Category: Economics

economic-shalom-bolt“Economics is complicated,” says Derek Rishmawy in his review of John Bolt’s new book, Economic Shalom. “Establishing a Christian approach to economics seems even more daunting a task, especially given the amount of ink that’s been spilled when it comes to a Christian approach to money and wealth.”

The primary strength of Bolt’s proposal is try to move us past the simple biblicism that tends to run rampant in these theological discussions. In the first chapter, he disposes of the idea that there is clearly one “biblical economics” that can be cleanly read off the surface of the text. He does so partially by surveying the economic thought of three major christian ethicists, Walter Rauschenbusch, Ronald Sider, and David Chilton, using essentially the same biblicistic assumptions, end up with a wide variety of contradictory economic proposals ranging from interventionist socialism to theonomic libertarianism.

Instead, he holds up the thought of Herman Bavinck, who put forward a more chastened reading of Scripture that takes into account it’s salvific purposes . . .

Instead of piling up a bunch of verses and trying to see which specific commands can be cleanly mapped onto the current political system, Bavinck proposes we recover the main spiritual purpose of the Scriptures–the restoration of fallen man to God through the Gospel. From there, humans begin to be restored to their proper relationships with each other and are enabled to begin taking up the form of life rooted in God’s creational norms. Where do we go to find those norms? Well, back to the Scriptures, but now, we don’t go looking for particular commands, but the general principles that underlie and inform them. For this reason, Bavinck won’t speak directly of a “biblical economics”, but rather an economic system that is consistent with Scripture.

Read more . . .

Acton Institute Director of Research and author of Tea Party Catholic Samuel Gregg joined host John Pinhiero for a discussion of his latest book and the Catholic influence on the American founding on Faith and Reason, Pinhiero’s new show on Holy Family Radio in Grand Rapids and Kalamazoo, Michigan. The wide-ranging discussion lasted a full broadcast hour, and can be heard using the audio player below.

economistsIs the teaching of basic microeconomics — opportunity cost, supply and demand curves, incentives, etc. — a form of conservative propaganda?

Most people, including almost all economists whether liberal or conservatives, would obviously say “no.” Yet many educators, as well as the general public, believe it’s true.

In 1994, the Federal Goals 2000 Act expanded the national standards movement to include the teaching of economics in K-12 education. This led to the creation in 1997 of the Voluntary National Content Standards in Economics (VNCSE), which were organized around the core principles of the discipline. While there has been almost no controversy within the discipline over the VNCSE, notes Robert M. Costrell, the objections have come almost entirely from those outside the discipline. Costrell adds that, “There are many who believe that mainstream economics provides an unwarranted defense of free markets, or at least gives short shrift to the case for government intervention.”

Joy Pullmann provides some examples of criticism from non-economists that Costrell chronicles:
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Coolidge In November of 1925, President Calvin Coolidge delivered an address on the topic of the proper relationship between government and business. His audience was the New York State Chamber Commerce. One of Coolidge’s main aims of the speech was to elevate the spiritual value of business.

As president, Coolidge oversaw unprecedented economic expansion and growth, but he also lived through the rise of America’s progressive era and Russia’s Bolshevik Revolution. New ideas about government and society had already long been popularized in large segments of America by 1925. Coolidge, who saw himself as a civic educator, articulated a much more traditional and conservative view of American ideals. A common recurrence of his public addresses was to praise the truths and virtues of America’s founding principles. At the very end of this address, Coolidge closed with the line, “The truth and faith and justice of the ancient days have not departed from us.” Below is a poignant excerpt from his 1925 address:

While there has been in the past and will be in the future a considerable effort in this country of different business interests to attempt to run the Government in such a way as to set up a system of privilege, and while there have been and will be those who are constantly seeking to commit the Government to a policy of infringing upon the domain of private business, both of these efforts have been very largely discredited, and with reasonable vigilance on the part of the people to preserve their freedom do not now appear to be dangerous.

When I have been referring to business, I have used the word in its all-inclusive sense to denote alike the employer and employee, the production of agriculture, and industry, the distribution of transportation and commerce, and the service of finance and banking. It is the work of the world. In modern life, with all its intricacies, business has come to hold a very dominant position in the thoughts of all enlightened peoples. Rightly understood, this is not a criticism, but a compliment. In its great economic organization it does not represent, as some have hastily concluded, a mere desire to minister to selfishness. The New York Chamber of Commerce is not made up of men merely animated with a purpose to get the better of each other. It is something far more important than a sordid desire for gain. It could not successively succeed on that basis. It is dominated by a more worthy impulse; it rests on a higher law. True business represents the mutual organized effort of society to minister to the economic requirements of civilization. It is an effort by which men provide for the material needs of each other. While it is not an end in itself, it is the important means for the attainment of a supreme end. It rests squarely on the law of service. It has for its main reliance truth and faith and justice. In its larger sense it is one of the greatest contributing forces to the moral and spiritual advancement of the race.

welfare-stateStanford University’s Michael J. Boskins wants to talk about disease and dysfunction. It’s not a medical condition, though; it’s an economic one.

Far too few governments rein in their countries’ bloated welfare states before disaster strikes. As a result, some citizens eventually suffer the economic equivalent of a heart attack: wrenching declines in living standards as they are victimized by unsustainable programs’ endgame. Greece and the city of Detroit are only the most recent grim examples.

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Acton Institute President Rev. Robert A. Sirico made an appearance on The Price of Business with host Kevin Price on Business 1110 KTEK in Houston, Texas. The conversation focused on the importance of liberty and the vital need to understand the foundations of our freedoms. You can listen to the interview via the audio player below.

Ladies: are you upset that women make only 77 cents on the dollar as compared to men? Are you sure that’s even accurate? It’s time for some straight talk about the so-called “wage gap.”

Video courtesy of the Independent Women’s Forum.

100930_minimum_wageYesterday I mentioned that translating economic principles into intuitive concepts is one of the most urgent and necessary tasks to prevent such evils as harm to the poor. Today, William Poole provides an excellent example of what is needed with his “common-sense thought experiment” on minimum wage increases:

Suppose Congress were to enact a minimum wage $50 higher than the current one of $7.25 per hour. Would a minimum of $57.25 reduce employment? I know of no economist who would assert a zero effect in this case, and recommend that readers ask their economist friends about this thought experiment. Assume that the estimate is that a minimum of $57.25 would reduce employment by 100,000. The actual number would be far higher but 100,000 will do for this thought experiment. Now, consider several other possible increases of less than $50. The larger of these increases would have substantial effects, the smaller ones smaller effects.

But is there reason to believe that a minimum of $10 would have no effect? I have never seen a convincing argument to justify that belief. If you accept as a fact that a minimum wage of $57.25 would reduce employment, and you accept as a fact that some workers are currently paid $7.25 per hour, then logic compels you to believe that a small increase in the minimum wage above $7.25 will have at least a small negative effect on employment.

The only escape from this logic is to believe that there is a discontinuity in the relationship between the minimum wage and employment. No one has offered evidence that there is a discontinuity at a certain minimum wage such that a minimum above that has an effect and one below does not.

Far too often, advocates of minimum wage increases tend to dismiss such thought experiments before giving them due consideration. I think I know why. I don’t mean to cast aspersions on their motives (it certainly sounds like I’m about to cast aspersions on their motives, doesn’t it?), but I suspect they fear that admitting the undeniable logic of this reasoning will cause them to lose the moral high ground.
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Many people believe laws to protect ownership and private property primarily favor the wealthy. But as Prof. Dan Russell explains, lack of property protections can lead to abject poverty.

(Via: Institute for Faith, Work, and Economics)

asian familyPresident Obama has called income inequality the “defining challenge of our time,” but is it strictly about paychecks? Ari Fleischer thinks there is definitely more to it; he believes it’s about the breakdown of the family and American rejection of marriage.

“Marriage inequality” should be at the center of any discussion of why some Americans prosper and others don’t. According to Census Bureau information analyzed by the Beverly LaHaye Institute, among families headed by two married parents in 2012, just 7.5% lived in poverty. By contrast, when families are headed by a single mother the poverty level jumps to 33.9%. (more…)