Category: Economics

In a new article at The Stream, Acton Director of Research Samuel Gregg offers good reasons why a move toward economic nationalism is not in the best interest of America.  He starts with this:

Whatever the motivations for such policies, their costs vastly outweigh their benefits. In the first place, protectionism discourages American businesses and workers from focusing on producing those goods and services where they enjoy a comparative advantage vis-à-vis other nations. Not only does this undermine productivity, efficiency, and international competitiveness of American businesses. It also encourages American workers to enter industries that, no matter how much protection they enjoy, won’t be able to compete in the long term.

Gregg continues to give reasons against economic nationalist policies throughout his article, but one reason that seems to be quite relevant at the time is crony capitalism.  Gregg says this:

Yet another problem with economic nationalism is that it encourages a growing problem in American economic life: crony capitalism.

Giving certain American businesses subsidies or lumbering foreign products with tariffs may seem like economic questions, but in practice they are ultimately political. Such policies encourage companies prefer to seek profits by lobbying legislators and bureaucrats rather than serving customers and creating value.

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While it may not seem like it when you’re at the supermarket checkout, Americans benefit tremendously from relatively low food prices.

Consider the typical Thanksgiving feast. According to an informal price survey conducted by the American Farm Bureau Federation (AFBF), the average cost of this year’s Thanksgiving meal for ten people is $49.87—less than $5 per person.

The AFBF survey shopping list includes turkey, bread stuffing, sweet potatoes, rolls with butter, peas, cranberries, a veggie tray, pumpkin pie with whipped cream, and coffee and milk—all in quantities sufficient to serve a family of 10 with plenty for leftovers.

That same meal a century ago would have been much more expensive. According to Business Insider, when adjusted for inflation the same meal for ten would have cost $167.77. One reason is that turkeys are considerably cheaper. A 16-pounder in 1911 prices would cost roughly $110 today (the AFBF says the average turkey today costs $22.74).

So when you sit down to Thanksgiving dinner on Thursday, be sure to include prayer of thank that you don’t have to spend as much of our income on food as your ancestors.

thanksgiving-assortmentFamilies across the country are about to celebrate Thanksgiving, expressing gratitude for God’s overwhelming grace and abundance. And yet even as we offer thanks to God for his provision — materially, socially, spiritually, or otherwise — how often do we pause and reflect on the freedoms and channels that God uses in the process?

Will we remember that the very foods we are sure to enjoy on Thanksgiving Day required a great deal of investment, cultivation, and risk-taking? Will we reflect with gratitude on the labor it took to grow and harvest, package and ship, market and sell these items? It’s but one small window into the innumerable hands working together each and every day in service of the common good.

And will we recognize that this mysterious, creative activity is not only due to human hands, but that such dominion and stewardship mirrors that of a Creator God who so loved that he gave?

Whether we talk about this phenomenon in terms of an “invisible hand” (Adam Smith), “spontaneous order” (Hayek) “the magic of the marketplace” (Reagan), or a “great and mysterious collaboration” (Grabill), we’d do well to remember that even as we pour gratitude and honor out to our neighbors, we should be careful that we orient things before and beyond the work of human hands. “The price system is indeed an amazing creation, but of the divine mind,” ” writes Joe Carter. “It’s one of God’s means of coordinating human activity for the purposes of human flourishing.”

At Carpe Diem, Mark Perry dusts of a Jeff Jacoby column that beautifully explains this very point, and does so in the particular context of Thanksgiving. “Isn’t there something wondrous — something almost inexplicable — in the way your Thanksgiving weekend is made possible by the skill and labor of vast numbers of total strangers?” Jacoby writes. (more…)

“The mundane progress driven by ordinary economic and social processes in a free society becomes dramatic only when its track record is viewed in retrospect over a span of years.” –Thomas Sowell

In a recent edition of Uncommon Knowledge, economist Thomas Sowell discusses his latest book, Wealth, Poverty, and Politics, which provides a comprehensive argument for the origins of prosperity.

“There’s no explanation needed for poverty. The species began in poverty,” Sowell says. “So what you really need to know is what are the things that enable some countries, and some groups within countries, to be prosperous.”

Revisiting many of the same themes and economic arguments found in his other works, Sowell adds a wider historical exploration of culture, geography, and politics, connecting the dots between each and critiquing competing social analyses along the way (e.g. Keynes, Piketty, etc.). (more…)

 When you hear reports on the unemployment rate it’s usually a single number. For example, in October that number was 4.9 percent. But that single number is the national average, and can conceal a wide range at the state and local level.

For instance, in September South Dakota and New Hampshire had the lowest rates in the country—2.9 percent—while six states (Nevada, Mississippi, West Virginia, Louisiana, New Mexico, and Alaska) all had rates that were twice that number.

Not surprisingly, states with unemployment rates that are rising tend to vote differently in national election than states where people are having an easier time finding jobs. As Anna Louie Sussman of the Wall Street Journal notes, of the 17 states where unemployment rose over the past 12 months, Trump won 13 while Clinton only won four.
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President-elect Donald Trump

President-elect Donald Trump

Sen. Lindsey Graham, Republican from South Carolina, wants to change the rules of one of the biggest crony capitalist organizations in Washington.  He wants to make it easier for the Export Import Bank to dish out large amounts of corporate welfare to companies such as Boeing, which already brings in revenues upward of $95 billion per year.

USA Today reported in a recent article that “Graham, as chairman of the Senate Appropriations subcommittee that funds foreign operations, has added a provision to the 2017 spending bill that would allow the Export-Import Bank to consider projects of more than $10 million.”

Many supporters of free trade have long opposed the cronyism and corporate welfare of the Export-Import Bank, all while only celebrating minor victories.  In the summer of 2015, the Export-Import Bank’s charter expired forcing it to close its doors until five months later when Congress reauthorized the bank for another five years.

Another minor victory for those who oppose the Export-Import Bank might be the election of Donald Trump.  Although evidence from Trump’s past portrays him as a mercantilist, the president-elect is on record of making critical remarks toward the Export-Import Bank:

I don’t like it because I don’t think it’s necessary. It’s a one-way street also. It’s sort of a featherbedding for politicians and others, and a few companies. And these are companies that can do very well without it. So I don’t like it. I think it’s a lot of excess baggage. I think it’s unnecessary. And when you think about free enterprise it’s really not free enterprise. I’d be against it.

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Yesterday, Pope Francis hosted a private audience in his Apostolic Palace for a few hundred international entrepreneurs and business leaders. The members of the International Christian Union of Business Executives (UNIAPAC) had gathered inside the Vatican’s walls for two days of meetings for the “noble purpose of reflecting on the role of business persons as agents of economic and social inclusion.”

Pope Francis, not always an affirming supporter of free market capitalism, focused on some of his usual challenging caveats to business persons. While business is certainly noble and its success is a vital part of the promoting economic growth for the common good, fallen man should nevertheless be constantly wary of his weaknesses for material idolatry (especially money), selfishness (not showing solidarity), and unguarded concern for acts of corruption (intentional deceit), the latter of which Francis said was “the worst of social plagues.”

This holds true for “all human activity”, the pope reassured those present, and not just business activity. It is an anthropological-spiritual discipline that we must keep on the forefront of our daily decision making. In this way, we sharpen our prudence and hone our focus when treading uphill individual paths to holiness and salvation. By way of constant prayer and deep spiritual discernment, man can more likely make the best moral choices, even in the most cut-throat and difficult business situations.

But sometimes this is risky for the seeker and promoter of virtue.

papa-uniapac

Pope Francis addresses UNIAPAC Christian entrepreneurs and business executives at a private audience on November 17, 2016.

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