Posts tagged with: economics

noun_project_19538As the US federal government sidled up to the debt ceiling earlier this week without quite running into it, one of the key arguments in favor of raising the debt ceiling was that it is immoral to breach a contract. The federal government has creditors, both from whom it has borrowed money and to whom it has promised transfer payments, and it has an obligation to fulfill those promises.

As Joe Carter argued here, “Member of Congress who are refusing to raise the debt ceiling (or raise taxes) until their ancillary demands are met are acting immorally, since they are refusing to pay the debts they themselves authorized.”

But as Connie Cass writes, the idea that the United States has never defaulted isn’t quite true. As she writes,

America has briefly stiffed some of its creditors on at least two occasions.

Once, the young nation had a dramatic excuse: The Treasury was empty, the White House and Capitol were charred ruins, even the troops fighting the War of 1812 weren’t getting paid.

A second time, in 1979, was a back-office glitch that ended up costing taxpayers billions of dollars. The Treasury Department blamed the mishap on a crush of paperwork partly caused by lawmakers who — this will sound familiar — bickered too long before raising the nation’s debt limit.

So if it is immoral to default, then America has done so at least twice.
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Blog author: dpahman
Monday, October 14, 2013
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Among many other bizarre claims in his most recent article at The American Conservative, Patrick Deneen writes,

Today’s conservatives are liberals — they favor an economy that wreaks “creative destruction,” especially on the mass of “non-winners,” increasingly controlled by a few powerful actors who secure special benefits for themselves and their heirs….

Pace Inigo Montoya, I actually have no idea what Deneen thinks creative destruction means in this context.

Setting aside the question of whether or not it is a bad thing (or accurate, for that matter) to say that “[t]oday’s conservatives are liberals,” I am far more concerned with how Deneen thinks creative destruction is “wreaked” upon “non-winners.” This is further complicated by his implication that creative destruction supports, rather than threatens, “a few powerful actors.” (more…)

Defending the Free Market: The Moral Case for a Free Economy

Defending the Free Market: The Moral Case for a Free Economy

Father Sirico argues that a free economy actually promotes charity, selflessness, and kindness, and why free-market capitalism is not only the best way to ensure individual success and national prosperity but is also the surest route to a moral and socially-just society.

Visit the official website at www.defendingthefreemarket.com

This short, satirical video sums up our mess.

Becoming Europe: Economic Decline, Culture, and How America Can Avoid a European Future

Becoming Europe: Economic Decline, Culture, and How America Can Avoid a European Future

In Becoming Europe, Samuel Gregg examines economic culture - the values and institutions that inform our economic priorities - to explain how European economic life has drifted in the direction of what Alexis de Tocqueville called "soft despotism", and the ways in which similar trends are manifesting themselves in the United States.

Visit the official website at www.becomingeurope.com

Blog author: johnteevan
Monday, October 7, 2013
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Photo Credit: Alan Cleaver via Compfight cc

Photo Credit: Alan Cleaver via Compfight cc

This first appeared in my newsletter, Economic Prospect, in late 2008. Looking back after five years I still like it.

The American failure to save is matched by our insistence on spending to have it all. One part of the problem is the consumer’s love of debt. The other part is the government’s love of debt. Both love debt to enjoy things now and to put off the day of reckoning. How did we get so far from the idea of being content with having enough food, clothing, and shelter?

  1. This is a complex issue based at first in ‘scarcity’ which leads people to create products to fill real needs. When these products are produced people have jobs and can afford more products. Say’s Law says that production creates its own demand.
  2. There comes a point where we move beyond some invisible line and marketing takes over to create imagined needs in people. These needs are filled by more products creating more jobs. This happened after WW2 and made us very prosperous.
  3. Then there is a third stage when the credit industry takes over and tries to convince people to borrow not just for houses or cars (durables) but for anything to enhance their way of life. This started in the 1970s. Consumer debt is $2 trillion but this kind of borrowing creates still more jobs at least for as long as the party lasts.

But the day of reckoning has arrived. Will we get the point and change our behavior? Apparently not. First, the government sold bonds, then raided the trust funds (Social Security), then we borrow to stimulate the economy…then we just borrow without limit.

If Americans are not saving, who will loan us all this money? The answer is the Chinese and Asians who are amazing savers. They will loan us the money. China already owns nearly $2 trillion in U.S. government bonds. This is not a small issue.

Economics in One Lesson : The Shortest and Surest Way to Understand Basic Economics

Economics in One Lesson : The Shortest and Surest Way to Understand Basic Economics

This classic work provides the layman with a clear understanding of the economic way of thinking. A must-read for the beginner!

Wilkins Micawber from David Copperfield art by Frank Reynolds (2)

Wilkins Micawber, the namesake for the Micawber Principle.

Joe Carter points to a Lifehacker article that sums up two basic equations that lead to the creation of wealth (with what I consider to be a clarifying correction applied in the first formula):

Income > spending = surplus

Surplus x time = wealth

Likewise, Wilhelm Röpke, in his A Humane Economy, points to two equations arising from classical literature that connect surplus with happiness and deficit to misery (the Micawber Principle).

According to Mr. Micawber from Dickens’ David Copperfield:

Annual income £20, annual expenditure £19.975 = happiness

Annual income £20, annual expenditure £20.025 = misery
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DollarSignCapitalism is routinely castigated as an enemy of the arts, with much of the finger-pointing bent toward monsters of profit and efficiency — drooling only for money, caring nothing for beauty, and so on. Other critiques take aim at more systemic features, fearing that the type of industrialization that markets sometimes tend toward will inevitably detach artists from healthy social contexts, sucking dry any potential for flourishing as a result.

Yet while free economies certainly introduce a unique series of challenges for artists and consumers alike, and despite the wide array of bottom-dollar record-company execs and merchandising-obsessed Hollywood crackpots that demonstrate such obstacles, recent increases in economic empowerment have also led to plenty of artistic empowerment in turn.

Empowered to Create

The more obvious and overarching examples of this have to do with the simple ways in which widespread prosperity has freed up our time, energy, and resources. As collaboration and innovation accelerate, folks are continuing to discover new ways of doing more with less. As result, the tools and time needed to participate in a variety of artistic ventures, from hand-painting to stage acting to music production, are closer to common fingers than ever before.

Of course, market forces aren’t perfect. As channels of culture, they mostly funnel what they funnel, and that includes squalid appeals to the lowest common denominator. But neither are such forces limited to the hands of the tasteless and trite. Indeed, despite the best efforts of the powerful and privileged, many artists are now finding themselves increasingly equipped to bypass the big shots altogether, taking their art and their audiences with them, from the purchase of their paintbrushes to the publication of their portrait.

As a young boy, I dreamed of one day becoming a filmmaker. After working only two summers at minimum wage, I was able to save up enough cash to put that dream to the test, purchasing a-state of-the-art video camera and my very own digital editing equipment. Thanks to the innovations of others, and the basic freedoms that unleashed it all in the first place, at the age of 16, I was able to secure the tools needed to begin my work — tools that, only a decade prior, were confined to the hands of Hollywood bigwigs. (more…)