Posts tagged with: economics

Photo courtesy of Wikimedia.

Photo courtesy of Wikimedia.

What is the biggest economic problem that the U.S. is currently facing? Depends who you ask.  Some social justice warriors would tell you that capitalism is ruining our economy, yet many who have studied and understand economics would argue the opposite. Capitalism is not to blame, but rather cronyism and protectionist policies are the ones wreaking havoc on the economy.

In a previous post, I discussed how occupational licensing as a form of cronyism is trapping people in poverty. However, cronyism is a much bigger problem than just occupational licensing. The U.S. struggles with other forms of cronyism too, such as protectionism through quotas, tariffs, and corporate welfare.

Quotas and tariffs make it extremely difficult for international firms to sell their product in the U.S., thus protecting U.S. firms from international competitors.  Corporate welfare is government support of a private business usually through direct money transfers (subsidies) or tax breaks, often protecting big firms from the competition of smaller firms.

This form of cronyism typically occurs for two reasons:  First, in an attempt to create new domestic jobs or prevent jobs from being sent overseas and second, because politicians promise “goodies” to corporations and individuals that help them get elected. (more…)

bourgeious-equality-mccloskeyIn Dierdre McCloskey’s latest book, Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World, she builds on her ongoing thesis that our newfound prosperity is not due to systems, tools, or materials, but the ideas, virtues, and rhetoric behind them.

Much has been made of her argument as it relates to the (ir)relevance of those material features as causes: “coal or thrift or capital or exports or exploitation or imperialism or good property rights or even good science.” But less has been said about her views on the spiritual/material as it relates to the byproducts.

I’m not yet finished with the book, but on page 70, she offers her view on the spiritual dynamics of what’s to come.

Contrary to popular claims that an increasingly prosperous free society will necessarily trend toward greed, envy, and idleness, McCloskey sees a future with more resources, and thus, more time and space for the transcendent. “One would hope that the Great Enrichment would be used for higher purposes,” she writes…”Enrichment leads to enrichment, not loss of one’s own soul.” (more…)

John Calhoun (1782 - 1850)

John Calhoun (1782 – 1850)

Proponents of protectionism often ground their support in a quasi-nationalism; trade should be restricted for the benefit of the nation. Economically, the argument holds little weight. The benefits of more trade, like more and cheaper goods, outweigh the costs, like some temporary unemployment that results from the closing of a factory that couldn’t compete with foreign companies.

Some protectionists may accept this, and still urge tariffs, quotas, and other restrictions. They argue that a nation can still benefit, even with economic disadvantages. Sure, consumers might pay in higher prices if there’s a tariff on steel, but think of all the jobs! The consequences of protectionism, however, are not simply economic. Rather than developing national and political unity, tariffs often lead to national discord.

Take the United States in the early nineteenth century. Its still developing economy was primarily agricultural, with a growing commercial and manufacturing sector. Many early American politicians advocated a tariff in order to protect, foster, and develop American manufacturing.

Ignoring the economic flaws of such a plan, the policy sowed the seeds for national disunion, culminating in the United States Civil War. How?



Lester DeKoster (1915 – 2009) | Acton Institute

Overproduction, simply put, is supply in excess of demand. It is the production of more goods and services than those in the market would like to purchase. Overproduction, in a well functioning market economy, should be temporary. In a dynamic market driven by entrepreneurs, resources become allocated towards their most highly valued uses. If some clever entrepreneur makes a million shoes, but only sells two pairs, he will be unlikely to overproduce in the future. This is good, because the overproduction signals to the entrepreneur that there are better ways to use the limited resources that he has.

Multiply this process over an entire economy, and one can see the temporary nature of overproduction, and its undesirability given scarce resources.

Stewardship, according to Kent Wilson, is “the faithful and efficient management of property or resources belonging to another in order to achieve the owner’s objectives.”

In this context, human beings are the stewards of Earth’s resources, which ultimately belong to God.  Using resources wisely, in a way that contributes to human flourishing, is a key concept of Christian stewardship. Overproduction, then, is not “faithful and efficient” management, as it allocates scarce resources to less highly valued ends. (more…)

Blog author: TGroenendal
Thursday, June 30, 2016


Abraham Kuyper (1837 – 1920) | Wikimedia Commons

The benefits of free trade are vast, and enjoyed throughout the world.  The alternative — trade restricted by protective tariffs and quotas — concentrates benefits to a protected few who profit due to less competition from foreign competitors.

The morality of free trade is clear. Individuals can choose what they buy from where, linking the world through a network of exchange. Integration through trade and exchange is a major factor lifting people out of poverty. The more and freer the trade, the better for human flourishing. Despite this, there is a growing protectionist movement in the United States political landscape.

In Abraham Kuyper’s book Antirevolutionaire Staatkunde (or Anti-Revolutionary Politics), he discusses his political support of tariff increases in the Netherlands. One of Kuyper’s arguments in defense of tariffs is a moral argument, which stems from concerns over unemployment. He writes:

Excessive enthusiasm for Free Trade and for free movement of population can deprive men of work who would otherwise have it in abundance. Free Trade can have as a consequence that many items are fabricated abroad so that there is no work to be done here. This can be observed in its simplest form in the case of lumber. If unsawed logs are imported, then the wages of sawing can be earned here. If, however, lumber arrives sawed, then the wages for sawing are lost here. (more…)

jmk photo

John Maynard Keynes

“Critics of John Maynard Keynes were so determined his economics were wrong that they allowed Keynes to dictate the terms of the debate,” says Victor Claar, professor of economics at Henderson State University, in his Acton University lecture. He continues to describe Keynes flawed anthropology with respect to classical economists and the Great Depression. Key observations of human nature include the principles of work, property, exchange, and division of labor. We can survive and prosper, take ownership of our work, support and rely on each other through exchange, and specialize in exchange at an opportunity cost. Furthermore, these observations are linked to moral imperatives.


JMM_19 1Our most recent issue of the Journal of Markets & Morality, vol. 19, no. 1, has now been published online and print issues are in the mail.

In addition to our regular slate of articles examining the intersections between faith, freedom, markets, and morality, this issue contains a new entry in our Scholia special feature section: “Advice to a Desolate France” by Sebastian Castellio. Writing in 1562, Castellio was one of the first early modern defenders of freedom of religion on the basis of freedom of conscience, in the midst of a turbulent time of conflict between Roman Catholics and Protestants in sixteenth-century France. His insights should still be valuable today, both to scholars and others who value that same freedom.

As is our usual custom, this issue’s editorial, “Self-Interest and Moral Contexts,” is open access. In it, I examine the necessity of context for determining the morality of the choices of market actors:

The economic idea of self-interest as the driving motivator of economic (and other) behavior is as widely accepted by economists as it is criticized by others. The critics, generally, object to the assumption that “widespread and/or persistent human behavior can be explained by a generalized calculus of utility-maximizing behavior,” to quote George Stigler and Gary Becker. Is not that selfishness? And is not selfishness immoral? And do not people, at least sometimes, act morally? Furthermore, should not they be encouraged to act altruistically instead of only thinking of their own interests?

In reality, context complicates such moralisms.

The full editorial can be read and downloaded here.

Read the entire issue here.

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