Posts tagged with: money

Blog author: jcarter
Tuesday, December 13, 2016
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Note: This is post #13 in a weekly video series on basic microeconomics.

What is a subsidy? A subsidy is really just a negative or reverse tax, explains Alex Tabbarok. Instead of collecting money in the form of a tax, the government gives money to consumer or producers. In this video by Marginal Revolution University, Tabbarok looks at the subsidy wedge and who benefits the most from different subsidies.

(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)

Previous in series: Understanding tax revenue and deadweight loss

student-loan-debt-1To reduce the number of people defaulting on student loans, President Obama has been promoting  income-driven repayment plans. The most widely available income-driven repayment plan for federal student loans—the Income-Based Repayment (IBR) plan—provides payment caps based on a borrower’s family size and income (150 percent of the poverty level). After making 25 years of these reduced payments, the remaining debt is “forgiven.” (If you work for the government or a non-profit the remainder may be forgiven after 10 years.)

This may sound like a way to help those on the lower rungs of the economic ladder from having to pay student loan debt as retirees. But the reality is that the program is aimed more for white collar professionals than the working class. As the Wall Street Journal notes, “Growing evidence suggests many of the most hard-pressed borrowers—college dropouts who owe less than $10,000—aren’t taking advantage of the programs, while workers with graduate degrees, such as doctors and lawyers who don’t necessarily need help, are.”

In a report released this week, the Government Accountability Office (GAO) reported that $108 billion will be “forgiven” by the federal government. And that’s just through the current school year. As new students enroll and take on debt they can’t (or simply won’t) repay, the number will increase significantly.

Of course the debt isn’t really “forgiven” since it was already paid to colleges and universities (who have no intention of giving it back. What debt forgiveness means, as economist Don Boudreaux explains in this video is that the debt is merely being transferred to the American taxpayer.
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Yesterday, Pope Francis hosted a private audience in his Apostolic Palace for a few hundred international entrepreneurs and business leaders. The members of the International Christian Union of Business Executives (UNIAPAC) had gathered inside the Vatican’s walls for two days of meetings for the “noble purpose of reflecting on the role of business persons as agents of economic and social inclusion.”

Pope Francis, not always an affirming supporter of free market capitalism, focused on some of his usual challenging caveats to business persons. While business is certainly noble and its success is a vital part of the promoting economic growth for the common good, fallen man should nevertheless be constantly wary of his weaknesses for material idolatry (especially money), selfishness (not showing solidarity), and unguarded concern for acts of corruption (intentional deceit), the latter of which Francis said was “the worst of social plagues.”

This holds true for “all human activity”, the pope reassured those present, and not just business activity. It is an anthropological-spiritual discipline that we must keep on the forefront of our daily decision making. In this way, we sharpen our prudence and hone our focus when treading uphill individual paths to holiness and salvation. By way of constant prayer and deep spiritual discernment, man can more likely make the best moral choices, even in the most cut-throat and difficult business situations.

But sometimes this is risky for the seeker and promoter of virtue.

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Pope Francis addresses UNIAPAC Christian entrepreneurs and business executives at a private audience on November 17, 2016.

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The following article is the Acton Institute’s English translation from the Italian “Il Papa e la condanna dei soldi. Parla Padre Robert Sirico” written by  Matteo Matzuzzi and published in the Rome-based daily Il Foglio on November 8.  Readers should note that there is no official English translation of Pope Francis’ November 5 address to leaders of lay movements gathering inside the Vatican. The original speech in Italian, Spanish and Portuguese can be found here.


“It certainly would be absurd to criminalize money if one’s sincere concern is the well-being of the poor. Lamenting the struggle of the poor is not the end goal of moral compassion. Ameliorating their concern is. And at least at the material level, this requires the production of wealth,” said Rev. Robert A. Sirico, president of the American think tank, the Acton Institute for the Study of Religion and Liberty, which aims to promote a free, virtuous and humane society.

Rev. Sirico shared his views with the Italian daily ll Foglio following the Pope’s long speech delivered last Saturday before an audience of charismatic lay movement leaders who had come to the Vatican for their third world gathering. During the audience, Pope Francis relaunched his accusation that money is “an idol that rules instead of serves, which tyrannizes and terrorizes humanity.”

Francis

Pope Francis regularly speaks to leaders of cultural and social change during specially arranged private audiences inside the Vatican.

It is money, continued the Holy Father, “that rules with the whip of fear, inequality, economic, social, cultural and military violence. [It] generates ever more violence in a seemingly unending downward spiral. There is a basic [form of] terrorism stemming from the global control of money on earth and which threatens all of humanity.”

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What is the purpose of money? Is it for our survival? For our status, significance, or success? Is it for the service of ourselves or for the service of others?

In a talk for the Oikonomia Network, theologian Darrell Bock sets out to answer the question, drawing from the numerous treatments of money in the book of Luke — from the rich fool and Lazarus’ wealthy neighbor to Zacchaeus and the widow’s mite.

“Money is to be surrendered into stewardship,” he says, “because that is the way God has designed not just the resources that he gives us; that’s the way he’s designed our very lives.”

Money is ultimately about a stewardship of managing the creation in which God has placed us. It’s for others, and it’s for Him…It’s a stewardship that serves and leads to flourishing, and we are all stewards, every one of us. It’s a surrender to Christ. It’s a surrender to others. And it’s a surrender to the divine design. It’s a commitment not to serve the self, and it’s a commitment not to use other people as currency…

Yes, money does make the world go around, but we drive that bus. And it’s not the money that’s the agent of change; we are the agents of change. So how do we make money that matters? We don’t make money the old fashioned way, by earning it for ourselves. We make money useful the divine way, by stewarding it so that others can flourish and be developed, and by generating value for those who are around us.

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MolinaCover - CopyCLP Academic has now released A Treatise on Money, a newly translated selection from Luis de Molina’s larger work, On Justice and Right (De iustitia et iure). The release is part of the growing series from Acton: Sources in Early Modern Economics, Ethics, and Law.

Molina (1535–1600) was one of the most eminent theologians of the Jesuit order in the sixteenth century. Known widely for developing a theory of human freedom of action (and in turn, a new religious doctrine now known as Molinism), Molina was also the first Jesuit to make major contributions to economic thought through a major treatise (On Justice and Right).

In the book’s introduction, Rudolf Schuessler offers more on the historical context and Molina’s contribution therein. As Schuessler explains, Molina’s views on freedom impacted his entire approach to economics and helped “set the pace for Jesuit economic thought.”

Jesuit economic thought in the seventeenth century gravitated toward individual freedom and displayed a keen appreciation of the market economy while upholding moral restrictions for market activities in a flexible and low-profile form. These features of Jesuit economic thought are of great—although not universally recognized—importance because the Jesuits were the teaching order par excellence in early modernity. Almost all early modern economic thinkers in Catholic countries were taught by the Jesuits, and Molina had the privilege to set the agenda for his order’s economic thought…

…By summarizing and discussing the state of the art of his time, Molina sets the pace for Jesuit economic thought. After the demise of the scholastic tradition and the temporary abolition of the Jesuit order in the eighteenth century, the respective doctrines traveled on back roads into the nineteenth century where they influenced the Austrian school and the marginalist revolution in economics. Molina and his contemporaries were the first to apply the laws of supply and demand systematically to money markets, and as a result conceived the quantity theory of inflation. They began to understand the role of risk, of liquidity, and of time preference in economic contexts, as well as the institutional role of property rights. For this they still deserve our attention.

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money-heartI think it is important to keep in mind that it is not the world of economics that is critical to human life on earth. When I left the field of economics for what I still believe to be a more important life agenda, it was because I regarded economics as driving cross-country at 80 mph with my eyes firmly fixed on the rear-view mirror.

We do, in fact, live in a world defined by economic and political realities, just as a fish lives in water. But that economic world has existed for less than 300 years and it will not last forever. When we talk of poverty or the benefits of living above poverty, it’s easy to think that the miseries of poverty are true miseries. But that misery is often only the economic part of the story. Poverty of mind, of person, and, worst, of soul are the true poverties. Comfortable affluence addresses the less important parts of being human.

I wrote my book, Integrated Justice and Equality, to rebuke the current supremacy of the trendy idea about income redistribution. But is income really the point of life? If I had not focused on biblical integration, my work would have just been a commentary on economic well-being without an anchor. (more…)