Posts tagged with: Business/Finance

Blog author: KHanby
Wednesday, November 30, 2016
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“An underlying theme in basic economics says, ‘offering a product for free can destroy the local economy’” writes Luis Miranda.  Miranda recently watched Poverty, Inc and since seeing the award winning Acton Institute documentary he has shared some of its lessons in an article at The Indian Economist.  He begins by explaining how often times aid can harm its recipient more than help them.

A farmer in Rwanda goes out of business because he cannot compete against an American church sending free eggs to feed starving Rwandans. A rice grower in Haiti stops growing rice because he is unable to compete against very cheap rice coming from rich farmers in the US who receive huge subsidies. A local cobbler goes out of business in Africa when TOMS shoes land up in the village and are distributed for free.

In all these cases, the donors had honest intentions. The American church wanted to feed starving people in Rwanda. The US government wanted to feed the disaster-stricken Haitians. Blake Mycoskie, the founder of TOMS, genuinely wanted to help Africans who did not have proper footwear.

Miranda continues to share key takeaways from Poverty, Inc.  Next he shares how although aid can appear to be effective in the short term, it can create negative effects in the long term. (more…)

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.

Tucker 3

Jeffrey Tucker lectures at Acton University.

The industrial revolution did not begin in the eighteenth century, but was a gradual process of development comprised of the individual actions of thousands of innovators across time. The dramatic changes in the world have come about partially due to the technological growth, some of which developed out of this revolution of industry. It is not the result of a few “great, singular men”, but of many interconnected individual innovations. Jeffrey Tucker, Director of Content at FEE (Foundation for Economic Education) painted a vivid picture of the role of technology and ideas in shaping the world we live in today in an Acton University lecture titled “Technology and Markets: Medieval Times to Modernity.” He emphasized the importance of the medieval era for technological growth and formation, particularly the gradual emergence of the social norm of respecting the property rights of others.

Despite the importance of property rights, Tucker argues that ideas should not be thought of as property. (more…)

During her evening plenary presentation, Magatte Wade asked the audience to raise their hand if they cared about poverty alleviation; hands went up all over the room. She followed up by asking how many in the room had checked the doing business index recently; far fewer hands went up.

It’s easy to forget that the most powerful poverty alleviation tool is a job, and that jobs are more plentiful in those parts of the world where it is easier to do business. Wade, entrepreneur and founder and CEO of Tiossan, used her time on the stage of Acton University to show the power of entrepreneurship to change perceptions and lift up the poor. You can view her presentation below.

19893712-mmmainAbout twenty years ago I made some terrible choices and found myself in a serious financial bind. The amount I needed wasn’t much — about $200 — but without it I wouldn’t have been able to pay my rent. I took out a payday loan that cost me $30 every two weeks. It took about eight weeks to get clear of the loan, resulting in a cost of $120 to borrow $200 for two months.

Was I fooling myself thinking the loan could be paid in two week? Not at all. In fact, I knew quite well that there was likely no way possible for me to pay it off in that timeframe. I knew precisely how much money I was going to be able to earn and how much my expenses would be during that two-week period. I had, roughly speaking, about $40 a week that I could apply toward the loan.

But $40 was not sufficient to cover the balloon payment of $200 that was due at the end of two weeks. So I had to roll over the loan, applying $15 a week to the new fees and saving $25 a week to be paid toward the principal. That is why it took me eight weeks to pay off the original loan: $25 a week for principal + $15 a week for fees = $40 x 8 weeks = $320 ($200 for principal + $120 for fees.

If you’re middle class and think of it in terms of interest rate, that repayment cost sounds appalling usurious. And it is. But as the poor will tell you, man does not live on APR alone. Having to pay an extra $120 was cheaper than having to find a new place to live. Yes, it was a bad deal. But it was better than all my other choices. I didn’t agree to the loan because I was bad at a math; I did it because I was desperate. And the payday lending company was more than willing to take advantage of my desperation.

How then do we solve the problem of rollover fee that take advantage of the poor when they are in dire straits? As I’ve argued before, I believe a helpful first step is to get churches and other faith-based organizations involved in providing alternatives to commercial lending agencies. The Worship Center Christian Church in Birmingham, Alabama seems to be providing a wonderful example of how Christians can help.

This past Sunday the church announced it will pay off the payday loans of 48 people — a combined total of more than $41,000 on high interest rates of 36 percent or higher.

(more…)

cellphones-povertyFrom mass shootings to terrorist attacks, political incompetence to racial unrest, there has been no shortage of bad news stories in 2015. Death, destruction, and divisiveness tend to dominate the news cycle, leading us to despair over the direction our world is headed.

But our incessant focus on the negative can lead us to overlook or downplay the positive changes that are happening across the globe. That is especially true of the most important good news story of 2015, one few people have heard and fewer have grasped the significance.

The good news: For the first time in world history, less than 10 percent of the global population will be living in extreme poverty.
(more…)

Yes, there really is a headstone cartel, at least in New Jersey. The Monument Builders Association of New Jersey are the only ones who can sell, carve, deliver and install headstones.

One might think this is all right (after all, headstones aren’t that creative] but there is at least one church cemetery that would like the right to sell their own headstones to the patrons of their cemeteries. So the Archbishop of Newark took the headstone cartel to court. Liberty & Law explains the issue: