Category: Economics

52-Kids-innovationInequality in consumption used to be a matter of acreage. Throughout most of history, economic value was chiefly found in land or personal property. The divide between the rich and the poor was therefore between those who owned property and those who did not.

But the age of technology has changed that. “A billionaire and a member of the middle class have relatively equal portals to the wonders of the internet,” says John O. McGinnis, “certainly far more equal access than the rich and the rest of society would have had to the material goods that defined wealth in centuries past.” Nowadays, if we want to reduce inequality we need to focus on redistributing the benefits of ideas and innovations:
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givingmoney“Do economic incentives help or hinder ‘business as mission’ (BAM) practitioners?” In a forthcoming study, Dr. Steven Rundle of Biola University explores the question through empirical research.

Unsatisfied with the evidence thus far, consisting mostly of case studies and anecdotes, Rundle conducted an anonymous survey of 119 “business as mission” practitioners, focusing on a variety of factors, including (1) “the source of their salary (does it come from the revenues of the business or from donors?),” and (2) “the outcomes of the business in terms of the four ‘bottom lines’ of economic, social, environmental and spiritual impact.”

The reason for focusing on such areas? “Many people in the ministry/missions world believe that donor support helps ensure that practitioners stay focused on the ministry goals.”

Rundle summarizes his findings as follows:

This study essentially found the exact opposite. It found that practitioners who are fully supported by the business tend to out-perform – sometimes significantly – donor-supported BAM practitioners, and are no less fruitful in terms of spiritual impact. This finding holds up even after controlling for things like geography, firm size, and firm type.

…. The moral of the story is that economic incentives matter. Contrary to the mission community’s concern that self-support will take one’s attention away from the ministry goals, the truth is that only by creating a successful business can a practitioner hope to have a meaningful and holistic impact on a community. (more…)

61-kids-expensiveAs any parent can attest, kids are expensive. They take up space (increasing the cost of housing), eat everything in your kitchen (increasing the grocery bill), never remember to turn off lights (increasing the cost of utilities), and find dozens of other ways to drain your banking account. From birth to high school graduation, the average cost to raise a kid is $241,080.

The high cost is often proffered as an explanation for why families today are much smaller than in the past. But as Bryan Caplan explains having kids was never a paying venture:

One popular story about the decline in family size over the last two centuries goes like this: Back in the old days, having kids paid. Children started working when they were quite young, and provided for their parents in their old age. Then industrialization and/or the welfare state came along and changed everything. Young children ceased to contribute much economically to their families, and once Social Security, Medicare, and so on were in place, people stopped supporting their aging parents.

It turns out that this story is only half true. Yes, in the modern era, people give little financial assistance to their elders; even in late adulthood, old-to-young transfers remain larger than young-to-old transfers. The flaw in the story is the assumption that things used to be different. In an eye-opening 1996 JEL piece, Ted Bergstrom summarizes evidence showing that even in pre-modern societies, kids did not pay.

Caplan also adds this intriguing question, “If parents in 1850 were willing to support five or six kids with a negative financial return, why aren’t we?”

Sadly, because unlike most people in 1850, we measure the worth of children in financial terms. Theologian Al Mohler noted this a few years ago:
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Acton’s busy week of media appearances continued last night with Acton President Rev. Robert A. Sirico joining guest host Arthur C. Brooks – president of the American Enterprise Institute – on The Hugh Hewitt Show to discuss Pope Francis, Evangelii Gaudium, and the compatibility of Catholic social teaching with free market capitalism. We’ve embedded the interview for you below, and added the video of Arthur Brooks’ 2012 Acton University plenary address after the jump.

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Blog author: ehilton
Friday, December 13, 2013
By

cardsOn some snowy winter afternoon, bored with everything in the house, you probably tried to build a house of cards. From this experience, you know you have to build a large base, and work your way up to a smaller and smaller peak. That’s the only sensible way to do it.

Obamacare, on the other hand, is a house of cards inverted. It is structured in a way that the young must hold up the aging population. And the young are staying away from Obamacare in droves. The base can’t hold up the larger peak. (more…)

TCC Banner

Dan Clements, an American student studying at the University of Leuven, and I help greet conference attendees

Last week, an exciting new organization called the Transatlantic Christian Council (TCC) hosted its inaugural conference. The theme of the conference was “Sustaining Freedom”, which aligns well with the Council’s mission “to develop a transatlantic public policy network of European and North American Christians and conservatives in order to promote the civic good, as understood within the Judeo-Christian tradition on which our societies are largely based.”

What I find most exciting about this Council, for which I commend Todd Huizinga and Henk Jan van Schothorst on their vision and initiative in founding, is this: like the Acton Institute, the TCC is not exclusively devoted to just one aspect of life, but rather aims to provide a forum for conversation on a broad range of life’s many important and fundamental human questions.

The starting point for these conversations is with a basic concept of human dignity. This concept is rooted in an openness to the idea of man as an image of God — endowed with the capacities for willfulness and reason, a creature and a sub-creator. And it is this understanding of the human person that serves as a point of departure for working through all sorts of interesting questions of politics, economics, liberty, government, religion, and family.

When I mentioned to a friend that I would be travelling to Belgium for this conference, he said to me: “Be sure they don’t euthanize you and harvest your organs!”

“Well,” I thought to myself, “that’s certainly a novel way to wish someone a good trip.”
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Acton Institute Director of Research Samuel Gregg sat down with Daniel McInerny, the Editor of the English edition of Aleteia, to discuss his latest book, Tea Party Catholic. McInerny and Gregg explore what Catholics should believe regarding limited government, free markets and capitalism. Check out Sam’s book here, and view the interview below.

AOTDid you miss Acton on Tap? You really shouldn’t miss Acton on Tap. That’s a bad idea. For instance, if you missed last night’s event, you passed up an opportunity to hear Jordan J. Ballor, Executive Editor of the Journal of Markets & Morality and author of Get Your Hands Dirty: Essays on Christian Social Thought (and Action), speak at San Chez Bistro in Grand Rapids, Michigan on the topic of the economics of the Heidelberg Catechism. He focused on Lord’s Days 50, 42, and 38 as the origin, essence, and goal of economic activity, and it was a really worthwhile talk.

But we’re nothing if not forgiving here at Acton, so if you weren’t able to be there, we’re posting the audio of Jordan’s talk below. Enjoy, and watch this space for info on our next Acton on Tap event!

Jordan J. Ballor speaks at Acton On Tap

Jordan J. Ballor speaks on the economics of the Heidelberg Catechism

2716popefrancis_00000001928Pope Francis’ recent comments about economics has raised concerns among conservatives and libertarians. But at National Review, James Pethokoukis says free marketeers shouldn’t take the critique so personally:

If you are a free marketeer offended by Pope Francis’s Evangelii Gaudium (“The Joy of the Gospel”) — in which he critiqued “deified” market capitalism and attacked income inequality — ask yourself: What should the leader of the worldwide Catholic Church say about economics in 2013? Should he take a victory lap over free enterprise’s defeat of Communism as if it were 1993?

[. . .]

Certainly now is not a time for “end of history” triumphalism that fails to recognize every human construct is imperfect and generates tradeoffs. We live in a fallen world. Such understanding is actually crucial to conservatism. Leave utopianism through “smarter policy” to the Left. Pro-market advocates need to consider that faster GDP growth may be necessary but not sufficient, that a rising tide may not lift all boats if accelerating automation means a vast swath of workers face unemployment or stagnant wages, as some economists on the left and right warn.

Read more . . .

“There is only one effective solution to world poverty,” says theologian Wayne Grudem in a recent lecture on his latest book, The Poverty of Nations, co-authored with economist Barry Asmus. That solution, he argues, is a rightly ordered free market, and such a solution, he goes further, is “consistent with the teachings of the Bible about productivity, property, government, and personal moral values.”

Watch the whole thing here:

Grudem’s primary question, “What causes wealth or poverty in the world?,” is not new, but he approaches it from a distinctly Christian perspective. Assessing the question from three distinct angles — a nation’s economic system, government, and cultural beliefs and values — Grudem and Asmus propose 79 factors that “will help nations escape from poverty and move toward prosperity.”  (more…)