Posts tagged with: economics

polish moneyPoland’s prime minister, Donald Tusk, announced Wednesday that the government would attempt to cut government debt by taking money from its citizens’ private pension funds. Poland currently has a two-fold pension system: mandatory contributions are made to the state pension fund and then to private funds. It is the state funds, known as ZUS, that the Polish government plans to “transfer” money from. According to Reuters:

…Prime Minister Donald Tusk said private funds within the state-guaranteed system would have their bond holdings transferred to a state pension vehicle, but keep their equity holdings.

He said that what remained in citizens’ pension pots in the private funds will be gradually transferred into the state vehicle over the last 10 years before savers hit retirement age.

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noun_project_8671For this week’s Acton Commentary, ahead of Labor Day weekend, I write about “working harder and smarter,” lessons we can learn from Ashton Kutcher and Mike Rowe.

One of the implications of connecting hard work with smart work is that the difficulty of work on its own does not determine its value in the marketplace. It isn’t a question of how hard you are working, but how hard you are working in productive service. This is why Lester DeKoster writes,

The paycheck follows upon work. Often the harder we work, the larger the paycheck—though, as many workers know, this unfortunately is not an invariable law. That is because, as we shall see, work and wage are not related as cause and effect.

He refers to money as the “bait,” which induces us to work and which tends to direct our work in service to others. But the bait can become a “trap” if we conflate the meaning of work with the wage: “Work endows life with meaning because of what work is, not because of what it earns. Paychecks buy goods and services provided to us through the gift of selves by others, but money buys no meaning. Life’s meanings are not for sale!”
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becomingeuropeBecoming Europe, the latest book from Acton’s Director of Research Samuel Gregg, has been reviewed by Books & Culture: A Christian Review. Theodore Roosevelt Malloch, a research professor at Yale University’s Center for Faith & Culture, begins his review with a series of question, including, “Will entrepreneurship vanish in America, as it has, more or less, in Europe? And what will be the moral and political costs of what Gregg describes as ‘reduced freedoms’?”

Malloch notes how Gregg walks the reader through most of Europe’s long-standing desire to provide full employment and “to preserve the market from its own inherent instabilities“: (more…)

Blog author: jballor
Friday, August 23, 2013
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I ran across this video yesterday (courtesy of ESA), which I thought presented some interesting challenges and issues:

The video was presented on Upworthy as an example of something “all white people could do to make the world a better place,” that is, use their white privilege to address injustices.

A number of economists, including Milton Friedman and Thomas Sowell, have written about the power of the market economy to overcome racism and discrimination, to put people into relationships on the basis of economic decision-making rather than skin color. As Friedman contended,

the preserves of discrimination in any society are the areas that are most monopolistic in character, whereas discrimination against groups of particular color or religion is least in those areas where there is the greatest freedom of competition.

But as a conversation I had with some others about the video also illustrates, there are times when (at least in the short run interests of the firm), something like profiling can seem to make some economic sense. The successful passing of one bad check can really hurt a store’s margins. Practically speaking the stores often take a complete loss.
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It sounds like a late-night tv scam: make tens of thousands of dollars and don’t work at all! And yet, it turns out that the U.S. government is offering just such a deal. For instance, a welfare recipient in the state of Connecticut can make up to uncle sam's money$38,761, according to a new Cato Institute study. In Hawaii, the figure is $49,175, over 200 percent above the Federal Poverty Level. As The Heritage Foundation has pointed out, nearly half of Americans pay no income tax at this point in history.

Michael Tanner and Charles Hughes have written “Work versus Welfare Trade-off 2013: An Analysis of the Total Level of Welfare Benefits by State.” Tanner has this to say about paying people not to work:

To be clear: There is no evidence that people on welfare are lazy. Indeed, surveys of them consistently show their desire for a job. But they’re also not stupid. If you pay them more not to work than they can earn by working, many will choose not to work.

While this makes sense for them in the short term, it may actually hurt them over the long term. One of the most important steps toward avoiding or getting out of poverty is a job.Only 2.6 percent of full-time workers are poor, vs. 23.9 percent of adults who don’t work. And, while many anti-poverty activists decry low-wage jobs, even starting at a minimum-wage job can be a springboard out of poverty.

Thus, by providing such generous welfare payments, we may actually not be helping recipients.

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Wizard of Id - Minimum WageThe protests organized by labor organizations to advocate for an increase in the minimum wage have garnered attention, most recently from the NYT, which editorialized in favor of such moves. Over at Think Christian, I weigh in with an attempt to provide some more of the complex context behind the moral evaluation of such mandates.

In the piece, I’m really less interested in the plight of current-minimum wage workers relative to those who might become minimum-wage workers with an increase, those who are currently priced-out of labor markets because of minimum-wage legislation, and those who will be priced out with an increase.

Earlier this week, Joseph Sunde discussed the issue with an eye towards the price of labor: “Prices are not play things.” I largely agree with Joseph about the significance of the price associated with various kinds of labor. The signal that minimum-wage workers should be receiving is that their work is not that specialized or valuable in the marketplace. You can rage against the values of the marketplace all you like, but that’s what the prices signal.
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For a limited time, the Acton Book Shop is offering a book by rabbinical scholar Dr. Joseph Isaac Lifshitz for free: Judaism, Law & The Free Market: An Analysis. Acton released this title at an academic conference late last year, and in it, Lifshitz judaism_law_and_free_marketexamines the Jewish treatment of themes such as property rights, social welfare, charity, generosity, competition, and concepts of order.

There are three ways to download this title.

Click here to download this title as ePub.

Click here to download this title for Kindle.

Click here to download as a PDF file.

Again, this is a limited time offer.