Posts tagged with: economics

sharing-economyJohn O. McGinnis, the George C. Dix Professor in Constitutional Law at Northwestern University, says we are in the midst of a sharing economy, and that’s a good thing. (Don’t get all socialist on me; a sharing economy is one driven by service and technology. We are not going to have to pool our food in the commune.) McGinnis says this type of economy is good for liberty as well.

There are three basic features of a sharing economy:

    1. It reduces costs, by matching up real-time idle services and resources with people in need.
    2. It employs the hard-to-employ, say, people who need a very flexible schedule.
    3. It creates new jobs – jobs that didn’t exist before.

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    Francis (1)“If there is one thing that religious leaders around the world seem to agree on today,” says Acton research associate Dylan Pahman, “it is the evils of income inequality stemming from a globalized economy.” But as Pahman points out, there is a connection between inequality and poverty alleviation that affirms the moral merits of economic liberty:

    It would seem the consensus is that economic inequalities have increased worldwide, and this is a clear moral evil. But when we examine the numbers, a somewhat different picture emerges. Even as inequality has increased, extreme poverty has simultaneously decreased—a clear moral good. Considered in this light, and with the help of Nassim Taleb and (in Part Two of this post) Friedrich Hayek, I will examine the connection between inequality and poverty alleviation and argue that the data affirm, rather than refute, the moral merits of economic liberty.

    It stands to reason that if religious leaders are so willing to condemn global capitalism for its apparent evils, they ought to be even more eager to praise its actual goods. I will recommend a different moral metric, drawn from St. John Cassian and St. John Chrysostom, that would support people of faith in being attentive to the plight of the poor while prudently engaging the economic realities at hand.

    Read more . . .

    Participant in the Doe Fund, New York City

    Participant in the Doe Fund, New York City

    No one wants to be poor. No one enjoys figuring out how to stretch meals to last just three more days. No parent wants to tell their child they can’t play a sport or get a new backpack because there is simply no money. No one wants to be evicted. Poverty in America is a reality; so what are we going to do about it?

    The American Enterprise Institute has a few ideas. They’ve taken a look at where we are 50 years after the War on Poverty was declared. The conclusion is that we’ve not been successful in that war. Poverty in America—and What to Do About It is a compilation of essays on the topic.

    Aparna Mathur says the talk of late about “income inequality” is misleading. We must address poverty, not differences in individual income.

    We are now in the fifth year of an economic recovery that does not seem like a recovery to most people in the labor market. There are more than 10 million unemployed workers, of which nearly 4 million have been jobless for longer than 27 weeks. In addition, there are another 10 million who are either in involuntary part-time jobs, or are too discouraged to look for work. Therefore, I would argue that the focus on income inequality is somewhat misplaced. This is essentially a problem of poverty.

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    Christian churches in the West have been focused on redistribution of income rather than the creation of wealth, says Brian Griffiths in this week’s Acton Commentary.

    Through much of the post-war period in the West, the formation of economic policy was dominated by Keynesian activism on the part of governments seeking an increasing role in providing public services, reducing material poverty, and reshaping income redistribution.

    In the United States, President John F. Kennedy launched the New Frontier program and his successor, President Lyndon Johnson, soon after embarked on what came to be called the Great Society. In both cases, emphasis was placed on increasing the role of the state in order to solve problems of poverty and destitution. In intellectual terms, the economist John Kenneth Galbraith made the case for trade unions and government becoming “countervailing powers” in capitalist economies in order to check the power of large corporations. In Britain, Harold Wilson nationalized various industries, developed a national plan, a comprehensive prices and incomes policy, and extended the scope of the welfare state. Across the Channel and Rhine, the Social Democrat Willy Brandt was a major influence in extending the role of government in social policy throughout West Germany.

    The full text of the essay can be found here. Subscribe to the free, weekly Acton News & Commentary and other publications here.

    pope washing feetArchbishop Charles Chaput of Philadelphia spoke recently at the Napa Institute on Pope Francis’ view of economics. Archbishop Chaput reminded the audience that the pope was not an economist, but spoke rather as a pastor and theologian. He went on to say that some of what the pope has to say about economics is “hard for some of us to hear” but told his listeners to read the pope’s writings for themselves, without the filter of the media.

    Archbishop Chaput also stated that Pope Francis’ message is not so different from that of his predecessors.

    In matters of economic justice, Francis’ concerns are the same as Benedict’s and John Paul II’s, and Pius XI’s and Leo XIII’s. He understands economic matters through the lens of Church teaching in the Compendium of the Social Doctrine of the Church.  Like his predecessors, he defends human dignity in a world that consistently threatens it. But Francis stresses more directly than they did that human solidarity is a necessary dimension of human dignity. We need both. Human dignity requires not just the protection of individuals, as in our prolife work, but an on-going commitment to the common good. (more…)

    “You are a slow learner, Winston.”
    “How can I help it? How can I help but see what is in front of my eyes? Two and two are four.”
    “Sometimes, Winston. Sometimes they are five. Sometimes they are three. Sometimes they are all of them at once. You must try harder. It is not easy to become sane.” – George Orwell, 1984

    In a calculation that surely qualifies as “new math,” the government has created an equation in which $29,000 is equal to $69,000. Within the current welfare structure a single mother is better off making $29,000 per year in income and subsequent welfare benefits, than she is making $69,000 per year in income alone. This perverse incentive is what perpetuates the cycle of poverty and condemns impoverished moms to dependence on a paternalistic state. Social Security, Medicare, Medicaid, and SNAP (food stamps) are all larger than ever before with no subsequent reversal in the level or scope of poverty.

    The “Welfare Cliff,” an economic model developed by Gary Alexander, the Secretary of Public Welfare in Pennsylvania, shows the amount of net income a person would need to receive in order to match their current net income plus welfare benefits. This is called a cliff, as there are drastic drop-offs in welfare benefits as one increases their income. In this graph, “the single mom is better off earning gross income of $29,000 with $57,327 in net income and benefits than to earn gross income of $69,000 with net income & benefits of $57,045.” In fact, if a single mother were to raise her income from $29,000 to just $30,000, she would lose nearly $10,000 in welfare benefits per year.

    The incentives provided under this system replace the desire for individual development with the maintenance of the status quo.  A single mother is highly unlikely to spend the time, effort, or capital in order to gain skills that result in receiving a lower disposable income. (more…)

    SR-culture-index-2014-Scorecard_Poverty-and-Dependence.The Heritage Foundation has released their 2014 Index of Culture and Opportunity, the first annual report that tells how social and economic factors relate to the success of individuals, families, opportunity, and freedom. Through charts that track changes, and commentary that explains the trends, the Index shows the current state of some key features of American society and tells whether specific indicators are improving or getting off track.

    Here are a few highlights from the report:
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    Blog author: jballor
    Tuesday, July 22, 2014
    By

    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.

    cherrypieShould we always take the side of the individual consumer?

    That’s the question Rod Dreher asks in a recent post on “Amazon and the Cost of Consumerism.” It’s a good question, one that people have been asking for centuries. The best answer that has been provided—as is usually the case when it comes to economic questions—was provided by the nineteenth-century French journalist Frédéric Bastiat.

    Bastiat argues, rather brilliantly, that,

    consumption is the great end and purpose of political economy; that good and evil, morality and immorality, harmony and discord, everything finds its meaning in the consumer, for he represents mankind.

    He summarizes his argument as follows:

    There is a fundamental antagonism between the seller and the buyer.

    The former wants the goods on the market to be scarce, in short supply, and expensive.

    The latter wants them abundant, in plentiful supply, and cheap.

    Our laws, which should at least be neutral, take the side of the seller against the buyer, of the producer against the consumer, of high prices against low prices, of scarcity against abundance.

    They operate, if not intentionally, at least logically, on the assumption that a nation is rich when it is lacking in everything.

    Bastiat uses this as the basis of his argument that the interests of the consumer, rather than the producer, align more closely with the interests of mankind (see addendum below for more on this reasoning). Producers want scarcity since it increases their profits. If they can’t produce scarcity in the market, they’ll seek out government protections that create artificial scarcity (which is why those who are pro-business are rarely pro-market).

    Book publishers don’t like the fact that Amazon is reducing the scarcity of their product, because it lowers the cost. But what is the result from the consumer side? The lower prices allow consumers to consume more books than they otherwise would be able to afford.
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    Blog author: ehilton
    Tuesday, July 22, 2014
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    Economics, at first glance, doesn’t seem very…well…sexy. It’s all about numbers, right? How the stock market is doing, how much people are willing to spend on stuff they need or want, whether or not people have jobs. That’s economics, right?

    As the Rev. Robert Sirico is fond of saying, economics is fundamentally about human action. If this is true, then economics applies to sexual activity as well. In the following video (from the Austin Institute), today’s sexual landscape is examined through the lens of economic truisms.