Category: Economics

In his latest column, Tyler Cowen points out that whatever economic recovery we’ve experienced has “largely bypassed young people,” arguing that such a development is bound to have an impact for years to come:

For Americans aged 16 to 24 who aren’t enrolled in school, the employment picture is grim. Only 36 percent are working full time, down 10 percentage points from 2007. Longer term, the overall labor-force participation rate for that age group has dropped 20 percentage points for men and 14 points for women since 1989.

This lack of jobs will damage the long-term careers of a big chunk of the next working generation. Not working after you finish school very often means missing out on developing the skills and habits that will serve you well later on. The current employment numbers are therefore like a telescope into the future labor market: a 23-year-old who is working part time as a dog walker, yoga instructor or retail clerk may be having fun, but perhaps will receive fewer promotions as a 47-year-old.

Cowen notes a higher minimum wage as one potential culprit, but argues that “the root causes run much deeper,” ranging from increasing uncertainty to expanding globalization to a newfound pickiness among employers. Arnold Kling offers some additional hypotheses, including the idea that decreases in child-rearing among the young-and-able will likely lead to decreases in a need or desire to work full-time. (more…)

Remember the “fiscal cliff”? It wasn’t a cliff.

Over at Neighborhood Effects, James Broughel asks the question, “Has the Sequester Hurt the Economy?”

So have the sequester cuts hurt the economy? One possible answer comes from a new paper by Scott Sumner of Bentley University. Sumner argues that cuts to government spending don’t have serious deleterious macroeconomic effects when the Federal Reserve is targeting inflation. This is because the Fed ensures that prices stay stable under an inflation targeting regime, which keeps demand stable even in the face of government spending cuts. Similarly, when the Fed stabilizes the price level it also offsets any beneficial effects that fiscal stimulus might have, which helps explain the lackluster results from the 2009 American Recovery and Reinvestment Act (aka the “stimulus”).

Implicit in Sumner’s theory is that expansionary austerity, or the idea that the economy can grow even in the face of large government spending cuts, is indeed possible. Some of my colleagues at the Mercatus Center have described other ways in which expansionary austerity is possible.

First of all, I would like to be clear that I do not disagree that “expansionary austerity” may be possible. Nor do I disagree that the sequester cuts have not significantly hurt the economy. However, while the sequester included spending cuts and, therefore, technically qualifies as “austerity,” it was not what everyone was making it out to be. (more…)

Blog author: jcarter
posted by on Wednesday, September 11, 2013

kas_656-1095-1-30_50Wilhelm Röpke is one of the most important 20th century economists that almost no Americans know anything about. To really learn about the man whose influence was considered largely responsible for enabling Germany’s post-World War II economic “miracle,” you should read Samuel Gregg’s Wilhelm Ropke’s Political Economy. But if you don’t have the time (or $109.25) to spend, you can read Ralph Ancil’s introductory article at Front Porch Republic:

Throughout his professional life Röpke was concerned about a socially and morally responsible market economy and the policies it entails. An ardent opponent of all forms of collectivism, he spoke and wrote not only against the ideologies of national socialism and communism, but against the more subtle forms of collectivism found in the ostensibly more democratic and free countries of the West.

Röpke’s central social policy concern was the distribution of economic power. Freedom and basic human happiness are best met in an economy where individuals and families are able to take responsibility for their own lives, he believed, and that meant some social and economic arrangements are better than others. Throughout his writing, Röpke therefore decentralization, deproletarianization, family farms, and small-scale artisans and merchants.

Read more . . .

Peter Greer has spent his life doing good, from serving refugees in the Congo to leading HOPE International, a Christian-based network of microfinance institutions operating in 16 countries around the world. Yet as Greer argues in his latest book, The Spiritual Danger of Doing Good, “service and charity have a dark side.”

The Spiritual Danger of Doing Good, Peter Greer

Pointing to a study by Fuller Seminary’s Dr. J. Robert Clinton, Greer notes that “only one out of three biblical leaders maintained a dynamic faith that enabled them to avoid abusing their power or doing something harmful to themselves and others.” From King David’s power trip with Bathsheba and Uriah to Jonah’s end-of-life anger and selfishness, the Bible is filled with examples of self-destruction amid service.

“When I looked to Scripture for guidance, what I found troubled me,” Greer writes. “Men and women who had heard from God—who even performed amazing miracles—were just as likely to blow it as everyone else.”

And alas, in all of our discussions about how to best serve our neighbors, how often do we focus on surface-level externalities to the neglect of the human heart? How often do we narrow down our “metrics for success” to exclude any discussion or contemplation about the motivations driving our actions or the potential for pitfalls along the way? (more…)

In a new article at Intercollegiate Review, Acton Research Director Samuel Gregg looks at the current state of “idea conservatives” and their place in the broader context of American conservative thought encompassing an amazing diversity of ideological subspecies. But it is ideas and core principles, more than anything else, that informs conservatism and its various movements, despite the many fractures and fissures. Gregg makes a compelling case for rooting “conservatism’s long-term agenda” in the “defense and promotion of what we should unapologetically call Western civilization.” His article is the first contribution to ISI’s symposium, “Conservatism: What’s Wrong with it and How Can We Make it Right?” Excerpt from the Gregg article:

… as the French theologian Jean Daniélou S.J. once observed, there is no true civilization that is not also religious. In the case of Western civilization, that means Judaism and Christianity. The question of religious truth is something with which we must allow every person to wrestle in the depths of their conscience. But if conservatism involves upholding the heritage of the West against those who would tear it down (whether from without and within), then conservatives should follow the lead of European intellectuals such as Rémi Brague and Joseph Ratzinger and invest far more energy in elucidating Christianity’s pivotal role in the West’s development—including the often complicated ways in which it responded to, and continues to interact, with the movements associated with the various Enlightenments.

Such an enterprise goes beyond demonstrating Christianity’s contribution to institutional frameworks such as constitutional government. Conservatives must be more attentive to how Judaism and Christianity—or at least their orthodox versions—helped foster key ideas that underlie the distinctiveness of Western culture. These include: (more…)

Blog author: ehilton
posted by on Friday, September 6, 2013

Is a company “Christian” because it sells Christian products, like Bibles and greeting cards with Scripture verses on them? Is a company Christian because its owners says it is? in god we trustWhat makes a company “Christian” and do we need them?

This is the question posed at by Hugh Whelchel at the Institute for Faith, Work and Economics. He points out that many well-known American businesses proclaim that they are Christian: Hobby Lobby, Chik-Fil-A and Forever 21, for instance, even though none of them specialize in specifically Christian items or consumers. Now, Hobby Lobby is closed on Sundays, specifically so its employees are free to worship and rest that day, clearly stemming from the owners Christian beliefs. Is that what it takes to be a “Christian” company? (more…)

food_desert_1As politicians continue their surrogate decision-making in the lives of the underclass, Washington, D.C. city politics remain a laboratory for repeated public policy failures. The Washington, D.C. city council recently approved a measure that would create a living wage for workers in the city who are employed by large retailers. Sometimes, you have to wonder if the city’s leaders have considered the long-term consequences of decisions like this. D.C. Mayor Vincent C. Gray took about a week to decide whether to veto or sign the Large Retailer Accountability Act, according to the Washington Times. The newspaper explains what the city is up to:

Part of the Gray administration’s five-year plan to boost the number of jobs in the city includes creating a “retail-friendly environment” in the District. But retailers have argued that the bill the mayor is considering unfairly targets certain employers — specifically those without union labor that occupy in excess of 75,000 square feet and whose parent companies gross $1 billion or more.

It would force those retailers to provide pay and benefits worth $12.50 an hour — a so-called “living wage” for workers — but could potentially curtail retail expansion in the District as affected businesses that oppose the law locate elsewhere. The current minimum wage is $8.25 an hour.

The bill applies only to large retailers with stores of 75,000 square feet or larger with annual corporate sales of at least $1 billion. Stores like Target, Walmart, Home Depot, Toys-R-Us, and the like are the targets of this part of the legislation. Walmart has already threatened to dissolve plans to build three stores in D.C. if the law passes. Can you blame them? How can politicians accurately discern how much Walmart should pay a cashier or someone who stocks shelves? How do politicians know how much any single job should be worth at a large retailer?

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Blog author: johnteevan
posted by on Thursday, September 5, 2013

Simon Vouet - La Richess - c. 1633Sustained prosperity is new and sustained prosperity for masses of people is completely unprecedented. What is sustained prosperity? It’s three or more generations of people who do not need to focus on survival or live in economic depression, but who can live comfortably even if they live paycheck to paycheck.

The only people who previously enjoyed sustain prosperity were the aristocratic landowners and royals especially of Europe and Asia. After the industrial revolution a few business men and bankers were added to that list but only if their wealth was handed down for more than two generations. No even we do.

Isn’t this the definition of the very rich? Yes, but what is new is that the entire group of people we call the ‘middle class’ has also become comfortable in the four generations since WWII.

How big is the middle class? Even though there are billions who do not enjoy this prosperity, fully 1.80b people are in the global middle class today (and another .15b people are rich). Of that 1.8b there are 18% who live in the U.S., another 36% live in Europe, and 20% are in the BRIC nations.

How did so many join the middle class? It was through the opportunities of new businesses, new inventions, a new high level education for the public, and new skill and knowledge based jobs. These are only possible where there is liberty and governments that allow businesses to prosper.

Why do Africa, the Mid-East, and Latin America have a very small middle class population? Because those regions still retain the old definitions of aristocratic and inherited wealth. That’s the polite way to say it. The reality is more that corrupt governments have plundered their own nations and their own people by corralling the wealth of the land including oil and minerals for themselves.
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In the latest episode of Uncommon Knowledge, Peter Robinson interviews Amity Shlaes, author of the new biography, Coolidge. Read Ray Nothstine’s review here.

In the book, Shlaes makes an explicit connection between Coolidge’s rough-and-humble upbringing in Plymouth Notch, VA, and his bootstraps optimism about commerce and markets. The Coolidges believed that responsibility, hard work, and a virtuous life were bound to pay off, in large part because they experienced it in their own lives.

On this, Robinson offers a wonderful follow-up (around the 31-minute mark), observing that some have connected Lyndon B. Johnson’s similar “hardscrabble upbringing” with an entirely different perspective, namely his “championing of the federal government as an instrument for lifting the poor of the nation.” Why, Robinson asks, did the early struggles of each of these men lead them to entirely different conclusions about economic empowerment and poverty alleviation? (more…)

conceptual-dignity-lost-poster-statement-typography-favim-com-38190For Labor Day weekend, Peggy Noonan wrote a column pointing to the critical connection between the spiritual value of work and the moral strength of our culture. But as Greg Forster notes, her “search for a beacon of hope that can point us back toward the dignity of work, she neglects the church in favor of less promising possibilities.”

In her column, she argues that to restore dignity and hope to our culture, we need politicians who celebrate – sincerely, not as a focus-group-tested messaging gimmick – the extraordinary possibilities of work, enterprise, and entrepreneurship to transform our lives and our culture for the better. I think she’s right that politicians who did that would be a positive cultural force. However, turning to politicians as our primary cultural hope is a mistake.

As Willard pointed out, the very fact that we mostly turn to politicians to tell us what the good life is – and to provide it for us – is itself a sign that we’ve turned away from God. We will never get away from catastrophic political conflict as long as people turn mainly to politicians when they seek hope. Government has an important social role to play, of course, and not just in forbidding force and fraud – libertarianism is as much a false hope as socialism. But “the American character” will never recover until we look to pastors as our primary guides and teachers in building a culture (which includes the economic system) that provides hope, dignity, and flourishing.

Noonan herself laments that “the old priests used to say” that “to work is to pray.” Why then does she now look only for politicians to say it? Are there no more pastors? Are today’s pastors incapable of saying it, mired in a truncated vision of their role in our lives, permanently stricken with prophetic laryngitis? Or is it that we no longer believe pastors matter?

Read more . . .