Posts tagged with: economics

We need to trim government programs today in order make way for bigger government tomorrow.

That seems to be the message former treasury secretary and Obama economic advisor Larry Summers delivered today at the Washington Ideas Forum:

“If we want to have the same kind of society we always had…you may see some upward drift in government,” he said. “That’s why you need to work ever harder to eliminate government activities that don’t need to take place.”

Summers deserves credit for attempting to incorporate reality into the liberal economic worldview. Government will have to take an increasing share of GDP just to keep up with the growth of current government programs. But we can’t afford the programs we have now, which means we must, as Summers says, “eliminate government activities that don’t need to take place.”

But his message will fall on deaf progressive ears. Liberals are generally opposed to giving up any government funding of private activities, much less give up actual government activities. Remember just a few weeks ago when President Obama mocked the idea of defunding PBS? And the mere suggestion of cutting off taxpayer funds for the president’s favorite billion dollar corporation—Planned Parenthood—causes him to reach for his veto pen.

American liberalism suffers from a political paradox: There is no realistic way for America to keep paying for all the programs liberals want to keep—and there is no realistic scenario in which American liberals voluntarily give up any of those programs. Unfortunately, the only resolution to the problem will be an economic crisis that leads to forced austerity measure. That’s the future reality all of us will be forced to contend with tomorrow since liberals refuse to contend with present realities today.

I will not indulge in any sort of “what would Dorothy Day do” when it comes to thinking about the current US Catholic Bishops’ Conference taking place in Baltimore.  However, it is interesting to ponder this woman who exemplifies so much of 20th century Catholicism and the bishops’ agenda, especially as the bishops discuss cause for her canonization, while on the same day failing to pass a pastoral message on economics.

Their last pastoral letter on economics was in 1986, “Economic Justice for All”. Certainly, many things have changed since then, but as Dorothy Day knew, “the poor you will always have with you”. Her life tells much of the story of the 20th century: socialism, suffrage, labor unions, a failed live-in relationship and abortion. But it also tells the story of redemption: a love of Christ and His Church, Scripture and prayer, the Rosary and Psalms.

In 1960, Dorothy Day returned money sent to the Catholic Worker house by the city of New York – interest on the house owned by the Catholic Worker Movement. In her letter to the city, she said, “We do not believe in the profit system, and so we cannot take profit or interest on our money. People who take a materialistic view of human service wish to make a profit but we are trying to do our duty by our service without wages to our brothers as Jesus commended in the Gospel (Matthew 25.)”

She was chided for this. Some thought the money should have been kept and used for the poor. A benefactor told Dorothy that it was interest from the benefactor’s estate that was donated; what was wrong with interest? Dorothy acknowledged she was only doing the best she knew how, and that,

[o]f course we are involved, the same as everyone else, in living off interest. We are all caught up in this same money economy. Just as “God writes straight with crooked lines,” so we too waver, struggle on our devious path – always aiming at God, even though we are conditioned by habits and ancestry, etc. We have free will, which is our greatest gift. We are free to choose, and as we see more clearly, our choice is more direct and easier to make. Be we all see through a glass darkly. It would be heaven to see Truth face to face…There is no simple solution. Let the priests and the economists get to work on it. It is a moral and an ethical problem.

Dorothy Day would be the first to say her poverty was voluntary. She did not expect everyone to live as she did. She felt profound allegiance with the poor, and chose the most personal approach of all to serving them: she became one of them, lived with them, ate with them, served them.

“Let the priests and the economists get to work on it.” That sounds like a perfectly reasonable idea, from a perfectly radical follower of Christ.

(image of Dorothy Day: copyright by Vivian Cherry)

Writing on The Corner over at National Review Online, Acton Research Director Samuel Gregg points to the election and, refreshingly, tells us that, “I’m not one of those who, in recent days, have seemed inclined to indulge their inner curmudgeon, apparently convinced that it’s more or less game-over for America and we’re doomed to Euro-serfdom.”

Gregg, author of the soon-to-be-released and available for pre-order Becoming Europe: Economic Decline, Culture, and How America Can Avoid a European Future (Encounter Books, January 2013), explains why there are, still, important differences between Eurotopia and the United States. For one thing:

… the strength and persistence of private entrepreneurship continues to substantially differentiate America’s economic culture from that of Europe. America remains ahead — and, in some areas, continues to pull ahead — of most of Europe when it comes to private innovation. As noted in a World Bank report earlier this year, the elements that fuel innovation, such as ease in obtaining patents and availability of venture capital, continue (at least for now) to be far stronger in America than in most of Europe.

The same report specified that it is young firms driving innovative growth in America. Among America’s leading innovators in the Industrial R&D Investment Scoreboard, more than half were created after 1975. They include firms such as eBay, Microsoft, Cisco, Amgen, Oracle, Google, and of course Apple. By contrast, only one in five leading innovators in Europe is young. In America, young firms make up an incredible 35 percent of total research and development done by leading innovators. Their European counterparts account for a mere 7 percent in the old continent. That’s great news for America and a major headache for Europe over the long term.

Read “Are We all Europeans Now?” by Samuel Gregg on NRO.

As a part of our evangelical outreach at Acton, we have commissioned four primers from different evangelical traditions on the intersection of faith, work, and economics. The books will be written from the Baptist, Wesleyan, Pentecostal, and Reformed traditions and will be released throughout this coming year.

The first book released is the Baptist primer written by Chad Brand. Chad is professor of Christian theology at The Southern Baptist Theological Seminary in Louisville, KY as well as the associate dean of Boyce College. He has served as pastor of three Southern Baptist churches and interim pastor of several others.

In Flourishing Faith, Dr. Chad Brand shows how by examining key issues of the history and theology of political economy: work, wealth, government, and taxation with its various implications. Brand then explores the philosophy of how government relates to political economy and highlights how Baptists have contributed. Insightful, provocative, and generous.

Regarding Flourishing Faith, Dr. David Allen, dean of the School of Theology at Southwestern Baptist Theological Seminary says:

Chad Brand has helped to fill a lacuna on the subject of work, economics, and civic stewardship in the Baptist tradition. Serving as something of a primer, Flourishing Faith examines key issues related to political economy such as vocational calling, wealth, government, and taxation. Interesting, informative, historically and biblically based, Chad’s book is an important and helpful addition in this sometimes neglected, but currently crucial area of our national life.

Christian’s Library Press has published this book and it is available here. Acton will be exhibiting at the Evangelical Theological Society’s annual meeting next week. This book along with others will be available for discounted purchase at Booth 121 in the Exhibit Hall.

In an essay for Big Questions Online, a site that examines questions of human purpose and ultimate reality, Rev. Robert Sirico considers whether morality is intrinsic to the free market:

Is a hammer intrinsically moral?

Your reply would most immediately be: “It depends on what it was used for. If employed to bash in the heads of people you do not like, the answer is no. If employed to help build a house for a homeless people, your answer might be yes. In either case, the precise answer is to say that the hammer is neither moral nor immoral; it is the person who chooses its use that can be evaluated morally.

Attending to these Big Questions will enable us to more deeply evaluate the economic organization of society. So the real issue here is not a financial one, but an anthropological one: What is man? Who am I? Why am I here? Where did I come from? Where am I going? What are my responsibilities to myself and others? How we answer these kinds of questions will have an enormous impact on every facet of our lives, including how we work and buy and sell, and how we believe such activities should be directed— in other words, on economics.

Read the rest of the article and join in the conversation at Big Questions Online.

Based on Nicholas Eberstadt’s book, A Nation of Takers, this Seussian video depicts the dangerous dependency of entitlements and the importance of liberty.

(Via: Values & Capitalism)

Washington Post columnist Robert Samuelson says everyone seems to understand that the private sector creates jobs. Everyone, that is, except the New York Times. Samuelson calls the Times’ decree of government job creation “simplistic” and that it has a “flat-earth quality”.

He explains that if the government adds jobs – expands government – it comes at taxpayer expense.

But if the people whose money is taken via taxation or borrowing had kept the money, they would have spent most or all of it on something — and that spending would have boosted employment.

Job creation in the private sector is mostly a spontaneous and circular process. People buy things they need and want. Or businesses and private investors take risks by investing in new products, technologies and factories. All this spending, driven by self-interest and the profit motive, supports more jobs. In a smoothly functioning market economy, the process feeds on itself. By contrast, public-sector employment grows only when government claims some private-sector income to pay its workers. Government is not creating jobs. It’s substituting public-sector workers for private-sector workers.

With knowledge of how the developing world struggles to create jobs, Juan José Daboub, former Managing Director of the World Bank, concurs: (more…)

Hurricanes almost always leave two things in their aftermath: broken windows and articles advocating the broken window fallacy.

As economist Don Boudreaux wrote earlier today, “Americans will soon be flooded by commentary that assures us that the silver lining around the destruction caused by hurricane Sandy is a stronger economy. Such nonsense always follows natural disasters.” The only detail Boudreaux gets wrong is that such nonsense has preceded the actual disaster. The Atlantic, wanting to get a jump on being wrong, published an article today at noon arguing that Hurricane Sandy will “stimulate the economy” in two ways:

First, the threat of a dangerous event pulls economic activity forward. Families stock up on extra food and supplies to prepare for a disaster. Second, and much more significantly, the aftermath of storms requires “replacement costs” that raise economic activity by forcing business and government to rebuild after a destructive event.

Frederic Bastiat provided the ultimate rebuttal to this spurious thinking 162 years ago in his essay ‘That Which is Seen, and That Which is Not Seen.’ So why do we people make the same claim that destruction is economically beneficial? Could it be that people are simply unaware of Bastiat’s “parable of the broken window”?

Back in August economist Bryan Caplan asked why the one group that should be familiar with Bastiat’s essay—economists—don’t universally love it:
(more…)

Bono, foreign aid, development, capitalismBono, lead singer of U2 and co-founder of charity-group ONE, recently offered some positive words about the role of markets in reducing global poverty and spurring economic development (HT):

The Irish singer and co-founder of ONE, a campaigning group that fights poverty and disease in Africa, said it had been “a humbling thing for me” to realize the importance of capitalism and entrepreneurialism in philanthropy, particularly as someone who “got into this as a righteous anger activist with all the cliches.”

“Job creators and innovators are just the key, and aid is just a bridge,” he told an audience of 200 leading technology entrepreneurs and investors at the F.ounders tech conference in Dublin. “We see it as startup money, investment in new countries. A humbling thing was to learn the role of commerce.”

The remarks have led to relative hype in “pro-market” circles, but I’d remind folks that these are brief statements made to a small group of innovators and entrepreneurs. ONE has plenty of wrinkles in its past, and Bono’s primary legacy in this arena consists of promoting the types of ineffective, top-down social engineering that groups like PovertyCure seek to expose. When Bono continues to claim that foreign aid, as he understands it, is still a “bridge”—even if just a bridge—it’s reasonable to assume that his orientation toward “bridge-building” has been left largely unchanged by his newfound appreciation for markets.

But although I’m not overly confident that Bono’s sudden self-awareness is enough to radically shift his aid efforts away from fostering dependency, this small admission helps illuminate one of our key obstacles to doing good in the world: overzealousness paired with overconfidence.
(more…)

Blog author: jcarter
Tuesday, October 23, 2012
By

In March 2009 the deputy chief of Italy’s Civil Protection Department and six scientists who were members of a scientific advisory body to the Department held a meeting and then a press conference, during which they downplayed the possibility of an earthquake. Six days later an earthquake of magnitude 6.3 killed 308 people in L’Aquila, a city central Italy. Yesterday, the seven men were convicted of manslaughter and sentenced to six years in prison for failing to give adequate warning to the residents about the deadly disaster.

The news reports imply that the scientists were sentenced because of their failure to predict the earthquake. But Roger Pielke, Jr., a professor of environmental studies at the University of Colorado, says “one interpretation of the Major Risks Committee’s statements is that they were not specifically about earthquakes at all, but instead were about which individuals the public should view as legitimate and authoritative and which they should not.”

Whether it was because of their predictions or because of the authority with which they made their claims, the scientists were sent to prison for making an erroneous prediction about how nature would act. Such a judicial ruling would strike most of us Americans as absurd. We’d rightly assume that it might provide scientists with an incentive to not make any predictions at all. As Thomas H. Jordan, a professor at the University of Southern California, says, “I’m afraid it’s going to teach scientists to keep their mouths shut.”
(more…)