Category: Economics

shovel_and_dirt_No2Why do liberal and conservative evangelicals tend to disagree so often about economic issues? This is the fourth in a series of posts that addresses that question by examining 12 principles that generally drive the thinking of conservative evangelicals when it comes to economics. The first in the series can be found here; Part 2 can be found here; and Part 3 can be found hereA PDF/text version of the entire series can be found here.

9. Social mobility — specifically getting people out of poverty — is infinitely more important than income inequality.

In his recent State of the Union address, President Obama signaled that income inequality will be his domestic focus during the remainder of his term in office. The fact that the president considers income inequality, rather than employment or economic growth, to be the most important economic issue is peculiar, though not really surprising. For the past few years the political and cultural elites have become obsessed with the issue.

That was not always the case. In 1990, a Nobel-winning economist wrote:

One reason that action to limit growing income inequality in the United States is difficult is that the growth in inequality is not a simple picture. Old-line leftists, if there are any left, would like to make it a single story–the rich becoming richer by exploiting the poor. But that’s just not a reasonable picture of America in the 1980s. For one thing, most of our very poor don’t work, which makes it hard to exploit them. For another, the poor had so little to start with that the dollar value of the gains of the rich dwarfs that of the losses of the poor.

The economist who wrote that was none other than Paul Krugman, who more recently said, “the president was right. Inequality is, indeed, the defining challenge of our time.”

The reason for Krugman’s change of opinion has less to do with economics than with political partisanship. In the apparent absence of other real economic problems, some progressives have decided to allow covetousness to drive their political agenda.
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schoolchoicesignWhy do liberal and conservative evangelicals tend to disagree so often about economic issues? This is the third in a series of posts that addresses that question by examining 12 principles that generally drive the thinking of conservative evangelicals when it comes to economics. The first in the series can be found here. Part 2 can be found hereA PDF/text version of the entire series can be found here.

7. The best way to compensate for structural injustice is to increase order and individual freedom.

As it relates to economics, structural injustice could be defined as occurring when outside forces unjustly limit some person’s opportunities to enact their morally legitimate plans. Almost all evangelicals – whether liberal or conservative — agree that structural injustices still exist and that they must be opposed. Where we disagree is about what forms of structural injustice are most pervasive in 2014 and how they should be corrected.

We tend to think of structural injustices as macro-level phenomena (such as racism) that affect the actions, practices, beliefs, and laws of a large region (such as the Jim Crow laws that that codified racial segregation and discrimination). That has historically been the case in America. But today, structural injustices are usually created on the micro-level and affect a smaller area. Take, for example, the issue of poverty. In 2014, the two factors that are most likely to create structural boundaries that keep a child in poverty are their parents and their local community.
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A recent report from the CBO contains an appendix detailing updated estimates of the labor market effects of the Affordable Care Act (ACA). Pundits for and against the ACA have wasted no time in putting their own particular spin on the projections. Republicans and some other opponents have seemingly celebrated the idea that these estimates may show that the ACA is “a job-killing, economy-crushing villain,” while Democrats and some other supporters have claimed that in times of high unemployment, it’s “an economic benefit” that some will be voluntarily reducing hours or dropping out of the labor force because that means greater demand for labor — those currently unemployed would therefore have more options.

So who’s right? These are mutually contradictory claims, or so it appears. The report is ultimately limited and mixed, but nevertheless raises some serious concerns, caused, in part, by the polarization of Congress both when the law was passed and up to the present. (more…)

jobs-reportThis morning the federal government released the latest jobs report. You may have noticed confusing headlines and reporting about the data, such as this story from NPR, “Job Growth Less Than Expected, But Unemployment Hits 5-Year Low.” What does that mean? Is that bad news mixed with good news? How should we interpret the jobs report?

Here’s what you need to know to understand what the job report is, what it tells us, and what it means for the economy:

What is the “jobs report”?

The “Jobs Report” is the term often used to refer to the Employment Situation Summary, a monthly report issued by the Bureau of Labor Statistics that is based on surveys used to monitor the labor market. This report is released on the first Friday of every month.

Why is the jobs report considered so important?
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Blog author: jcarter
posted by on Thursday, February 6, 2014

Napkin003During a meeting in a restaurant with two officials from the Ford Administration — Dick Cheney and Donald Rumsfeld — a young economist sketched a curve on a napkin to illustrate an argument he was making. Arthur Laffer was explaining to the policymakers the concept of taxable income elasticity—i.e., taxable income will change in response to changes in the rate of taxation.

By 1974, the idea was already ancient. Ibn Khaldun, a 14th century Muslim philosopher, wrote in his work The Muqaddimah: “It should be known that at the beginning of the dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments.” John Maynard Keynes had made the same point in 1933. But for American politicians the idea that people change their behavior based on rates of taxation seemed revolutionary, so the concept became popularized as “The Laffer Curve.”

The crucial point, as Laffer has explained, is that,
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Blog author: jsunde
posted by on Wednesday, February 5, 2014

Annette Gabbedy is a business owner and expert designer and goldsmith. She was also born without fingers, a disposition many might consider a “disability,” particularly in her line of work.

Yet, as you’ll see in the following video, having created and traded her wares for 23 years, Gabbedy sees no reason for this to inhibit her creativity and contribution to society.

As Gabbedy explains:

I tend to really look at people with fingers and think: Well, how can you manage with fingers, because they must get in the way? It’s just your own perceptive of how you look at yourself, and for me, I was born like it, so I’ve never known any different. I’m quite normal. I’m not disabled at all. (more…)

zero-sumWhy do liberal and conservative evangelicals tend to disagree so often about economic issues? This is the second in a series of posts that addresses that question by examining 12 principles that generally drive the thinking of conservative evangelicals when it comes to economics. The first in the series can be found hereA PDF/text version of the entire series can be found here.

In my first post, I covered the first four principles (#1 – Good intentions are often trumped by unintended consequences; #2 – Our current economic and historical context must be taken into account when applying Biblical principles; #3 – To exploit the poor, the rich need the help of the government; #4 – We love economic growth because we love babies). In this post I want to consider points #5 (The economy is not a zero-sum game) and #6 (Poverty in America is more often a matter of personal choice than structural injustice).

5. The economy is not a zero-sum game.

In a zero-sum game, one person’s gain (or loss) is exactly balanced by the losses (or gains) of the other participants. If the total gains of the participants are added up, and the total losses are subtracted, they will sum to zero. It’s similar to dividing a pumpkin pie between five people: someone can only get a larger slice if someone else’s portion is smaller.

Many progressives in America, including far too many (though not all) liberal evangelicals, believe economics is a zero-sum game. They believe wealth, like a pumpkin pie, is fixed and that “there must be one winner and one loser; for every gain there is a loss.” This may be true in some economic systems, but it does not apply in free markets.

Jay W. Richards explains why free enterprise does not require that there be an economic loser for every economic winner:
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Blog author: jcarter
posted by on Wednesday, February 5, 2014

Over the past few months I’ve become obsessed with the idea that economic principles and arguments need to be explained more intuitively. I’ve assumed that the best way to approach that task would be to create robust metaphors that can be intuitively grasped. But a short parody video by Julie Borowski on the minimum wage has made me realize that sometimes all we really need is to show the obvious conclusions of policy positions.

Borowski’s presentation is silly, her style slapdash and homemade, and her argument well worn to the point of being trite. But there is something about having the argument presented visually that helps to put a fresh spin on an stale (and obvious) point.

Watch the video below and keep in mind that when she talks about “raising your own minimum wage” that this is exactly what we are asking the government to do on the behalf of low-skilled workers — often with the same results.

(Via: Cafe Hayek)

liberal-conservativeWe read the same Bible and follow the same Jesus. We go to the same churches and even agree on the same social issues. So why then do liberal and conservative evangelicals tend to disagree so often about economic issues?

The answer most frequently given is that both sides simply baptize whatever political and economic views they already believe. While this is likely to be partially true, I don’t think it is a sufficient explanation for the views of more thoughtful and sophisticated evangelicals (which naturally, dear reader, includes you and me).* Even if we start with our naturally acquired political orientation, our engagement with the Bible tends to have a dialogical effect, causing us to modify and rethink our economic views in light of principles we discern from Scripture.

Because we conservatives and liberals come to different conclusions, though, one side will be right and the other wrong (or at least more right and more wrong than the other). We all believe our views on economics are true, which is why we are justified in holding these beliefs and think those who disagree are necessarily wrong. That is just how belief works.

But we often don’t have a sufficient depth of understanding about each others fundamental economic beliefs to know why exactly we come to such different conclusions. Too often we express disagreements about policy without comprehending what guiding principles are motivating our differences of opinion.
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Acton Institute Director of Research Samuel Gregg joined host Mike Murray on his show “Faith, Culture and Politics” on the Guadalupe Radio Network to discuss his latest book, Tea Party Catholic. The interview lasted nearly a half an hour, and you can listen to it via the audio player below.