Category: Economic Freedom

Blog author: jsunde
Monday, October 13, 2014
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capterrorismThe Middle East is enduring yet another wave of terror and political change, spurring countless Western analysts and elites to offer their preferred strategies and solutions, most of which involve military force, foreign aid, or some mixture of the two.

In last weekend’s Wall Street Journal, Peruvian economist Hernando De Soto sets forth a less predictable path, arguing for “an aggressive agenda for economic empowerment,” similar to that which was promoted in Peru during the 1990s.

I know something about this. A generation ago, much of Latin America was in turmoil. By 1990, a Marxist-Leninist terrorist organization called Sendero Luminoso, or Shining Path, had seized control of most of my home country, Peru, where I served as the president’s principal adviser. Fashionable opinion held that the people rebelling were the impoverished or underemployed wage slaves of Latin America, that capitalism couldn’t work outside the West and that Latin cultures didn’t really understand market economics.

The conventional wisdom proved to be wrong, however. Reforms in Peru gave indigenous entrepreneurs and farmers control over their assets and a new, more accessible legal framework in which to run businesses, make contracts and borrow—spurring an unprecedented rise in living standards… Over the next two decades, Peru’s gross national product per capita grew twice as fast as the average in the rest of Latin America, with its middle class growing four times faster.

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Blog author: ehilton
Thursday, October 2, 2014
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Hamlet_skullSam Gregg, Acton’s Director of Research, bemoans the state of Europe in The American Spectator today. In a piece entitled, “Something is Rotten in the State of Europe,” Gregg begins by noting that Germany seems to have lost all common sense.

William Shakespeare knew a thing or two about human psychology. But he also understood a great deal about the body-politic and how small signs can be indicative of deeper traumas. So when Marcellus tells Horatio at the beginning of Hamlet that you can almost smell the weakness permeating Denmark, it’s Shakespeare’s way of telling us to pay attention to what sticks out as abnormal and to ask what else it may portend.

It was difficult not to be reminded of this advice when reading that a majority of Germany’s Ethics Council recently called for the abolition of legal constraints upon incest. Referring to a case in which a man had entered into a relationship with his biological sister, the Council declared: “The fundamental right of adult siblings to sexual self-determination has more weight in such cases than the abstract protection of the family.”

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success-2Earlier this month Brian Grim of Georgetown University and Greg Clark and Robert Edward Snyder of Brigham Young University released the results of an extensive study, “Is Religious Freedom Good for Business?,” which concludes that “religious freedom contributes to better economic and business outcomes.”

A few months ago Grim provided 7 reasons why religious freedom is a positive good for businesses:
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Blog author: jcarter
Thursday, September 18, 2014
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bible-studyMost Christians recognize that the Bible has lot to say about economic topics, such as money and poverty. Yet there is a paradoxical assumption, whether stated or unspoken, that these passages don’t speak to larger economic issues. Occasionally this is true, but more often than not, we can find principles from Scripture that can help us discern how we should think about matters related to economics.

Consider, for example, the issue of economic systems. The Bible doesn’t claim to favor any particular nation-based economic system, such as American-style capitalism or the old Soviet-style communism. But Scripture does seem to have a clear preference for the economic activities that underpin the free market. As David Kotter explains,
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Blog author: jcarter
Monday, September 15, 2014
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slaveryThere is a near universal agreement that America’s experience with chattel slavery, where people are treated as the chattel or personal property of an owner and are bought and sold as if they were commodities, was one of our country’s gravest moral horrors. But some people seem to believe that the despicable institution aided the nation’s prosperity.

That’s not the case, explains economist Scott Sumner, who points out that countries with free labor tend to be more prosperous:

Between 1850 and 1880 the market value of slaves falls by just over 100% of GDP. And that decrease is almost precisely offset by a slightly more than 100% increase in capital (industrial and housing.) The total capital stock declines slightly in the Piketty graph, but that’s only because of a fall in the value of agricultural land, not capital.

Now here’s where mislabeling slaves as capital comes into the equation. At first glance it looks like America’s capital stock was unaffected by the abolition of slavery. But the actual capital stock rose by over 100% of GDP—an industrial revolution. If you insist on treating slaves as “capital” it doesn’t change the basic story. Because in that case a separate ledger of “labor resources” would have soared after 1865. Former slaves would now be classified as “labor,” and hence the labor stock would rise dramatically, even on a per capita basis. Either way, abolishing slavery made America a much more productive, and hence richer country.

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In the United States, we’ve only begun to see how impediments to religious liberty can harm and hinder certain businesses and entrepreneurial efforts. Elsewhere, however, particularly in the developing world, religious restrictions and hostilities have long been a barrier to economic growth.

To identify these realities, Brian Grim of Georgetown University and Greg Clark and Robert Edward Snyder of Brigham Young University conducted an extensive study, “Is Religious Freedom Good for Business?,” which concludes that “religious freedom contributes to better economic and business outcomes.”

Katrina Lantos Swett and Daniel Mark summarize the key findings at Investor’s Business Daily:

Reviewing the GDP growth of 173 countries while controlling for 23 financial, social and regulatory factors, [Clark and Snyder] found that religious freedom not only is associated with global economic growth, but also is one of only three factors carrying that association.

As the study found, 20% of countries with low levels of religious hostilities and 20% nations with low levels of government restrictions on religion were economic innovators, while the figures for nations with high levels of hostilities and restrictions were only 8% and 7%, respectively.

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Those of you in West Michigan with a taste for libertarian cinema may want to to join local restaurateur Tommy Brann for a special screening of “Atlas Shrugged 3: Who is John Galt?” Brann is hosting the showing at Celebration Cinema North at Knapp’s Corner tomorrow (Sept. 12) at 7 p.m. Tickets are $7.75 and email tombrann@branns.com to reserve your seat.

Before you go, read Rev. Robert A. Sirico’s essay “Who Really Was John Galt, Anyway?” published at Patheos.com in 2011. Also see the PowerBlog post and video from 2012 in which Rev. Sirico talks about Rand’s “false gospel.”

Blog author: dpahman
Wednesday, September 10, 2014
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I have spoken in the past in favor of net neutrality, writing,

Whoever is responsible for and best at enforcing it, net neutrality had this going for it: it was a relatively stable, relatively open playing-field for competition…. [T]he fact that companies tried to get around it via copyright protection privileges shows that it was, in fact, doing something to enforce freedom of competition. Now, without it, there is an opportunity for concentration of power…. As [Walter] Eucken illustrated, concentration can lead to instability, and instability leads to popular calls for state regulation, which tend in practice toward cronyism. Certainly, such a trajectory is not inevitable, but it is now more likely, giving good reason for pause at the idea that we do not need net neutrality — or something like it — in the future.

This week, House minority leader Nancy Pelosi voiced her support for net neutrality as well. So why would I object? Because the measures that Pelosi proposes give much more power to the government, following the trajectory outlined above in the direction of over-regulation. (more…)

Blog author: dpahman
Wednesday, September 3, 2014
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City Summer 2014In the most recent issue of The City, I have an essay on Orthodoxy and ordered liberty. I argue that Orthodox theological anthropology, which distinguishes between the image and likeness of God and two forms of freedom corresponding to them, fits well with the classical understanding of ordered liberty.

In particular, I examine these freedoms with regards to the family, religious liberty, political liberty, and economic liberty, arguing that the Orthodox ascetic tradition has much to offer to modern Christian social thought with regards to how best to order the freedom we have by virtue of being created after the image of God toward that freedom from passion and sin that finds its fulfillment in the likeness of Jesus Christ.

Of interest to our readers here, with regards to economic liberty, I write,

We are created with a capacity for freedom, autexousio, to be used for the purpose of the moral freedom of theosis: eleutheria. Thus, just as we ought to offer up our bodies as living sacrifices to God (cf. Romans 12:1), so also we are to offer up God’s creation to him through our labor. God has given us the earth in order “to tend and keep it” in a paradis[ai]cal state (Genesis 2:15). Thus, acknowledging … our propensity for failure, we nevertheless have a duty to make of God’s creation what we can, imitating the creativity of God and exercising the dominion he gave us (Genesis 1:26).

We must, then, have liberty in society to freely cultivate the resources of the earth for the sake of the higher good of self-sacrificing love. Helen Rhee affirms in Loving the Poor, Saving the Rich, her study of wealth and poverty in the early Church, the consistent patristic teaching of both the affirmation of private property rights and our moral duties to use our property for the good of others (what is known in the West as the “universal destination of goods”)….

You can read the full article online here.

And while you’re at it, take the time to subscribe to The City. It’s free and published in print and online three times a year. Subscribe here.

Reading through the German economist Walter Eucken’s work The Foundation of Economics (1951), I came across one of the most helpful charts for economic analysis I have yet to find. In it, Eucken gives every possible form of market in a single table:

Eucken Chart

The Foundation of Economics, p. 158

Eucken adds four qualifications that are important to keep in mind:

  1. “These forms of market are actual forms which have been or are to be found in actual economic life (often blended with one another, and existing alongside the forms of a centrally directed economy). They are not given a priori. They are discovered with their distinguishing characteristics by studying the planning data of those taking part in the market….”
  2. “Under each particular form of market a man can act according to different principles, for example, that of maximum net receipts or that of optimum output….”
  3. “Each of these forms of market can appear in four types: both open, both closed, or closed on either side only.”
  4. “Fixing of prices by the state occupies a special position, since it can follow any form of market and has different effects accordingly…. For example, the significance of coal prices being fixed by the state varies according to whether perfectly competitive, oligopolistic, or monopolistic supply, or some other form of market, exists, or whether both sides of the market are open, or whether the supply side is closed by an investment veto. Governmental price-fixing is to be treated as a variant of the different market forms and not as a special market form of its own.”

So, what does this amount to? (more…)