Category: Economics

I recently posted some thoughts at The Power Blog on “God’s Problem With Centralized Power”, which took a macro view of what I believe to be God’s clear disdain for mankind pursuing their own ends instead of His articulated purposes when it comes to how we organize ourselves communally. This time I want to highlight a specific, micro-level example of that same general idea.

The story of Israel’s demand for a king in I Samuel 8 contains so many relevant, interesting nuggets of insight that I’ve broken it into two parts. This first post will cover verses 1-9; the second one (on Monday) will explore verses 10-22.

When the elders of Israel come to Samuel on behalf of their people to ask for a king to lead them, the decentralized governing system of “judges” had largely been in place since the Hebrew people’s return from exile in Egypt (some 400 years). What the people were asking for was a massive break with a God-ordained system and time-tested tradition. It marks a major shift in the history of God’s chosen people and, truly, the history of God’s plan for salvation. (more…)

AYN RANDThere once was a time when I was enamored by the philosophy of Ayn Rand. An émigré from the Soviet Union, the influential novelist and founder of Objectivism had an enthusiasm for market capitalism and a hatred of communism that I found entrancing. I discovered her two major philosophical novels, The Fountainhead and Atlas Shrugged, in my early years in college as I was beginning to wake from my enchantment with liberalism. I was instantly hooked.

Rand’s ideas were intriguing, yet she harbored sentiments that made it difficult for a young Christian to accept. She was an atheist who despised altruism and preached the “virtue of selfishness.” She believed that rational self-interest was the greatest good and sang the praises of egoism.

In retrospect, it appears obvious that any attempt to reconcile these ideas with my orthodox evangelicalism was destined to fail. Still, I thought there might be something to the philosophy and was particularly intrigued by her defense of capitalism. My understanding of our economic system was a rather immature, though, and I failed to recognize that Rand had an almost complete misunderstanding of capitalism. She confused self-interest with selfishness.
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Women tending a farm field in Kosovo

Women tending a farm field in Kosovo

In its first five years as an independent country, Kosovo has not experienced the positive developments that were hoped for, and remains far behind most countries in terms of economic development and rule of law. It is one of the poorest countries in Europe, boasting a meager 2012 per capita GDP of $3,453. Partly accounting for this low statistic is the minimal involvement of women in the economy. A 2012 World Bank report measures the portion of working-age women employed to be only 11 percent.

Along with scarce economic engagement, Kosovo struggles with corruption. It remains among the countries with the highest corruption levels, receiving a Corruption Perceptions Index 2012 score of 105, a far worse ranking than most states in the region.

In her recent lecture at Calvin College, Sandra F. Joireman, Weinstein Chair of International Studies and professor of Political Science at the University of Richmond, touched on these topics in relation to another major issue in Kosovar society: private property. In her presentation she explained that, “only 8 percent of property in the country is owned by women.” This statistic is far below most all other countries, including Balkan states.

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Class struggle. Racially-charged rhetoric. Anti-capitalist diatribes. Sounds like the lineup to a “Fantasy Diversity” team from a sociology professor at Wellesley College, right?

Alas, I’m merely referring to the controversy surrounding ex-Miami Dolphins players Jonathan Martin (black) and Richie Incognito (white).  For those who haven’t been paying attention – and thank your lucky stars that you haven’t – Martin left the team for personal reasons and his fellow offensive lineman Incognito was released by the Dolphins for allegedly being the bully who broke the spirit of the younger Martin.

I’m not here interested in solving the intra-team dynamics of a professional football team (comprised of giant men who willingly smash into each other for a living), but instead wanted to share with you a very telling quote from the media’s coverage of this story.

It comes from a sports “journalist” (term used loosely) named Jason Whitlock who works for ESPN. Mr. Whitlock is no stranger to controversy or inflammatory remarks, having made many of his own through the years via his columns and various radio shows. On Tuesday’s episode of The Tony Kornheiser Show on ESPN 980 (out of Washington D.C.), Whitlock was asked by Kornheiser to explain why the Dolphins players would want to harass and “cannibalize” a promising young player like Martin when they need all the help they can get on the actual football field.

Jason’s response?

“Because that’s what we do in America. That’s what capitalism does. It’s preys upon the weak.”

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Blog author: jcarter
posted by on Tuesday, November 12, 2013

In every stage of my formal schooling – from high school to college to graduate school – I’ve taken courses in economics. Yet with all that education I still struggle to understand a seemingly simple question: How does the economy actually work?

Sure, I can still draw supply and demand curves or give the equation for GDP (Y = C + I + G + (X − M)). But when it comes to picturing a reasonably functional model of how it all fits together, I’m at a loss. Fortunately, Ray Dalio has come to my rescue.

Dalio is the founder of the “world’s richest and strangest hedge fund” and #31 on Forbes list of richest people in America. But more importantly (at least for our purposes), Dalio is also the creator and narrator of the 30-minute video, “How the Economic Machine Works.”

Dalio’s video is one of the best explanations of economics I’ve ever seen. I’ve watched it twice already and highly recommend setting aside half an hour to watch this entire video.

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Blog author: abradley
posted by on Friday, November 8, 2013

franceSince the French Revolution, Americans have glanced over to our friends across the Atlantic Ocean as a model of what a country should not do. That tradition continues. France’s centralized planning of the economy, health care, education, the family, religion, and so on is not working. The New York Times reports:

The pervasive presence of government in French life, from workplace rules to health and education benefits, is now the subject of a great debate as the nation grapples with whether it can sustain the post-World War II model of social democracy.

Well, those who champion economic, moral, and political liberty predicted this ages ago. As expected, government control of French society has crippled France’s “capability to innovate and compete globally.”

What is more, “investors are shying away from the layers of government regulation and high taxes.” Again, not surprising.

The French government continues to raise taxes and create reasons to redistribute workers’ earnings. According to the article, in France “most child care and higher education are paid for by the government, and are universally available, as is health care.” The cost of health care is “embedded in the taxes imposed on workers and employers; workers make mandatory contributions worth about 10 percent of their paycheck to cover health insurance and a total of about 22 percent to pay for all their benefits.” This is unsustainable.
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groupon-logoFor years I was unable to understand the reasoning behind the claims that income inequality is a moral issue that only applies at the group level. Then it came to me like an epiphany—or more accurately, as a Groupon email.

According to Wikipedia, the Groupon works as an assurance contract: If a certain number of people sign up for an offer, then the deal becomes available to all; if the predetermined minimum is not met, no one gets the deal that day.

The popular argument for claiming that income inequality is a moral issue appears to rely on a similar idea: If a certain number of people agree to abide by a moral obligation, then the obligation is required by all; if the predetermined minimum is not met, no is required to meet the obligation.

In the case of income inequality, few people are willing to agree that it even compels a moral obligation, much less one they must abide by. So the income inequality moralists believe that force must be factored into the equation. The formulation then becomes:
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Creation Heart ManBeginning today, Acton is offering its first monograph on Eastern Orthodox Christian social thought at no cost through Amazon Kindle. Through Tues., Nov. 12, you can get your free digital copy of Creation and the Heart of Man: An Orthodox Christian Perspective on Environmentalism (Acton Institute, 2013). The print edition, which runs 91 pages, will be available later this month through the Acton Book Shop for $6. When the free eBook offer expires, Creation and the Heart of Man will be priced at $2.99 for the Kindle reader and free reading apps.

A summary of Creation and the Heart of Man:

Rooted in the Tradition of the Orthodox Church and its teaching on the relationship between God, humanity, and all creation, Fr. Michael Butler and Prof. Andrew Morriss offer a new contribution to Orthodox environmental theology. Too often policy recommendations from theologians and Church authorities have taken the form of pontifications, obscuring many important economic and public policy realities. The authors establish a framework for responsible engagement with environmental issues undergirded not only by Church teaching but also by sound economic analysis. Creation and the Heart of Man uniquely takes the discussion of Orthodox environmental ethics from abstract principles to thoughtful interaction with the concrete, sensitive to the inviolability of human dignity, the plight of the poor, and our common destiny of communion with God.

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Sid Meir's CivilizationMy wife despises Sid Meier. She’s never met him, nor would she even recognize his name. But she knows someone is responsible for creating the source of my addiction.

For over twenty years I’ve spent (or wasted, as my wife would say) countless hours playing Civilization, Meier’s award-winning strategy game. Every time I play the game I enter an almost trance-like state of complete immersion. According to positive psychologist Mihály Csíkszentmihályi, what I’m experiencing in that moment is known as “flow.” Csíkszentmihályi describes the mental state of flow as,

being completely involved in an activity for its own sake. The ego falls away. Time flies. Every action, movement, and thought follows inevitably from the previous one, like playing jazz. Your whole being is involved, and you’re using your skills to the utmost.

According to Csíkszentmihályi, there are ten factors that accompany the experience of flow:
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Blog author: jballor
posted by on Wednesday, November 6, 2013

Bansky No StoppingOver at the University Bookman today, I review John Lanchester’s novel Capital. I recommend the book.

I don’t explore it in the review, “Capital Vices and Commercial Virtues,” but for those who have been following the antics of Banksy, there is a similar performance artist character in the novel that has significance for the development of the narrative.

As I write in the review, the vice of envy, captured in the foreboding phrase, “We Want What You Have,” animates the book. Capital “provides a richly textured and challenging narrative of the challenges of affluence, the temptations of materialism and envy, and the need for true human community expressed in a variety of social institutions.”

I note the insights of my friend and colleague Victor Claar in the review, and for a more thorough academic engagement of the ethics and economics of envy, check out our co-authored paper recently accepted for publication in Faith & Economics, “Envy in the Market Economy: Sin, Fairness, and Spontaneous (Dis)Order,” as well as my piece slated to appear in Philosophia Reformata, “The Moral Challenges of Economic Equality and Diversity.”