Category: Economics

unequal_soup_business_deskThe topic of economic inequality continues to be at the forefront of our current political discussions, thanks in no small part by a president who calls it “the defining challenge of our time.”

But although such concerns are more typically lobbed about rather carelessly and thoughtlessly — cause folks to fret over the “power” of small business owners and entrepreneurs in a mythological zero-sum market ecosystem — there are indeed scenarios in which the rise of such inequality ought to give us pause.

In his book Integrated Justice and Equality: Biblical Wisdom for Those Who Do Good Works, John Teevan challenges those former assumptions, noting the dangers of observing inequality at the surface (“the rich get richer!”) and the destruction of knee-jerk redistributionist policies. Yet he also duly recognizes that what lies beneath that surface can sometimes be rather nasty indeed.

We may not live in the landed aristocratic context of the French Revolution, but distortions to market forces are increasingly promoted, leading to lots of tiny barriers over the long run. When passed and implemented, these are bound to trap the downtrodden and further insulate the rich and powerful. Where the “rich get richer” in this type of setting, problems surely abound. (more…)

Blog author: jballor
Thursday, October 30, 2014
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Following up on the recent discussions of envy, here’s a bit from Russell Kirk’s book on economics:

It would be easy enough to list other moral beliefs and customs that are part of the foundation of a prosperous economy, but we draw near to the end of this book. So instead we turn back, for a moment, to one vice we discussed earlier—and to the virtue which is the opposite of that vice.

The vice is called envy; the virtue is called generosity.

Envy is a sour emotion that condemns a person to loneliness. Generosity is an emotion that attracts friends.
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incomeinequalityWhen historians and economists look back at our era (starting around the time of the “Great Recession” in 2007) they’ll be hard-pressed to understand why so much of the policy debates centered around an issue of relatively minor importance that has existed since the beginning of humanity: income equality.

The standard that really matters — and yet is relatively ignored — is consumption. In economics, consumption is the use of goods and services by households. Ensuring people have an income sufficient to meet their own consumption needs is the ultimate goal. And as a new paper by Scott Winship finds, income inequality doesn’t appear to affect consumption standards.

Winship’s paper examines the relationship between income inequality and living standards among the middle class and the poor worldwide. Some of the key findings are:

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Blog author: jcarter
Monday, October 27, 2014
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What’s the perfect minimum wage? $10 an hour? $20? $50?

Economist David Henderson explains why it should be “zero.” As Henderson explains, when the state mandates a minimum wage (or an increase), it makes harder for unemployed people to find work and forces business owners to cut the hours of lower-skilled employees.

AirportOver at The Federalist today, I ruminate on a conversation I overheard at an airport recently. I was an innocent auditor, I assure you. In the words of Sam Gamgee to Gandalf, “I ain’t been droppin’ no eaves sir, honest.”

The conversation had to do with the prices of goods and services on offer at airports. To simply blame (or credit) capitalism with the situation is misleading. As I conclude, “We should try to understand the words people are using, the way they are using them, and the assumptions underlying such uses.” After all, capitalism means different things to different people in different contexts.
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4669122802_1eb4ba97de_zTeaching our children about the value and virtues of hard work and sound stewardship is an important part of parenting, and in a privileged age where opportunity and prosperity sometimes come rather easily, such lessons can be hard to come by.

In an effort to instill such virtues in my own young children, I’ve taken to a variety of methods, from stories to chores to games, and so on. But one such avenue that’s proven particularly effective has been taking in Walt Disney’s Silly Symphonies, a remarkably artistic set of 75 animated shorts produced from 1929 to 1939.

Spun from a mix of myths, fables, fairy tales, nursery rhymes, and original stories, the cartoons evolved from simple, musical cartoons to cohesive tales that offer ethical lessons. Although the whole series is well worth taking in, I’ve provided highlights of 8 particular cartoons that have struck me as quite powerful. Each offers a splendid mix of humor and artistry that you’d be hard pressed to find in today’s cartoons, but they also offer healthy prods to the imagination when it comes to how we approach work, wealth, and stewardship.

1. Beware of Short-Term Solutions — Three Little Pigs (1933)

Perhaps the most famous of the series, “Three Little Pigs” went on to win numerous awards and spur several off-shoot shorts. Unlike the traditional tale, it avoids the deaths of pigs 1 and 2, yet it still offers the same striking parallels to Jesus’ parable of the wise and the foolish builders. (more…)

Blog author: jcarter
Thursday, October 23, 2014
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cavemaneconomicsFor a country that talks incessantly about “the economy”, a surprisingly large number of Americans are confused about how an economy actually functions. To help close that educational gap, Microsoft co-founder Paul G. Allen’s Vulcan Productions and documentary filmmaker Morgan Spurlock’s Cinelan have produced a series of 20 short films that explain economic issues.

“At its core, the vision of this project is to fuse artistry and storytelling with economic expertise to engage the public in a truly informed dialogue about the U.S. economy,” Carole Tomko, general manager and creative director of Vulcan, told Entertainment Weekly. “This esteemed group of artists and thinkers galvanizes our mission of bringing innovation to the public discourse about the economy, and empowering people to make better economic choices in their own lives.”

The first film in the series — “Cave-o-Nomics” — provides an effective, albeit rudimentary, introduction to how a market economy works. (I’d recommend the video as a tool for parents trying to explain the market to their kids.)
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tim-keller-head-shot-2011The Christian life is one filled with risk, driven by active faith in an active God whose ways are higher than our own. In all that we put our hands to, God calls us to turn away from the supposed predictability of our own plans and designs and rely entirely on Him.

Such an orientation transforms each area of our lives, from family and friends to politics to church life and beyond. But for those involved in entrepreneurship and business, the stakes feel particularly high, and amid the rise of modernity and overwhelming economic prosperity, the temptation to rely on our own devices is more alluring than ever before.

Christians are good at talking about “abandoning all” for the sake of the Gospel, to be sure, but what does this look like in day-to-day life? The rich young ruler made a risk calculation when asked to give all of his wealth to the poor, and based on that output, he failed. What similar calculations do we encounter as God prompts our stewardship, whether it means donating to a particular charity or investing in a new idea or enterprise? (more…)

Contrary to current policy, this is not reality.

Last Saturday The Imaginative Conservative published my essay, “Let’s Get Back to Robbing Peter: The Welfare State and Demographic Decline.”

To add to what I say there, it should be a far more pressing concern to conscientious citizens that the US national debt has risen from $13 trillion in 2010 to nearly $18 trillion today. That is an increase of $5 trillion in just four years, or a nearly 40 percent increase. It is becoming more and more clear that, at our current rate, our nation’s entitlement programs represent the injustice that people today feel entitled to spend the tax dollars of tomorrow on benefits that we cannot realistically continue to afford. John Barnes wrote in 2010 that “the total value of all debt and unfunded promises made by the U.S. government is $61.9 trillion over the next 75 years.” I don’t know how much that figure has changed in the last four years, but I doubt it has shrunk, to put it lightly.

As any student of the Old Testament should know, God is very concerned about each generation leaving a proper inheritance to the next (cf. Numbers 27:8-11). No doubt many readers in their private lives have made provisions for their children after they pass. But as a nation, we are doing the reverse: paying for our provision today with the resources of tomorrow.

I write,

The German economist Wilhelm Röpke, commenting on the expansion of European welfare states in 1958, wrote, “To let someone else foot the bill is, in fact, the general characteristic of the welfare state and, on closer inspection, its very essence.” While he did not argue that, therefore, such state assistance should in all cases be stopped, he put the question in sober terms: “[T]he welfare state is an evil the same as each and every restriction of freedom. The only question on which opinions may still differ is whether and to what extent it is a necessary evil.”

In the interest of carrying on that same sobriety of analysis, I believe the picture is far bleaker today. Röpke, in the title to the essay quoted, characterized the welfare state as “robbing Peter to pay Paul.” But Sts. Peter and Paul were contemporaries. If only we would simply rob our peers! Then we could have a lively discussion regarding “whether and to what extent” such robbery is “a necessary evil.” Instead, it is our children and grandchildren who must “foot the bill.” Yet on our current course, when the time comes to pay up there will be much less welfare available to them.

Read more . . . .

socialist_unity_poster_by_party9999999-d4bphbmThere’s something almost charming about people in American who champion socialism. Yes, their economic views are naive and destructive. And yes most people (though especially the poor) would be much worse off if their vision for “progress” was actually implemented. But it’s hard to be too concerned when they are, at heart, really just capitalists who like to play political dress up.

Consider one of their favorite causes, a $20 minimum wage. In their most recent party platform, the Freedom Socialist Party advocated for raising the minimum wage to $20 an hour. Naturally, you might assume that the Freedom Socialist Party would be a great place to work for since the minimum pay you’d received is $20 an hour, an annual salary of $40,000 per year. But that assumption would be based on their applying their socialist principles to themselves. In reality, of course, their wages are based on the tenets of free enterprise.

Last week the party posted a notice on Craigslist that they were looking for a web developer. The pay: $13 an hour.

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Like all good capitalists running a business or organization, I’m sure they have a good reason for offering the wages they do. But as good socialists, how do they justify such “slave wages”?

(Via: AEI Ideas)