Category: Economics

tim-keller-head-shot-2011The Christian life is one filled with risk, driven by active faith in an active God whose ways are higher than our own. In all that we put our hands to, God calls us to turn away from the supposed predictability of our own plans and designs and rely entirely on Him.

Such an orientation transforms each area of our lives, from family and friends to politics to church life and beyond. But for those involved in entrepreneurship and business, the stakes feel particularly high, and amid the rise of modernity and overwhelming economic prosperity, the temptation to rely on our own devices is more alluring than ever before.

Christians are good at talking about “abandoning all” for the sake of the Gospel, to be sure, but what does this look like in day-to-day life? The rich young ruler made a risk calculation when asked to give all of his wealth to the poor, and based on that output, he failed. What similar calculations do we encounter as God prompts our stewardship, whether it means donating to a particular charity or investing in a new idea or enterprise? (more…)

Contrary to current policy, this is not reality.

Last Saturday The Imaginative Conservative published my essay, “Let’s Get Back to Robbing Peter: The Welfare State and Demographic Decline.”

To add to what I say there, it should be a far more pressing concern to conscientious citizens that the US national debt has risen from $13 trillion in 2010 to nearly $18 trillion today. That is an increase of $5 trillion in just four years, or a nearly 40 percent increase. It is becoming more and more clear that, at our current rate, our nation’s entitlement programs represent the injustice that people today feel entitled to spend the tax dollars of tomorrow on benefits that we cannot realistically continue to afford. John Barnes wrote in 2010 that “the total value of all debt and unfunded promises made by the U.S. government is $61.9 trillion over the next 75 years.” I don’t know how much that figure has changed in the last four years, but I doubt it has shrunk, to put it lightly.

As any student of the Old Testament should know, God is very concerned about each generation leaving a proper inheritance to the next (cf. Numbers 27:8-11). No doubt many readers in their private lives have made provisions for their children after they pass. But as a nation, we are doing the reverse: paying for our provision today with the resources of tomorrow.

I write,

The German economist Wilhelm Röpke, commenting on the expansion of European welfare states in 1958, wrote, “To let someone else foot the bill is, in fact, the general characteristic of the welfare state and, on closer inspection, its very essence.” While he did not argue that, therefore, such state assistance should in all cases be stopped, he put the question in sober terms: “[T]he welfare state is an evil the same as each and every restriction of freedom. The only question on which opinions may still differ is whether and to what extent it is a necessary evil.”

In the interest of carrying on that same sobriety of analysis, I believe the picture is far bleaker today. Röpke, in the title to the essay quoted, characterized the welfare state as “robbing Peter to pay Paul.” But Sts. Peter and Paul were contemporaries. If only we would simply rob our peers! Then we could have a lively discussion regarding “whether and to what extent” such robbery is “a necessary evil.” Instead, it is our children and grandchildren who must “foot the bill.” Yet on our current course, when the time comes to pay up there will be much less welfare available to them.

Read more . . . .

socialist_unity_poster_by_party9999999-d4bphbmThere’s something almost charming about people in American who champion socialism. Yes, their economic views are naive and destructive. And yes most people (though especially the poor) would be much worse off if their vision for “progress” was actually implemented. But it’s hard to be too concerned when they are, at heart, really just capitalists who like to play political dress up.

Consider one of their favorite causes, a $20 minimum wage. In their most recent party platform, the Freedom Socialist Party advocated for raising the minimum wage to $20 an hour. Naturally, you might assume that the Freedom Socialist Party would be a great place to work for since the minimum pay you’d received is $20 an hour, an annual salary of $40,000 per year. But that assumption would be based on their applying their socialist principles to themselves. In reality, of course, their wages are based on the tenets of free enterprise.

Last week the party posted a notice on Craigslist that they were looking for a web developer. The pay: $13 an hour.

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Like all good capitalists running a business or organization, I’m sure they have a good reason for offering the wages they do. But as good socialists, how do they justify such “slave wages”?

(Via: AEI Ideas)

market4In his new book, The Half Has Never Been Told: Slavery and the Making of American Capitalism, Edward E. Baptist “offers a radical new interpretation of American history,” through which slavery laid the foundation for and “drove the evolution and modernization of the United States.”

In a review of the book for the Wall Street Journal, Fergus M. Bordewich concurs with this central point, noting that “Mississippi…does not have to look like Manchester, England, or Lowell, Mass., to make it an engine of capitalism.”

Responding to Bordewich in a letter to the Journal, John Addison Teevan, author of the newly released Integrated Justice and Equality and past Acton University lecturer, offers some compelling counterpoint, asking, “Was Roman slavery capitalist as well?” (more…)

imagesCAOWWLJWWhen the economy takes a downturn and unemployment rises, more people rely on the social safety net and programs like the recently renamed food stamp program called SNAP (Supplemental Nutrition Assistance Program). As the economy improves and employment increases, people need to rely less on government provided support.

At least that’s what used to happen. But something has changed.

From 1969 until 2003, SNAP has been very responsive to changes in the unemployment rate. But from 2003 to 2007, the number of SNAP recipients kept increasing even as unemployment declined. And the number of SNAP recipients has barely come off its all-time peak of 47.8 million recipients hit in December 2012. Since then, the number of SNAP recipients has only declined by 2.7 percent and started increasing again in the months of April and June 2014.

So why, asks AEI’s poverty scholar Robert Doar, is the number of SNAP recipients staying near record highs even as the economy strengthens? A still-weak economy is part of the answer, says Doar, but not a sufficient explanation:
(more…)

Blog author: jcarter
Thursday, October 16, 2014
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currencyIf money didn’t exist, would God have ordained that we invent it? Theologian Wayne Grudem says he would since money is simply a tool for our use that makes voluntary exchanges possible:

Money makes voluntary exchanges more fair, less wasteful, and far more extensive. We need money in the world in order for us to be good stewards of the earth and to glorify God through using it wisely. If money were evil in itself, then God would not have any. But he says, “The silver is mine, and the gold is mine, declares the LORD of hosts” (Hag. 2:8). It all belongs to him, and he entrusts it to us so that through it we would glorify him.

Money provides many opportunities to glorify God: through investing and expanding our stewardship and thus imitating God’s sovereignty and wisdom; through meeting our own needs and thus imitating God’s independence; through giving to others and thus imitating God’s mercy and love; or through giving to the church and to evangelism and thus bringing others into the kingdom.

Read more . . .

Blog author: jsunde
Monday, October 13, 2014
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capterrorismThe Middle East is enduring yet another wave of terror and political change, spurring countless Western analysts and elites to offer their preferred strategies and solutions, most of which involve military force, foreign aid, or some mixture of the two.

In last weekend’s Wall Street Journal, Peruvian economist Hernando De Soto sets forth a less predictable path, arguing for “an aggressive agenda for economic empowerment,” similar to that which was promoted in Peru during the 1990s.

I know something about this. A generation ago, much of Latin America was in turmoil. By 1990, a Marxist-Leninist terrorist organization called Sendero Luminoso, or Shining Path, had seized control of most of my home country, Peru, where I served as the president’s principal adviser. Fashionable opinion held that the people rebelling were the impoverished or underemployed wage slaves of Latin America, that capitalism couldn’t work outside the West and that Latin cultures didn’t really understand market economics.

The conventional wisdom proved to be wrong, however. Reforms in Peru gave indigenous entrepreneurs and farmers control over their assets and a new, more accessible legal framework in which to run businesses, make contracts and borrow—spurring an unprecedented rise in living standards… Over the next two decades, Peru’s gross national product per capita grew twice as fast as the average in the rest of Latin America, with its middle class growing four times faster.

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farm-subsidy-column-imageHave you ever listened to a classical symphony and thought the music needed more distortion? Or have you ever read a newspaper and believed it would have been improved if it had more disinformation? Most of us don’t appreciate distortion in our music or disinformation in our news. Yet far too many do favor distortion and disinformation when it comes to pricing.

Prices signal information in markets. A “market” is a summary term for a variety of voluntary exchange for tangible commodities or nontangible services. In fact, one of the most important functions of a market is to use pricing to serve as an information system (creating, collecting, filtering, processing, and distributing information). When we describe a market as a “free market” one of things meant is the prices are largely free of distortions and disinformation.

This is one of the main reasons free market advocates oppose government subsidies: they inject distortions and disinformation into the pricing system. Almost always, the distortions result in an advantage of the strong over the weak, the big over the small, and the rich over the poor.

A prime example is government subsidies to farmers. During the Depression, the government began subsidizing crops to save family farms. But now the program costs billions, benefits big agricultural companies, and can even harm family farms.
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job seekerAccording to the U.S. Department of Labor, unemployment across the country is at about 6.1 percent (here in Michigan, it’s at 7.4 percent, which puts us in the bottom 10 states.) That means a lot of folks are still struggling to find a job, or a job where they are not underemployed.

Peter Morici, an economist at the University of Maryland give 5 reasons for this. Have all the “good” jobs moved overseas? Do we need to raise the minimum wage? Are we Americans lagging behind in math and science? Here are Morici’s thoughts: (more…)

baby-boomersIn the nineteenth century, fertility in Europe began to drop — and it never rose again. Of all the explanations given for the change (e.g., increase in birth control technology), there is one that is often overlooked: public pension systems.

Does knowing you’ll get a social security check at 70 limit the number of children you have in your 30s? Most people would say it wouldn’t (or, at least, shouldn’t). But a new study finds that in the past there is a strong correlation between state-provided pensions and fertility. The working paper produced by the European Central Bank finds,
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