Category: Economics

fast-food-strikeWould you be in favor of a pay increase of 107 percent for your current job?

Most of us would be thrilled at having our pay more than double, and would readily support such a change. Imagine if all that was required was to vote for your industry to become unionized. Who wouldn’t support unionization if it resulted in a bigger paycheck?

But what if the change came with one caveat: If the pay increase were approved you’d not only lose your job, you’d no longer be qualified to work in the same industry. Would you still support the pay increase if it cost you your job?

That’s the choice a lot of food-service workers face—though few understand the true implications of their decision. Most fast-food workers going on strike for higher wages simply believe they are deserving of more money and aren’t aware of the basic economic factors that could cause them to become unemployable.
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save-to-winPeople who play the lottery with an income of less than $20,000 annually spent an average of $46 per month on lottery tickets. That comes out to more than $550 per year and it is nearly double the amount spent in any other income bracket.

Those who have the least spend an inordinate percentage of their income every year on lottery tickets (estimates vary from 4-9 percent). Yet while it is irrational for those in poverty to waste their limited resources on a one in 176 million chance, there is something almost rational in the reasoning for doing so. In 2012, The Atlantic’s Derek Thompson noted that,

For the desperately poor, lotteries perform a role not unlike the obverse of insurance. Rather than pay a small sum of money in exchange for the guarantee of protection that you’ll need in the future, you pay a small sum of money in exchange for the small probability that you’ll win money to help your lot right away. It is, for lack of a better term, a kind of aspirational insurance.

But what if the poor could pay a small sum to themselves (in the form of savings) and still reap the “aspirational insurance” benefits of the lottery? As the New York Times reports, some credit unions and non-profits are doing just that:
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ISSchk0825_280More than 100 million Americans are getting some form of “means-tested” welfare assistance, reports Investor’s Business Daily:

The Census Bureau found 51 million on food stamps at the end of 2012 and 83 million on Medicaid, with tens of millions of households getting both. Another 4 million were on unemployment insurance.

The percentage of American households on welfare has reached 35%. If we include other forms of government assistance such as Medicare and Social Security, almost half of all households are getting a check or other form of government assistance. The tipping point is getting closer and closer.

So much is shocking and dismaying about these numbers. How is it that the number of recipients and the price tag for many of these programs kept skyrocketing though the recession officially ended in 2009? Normally, you’d expect welfare caseloads to fall in a recovery as the unemployment rate dips, but this time welfare participation keeps expanding.

Read more . . .

On Tuesday, the Acton Institute welcomed Ron Blue to the Mark Murray Auditorium to deliver an address on the topic of “Perpetual Generosity.” In his lecture, Blue draws from his nearly 50 years in the financial services world, with 35 of those working almost exclusively with Christian couples, in order to lay out some basic principles and strategies for developing and wisely distributing wealth. Over this time, he has observed that those who are consistently generous over the long term exhibit three characteristics that have nothing to do with money: contentment, confidence, and the ability to communicate with each other, their children, and advisors if they use them.

Watch Blue’s full lecture below:

lego-people“Can you explain that important economic concept using Legos?”

Apparently, someone must have said that to Richard Reeves, an economist at the Brookings Institution economist, because he’s made a brief video using Legos to visualize social mobility.

There are two reasons I really appreciate this video. First, I love to see important economic issues explained in an accessible and entertaining manner. Second, as I’ve repeatedly said to anyone who will listen, social mobility — specifically getting people out of poverty — is infinitely more important than focusing income inequality, a topic that gets far too much attention nowadays.

The one drawback to the video is that it’s far too pessimistic. Yes, social mobility is still a huge problem. But the video makes clear, that social mobility is possible for almost all people. That has not been true for most of human history and it is not true in most parts of the world today.

Also, I am far less concerned with whether a person can go from the bottom quintile to the top as I am with going from the bottom quintile to the middle. Like many Americans, I was born in the bottom quintile and worked my way to the middle quintiles. The fact that I’m unlikely to ever join the top quintile is of absolutely no importance to may life. None at all. What we should care about is whether people can get out of poverty and flourish economically, not whether they can join Beyonce and Jay-Z in the billionaire’s club.

But those quibbles aside, I’m grateful this video is helping to spread the message about the importance of social mobility.

Accra Confession 2004The Accra Confession, a document arising out of the Reformed ecumenical movement, was promulgated ten years ago. At the time, Rev. Jerry Zandstra and I wrote with some rather harsh criticisms of the document.

In the meanwhile, the original group that organized the Accra Confession, the World Alliance of Reformed Churches, merged with a smaller ecumenical group, the Reformed Ecumenical Council, to create the World Communion of Reformed Churches (WCRC). At the Uniting General Council held at Calvin College in 2010, where the status of the Accra Confession for the new movement was to be determined, the Acton Institute distributed a packet of material, including a book-length engagement with the Accra Confession and the larger mainline ecumenical movement’s economic witness.

In Ecumenical Babel I devote a full chapter to the Accra Confession as perhaps the most imbalanced and skewed of all the mainline ecumenical documents on economic justice. For other critical engagements of the Accra Confession, I recommend Stan du Plessis, “How Can You Be a Christian and an Economist? The Meaning of the Accra Declaration for Today,” and Roland Hoksbergen, “The Global Economy, Injustice, and the Church: On Being Reformed in Today’s World.”

There are a number of celebratory posts recognizing the anniversary of the confession at places like Ecclesio, and for a critical engagement of Ecumenical Babel you can read an essay by Christopher Dorn in Perspectives. (Ecumenical Babel was also reviewed for CommentCalvin Theological Journal, Journal of Markets & MoralityJournal of Interdisciplinary Studies, and Journal of Ecumenical Studies. I respond at some length to Dorn’s essay in my latest book, Get Your Hands Dirty.)

The World Communion of Reformed Churches purports to represent 80 million Christians of 229 member denominations in 108 countries. An ecumenical group of this significance and diversity can do better than the Accra Confession in its social witness, and after ten years, it must do better.

Earlier this month, I wrote a two part article for the Library of Law & Liberty, critiquing the uncritical condemnation of income inequality by world religious leaders.

In part 1, I pointed out that “while the Pope, the Patriarch, the Dalai Lama, and others are right about the increase in [global income] inequality, they are wrong to conclude that this causes global poverty—the latter is demonstrably on the decline. And that, I would add, is a good thing.”

F. A. Hayek

In part 2, drawing on the work of F. A. Hayek, I noted, “As societies learn to use their resources ‘more effectively and for new purposes,’ the cost of manufacturing luxury goods decreases, making them affordable to new markets of the middle class and, eventually, even for the poor.” I continue, “Such inequality not only accompanies the very economic progress that lifts the poor out of poverty, it is one essential factor that makes that progress possible.”

We may add to this two more ways in which focusing solely on income inequality can be misleading from article in the Wall Street Journal yesterday by Nicholas Eberstadt: increased equality in lifespan and education. He writes,

Given the close correspondence between life expectancy and the Gini index for age at death, we can be confident that the world-wide explosion in life expectancy over the past century has been accompanied by a monumental narrowing of world-wide differences in length of life. When a population’s life expectancy rises from 30 to 70, the Gini index drops by almost two-thirds—from well over 0.5 to well under 0.2.

This survival revolution—and the narrowing of inequalities in humanity’s life chances—is an epochal advance in the human condition. Since healthy life expectancy seems to track closely with overall life expectancy, a revolutionary reduction in health inequality may also have occurred over the past century. Improvements in global mortality for the poor have contributed to the very “economic inequality” so many now decry. This is another reason such measures can be deceiving.

The spread and distribution of education has had a similar impact. In 1950 roughly half of the world’s adults—and the overwhelming majority of the men and women from low-income regions—had never been exposed to schooling. By 2010 unschooled men and women 15 and older account for a mere one-seventh of the world’s adults, and about one-in-six from developing areas. (more…)

Oikonomia, Acton, PatheosThe Acton Institute has just launched Oikonomia, a new blog at Patheos’ Faith and Work Channel, which will provide resources specific to the intersection of faith, work, and economics. Other partners at the channel include The High Calling, Steve Garber’s Visions of Vocation, and Theology of Work Project, among others.

The blog will include a variety of content from across the Acton ecosystem, including articles, commentaries, video clips, and book excerpts, providing a centralized source of information on whole-life discipleship, stewardship, and human flourishing.

We encourage you to check out the blog, and follow us on Facebook and Twitter.

We also recommend following the Faith and Work Channel on Facebook and Twitter as well, which will be sharing updates on the blog, along with resources from a variety of other great sources.

For the Life of the World: Letters to the Exiles DVD & Blu-Ray Combo Pack

For the Life of the World: Letters to the Exiles DVD & Blu-Ray Combo Pack

For the Life of the World is an entertaining film series that explores the deeper meaning of Salvation. Have you ever wondered, “What is my Salvation actually FOR?” Is it only about personal atonement, about getting to heaven, or something that comes later? Is it just to have a “friend in Jesus?”

Join Evan Koons and his friends – Stephen Grabill, Amy Sherman, Anthony Bradley, Makoto Fujimura, John M. Perkins, Tim Royer and Dwight Gibson – as they discover a “new perspective,” the BIGGER picture of what it means to be “in the world, not of it.” This seven-part film series will help you, your friends, church or organization investigate God’s Economy of All Things – OIKONOMIA (a Greek word that has a lot to say about God’s plan for his creation, the world, and us.)

This Combo Pack includes a letter from Evan and two discs for your player of choice: DVD and Blu-ray. Enjoy seven episodes around 20 minutes each, along with episode teaser videos, a series trailer, and bonus content.

Explore how God’s purposes are woven into every area of our lives: family, work, art, charity, education, government, recreation and all creation! The Bible calls us Strangers and Pilgrims, living in "the now and not yet" of God’s Kingdom Come on earth. We are also called to be salt and light, to have a transforming presence among our neighbors. Rediscover the role of the church and how our lives lived on earth matter in God’s plan for the world.

Designed for deep exploration, the series invites viewers to watch the series again for new insights. Also, check out the companion Field Guide to jump-start group and individual investigation and enhance the film experience! FOR THE LIFE OF THE WORLD Field Guides are available in print or via streaming access at StudySpace.org.

Regular Price: $59.99

Special Price: $35.00

soil-hands-web“A Christian society is not going to arrive until most of us really want it: and we are not going to want it until we become fully Christian… I cannot learn to love my neighbour as myself till I learn to love God: and I cannot learn to love God except by learning to obey Him.” –C.S. Lewis

In Economic Shalom, John Bolt’s Reformed primer on faith, work, and economics, he includes a chapter on how we might understand flourishing in the social order through “a biblical understanding of the human person, created in God’s image and living in God’s world.”

Bolt reviews a variety of different areas and approaches, providing a firm critique of top-down social planners who, in their attempts to impose utopia, far too often impede, distort, or destroy the positive manifestations of organic and spontaneous order that already exist, whether in churches, schools, businesses, communities, or the family. That’s not to say such planners don’t have some role to play or vocation to fulfill, but it must be constrained accordingly and focused toward that which is productive and possible.

As political theorist Kenneth Minogue explains: “We could never produce a crystal by directly placing [i.e., mechanically] the individual molecules from which it is built up. But we can create the conditions under which such a crystal will form itself. . . . Similarly, we can create the conditions under which a biological organism will grow and develop” (507–8). (more…)

Reading through the German economist Walter Eucken’s work The Foundation of Economics (1951), I came across one of the most helpful charts for economic analysis I have yet to find. In it, Eucken gives every possible form of market in a single table:

Eucken Chart

The Foundation of Economics, p. 158

Eucken adds four qualifications that are important to keep in mind:

  1. “These forms of market are actual forms which have been or are to be found in actual economic life (often blended with one another, and existing alongside the forms of a centrally directed economy). They are not given a priori. They are discovered with their distinguishing characteristics by studying the planning data of those taking part in the market….”
  2. “Under each particular form of market a man can act according to different principles, for example, that of maximum net receipts or that of optimum output….”
  3. “Each of these forms of market can appear in four types: both open, both closed, or closed on either side only.”
  4. “Fixing of prices by the state occupies a special position, since it can follow any form of market and has different effects accordingly…. For example, the significance of coal prices being fixed by the state varies according to whether perfectly competitive, oligopolistic, or monopolistic supply, or some other form of market, exists, or whether both sides of the market are open, or whether the supply side is closed by an investment veto. Governmental price-fixing is to be treated as a variant of the different market forms and not as a special market form of its own.”

So, what does this amount to? (more…)