Category: Economics

Tunisia Arab SpringConversations about economic development often gravitate toward such topics as monetary policy, trade regulation, tax structures, infrastructure, etc. These are critical pieces of the puzzle indeed, but there exist even more primary components of prosperity that are often skipped over.

In our interview with Samuel Gregg, director of research at the Acton Institute, he lists a few of the foundational elements of growth:

Rule of law is essential if you want to have a functioning economy. You cannot have a functioning economy without secure property rights. You cannot have a functioning economy unless contracts are enforced. You cannot have a functioning economy if government officials can act in an arbitrary fashion.

The Property Rights Alliance, a Washington D.C.-based think tank, publishes research concerning private property and rule of law. Earlier this month, the organization released its annual 2013 International Property Rights Index (IPRI), which measures the intellectual and physical property rights of 131 nations from around the world, representing 98% of world GDP.

The 2013 IPRI represents the seventh edition of the index and focuses on three core components:

  1. Legal and Political Environment
  2. Physical Property Rights
  3. Intellectual Property Rights

Countries received a score (on a scale of 0 – 10, where 10 is the highest value for a property rights system and 0 is the lowest value) in each of these areas; those scores were then averaged to calculate the “IPRI score.” The countries receiving the top five IPRI scores were Finland, New Zealand, Sweden, Norway, and the Netherlands. The United States claimed the 17th spot.

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This is a guest post by Michael Hendrix, following up on his previous post on the economic challenges of millennials, and my own post on the deeper vocational questions that persist for Christians. Michael serves as the director for emerging issues and research at the U.S. Chamber of Commerce in Washington, D.C. He is a graduate of the University of St. Andrews and a Texas native.

By Michael Hendrix

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Twenty years from now, we will see an America where merit and reward are intertwined more than ever before. As I’ve written recently, those who win the future will significantly outpace their peers, leaving the rest to fight over the scraps until organizational innovations and human capital catches up once again.

If true, such a reality must be reckoned with. So what about those left behind? What will their futures look like? With decreases in gainful employment and the increasing disconnect between vocational aspirations and actual occupations, what other risks persist — economic, social, spiritual, and otherwise? Assuming we are not comfortable with such a future, what should we do about it?
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Blog author: jcarter
posted by on Tuesday, October 1, 2013

“They see nothing wrong in the rule that to the victors belong the spoils of the enemy,” said William L. Marcy in 1832. Macy was explaining why victorious political parties claim they deserve government jobs, but today his claim could be applied to a broader swath of American society. As Robert J. Samuelson says, “We are, I fear, slowly moving from ‘the affluent society’ toward a ‘spoils society.’”

There are two ways to become richer. One is to provide more goods and services; that’s economic growth. The other is to snatch someone else’s wealth or income; that’s the spoils society. In a spoils society, economic success increasingly depends on who wins countless distributional contests — not who creates wealth but who controls it. This can be contentious. Winners celebrate; losers fume.

Of course, the two systems have long coexisted — and always will. All modern societies chase growth; all redistribute income and wealth. Some shuffling is visible and popular. Until now, that’s been the case with America’s largest transfer, which is from workers to retirees through Social Security and Medicare. In 2012, this exceeded $1 trillion. Still, for the nation, the relevant question is whether productive behavior (generating economic growth) is losing ground to predatory behavior (grabbing existing wealth and income). There are good reasons to think it is.

Read more . . .

Obamacare-trainTomorrow is the big day for Obamacare, despite the fact that even the Obama Administration admits it’s “glitchy.” The president is cheerleading the program, reminding us that he’s been right all along:

Reforming health care will help the economy over the long-term,” by curing health-care costs and free individuals to start small companies, he said.

Through his speech, Obama ridiculed critics of his plan, which imposes far-reaching federal requirements on one-sixth of the nation’s economy. (more…)

Wilkins Micawber from David Copperfield art by Frank Reynolds (2)

Wilkins Micawber, the namesake for the Micawber Principle.

Joe Carter points to a Lifehacker article that sums up two basic equations that lead to the creation of wealth (with what I consider to be a clarifying correction applied in the first formula):

Income > spending = surplus

Surplus x time = wealth

Likewise, Wilhelm Röpke, in his A Humane Economy, points to two equations arising from classical literature that connect surplus with happiness and deficit to misery (the Micawber Principle).

According to Mr. Micawber from Dickens’ David Copperfield:

Annual income £20, annual expenditure £19.975 = happiness

Annual income £20, annual expenditure £20.025 = misery
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In what presumably was a misguided attempt to have Aaron Sorkin pen their newest round of armor-piercing media talking points, the White House sent adviser Dan Pfeiffer to the set of CNN’s The Lead with Jake Tapper armed to the teeth with explosive political metaphors meant to describe the GOP’s position on debt-ceiling negotiations.

TAPPER: You saw — and this is the final question. You saw today a new Bloomberg News poll indicating that the American people support by a 2-1 margin its right to require spending cuts when negotiating the debt ceiling.

I understand that Keystone and other provisions that the Republicans are talking about attaching to the debt ceiling are not related, but why not cut some spending?

PFEIFFER: The Republicans — we are for cutting spending. We’re for reforming our tax code. We’re for reforming our entitlements.

What we’re not for is negotiating with people with a bomb strapped to their chest. We’re not going to do that. So, if they want to have a discussion about how we reduce our deficits, how we help the middle class, how we give them a better bargain, lift the debt ceiling, take the full faith and credit of the United States off the table and let’s have a discussion. (more…)

According to a new study by Dick Slikker, “changes in the percentage of Christians within a society exert a measurable correlated influence of the economic well-being of that society” — particularly when those Christians are evangelicals.

Correlations Between Christian Population Changes and Changes in Sovereign Ratings in Countries for the Period Between 2000 to 2012

Kate Tracy summarizes the findings at Christianity Today:

Dutch researcher Dick Slikker wanted to assess the Marxist theory that increases in prosperity lead to decreases in religious practice. So he examined the past decade’s worth of data from countries including the United States, Belgium, China, Germany, Iceland, Italy, the Netherlands, Spain, and the United Kingdom. His research used Operation World and the World Religion Database for its data on changes in the percentage of Christians in each country, while studies fromMoody’s Analytics and Fitch Ratings provided data on changes in the economic status of each country, particularly its sovereign credit rating…

…”When using total Christian populations per country, statistically significant positive linear correlations were obtained in seven out of eight combinations of data source, rating agency and either five- or ten-year interval.” Slikker notes in his abstract.

Furthermore, within the three subsets of Christianity studied—Protestants, Catholics, and evangelicals—it was evangelicals that proved to have the highest rate of correlation with economic wellbeing. (more…)

We’re continuing to round up appearances by Acton Director of Research Samuel Gregg as he does radio interviews nationwide to promote his latest book, Tea Party Catholic. This past Monday, Sam made an appearance on the Relevant Radio network show A Closer Look with Sheila LiaugminasAs usual, it was a wide-ranging and intelligent discussion, and you can listen to it via the audio player below.

Tea Party Catholic

Tea Party Catholic

In Tea Party Catholic, Samuel Gregg draws upon Catholic teaching, natural law theory, and the thought of the only Catholic Signer of America's Declaration of Independence, Charles Carroll of Carrollton—the first “Tea Party Catholic”—to develop a Catholic case for the values and institutions associated with the free economy, limited government, and America's experiment in ordered liberty. Beginning with the nature of freedom and human flourishing, Gregg underscores the moral and economic benefits of business and markets as well as the welfare state's problems. Gregg then addresses several related issues that divide Catholics in America. These include the demands of social justice, the role of unions, immigration, poverty, and the relationship between secularism and big government.

Visit the official website at www.teapartycatholic.com

$24.00

need1Earlier this week, Michael Hendrix offered some striking commentary on the economic future of millennials, fearing that many in our generation are in a similar position as “the horse at the advent of the automobile.”

The economic horizon is shifting, and with such changes come new opportunities. Yet rather than being energized and agile in response, many are content to simply shrug and plod along.

As Hendrix concludes, there’s hope in the reality that we are not horses, but creative, spiritual beings, fashioned in the image of God:

It isn’t so much that we’ll have winners and losers that gets me. It’s that many millennials aren’t facing up to the tough choices they’ll need to make to align their visions with reality. When the internal combustion engine came along and rendered horsepower to the pages of Motor Trend, these animals had little choice over their fate. We are different. We can look square-eyed into a future of vast change. We can work hard at the tasks set before us, for we were made to do so. Put another way, we can avoid the glue factory.

The basic idea of the American Dream has come under scrutiny in recent years — most strongly, it seems, from various corners of the church. And though some critiques are clumsier than others, all seem to point to at least one critical reality: With increased prosperity comes increased temptation to give way to an overly individualized and materialistic understanding of vocation and calling. Where our ancestors seized economic opportunity through hard work and service, paving the way for a more comfortable life, we now show a propensity to conflate the former (opportunity) with the latter (a 4-bedroom house in the burbs). (more…)

This is a guest post by Michael Hendrix in response to the recent debate sparked by a provocative post on millennials and Gen Y “yuppie culture.” Michael serves as the director for emerging issues and research at the U.S. Chamber of Commerce in Washington, D.C. He is a graduate of the University of St. Andrews and a Texas native.

mememe1

By Michael Hendrix

Over the past few weeks, much has been written on GYPSY unicorns and my generation’s dashed hopes (warning: strong language). For my fellow millennials who get overly defensive on such matters, I have a request: Get over yourselves and get to work.

We are entering an era of profound economic change, and I fear that the career prospects of many in my generation have too much in common with those of the horse at the advent of the automobile. Consider these words from the economist Gregory Clark, who’s quoted at a key point in Erik Brynjolfsson and Andrew McAfee’s Race Against the Machine:

There was a type of employee at the beginning of the Industrial Revolution whose job and livelihood largely vanished in the early 20th century. This was the horse. The population of working horses actually peaked in England long after the Industrial Revolution, in 1901, when 3.25 million were at work. … But the arrival of the internal combustion engine in the late 19th century rapidly displaced workers, so that by 1924 there were fewer than 2 million. There was always a wage at which these horses could have remained employed. But that wage was so low that it did not pay for their feed.

Structural changes are coming. Information and communications technologies (ICT) are bringing about a shift equally as profound as that of the Industrial Age. Just as steam power and the internal combustion engine swept away inefficient production and labor, so too will the Information Age’s connectivity and automation advance on so many of the jobs we hold dear. What Brynjolfsson and McAfee argue — and not without controversy — is that technology is advancing on mankind’s comparative advantages in a way that previous revolutions never could. Building a steam-powered hammer to take on John Henry’s brawn is one thing; fashioning a highly cognitive robot with fine motor skills is quite another. And while this future hasn’t fully arrived yet, it’s the process of getting there that we must prepare for. (more…)