Category: Economics

pentecost12Pentecost Sunday: The Holy Spirit comes with tongues of fire and an “incendiary community” is empowered for mission.

Pentecost is not the birth of the church. The church is conceived in the words and works of Jesus as he gathers followers and promises, “If any one is thirsty, let him come to me and drink. Whoever believers in me, as the Scripture has said, streams of living water will flow from within him.” (John 7:37-39)

The church is born when our Resurrected Lord appears to the fearful disciples and breathes new life into them and sends them out in mission (John 20:21-23).

There was one more moment to come in this drama of unveiling a missional people reflecting the manifold wisdom of God: empowerment for witness and the formation of heterogeneous communities of faith, hope, and love (Luke 24:44-49; Acts 1:8). (more…)

no-job-openings-signMany of the current debates about minimum wage revolve around whether such laws increase unemployment. Such disputes often make it appear that there is a lack of consensus on the issue when, in fact, there is broad-based agreement. For example there are two groups who clearly understand the connection between government-mandated wage floors and unemployment of low-skilled workers: right-leaning economists and left-leaning politicians.

Conservative and libertarian economists are frequently vocal in their opposition to the minimum wage because they know it decreases employment. Left-leaning politicians, however, are less likely to admit the connection but show by their actions that the increases will harm employment. That is why every minimum wage hike proposed by localities has been designed to be phased-in gradually over several years rather than being raised immediately: Seattle’s $15 per hour minimum wage won’t take effect until 2017, 2018, 2019 or 2021 depending on the size and type of employer, Los Angeles’s $15 per hour minimum wage won’t take full effect until 2020, and San Francisco’s $15 per hour minimum wage won’t be in effect until 2017.

If the minimum wage benefits the poor, then why not, as Bryan Caplan asks, just immediately impose the minimum wage you actually want? The reason, Caplan explains, is that local governments want to hide the disemployment effect:
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LemonisMarcus2I’ve written before on how television can be a powerful tool for illuminating the deeper significance of daily work and the beauties of basic trade and enterprise. Shows like Dirty Jobs, Shark Tank, Undercover Boss, and Restaurant Impossible have used the medium to this end, and today at The Federalist, I review a new contender in the mix.

CNBC’s The Profit is arguably the best reality show currently on television. Starring Marcus Lemonis, a Lebanese-born American entrepreneur and investor, each episode highlights an ailing businesses in desperate need of cash, care, and wisdom.

By the end, we get a remarkable view into the types of struggle, pain, glory, and redemption that occur across countless businesses every single day.

The show counters a host of false stereotypes about business, three of which I highlight in my piece. But one that is perhaps more popular and pernicious than all is the notion that business and is necessarily driven by greed and selfishness.

On the contrary, I argue, selfishness kills and service prospers: (more…)

Blog author: jsunde
Wednesday, May 20, 2015
By

economicman (1)“As a social psychologist, I have long been amused by economists and their curiously delusional notion of the ‘rational man.’” writes Carol Tavris. “Rational? Where do these folks live?”

In a review of behavioral economist Richard Thaler’s new book, Misbehaving: The Making of Behavioral Economics, Tavris notes how economists are slowly beginning to see — or, one could argue, finally returning to the notion — that the discipline ought treat man as more than a mere robot or calculator.

“Researchers in this field are making up for lost time,” Tavris continues, “or perhaps realizing that they are social psychologists after all.”

As human beings who arrogantly and often wrongly consider ourselves “sapiens,” we simply don’t match the model of human behavior favored by economists, one that “replaces homo sapiens” (whom Mr. Thaler calls Humans) with “a fictional creature called homo economicus” (whom he calls Econ). “Econs do not have passions; they are cold-blooded optimizers,” he says. “Compared to this fictional world of Econs, Humans do a lot of misbehaving”—thus the book’s title.

The problem, Mr. Thaler argues, is that although economists “hold a virtual monopoly” on giving policy advice, the very premises on which that advice rests are deeply flawed. That is why “economic models make a lot of bad predictions”: some small and trivial, some monumental and devastating. “It is time to stop making excuses,” he admonishes his colleagues. Mr. Thaler calls for an “enriched approach to doing economic research, one that acknowledges the existence and relevance of Humans.” By injecting economics with “good psychology and other social sciences” and by including real people in economic theory, economists will improve predictions of human behavior, make better financial and marketing decisions, and create a field that is “more interesting and more fun than regular economics.” In that way, Mr. Thaler believes, economists will finally produce an “un-dismal science.”

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tppThe controversial Trans-Pacific Partnership (TPP), backed by many Republicans and President Obama, hit a snag Tuesday when key Democrats spoke out against the agreement.

What exactly is the TPP? It is a free trade agreement with 12 nations (including China and Japan) that purports to increase economic growth, jobs and free trade. However, there is much opposition in Congress.

Leading opponents of the measure in the Senate have pushed for additional protections for U.S. workers and address concerns about alleged foreign-currency manipulation by China that makes American products too expensive.

“It’s a betrayal of workers and small business in our communities to pass fast track, to put it on the president’s desk without enforcement  … and without helping workers,” Sen. Sherrod Brown, D-Ohio, told The Washington Post.

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poor-working-class-family-after-the-days-workCapitalism is routinely blamed for rampant materialism and consumerism, accused of setting society’s sights only on material needs and wants, and living little time, attention, or energy for much else. But what, if not basic food, shelter, and survival, was humanity so preoccupied with before the Industrial Revolution?

As Steve Horwitz argues in a preview of his forthcoming book, Hayek’s Modern Family, our newfound liberty and accelerated activity in the Economy of Creative Service has actually freed us to devote more to other spheres of stewardship, not less:
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Prof. Harry Veryser stars in a new video from ISI that explores some of the lessons about private property, rights, responsibilities, and stewardship that can be gleaned from the thought of Thomas Aquinas.

For a much more in-depth exposition of the connections between and lessons from Aristotle, Augustine, and Aquinas, check out John Mueller’s Redeeming Economics (ISI, 2010). For more, check out a slate of review essays on Mueller’s book published in Research in the History of Economic Thought & Methodology, including a piece by me, “The Economies of Divine and Human Love.”

walmart-lowwagesAs Elise pointed out earlier today, economist Donald Boudreaux completely eviscerates former Labor Secretary Robert Reich’s call to raise the federal minimum wage to $15 an hour. As Boudreaux says, “Reich’s video is infected, from start to finish, with too many other errors to count.”

But Boudreaux also wrote a letter to Reich countering the economically ignorant (though increasingly popular!) claim that “we subsidize low wage employers” like Wal-Mart, McDonald’s, and almost every mom-and-pop business in America through government welfare programs such as food stamps, Medicaid, and housing assistance. As Boudreaux says to Reich:
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fight forRobert Reich seems to be a smart man. He served under three presidents, and now is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California, Berkeley. His video (below) says raising the minimum wage is the right thing to do. Unfortunately, he gets it all wrong.

Donald Boudreaux of the Cato Institute notes a couple of errors in Reich’s thinking. First,

Ignoring supply-and-demand analysis (which depicts the correct common-sense understanding that the higher the minimum wage, the lower is the quantity of unskilled workers that firms can profitably employ), Reich asserts that a higher minimum wage enables workers to spend more money on consumer goods which, in turn, prompts employers to hire more workers.  Reich apparently believes that his ability to describe and draw such a “virtuous circle” of increased spending and hiring is reason enough to dismiss the concerns of “scare-mongers” (his term) who worry that raising the price of unskilled labor makes such labor less attractive to employers.

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witherspoonIn the spring of 1776, John Witherspoon preached his first sermon on political matters, about a month before he was elected to the Continental Congress. The sermon, “The Dominion of Providence Over the Passions of Men,” is a fascinating exploration of how God can work through human crises, and how even the “wrath of man” can lead us to glorify God in unexpected ways.

Surrounded by the conflict of the Revolution, Witherspoon calls on his countrymen to “return to duty,” neither letting blind rage get the best of them, nor retreating out of fear or for idols of security and “peace.” Yet while all this is directed specifically to the crisis of his time, I’m struck by how far his wisdom actually applies.

In today’s context, our conflicts vary, from economic woes to fights about religious liberty to racial tensions to terrorist threats to brazen abuses of power and authority within the halls of our own government. In each area, we can benefit from Witherspoon’s advice, learning to “hearken the rod” when times get tough, not only in terms of our own salvation, but for the sake and the cause of a free and virtuous society. (more…)