A solid case could be made that the most powerful natural law in the universe is the “law of unintended consequences.” It’s definitely the dominant force when it comes to public policy.

For example, in 2007 Congress created the Public Service Loan Forgiveness program, which was designed to encourage young workers to seek government and nonprofit jobs that pay far less than what they’d get in the private sector. The program forgives the remaining balance on direct loans after a borrower has made 120 qualifying monthly payments under a qualifying repayment plan while working full-time (30 hours per week) for the government or a non-profit. The payments are capped at 10 percent of discretionary income, defined as a borrower’s adjusted gross income minus 150 percent the federal poverty level. Any balance remaining after the 120 payments is forgiven, tax-free.

The intention was to encourage people to become schoolteachers or social workers. But there’s another group that found a way to take advantage of this subsidy: doctors.

Photo courtesy of Wikimedia.

Photo courtesy of Wikimedia.

What is the biggest economic problem that the U.S. is currently facing? Depends who you ask.  Some social justice warriors would tell you that capitalism is ruining our economy, yet many who have studied and understand economics would argue the opposite. Capitalism is not to blame, but rather cronyism and protectionist policies are the ones wreaking havoc on the economy.

In a previous post, I discussed how occupational licensing as a form of cronyism is trapping people in poverty. However, cronyism is a much bigger problem than just occupational licensing. The U.S. struggles with other forms of cronyism too, such as protectionism through quotas, tariffs, and corporate welfare.

Quotas and tariffs make it extremely difficult for international firms to sell their product in the U.S., thus protecting U.S. firms from international competitors.  Corporate welfare is government support of a private business usually through direct money transfers (subsidies) or tax breaks, often protecting big firms from the competition of smaller firms.

This form of cronyism typically occurs for two reasons:  First, in an attempt to create new domestic jobs or prevent jobs from being sent overseas and second, because politicians promise “goodies” to corporations and individuals that help them get elected. (more…)



On Tuesday, President Obama declared this week Captive Nations Week. The first Captive Nations Week was in 1959, proclaimed by President Eisenhower to call attention to the oppression of several countries in the Soviet Bloc and to encourage Americans to support fight for democracy and liberty worldwide. Enjoy the six quotes below as we observe a week dedicated to the beauty of freedom and decrying the continued existence of tyranny:


halo-effect1As church attendance continues to decline across the West, many have lamented the spiritual and social side effects, namely a weakening of civil society and the fabric of community life. What’s less discussed, however, is the economic impact of such a decline.

In a new study published by Cardus, Dr. Michael Wood Daly of the University of Toronto explores this very thing, researching the “economic value” of ten Toronto congregations, and finding “a cumulative estimated economic impact of approximately $45 million,” based on a combined budget of only $10 million. The study refers to this as the “halo effect,” noting the church’s value to the community, whether through social capital, community services, or physical resources and infrastructure.

The research builds on an existing framework from a pilot study done in 2010 by Partners for Sacred Spaces and the University of Pennsylvania, which resulted in similar findings. Focusing on 12 congregations, the Pennsylvania study found an economic contribution of roughly $52 million, concluding that local congregations can “now be viewed as critical economic catalysts.” Both studies evaluated a range of variables in the seven key categories, including (1) open space, (2) direct spending, (3) education, (4) magnet effect, (5) individual impacts, (6) community development, and (7) social capital and care. (more…)

“Both economic and religious freedom tend to exist together in the same societies,” says Jay Richards in this week’s Acton Commentary, “they are both based on the same principles; they tend to reinforce each other; and over the long haul, they arguably stand or fall together.”

By economic freedom, I refer to the social condition in which individuals, families, and associations enjoy the rule of law, respect for their rights, limited government, a vibrant civil society outside the jurisdiction of the state, well-delineated rights to private property and contracts, and broad discretion on economic matters. If it is easy to start a business; to seek employment; to hire employees without invasive dictates from political authorities, private cartels, or organized crime; to negotiate salary, benefits, and responsibilities; to have fair contracts enforced; and the like, then a society enjoys some measure of economic freedom.

The philosophical basis for religious freedom rests on the same foundation as the case for economic freedom: individual rights, freedom of association and the family, and the presence of a government with limited jurisdiction.

The full text of the essay can be found here. Subscribe to the free, weekly Acton News & Commentary and other publications here.


Profile of Adam Smith, 18th century

In a new piece written for Public Discourse, Research Director for Acton Institute, Samuel Gregg, revisited crucial points made by Adam Smith in his classic Inquiry into the Nature and Causes of the Wealth of Nations which argued for an embrace of international trade. Unfortunately, many of Smith’s ideas have today been cast aside for a stronger cry of economic nationalism. Gregg combats some misconceptions of free, global trade by revealing the dangerous results which would occur if nations chose to only implement ‘neo-mercantilism’ in the name of national interest.

Gregg organizes Smith’s insights into three categories, first addressing how Smith proved that a country’s economy “flowed from the development and extension of the division of labor within and between nations…the wider and deeper the size of the market, the greater the division of labor and the subsequent gains in productivity and growth.” Smith’s understanding of the benefits of international trade has been undermined however by ideas encroaching on rights to property and on labor. In the wake of growing restrictions, “a retreat from free trade would not only worsen this situation. It would also raise the price of a good number of foreign-made products and services, thereby putting many such goods beyond the reach of lower-income Americans.” (more…)

Blog author: jcarter
Wednesday, July 20, 2016

Communism Still Persists. We Must Remember Nations Where People Are Not Free.
Lee Edwards, The Daily Signal

Communism is a cancer that must be removed lest it spread. That historical lesson led President Ronald Reagan, after four decades of containment and accommodation, to lay down a new policy to end the Cold War: “We win and they lose.”

Stop Making CEO Pay a Political Issue
Alex Edmans, Harvard Business Review

Presidential candidates once campaigned on taxes, government spending, and foreign policy. But more recently, executive compensation has suddenly become a hot topic for winning the public’s approval.

Countries That Transitioned Rapidly From Communism to Capitalism Fare Better
Marian Tupy, Reason.com

Former Soviet bloc countries that transitioned slowly now lag behind.

Mission Muffins: Serving the Poor in a Biblical, Sustainable, and Effective Way
Kathryn Feliciano, Institute for Faith, Work, and Economics

This organization is an example of program that is fighting poverty in a way that is biblical and effective.