Category: Christians Need to Know

joseph-interpreting-dreamsNote: This is the latest entry in the Acton blog series, “What Christians Should Know About Economics.” For other entries in the series see this post.

The Term: Consumption Smoothing

What it means: Consumption is the use of goods and services by households. Consumption smoothing is the balancing out of spending and saving over a period of time to maintain the highest possible standard of living (measured in consumption) over the course of one’s life.

Consumption is one of the first economic concepts mentioned in the Bible. Similarly, consumption smoothing is one of the first economic concepts to play a significant role in redemptive history.

In Genesis 41 we find that the Pharaoh of Egypt has two dreams that he is unable to interpret. Joseph is brought in to explain the meaning:
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Note: Later today at the Faith & Freedom conference I’ll be speaking on a panel titled, “A Cronyism Crisis: How Corporate Welfare Undermines Markets and Human Flourishing.” If you’re at the conference please stop by this session.

crony-capitalismThe Term: Crony capitalism (sometimes referred to as cronyism or corporatism)

What it means: Crony capitalism is a general term for the range of activities in which particular individuals or businesses in a market economy receive government-granted privileges over their customers and/or competitors.

Why it Matters:  For as long as there have been government officials, there have been economic cronies—friends, family, and associates who use their connections for their own financial gain.

In ancient Israel, for example, when the prophet Samuel appointed his own sons as leaders, they began to engage in cronyism: “[Samuel’s] sons did not follow his ways. They turned aside after dishonest gain and accepted bribes and perverted justice.” (1 Samuel 8:3).

Unsatisfied with these corrupt leaders, the elders of Israel asked Samuel to appoint a king over them. God told Samuel to warn the people of the consequences, which included even worse forms of economic cronyism: “[The king] will take the best of your fields and vineyards and olive groves and give them to his attendants. He will take a tenth of your grain and of your vintage and give it to his officials and attendants” (1 Samuel 8:14-15).

We read passages like that and instantly recognize this as unfair and unjust, a corrupting influence on both the people and the government. Yet we tend note to even notice the cronyism that occurs in our own economic system. Because the “dishonest gain” is often more subtle than the examples found in the Bible, we often do not recognize cronyism because we don’t know what to look for.
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crony-capitalismNote: This is the latest entry in the Acton blog series, “What Christians Should Know About Economics.” For other entries in the series see this post.

The Term: Crony capitalism (sometimes referred to as cronyism or corporatism)

What it means: Crony capitalism is a general term for the range of activities in which particular individuals or businesses in a market economy receive government-granted privileges over their customers and/or competitors.

Why it Matters:  For as long as there have been government officials, there have been economic cronies—friends, family, and associates who use their connections for their own financial gain.

In ancient Israel, for example, when the prophet Samuel appointed his own sons as leaders, they began to engage in cronyism: “[Samuel’s] sons did not follow his ways. They turned aside after dishonest gain and accepted bribes and perverted justice.” (1 Samuel 8:3).

Unsatisfied with these corrupt leaders, the elders of Israel asked Samuel to appoint a king over them. God told Samuel to warn the people of the consequences, which included even worse forms of economic cronyism: “[The king] will take the best of your fields and vineyards and olive groves and give them to his attendants. He will take a tenth of your grain and of your vintage and give it to his officials and attendants” (1 Samuel 8:14-15).

We read passages like that and instantly recognize this as unfair and unjust, a corrupting influence on both the people and the government. Yet we tend note to even notice the cronyism that occurs in our own economic system. Because the “dishonest gain” is often more subtle than the examples found in the Bible, we often do not recognize cronyism because we don’t know what to look for.
(more…)

consumptionNote: This is the latest entry in the Acton blog series, “What Christians Should Know About Economics.” For other entries in the series see this post.

The Term: Consumption

What it means: Consumption is the use of goods and services by households.

Why it Matters: Consumption is an ugly word for a beautiful concept.

Since the Middle Ages, the word “consumption” has referred to wasting diseases, such as tuberculosis, which “consume” the body. More recently, consumption has often been confused with consumerism, a useful and related term that has regrettably taken on a wholly negative connotation.

But in its most basic economic sense, consumption is a purely neutral term that refers to the use of goods and services by households. If you arrange for a babysitter to watch your toddler so that you can eat a steak dinner with your spouse, you are “consuming” both goods (the steak) and services (the babysitter’s time and attention). While you pay for these goods and services it’s merely their use that marks them as “consumption.” (We’ll come back to that point in a moment.)

Consumption is arguably the first (or maybe second) economic concept mentioned in the Bible. After creating Adam and Eve and giving them the cultural mandate (“Be fruitful and increase in number; fill the earth and subdue it.”), God says to them,
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new-york-cityLarge cities in the northeast like Boston, New York, Newark, Philadelphia, and so on, are often caricatured as wastelands of non-religious, unchurched, overtly secular theaters. Caricatures of this type seem odd given the fact that many of America’s oldest religious institutions are actively operating in those regions. One of my friends is quick to point out that every week people sit on church pews in northeastern churches that older than many states out west. For example, by looking at the Christian presence in the New York City area alone, research shows that the northeast might not be as religiously barren as many believe.

I recently contacted Tony Carnes, editor and publisher of A Journey through NYC Religions, to set the record straight on the New York City area. Since 2010, Carnes and his team have visited thousands of religious houses of worship, from all religious traditions cataloging the religious activity in New York City. In light of what he and his team have seen on the ground, Carnes has come to the conclusion that the best description of New York City is that it is a “post secular” city—a condition somewhere between a secular and sacred.
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comparativeadvantageNote: This is the latest entry in the Acton blog series, “What Christians Should Know About Economics.” For other entries in the series see this post.

The Term: Comparative advantage

What it Means: The ability of an individual or group of individual (e.g., a business firm) to produce goods or services at a lower opportunity cost than other individuals or groups.

Why it Matters: There is a story of the distinguished British biologist, J.B.S. Haldane, who found himself in the company of a group of theologians. On being asked what one could conclude as to the nature of the Creator from a study of his creation, Haldane is said to have answered, “An inordinate fondness for beetles.”

When we examine creation to uncover what it reveals about the character of God, one of the things we discover time and time again is the Creator’s fondness for diversity. Like Haldane, we can see this by looking at biology (e.g., there are more species of beetle than birds or mammals combined). But we can also find it when we turn to economics.

A primary example of God’s enthusiasm for diversity is the concept of comparative advantage. While the definition of the them makes it sounds dull and wonky, comparative advantage is a beautiful, theologically profound norm of creation.

Fully appreciating the nuances of the ideas requires timely reflection. But understanding it can be achieved when a few minutes. In this brief video, economist Donald J. Boudreaux does a masterful job of explaining how, when combined with trade, comparative advantage improves human communities.
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MoneyRoll

Note: This is the latest entry in the Acton blog series, “What Christians Should Know About Economics.” For other entries in the series see this post.

The Term: Money

What it Means: In economics, money is a broad term that refers to any financial instrument that can fulfill the functions of money (more on that in a moment).

There are three basic ways to exchange goods and services: gifting (e.g., I give you a banana, expecting nothing in return); barter (e.g., I give you a banana, in exchange you give me an apple); by using money (e.g., I give you a banana, in exchange you give me $1). Money was invented (and reinvented in every culture) because it makes exchanges easier than the barter system.

What Money Is: Money is a shared belief system used to simplify exchanges of goods and services. To be used as money people have to share a belief that the item —whether paper, gold, rocks, etc. — can perform three main functions: be a store of value, be used as a unit of account, and serve as a medium of exchange.

In the next section we’ll examine these functions. For now, here are two examples of how money serves as a shared belief system:
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