Category: Economics

covOver the past few decades, economist Thomas Sowell has been one of the most effective, yet under under-appreciated, proponents of conservative and libertarian economic thought. He is also one of our most powerful critics of the often destructive and harmful effects of liberal economic policies.

Sowell frames the differences between the left and the right as a “conflict of visions”, a political divide separated by “constrained” and “unconstrained” visions. As Wikipedia helpfully summarizes this view:

carson-debateIn last night’s GOP presidential candidate debate, Dr. Ben Carson was asked if he would raise the federal minimum wage. Carson said that he would not do so because the minimum wage hurts workers, especially those in the black community:

People need to be educated on the minimum wage. Every time we raise the minimum wage, the number of jobless people increases. This is particularly a problem in the black community. Only 19.8 percent of black teenagers have a job. Or are looking for one. And that’s because of those high wages. If you lower those wages, that comes down.

While many people will be hearing this claim for the first time, it’s nothing new. In their 1979 book Free to Choose, economist Milton Friedman and his wife Rose wrote, “We regard the minimum wage law as one of the most, if not the most, anti-black laws on the statute books.”

That’s not hyperbole—it’s history. Many of the early minimum wage laws, both in the U.S. and in other Western countries, were instituted precisely to prevent immigrants and black Americans from competing with white workers. As Thomas C. Leonard explains, progressive economists in the early 1900s believed that “the job loss induced by minimum wages was a social benefit, as it performed the eugenic service ridding the labor force of the ‘unemployable.’”

That was also the motive of many lawmakers who passed one of the first federal minimum wage laws, the Davis-Bacon Act.

Blog author: jcarter
Monday, November 9, 2015

price-knowledgeI’m something of a cheapskate (or as I prefer to think of myself, prudentially frugal) and so I take special pleasure in finding a good deal. I’m also, by nature, rather grateful and so I frequently thank God for helping me to find goods and services at bargain prices.

But sometimes I remember to step back and be grateful for the larger system God has created that makes such exchanges possible: the price system. 

As I’ve said before, a “price is signal wrapped in an incentive to be coordinated by God.” Humans may set individual prices but it was God who designed the price system as a means of coordinating human activity for the purposes of human flourishing.

This isn’t an obvious concept, though, or necessarily easy to grasp. To better appreciate the benefits of the price system, it’s helpful to understand what would happen if it didn’t exist. What if there were no prices? How would you use available resources?

To appreciate why market prices are essential to human well-being, economist Howard Baetjer Jr. from Towson University explains market prices through the railroad thought experiment.

paul ryanDue to a surprising series of events, Wisconsin congressman Paul Ryan is now Speaker of the House.

Given the range of interparty disruptions that preceded the event, many are wondering what, if anything, he might accomplish. Those questions won’t be answered anytime soon, but if Ann Coulter’s recent criticisms offer any clue, his views on poverty alleviation are a good appetizer to his broader vision for the country.

More recently, Ryan embarked on a series of on-site visits in poor neighborhoods, learning how local leaders, institutions, and enterprises are effectively fighting poverty. Bob Woodson, who hosted the visits, notes that the “focus was on the victories—the miraculous transformations witnessed and redemptions of people—being accomplished against all odds, not on the presence of state, local, or federal policy makers.” (more…)

In Cuba, taxi drivers earn far more than doctors, raking in more money in one day than a doctor will make in an entire month.

The reason? Unlike most of the Cuban economy, taxi licenses are privately held and wages are not set by the state.

Johnny Harris explains:

Although Cuba offers few opportunities for private enterprise — outside of its sprawling black market, that is — the number of self-employed workers has slowly grown in recent years. Seven years after Raul Castro took over, 20% of the economy is now private.  (more…)

frederic-bastiat-john-lImagine you receive an email from the Secretary of Education saying that you’ve been randomly selected for a test pilot program.

In an attempt to democratize the educational system, 20 citizens have been selected to develop a curriculum that will be added as a graduation requirement for every high school student in America. The only limitation is that the curriculum must pertain to a subject that is already covered in high school, must not be tied to religion or theology, and must take no longer than a total of 3 hours (half a school day) to implement.

For the typical student in America, the school year typically lasts for 180 days at 6-hour for 13 years (K-12). That’s roughly 14,040 hours of time they’ll spend in school. You now have three of those hours to change the course of their education. What would you do?
Here’s my proposed program:

farmhouseThe global economy is ever-growing in its complexity and interconnectedness, leading to a range of positive and transformative effects. Yet even as this web of human relationships expands and intensifies, many of the latest innovations are prodding us back to the simple and personal.

Whether we look to the various offspring of the “sharing economy” (e.g. Uber, Airbnb) or the range of bottom-up trading tools and crowdfunding platforms (Craigslist, Kickstarter), we see an eager appetite for simple and direct exchange.

In some reflections on his neighborhood’s online community marketplace (“The Swap,” as it’s called), Chris Horst notices much of the same: (more…)