Posts tagged with: International economics

Blog author: ehilton
Monday, May 4, 2015

global shopping cartAt The Stream, Anne Bradley writes about the freedom that free trade brings. Why does free trade matter?

  • We live in a world of scarcity: we have unlimited wants and limited means (resources) to satisfy those wants.
  • As individuals, we aren’t good at producing everything we need to survive. We are limited in our talents and opportunities.
  • We flourish when we are free to trade the things we are better at producing for the things we are not as good at producing.


Sic semper tyrannis, eh?

Sic semper tyrannis, eh?

The Burger King acquisition of Tim Hortons and the resulting plans to move the corporate headquarters under the taxing authority of the Canadian government is being derided by some as unpatriotic.

This is the latest in a long string of similar phenomena over the last decade or so, as we see patriotic loyalty (or the lack thereof) becoming a political issue in the context of offshoring, globalization, outsourcing, and so on.

A response to the charge of being unpatriotic would seem to me to require at least two points.

First, the responsibilities of a business owner, CEO, or corporate board are different than those of a government politician. They have different loyalties, so to speak. So to judge the one by the standards of the other is an exercise in missing the point.

Second, I would respond with a query along these lines: Which is more unpatriotic, a greater disservice to a nation, for someone to be involved in: moving a business from one country to another or making the tax environment in a country inhospitable to businesses?

comparativeadvantageNote: This is the latest entry in the Acton blog series, “What Christians Should Know About Economics.” For other entries in the series see this post.

The Term: Comparative advantage

What it Means: The ability of an individual or group of individual (e.g., a business firm) to produce goods or services at a lower opportunity cost than other individuals or groups.

Why it Matters: There is a story of the distinguished British biologist, J.B.S. Haldane, who found himself in the company of a group of theologians. On being asked what one could conclude as to the nature of the Creator from a study of his creation, Haldane is said to have answered, “An inordinate fondness for beetles.”

When we examine creation to uncover what it reveals about the character of God, one of the things we discover time and time again is the Creator’s fondness for diversity. Like Haldane, we can see this by looking at biology (e.g., there are more species of beetle than birds or mammals combined). But we can also find it when we turn to economics.

A primary example of God’s enthusiasm for diversity is the concept of comparative advantage. While the definition of the them makes it sounds dull and wonky, comparative advantage is a beautiful, theologically profound norm of creation.

Fully appreciating the nuances of the ideas requires timely reflection. But understanding it can be achieved when a few minutes. In this brief video, economist Donald J. Boudreaux does a masterful job of explaining how, when combined with trade, comparative advantage improves human communities.

bitcoin-wallBitcoin is dead, long live Bitcoin.

A few weeks ago the IRS killed off any chance that Bitcoin could become a mainstream currency. That’s probably for the best since it clears the way for it to become something much more important: the world’s first completely open financial network.

Timothy B. Lee has a superb article explaining why this could be transformative. Lee highlights one particularly helpful innovation:

One obvious application is international money transfers. Companies like Western Union and Moneygram can charge as much as 8 percent to transfer cash from one country to another, and transfers can take as long as 3 days to complete. In contrast, Bitcoin transactions only take about 30 minutes to clear, and Bitcoin transaction fees could be a lot less than 8 percent.

An “alternative to Western Union” doesn’t sound revolutionary, does it? Now look at this graphic produced by The Daily Mail which shows how much money is being sent by migrants to their families back home.

Blog author: ehilton
Wednesday, February 5, 2014

tillingHelping people get out of poverty is hard, dirty work. It isn’t glamorous. Most of those involved do not get to wander around the developing world wearing cool blue shades and giving sound bites. In fact, the Campaign for Boring Development is so insistent on this, they’ve written a manifesto to drive home the point: development work can be…boring.

  • Development Does Not Photograph Well. Watching a family till their land does not make for riveting video. It’s just plain ole hard work.
  • “Making the Lives of the Poor Better” is not the same thing as ”Fighting Poverty.”


PovertyCure, an international coalition of more than 250 organizations and 1 million individuals (the Acton Institute is a founding partner), is seeking entries for their International Short Film Festival, slated for December 12, 2013 in New York DRCity.

Guidelines for the film festival may be found here. With $30,000 in prizes, PovertyCure is seeking short films (25 minutes or less in length) that “push the boundaries” of thinking about poverty and ways to alleviate it. Since PovertyCure’s vision of poverty alleviation runs against the grain of foreign aid and international “hand-outs”, the organization is looking for creative narrative, documentary, and music video films that also demonstrate new, innovative ways of seeking solutions to global poverty. By looking above and beyond the traditional way of responding to poverty and international crises that stem from poverty, film-makers are encouraged to visualize new ways of tapping into human potential, illustrating not only what helps lift humans from poverty, but also what impedes poverty alleviation.

Films may be submitted via With the code 2WG2BWF, Acton PowerBlog readers can submit without having to pay the entry fee ($30 for non-students, $25 for students.) Entries must be made by September 9, 2013, with a late deadline of September 30, 2013. Again, all information regarding the PovertyCure Short Film Festival can be found by visiting their page.

[Note: This is the third entry in a three part series. You can read the introductory post here and part two here.]

The Disadvantages of Bitcoin

For people who are not obsessed with anonymity and are not waiting for the U.S. to return to the gold standard, the reasons for avoiding entering the Bitcoin market are numerous:

1. Convertibility – Whereas other currencies are convertible into other financial instruments (dollars to checks to certificates of deposit, etc.) and through numerous third-party services (e.g., Visa, PayPal, Citibank), commodity currencies like Bitcoin can only be exchanged for fiat currencies—and then only through an online exchange. Indeed, unless your computer is working overtime on Bitcoin mining, the only way to acquire the currency is to buy it from one of the 30 online exchanges.

These exchanges are completely unregulated and are subject to problems that do not affect other financial markets. For instance, in 2011 the largest Bitcoin exchange, MTGox, had a security breach that resulted in the theft of nearly $9 million worth of Bitcoins. The theft caused the value of Bitcoins to crash from $17.50 to one cent before the market was able to recover.

2. Instability – The MTGox breach—and the subsequent market crash—taught Bitcoin owners a harsh lesson about commodity currencies: they can be wildly unstable. Over the 8 month span from October 1 2010 to June 9 2011, the market value of Bitcoins skyrocketed 9667-fold from a value of $0.06 to $29.

The rate had dropped in 2012 and at the end of last year a Bitcoin was worth only $13.51. Last week, though, Bitcoins were trading as high as $266 before plummeting to less than $100. Anyone who had bought $1,000 worth of currency in October 2010 would theoretically have $4.4 million worth of Bitcoins. However, the convertibility problem would make it nearly impossible to extract that money without crashing the market and devaluing the entire currency. A gradual sell-off over an extended period of time would be necessary to take advantage of increase in valuation.

Still, being the seller of the overvalued currency is preferable to being the buyer. The Winklevoss twins, millionaires famous for their legal battle with Facebook, claim to own around one percent of all Bitcoins currently in existence (around 108,000). They began buying the currency in 2012, making some early Bitcoin holders very rich.