Posts tagged with: economics

Today at Public Orthodoxy, the blog of the Orthodox Christian Studies Center of Fordham University, I have an essay on the need for Orthodox theology to more seriously engage modern economic science. The argument would likely apply in some degree to other theological traditions as well.

I write,

Personal relationships and the monastic life have different norms than impersonal markets. This does not mean that markets have no norms, nor that the norms of markets should overrule any other concerns. But it does mean that if we wish for our economies to be more moral, whether we hail from the political right or left (or somewhere outside of that simplistic binary), we must first understand what they are and how they function.

In the article, I quote Peter Hill and John Lunn on this distinction, but it can be found in the work of Paul Heyne as well. For example, in his essay “Are Economists Basically Immoral?” citing a newspaper article about Mother Theresa (now officially recognized as a Roman Catholic saint as of this past Sunday), he wrote,

I shall conclude with two recent newspaper items. One is a short news item reporting that Mother Teresa was about to appeal to prevent the execution of a convicted California murderer. I don’t know whether she did appeal or not, but the newspaper said that she was going to call the Governor and say that this man should be forgiven because that is what Jesus would have done. Now I don’t want to get into the issue of capital punishment; I just want to point out that if Mother Teresa made that argument she was mixing different moralities. I choose Mother Teresa because I can’t think of a person for whom I have more respect; she is a far better person than I am. But forgiveness is appropriate only in face-to-face relations or for God. The criminal-justice system of the State of California is not God nor is it running a face-to-face society. A judge who forgives a convicted criminal is not a candidate for sainthood but for impeachment. The morality of large social spheres is simply different from the morality of face-to-face systems. Arguments against capital punishment must take those differences into account, and so must our arguments for revised economic policies.

This is a crucial distinction that I have come back to again and again, and one that I explore in more detail at Public Orthodoxy today. Read my full essay here.

Acton Research Fellow and Director of Poverty, Inc. Michael Matheson Miller joins host Bill Meyer on The Bill Meyer Show on KMED Radio in Medford, Oregon, to discuss how to genuinely help those around the world who remain mired in poverty. He notes that often, foreign aid tends to support the “big three” items: education, infrastructure, and health care. But the question remains: are these things the cause of wealth, or are they the result of wealth? The answer to that question will shed light on the effectiveness of our foreign aid efforts.

You can listen to the interview via the audio player below.

In a new video from TED Ed, Akshita Agarwal provides a quick lesson on Adam Smith’s “paradox of value” and the differences between “value in use” and “value in exchange.”

For Christians, there’s a crucial lesson here about the best way to meet human needs in the economic order, whether through trade policy, reducing price controls, or any number of other areas. Discerning “economic value” is a tricky thing, and free economies are a handy tools for working through these things in peaceful and productive ways.

But as Agarwal concludes, it also has implications for our everyday stewardship: (more…)

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?

(more…)

dekoster

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…)