Category: Economics

SexTraffickingReality has no shortage of enemies. In America alone there are millions of people who will throw away common sense, empiricism, and established economic principles when it conflicts with their pet political ideology. Oftentimes the best we can hope for is that the reality-denying does not tip over into outright advocacy of evil.

Unfortunately, that is exactly what has happened at a one of my favorite online publications. Since its inception, The Federalist has been churning out a steady supply of fresh, often funny, and indispensable content from a conservative perspective. The work being done by the editorial staff, several of whom are my friends, is nothing short of amazing.

But even the best editors can make a mistake, and The Federalist has made a huge unforced error in publishing Lucy Steigerwald’s article, “Prostitution is Just Another Vice—So Legalize It.”

The article not only promotes the evil of prostitution, but it display an almost total lack of understanding about the topic of prostitution. I don’t mean that as an insult, but as an accurate description of the almost complete lack of research that was done on the subject. For example, the article not only denies that prostitution hurts women, but implies that there is little to no connection between prostitution and sex trafficking.

Blog author: jcarter
Tuesday, November 17, 2015

first-thanksgiving-kidsThis week school children across the country will be hearing the tale of the Pilgrims and the first Thanksgiving. You probably heard a similar story when you were in a kid that went something like this:

The Pilgrims sailed over to America from Plymouth, England on the Mayflower. During their first winter in the new country many of them starved because they were unable to produce enough food. In the spring, though, a Native America tribe taught the Pilgrims how to plant crops that would flourish, such as maize (corn). That fall, after an abundant harvest, the Pilgrims gave thanks by celebrating the first Thanksgiving feast with the Indians.

What is often left out of the story is what happened next: The Pilgrims continued to face food shortages for three more years.

Kids don’t often hear this not-so-happy ending. They are also rarely told the reason why the Pilgrims went hungry. “Bad weather or lack of farming knowledge did not cause the pilgrims’ shortages,” says Benjamin W. Powell. “Bad economic incentives did.”

industrial-revolution-1024x665Economist Deirdre McCloskey is set to release the long-anticipated conclusion of the Bourgeois Era trilogy sometime next spring.

The book, Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World, will build on her thesis that our newfound prosperity is not primarily due to systems, tools, or materials, but the ideas and rhetoric behind them.

“The Great Enrichment, in short, came out of a novel, pro-bourgeois, and anti-statist rhetoric that enriched the world,” she writes, in a lengthy teaser for National Review. “It is, as Adam Smith said, ‘allowing every man [and woman, dear] to pursue his own interest his own way, upon the liberal plan of equality, liberty, and justice.’”

In an age where the Left continues to make age-old Marxian arguments about the destructive ju-ju of accumulated wealth, and where the Right is increasingly prone to react on those same grounds, McCloskey reminds us that the premises are entirely different. (more…)

Marco Rubio has inspired plenty of chin-stroking over his recent remarks about welders earning more than philosophers.

“We need more welders and less philosophers,” he concluded in a recent debate.

The fact-checkers proceeded to fact-check, with many quickly declaring falsehood (e.g. 1, 2). Yet the series of subsequent quibbles over who actually makes how much continue to side-step the bigger issue. Though the liberal arts are indeed important and ought not be viewed simply in terms of “vocational training,” mainstream American culture is certainly fond of pretending as much.

The individualistic  dream-stoking rhetoric, inflated expectations, and subsequent angst have become all too nightmarish a cliche among my generation, joined by ever-increasing attempts to secure more government goodies to keep the machine humming along. Surely there are many who approach the liberal arts with a healthy perspective, but at the same time, the jokes about the barista going for his third Master’s degree aren’t exactly jokes.

Rather than approaching each individual as a creative person with unique gifts and educational aspirations, we continue to pretend that one vocational or educational track ought to apply to all. At the same time, rather than approaching the so-called “job market” as an ecosystem of creativity and collaboration, filled with countless human needs waiting to be met, we revert to thinking only of ourselves, self-constructing our preferred vocational destinies while we move through the college assembly line. (more…)

covOver the past few decades, economist Thomas Sowell has been one of the most effective, yet under under-appreciated, proponents of conservative and libertarian economic thought. He is also one of our most powerful critics of the often destructive and harmful effects of liberal economic policies.

Sowell frames the differences between the left and the right as a “conflict of visions”, a political divide separated by “constrained” and “unconstrained” visions. As Wikipedia helpfully summarizes this view:

carson-debateIn last night’s GOP presidential candidate debate, Dr. Ben Carson was asked if he would raise the federal minimum wage. Carson said that he would not do so because the minimum wage hurts workers, especially those in the black community:

People need to be educated on the minimum wage. Every time we raise the minimum wage, the number of jobless people increases. This is particularly a problem in the black community. Only 19.8 percent of black teenagers have a job. Or are looking for one. And that’s because of those high wages. If you lower those wages, that comes down.

While many people will be hearing this claim for the first time, it’s nothing new. In their 1979 book Free to Choose, economist Milton Friedman and his wife Rose wrote, “We regard the minimum wage law as one of the most, if not the most, anti-black laws on the statute books.”

That’s not hyperbole—it’s history. Many of the early minimum wage laws, both in the U.S. and in other Western countries, were instituted precisely to prevent immigrants and black Americans from competing with white workers. As Thomas C. Leonard explains, progressive economists in the early 1900s believed that “the job loss induced by minimum wages was a social benefit, as it performed the eugenic service ridding the labor force of the ‘unemployable.’”

That was also the motive of many lawmakers who passed one of the first federal minimum wage laws, the Davis-Bacon Act.

Blog author: jcarter
Monday, November 9, 2015

price-knowledgeI’m something of a cheapskate (or as I prefer to think of myself, prudentially frugal) and so I take special pleasure in finding a good deal. I’m also, by nature, rather grateful and so I frequently thank God for helping me to find goods and services at bargain prices.

But sometimes I remember to step back and be grateful for the larger system God has created that makes such exchanges possible: the price system. 

As I’ve said before, a “price is signal wrapped in an incentive to be coordinated by God.” Humans may set individual prices but it was God who designed the price system as a means of coordinating human activity for the purposes of human flourishing.

This isn’t an obvious concept, though, or necessarily easy to grasp. To better appreciate the benefits of the price system, it’s helpful to understand what would happen if it didn’t exist. What if there were no prices? How would you use available resources?

To appreciate why market prices are essential to human well-being, economist Howard Baetjer Jr. from Towson University explains market prices through the railroad thought experiment.