Category: Economics

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…)

baby expensiveThe cost of raising kids in the United States has reportedly gone up, averaging $245,340 per child according to a recent report by the U.S. Department of Agriculture, which factors in costs for housing, food, clothing, healthcare, education, toys, and more.

From the Associated Press:

A child born in 2013 will cost a middle-income American family an average of $245,340 until he or she reaches the age of 18, with families living in the Northeast taking on a greater burden, according to a report out Monday. And that doesn’t include college — or expenses if a child lives at home after age 17.

In response to these estimates, much of the reporting has aimed to paint an even grimmer picture for prospective parents, emphasizing other factors such as the likely trajectory of declining wages and rising costs in areas like healthcare and education.

Taken together, it’s enough to make your average spoiled youngster run in the opposite direction. And indeed, many actively are. As Jonathan Last details extensively in his book, What to Expect When No One’s Expecting: America’s Coming Demographic Disaster, birthrates in the Western world are in a free fall, with more and more adults opting for fewer and fewer kids, if any at all, and making such decisions later and later in life.

For those of us who shudder at the prospect of a world with fewer children, and who increasingly encounter negative attitudes about child-bearing and -rearing amongst our peers, many of whom are in their child-bearing “primes,” one wonders how we might respond with a compelling financial case for having children amid such supposedly grim prospects. (more…)

Radio Free ActonThis week on Radio Free Acton, Michael Matheson Miller continues his conversation with David Bromwich, Sterling Professor of English at Yale University, on the thought of Edmund Burke. Bromwich is the author of The Intellectual Life of Edmund Burke, the first volume of what will be a two-volume intellectual biography of Burke. We kick off this portion of the conversation with some analysis of Burke’s position on free markets and crony capitalism..

To listen to Part 2 of Miller’s interview with Bromwich, use the audio player below; Part 1 is available here.

Boston_Skyline_Web-Banner1Conversations about “faith-work integration” are alive and well, whether in the church, workplace, or academia, and the Acton Institute continues to offer a variety of resources on the subject, from its growing series of tradition-specific primers to various books and lectures to educational video curricula.

In keeping with these efforts, the Acton Institute will be a co-sponsor to the very first Faith @ Work Summit in Boston, MA from October 24-25, where a diverse group of businesspeople, students, pastors, and various others will gather to discuss the state of the faith-work movement and how we might move forward.

From the event’s web site:

On October 24 and 25, 2014, a seminary, a technology school, a business school, and a foundation join forces to convene a summit to address these two over-arching questions.

The purpose of the summit is to gather active leaders and participants in the faith at work movement to assess the state of the movement (achievements, needs, obstacles, opportunities, and resources) and together to develop an agenda going forward for individuals in the workplace, churches, marketplace ministries, seminaries and Bible schools, and universities and business schools.

This is a working conference, not a celebrity or performance-oriented event. All speakers, leaders, and organizers are donating their time and effort. We welcome and encourage every voice in attendance to help shape our understanding and our sense of agenda going forward.

This is an important gathering for the movement at large, and an encouraging sign of the growth and prevalence of this important conversation. I look forward to seeing the fruit that comes from it.

View a list of speakers here, and register for the conference here.

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: $34.95

sharing-economyJohn O. McGinnis, the George C. Dix Professor in Constitutional Law at Northwestern University, says we are in the midst of a sharing economy, and that’s a good thing. (Don’t get all socialist on me; a sharing economy is one driven by service and technology. We are not going to have to pool our food in the commune.) McGinnis says this type of economy is good for liberty as well.

There are three basic features of a sharing economy:

    1. It reduces costs, by matching up real-time idle services and resources with people in need.
    2. It employs the hard-to-employ, say, people who need a very flexible schedule.
    3. It creates new jobs – jobs that didn’t exist before.

    (more…)

    kid-digging-holeLast Saturday was hot and humid in our corner of the world, and thus, my wife and I quickly decreed a pool day on the front lawn. The kids were ecstatic, particularly our four-year-old boy, who watched and waited anxiously as I got things prepared.

    All was eventually set — pool inflated, water filled, toys deployed — but before he could play, I told him he needed to help our neighbor pick up the fallen apples strewn across his lawn.

    With energy and anticipation, he ran to grab his “favorite bucket,” and the work quickly commenced. Less than three minutes later, however, his patience wore off.

    “This is boring, Daddy,” he complained. “Can I be done now?”

    More than anything else, the response was comical. Within mere minutes, this simple, ten-minute task had become a heavy burden he simply could not bear.

    But it also signaled something profound about our basic attitudes about work, and how early they begin to form. Our kids are only beginning to edge upon the golden ages of chorehood, but as these situations continue to arise, I’ve become increasingly aware of a peculiar set of challenges faced by parents raising children in a prosperous age.

    In a society wherein hard and rough work, or any work for that matter, has become less and less necessary, particularly among youngsters, how might its relative absence alter the long-term character of a nation? What is the role of work and toil in the development and formation of our children, and what might we miss if we fail to embrace, promote, and contextualize it accordingly? In a culture such as ours, increasingly propelled by hedonism, materialism, and a blind allegiance to efficiency and convenience, what risks do we face by ignoring, avoiding, or subverting the “boring” and the “mundane” across all areas of life, and particularly as it relates to work? (more…)

    mourn-work-woundI recently wrote about “wounding work,” a term Lester DeKoster assigns to work that, while meaningful and fruitful, is “cross bearing, self-denying, and life-sacrificing” in deep and profound ways. Take the recent reflections of a former Methodist minister, who, upon shifting from ministry into blue-collar work at a factory, struggled to find meaning and purpose.

    “I am not challenged at all in this work,” he writes, “and I want something more.”

    Although DeKoster helps us recognize that meaning and purpose do reside in such work, and that our day-to-day labor is not exempt from the sacrifice and obedience bound up in the Christian life, the pain for those of us in the midst of all this is likely to persist, even if for a season.

    On this, Evan Koons continues the discussion over at the FLOW blog: “To stress that all work is about gift-giving, to marvel at its vast community of relationships, or allude to the suffering one share’s with Christ by remaining in said environments, doesn’t make the experience any more pleasant.”

    What, then, are we to do amid such suffering? How ought we to respond, whether as wounded workers ourselves, or as those who simply serve and disciple alongside those who suffer? As Koons explains, there is no quick-and-easy cookie-cutter “solution,” spiritually, economically, or otherwise, and going down the paths to peace that Christ does provide will inevitably involve those same familiar features of our fallen world.

    (more…)

    81396fYesterday, Acton research associate Dylan Pahman made the connection between inequality and poverty alleviation. Today, he continues that argument and explains how the connection affirms the moral merits of economic liberty:

    Hayek argued for a stronger connection between inequality and economic progress in his 1960 work The Constitution of Liberty. “New knowledge and its benefits,” writes Hayek, “can spread only gradually, and the ambitions of the many will always be determined by what is as yet accessible only to the few . . . This means that there will always be people who already benefit from new achievements that have not yet reached others.”

    Hayek’s basic point is simple: Before many social advancements become common, they first exists as luxuries. “The new things,” writes Hayek, “will often become available to the greater part of the people only because for some time they have been the luxuries of the few.” This applies to much of what the average person in a developed society today takes for granted: automobiles, air-conditioning, refrigeration, tablet computers, smart phones, and so on. Go back far enough, and we might even add clean water and basic sanitation to the list.

    Read more . . .

    Francis (1)“If there is one thing that religious leaders around the world seem to agree on today,” says Acton research associate Dylan Pahman, “it is the evils of income inequality stemming from a globalized economy.” But as Pahman points out, there is a connection between inequality and poverty alleviation that affirms the moral merits of economic liberty:

    It would seem the consensus is that economic inequalities have increased worldwide, and this is a clear moral evil. But when we examine the numbers, a somewhat different picture emerges. Even as inequality has increased, extreme poverty has simultaneously decreased—a clear moral good. Considered in this light, and with the help of Nassim Taleb and (in Part Two of this post) Friedrich Hayek, I will examine the connection between inequality and poverty alleviation and argue that the data affirm, rather than refute, the moral merits of economic liberty.

    It stands to reason that if religious leaders are so willing to condemn global capitalism for its apparent evils, they ought to be even more eager to praise its actual goods. I will recommend a different moral metric, drawn from St. John Cassian and St. John Chrysostom, that would support people of faith in being attentive to the plight of the poor while prudently engaging the economic realities at hand.

    Read more . . .

    Hurricane IkeAfter 6,712 cyclones, typhoons, and hurricanes the evidence is clear: Bastiat was right all along.

    In 1850, the economic journalist Frédéric Bastiat introduced the parable of the broken window to illustrate why destruction, and the money spent to recover from destruction, is not actually a net benefit to society (see the video at the end of this post for an explanation of the broken window fallacy). For most people the idea that destruction doesn’t help society would seem too obvious to warrant mentioning. But some liberal economists argue that destruction can lead to an economic boom, mainly because it provides the government with an opportunity to spend more money.

    If the liberal economists are right, then we should find that destructive storms lead to economic growth. But a pair of researchers, Solomon M. Hsiang and Amir S. Jina, have recently published a study that shows the exact opposite. Using meteorological data, they reconstructed every country’s exposure to the 6,712 cyclones, typhoons, and hurricanes that occurred during 1950-2008 and then measured the long-term growth:
    (more…)