Category: Economics

johnoliverHave you ever watched HBO’s Last Week Tonight? It’s a show where British comedian John Oliver reads a teleprompter explaining to Americans what is wrong with our country. It’s also a show where smug, self-satisfied progressives who miss John Stewart can be entertained while thinking they are watching “smart” content.

In reality, Last Week Tonight is frequently one of the dumbest shows on cable (in the sense that watching it makes you less informed about the world). And yet it is almost inescapable if you have an internet connection. Even if you don’t subscribe to HBO you’ll find clips every Monday morning on left-leaning media sites, or someone who wants to feel self-righteous and pseudo-intelligent will slip it into your social media channels.

A prime example is the most recent episode where Oliver takes on the debt collection industry. A representative headline reporting on the show (from a site that should know better) is “Watch: John Oliver just topped Oprah with one of the largest giveaways ever on TV.”

Oliver didn’t top Oprah nor was he involved in one of the largest giveaways ever on TV. The actual amount of money that Oliver gave away wasn’t that significant — $60,000 — but he was able to fool people who don’t know much about economics into thinking he actually gave away $15 million.

I’m not kidding. There are a lot of people this morning who really think a third-tier cable talk show host gave away $15,000,000.

Do no harmAll Christian ethics can be summed up in one command: “Love your neighbor as yourself” (Matthew 22:39). And within that command is the provision, as the Apostle Paul said, “Love does no harm to a neighbor” (Romans 13:10). This is why the Christian approach to public policy should begin with a simple standard: Because we love our neighbors, we should not support policies that we suspect will cause them harm.

Unfortunately, while the rule is simple to state it can be difficult to apply. We don’t always know or agree on what policies will cause harm. Still, any type of policy that is presumed or known to cause harm should be carefully scrutinized. A prime example is government regulations.

As economist Scott Sumner says, “One of the most basic ideas in economics is that the vast majority of regulations are harmful.”* He gives the example of a regulation on banks than forbids them from charging fees for the use of ATMs. This regulation appears to be “pro-consumer,” but as Sumner explains, the actual effect is likely to harm bank customers:

Federalism may be out of fashion (at least when it comes to state’s rights), but the effect of individual state policies on the lives of individual citizens remains as relevant as ever.

Consider, for example, the case of Puerto Rico (which is technically a territory, but has many of the functions of a U.S. state). Financial mismanagement by the territorial government has led to a humanitarian crisis. Those who can afford to leave — such as doctors and scientists — are fleeing the island for the U.S. mainland. Not surprisingly, Puerto Rico ranks dead last on the Mercatus Center’s ranking of states by fiscal condition.

The new study ranks each U.S. state’s financial health based on short- and long-term debt and other key fiscal obligations, such as unfunded pensions and healthcare benefits. “Growing long-term obligations for pensions and healthcare benefits continue to strain the finances of state governments,” notes the report, “highlighting the fact that state policymakers must be vigilant to consider both the short-term and the long-term consequences of their decisions.”

Acton Institute Director of Research Samuel Gregg joined host Al Kresta on Ave Maria Radio’s Kresta in the Afternoon last Thursday to discuss the ongoing crisis of populism in Latin America, and the Vatican’s perspective on the region’s economic and social unrest under Pope Francis. Gregg notes that while institutionally, the Catholic church in Latin America has largely maintained its institutional integrity, regional leaders – and indeed Pope Francis himself – have an affinity for what is known as “teología del pueblo” – a “theology of the people” – that makes it difficult for the church to criticize the populist movements that cause so many social problems.

The whole interview is well worth your time, and is available via the audio player below.

loanapproved72-47ce85caSince its inception in the 1990s, the payday lending industry has grown at an astonishing pace. Currently, there are about 22,000 payday lending locations — more than two for every Starbucks — that originate an estimated $27 billion in annual loan volume.

But payday lenders may soon face some stiff competition. A few of the largest consumer banks in America are considering going to market with new small-dollar installment loan products, reports the American Banker.

The Consumer Financial Protection Bureau (CFPB), the U.S. government’s consumer protection agency, is considering proposing rules that would end payday debt traps by requiring lenders to take steps to make sure consumers can repay their loans. One of the proposals is to exempt lenders from certain requirements if the amount the consumer is required to pay each month is no more than 5 percent of the consumer’s gross monthly income. According to American Banker:

JMM_19 1Our most recent issue of the Journal of Markets & Morality, vol. 19, no. 1, has now been published online and print issues are in the mail.

In addition to our regular slate of articles examining the intersections between faith, freedom, markets, and morality, this issue contains a new entry in our Scholia special feature section: “Advice to a Desolate France” by Sebastian Castellio. Writing in 1562, Castellio was one of the first early modern defenders of freedom of religion on the basis of freedom of conscience, in the midst of a turbulent time of conflict between Roman Catholics and Protestants in sixteenth-century France. His insights should still be valuable today, both to scholars and others who value that same freedom.

As is our usual custom, this issue’s editorial, “Self-Interest and Moral Contexts,” is open access. In it, I examine the necessity of context for determining the morality of the choices of market actors:

The economic idea of self-interest as the driving motivator of economic (and other) behavior is as widely accepted by economists as it is criticized by others. The critics, generally, object to the assumption that “widespread and/or persistent human behavior can be explained by a generalized calculus of utility-maximizing behavior,” to quote George Stigler and Gary Becker. Is not that selfishness? And is not selfishness immoral? And do not people, at least sometimes, act morally? Furthermore, should not they be encouraged to act altruistically instead of only thinking of their own interests?

In reality, context complicates such moralisms.

The full editorial can be read and downloaded here.

Read the entire issue here.

Subscription instructions to access all of our content can be found here.

In the May 20 issue of the London-based Catholic Herald, Acton Research Director Samuel Gregg has a new piece that draws on his book For God and Profit: How Banking and Finance Can Serve the Common Good. “Rather than simply engaging in blanket condemnations that occasionally verge on moralism and which reflect little actual knowledge of the financial sector, we should follow our forebears’ example by first seeking to understand modern financial practices,” Gregg writes.

The article is not currently available online. The Catholic Herald has kindly shared it with PowerBlog readers as a PDF. Click on the following link to download a copy of the article: “Think twice before you condemn bankers”