Category: Economics


During a recent interview, presidential candidate Jeb Bush outlined his economic plan, which included a goal of achieving 4 percent economic growth.

As for how we might achieve that growth, Bush went on to commit a grave and sinful error, daring imply that Americans might need to work a bit harder:

My aspiration for the country — and I believe we can achieve it — is 4 percent growth as far as the eye can see,” he told the newspaper. “Which means we have to be a lot more productive, workforce participation has to rise from its all-time modern lows. It means that people need to work longer hours and, through their productivity, gain more income for their families. That’s the only way we’re going to get out of this rut that we’re in.

The pundits descended, the trolls ignited, and the competing politicians proceeded to pounce, including his chief rival, Hillary Clinton, who tweeted: “Anyone who believes Americans aren’t working hard enough hasn’t met enough American workers.” The media followed in turn, running numerous stories on the “real” barriers to economic growth: economic inequality, low wages, and — my personal least-favorite — a lack of “good jobs.” (more…)

more-moneyA perennial complaint by the political left is that the CEOs of American companies earn too much money. The implication is not, however, that the “excess” money should be distributed to the shareholders (who actually own the company). Instead, the idea is that “fairness” requires that much of the profit that normally goes toward the CEO’s pay should be redistributed to the rest of the company’s employees.

But what if we took it a step further: What if we redistributed all corporate profits to workers? What if the profits of every American company were not given to the shareholders but divided equally among every worker in America?How much do you think it would raise the average worker’s pay?

Take a moment to do a rough guestimation of how much the hourly wage would be raised if all profits were redistributed. Have a number in mind?

The answer to the question is that the average worker’s hourly wage would increase by . . .


JMM_18.1 front cropOur most recent issue of the Journal of Markets & Morality has now been published online and print issues are in the mail.

Volume 18, no. 1 is a special issue. Guest editor Shirley Roels details the origins of the contributions in her (open access) editorial:

To highlight the 2013–2014 English publication of the first volume of [Abraham] Kuyper’s theological commentary on common grace, the Calvin College Business Department organized an October 2014 symposium, which was co-sponsored by the Acton Institute. Faculty, business practitioners, and students gathered to think about the meaning of Kuyper’s common grace theology for twenty-first-century business. Over an exceptional day of discourse, presentations and panels were woven into a robust discussion about the light of faith for business when that life is shared together by Christians and those who follow other paths. Leaders from banking, manufacturing, natural resources, film, food, and floral industries, among others, joined with business educators to shape the current intertwining of common grace and business.

The symposium was framed around three themes that emerge from Kuyper’s writings about common grace. Its planners described these as the protective, constructive, and imaginative functions of common grace. Through such grace, God protects remnants and echoes of his good created order as gifts for all people despite continuing human perversity. God designs the expectation and possibility that together humans will construct institutions to respond to needs and support social order. God provides continuity between the values and virtues of all people so that Christians as well as those in other faith traditions can work together imaginatively.

The article contributions to this journal issue originated in that October 2014 symposium. Peter Heslam’s opening article provides some of Kuyper’s less-known commentary about business life. Then eight articles, all authored by Christian business educators, articulate the implications of Kuyper’s common grace theology for business ethics, strategic planning, global debt markets, entrepreneurship, market pricing, the accounting profession, operations management, and human resource frameworks. Richard Mouw’s closing article enjoins us to bring robust Christian faith to the business spaces where God’s light can readily flood. (A separate review essay unrelated to the symposium also appears as part of the journal’s regular publication schedule.) Finally, integrated into the journal’s book review section are four reviews of recent books about faith and business that highlight resources to deepen this intersection of faith and business.

In addition to Dr. Roels’ editorial, I have made my review of The Common Good: An Introduction to Personalism by Jonas Norgaard Mortensen open access as well. You can read it free here.

If you are interested in a subscription to the Journal of Markets & Morality, subscription directions and prices can be found here.

Once you’ve purchased a subscription, you can read our most recent issue, volume 18, no. 1, here.

Today at the Library of Law & Liberty, I examine Pope Francis’s recent speech in Bolivia, in which he calls for “an economy where human beings, in harmony with nature, structure the entire system of production and distribution in such a way that the abilities and needs of each individual find suitable expression in social life.”

I have no objection to that, but what he seems to miss is that the very policies he criticizes all characterize those countries in the world that most closely resemble his goal. I write,

So what stands in the way, according to the pontiff?—“corporations, loan agencies, certain ‘free trade’ treaties, and the imposition of measures of ‘austerity’ which always tighten the belt of workers and the poor.” Really?

Business, credit, trade, and fiscal responsibility are marks of healthy economies, not the problem, popular as it may be to denounce them. Indeed, these are also marks of economies that effectively care for “Mother Earth,” whose plight the Pope claims “the most important [task] facing us today.” That’s right, more important than the plight of the poor, to His Holiness, is the plight of trees, water, and lower animals.

That moral confusion aside, is there any way we could study what policies correlate with the Pope’s laudable goals? As it turns out, there is. The United Nations Human Development Index (HDI) ranks countries based upon an aggregate rating of economic growth, care for the environment, and health and living conditions—precisely the measures the Pope seems to care most about. Yet of the top 20 countries on the most recent HDI ranking, 18 also rank as “free” or “mostly free” on the most recent Heritage Index of Economic Freedom.

Read my full article, “Show Me the Way to Poverty,” here.

A bit of humility is in order. Alvin E. Roth to Russ Roberts on EconTalk:

… I think that economists have to approach their role as engineers with great humility. There’s a lot we don’t understand. Economics is still an early science. But let me read you the quote from Hayek that I included in my book. This is a quote from his free-market manifesto, The Road to Serfdom. And he wrote, “There is, in particular, all the difference between deliberately creating a system within which competition will work as beneficially as possible and passively accepting institutions as they are.”

So, that was Hayek. He understood that what makes a market free is that it has rules that allow it to work freely. And one of the metaphors I use in the book is of a wheel that can rotate freely. It’s not rotating in a vacuum. It has an axle and it has well-oiled bearings. And over time–people have been designing markets for millennia. And often the process of trial and error leads to better and better markets. But it can be a lengthy process of trial and error. And as we better understand what is required for marketplaces to help markets work freely we can sometimes intervene. And, you said ‘top down,’ but earlier you talked about Uber and Airbnb. Those are marketplaces that are not top down. People have been designing marketplaces forever. It’s what we do.

Martin Luther: Inventor of Austerity?

Martin Luther: Inventor of Austerity?

On the The Economist’s religion and public policy blog, the writer Erasmus pokes holes in a theory put forth by Giles Fraser, a left wing Anglican priest, who sees conflicting theories of the atonement of Christ as one of the causes of so much misunderstanding in the European Union. Erasmus explains:

… traditional Protestant and Catholic teaching has presented the self-sacrifice of Christ as the payment of a debt to God the Father. In this view, human sinfulness created a debt which simply had to be settled, but could not be repaid by humanity because of its fallen state; so the Son of God stepped in and took care of that vast obligation. For Orthodox theologians, this wrongly portrays God the Father as a sort of heavenly debt-collector who is himself constrained by some iron necessity; they prefer to see the passion story as an act of mercy by a God who is free. Over-simplifying only a little, Mr Fraser observed: “the idea that the cross is some sort of cosmic pay-back for human sin [reflects] a no-pain-no-gain obsession with suffering,” from an eastern Christian viewpoint.

Erasmus rightly describes this sort of thinking as a gross simplification. He quotes the Anglican priest, who said that “capitalism itself was built upon this western model of redemption” and that Angela Merkel is, in a sinister twist, is the daughter of a Lutheran minister. Erasmus: (more…)

Blog author: ehilton
Thursday, July 9, 2015

greece-bandaidGreece’s economic problems are so vast, comprehension is difficult. Over at NPR, Greg Myre breaks it down for us.

25: The unemployment rate, and that’s probably low-balling. For those under the age of 25, the unemployment rate hovers around 50 percent.

92: The average income earned by a typical citizen is under-reported by 92 percent, on average, to the government.

Tax evasion is endemic in Greece and a major contributor to the government’s budget shortfalls. Creditors are demanding this be addressed in return for a new rescue package.


frederic-bastiat-john-lToday is the 214th birthday of Frederick Bastiat, one of the greatest political and economic thinkers of the 19th century. Bastiat, a farmer turned politician and pamphleteer, had a inimitable gift for explaining economic and political concepts in way that make them not only understandable but seem downright commonsensical.

Bastiat, as Charles Kaupke notes, drew on his Catholic faith and the writings of Adam Smith and John Locke to articulate a vision of limited, efficient government that respects each citizen’s God-given dignity. And as Religion and Liberty adds,

He typified that rare breed of liberal who holds a deep and powerful belief in a personal and transcendent God, and who incorporates this belief in a wide ranging social philosophy centering on the proposition that when left alone society will most clearly display the wisdom and intent of the Creator.

A particular concept of Bastiat’s that has profoundly influenced my thinking is the idea that God arranged the social world. “I believe that He Who arranged the material world,” wrote Bastiat, “was not to remain foreign to the arrangements of the social world.” I wholeheartedly agree. That is why I never tire of arguing about how God created such economic phenomena as the price system and comparative advantage in order to coordinate human flourishing.

There are dozens of ideas in his writings like this one that are worthy of close attention, but here are four particularly important concepts of Bastiat’s that you should know:

BuyLocal.inddOver the past few decades buying locally produced goods and services over those produced farther away has become increasingly fashionable. However, this “modern” trend is really a reversion to an earlier period when most all products were produced and bought from people in a localized area. For most of human history, “buying local” was the only option.

There may be many reasons we may want to buy local goods and services—but improving the local economy is not one of them. As economist Don Boudreaux explains in the video below, there are many reasons why it’s foolish to ‘buy local’ if your goal is to improve the economy of the locale in which you live.

heart in handCompassion is a marvelous virtue. Feeling concern for others and acting sacrificially — especially on behalf of those that cannot return the favor — reveals mature character and contributes to human flourishing.

Compassion moves missionaries and monks to great efforts as they plant churches, pioneer institutions, and work for justice across cultures and geographies. Paul’s words are the motivation for his apostolic proclamation that, “…the love of Christ compels us…” and, “one died for all, therefore all died. And those who live should not live for themselves but for him who died and rose again.” (2 Cor. 5)

This agape love includes moral conviction and missional wisdom.

“Unsanctified mercy” (thank you, Jill Miller, for this term) arises when compassion becomes compromise and our fear of offending subverts biblical truth. The American church is increasingly guilty of doctrinal, moral, and spiritual compromise under the guise of compassion and misplaced historical guilt.

At the risk of offending tender sensibilities, it is time to confront our own hearts and our public ministries with gospel truth. Progressive Christians have served the kingdom well as they expose the excesses of consumerism, capitalism, and colonialism that often mark American and Western ecclesial efforts. Conservative Christians serve God’s reign as they remind the church that there are timeless beliefs and values not subject to one’s “evolution.” The sanctity of life, the definition and marriage, and the historical foundations of the gospel and Scripture are among these convictions. There is much room for civil family debate on a variety of issues and strategies.

The events of the past half-century and the last few months are cause for grave concern and I am unashamedly speaking truth to power as unsanctified mercy leads the church down pathways of compromise, irrelevance and ineffective witness. (more…)