Category: Economics

Blog author: dpahman
Thursday, September 24, 2015
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Today at the Library of Law and Liberty, I take a cue from probablist Nassim Nicholas Taleb and call for the commemoration of a National Entrepreneurs Day:

One has been proposed in the U.S. House of Representatives, and probabilist Nassim Taleb has given us a fully developed argument as to why we should have one. I second the motion. In Antifragile, his 2012 book, Taleb confesses that he is “an ingrate toward the man whose overconfidence caused him to open a restaurant and fail, enjoying my nice meal while he is probably eating canned tuna.”

This lack of gratitude is a moral failing of all of us in modern society, says Taleb. Hence his idea:

In order to progress, modern society should be treating ruined entrepreneurs in the same way we honor dead soldiers, perhaps not with as much honor, but using the exact same logic. . . . For there is no such thing as a failed soldier, dead or alive (unless he acted in a cowardly manner)—likewise, there is no such thing as a failed entrepreneur or failed scientific researcher.

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francisgmo62815“Defending capitalism on practical grounds is easy,” writes economist Donald Boudreaux at the Mercatus Center. “It is history’s greatest force for raising the living standards of the masses.”

What’s more difficult, it seems, is understanding its moral logic, spiritual implications, and which of each is or isn’t inherent to private ownership and economic exchange.

At what level, for instance, is freely buying a gallon of milk at a freely agreed-to price from a freely employed worker at an independent grocery store an act of sin, idolatry, and exploitation? Such basic transactions are, after all, the bread and butter of a system built on free enterprise and open exchange (i.e. capitalism). From here, it gets more complicated, of course, and even that basic starting point can surely involve corrupt actors and action.

Yet even Pope Francis, discernor of the discerning, seems to struggle in locating Point A of that basic logic, even when railing against its banner. I tend to presume that basic milk purchases are not, in fact, his actual target. But then he continues and without qualification, railing against markets at large and ripping at plenty of positives that dangle well outside the deserving injustices of cronyist corporatism.

The Pope prefers to argue not that capitalism “has its faults” or “demands a virtuous society,” but rather that it is a “new tyranny,” one that followed the ills of communism, but filled the void with something just as tragic. (more…)

The global conversation on poverty alleviation has taken some interesting turns over the past decade, with an increasing range of economists, government leaders, and even rock stars beginning to challenge the status quo of economic development and foreign aid.

Contrary to the longstanding model of top-down solution-seeking, we are seeing a new emphasis on the power of markets and the importance of bottom-up “searchers.” And yet, even as we begin to make productive steps toward improved quality of life and widespread economic progress, we must be careful that our efforts don’t simply replace the problems of poverty with those of prosperity – enabling vice and replacing old struggles with new temptations.

As Christians, this risk is particularly clear, and we are well aware of the solution to meet the need. As explained in the following excerpt from the PovertyCure series, the Gospel is the only solution that can truly set free the human spirit, and that includes redeeming the fruits of economic progress.

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Blog author: jsunde
Monday, September 21, 2015
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tree-colorful-4Over at the Reformation21 blog, Michael Jensen compares what he calls the “scarcity mindset” of the world with the “abundance mentality” of God, noting that “the world as we see it is open to the creative and transformative power of the Lord God.”

Although Jensen’s portrait of civilizational progress is undeservedly bleak (if anything, we’re learning to see beyond scarcity), and although he overstates the conflict between “growing populations” and “diminishing resources” (see Matt Ridley et al), he manages to frame the basic theology quite well:

A theistic worldview, and in particular the Christian one, has at the heart of reality the three-personed God of Love, whose creative energy made everything from nothing at all by his Word, and who makes a great nation out of the fruitless loins of Abraham, and who gives life even to the dead. His grace abounds; his abundance overflows. He enters into, blesses, and renews the earth. The Old Testament testifies again and again to the renewing power of the divine breath upon the earth.

The emblematic episode was the Exodus: a feeding in the wilderness, in which God reminded Israel of the title that Abraham had given him when he provided a ram to substitute for Isaac: yhwh yrh, the God who provides. The manna from heaven was not a natural co-incidence. It was miraculous. It wasn’t supposed to be there – it exceeded nature’s fruitfulness, and enabled survival in the wilderness, where nature was in fact barren…The feeding of the five thousand is the New Testament counterpart to the feeding in the Exodus. The 5000 who gathered in the desert ate from two fish and five loaves, and were satisfied. And, in excess of the Exodus miracle, there were twelve baskets of left overs! The miracle was a provision beyond necessity, to excess.

Of course, as with all the miracles, it’s an object lesson. This is a great extraordinary picture of what the world, when God rules it once for all, will look like. And it isn’t a world in which things will run out. It’s a world in which things overflow, because that’s the character of the God who made it. This is the God who made everything from nothing, not with any strain, but by a word; and the God who gives life to dead. This is the God whose artistry fills the heavens at night, and who has filled the earth with so many creatures that we haven’t counted them all yet. And this is the God, who, despite our willingness to believe that he has our good in mind, gives us even his own Son to supply what we need.

Again, I think these glimpses into the abundance of the not yet are far more prevalent in the here and now than Jensen seems to believe. We have seen unprecedented bursts of innovative and value-creative activity in so many ways, leading to more material needs being met and more bellies being filled than ever before. Surely human greed and vice continue to tempt folks throughout all of that, and the “scarcity mindset” is alive and well among many. But free societies have secured gains not out of quest for self, but by learning to orient inventors, entrepreneurs, and employees in the service of neighbor. (more…)

Free-tickets-to-more-Pope-FrLast week, 80,000 residents of New York got a free gift: a ticket to see Pope Francis’s procession through Central Park on September 25.

Not surprisingly, soon after the tickets started showing up for sale on websites like eBay and Craigslist for hundreds and even thousands of dollars. Also not a surprise is the disgusted reaction some people had to news about the ticket scalping:

“Tickets for events with Pope Francis are distributed free for a reason — to enable as many New Yorkers as possible, including those of modest means, to be able to participate in the Holy Father’s visit to New York,” Cardinal Dolan, the archbishop of New York, said in a statement. “To attempt to resell the tickets and profit from his time in New York goes against everything Pope Francis stands for.”

I’ve had the pleasure of meeting Cardinal Dolan (at an event I attended for free). I think he’s a wonderful, charming, gregarious leader. But on this point, I think he’s wrong.
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Israel M. Kirzner

While reading economist (and rabbi) Israel M. Kirzner’s Competition & Entrepreneurship (1973), it occurred to me that his description of what the “pure entrepreneur” does could also be applied to what a good interdisciplinary scholar, such as someone who studies faith and economics, does (or at least aspires to do).

In our world of imperfect knowledge, Kirzner writes,

there are likely to exist, at any given time, a multitude of opportunities that have not yet been taken advantage of. Sellers my have sold for prices lower than the prices which were in fact obtainable…. Buyers may have bought for prices higher than the lowest prices needed to secure what they are buying…. The existence of these opportunities opens up a scope for decision-making that does not depend, in principle, upon Robbinsian [means-end] economizing at all. What our decision maker without means needs to arrive at the best decision is simply to know where these unexploited opportunities exist. All he needs is to discover where buyers have been paying too much and where sellers have been receiving too little and to bridge the gap by offering to buy for a little more and to sell for a little less. To discover these unexploited opportunities requires alertness. Calculation will not help, and economizing and optimizing will not of themselves yield this knowledge.

To simplify, for Kirzner the entrepreneur is an equilibrating force in the market, a contrast of emphasis from the conception of Joseph Schumpeter, where the entrepreneur is a disequilibrating force through creative destruction. Rather, for Kirzner, the entrepreneur is the person who sees the opportunity to buy low and sell high. And I think that is what interdisciplinary scholars do at their best as well. (more…)

Blog author: jcarter
Tuesday, September 15, 2015
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Is free market capitalism moral or immoral? If it’s based on greed and selfishness, should it be rejected for an alternative economic system? And if capitalism is moral, what makes it so?

Walter Williams, a economist at George Mason University, answers these questions and explains why the free market is morally superior to any other approaches to organizing economic behavior.