Category: Public Policy

Blog author: jballor
Tuesday, July 22, 2014
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Idle RichOver at his blog, Peter Boettke writes, “The idle rich are never really idle in a free market economy.”

Now while we might want to distinguish between the rich and their riches, could it be that even in their consumption, conspicuous or otherwise, the rich are contributing to a rising tide that lifts all boats? Wesley Gant makes that related case over at Values & Capitalism: “Is It Possible to Waste Money?”

Gant seems to conclude that it isn’t possible to “waste” wealth. “Humans do not consume resources; they create and exchange them,” he says.

One might argue, however, as John Mueller does, that humans create and exchange things, but that they also consume and distribute them. It’s a truncated and reductionist economism that doesn’t do justice to that fuller picture. A basic problem with this kind of view is that it cannot distinguish between types of consumption. Maybe we need “ethics” rather than “economics” proper to do so, but that just goes to show the limitations of the economic way of thinking.

On Gant’s account, it would seem that there is no such thing as bad stewardship. Now it may be that consumption of luxuries is not always bad, or that such consumption often does have some redeeming virtues. But is it the case that such reasoning can justify any exchange or consumption? (As long as it doesn’t involve the government, of course!)

Perhaps the guy who got the one talent and buried it in the ground should have just given the wealthy owner a basic lesson in such economics.

Recently, the World Bank agreed to partner with Nicaragua to give the country 69 million U.S. dollars in aid. This poses the immediate question of whether or not this aid will be effective in producing its stated goal of decreasing poverty and increasing economic productivity. Should the World Bank continue to give money to the government of Nicaragua, which – especially of late – has been showing a decrease in political stability and democratic processes? History shows that international loans provide little help when countries suffer from decreases in stability and equality within their system.

The World Bank justifies the money that Nicaragua receives: “Nicaragua has achieved a real Gross Domestic Product (GDP) growth of 5 percent in 2012 and 4.6 percent in 2013, returning to pre-crisis growth levels.” GDP, however, does not paint a complete picture of the country’s performance. Most of the wealth within Nicaragua is located among the upper class, making the GDP less accurate for the country as a whole. Gross Domestic Product in purchasing power parity (PPP) in 2012 was estimated at $20.04 billion USD, and GDP per capita in PPP at $3,300 USD, making Nicaragua the second poorest country in the Western Hemisphere.
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As a child, one of the more difficult decisions I had to make was what to have for lunch. Thankfully, my parents always helped out with that decision, but the U.S. Food and Drug Administration (FDA) has begun to move towards taking that decision away from my parents and determining it on its own. Recently the FDA determined that it would begin to phase out artificial trans fats after it determined that artificial trans fat would no longer be listed as Generally Recognized as Safe. The proposal follows others made by Michelle Obama and the FDA to change the nutritional labels on food as part of the First Lady’s war on obesity. The problem with this is that the FDA does not have sufficient evidence or the legal authority to make this determination.

There is a fine line between what is considered to be safe and what is healthy. Typically if an item is not safe then it would not be healthy to consume; however, the inverse is not always the case. It may not be healthy for individuals to eat fried chicken, but that does not mean it is unsafe. Webster’s medical dictionary defines safe as,

Having a low incidence of adverse reactions and significant side effects when adequate instructions for use are given and having a low potential for harm under conditions of widespread availability.

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Arthur Brooks, president of the American Enterprise Institute, challenges conservatives to think and act differently in the fight against poverty and income inequality. He says conservatives must acknowledge that we have income inequality in our society, and be willing to do something about it. That does not mean income redistribution. Rather, he says, we must be willing to do what actually helps the poor.

Brooks is clear: what helps the poor is free enterprise. However, much of our political rhetoric is about things and ideas, and not people. People, he says, need to know that we care more about them than about ideas. People want to know someone is willing to fight for them, not a set of political or economic ideas.

He poses the question, “How do people change their lives?” In talking with people who have brought themselves out of poverty, he says three things are clear. People must be willing to make moral transformations and take responsibility for their own lives. They must have a dependable but short-term safety net from the government for extreme circumstances, and they must have hope. People need to know that if they work hard and commit to changing their lives, they can succeed. However, Brooks says that isn’t happening enough or fast enough in our country, and people lose hope.

Take a few minutes and listen to his thoughts on work, entrepreneurship and education.

“Politics makes strange bedfellows,” said Charles Dudley Warner. And nowhere is that more true than in the political alliances that form around regulation.

In a 1983 paper, regulatory economist Bruce Yandle coined the catch-phrase “Bootleggers and Baptists” for the observation that regulations are often supported by peculiar alliances who have very different end-goals in mind.

Yandle explains the Bootleggers and Baptists theory of regulation in this video by LearnLiberty.

(Via: Art Carden)

single-payerFor those on the left side of the political spectrum, single-payer health care — a system in which the government, rather than private insurers, pays for all health care costs — is one of the most popular policy proposals in America. But the recent Hobby Lobby decision is reminding some liberal technocrats that giving the government full control over health care funding also gives the government control over what medical services will be funded.

As liberal pundit Ezra Klein explains:
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smart piggyChristopher Blattman, an associate professor at Columbia’s School of International and Public Affairs, thinks giving cash to the poor is a good idea. Not free meals, not tickets to redeem for food, but cash. And it just might work.

Blattman writes in The New York Times of the experience of giving cash to the poor. The knee-jerk reaction to this idea is, “Well, they’re just gonna waste it.” But Blattman finds evidence to the contrary.

Globally, cash is a major tool to fight extreme poverty. The United Nations is handing out ATM cards to Syrian refugees alongside sacks of grain. The evidence suggests these cash programs work. There have been randomized trials of cash grants to poor Mexican families, Kenyan villagers, Malawian schoolgirls and many others. The results show that sometimes people just eat better or live in better homes. Often, though, they start businesses and earn more.

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offering-plateDespite the struggling-to-recover economy, charitable giving by Americans continues to rise. But a smaller proportion of this money is going to religious organizations.

According to a newly released report by Giving USA, total estimated charitable giving in the U.S. rose 4.4 percent between 2012 and 2013, to $335.17 billion in contributions. The single largest contributor to the increase in total charitable giving was an increase of $9.69 billion in giving by individuals. In 2013, per capita giving by U.S. adults reached $1,016, and average U.S. household giving reached $2,974.

Giving increased for three of the four sources of giving. Only giving by corporations declined slightly in 2013, notes Tom Watson of Forbes, because of the slow rate of growth in pre-tax corporate profits in 2013, at 3.4 percent.

Unfortunately, charitable contributions to religion continue to slow. The report attributes this to the result of declining religious affiliation and attendance and religious-oriented charitable organizations categorized within other subsections.

But as The Economist points out, the sharp overall rise in charitable giving has been driven by the very rich, who tend to favor secular charities:
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It seems like nowadays everyone has a connection to someone who brews their own beer. Grand Rapids recently was named Beer City because of its lively microbrewery scene so this is especially true here. While this hobby can be very enjoyable and refreshing be aware that taking your hobby to the next step could be more difficult than you would imagine. Recent regulations have made it harder than ever for new craft beers to enter into the consumer market.

Entrepreneurs are the building blocks of all economies. Every company must come from somewhere to create what they are today. This can easily be seen by looking at any company from Apple all the way to Nike. The problem is that many large companies are now being protected from competition from small businesses by unnecessary regulations. (more…)

SMkeepcalmWe know about climate change and global warming, right? After all, we’ve been talking about it for decades. The polar bears losing their homes, the wild swings in temperatures, too much snow, not enough rain, etc. But what do we really know?

That’s the question Phil Lawler asks. He thought he knew about climate change as well. But now he is convinced that what we are talking about when we talk about climate change has shifted from being a scientific issue to being a political one.

Consider how many newspaper editorials have been written about climate change—by journalists no more familiar with the science than I am. Rather than allowing the scientists to settle their disputes in the proper way, by conducting careful experiments and publishing arguments in peer-reviewed journals, political leaders have leapt into the fray. Despite his own obvious lack of credentials, President Obama has denounced some participants in the scientific debate. Former Vice President Al Gore has set himself as an expert on the subject, jetting constantly around the world to scold people who consume fossil fuels. (more…)