Posts tagged with: markets

Blog author: jballor
posted by on Thursday, March 18, 2010

In this week’s Acton Commentary I expand on a minor meme floating around the web towards the end of last year that criticized the purported claim made by Lord Brian Griffiths, a Goldman Sachs advisor and vice chairman: “The injunction of Jesus to love others as ourselves is an endorsement of self-interest.”

I do a couple of things in this piece. First, I show that Griffith’s claim was rather different than that reported by various news outlets. Second, I place his reported comments within the broader context, which includes a greater emphasis on generosity than on self-interest. The entire transcript (PDF) of the panel discussion from which the quote was taken is an interesting read.

For instance, Griffiths also says this in the context of the question of ordering self-interest to serve justice: “…nobody, I think, on this panel believes in completely free markets. In fact, I don’t think I know anyone even in Goldman who believes in completely free markets.” By “completely free markets” Griffiths is talking about a pure lassez-faire view of the market. The broader context of Griffiths comments, including his emphasis on generosity and his qualification of endorsement of the market, should serve adequate notice to anyone who seeks to characterize him as a espousing some kind of radical view incompatible with Christian teaching. For more on the theological backgrounds of this topic, see my post over at Mere Comments.

And for even more background on Griffiths views, in addition to his Globalization, Poverty, and International Development, check out his plenary address, which includes endorsement of a kind of cap-and-trade system on carbon markets, given at 2008′s Acton University:

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In the Orange County Register, Senior Editorial Writer Alan Bock reviews the Acton Institute book, “Environmental Stewardship in the Judeo-Christian Tradition.” (Available in the Acton Bookshoppe for the bargain price of $6).

Environmental Stewardship
The book might be viewed as an extended rebuttal to a famous 1967 Science magazine article by Lynn White that contended that the biblical injunction for people to have “dominion” over the Earth led to an arrogant view toward the environment that led to widespread environmental despoliation. The proper religious attitude toward the Earth, the authors argue, is one of stewardship, which includes using Earth’s resources to improve the lot of humankind, but doing so with an attitude of responsibility and even love, taking care not to destroy what cannot be replaced. Mistakes certainly have been made along the way, but these have resulted from an imperfect understanding of the requirements of stewardship – often by people who were not motivated by religious attitudes – rather than biblically decreed arrogance.

The perhaps counterintuitive but, on reflection, logical thread running through the three essays – along with a statement called the Cornwall Declaration on Environmental Stewardship promulgated in 1999 by an interfaith group meeting in Connecticut – is that achieving a certain level of wealth in a society seems to be a prerequisite to effective environmental stewardship. A secondary theme is that a system of private property and relatively free markets is the most effective way to achieve both societal wealth and environmental protection and improvement.

Read the entire review on the OC Register site.

An essay of mine appears today over at the First Things website as part of their “On the Square: Observations & Contentions” feature. In “Between Market and State,” I explore the dialectic logic of market and government “failure,” which functions in part to provide us with a false dilemma: our solution to social problems must lie with either “market” or “state.”

I work out this logic in the context of the sub-prime mortgage crisis, and conclude that non-profits play a critical role as mediating institutions that are not driven in the first place by profit motives. A great deal of the economic woe of the last year or so has been the result of seeing the poor as objects of material gain rather than partners in charitable compassion. Read the piece over at the First Things site and discuss it here.

I should note that PowerBlog contributor Dr. William Luckey has provided a brief and challenging analysis of the role of non-profits. His survey of the treatment of non-profits in the literature includes the observation, “Many sources see the purposes of non-profits as taking up the slack from either market failure or government failure, thus revealing a pro-statist, anti-market bias.” The argument in my First Things essay takes the position that one purpose of non-profits is to “take up the slack,” so to speak. But I don’t see how this by definition reveals a “pro-statist, anti-market bias.”

As I say in the essay,

Advocates for government intervention abound nowadays. But apologists for the market economy do themselves and their cause no favors when they ignore the fact that there are limits to what the market can and ought to be asked to do. Indeed, much of what has been called “market failure” is actually the result of applying market-based solutions to problems for which profit considerations ought to be considered secondarily—if at all.

Within a market framework people tend to maximize efficiency and increase material well-being. But the market is not the answer for everything. It cannot tell us, for instance, how to arrange our familial or spiritual lives.

I was influenced in this line of thinking by a brief reflection from Arnold Kling, who writes about two propositions in the context of the sub-prime lending disaster: 1) Market failure is inevitable; and 2) Government failure is inevitable. He says, “In talking about the financial crisis, I believe that to speak the truth one has to accept both propositions. Most people prefer narrative, which either explicitly or implicitly denies one or the other.”

To be sure, I do think Luckey is right to call for “a completely new study of non-profit organizations,” an early attempt at which was made in the context of Acton’s own Samaritan Guide program. (With Marvin Olasky’s comment that the finalists tended to be either “rescue missions for the homeless or rehab centers for alcoholics and addicts” in view as well, see the conclusions of the promising paper, “Faith Makes a Difference: A Study of the Influence of Faith in Human Service Programs,” by Beryl Hugen, Fred De Jong, and Karen Woods.)

One non-profit ministry that I highlight in the First Things essay that is neither a homeless shelter nor a rehab center is the Inner City Christian Federation. This is a worthy organization that merits a great deal of attention in the debate about home ownership, the mortgage industry, and Christian charity.

As I also note in the First Things essay, this discussion about the credit crisis must go to our core assumptions about home ownership. A fascinating interview with Edmund Phelps, director of Columbia University’s Center on Capitalism and Society, picks up on some of these issues. Phelps has a lot of great things to say, and here’s one of them:

I’m hoping that the administration and other thought leaders will succeed eventually in bringing the country back to the older idea that the American dream is having a career, getting a job, and getting involved in it, and doing well. That was the core of the good life. That’s what we have to get back to, and get away from this mystique that the most important thing in your life that could ever happen to you is to be a home owner.

A handy chart showing the movement in trust in social institutions over the last thirty years according to the General Social Survey is available here.

Non-profits are increasingly being squeezed out between market and state, and the solutions they offer are either marginalized or subsumed under the logic of profit or coercion. As many others have noted, some recent policy initiatives, most notably lowering the limit on qualifying charitable donations, will only serve to exacerbate this problem.

Dr. David W. Miller, who was interviewed in Religion & Liberty for the Winter 2008 issue, was recently on a PBS program discussing corporate morality.

Here is a portion of the PBS interview which relates to the theme in Acton’s R&L interview titled “Theology at Work: Faithful Living in the Marketplace:”

(anchor) ABERNETHY: You, as I said, you used to work in the financial business. What do your friends there, the friends that you have who’ve worked there — what do they tell you about what went wrong; how they feel about it; what they might have done wrong?

Dr. MILLER: Yeah, I work with a group up in Greenwich, Connecticut—we were known as the hedge-fund capital of the world—a group called Greenwich Leadership for people trying to connect their faith and their work and their morals and their values. Some people feel a bit beleaguered by the current situation, because they love their job and they’re good at it, and they are trying to do it in a moral, ethical way and create liquidity and creative instruments for companies. Others, however, realize they’ve bought into something. They’ve almost become addicted to the power and the money. One friend who recently was laid off by AIG, is part of their troubles, privately said he felt that he had made his company his false idol, if you will—that work had become, in his company that he is very proud of actually, had become a false idol, and he was now trying to reorient his life to have balance where faith, family, and other priorities, including his work, would have the right balance, the right perspective.

Next Monday will be the sixtieth anniversary of Luigi Einaudi’s inauguration as Italian President. Einaudi (1874-1961) was a distinguished economist and defender of classical liberalism. In the immediate period following World War II, he was governor of the Bank of Italy and finance minister. Many credit his policy of low taxes and dismantling tariffs with having laid the foundation for Italy’s “miracolo economico” of the 1950s and 1960s.

However, while his role as president between 1948-55 is still remembered, his legacy of economic freedom as a key to Italian post-war development has largely been forgotten. In a recent article, the Milanese financial newspaper Il Sole 24 Ore lamented that currently there is no political force in the country which feels inspired by Einaudi’s actions and insights.

The center-right led by Silvio Berlusconi which won the recent general elections in April cannot be considered a catalyst for market reforms. Its new economy minister Giulio Tremonti has expressed hostility to free trade and blames most of the world’s economic problems on an ideology he calls “marketism”. At the same time, the Northern League, Berlusconi’s junior coalition partner, is impossible to categorize in terms of its economic policy. It demands decentralization and reducing the role of the Italian state but also advocates protectionism.

Neither can Einaudi’s heirs be found on the Italian center-left. The recently founded Democratic Party (PD) has its origins in communism. One can appreciate its transformation towards more moderate positions and a certain openness to economic liberalization. However, the transition is not complete and cannot be compared to the process initiated by Tony Blair in the UK Labour Party in the 1990s.

It is regrettable that nobody wishes to emulate Einaudi’s achievements. These go beyond the technical mastery and application of market economics. Einaudi’s understanding of freedom also led him to insights of more wide-ranging importance for Italian society. He believed that an excess of state power tends to make citizens more lazy in the way they live their lives and think of their responsibility towards others. This attitude leads them to tolerate the social ills around them. They view the poor state of public services as inevitable and accept corruption and rent-seeking as unchangeable phenomena.

Now, that so many people in Italy worry about the economic situation of the country and feel alienated from the political institutions and their lack of accountability, one might think that the time is ripe to return to Einaudi’s lessons.

I have argued for many years now that free markets are intrinsically good. I have tried to engage this issue with Christians but many are either not interested or do not see any importance in the pursuit. I know markets can become bad masters when people lack virtue. I also know that the alternatives to free markets have littered the twentieth century with more death than any single cause in human history. (Think socialism, fascism and Marxism.) And representative democracy, a republic of just laws, is not perfect either but it sure beats the alternatives. Shared power is always better than control by the one or the few. Social engineering and economic planning by an elite and powerful few strips us of both human dignity and true freedom.

Bryan Caplan, an economics professor at George Mason University, is the author of a new book, The Myth of the Rational Voter: Why Democracies Choose Bad Politics, that has a significant bearing on how we should think about the political side of economic concerns in America. Professor Caplan concludes, in words that are not at all comforting to me personally, that most Americans cast their votes on the basis of irrational biases about economics. This, he reasons, is why candidates who oppose free markets, free trade, profits and immigration win. Sadly, I am quite sure that he is right about this point.

Creators Syndicate writer John Stossel, in reviewing the professor’s new book, says: "People tend to acquire wrong opinions about economic policy packaged in worldviews they inherited while growing up." Since people resist, and often strongly, having their own worldview challenged or changed they will vote for those candidates who make them feel good. Stossel concludes that this means "They will vote irrationally." I have long sensed that this was true on an intuitive level but the professor’s argument tends to fortify what I had only sensed but not quite had a handle on how to argue my case well. Simply put, most voters see no compelling reason to vote otherwise since their choices in elections bear no direct consequence on their lives, at least as they understand their lives. Gloomily Stossel concludes, "When irrationality is free, people will indulge their biases." (more…)

As many of you may know, Acton has been working on a documentary. The Call of the Entrepreneur will premier in Grand Rapids, Mich., on May 17 at Celebration Cinema North. Come one, come all, and see this wonderful documentary. The Call of the Entrepreneur tells the stories of three entrepreneurs: one a farmer in rural Evart, Michigan, another a mercantile banker in New York, and finally an entrepreneur in Hong Kong, China. The film examines the drive behind what these people do: Why are they driven to create wealth? Why do they produce? Who does it benefit?

This video clip is also available via YouTube and in a larger format here (Requires RealPlayer or Quicktime).

Joe Carter concludes:

What we need is a third way. We need a clear Christian vision that understands that markets are a moral sphere (contra the libertarians). We need to promote the idea that free individuals rather than government force is necessary to carry out this task (as the left often contends). We need to realize that the “market” is not a mystical system that will miraculously provide for our neighbor (as many conservatives seem to think). What we need is develop a coherent Biblically-based conception of how the market as a human institution can be used for the redemptive purposes of our Creator. As with every institution, what the markets need is for Christians to act more like Christ.

According to the Church Report’s Jennifer Morehouse, Parents Television Council President L. Brent Bozell is renewing an argument for the FCC to require a la carte cable programming. “It’s time to let the market decide what it wants on cable programming,” says Bozell.

I’m sympathetic to this view. I would prefer the option to be able to pick and choose which cable channels I pay for and get access to, instead of having to decide on subscription levels which include a lot of channels I’m not interested in.

But here’s where Bozell loses me: “Families, according to Bozell, have to pay for dozens of channels they do not watch and find offensive.” They only have to pay for them if they choose to have cable TV. Families make clear which of their desires are more powerful when they are willing to “subsidize some of the most graphic content imaginable” rather than forego cable television.

The market in this sense is working, as it is illustrating that cable consumers do not have sufficiently high interest to make it worthwhile for cable providers to respond and offer a la carte services. The problem with the cable market in the end is not that cable providers aren’t being required to offer a la carte, but that there is a lack of competition in local markets, although that is changing in a few places. Increased competition might make offering a la carte services more of a realistic option to give particular providers a competitive edge.

So, in my case, for instance, my desire for a la carte is not stronger than my desire for cable television/cable internet as it is now (although I do only get the lowest “basic” level of programming). I think this is probably representative of the position of many of the cable consumers Bozell is talking about. In no way, however, am I being forced to “subsidize the cable industry’s raunch.”

More on families and parenting in an age of technology later today.

Blog author: jballor
posted by on Monday, November 27, 2006

Here’s some good news for those who prefer to combat cultural evil through the edification and cultivation of moral sensibilities: In “Repugnance as a Constraint on Markets,” Alvin E. Roth finds that “distaste for certain kinds of transactions is a real constraint, every bit as real as the constraints imposed by technology or by the requirements of incentives and efficiency.”

He also finds that “while repugnance can change over time, change can be quite slow.” This presumably applies to the decrease of a sense of repugnance over a currently outlawed activity, as well as the increase in repugnance to a currently practiced pursuit.

This means, though, that not only is patience required, but also that church leaders need to get their positions right before they have a chance of influencing culture for the better. This also means, in part, not calling evil good and good evil as false prophets do.

John Piper’s words from his foreword to John Owen’s Overcoming Sin and Temptation would seem to apply here:

As I look across the Christian landscape, I think it is fair to say con귎rning sin, ‘They have healed the wound of my people lightly’ (Jer. 6:14; 8:11, ESV). I take this to refer to leaders who should be helping the church know and feel the seriousness of indwelling sin (Rom. 7:20), and how to fight it and kill it (Rom. 8:13). Instead the depth and complexity and ugli­ness and danger of sin in professing Christians is either minimized—since we are already justified—or psychologized as a symptom of woundedness rather than corruption. This is a tragically light healing. I call it a tragedy because by making life easier for ourselves in minimizing the nature and seriousness of our sin, we become greater victims of it.