Category: Economics

U.S. Rep. Justin Amash, in an article for www.mlive.com, discussed the recent charter expiration of the Export-Import Bank (Ex-Im) and how that is a good first-step toward reducing the corporate welfare and crony capitalism that has infected American politics and economics:

If a man swipes your wallet, he’s a thief. We don’t ask whether the pickpocket ultimately spent the cash on a worthy cause. Yet, supporters of corporate welfare would have you believe that as long as the companies receiving welfare prosper, you shouldn’t care that the government snatched your money to make it happen.

The moral implications of cronyism are abundant. As public/private partnerships expand, the market system slowly transforms from free enterprise and competition driven by market forces to government control of who succeeds and fails based on loans or bailouts to favored groups and corporations. In an interview with the Acton Institute’s Religion & Liberty, Peter Schweizer discussed how cronyism is creating a moral crisis and how it is affecting the poor:

Our poverty programs get distorted by crony corporations. Just look at how the food stamp program has expanded over the years. Initially, it was a safety net to provide basic provisions, and most people agree basic safety nets are needed. The problem is that when the government started throwing around billions of dollars, the snack food and soft drink industry saw dollar signs. So they lobbied and got the regulations changed so that snack food and sodas are now covered by government assistance. It’s now a $10 billion industry for soft drink companies. Then it got expanded to include convenience stores, and now you’ve got the fast food industry lobbying lawmakers to let people use EBT cards at fast food establishments.

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Kishore Jayabalan, director of the Istituto Acton in Rome, talked to Voa News yesterday about the flaws in Pope Francis’s pronouncements on free markets and globalization, as articulated in the recent encyclical Laudato Si’.

“When the pope says that this economy kills, that this economy destroys the environment, I’m not quite sure what economy he’s talking about,” said Jayabalan.

Read the full article here.

jeb

During a recent interview, presidential candidate Jeb Bush outlined his economic plan, which included a goal of achieving 4 percent economic growth.

As for how we might achieve that growth, Bush went on to commit a grave and sinful error, daring imply that Americans might need to work a bit harder:

My aspiration for the country — and I believe we can achieve it — is 4 percent growth as far as the eye can see,” he told the newspaper. “Which means we have to be a lot more productive, workforce participation has to rise from its all-time modern lows. It means that people need to work longer hours and, through their productivity, gain more income for their families. That’s the only way we’re going to get out of this rut that we’re in.

The pundits descended, the trolls ignited, and the competing politicians proceeded to pounce, including his chief rival, Hillary Clinton, who tweeted: “Anyone who believes Americans aren’t working hard enough hasn’t met enough American workers.” The media followed in turn, running numerous stories on the “real” barriers to economic growth: economic inequality, low wages, and — my personal least-favorite — a lack of “good jobs.” (more…)

more-moneyA perennial complaint by the political left is that the CEOs of American companies earn too much money. The implication is not, however, that the “excess” money should be distributed to the shareholders (who actually own the company). Instead, the idea is that “fairness” requires that much of the profit that normally goes toward the CEO’s pay should be redistributed to the rest of the company’s employees.

But what if we took it a step further: What if we redistributed all corporate profits to workers? What if the profits of every American company were not given to the shareholders but divided equally among every worker in America?How much do you think it would raise the average worker’s pay?

Take a moment to do a rough guestimation of how much the hourly wage would be raised if all profits were redistributed. Have a number in mind?

The answer to the question is that the average worker’s hourly wage would increase by . . .

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JMM_18.1 front cropOur most recent issue of the Journal of Markets & Morality has now been published online and print issues are in the mail.

Volume 18, no. 1 is a special issue. Guest editor Shirley Roels details the origins of the contributions in her (open access) editorial:

To highlight the 2013–2014 English publication of the first volume of [Abraham] Kuyper’s theological commentary on common grace, the Calvin College Business Department organized an October 2014 symposium, which was co-sponsored by the Acton Institute. Faculty, business practitioners, and students gathered to think about the meaning of Kuyper’s common grace theology for twenty-first-century business. Over an exceptional day of discourse, presentations and panels were woven into a robust discussion about the light of faith for business when that life is shared together by Christians and those who follow other paths. Leaders from banking, manufacturing, natural resources, film, food, and floral industries, among others, joined with business educators to shape the current intertwining of common grace and business.

The symposium was framed around three themes that emerge from Kuyper’s writings about common grace. Its planners described these as the protective, constructive, and imaginative functions of common grace. Through such grace, God protects remnants and echoes of his good created order as gifts for all people despite continuing human perversity. God designs the expectation and possibility that together humans will construct institutions to respond to needs and support social order. God provides continuity between the values and virtues of all people so that Christians as well as those in other faith traditions can work together imaginatively.

The article contributions to this journal issue originated in that October 2014 symposium. Peter Heslam’s opening article provides some of Kuyper’s less-known commentary about business life. Then eight articles, all authored by Christian business educators, articulate the implications of Kuyper’s common grace theology for business ethics, strategic planning, global debt markets, entrepreneurship, market pricing, the accounting profession, operations management, and human resource frameworks. Richard Mouw’s closing article enjoins us to bring robust Christian faith to the business spaces where God’s light can readily flood. (A separate review essay unrelated to the symposium also appears as part of the journal’s regular publication schedule.) Finally, integrated into the journal’s book review section are four reviews of recent books about faith and business that highlight resources to deepen this intersection of faith and business.

In addition to Dr. Roels’ editorial, I have made my review of The Common Good: An Introduction to Personalism by Jonas Norgaard Mortensen open access as well. You can read it free here.

If you are interested in a subscription to the Journal of Markets & Morality, subscription directions and prices can be found here.

Once you’ve purchased a subscription, you can read our most recent issue, volume 18, no. 1, here.

Today at the Library of Law & Liberty, I examine Pope Francis’s recent speech in Bolivia, in which he calls for “an economy where human beings, in harmony with nature, structure the entire system of production and distribution in such a way that the abilities and needs of each individual find suitable expression in social life.”

I have no objection to that, but what he seems to miss is that the very policies he criticizes all characterize those countries in the world that most closely resemble his goal. I write,

So what stands in the way, according to the pontiff?—“corporations, loan agencies, certain ‘free trade’ treaties, and the imposition of measures of ‘austerity’ which always tighten the belt of workers and the poor.” Really?

Business, credit, trade, and fiscal responsibility are marks of healthy economies, not the problem, popular as it may be to denounce them. Indeed, these are also marks of economies that effectively care for “Mother Earth,” whose plight the Pope claims “the most important [task] facing us today.” That’s right, more important than the plight of the poor, to His Holiness, is the plight of trees, water, and lower animals.

That moral confusion aside, is there any way we could study what policies correlate with the Pope’s laudable goals? As it turns out, there is. The United Nations Human Development Index (HDI) ranks countries based upon an aggregate rating of economic growth, care for the environment, and health and living conditions—precisely the measures the Pope seems to care most about. Yet of the top 20 countries on the most recent HDI ranking, 18 also rank as “free” or “mostly free” on the most recent Heritage Index of Economic Freedom.

Read my full article, “Show Me the Way to Poverty,” here.

A bit of humility is in order. Alvin E. Roth to Russ Roberts on EconTalk:

… I think that economists have to approach their role as engineers with great humility. There’s a lot we don’t understand. Economics is still an early science. But let me read you the quote from Hayek that I included in my book. This is a quote from his free-market manifesto, The Road to Serfdom. And he wrote, “There is, in particular, all the difference between deliberately creating a system within which competition will work as beneficially as possible and passively accepting institutions as they are.”

So, that was Hayek. He understood that what makes a market free is that it has rules that allow it to work freely. And one of the metaphors I use in the book is of a wheel that can rotate freely. It’s not rotating in a vacuum. It has an axle and it has well-oiled bearings. And over time–people have been designing markets for millennia. And often the process of trial and error leads to better and better markets. But it can be a lengthy process of trial and error. And as we better understand what is required for marketplaces to help markets work freely we can sometimes intervene. And, you said ‘top down,’ but earlier you talked about Uber and Airbnb. Those are marketplaces that are not top down. People have been designing marketplaces forever. It’s what we do.