Category: Economics

John Calhoun (1782 - 1850)

John Calhoun (1782 – 1850)

Proponents of protectionism often ground their support in a quasi-nationalism; trade should be restricted for the benefit of the nation. Economically, the argument holds little weight. The benefits of more trade, like more and cheaper goods, outweigh the costs, like some temporary unemployment that results from the closing of a factory that couldn’t compete with foreign companies.

Some protectionists may accept this, and still urge tariffs, quotas, and other restrictions. They argue that a nation can still benefit, even with economic disadvantages. Sure, consumers might pay in higher prices if there’s a tariff on steel, but think of all the jobs! The consequences of protectionism, however, are not simply economic. Rather than developing national and political unity, tariffs often lead to national discord.

Take the United States in the early nineteenth century. Its still developing economy was primarily agricultural, with a growing commercial and manufacturing sector. Many early American politicians advocated a tariff in order to protect, foster, and develop American manufacturing.

Ignoring the economic flaws of such a plan, the policy sowed the seeds for national disunion, culminating in the United States Civil War. How?

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In a weekend, Pokémon GO has already taken our smartphones by storm. But where did it come from?

On the one hand, this is a simple question to answer: Nintendo. Pokémon is a game franchise created by Nintendo, and Pokémon GO is the newest installment.

But Pokémon GO isn’t just more of the same. It’s a revolutionary innovation.

Using the camera function on people’s phones, the world of the game is our world. The eponymous monsters appear on the screen as hiding in plain sight. People catch them, train them, fight them, trade them, and so on, just like in previous games. But now the game itself is causing people to get out of their homes and see new scenery, meet new people. (more…)

Kentucky-trade-schoolFueled by a mix of misguided cultural pressures and misaligned government incentives, college tuition has been rising for decades, outpacing general inflation by a wide margin. Yet despite the underlying problems, our politicians seem increasingly inclined to cement the status quo.

Whether it be increased subsidies for student loans or promises of “free college” for all, such solutions simply double down on our failed cookie-cutter approach to education and vocation, narrowing rather than expanding the range of opportunities and possibilities.

Fortunately, despite such an inept response from the top-down, schools at the local and state levels are beginning to respond on their own. In Kentucky, for example, PBS highlights innovative efforts to rethink the meaning of “career-ready” education and retool the state’s incentives and accountability structures accordingly.

While “college-” and “career- readiness” have become buzz words that are assumed to be all but equal, Kentucky has awoken to the reality that they ought not be so lumped together so hastily. Alas, we have tended to amplify college not only to the detriment of career, but to college itself. (more…)

fight-for-15-and-a-union-672x372Sometimes predicting the future is difficult (ask anyone who thought we’d have flying cars by now). But sometimes foreseeing what is going to happen — at least to a high degree of probability — is all too easy.

For example, it’s fairly simple to ascertain that sometime in 2017 or 2018 we will see a huge spike in the unemployment for the working poor and increasing the replacement of low-skilled jobs with automation (i.e., robots). The reason: the $15 minimum wage.

Earlier this year the first and fourth most populous states in the U.S. — California and New York — adopted the increase to $15. Numerous cities have also adopted the higher wage floor. But perhaps the most significant step forward for the “Fight for $15” movement is that it is being adopted by the entire Democratic Party.

On Friday, the Democratic National Committee released a draft of the proposed party platform that includes a number of economically destructive proposals, including a federal minimum wage of $15:
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dekoster

Lester DeKoster (1915 – 2009) | Acton Institute

Overproduction, simply put, is supply in excess of demand. It is the production of more goods and services than those in the market would like to purchase. Overproduction, in a well functioning market economy, should be temporary. In a dynamic market driven by entrepreneurs, resources become allocated towards their most highly valued uses. If some clever entrepreneur makes a million shoes, but only sells two pairs, he will be unlikely to overproduce in the future. This is good, because the overproduction signals to the entrepreneur that there are better ways to use the limited resources that he has.

Multiply this process over an entire economy, and one can see the temporary nature of overproduction, and its undesirability given scarce resources.

Stewardship, according to Kent Wilson, is “the faithful and efficient management of property or resources belonging to another in order to achieve the owner’s objectives.”

In this context, human beings are the stewards of Earth’s resources, which ultimately belong to God.  Using resources wisely, in a way that contributes to human flourishing, is a key concept of Christian stewardship. Overproduction, then, is not “faithful and efficient” management, as it allocates scarce resources to less highly valued ends. (more…)

Wikipedia

Wikipedia

“Having a heart for the poor isn’t hard. Having a mind for the poor…that’s the challenge.” –Poverty, Inc.

This quote from the documentary Poverty, Inc. highlights the reason why so many people are willing to give their money to foreign aid, without necessarily understanding its harmful effects.  This quote can also shed some light on the recent embrace of socialism by many millennials.

When young people look at the rate of poverty in the U.S. and see that we are not doing as well as  some other developed countries, it is easy for them to place this blame on what they believe is “capitalism.”  If capitalism has caused the U.S. to experience this poverty then it logically follows that people today, especially millennials, would embrace socialism instead of capitalism.

Given that I am a millennial myself, this makes sense to me.  It’s clear that we care about these causes and that we are willing to give our time and money.  That’s the easy part.  We have a heart for the poor. The challenge is having a mind for the poor. (more…)

Blog author: jcarter
Thursday, June 30, 2016
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all-in-bastiat“It’s all in Plato, all in Plato: bless me,
what do they teach them at these schools!”
– Digory Kirke in C.S. Lewis’s The Last Battle

The way Professor Kirk feels about Plato is how I feel about Frederick Bastiat. Whenever I hear someone repeating an economic fallacy online I have a tendency to cry out, “It’s all in Bastiat, all in Bastiat: bless me, what do they teach them at these schools!”

Unfortunately, Bastiat, whose 215th birthday is today, is not often taught in schools, whether in high school or college. That’s a shame for he was one of the greatest political and economic thinkers of the 19th century. Bastiat, a farmer turned politician and pamphleteer, had a inimitable gift for explaining economic and political concepts in way that make them not only understandable but seem downright commonsensical.

Bastiat, as Charles Kaupke notes, drew on his Catholic faith and the writings of Adam Smith and John Locke to articulate a vision of limited, efficient government that respects each citizen’s God-given dignity. And as Religion and Liberty adds,

He typified that rare breed of liberal who holds a deep and powerful belief in a personal and transcendent God, and who incorporates this belief in a wide ranging social philosophy centering on the proposition that when left alone society will most clearly display the wisdom and intent of the Creator.

A particular concept of Bastiat’s that has profoundly influenced my thinking is the idea that God arranged the social world. “I believe that He Who arranged the material world,” wrote Bastiat, “was not to remain foreign to the arrangements of the social world.” I wholeheartedly agree. That is why I never tire of arguing about how God created such economic phenomena as the price system and comparative advantage in order to coordinate human flourishing.

There are dozens of ideas in his writings like this one that are worthy of close attention, but here are four particularly important concepts of Bastiat’s that you should know:
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