Category: Economics

Writing in The Detroit News, Rev. Robert A. Sirico looks at Pope Francis’ recent Apostolic Exhortation, the “much talked about, but little-read” document titled “The Joy of the Gospel” with a special emphasis on how the pontiff understands the problem of poverty. The president and co-founder of the Acton Institute notes how Francis “speaks boldly through effective and moving gestures.” Excerpt:

It is no surprise that the man who took as his model and name the model of il poverello of Assisi would place the poor as a central concern of his pontificate: their dignity, their rights and their sustenance. Yet, the spontaneous gestures and the impromptu manner in which they are displayed ought not to beguile us into thinking this pope is offering a superficial dichotomy between left and right; between capitalism and socialism. To think that any pope, but especially this pope, is animated in his concern for the poor and vulnerable by a particular political ideology is to miss him completely.

While renouncing the notion that the market alone is sufficient to meet all human needs, Francis is also prepared to denounce a “welfare mentality” that creates a dependency on the part of the poor and reduces the Church to the role of being just another bureaucratic NGO. The complexity of his thought surprises some, on both the Right (some of whom worry, needlessly, that he is a liberation theologian) and the Left (who are already using his words to foment a political “Francis Revolution” in his name). Such tendencies reveal a rather anemic understanding of this man but also of Catholicism, which has historically been comfortable balancing the tensions of apparent paradoxes (Divine/human; Virgin/Mother; etc.). It is too facile a temptation to collapse 2,000 years of tradition, commentary and lived experience into four or five politically-correct hot button sound bites that are the priority, not of the Church, but of propagandists with an agenda.

Read “Pope Francis, without the politics” by Rev. Robert A. Sirico in The Detroit News.

Blog author: jballor
posted by on Friday, December 20, 2013

Newburgh, ME Piper Mountain Christmas tree farm1

A couple of further points in reply to Micah Mattix’s response on buying Christmas trees, based on his original post here.

1) I think Mattix’s characterization of the buyer as “selfish” goes a bit too far, and is not an accurate characterization of a good deal of market activity. “Self-interested” would be more accurate, and would allow for selfish actors, but would also allow more generally for benevolent actors. For instance, a nun who runs an orphanage has decided that her wards need spiritual as well as material sustenance, and has allotted a portion of the budget to purchase a live Christmas tree. But for every dollar she spends on the tree, one less bowl of gruel will be served. Is she acting selfishly if she gets the best deal on a tree that she can get? She may not be regarding the interests of the seller on the same level as her own (which include the interests of her wards), but it seems to bias the discussion too much to simply describe all the players involved as necessarily selfish. The same would apply mutatis mutandis to the father providing a tree for his family. In fact, buying a Christmas tree is usually a pretty unselfish activity.

2) Related to the above point, and developing it a bit further, certainly the buyer ought view the seller as someone to whom he or she has moral obligations. But to expect the seller to haggle up seems wrong. Perhaps the seller is perpetuating injustice by simply trying to sell trees even at a loss. Perhaps like the poet in Frost’s work they would be better off doing something else with them besides dumping. But they key here is that the buyer and the seller are in the best position to judge for themselves. It should also be noted that the tree seller isn’t just selling a single tree. Earlier sales of higher priced trees may subsidize and offset the costs of selling later trees at a discount. Mattix largely seems to want to argue for conscientious consumption, and I am all in favor of that. Let your conscience be your guide, and let your conscience be informed. But all too often things move beyond this to legislation of some kind of baseline. I realize that Mattix is not arguing for this, but the dangers of a mandated price floor for Christmas trees should be apparent.

3) We do agree “that a market economy is a good system that takes into consideration certain truths about human nature” and we also agree, as Mattix concludes, “that as a buyer price should always be the only determining factor.” I am certainly not defending an ideal of perfect prices. Prices are not perfect, and they are not sacrosanct. But they are often the best device we have for sorting out all of the complex realities that lie behind market transactions. The dynamic of this issue shares similarities with the disputes over fast food as well as, more broadly, the debates over fair trade. Here’s how Victor Claar sums things up, and I’ll close with this thought: “If you purchase ‘fair trade,’ buy it because you like the good or the service. Do not do it out of mere charity. Instead, give generously to charities that you know are effectively working for human rights, development of human and physical capital, and opportunities for the poor to discover increasingly valuable ways to serve others in the global marketplace.” Otherwise you might just be helping perpetuate the poverty-trap of Christmas tree sales.

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The Ballors went with a live tree this year. We bought it at Flowerland and I do not know the name of the farm whence it came.

Over at the American Conservative, Micah Mattix reflects on the Christmas tree market, which in his neck of the woods is “notoriously unstable.” In Ashe County, North Carolina, says Mattix, a dilemma faces the small tree farmer: “It is not sell or starve, but it is sell or go without a new septic tank, a repaired roof, a mended this or that.” Although not specifically about Christmas trees, the difficult choice faced by the poet in the Robert Frost poem Mattix engages at length is also reminiscent of the dynamic of poverty in Winter’s Bone.

Mattix explores some valid concerns about the human cost of low prices: “When we look for ‘deals’ at Christmas, I doubt many of us think about the labor another human being expended to make a certain object and whether the price we pay for it is a fair one. We think, rather, of big corporations and highly paid CEOs who can afford a dollar to two less and who have probably already calculated the discount into the cost of production.”

In the context of a market transaction, particularly in a globalized marketplace where we cannot possibly know all the people that have been involved in bringing a commodity to market, there is a kind of anonymity that is inherent in the system. Thus, writes Mattix, “But an anonymous market economy can obscure the relational aspect of trade—it can obscure the fact that transactions are always, ultimately, between people. And when we look to buy objects for as little as possible without any consideration of the labor of others, we are acting no differently than CEOs who look to maximize profit, whatever the human expense.” Perhaps. Perhaps.
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reich2In 2012, nearly $39 billion was spared to American givers via the charitable tax deduction, $33 billion of which went to the richest 20 percent of Americans. If that sounds like a lot, consider that it’s associated with roughly $316 billion in charitable donations.

Yet for Professor Robert Reich, former Secretary of Labor under President Clinton, much of this generosity is not devoted to, well, “real charities.” His beef has something to do with the wealthy’s obsession with “culture places” — the opera, the symphony, the museum — realms that, in Reich’s opinion, are undeserving of what should be an allocation to his own pet projects. “I’m all in favor of supporting fancy museums and elite schools,” he writes, “but face it: These aren’t really charities as most people understand the term.”

The picking and choosing follows in turn, descending farther and farther into the typical terrain of progressive materialism — focusing excessively on surface-level transfers of this particular dollar into that particular hand and lambasting those rebellious Makers and Givers for getting it all wrong. (more…)

52-Kids-innovationInequality in consumption used to be a matter of acreage. Throughout most of history, economic value was chiefly found in land or personal property. The divide between the rich and the poor was therefore between those who owned property and those who did not.

But the age of technology has changed that. “A billionaire and a member of the middle class have relatively equal portals to the wonders of the internet,” says John O. McGinnis, “certainly far more equal access than the rich and the rest of society would have had to the material goods that defined wealth in centuries past.” Nowadays, if we want to reduce inequality we need to focus on redistributing the benefits of ideas and innovations:
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givingmoney“Do economic incentives help or hinder ‘business as mission’ (BAM) practitioners?” In a forthcoming study, Dr. Steven Rundle of Biola University explores the question through empirical research.

Unsatisfied with the evidence thus far, consisting mostly of case studies and anecdotes, Rundle conducted an anonymous survey of 119 “business as mission” practitioners, focusing on a variety of factors, including (1) “the source of their salary (does it come from the revenues of the business or from donors?),” and (2) “the outcomes of the business in terms of the four ‘bottom lines’ of economic, social, environmental and spiritual impact.”

The reason for focusing on such areas? “Many people in the ministry/missions world believe that donor support helps ensure that practitioners stay focused on the ministry goals.”

Rundle summarizes his findings as follows:

This study essentially found the exact opposite. It found that practitioners who are fully supported by the business tend to out-perform – sometimes significantly – donor-supported BAM practitioners, and are no less fruitful in terms of spiritual impact. This finding holds up even after controlling for things like geography, firm size, and firm type.

…. The moral of the story is that economic incentives matter. Contrary to the mission community’s concern that self-support will take one’s attention away from the ministry goals, the truth is that only by creating a successful business can a practitioner hope to have a meaningful and holistic impact on a community. (more…)

61-kids-expensiveAs any parent can attest, kids are expensive. They take up space (increasing the cost of housing), eat everything in your kitchen (increasing the grocery bill), never remember to turn off lights (increasing the cost of utilities), and find dozens of other ways to drain your banking account. From birth to high school graduation, the average cost to raise a kid is $241,080.

The high cost is often proffered as an explanation for why families today are much smaller than in the past. But as Bryan Caplan explains having kids was never a paying venture:

One popular story about the decline in family size over the last two centuries goes like this: Back in the old days, having kids paid. Children started working when they were quite young, and provided for their parents in their old age. Then industrialization and/or the welfare state came along and changed everything. Young children ceased to contribute much economically to their families, and once Social Security, Medicare, and so on were in place, people stopped supporting their aging parents.

It turns out that this story is only half true. Yes, in the modern era, people give little financial assistance to their elders; even in late adulthood, old-to-young transfers remain larger than young-to-old transfers. The flaw in the story is the assumption that things used to be different. In an eye-opening 1996 JEL piece, Ted Bergstrom summarizes evidence showing that even in pre-modern societies, kids did not pay.

Caplan also adds this intriguing question, “If parents in 1850 were willing to support five or six kids with a negative financial return, why aren’t we?”

Sadly, because unlike most people in 1850, we measure the worth of children in financial terms. Theologian Al Mohler noted this a few years ago:
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Acton’s busy week of media appearances continued last night with Acton President Rev. Robert A. Sirico joining guest host Arthur C. Brooks – president of the American Enterprise Institute – on The Hugh Hewitt Show to discuss Pope Francis, Evangelii Gaudium, and the compatibility of Catholic social teaching with free market capitalism. We’ve embedded the interview for you below, and added the video of Arthur Brooks’ 2012 Acton University plenary address after the jump.

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Blog author: ehilton
posted by on Friday, December 13, 2013

cardsOn some snowy winter afternoon, bored with everything in the house, you probably tried to build a house of cards. From this experience, you know you have to build a large base, and work your way up to a smaller and smaller peak. That’s the only sensible way to do it.

Obamacare, on the other hand, is a house of cards inverted. It is structured in a way that the young must hold up the aging population. And the young are staying away from Obamacare in droves. The base can’t hold up the larger peak. (more…)

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Dan Clements, an American student studying at the University of Leuven, and I help greet conference attendees

Last week, an exciting new organization called the Transatlantic Christian Council (TCC) hosted its inaugural conference. The theme of the conference was “Sustaining Freedom”, which aligns well with the Council’s mission “to develop a transatlantic public policy network of European and North American Christians and conservatives in order to promote the civic good, as understood within the Judeo-Christian tradition on which our societies are largely based.”

What I find most exciting about this Council, for which I commend Todd Huizinga and Henk Jan van Schothorst on their vision and initiative in founding, is this: like the Acton Institute, the TCC is not exclusively devoted to just one aspect of life, but rather aims to provide a forum for conversation on a broad range of life’s many important and fundamental human questions.

The starting point for these conversations is with a basic concept of human dignity. This concept is rooted in an openness to the idea of man as an image of God — endowed with the capacities for willfulness and reason, a creature and a sub-creator. And it is this understanding of the human person that serves as a point of departure for working through all sorts of interesting questions of politics, economics, liberty, government, religion, and family.

When I mentioned to a friend that I would be travelling to Belgium for this conference, he said to me: “Be sure they don’t euthanize you and harvest your organs!”

“Well,” I thought to myself, “that’s certainly a novel way to wish someone a good trip.”
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