Category: Economics

Blog author: jcarter
Tuesday, September 15, 2015

Is free market capitalism moral or immoral? If it’s based on greed and selfishness, should it be rejected for an alternative economic system? And if capitalism is moral, what makes it so?

Walter Williams, a economist at George Mason University, answers these questions and explains why the free market is morally superior to any other approaches to organizing economic behavior.

Tony Abbott

Tony Abbott

In today’s American Spectator, Acton’s director of research Samuel Gregg discusses the ousting of former Australian prime minister Tony Abbott and what that means for the Australian economy and beyond.

Gregg points out that the Australian economy “is on the brink of substantial economic regression.”

What’s especially worrying is the across-the-board decline in Australia’s economic productivity: something long masked by the resources boom but now more visible than ever.

The basic problem, however, that lies at the root of what the best commentator on Australian politics, Paul Kelly, describes as ‘the Australian crisis’ is ‘the intersection of a corrosive political culture and the need for hard and unpopular economic repair. (more…)

Blog author: jcarter
Thursday, September 10, 2015

casino-package-02In 1942, economist Joseph Schumpeter coined the term “creative destruction” for the process of incessant product and process innovation mechanism by which new production units (jobs, businesses, industries) replace outdated ones.

Schumpeter said this process was the “essential fact about capitalism.” This essential fact is also one of the essential reasons people oppose capitalism. Creative destruction sounds wonderful when it’s replacing things like rotary phones with iPhones and typewriters with laptop computers. Unless, that is, you’re in business of making typewriters and rotary phones. When it’s your job, business, or industry that is being lost and replaced by innovation, it’s much harder to appreciate the benefits of creative destruction.

While we need to find ways to help those who are harmed by creative destruction, we also need to make it clear to everyone why the process is necessary and eventually helps mankind far more than it hurts. Don Boudreaux has a very helpful metaphor for explaining how the process benefits everyone in the long run: Creative destruction is like an anti-casino.

georgia-prison-welding-class_1With the rise of the information economy, many millennials have steered clear from blue-collar jobs and manual labor, often prodded by their parents to pursue a “real education” and “a better life.

As folks like Mike Rowe have only begun to highlight, such attitudes have led to a serious skills gap in the trades, one that appears to hold steady even in the face of record unemployment. Yet despite these cultural shifts, such work does indeed provide significant value to the economy while affirming the dignity and creative potential of the worker.

Thus, while some prefer to hold their noses at the trades, others are seizing it as an opportunity to create and share value. Such is the case at Walker State Prison in Georgia, where a unique welding program offers to train prisoners in the high-demand trade of welding.

According to the American Welding Society, we will be short by nearly 300,000 welding-related positions by 2020 (HT), giving participating prisoners a good shot at meaningful careers upon their release.

And the prisoners aren’t complaining. They are eager to offer their skills, learn a craft, and contribute to society. Watch some highlights here:

One can’t help but be inspired by Christopher Peeples, for example, who at 26 years old is about to finish a 10-year prison sentence. Thanks to the program, he looks forward to wonderful job prospects, and his Dad (a craftsman himself) has been quick to share in the excitement. According to NPR, one recent alumnus of the program had three job offers upon his release, one of which offered $50,000 per year with a company truck.

Ultimately, though, this isn’t about money or even stability. It’s about authentic, whole-life rehabilitation.

By pursuing work in a needed skill — by orienting hearts and hands toward service to others and thus to God —  these men are entering into a transformative, collaborative exchange that will shape their very souls and spirits. Material provision is just the byproduct.

Of course, it would require no small amount of these programs to fill the skills gap we’re facing, and so the question remains: what are others waiting for?

As we continue to expand our economic imaginations and pursue vocational clarity, these prisoners offer a powerful example on how we ought to view and approach such work.

What a blessing it truly is.

onward-russell-moore-culture-gospelOne of the long-running mistakes of the church has been its various confinements of cultural engagement to particular spheres (e.g. churchplace ministry) or selective “uses” (e.g. evangelistic conversion).

But even if we manage to broaden the scope of our stewardship — recognizing that God has called us to pursue truth, goodness, and beauty across all spheres of creation — our imaginations will still require a strong injection of the transformative power of Jesus.

When we seek God first and neighbor second, we no longer proceed from the base assumptions of earthbound goods — the “love of man” what-have-you. Yes, our goals and actions will occasionally find overlap with those of the world, but eventually, the upside-down economics of the Gospel will set us apart. We will do certain things and make certain sacrifices that are foreign and incomprehensible to those around us.

This has implications for all areas, but much of it boils down to our basic views about the human person: his and her dignity and destiny as an image-bearer of an almighty God. Once our hearts are transformed according to his designs and our views about our neighbors are aligned to God’s story about his children, our cultural engagement will manifest in unpredictable and mysterious ways. This is, after all, what it means to be strangers in a strange land, as Episode 1 of For the Life of the World artfully explains.

In his latest book, Onward: Engaging the Culture without Losing the Gospel, Russell Moore offers some valuable reflections along these lines, noting that we can’t possibly stand as witnesses of God’s love if our cultural comings and goings fail to respond through the lens of Christ’s kingdom. “The kingdom of God changes the culture of the church by showing us a longer view of who’s important and who’s in charge,” he writes.

What cultural engagement really requires, then, is a careful destruction of that basic lie the enemy continues to spread and embed across societies and civilizations: that the love of man and the worship of his goals is, indeed, enough. (more…)

Blog author: jsunde
Wednesday, September 2, 2015

creativity-capitalism-money-crashCapitalism is routinely castigated as an enemy of the arts, with much of the finger-pointing bent toward monsters of profit and efficiency. Other critiques take aim at more systemic features, fearing that the type of industrialization that markets sometimes tend toward will inevitably detach artists from healthy social contexts, sucking dry any potential for flourishing as a result.

But what if the opposite is true? I offer the argument over at The Federalist.

Free economies introduce their own unique challenges for artists and consumers alike. We are justified in cringing at the array of bottom-dollar record-company execs and merchandising-obsessed Hollywood crackpots (though I will always prefer their ilk to your run-of-the-mill Commissar of the Arts). But the increases in economic empowerment that have led to these many marketing machines have also led to plenty of artistic empowerment in turn.

In an article for New York Times Magazine, Steven Johnson reinforces this very point, observing that the many apocalyptic prophecies about arts in the digital age have not quite manifested. “In the digital economy, it was supposed to be impossible to make money by making art,” he writes. “Instead, creative careers are thriving — but in complicated and unexpected ways.” (more…)

The-Cdecker-Theft-modOver the last couple of years there has been a lot of criticism over the crypto-currency Bitcoin—some of which I’ve made myself (I think it is doomed as a currency but would be a great “alternative to Western Union”). But Neil Stevens at RedState recently made one of the most intriguing criticism’s I’ve heard so far: Bitcoin, if adopted widely, would be a grave threat to property rights.

There may be another cryptocurrency that isn’t hostile to our liberties, but Bitcoin is incompatible with freedom under the rule of law.

If our nation’s founders are to be believed, our government exists to protect life, liberty, and property. The reason it exists, and the way it has legitimacy, is that it serves the people to protect our fundamental rights. That’s how the rule of law is better than anarchy, because we can have laws against murder, slavery, and theft.

Recently in Virginia, a man was caught after stealing $2 million worth of gold. One of the jobs of police in this matter is to recover the stolen property, including through a pawn shop where the thief ran $340,000 worth of the precious metals.
If the man had stolen Bitcoin instead of gold, that would be out of the question. Money in the form of cash or a bank account, or tangible goods like gold or silver, can always have unlawful transactions reversed. Money can be sent back to the person it was stolen from. Property can be taken and returned to its rightful owner. But Bitcoin? Bitcoin advocates brag about how Bitcoin payments are irreversible. Anything the thief spent is gone forever, and anything the thief didn’t yet spend is meant to be gone forever.

Perhaps I’m missing something but I think there is a key flaw in Stevens’ argument: being foolish with one’s property is not a violation of property rights.

income-inequalityIncome inequality and poverty are separate issues. For many people this is obvious. But there are numerous Christians who believe that income inequality is an important issue because they assume it is a proxy for poverty. If this were true, Christians would indeed need to be concerned about income inequality because concern about poverty is a foundational principle of any Christian view of economics.

Fortunately, there is neither a necessary connection nor correlation. A country could have absolutely no poverty at all and have extremely high-income inequality. The reason is because income inequality (measured by the Gini coefficient), measures relative, not absolute, income.

But you don’t have to take my word for it. Harry Frankfurt, a philosopher who has written a book on inequality, has a guest post at Forbes in which he makes the same point: income inequality and poverty aren’t the same thing.


trade21Many conservatives exhibit a peculiar tendency to be pro-liberty when it comes to business, trade, and wages, but protectionist when it comes to the economic effects of immigration.

It’s an odd disconnect, and yet, as we’ve begun to see with figures like Donald Trump and Rick Santorum, one side is bound to eventually give way. They’ll gush about the glories of competition, but the second immigration gets brought up, they seem to defer to labor-union talking points from ages past.

When pressed on this in a recent podcast, immigration protectionist Mark Krikorian argued that the difference is that immigrants are people not products, and thus they make things a bit more problematic. It’s more complicated and disruptive, he argues, when you’re dealing with actual people who have diverse and ever-shifting dreams. (more…)

In an interview with Reason TV, Whole Foods co-founder John Mackey answers a range of questions about why so many intellectuals are opposed to the free market, whether throughout history and to this today.

“Is it a misunderstanding of what business does?” asks Nick Gillespie. “Is it envy? Is it a lack of capacity to understand that what entrepreneurs do or what innovators do?”

Here’s a sample:

Intellectuals have always disdained commerce. That is something that tradesmen did; people that were in a lower class. And so you had minorities, oftentimes did it, like you had the Jews in the West. And when they became wealthy and successful and rose, then they were envied, then they were persecuted and their wealth confiscated, and many times they were run out of country after country. Same thing happened with the Chinese in the East. They were great businesspeople as well. So the intellectuals have always sided kind of with the aristocrats to maintain a society where the businesspeople were kind of kept down. You might say that capitalism was the first time that businesspeople kinda caught a break, because of Adam Smith and the philosophy that came along with that, and the industrial revolution began this huge upwards surge of prosperity.

Mackey does a nice job summarizing the historical and practical forces, but another dynamic worth noting is Thomas Sowell’s notion of the “unconstrained vision” (or the “vision of the anointed”), which one finds among many intellectuals. When Sowell talks about “visions” he’s speaking less to our particular position (vocationally or otherwise) and more to how we perceive the basic nature and destiny of man —“not simply his existing practices,” Sowell writes, “but his ultimate potential and ultimate limitations.” (more…)