Category: Effective Compassion

One of the most astounding economic statistics is the wealth gap between black and white Americans. According to a Pew Research Center analysis of government data from 2009, the total wealth (assets minus debts) of the typical black household was $5,677 while the typical white household had $113,149. Why is the median wealth of white households 20 times that of black households?

racial-wealth-gapPlummeting house values were the principal cause, says Pew Research. Among white homeowners, the decline was from $115,364 in 2005 to $95,000 in 2009 and among black homeowners, it was from $76,910 in 2005 to $59,000 in 2009. The fact that only 46% of black Americans own a home, compared to a homeownership rate of 76% for whites likely affect the gap too.

But in a paper published last month, Princeton graduate student Rourke O’Brien suggests another reason: the generosity of black families.
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In the German newsmagazine Spiegel, Kenyan economics expert James Shikwati says that foreign aid to Africa is doing more harm than good:

SPIEGEL: Mr. Shikwati, the G8 summit at Gleneagles is about to beef up the development aid for Africa…

Shikwati: … for God’s sake, please just stop.

SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty.

Shikwati: Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor.

SPIEGEL: Do you have an explanation for this paradox?

Shikwati: Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: Development aid is one of the reasons for Africa’s problems. If the West were to cancel these payments, normal Africans wouldn’t even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.

Read more . . .

During the debate about how to resolve the fiscal cliff crisis, lawmakers on both sides have considered reducing the charitable tax deduction. That strikes many people as the wrong approach (especially those of us who work for non-profits!) even though we may not be able to explain why it’s such a bad idea.

Fortunately, John Carney has provided a superb explanation for why reducing or removing this deduction is counterproductive. For instance, changing the charitable deduction as Carney notes, has the same effect as another deduction that most of us didn’t even know exist: the deduction for volunteers.

Imagine that you serve a charity that pays you $15 a hour for your labor. Instead of cashing their checks, though, you immediately donate that money back to the charity. If this income was taxed and deduction was allowed, it would mean we were paying a tax on the time we volunteer to charities. But as Carney explains, this is the same thing as when we provide “free” labor to a charity. The income we forgo is equivalent to donated income.
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Blog author: dpahman
Thursday, December 13, 2012
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This past Friday, I had the opportunity to present a paper at the Sophia Institute annual conference at Union Theological Seminary. This year’s topic was “Marriage, Family, and Love in the Eastern Orthodox Tradition.” My paper was titled, “What Makes a Society?” and focused, in the context of marriage and the family, on developing an Orthodox Christian answer to that question. The Roman Catholic and neo-Calvinist answers, subsidiarity and sphere sovereignty, respectively (though not mutually exclusive), receive frequent attention on the PowerBlog, but, to my knowledge, no Orthodox answer has been clearly articulated, and so it can be difficult to know where to begin. To that end, it is my conviction—and a subject of my research—that a historically sensitive, Orthodox answer to this question can found be in the idea of asceticism, rightly understood.

While I will not reproduce my paper here, I wanted to briefly summarize two of its main points that might have broader interest. First of all, what is asceticism? Second, how can asceticism be viewed as an organizational principle of society? Lastly, I want to briefly explore—beyond the scope of my paper—the relevance of this principle for a free society. (more…)

The Goldwater Institute has released a new study showing that states with a larger share of entrepreneurs do a better job at reducing poverty than states with fewer entrepreneurs.

There is a strong connection between a state’s rate of entrepreneurship and declines in poverty. Statistical analysis of all 50 states indicates that states with a larger share of entrepreneurs had bigger declines in poverty. In fact, comparing states during the last economic boom—from 2001 to 2007—data show that for every 1 percentage point increase in the rate of entrepreneurship in a state, there is a 2 percent decline in the poverty rate.

To help reduce poverty, policymakers should focus on increasing the number of entrepreneurs in their state. Research shows that one of the most effective ways to increase entrepreneurship is by lowering tax burdens. In particular, this study shows that high tax burdens, measured as a percentage of personal income, drags down the growth rate of entrepreneurship in a state: for every 1 percentage point increase in the tax burden, there’s a corresponding 1 percentage point drop in the entrepreneurship rate. States without income taxes also have higher average rates of entrepreneurship than those with income taxes. The average number of sole proprietors as a percentage of employment in states without an income tax is 21.7. The rate for states with an income tax is 19.6.

You can access a PDF of the report here.

Blog author: dpahman
Monday, October 22, 2012
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Recently at Big Questions Online, Barbara Dafoe Whitehead answers the question, “Does a culture of thrift cultivate generosity?” with a solid yes, documenting the history of thrift and generosity in the United States and their subsequent and unfortunate decline in recent years:

By the 1960s, however, the coalition of national organizations promoting thrift ceased their activities. Schools gave up their savings programs. And American households increasingly turned to consumer debt rather than savings to finance their wants and needs. The savings rate, which stood in double digits as late as the early 1980s, fell to near zero in 2005 and has since rebounded to a still anemic 4.4 percent.

As a consequence, thrift has lost much of its cultural force. Few schoolchildren today have even heard the word, much less are able to say what it means. A teacher of my acquaintance reports that her students, rich, poor and in-between, customarily throw their loose change into the trash along with their lunch leftovers. Apparently, they are clueless as to the value of their nickels and dimes when their customary medium of exchange is the “swipe” card.

Read more . . .

Blog author: dpahman
Friday, September 14, 2012
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Working Paper: “Top Ten Myths of Medicare”
Richard L. Kaplan (University of Illinois College of Law), Illinois Program in Law, Behavior and Social Science Paper No. LBSS13-02; Illinois Public Law Research Paper No. 11-28; SSRN, Working Paper Series (PDF)

In the context of changing demographics, the increasing cost of health care services, and continuing federal budgetary pressures, Medicare has become one of the most controversial federal programs. To facilitate an informed debate about the future of this important public initiative, this article examines and debunks the following ten myths surrounding Medicare: (1) there is one Medicare program, (2) Medicare is going bankrupt, (3) Medicare is government health care, (4) Medicare covers all medical cost for its beneficiaries, (5) Medicare pays for long-term care expenses, (6) the program is immune to budgetary reduction, (7) it wastes much of its money on futile care, (8) Medicare is less efficient than private health insurance, (9) Medicare is not means-tested, and (10) increased longevity will sink Medicare.

Conference: “How to Feed Nine Billion People from the Ground Up”
Quivira Coalition, November 14-16th, Albuquerque, New Mexico

Global human population is projected to reach nine billion by 2050, which means food production will need to expand by 70% to keep up. Fulfilling this demand will place unprecedented pressure on ecosystems, including the planet’s grasslands, especially as competition grows for scarce natural resources. How to meet this daunting challenge while ensuring the health of land, water, wildlife and people will be one of the great tasks of the 21st century. In this conference, we will explore a variety of innovative practices that are already successfully intensifying food production while preserving, maintaining, and restoring the natural world. Speakers will share their hands-on experience and ideas for feeding all life – from the ground up.

Working Paper: “The Economics of Religious Altruism: The Role of Religious Experience”
Timothy T. Brown (University of California, Berkeley), ARDA/ASREC Working Papers Series (PDF)

Altruism has many motivations, including religious motivations. Perceived religious experience plays a strong role in the life of many religious individuals in the U.S. and can be a strong motivator of altruistic behavior. Religious altruistic behavior can be described by an economic theory of religious/spiritual health. Empirical tests using a theoretically and statistically valid set of instrumental variables show a strong causal link between perceived religious experience and the frequency of altruistic acts. An additional weekly event during which an individual perceives feelings of love that they believe come directly from God results in individuals increasing their altruistic acts by an average of 4.7% over a one-year period.

Call for Papers: “Ethics, Society, and Cultural Analysis”
Southwest Commission on Religious Studies, AAR session

Proposals for papers and panels are invited on the following topics in Ethics, Society, and Cultural Analysis: Pedagogy and Ethics, History and Ethics, Christian Social Ethics, and Moral Theology. Also of interest are reflections about comparative theological and ethical discourse featuring reflections on Jewish Ethics, Islamic Ethical Perspectives, Indigenous Religious Moral Perspectives, Buddhist ethics and Christian ethics. Constructive treatments of ethical issues including immigration, transnationalism, bioethics, global economics and poverty, health care, food and hunger, environmental ethics, ecofeminism, ecowomanism, medical ethics, theological ethics, sexual ethics, and the use of Scripture or tradition in ethics are also invited. Proposals may also discuss Womanist ethics, Mujerista theological ethics, Latina/o ethics, Native and Indigenous religious ethical perspectives, LGBTIQ ethics, and Feminist ethics.

July 31st marks the 100th birthday of the economist Milton Friedman. Celebrations planned by proponents of free-markets will take place across the country to recognize and pay tribute to his legacy and the power of his ideas. I am speaking at an Americans for Prosperity event in town on the topic of school choice on his birthday.

My commentary this week is on school choice. Nobody has influenced and shaped the school choice movement more than Friedman. In my piece, I stressed the moral power of pivoting away from bureaucratic centralized schooling and encourage greater parental involvement in education. Simply put, school choice allows for parents to better shape the spiritual formation of their children. Nobody can make better decisions about the education of their children than the parents.

Finally, schools that have to compete for students and tax dollars will be forced to improve and be innovative for today’s complex and global marketplace.

Last week, PowerBlogger Andrew Knot and I wrote posts about American sugar policy and farm subsidies, respectively. Now, the United States Conference of Catholic Bishops, as well as the Catholic Relief Services and National Catholic Rural Life Conference, have come out with a joint letter on the 2012 farm bill that just passed the Senate. Among other things, they urge Congress to reduce agricultural subsidies, and limiting crop insurance to small and medium sized farms.

In 2010, the government gave out $96 billion in farm subsidies. As I pointed out last week, the median farmer’s income is already 25 percent higher than the median American’s. Furthermore, most of the farm money is going to a small number of the farmers. Big farms tend to get a much larger share of the handout than small and medium sized farms do. American agricultural policies represent welfare and protectionism for the already well off.

The USCCB’s letter can be read here.

At the most recent Acton University, American Enterprise Institute president Arthur Brooks gave a brilliant and paradigm-shifting speech on why advocates of free enterprise need to explain why it is the most moral, most fair, and most helpful system for alleviating poverty. You can download it here. (It’ll be the best 49 cents you spend this week.)

I was thrilled to discover today that AEI has created an animated video that covers much the same material as in his lecture. Watch the whole thing. (It’ll be the best 8 minutes you spend this week.)