Category: Economics

childlaborImagine you are given three choices — A, B, or C. In the ranking, A is much preferred to B and B is exceedingly preferable to C. Which do you choose? Obviously, all else being equal, you’d choose A.

Now let’s add the following restrictions to your choice:

• You, your family, and your friends will all get A. But you must make the choice of A, B, or C, for other people who you will likely never meet.

• If you choose A, no one gets B and some (perhaps many) other people will be stuck with choice C.

• If you choose B, few people will get A but even fewer will get stuck with C.

Which do you choose now?

Before you know what the choices entail, you’d likely select B as the least bad option for the people you are choosing for. It’s not as good as the choice you yourself got but it’s still better than C.

But what if I told you A is a ban on child labor in Bangladesh and B is allowing children to work in a garment factory earning 53 cents per day. Does that change your decision?
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There’s been a lot of discussion leading up to the planned Pan-Orthodox Council in Crete this month. As is typical of councils in the history of the Church, so far it’s a mess, and it hasn’t even happened yet.

In what has been described as an act of self-marginalization by Bulgarian Orthodox scholar Smilen Markov, it looks like the Bulgarian Patriarchate has already backed out.

Antioch has a laundry list of grievances.

The OCA, which might not even technically be invited in the first place, has issued a statement.

And further statements from the Ecumenical Patriarchate, the Georgian Patriarchate, and others can be found.

No need to review the contents as the point is simply to note that, once again, the council is already a mess.

Officially, I should be calling it the “Great and Holy” council, but I’m not holding my breath on that one. That’s not out of cynicism (well, not entirely) but due to the record of history and the science of economics. (more…)

johnoliverHave you ever watched HBO’s Last Week Tonight? It’s a show where British comedian John Oliver reads a teleprompter explaining to Americans what is wrong with our country. It’s also a show where smug, self-satisfied progressives who miss John Stewart can be entertained while thinking they are watching “smart” content.

In reality, Last Week Tonight is frequently one of the dumbest shows on cable (in the sense that watching it makes you less informed about the world). And yet it is almost inescapable if you have an internet connection. Even if you don’t subscribe to HBO you’ll find clips every Monday morning on left-leaning media sites, or someone who wants to feel self-righteous and pseudo-intelligent will slip it into your social media channels.

A prime example is the most recent episode where Oliver takes on the debt collection industry. A representative headline reporting on the show (from a site that should know better) is “Watch: John Oliver just topped Oprah with one of the largest giveaways ever on TV.”

Oliver didn’t top Oprah nor was he involved in one of the largest giveaways ever on TV. The actual amount of money that Oliver gave away wasn’t that significant — $60,000 — but he was able to fool people who don’t know much about economics into thinking he actually gave away $15 million.

I’m not kidding. There are a lot of people this morning who really think a third-tier cable talk show host gave away $15,000,000.
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Do no harmAll Christian ethics can be summed up in one command: “Love your neighbor as yourself” (Matthew 22:39). And within that command is the provision, as the Apostle Paul said, “Love does no harm to a neighbor” (Romans 13:10). This is why the Christian approach to public policy should begin with a simple standard: Because we love our neighbors, we should not support policies that we suspect will cause them harm.

Unfortunately, while the rule is simple to state it can be difficult to apply. We don’t always know or agree on what policies will cause harm. Still, any type of policy that is presumed or known to cause harm should be carefully scrutinized. A prime example is government regulations.

As economist Scott Sumner says, “One of the most basic ideas in economics is that the vast majority of regulations are harmful.”* He gives the example of a regulation on banks than forbids them from charging fees for the use of ATMs. This regulation appears to be “pro-consumer,” but as Sumner explains, the actual effect is likely to harm bank customers:
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Federalism may be out of fashion (at least when it comes to state’s rights), but the effect of individual state policies on the lives of individual citizens remains as relevant as ever.

Consider, for example, the case of Puerto Rico (which is technically a territory, but has many of the functions of a U.S. state). Financial mismanagement by the territorial government has led to a humanitarian crisis. Those who can afford to leave — such as doctors and scientists — are fleeing the island for the U.S. mainland. Not surprisingly, Puerto Rico ranks dead last on the Mercatus Center’s ranking of states by fiscal condition.

The new study ranks each U.S. state’s financial health based on short- and long-term debt and other key fiscal obligations, such as unfunded pensions and healthcare benefits. “Growing long-term obligations for pensions and healthcare benefits continue to strain the finances of state governments,” notes the report, “highlighting the fact that state policymakers must be vigilant to consider both the short-term and the long-term consequences of their decisions.”
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Acton Institute Director of Research Samuel Gregg joined host Al Kresta on Ave Maria Radio’s Kresta in the Afternoon last Thursday to discuss the ongoing crisis of populism in Latin America, and the Vatican’s perspective on the region’s economic and social unrest under Pope Francis. Gregg notes that while institutionally, the Catholic church in Latin America has largely maintained its institutional integrity, regional leaders – and indeed Pope Francis himself – have an affinity for what is known as “teología del pueblo” – a “theology of the people” – that makes it difficult for the church to criticize the populist movements that cause so many social problems.

The whole interview is well worth your time, and is available via the audio player below.

loanapproved72-47ce85caSince its inception in the 1990s, the payday lending industry has grown at an astonishing pace. Currently, there are about 22,000 payday lending locations — more than two for every Starbucks — that originate an estimated $27 billion in annual loan volume.

But payday lenders may soon face some stiff competition. A few of the largest consumer banks in America are considering going to market with new small-dollar installment loan products, reports the American Banker.

The Consumer Financial Protection Bureau (CFPB), the U.S. government’s consumer protection agency, is considering proposing rules that would end payday debt traps by requiring lenders to take steps to make sure consumers can repay their loans. One of the proposals is to exempt lenders from certain requirements if the amount the consumer is required to pay each month is no more than 5 percent of the consumer’s gross monthly income. According to American Banker:
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