Posts tagged with: economics

Trade and Mutual AidIn the forthcoming issue of Comment magazine, I examine how free trade orients us towards the good of others. In doing so, I argue against the value of pious banalities and cheap slogans. I include examples like, “Go in peace; keep warm and well fed,” or, “When goods do not cross borders, armies will.” The latter is often attributed to Bastiat, and while it captures the spirit, if not the letter of Bastiat’s views, the closest analogue is actually found in Otto Tod Mallery: “If soldiers are not to cross international boundaries on missions of war,” wrote Mallery in 1943, then “goods must cross them on missions of peace.”

I was struck by the disconnect between ideology and reality, or between idealism and realism, in an anecdote from a recent foreign policy speech from Sen. Rand Paul. As Paul notes,

In George Kennan’s biography, John Gaddis describes President Clinton asking Strobe Talbot “why don’t we have a concept as succinct as ‘containment.'” Talbot’s response [was] “that ‘containment’ had been a misleading oversimplification; strategy could not be made to fit a bumper sticker. The president laughed… “that’s why Kennan’s a great diplomat and scholar and not a politician.”

I guess that’s also the reason that I’ll never be a politician, either. As Lord Acton observed, “Every doctrine to become popular, must be made superficial, exaggerated, untrue. We must always distinguish the real essence from the conveyance, especially in political economy.” The key for responsible governance is not to lose sight of the complexity that lies behind popular exaggerations and conveyances.

As I argue in “Trade and Mutual Aid,” the temptation to rest easy with simple formulas to complex problems is common, but must be resisted: “Divorced
from a more comprehensive conception of the human person and social flourishing, an uncritical reliance on free trade to solve the world’s problems can well become destructive.” Even so, I conclude, “Free trade is a system that imperfectly, and yet with some measure of success—as Bono and countless others are beginning to recognize anew—orients us toward the good of others.” In the course of this piece, I draw on a variety of sources, including Frédéric Bastiat, Adam Smith, John Calvin, Johannes Althusius, Abraham Kuyper, Herman Bavinck, Pope Paul VI, and Friedrich Hayek.

To get your copy of the Comment issue on the topic of persuasion, including my piece on the fundamental persuasive nature of exchange, “Trade and Mutual Aid,” subscribe by March 1. You’ll also find content from new editor James K.A. Smith, Anne Snyder, Jim Belcher, Ashley Berner, Jonathan Chaplin, Marilyn McEntyre, Janet Epp Buckingham, D. Bruce Lockerbie, Calvin Seerveld, Natalie Race Whitaker, and Nicholas Wolterstorff.

Flourishing Churches and CommunitiesI recently wrote about the need to reach beyond an earthbound economics, re-orienting our thinking around a more transcendent framework that requires active spiritual engagement and discernment. Even as Christians, far too often we set our focus too strongly on temporal features like material needs, happiness, and quality of life—all of which come into play accordingly—without first concerning ourselves with what God is actually calling us to do as individuals.

Transcendent ends will only come from transcendent beginnings, and those beginnings will only be ordered properly if we take the time to identify what objective truths exist for society and how exactly God is calling us to participate within that broader social framework.

As Charlie Self notes in his book, Flourishing Churches and Communities: A Pentecostal Primer on Faith, Work, and Economics for Spirit-Empowered Discipleship, “cultural, economic, and social institutions are built on transcendent moral foundations,” and rely on spiritually transformed individuals to function and flourish toward God’s ultimate ends. By structuring our institutions around this understanding, we create more opportunity for society to reach past the mere meddling of man.

As Self explains, properly rooted ourselves in transcendent truths opens the door to a broader, fuller approach to “service” itself:

Economic and personal liberties must be united with the rule of law to nurture loving and just expressions and allow all people to flourish. Objective truths, which guide behavior and relationships, do indeed exist. There must be explicit and implicit values that ensure cohesive and prosperous living. The Holy Spirit gives discernment and wisdom, enabling Christians to engage virtuously in commerce and culture without being enslaved by the perversions of liberty caused by rebellion and sin. (more…)

Coolidge and pitching great Walter Johnson.

Coolidge and pitching great Walter Johnson.

Calvin Coolidge is ripe for national recognition and his wisdom is being sought out perhaps now more than ever. If you’re a voracious reader of commentary and columns you’ve noticed his common sense adages are being unearthed at a rapid pace. Most of the credit and recognition for the Coolidge revival goes to Amity Shlaes. Her newly released and splendid biography Coolidge can’t be recommended enough. (Full review on the PowerBlog forthcoming)

Coolidge was the last president to oversee federal budget surpluses for every year in office. He cut taxes and government while preaching the wisdom of the American Founders. He was dismissed by many intellectual contemporaries and most historians ignored him or discounted him as some sort of throwback that came to power by luck. A mere placeholder in between the more important Progressive and New Deal eras. But as our spending and debt crisis continues to spiral out of control, America is starving for economic heroes. There is so little courage in Washington to make the tough choices and address the crisis directly. The spending binge has become a mockery of America’s foundations and ideals.

However, This fiscal insanity, debt, and rapid centralization of power is magnifying Coolidge’s heroics. His words and deeds are really timeless though, and deeply rooted in America’s Founding. The principles and lessons only need to be put into practice. Below is a great excerpt from the introduction of Shlaes’s biography:

Our great presidential heroes have often been war leaders, generals, and commanders. That seems natural to us. The big personalities of some presidents have drawn attention, hostile or friendly: Lyndon Johnson, Franklin Roosevelt. There are plenty of personal events in Coolidge’s life, many of them sad, but he was principally a man of work. Indeed, Coolidge was a rare kind of hero: a minimalist president, an economic general of budgeting and tax cuts. Economic heroism is subtler than other forms of heroism, harder to appreciate.

Georgene Rice recently interviewed Samuel Gregg about his latest book, Becoming Europe: Economic Decline, Culture, and How America can Avoid a European Future.  Her show airs on KDPQ FM in Portland, Oregon.

Rice says that Becoming Europe is “sobering, but not hopeless.” She says that it

Exposes the true scope of the crisis gripping our transatlantic cousins: the crush of economic debt, governments consuming close to 50 percent of the economy, high taxation, sharply aging populations, crony capitalism, and staggeringly high numbers of public sector workers being supported by an ever dwindling class of private sector employees. Most alarmingly, the book Becoming Europe reveals that America has already moved in the direction of the European state, much closer than most Americans realize.

Listen to the full interview here:

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You can learn more about Becoming Europe and Samuel Gregg here.

Reflecting on the pontificate of Pope Benedict XVI, Philip Booth, professor at Cass Business School in London, says the pope was clear on his economic ideas.

As he said in Caritas in Veritate: “Economy and finance, as instruments, can be used badly when those at the helm are motivated by purely selfish ends. But it is man’s darkened reason that produces these consequences, not the instrument per se”. In other words, credit derivative swaps are not evil, but those who abuse them might be.

He had a similarly wise understanding of the problems facing the welfare state. As he stated elsewhere: “There will always be suffering which cries out for consolation and help. The state which would provide everything, absorbing everything into itself, would ultimately become a mere bureaucracy, incapable of guaranteeing the very thing that the suffering person needs: namely, loving personal concern. We do not need a state which regulates and controls everything”. Solidarity as a virtue is far superior to an intrusive welfare state.

Booth goes on to say that Benedict, in this same encyclical, states that the state’s role is to serve, and that family and civil society must take priority over the state.

Read “Pope Benedict saw why the capitalist system is virtuous” at City A.M.

Philip Booth is author of International Aid and Integral Human Development, available in the Acton Book Shop. He is author of the Acton Commentary, “Solidarity, Charity and Government Aid.”

As occurrences of preventable diseases increase and the debt deepens, some look to “sin taxes” as an easy to solution to both problems. Thirty-three states have even gone as far as to implement a soda tax in an attempt to curb obesity. At first glance sin taxes seem to be a good idea, but they can actually cause more harm than good.

The Mercatus Center at George Mason University has just published a working paper on sin taxes and their negative effects. The study was conducted by Adam J. Hoffer, William F. Shughart II, and Michael D. Thomas.  They have found that taxing specific goods or services based on perceived “negative externalities their consumption generates”  is an ineffective source of revenue.

The authors summarize their findings in a recent U.S. News and World Report op-ed:

  • Lobbying: Millions of dollars have been spent to thwart taxation of the soft drink industry’s products and to prevent existing taxes from being raised. In 2009 alone, the industry spent more than $57 million on lobbying. Such lobbying expenditures are socially wasteful. How much money is now being spent attempting to block Mayor Bloomberg’s ban on 32-ounce soft drink containers?
  • Regressive taxation: Far from being income-neutral, such taxes are regressive because their burden falls most heavily on people with the fewest options—the poor. Low-income households who continue to purchase goods that are sin-taxed will have even less money left over to spend on other items.
  • Revenue not used for its intended purpose: Sin taxes raise revenue by transferring money from those who continue to buy the taxed items straight to the coffers of the public treasury. Taxing sin might be reasonable if the revenue from these taxes was used to address the underlying negative consequences of consumption. In the real world, however, money generated by the tobacco settlement financed general spending and not smoking cessation programs or treating smoking-related diseases. The social security trust fund has been replaced with treasury IOUs, and the highway trust fund filled by taxing the sin of driving will fail to meet obligations as early as 2015.

You can read the entire working paper, “Sin Taxes: Size, Growth, and the Creation of the Sindustry” here. Acton president and co-founder, Rev. Robert Sirico has also written about the consequences of sin taxes. You can read his “Hate the Sin, Tax the Sinner?” here.

After decades of bloody turmoil between Protestants and Catholics in Northern Ireland, on March 26, 2007, Ian Paisley and Gerry Adams, sitting side-by-side at Stormont confirmed that power-sharing will return to Northern Ireland on May 8th of that same year. It was supposed to be a “new era.” Unfortunately, in order for Ireland to recover from decades of a very complicated history it needs a growing economy. Northern Ireland’s economy is in steep decline because it remains such a high-taxed welfare state.

For example, jobless remains at extremely high levels. The BBC reports that between June and August of 2011 8.1% of the population were unemployed. In fact,

Over the year, the number of people claiming unemployment benefit has increased by 4.8%, to 63,400, while in the UK as a whole the figure has fallen by 1.4%. A large proportion of the unemployed are young people, with 21.1% of those between aged between 18 and 24 now unemployed, up 3.0% over the year.

Northern Ireland also has high minimum wage rates—about $7.87/hr for workers 18-20 years-old—and a ridiculous corporate tax rate of 24%. This “one-two punch” does nothing but discourage the starting of new businesses, foreign direct investment, and provide incentives for companies not to hire young people. The Central Bank of Ireland, in a moment of common sense, now believes that maybe, just maybe, high corporate taxes stifle job creation. According to the BBC,
(more…)

Blog author: jcarter
Friday, February 8, 2013
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In this abridged version of the video series Economics for Everybody, R.C Sproul Jr. explains why it’s important for Christians to understand economics. Economics Has Consequences pulls together some of the key aspects of the original series into one film, including introductions to such basic principles of economics as stewardship, civil government, work, wealth, and entrepreneurism. The second section explores the impact of government intervention on education, the money supply, welfare, depressions, markets, and more.

The video shows why economic freedom is directly related to religious freedom, and that the loss of one inevitably leads to the loss of the other.

JMM_15.2_WebThe newest issue of the Journal of Markets & Morality has been published. The issue is available in digital format online and should be arriving in print in the next few weeks for subscribers. This issue continues to offer academic engagement with the morality of the marketplace and with faith and the free society, including articles on economic engagement with Pope Benedict XVI’s encyclical letter Caritas in Veritate, biblical teaching on wealth and poverty, schools as social enterprises, the Reformed philosopher Herman Dooyeweerd’s economic theory, and much more.

As we have done in the past, Jordan Ballor’s editorial is open access, even to non-subscribers. In “Between Greedy Individualism Editorial and Benevolent Collectivism” he examines the enduring impact of Michael Novak’s The Spirit of Democratic Capitalism, writing,

At the time of its publication, Novak’s work must have been like a window thrust wide open in a dank room, introducing a breath of fresh air and the sanitizing rays of sunlight. Against ideologies that posit state power as a neutral or even benevolent force arising of necessity against the rapaciousness of the market, Novak observed instead that it was democratic capitalism that arose first as a system designed to check the invasiveness of state tyranny. The “founders of democratic capitalism,” wrote Novak, “wished to build a center of power to rival the power of the state.” Indeed, “they did not fear unrestrained economic power as much as they feared political tyranny.” Still more would they fear the union of economic and political power that we find all too often today in corrupt and cronyist regimes.

You can read his full editorial here. (more…)

Over at Fieldnotes Magazine, Matthew Kaemingk offers a good reminder that in our social solutions-seeking we needn’t be limited to thinking only in terms of market and state. By boxing ourselves in as such, Kaemingk argues, Christians risk an overly simplistic, non-Biblical view of human needs and human destiny:

When presented with almost any social problem (education, health care, poverty, family life, and so on), today’s leaders typically point to one of two possible solutions—a freer market or a stronger state. But in opposition to these rather myopic solutions, I think there is a more complex and biblical lens through which leaders can consider the social eco-system and the people who move around in it.

Instead of simplistic descriptions of human beings as either clients of the state or competitors in the market, the Christian Scriptures present humanity in a refreshingly complex way. We find a complex creature with a wide variety of gifts, abilities, interests, aspects, loyalties, and solidarities. Created in the image of God, human beings in the Bible are anything but simple. They are musical, communal, religious, artistic, familial, charitable, scientific, literary, moral, athletic, fun, and funny. The robust anthropology found in the Bible depicts a creature that could never be fully defined, controlled, content, or nourished by the market or the state alone—thank God.

This perspective ties in well with Rev. Robert Sirico’s final chapter in his book, Defending the Free Market, where he criticizes the popular notion of homo economicus, from which plenty of bad economic policy and market decision-making has been generated:

Any man who was only economic man would be a lost soul. And any civilization that produced only homines economici to fill its markets, courts, legislative bodies, and other institutions would soon enough be a lost civilization. Familial love, voluntary dedication to philanthropy and faith, the creation of art and music would be at their most minimal level, and whole sectors of life would completely vanish. Focusing the whole of life on the acquisition of quantifiable goods does not bring true happiness or peace, as almost everyone knows. We all have material appetites, but we do not (pray God) always feed them…Human beings find ultimate fulfillment not in acquisition but in developing, sharing, and using their God-given creative capacities for good and giving themselves to others. (more…)