as a necessary lever in guarding against and offsetting excesses; for regulatory agency bodies to have responsibility to ensure prudential standards were maintained.

However as a result of rising inflationary pressures due to the oil shock of 1973, as a consequence of supply restrictions imposed by the OPEC nations, economies faced soaring unemployment as energy costs escalated and businesses reduced their operations. This situation posed a crisis for Keynesian economics, since his model called for stimulatory measures in the face of a contraction and rising unemployment, but which if implemented at that time would have only aggravated already rising inflation. Of course nations could have simply opted to institute price control subsidies to reduce fuel prices and inflation until the prices of oil stabilized and returned to normal historical trends. Prior to this turning point Keynesian economics had dominated policy in almost all capitalist governments.  

Economic schools of thought
Hence this crisis in Keynesian economic “orthodoxy” fuelled interest in emerging different schools of thought, as the monetarists in the USA gained ascendancy.
It is helpful to examine the effects on both microeconomics and macroeconomics.

Microeconomics is concerned with the choices of individuals who will pay less for a commodity when they have more of it and more when they have abundance; applied to free markets consumer’s choices determine prices, rather than firms.  It is only when firms hold monopolistic powers are they able to exert pricing power over consumers. Of course, the values we hold collectively are unlikely to always coincide with this simplistic economic principle, so that economists now attempt to categorise consumer and business choices into sub groups in a concerted effort to more accurately define aggregated totals.     
Macroeconomics is concerned with the aggregates of production, supply, distribution, money supply and so forth, where we encounter the divergent schools of thought. Along with the diminished Keynesian economics, the Monetarists and others such as the Austrian school placed more emphasis on uncertainty and is critical of many of the modelling theories .
Monetarism, was the brain child of Milton Friedman whose philosophical thrust was stability can be maintained by exercising control just over the supply of money and central banking. Inflation in the seventies dominated economic debate and monetarism simplistically attributed its root cause to an excessive monetary supply by a central bank and for the reverse to be the cause of recessionary cycles. The simplicity of such a new found philosophy was popular with politicians, as it reduced the onus of regulation and policy to just the supply on money, which became popular in the US.
 
Australia –embracing economic reform within Keynesian economics.
In the earlier post war period the government exercised control over leading economic settings, so that exchange rates were set by the regulatory authorities, who also imposed conditions over lending, setting interest rates, tariff rates and banking.

It was not until the seventies that tariffs were reduced by 25% to open up the nation to overseas competition but the pace of reform increased markedly under the Hawke/ Treasurer Keating labour government of the eighties.
During this period massive changes were instituted, with bipartisan political support, to float the Australian dollar, reduce tariffs, reform the tax system, introduce an enterprise bargaining system for wages outcomes and to privatize previous publically owned companies such as Qantas and the Commonwealth Bank. Later national superannuation was introduced to play a significant role in increasing our national savings pool.

More recently the Howard liberal Government established the GST , and presided over a period of government surpluses arising from the mineral boom, to establish a future Fund once federal government debt was eliminated.

During the global financial crisis the Rudd labour Government employed classical Keynesian investment stimulatory expenditure to counteract any adverse consequences, to ensure the economy remained strong.

 Keynesian philosophy in favour elsewhere
There is a growing realisation that placing all your faith in markets, reducing regulation and having a very loose monetary policy with declining interest rates to discourage savers and fuel reckless lending was a major determinate in the outset of  the Global Financial Crisis.
Furthermore notable economists such as Joseph Stiglitz, James K. Galbraith, Robert Shiller and Paul Krugman have all been critical on monetarism and have argued for a return to Keynesian economics.

Modern day economics – the use of quantitative easing.
Quantitative easing is an unconventional branch of stimulatory monetary policy used when low interest rates has proven to be ineffectual in reigniting sluggish economies, QE has been employed in the US, the UK and the Eurozone, where real risk free interest rates are virtually zero, and in Japan to reflate its economy and reverse deflationary pressures.
QE does not initially involve the printing money, since the volume of cash in circulation is unchanged, as no new financial assets are added to the private sector. How it works is a central bank such as the Federal Reserve in the US, buys a quantity of Treasury notes or bonds ( hence the word quantitative ) from the commercial Banks, who afterwards have a corresponding lesser value of bonds held but more in reserves, to facilitate more lending. Depending on the quantity of different maturing securities bought relative yields can be influenced to make short term commercial interest rates more favourable to longer term or vice versa. After the transactions the central banks holding in government securities increases, according to the quantity purchased, with a corresponding liability to the selling bank. This process is often referred to as expanding its Balance sheet, since it is increasing its assets (securities bought) whilst simultaneously increasing its liability to the banks. No money changes hands as only a credit is registered in the central bank as the amount owing to the commercial banks for the assets purchased.
Banks themselves, have always had the ability to create money through leverage as their lending is always a multiple of capital and reserves, (typically a factor of about 10) so that through quantitative easing they are able to create money once they engage in increased lending.
The ongoing criticism of quantitative easing is that it has continued on for too long, from the early days when it could be argued it was a valid policy response to counter the curtailment of credit before and after the global financial crisis. Then credit was contracting sharply as corporates and individuals deleveraged from the excesses of previous reckless lending that preceded the global financial crisis.
What critics of quantitative easing claim is it is creating distortions with asset inflation and  we need to begin winding back from QEs – the longer we wait the more painful the adjustment. The move to scale back will most likely result in a reduction in the value of many inflated asset classes as interest rates begin to increase to reflect long term mean averages.
Growing inequality.
What is not always acknowledged is that economics originally arose not only as a tool to ensure superior outcomes and improved wellbeing for a nations citizens but more importantly to underpin moral values. In this regard Smith rallied against the unethical stance of the mercantilists, whilst later Keyes and others concluded your cannot legislate against human greed and fear, but you can, with improved regulation, afford control over inevitable excesses, to champion prudential management, under government agencies supervision.

More recently economists, such as Joseph Stiglitz, continue in this tradition to make the case growing inequality in income distribution (evident mostly abroad), is not only an undesirable social objective, but economically is irresponsible. In the US for instance, according to Stiglitz,  one in four people in the US will now be born into a family that will be unable to afford even reasonable nutritional standards or heath care which will substantially impede any future growth. In the US wages are not the problem but a lack of demand emanating from contraction of the middle class and an ineffective tax system. Even in China, which has, in the last 35 years of attempted to emulate a market based economic system under centralist communist oversight, produced inequality which increases the risk the sustainability of past impressive growth.

Inequality increased under coalition’s first budget in Australia
The incoming coalition’s first budget was designed to meet the structural decline in the economy following declines in investments from the mining boom and as a consequence the fiscal challenges from a reduced tax base. But the budget represented a piecemeal approach, with no tax reform but a general notion it was unfair, to overall represent about a negative .3% drag on the economy.
Notwithstanding the latest developments, inequalities have continued to grow, but albeit at a vastly subdued rate compared to most other countries. According to economist Judith Sloan, who recently appearing on Q & A on the ABC, the drift is mitigated by the nations efficient tax and transfer system which redistributes 30% of income to those on lower incomes. The end result is real gains after inflation for the past 23 years for the bottom percentile of  27 % compared to 33% gain for those in the top quartile. The latter increase, might well be explained by enhanced income opportunities arising from higher education.
But Sloan is also critical of the recent first budget to impose a 6 month waiting period for those under 30 to receive unemployment benefits. An alternative would be to provide a relief to employers to employ say the unskilled at a rate below the current minimum wage (about $33,000 pa) but above current unemployment benefits for a period up until they became skilled and are entitled to minimum compensation. In other words, similar to apprenticeships, imaginative solutions need to employed to offer hope to young people and avoid Australia flowing on the folly of accepting the very high rates of evident in much of the world today.

Conclusion
Whilst the US has only just reached the level of employment that existed just before the advent of the GFC, the new jobs are mostly in in the lower paid category and hence they represent people who are unable to save, many of whom are referred to as the working poor, unable to afford basic heath or possibly nutrition, Elsewhere, as in the US, successive governments ran up huge deficits, to exhaust all reserves, so that the last resort was is in the use of quantitative easing.
Making up for decades long of unsustainable spending and failure to ensure sound economics presents a formidable challenge ahead, but accelerated tapering in relation to quantitative easing, with a goal to completion in the next year will help remove the present distortions in asset inflation and restore incentives for savers as rates return to normality.   
A national savings flow is now also essential to sustain future investment and to begin to build up a reservoir to employ against any unexpected further external shocks. Although corporate balance sheets are in much better shape now tax on earnings is hampered by the ease to redirect earnings to low tax regimes, further exasperating respective countries tax collections.
This requires a concerted effort by respective government’s regulatory agencies to ensure multinationals pay a fair share of tax.
Governments also need to revert to more imaginative means pf employment, particularly for the youth and older displaced workers, with the reintroduction of Keynesian style investment expenditures.
But placing more emphasis on savings and investment in expanded resources and people will require a change in policy mix and the prospect of raising taxes of one kind or another likely to be an anathema within current political debate.
The additional investment in both people and facilities to counter downturns or sluggish economies is just as it was first envisaged by Keyes so it remains even more relevant today.

Catching up with the future

My letter as per below was published in the AFR on the 30th June   

In “When the past starts catching up with the future” (AFR, June 26) Maximilian Walsh contends the US economy reached a significant milestone in May when the number of employed Americans returned to the peak recorded before the advent of the GFC. But therein is also a salutary reminder it has taken six years to replace those jobs previously lost just after the GFC.
Australia managed to largely avoid any diminution in employment, which Walsh attributed to government stimulus and our favourable commodity trade with Asia. But what he did not mention is our past higher level of saving compared to the US whose successive governments ran up huge deficits. Having exhausted all reserves, their only resort was the use of quantitative easing.
Australia’s national saving has been much higher, due to the Howard government surpluses, corporate savings which funded the increased investments in mining and from superannuation, to underpin stimulatory measures and investment.
A national savings flow is essential to sustain investment and to build a reservoir to employ against any unexpected external shocks.

Apply accounting principles to multinational tax concessions

My letter as per below published today in the AFR with a cartoon. 

In “Tech has left tax system behind says Google” (AFR, June 12), Paul Smith reports that the head of Google Australia wants governments to clarify grey areas in the global tax system and end the shaming of individual companies for how they transfer profits around the world.

However, the accounts of Google and other multinationals which legitimately take advantage of low-tax regimes don’t coincide with normalised accounting principles.

The numbers booked in the case of Google don’t include advertising revenue of up to $2 billion, which is accounted for in more favourable tax locations such as Singapore and Ireland.

Favourable tax principles are applied to the cost of Apple computers and iPads sold at a cost in Australia that ensures profits are booked primarily in the lower tax regimes, such as Ireland.

What is evident is not only the foolishness of countries offering extraordinarily generous tax concessions but a lack of a co-ordinated effort to ensure commercial principles are upheld in assessing tax liabilities.

Hopefully Prime Minister Tony Abbott will follow through on his remark made while in the US, that he is serious about leading global efforts through the G20 to stop tax ­evasion through profit shifting.

What is needed is the application of recognised accounting principles to tax, so that profits and revenues are either included or deemed to be included where multinationals do business, in assessing taxation liabilities

Ill-advised medical fund is weird science

This letter was  published in the AFR on the 6th June 2014.

In “Basic science research under-funded” (AFR, June 3), Joanna Mather contends the federal government is under growing pressure to justify its decision to focus on medical research while cutting other science programs, as official figures show investment is already heavily skewed toward studies in medicine.
What is evident is the proposed creation of the new $20 billion fund for medical research was formulated with virtually no consultation from our leading scientists.
They would have advised the fund risks being largely ineffective without integrated support from the other science areas which are being cut.
Liberal backbencher Dennis Jensen, who has a PhD in materials science and physics and experience as a research scientist, contends it is not good policy to massively increase medical research when you are making heavy cuts to the CSIRO, the Defence Science and Technology Organisation, the Australian Nuclear Science and Technology Organisation, the Australian Research Council and the Australian Institute of Marine Science.
He laments the absence of a science minister, noting “not a single G8 nation lacks a dedicated science minister, and this bodes ill for our future’’. But Prime Minister Tony Abbott foolishly ruled out a science portfolio, claiming ministers could take an integrated approach where scientific matters are involved and seek relevant departmental advice.
The budget’s piecemeal approach indicates no such consultative action has been taken, and the skewed outcome severely undermines the nation’s future to invest wisely in science and technology to secure our future prosperity.

Beyond time and space

When the quantum theory first emerged over 100 years ago it was called quantum mechanics, assuming sub atomic particles and energies’ behaviour would conform to the mechanical laws such as is evident in large scale physics rather than as closely connected particles that interact as if they are one being.

Since then, notwithstanding the quantum entanglement mystery, the principles of quantum mechanics has expanded our understanding so we can say it is impossible to determine absolutely what will happen to individuals in relation to dates or numbers, but rather the best we can do is to revert to probabilities. Hence, although it is logical for us to live our life on the basis we all have free will, to plan and make logical choices which have consequences, it would seem in reality we can never be completely free in a world which is unpredictable, since you and I are made up of those same unpredictable cells and atoms.

 

Nevertheless this realisation of interconnectedness has led to  enhanced medical outcomes, a better understanding of chemical bonding and what occurs in photosynthesis , just to mention a few advances in knowledge. We have adapted to many commercial applications such as in in the widespread use of lasers, atomic clocks and in encryption coding used to safeguard large banking transfers. Soon we will have much faster quantum computers and can possibly even look forward to the discovery of cancer cures. 

But one of the more interesting applications concerns our consciousness. According to Science daily the old theory that our consciousness derives from the finer scale activities within brain neurons, has been given further impetus with the recent discovery of quantum vibrations therein. Click here for the full article

 

Orchestrated objective reduction.

This discovery reignites in my mind the old idea advanced by physicist Roger Penrose who concluded “our mind thought process began by way of a number of superimposed quantum states to collapse through gravity to produce our conscious thoughts”. Click here for more.
 
Penrose postulates how one might be able to reconcile the seemingly contradictory theory of being able to compute a future from a deterministic world about which can have only random outcomes. He suggests a cause arising from our consciousness lies beyond computation and random effect.

A 'cause' could be something that cannot be computed in practice or in principle. I shall argue that when a 'cause' is the effect of our conscious actions, then it must be something very subtle, certainly beyond computation, beyond chaos, and also beyond any purely random influences.
Whether such a concept of 'cause' could lead us any closer to an understanding of the profound issue (or the 'illusion'?) of our free will is a matter for the future.

Conclusion
We may never be able to say with any authority what is the reality we attempt to determine within our consciousness, or even define our consciousness other than to postulate it lies within the province of the  quantum mystery, which allow us to determine certain probabilities. Otherwise that might denote the end of the journey that is not to be.

 

Ending entitlements means cutting youth safety net

In “Ending entitlements means cutting youth safety net“ (Australian  Financial Review, May 21) Cassandra Goldie reports major cuts in jobless benefits for people under 30 will create a lot of hardship without increasing opportunities.

Given the limited job opportunities the inescapable conclusion of such a policy to require the under 30 to wait up to six months before getting unemployment benefits and who will then will have to work for the dole, is to provide this government with the distinction of helping set up the next lost generation from an envisaged 100,000 effected.

The estimated saving of 2 billion in government outlays will simply dissipate in the future in increased costs to society if some people become homeless or turn to a life of crime, from those who unable to obtain regular work because employment opportunities are simply not available . 

 A feature of the improved technology over the past decades has not been the flow on effect to labour participation but the reverse is now true today with a propensity to relocate processing or support functions overseas, reducing the pool of opportunities for younger people.

Hence, the simplistic slogan we heard of ‘’learn or earn‘’ presupposes the idea ample opportunity exists for all, as the economy undertakes structural changes and which represents an inopportune  time to remove a long standing safety net for those most vulnerable within our society.

 

Strong arm tactics with states not the way

Below is my letter which was published in the Australian Financial Review today.

In “States have every right to be screaming”(AFR, May 15) Laura Tingle identifies the disaster for the states of federal budget cuts of $80 billion in funding to schools and hospitals, forcing them to either cut services or increase taxes.
There are good reasons to have a conversation about reshaping tax-sharing arrangements with the states but that requires consultation, not strong-arm tactics, which alienates state premiers.
The fact Abbott has further announced he is willing to negotiate aspects of the budget to get the measures through the Senate illustrates the lack of any prior consultation beforehand within the Parliament, which may have improved overall outcomes.
This piecemeal approach contrasts markedly with NZ, which has just announced a $NZ372 million ($342 million) budget surplus for the year to June 2015, reaching $NZ3.5 billion in 2017-18 as a result of increases to its GST. Its budget provides for increases in health and education, and the whole exercise was only completed after widespread consultation within the party and the electorate.
Before the election Abbott foolishly ruled out any change to the GST, stating any future changes envisaged would be taken to the next election.
But this approach necessitates consultation with the states, particularly if funding to education and health services is to be cut, necessitating a rise in the GST.

US fails to support IMF reform

In ”Hockey slams US for blocking IMF reform” (Australian Financial Review  11^thApril 2014) Treasurer Joe Hockey has conceded that Australia’s G20 goal of ushering through governance reforms to the International Monetary Fund is likely to fail, causing him to lash the US Congress for blocking the changes.

 

Hockey is justified in his criticism of the US Republican Party who have thwarted plans for IMF reforms , notwithstanding those moves were backed by almost all other nations, to increase bailout funds by US314m (A335m) and give China more say in management.  

The inescapable conclusion is the US is currently under hostage to the Tea Party and the far-right Heritage Foundation, who continues to demonstrate a great distrust for all multilateral institutions. But such intransience underpins the reasons we are unable to make any progress, as we simply can’t trust one another. 

The wider question to ask is why should G20 countries support Washington's global economic expansionary policies and persuade others to adopt its agenda to punish Moscow for its position against the Ukraine, given its lack of support to reform the IMF, a move previously agreed upon.

The U.S. deserves the strongest possible condemnation from Hockey for its insular approach to global good governance and lack of concern in providing sound economic leadership by supporting the IMF.

The best option is now to implement "Plan B" reforms without Washington's consent, which will involve closer links with those who are willing to be part of the team.

Congarinni and John Patrick Byrnes

Congarinni  is a small village at Nambucca,  and one of it's  pioneers was my great. great , grandfather , Patrick John Byrnes who farmed 295 acres in 1864, to  later operate a general store and pub, to take advantage of  stopovers  to the Bellinger River. Here is a short poem I composed about his life. For more click here   

John Patrick Byrnes
In Ireland, in 1836, before the dock, in mortal fear he trembled   
But the judge ruled in clemency, to the colonies transported   
Go forth as a convict these shores now be departed   

 And so below in a filthy hold, as he was tethered   

To scheme all day, when his liberty was granted.  
On shore he worked for slops and bread
Until the pardon came, then to the crooked river
To build an Inn, to farm the land, to raise a family,
Along the crooked river there was no better man.

To the Bullock trains passing by it was a favourite spot

For witty tales, for tasty ales, but not your only lot
For gentlemen seeking tweeds he sold a quality none better   
And so in fame his fortune spread, along the crooked river.

To the cedar kings of high country where rivers just a speck  

To the rivers mouth a graveyard for all the dreaded wrecks
He was the grand innkeeper, the one where all would stay.

This is the story of an Irish lad, who just stole for bread and butter
A pioneer whose fortune was told along the crooked river.

Perspectives on wealth from biblical texts.

Introduction

The biblical texts of the Old and New Testaments span events over thousands of years, with the early periods marking a transition from a tribal nomadic existence to settlements supported by improved agricultural and farming techniques.

Subsequently the Jewish kingdom evolved as the tribes put down roots which brought wealth and influence, punctuated by wars, prosperity and periods of captivity. Forming a view on wealth is a moving feast and this paper aims to discern emerging themes in the context of the writers intended audience.

In a period when what GOD you believed in was more the question than whether you believed in God(s), any religion, including Judaism would seek to interpret events as a sign of GODS favour or otherwise so as to unite or reassure its followers. Hence simplistically the stories about Abraham, Isaac, Jacob, Joseph, Moses and Joshua illustrate the theme of reward for obedience to GOD and to attribute punishment when they strayed. Prosperity and wealth were seen as evidence of GODS blessing for obedience.

In the later stories as the Jewish of nation advances, victorious in battles and assisted by trade links this theme continues. But in the later books under the wisdom steam covering Job, Psalms, Proverbs, Ecclesiastes, Song of Songs and Lamentations, the theme links wisdom to a fear of GOD to bring wealth and prosperity. But it is important to note in the Hebrew tradition a fear of GOD means holding GOD in awe or reverence, See reference http://www.hebrew4christians.com/Meditations/Yirat_Adonai/yirat_adonai.html

By the time of the last book in the Old Testament of Malachi, Israel has resettled in Palestine following the Babylonian captivity when a smaller temple to Solomon’s had been built to continue the Mosaic ritual sacrificial practices.

The Jewish nation was also authorized to mint their own coinage, which was  not to conflict with the Commandments: “Thou shalt not make unto thee any graven image, so that simple wordage might only be complimented with say an anchor to represent commerce. A period of 400 years elapses before the New Testament during which time power shifts from the east to West to Rome.

Therein in the New Testament we have a more immediate expectation of the messianic kingdom to come with more emphasis on the here and now, and the pragmatic view of St Paul to simply encourage generosity in giving money.  

Attitudinal approach to wealth

The practice of apportioning ten percent of one’s income, known as Tithing was evident in both Testaments, as was making sacrificial offerings. In the earlier periods this marked an expression of affinity to the land, to give thanks for the harvest so that the first fruits were given to GOD. Overall the ritualistic practices became codified into the Mosaic Laws and as in Deut. 12:6-7. And thither ye shall bring your burnt offerings, and your sacrifices, and your TITHES, and heave offerings of your hand, and your vows, and your freewill offerings, and the firstlings of your herds and of your flocks: And there ye shall eat before the Lord your God, and ye shall rejoice in all that ye put your hand unto, YE and your Households, wherein the Lord thy God hath blessed thee" and in Malachi 3:10 bring the whole tithe into the storehouse, that there may be food in my house. Test me in this," says the LORD Almighty, "and see if I will not throw open the floodgates of heaven and pour out so much blessing that there will not be room enough to store.

A natural expression of nature’s bounty associated with GODS blessings, was exemplified in the vision of Abraham finding favour with GOD, which was evidenced by his great riches and influence as in Genesis 13:2: he was very rich in livestock silver and gold, and in 14, as he leads his 318 of his trained servants into battle.

In this context wealth was seen as GODS blessing, which in summary form can be ascertained from these passages from Joshua. Here we see that the land or their wealth is given to them by their GOD: “This is what the LORD, the God of Israel, says: ‘Long ago your ancestors, the father of Abraham and Anchor, lived beyond the Euphrates River and worshiped other gods. But I took your father Abraham from the region beyond the Euphrates River, led him throughout the land of Canaan, and multiplied his heirs ’I’II gave him Isaac and to Isaac I gave Jacob and Esau.  I gave the hill country of Seri to Esauas possession, but Jacob and his sons down Egypt. Then I sent Moses and Aaron; I plagued Egypt by what I did there and afterward I brought you out. When I brought your fathers out of Egypt and you reached the Red Then I sent Moses and Aaron; I plagued Egypt by what I did there and afterward I brought you out. When I brought your fathers out of Egypt and you reached the Red Sea, the Egyptians pursued your fathers with chariots and horsemen as far as the sea. Your fathers cried out to the LORD, so He put darkness between you and the Egyptians, and brought the sea over them, engulfing them. Your own eyes saw what I did to Egypt. After that, you lived in the wilderness a long time.

“I brought you to the land of the Amorites lived beyond the Jordan’s they fought against you, but I handed them over to you. You possessed their land, and I annihilated them before you. Balak son of Zippor, king of Moab, l set out to fight against Israel. He sent for Balaam son of Beor to curse you, but I would not listen to Balaam. Instead, he repeatedly blessed you, and I delivered you from his hand.

 ‘You then crossed the Jordan and came to Jericho.m The people of Jericho — as well as the Amorites, Perizzites, Canaanites, Hittites, Girgashites, Hivites, and Jebusites — fought against you, but I handed them over to you.  I sent the hornetn, ahead of you, and it drove out the two Amoritekings’ before you. It was not by your sword or bow. I gave you a land you did not labour for, and cities not build though you live in them; you are eating from vineyards and olive groves you did not plant. ’Sea the Egyptians pursued your fathers with chariots and horsemen as far as the sea. Your fathers cried out to the LORD, so He put darkness between you and the Egyptians, and brought the sea over them, engulfing them. Your own eyes saw what I did to Egypt.  After that, you lived in the wilderness a long time.

However we should have no illusions that for many, subject to the control of capricious or unjust masters, life was exceedingly difficult. A check against this excess of power can be found in the Prophets such as Isaiah, although the prophet doesn’t argue over the idea of God’s blessing as a sign of righteousness but rather rallies against widespread injustices.  In Isaiah 3:14, 15 “The LORD will enter into judgment with the elders of His people and His princes: for you have eaten up the vineyard; the plunder of the poor is in your houses. What do you mean by crushing my people and grinding the faces of the poor?’ says the Lord GOD of hosts. “Isaiah 10:1, 2 - “Woe to those who decree unrighteous decrees, who write misfortune, which they have prescribed to rob the needy of justice, and to take what is right from the poor of My people, that widows may be their prey, and that they may rob the fatherless.

The earlier more vivid Old Testament stories are contained in the captivating stories of Moses in Exodus, Leviticus Numbers and Deuteronomy. These were written about events occurring thousands of years earlier and scholars are dubious over their authenticity, particularly in regard to any mass migration from Egypt. Moses as "The Lawgiver is central to Jewish practices since he delivered the Ten Commandments, but passages in Deuteronomy 8:17-18, warn against attributing wealth to one’s own power: Beware lest you say in your heart, ‘My power and the might of my hand have gotten me this wealth.’ You shall remember the Lord your God, for it is he who gives you power to get wealth that he may confirm his covenant that he swore to your fathers, as it is this day, in Deuteronomy 9:4 After the LORD your God has driven them out before you, do not say to yourself, "The LORD has brought me here to take possession of this land because of my righteousness." No, it is on account of the wickedness of these nations that the LORD is going to drive them out before you.

Hence the writer’s intention equates these leaders’ wealth and prosperity to emanating from God’s favour, due in turn to their righteousness, or bequeathed to them by GOD because of the extreme wickedness of the previous owners.  

King David’s empire grows under Solomon, only to be split in two under his son.

The biblical King Solomon is associated more than anyone else with wisdom and great wealth, whose crowning achievement was the building of the temple in Jerusalem, whose descriptions and size give the impression of a massive undertaking involving expert craftsmen and fine material such as sandalwood and gold. As in Kings 10:12 The king used the sandalwood to make railings for the Temple of the LORD and the royal palace, and to construct lyres and harps for the musicians. Never before or since has there been such a supply of sandalwood.

 

To obtain the wood and precious metals to build the temple many of the materials and expertise were imported from the Phoenicians and with whom he was to engage in significant trade. Solomon had already inherited a considerable empire from his father, King David but subsequently accumulated unimaginable wealth. When we consider the total world population then was estimated at less than 50 million these assets are enormous. Under Kings 1 his assets are listed as 12,000 horses with horsemen, 1,400 chariots, (which was partly verified from archaeological excavations) together with 700 wives and 300 concubines. The latter references however may well be exaggerations as the writer is prone to overly enthusiastic phraseology depicting the streets as paved with Gold.

However there can be no doubting the Solomon era was one of enhanced prosperity to the inhabitants during a period of political stability, as he was able to forge trade links and live peacefully with neighbouring countries.

The salutary warning however by the writer was that great wealth and power can bring corruption to even the wisest as Solomon began to worship idols and his empire was subsequently torn in two during the reign of his son Rehoboam.

Seeking Wisdom  

The Old Testament books of, Psalms, Proverbs, Ecclesiastes, Song of Songs and Lamentations are considered books representing the wisdom stream whose theme is to link wisdom with a fear of the Lord, which in turn would bring prosperity. However this concept of "fearing God," has a different meaning to how we would normally view the word. In Hebrew the meaning denotes immensity and awe of GOD, to be simultaneously fearful over our smallness in the vast expansion of the stars. There are numerous references to this theme as under: Job 28:28 Behold, the fear of the Lord, that is wisdom, and to depart from evil is understanding Psalm 111:10 the fear of the LORD is the beginning of wisdom; all who follow his precepts have good understanding. To him belongs eternal praise. Proverbs 1:7 Fear of the Lord is the foundation of true knowledge, but fools despise wisdom and discipline. Proverbs 3:7 do not be wise in your own eyes; fear the LORD. Ecclesiastes 2:26 To the man who pleases him, God gives wisdom, knowledge and happiness, but to the sinner he gives the task of gathering and storing up wealth to hand it over to the one who pleases GOD.  

The New Testament references

At the time of the New Testament, following a period of 400 years since the last book of Malachi in the Old world power had shifted from the East to the West, to Rome, for Palestine to become a puppet state.

Although the rebuilt Temple continues to dominate as the centre for mosaic practices, the Jewish kingdom is spilt into three factions; the Pharisees, Sadducees and the Essenes, with some scholastic influences attributing Jesus’s prior association to be amongst the Essenes.

Because of the messianic expectation of a new kingdom there is less emphasis on storing up reserves for the future, since the expectation of the end of time (prophecy) was on the here and now. Even so many of the practices continued during Christ’s ministry, as the Mosaic Law tradition continued as Jesus instructed the disciples to offer animal sacrifices Luke 5:14; to pay for upkeep of the Temple Matthew 17:24–27; to recognize Scribes and Pharisees Matthew 23:2–3, but was concerned over corrupt practices as in Matthew 21:12-13 Jesus entered the temple courts and drove out all who were buying and selling there. He overturned the tables of the money changers and the benches of those selling doves. “It is written,” he said to them, “My house will be called a house of prayer, but you are making it ‘a den of robbers.^]”

Hence just as is in the OLD the prophets were to act as a check against injustices arising from the excesses evident in injustices from power and wealth, Jesus similarly takes his lead from the words of the prophet Isaiah Is:61.1-2 in proclaiming his mission: “The Spirit of the Lord is upon Me, because He has anointed Me to preach the Gospel to the poor, to heal the broken-hearted, to preach deliverance to the captives, and recovery of sight to the blind, to set at liberty them that are bruised, to proclaim the acceptable year of the Lord.”

In the “Sermon on the Mount Jesus exhorts his audience to give to the poor, and so to build up "a treasure in heaven that will never fail, where no thief comes near and no moth destroys" Lk 12.33; For where your treasure is, there will your heart be also" Lk 12.33:34. We have an interesting story of the tax collector Zacchaeus promising to give half his possessions to the poor, and to refund overpayments four times over if he defrauded anyone Lk 19.8.

Hence the ongoing themes are as in Matthew 6:24 "No one can serve two masters, nor is generosity necessarily dictated by wealth Mark 12:41-44. They all gave out of their wealth; but she, out of her poverty, put in everything--all she had to live on.

St Paul.

Paul as a missionary, took a slightly different perspective not to distinguish between rich or poor, but encourages generosity in giving. 2 Cor. 6:10.  When he was poor he could still make many rich and having nothing he still possessed everything.

Pauls ongoing theme was the mysterious “in Christ ” unity where mankind is equalised so that he takes a pragmatic approach that should needs arise, we will respond positively in gladness. 2 Cor. 8:13-14. At the present time your plenty will supply what they need, so that in turn their plenty will supply what you need. Then there will be equality” .

Pauls approach was to unity for the fledgling communities to care for their widows, but not all, (1 Tim. 5:3) “Give proper recognition to those widows who are really in need.” In Timothy 6:17-9 Paul has some advice to the rich  : "Command those who are rich in this present age not to be haughty, nor to trust in uncertain riches but in the living God, who gives us richly all things to enjoy. Let them do good, that they be rich in good works, ready to give, willing to share, storing up for themselves a good foundation for the time to come, that they may lay hold on eternal life"

Conclusion
The underlying tension attributed to the Old Testament which saw GODs favour evident in wealth to differ from the NEW references , where Jesus, amongst other things, emphasised the importance of helping the poor is more a matter of changed emphasis than one of contradictions.

The Old Testament was also always concerned with the poor, as enunciated by the prophets, but for an evolving belief in one GOD to take hold the writers no doubt needed to reassure the followers of evidence of GODS favour for righteousness and adherence to the law for the Jewish religion to flourish.

Today we have rich images from both sources that provide valuable insights into the idea that in the end any material wealth is a transitory state.

Beyond reasonable needs for existence this underpins a wider responsibility to share in our inheritance in the position we find ourselves, to be generous in time or money or both as best we are able.