Category: Business and Society

The Dodd-Frank Act became law in 2010, adding more regulation to a banking industry that was already heavily regulated.  The main purpose of this 2,300 page act was to give consumers protection against big profit seeking banks but the unintended consequences prove to be much greater.  The regulation was supposed to help the little guy but as Acton Director of Research Samuel Gregg writes at The Stream, it actually hurts the little guy.

President-elect Donald Trump claims that he wants to deregulate the financial industry but in order for this to happen successfully, we need to understand the argument for why such actions would be beneficial.  Gregg says this:

Consider, for instance, the costs associated with meeting the ever-growing demands of regulatory compliance. Such costs are more easily borne by large banks than smaller-sized institutions such as community banks. The result is that excessive regulation makes it harder for smaller banks to compete. That often puts access to capital out of reach for many people.

But perhaps the most harm which excessive financial regulation inflicts upon ordinary people concerns the ways in which such regulations can — and have — contributed to financial meltdowns. Such crises are far more likely to hurt those on the lower-side of the economic scale than the already-wealthy.

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Blog author: jballor
Monday, October 3, 2016
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This ad perhaps captures Deirdre McCloskey’s observation that “love runs consumption” better than anything I have yet seen.

Coca Cola – What Goes Around comes Around from THE APA on Vimeo.

And embedded in Jack White’s song are some rich theological insights. For more on the backstory for the song and the ad, check out this piece at the Consequence of Sound.

Appletons' Wesley John.jpg

By Jacques Reich (undoubtedly based on a work by another artist) – Appletons’ Cyclopædia of American Biography, 1900, v. 5, p. 438, Public Domain, https://commons.wikimedia.org/w/index.php?curid=8565386

“You are the spring that puts all the rest in motion; they would not stir a step without you.”

John Wesley (1703–1791) was talking about the slave trade and was impugning the buyers and owners of slaves as equally culpable as those who captured and sold them, those who “would not stir a step” without buyers for their wares.

But his observation applies to all transactions in a market economy, whether morally permissible or impermissible. The customer is king, whether he is buying illegal drugs or organic, cage-free eggs.

Recognizing the primacy of the buyer in the market economy is a key step in making appropriate moral judgments as well as formulating sound public policy.

Frank Borman, then-chairman of the Eastern Airlines, said that “capitalism without bankruptcy is like Christianity without Hell.”

That’s one way to take Peter Heslam’s reflection on the closing of BHS in the UK, “Business with a Human Face.”

I would add that the purportedly impersonal nature of market exchange is also what attracts many of its supporters. Drones and automated checkout lines are increasingly allowing us not to see any faces at all.

And as Martin Luther would surely have also added, when we see the face of our neighbor, we are doing so before the face of God (coram Deo), and in our service to one another we are to be his agents, or “masks” (larvae Dei).

I want to be very clear from the outset that moral concerns surrounding transgender identity are not unimportant. But in the likely event that we don’t come to any national consensus on that question any time soon, it is important not to overlook other moral and social concerns that are far more pressing. In particular, there are legitimate concerns regarding safety and privacy, no matter which side one favors, but resorting to the force of law will leave some real victims vulnerable.

On the one hand, the Anti-Violence Project’s 2014 Report on Lesbian, Gay, Bisexual, Transgender, Queer, and HIV-Affected Hate Violence found that compared to violence among the general population, “Transgender women [i.e. biologically male] survivors were 1.6 times more likely to experience physical violence and 1.6 times more likely to experience sexual violence, when compared with other survivors.” I have seen headlines connecting this violence with restroom use in the past, but now that the issue has become politicized those stories are harder to locate. In any case, privacy and safety are real and major concerns for many. We should not be indifferent to this.

On the other hand, according to the CDC,

  • Nearly 1 in 5 (18.3%) women and 1 in 71 men (1.4%) reported experiencing rape at some time in their lives.
  • Approximately 1 in 20 women and men (5.6% and 5.3%, respectively) experienced sexual violence other than rape….

Again, privacy and safety are real and major concerns here. We should not be indifferent. (more…)

Leighblackall-76202405Andrew Biggs of AEI has a piece up today at Forbes addressing the gender pay gap and provides a neat solution: “forbid women from staying at home with their children.” As Biggs points out, such a policy would address perhaps the greatest root cause of gender pay inequality: varied work experience attributable to choices women make. “Most mothers who stay at home or work only part-time are doing what they wish to do and what they view as best for their kids,” writes Biggs. This results in gaps in pay when those women re-enter the work force or increase their labor participation.

Biggs’ proposal to “make staying at home with kids illegal, just like child labor is illegal” would have another benefit favored by many: it would be a boon to GDP. As I point out in a review essay in the latest issue of Christian Scholar’s Review, the work that stay-at-home parents do is not counted toward GDP. When those parents pay someone to take care of their children as part of a business transaction, however, as in the case of day care centers, then that exchange does count towards GDP.

My piece, “Affluence Agonistes–A Review Essay,” takes a look at the book The Poverty of Nations by Wayne Grudem and Barry Asmus, in addition to a couple of other recent publications. The CSR essay expands upon a review of the Grudem/Asmus book I wrote for Public Discourse, “Life to the Full: The Dangers of Material Wealth and Spiritual Poverty.” As Grudem and Asmus put it simply, to combat poverty “the goal must be to increase a nation’s GDP.”

So not only are stay-at-home moms a major source of wage inequality, they are also “a drag on GDP.” As one press report put it, “With female participation stagnating, potential growth isn’t rising as quickly.”

Biggs’ proposal to ban stay-at-home mothers should logically be embraced by both anti-gender inequality progressives as well as GDP growth fundamentalists. As I argue in the essay, “If a nation were to pursue GDP growth as its highest goal, it would probably institute policies and incentives to induce women to work outside the home and professionalize child care. GDP incentivizes specialization and the division of labor, since such transactions are the only things taken into account.”

But the Grove City College economist Shawn Ritenour rightly concludes, “We ought not give into the temptation that all of human welfare is encapsulated in GDP.” Another way of putting it is that men, women, and children do not “live on GDP per capita alone.”

Update: For those readers who might not bother to read Biggs’ piece, he does not (and neither do I, for that matter) actually advocate for this policy.

Blog author: jballor
Wednesday, January 20, 2016
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The_Odds
In this week’s Acton Commentary, I take a look at “The Moral and Economic Poverty of the Lottery.” I take a look at the main parties involved: the winners, the players, and the government, and conclude, “Far from a force for good, lotteries are a danger to society.”

The problems with lotteries and gambling more generally are various and sundry. But Gerda Reith captures a fundamental aspect when she writes that “the state-sponsored fantasy of the big win turns the ethos of production and accumulation on its head.” This is essentially what Edmund Burke’s problem with a gaming society involves, which I explore in more depth in this week’s piece.

And later today I’ll be on Chris Brooks’ program on Moody Radio, “Equipped,” to discuss lottery winners and losers. Tune in at 1pm Eastern.