Category: Economics

RefuseServiceSignIn today’s Acton Commentary, “The Logic of Economic Discrimination,” I take up a small slice of the larger controversy and discussion surrounding religious liberty laws like the one passed recently in Indiana. My point, drawing out some of the implications of observations made by others, including Ryan Anderson and Shikha Dalmia, is that anti-discrimination boycotts depend on discrimination. Or as Dalmia puts it, “what is deeply ironic is that corporate America was able to wield its right not to do business (and boycott Indiana) by circumscribing the same right of Indiana businesses.”

Now there are lots of other angles and significant points to explore surrounding this enormously complex and important debate. Many have criticized the hypocrisy of corporations like Apple for doing business in places like China and Saudi Arabia even while they grandstand against Indiana. Others are now pointing to the actions of many in Silicon Valley, which despite the proclamations of support for social justice, have actually created huge inequalities. Tech centers like Silicon Valley are great, it seems, unless you are a woman, have a family, or are a blue-collar worker.

Indiana politicians, under massive scrutiny, have since moved to “clarify” the RFRA law that was passed, a move that has mollified some but not others. From the beginning, these conversations about religious liberty and economic rights have, in my view, insufficiently included sensitivity to considerations like freedom of association. Hopefully the larger context and interactions of contracts and rights, not merely “religious liberty” narrowly defined, can help broaden and mature the conversation.

Blog author: jcarter
Tuesday, April 7, 2015

Profit-Risk-LossYesterday I noted how Americans tend to overestimate the amount of profit earned by corporations. The actual profit margins are so thin that, as Mark J. Perry points out, for the typical company all sales revenue from January 1 to December 7 would go to cover the firm’s expenses for the year, and its sales on roughly the last 24 days of December from December 8 to December 31 would represent its profits.

For the other industries displayed in the table above that operate on thin profit margins of less than 4%, companies in those industries have to operate until the middle of December (airlines for example at December 18), or even until the last week (department stores), or in the case of grocery stores until the middle of the last week of December. Think about it — a grocery chain like Safeway or Kroger has to operate from January 1 to December 26 until it breaks even for the year, and only then will its sales revenue from the the last 4.4 days starting on December 27 represent the profits for the entire year! And that’s only if everything goes exactly right, and nothing goes wrong — like a sales slump from a recessionary slowdown or from increased competition from a new competitor like Walmart and Target (now in the grocery business); or like an unexpected increase in costs that can’t be passed along in the form of higher prices, etc.

As a percentage of operating costs, profits are often miniscule. Yet they play an outsized moral role in the creation and distribution of goods and services. “Profits motivate people to work hard for themselves and to make life bette for others,” says economist Walter Williams.


When struggling with “work that wounds”— work that’s “cross-bearing, self-denying, and life-sacrificing,” as Lester DeKoster describes it — we can content ourselves by remembering that God is with us in the workplace and our work has meaning.

But although these truths are powerful, God has not left us with only head knowledge and philosophical upgrades. When we give our lives to Christ and choose a path of transformation and obedience, the fruits of the Spirit will manifest in real and tangible ways, despite our circumstances. We will find meaning, but we will also experience peace, patience, and joy, even when it doesn’t make sense.

In Music Box, a classic Christian film from the early 1980s, we see an apt demonstration of this. The joy of the Lord is indeed our strength, not just as some abstract idea, but in real and noticeable ways through the application of mind to hands and hands to creative service. The Gospel breathes new life, even into the most dark and plodding situations.

Watch it here:

In the film, we see a tired and moping man, who lives a life of drudgery at a factory, followed by misery and disconnect at home. The solution? On his way home from work, he finds a magical music box that triggers a chorus of angels. God reminds him of the gift of Jesus — a lesson that sets the man about gift-giving of his own joy and purpose to other people, a newfound capacity that God continues to stretch throughout the film. In short, he’s awakened to the reality that all is gift. (more…)

300px-GeocentrismGeocentrism was the belief that the sun, the planets, and all the stars revolve around the Earth. The alternative view—heliocentricism—had been around since the 3 BC but was not taken seriously until the 16th century AD. What seems obvious to us now was a matter of heated debated for almost two thousand years.

Economist Don Boudreaux says the minimum-wage debate in economics is rather like the reverse of this debate that took place centuries ago among astronomers.


Profits-Down“Someday this will all be yours,” I said, waving my hand across the aisles of the Piggly Wiggly. I was trying to ingratiate myself with my boss, the general manager for the biggest grocery store in Clarksville, Texas. He just smirked and shook his head. “For every dollar in sales, how much do you think this stores earns in profit?”

At the time I was taking high school economics and considered myself something of a financial savant because I knew the difference between stocks and bonds. Still, I was in full-on toady mode and thought it best to undershoot what I believed the true profit margin to be. I went with a safe number that I knew must be far too low. “About forty cents?” I asked.

“One cent,” he said. “For every dollar we put in the cash register we keep about one penny in profit.”

I was stunned, both by the skimpy profit margin and by my astoundingly shoddy ability at financial estimation. Unfortunately, I wasn’t alone. A poll taken last year asked a random sample of American adults, “Just a rough guess, what percent profit on each dollar of sales do you think the average company makes after taxes?” The average response was 36 percent.

As Mark J. Perry explains, the public’s estimates are way, way off:

Blog author: jcarter
Thursday, April 2, 2015

food-cost1While it may not seem like it when you’re standing at the checkout line at the grocery store, food is cheaper now that it was half a century ago.

“We are purchasing more food for less money, and we are purchasing our food for less of our income,” says Annette Clauson, an agricultural economist. “This is a good thing, because we have income to purchase other things.”

A recent report published by the U.S. Department of Agriculture shows how the average share of per capita income spent on food fell from 17.5 percent in 1960 to 9.9 percent in 2013.


A reduction of 7.6 percent over 50 years may sound trivial, so let’s examine how it would affect an average person.

economic decisionIf there’s one area of the faith-work conversation that’s lacking in exploration and introspection, it’s the role of spiritual discernment in the day-to-day decisions of economic life.

It’s one thing to orient one’s heart and mind around the big picture of vocation and stewardship — no small feat, to be sure — but if economics is about the intersection of knowledge and human action, what does it mean to serve a God whose thoughts are higher than our thoughts? Before and beyond our questions about ethics and meaning and vocation (“is my work moral?”; “does it have meaning?”; “what am I called to do?”) remains the basic question of obedience.

How does the Gospel transform our hearts and minds and how does that process transform our economic action? How do we make sure we’re putting obedience before sacrifice in all that we do? How do we hear the Holy Spirit minute-by-minute, day-by-day, and how does that impact the ideas we have, the products we conceive, the prices we set, the relationships we build, and the trades and investments we make?

I was reminded of this recently upon reading an essay on discernment by Peter Kreeft. Although he doesn’t speak directly to economic matters, Kreeft does a nice job of connecting the earthly with the transcendent, cautioning us against “emphasizing Christ’s divinity at the expense of his humanity or his humanity at the expense of his divinity,” or likewise, “his divine sovereignty at the expense of free will or free will at the expense of divine sovereignty.” Spiritual discernment ought not descend into some kind of peculiar escapism, but rather, it must engage with the natural world, leverage the gifts and the resources God has given us, and ultimately bear fruit for the good of the city and for the life of the world. (more…)