Category: Economics

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As many are beginning to realize, and as the new documentary, Poverty, Inc., details at length, the foreign aid movement has largely failed the global poor, promoting top-down solutions at the expense of bottom-up enterprises and institutions.

This is partly due to errors in economic thinking, but it also comes from a lack of understanding and appreciation for the intangible assets in individual communities, particularly as it relates to the social and the spiritual.

“There has got to be more than just a change in a wallet for significant change to happen,” says Peter Greer in an excerpt from the PovertyCure series. “And I think that is where certainly the church and the faith community has something materially different to offer than just another loan, just another job. When you have the opportunity to touch hearts, to touch meaning, to touch purpose, to touch identity, alongside helping an individual get out of physical poverty, that’s where you see incredible transformation.”

Unfortunately, in our efforts to assist with this sort of ground-level, whole-life transformation, Christians often give way to the same mistakes of detached economic planners. Such risks are detailed at length in PovertyCure, as well as in books such as Toxic Charity, When Helping Hurts, and The Spiritual Danger of Doing Good, each illuminating the temptations and dangers of misaligned charity and activism. (more…)

Working For Our Neighbor“If you are a manual laborer, you find that the Bible has been put into your workshop, into your hand, into your heart. It teaches and preaches how you should treat your neighbor.” –Martin Luther

Christian’s Library Press has now released Working for Our Neighbor, Gene Veith’s Lutheran primer on vocation, economics, and ordinary life. The book joins Acton’s growing series of tradition-specific, faith-work primers, which also includes Baptist, Wesleyan, Pentecostal, and Reformed perspectives.

Veith, who describes Martin Luther as “the great theologian of vocation,” believes Luther’s approach is distinct in approaching vocation as a manifestation of “the spiritual and the physical, transcendence and incarnation, ascent and descent, faith and love, love of God and love of neighbor.” Luther’s theology “shows the interconnections of faith, work, and economics not just theoretically, but practically,” Veith writes, “and discloses how the ordinary, seemingly secular activities of everyday life are essential dimensions of Christian spirituality.”

Beginning with a hearty critique of Max Weber’s classic work, The Protestant Ethic and the Spirit of Capitalism, Veith argues that the Reformation’s influence on capitalism has long been mischaracterized and misunderstood. Although Weber properly identified a variety of psychological and cultural factors, his analysis of the theological and spiritual connections fell remarkably short. (more…)

navy_shipsThe evening news reports there has been a complete blockade of the U.S. On the East Coast of the United States, Russian forces have instituted a naval and air blockade, similar to the one being imposed by China on our West Coast. A similar blockade has been set up on the borders of Canada and Mexico.

The blockade is somewhat porous. People are allowed to pass through freely (but only if they are not trying to enter the U.S. illegally). Exports from the U.S. also are unhindered. But all imported goods from every nation on earth are being kept out.

What would be your reaction? Well, naturally you’d cheer. This is great news! Someone has finally stopped the “invasion” of foreign products into our homeland. Without cheap imports flooding our market prices will have to rise, which means increased wages and better jobs. Factories will have to open since everything will need to be made in the good ol’ US of A. Unemployment will plummet since the demand for workers will spike. Our economy will soon be booming!

Wait, what’s that you say? You don’t think it’s a good idea? You say such provocation would be an act of war?

Okay, what if the blockade was limited. Instead of completely keeping out foreign goods, the blockading countriesmerely require importing countries to pay a “toll” of between 10 and 40 percent. And to keep the peace, the blockaders even give the money collected from the tolls to the U.S government. That would be almost as good, wouldn’t it? Maybe even better?

No? You still say the blockade would be an act of war? That it’d make us all worse off than before?

Of course, you’d be right. A naval blockade by foreign countries would hinder, not help, our economy. So why do we allow in peace what we oppose in war?

That was the question asked in the 19th century by the American economist Henry George. In his book Protection or Free Trade, George explained how voluntary governmental restrictions on trade are the same as blockades in a time of war by foreign nations:
(more…)

donald-trump-milton-friedmanIf it wasn’t for Bernie Sanders, Donald Trump would win the title of most economically illiterate presidential candidate in the short history of the twenty-first century.

A prime example of why he’d earn this ignoble title is Trump’s opposition to free trade — a position which, not surprisingly, he shares with Sanders. The only real difference between Sanders and Trump on this issue is that no one trust that Trump would actually carry out his proposed destructive policies (he’d flip-flop on the issue like he does on everything else), while Sanders would be devastatingly consistent.

The video below compares and contrasts Trump’s ignorance about free trade with the wisdom of Milton Friedman, one of the greatest economists in American history.

If judged on substance, it’s obvious Friedman wins this debate. But in the long run Trump and other anti-free market politicians are likely to continue to convince the public to support their terrible, anti-trade policies. When it comes to economics, Americans have a tendency to reject policies that make our country more prosperous in favor of ignorant demagoguery that gives the appearance of punishing foreign nations.

(Via: AEI Ideas)

Since the era of Adam Smith economists have been asking, “What creates wealth?” One key answer is specialization and trade. On a timeline of human history, the recent rise in standards of living resembles a hockey stick — flatlining for all of human history and then skyrocketing in just the last few centuries.

As economist Don Boudreaux explains, without specialization and trade, our ancient ancestors only consumed what they could make themselves. How can specialization and trade help explain the astonishing growth of productivity and output in such a short amount of time—after millennia of famine, low life expectancy, and incurable disease?

Western activists and foreign aid experts often pretend as though material redistribution is enough to elevate the world’s poor. All we must do is give people the “tools” to do their work, they’ll say, and developing nations will take it from there.

What these “tools” consist of is a bit more blurry. The more serious development experts and economists recognize the need for immediate relief, but point to deeper factors and obstacles that prevent or accelerate the path to long-term prosperity and flourishing — “intangible assets and hidden liabilities,” as Arnold Kling and Nick Schulz have put it.

One such overlooked asset is cultural capital and the ripple effect it yields on a society’s underlying attitudes and overarching philosophy of life. In an excerpt from the PovertyCure series, Michael Miller and Michael Fairbanks explain why it matters.

As Fairbanks explains:

The most important type of capital is cultural capital, and by cultural capital I don’t mean just food and music and fashion and language. These are very valuable things, but I mean, how does a group of people attach meaning in their lives? Are they tolerant of people unlike themselves? Are they optimistic about the future? Do they believe in competition?

It’s trustful relationships…loving new ideas, loving the idea of serving the client very, very well. This cultural capital tells you if the country has the conditions to be prosperous in the future.

For those living in countries with higher levels of such capital, it can be easy to take it for granted, assuming society rolls along simply on the momentum of self-seeking investment and blind consumerism.

If society grasps the proper meaning of work — “as service to others and thus to God” — cultural and economic transformation is a natural byproduct.

Having a healthy understanding of God’s design for work is important for our individual lives, but here we see its importance for flourishing across society. Here we see it’s importance for an enduring economic order that is both just and prosperous.

culture-trust“If a market is going to be sustainable in the long run, we need something very different from unconnected self-seeking individuals,” Miller concludes. “We need people who think of others, and who are rooted in their families and communities. We need a moral culture and a measure of trust that extends beyond family and clan.”

23-VIEW-master675Under the feudalistic societies of old, status was organized through state-enforced hierarchies, leaving little room for the levels of status anxiety we see today.

For us, however, status competition ranges wide and free, leading to multiple manifestations and a whole heap of status signaling.

Such signaling is as old as the free society itself, of course. Whether sending their children to fancy classes and fencing lessons, accumulating ever-expensive luxury goods, or boasting in the labels of their fair trade coffee and the nobility of non-profit activism, aristocrats have always found ways to signal their superiority.

Yet these preferences have shifted over time, the present form of which is carving out its own unique space. In a recent report from the Adam Smith Institute, Prof. Ryan Murphy explores the situation, noting that while past generations were more concerned with “conspicuous consumption” and “keeping up with the Joneses” – chasing faster cars and bigger diamonds – the current pursuit of status has adapted toward “conspicuous authenticity.”

We are now seeing a “new status signaling,” Murphy observes, where society has “moved beyond associating ostentatious displays of wealth with high status,” opting instead for behavior that signifies we are above and beyond such base behavior. (more…)