Posts tagged with: Economic liberalism

In a new article at The Stream, Acton Director of Research Samuel Gregg offers good reasons why a move toward economic nationalism is not in the best interest of America.  He starts with this:

Whatever the motivations for such policies, their costs vastly outweigh their benefits. In the first place, protectionism discourages American businesses and workers from focusing on producing those goods and services where they enjoy a comparative advantage vis-à-vis other nations. Not only does this undermine productivity, efficiency, and international competitiveness of American businesses. It also encourages American workers to enter industries that, no matter how much protection they enjoy, won’t be able to compete in the long term.

Gregg continues to give reasons against economic nationalist policies throughout his article, but one reason that seems to be quite relevant at the time is crony capitalism.  Gregg says this:

Yet another problem with economic nationalism is that it encourages a growing problem in American economic life: crony capitalism.

Giving certain American businesses subsidies or lumbering foreign products with tariffs may seem like economic questions, but in practice they are ultimately political. Such policies encourage companies prefer to seek profits by lobbying legislators and bureaucrats rather than serving customers and creating value.

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walter_williams2On this day in 1936, Walter E. Williams was born in the city of Philadelphia. The George Mason University economist is famous for his classical liberal views, often arguing that free market capitalism is not only the most moral economic system known to mankind, but it allows for the creation of the most wealth and prosperity. He has discussed many diverse themes, including: race in the United States, politics, liberty, education, and more. A prolific writer, Williams has written ten books, dozens of essays for scholarly journals, and hundreds of newspaper articles.

In honor of turning eighty, here are ten excellent quotes from Williams:

At the beginning of each semester, I tell students that my economic theory course will deal with positive, non-normative economic theory. I also tell them that if they hear me making a normative statement without first saying, “In my opinion,” they are to raise their hands and say, “Professor Williams, we didn’t take this class to be indoctrinated with your personal opinions passed off as economic theory; that’s academic dishonesty.” I also tell them that as soon as they hear me say, “In my opinion,” they can stop taking notes because my opinion is irrelevant to the subject of the class — economic theory. Another part of this particular lecture to my students is that by no means do I suggest that they purge their vocabulary of normative or subjective statements. Such statements are useful tools for tricking people into doing what you want them to do. You tell your father that you need a cell phone and he should buy you one. There’s no evidence whatsoever that you need a cell phone. After all, George Washington managed to lead our nation to defeat Great Britain, the mightiest nation on Earth at the time, without owning a cell phone.

Democracy and liberty are not the same. Democracy is little more than mob rule, while liberty refers to the sovereignty of the individual.

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Blog author: jcarter
Thursday, March 31, 2016
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An Ethicist Reads The Art of the Deal
John Paul Rollert , The Atlantic

Donald Trump succumbs to the age-old temptation to see capitalism not as an economic system but a morality play.

Welfare System Is ‘Anti-Work,’ Researchers Say
Mariana Barillas, The Daily Signal

The war on poverty is a war on work, the authors of a new book that criticizes the nation’s welfare system assert.

Again, What Is Economic Freedom?
Jeffrey Tucker, FEE

Quite often when I am interviewed, I get the question: What precisely do you mean by “capitalism”? It’s an excellent question. The great debate among capitalism, fascism, and socialism suffers from a lack of clear language.

Nafta May Have Saved Many Autoworkers’ Jobs
Eduardo Porter, New York Times

There are still more than 800,000 jobs in the American auto sector. And there is a good case to be made that without Nafta, there might not be much left of Detroit at all.

Blog author: ehilton
Monday, May 4, 2015
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global shopping cartAt The Stream, Anne Bradley writes about the freedom that free trade brings. Why does free trade matter?

  • We live in a world of scarcity: we have unlimited wants and limited means (resources) to satisfy those wants.
  • As individuals, we aren’t good at producing everything we need to survive. We are limited in our talents and opportunities.
  • We flourish when we are free to trade the things we are better at producing for the things we are not as good at producing.

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Blog author: dpahman
Wednesday, August 20, 2014
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Reading through the German economist Walter Eucken’s work The Foundation of Economics (1951), I came across one of the most helpful charts for economic analysis I have yet to find. In it, Eucken gives every possible form of market in a single table:

Eucken Chart

The Foundation of Economics, p. 158

Eucken adds four qualifications that are important to keep in mind:

  1. “These forms of market are actual forms which have been or are to be found in actual economic life (often blended with one another, and existing alongside the forms of a centrally directed economy). They are not given a priori. They are discovered with their distinguishing characteristics by studying the planning data of those taking part in the market….”
  2. “Under each particular form of market a man can act according to different principles, for example, that of maximum net receipts or that of optimum output….”
  3. “Each of these forms of market can appear in four types: both open, both closed, or closed on either side only.”
  4. “Fixing of prices by the state occupies a special position, since it can follow any form of market and has different effects accordingly…. For example, the significance of coal prices being fixed by the state varies according to whether perfectly competitive, oligopolistic, or monopolistic supply, or some other form of market, exists, or whether both sides of the market are open, or whether the supply side is closed by an investment veto. Governmental price-fixing is to be treated as a variant of the different market forms and not as a special market form of its own.”

So, what does this amount to? (more…)

bratI had a chance to talk with Michelle Boorstein yesterday about David Brat and a bit of his work that I’ve been able to become familiar with over the past few days. She included some of my comments in this piece for the Washington Post, “David Brat’s victory is part of broader rise of religion in economics.”

I stressed that Brat’s research program, which in many ways emphasizes the relationship between Christianity and capitalism, has at least two basic features. First, he’s focused on increasing theological awareness of economic realities: “I never saw a supply and demand curve in seminary. I should have.” This kind of increased economic sensibility would help the church to be a positive factor for social cultural change: “The church needs to regain its voice and offer up a coherent social vision of justice and rationality.”

But on the other hand, Brat has a message for economists as well. He challenges the mainstream assumption of economics as merely a positive, value-free science that can provide objective answers to questions without the trappings of morality or religion. A comment on Boorstein’s piece illustrates this important aspect of Brat’s work:

Dave helped me understand the essentiality of the links between capitalism (voluntary exchange that serves both parties’ interests) and theology (man’s obligation to serve God through work and use gain to carry out Jesus’ admonition to help the poor). At first, I thought he was joking. Surely one did not have to embrace a theological perspective to be a good capitalist. But he was not joking. I now have a much more nuanced and mature understanding of the “moral foundations of capitalism” than I did before I met Dave.

Brat’s faculty page includes portraits of John Calvin, Adam Smith, Friedrich Hayek, and John Maynard Keynes. Obviously there’s a lot to David Brat and I look forward to becoming more familiar with him and his work.

Amid all of the bad reportage out there on Brat, and there is so much that it is hard to keep up, here are a few other pieces that I have found to be helpful:

downloadIn his latest column for National Review, Jonah Goldberg notes the difference between being pro-business and pro-market and says the GOP can’t have it both ways anymore:

Just to clarify, the difference between being pro-business and pro-market is categorical. A politician who is a “friend of business” is exactly that, a guy who does favors for his friends. A politician who is pro-market is a referee who will refuse to help protect his friends (or anyone else) from competition unless the competitors have broken the rules. The friend of business supports industry-specific or even business-specific loans, grants, tariffs, or tax breaks. The pro-market referee opposes special treatment for anyone.

Politically, the reason the lines get blurry in good times and bad is that in a boom, the economic pie is growing fast enough that the friend and his competitor alike can prosper. In bad times, when politicians are desperate to get the economy going, no one in Washington wants to seem like an enemy of the “job creators.”

Goldberg is absolutely right about the difference being categorical. As economist Arnold Kling has helpfully outlined, support/opposition to markets and business gives us four categories:
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