There never seems to be a shortage in calls for government intervention in the economy to help alleviate poverty. Increasingly, such proposals are being floated by the Christian Left who identify people facing undesirable circumstances and then claim that Christian ethics demand statist economic policy as a solution.
An example of such thinking is the warning from Jim Wallis that we dare not solve our government’s fiscal disaster by balancing the budget on the backs of the poor. To do so would be to lack a true Christmas spirit.
Does caring for the poor demand a welfare state? Is income redistribution to the poor something that should be embraced as a good economic policy?
In evaluating any economic policy, we would do well to remember Murray Rothbard’s insight that all economic policy has an ethical component. Once we move beyond examining the purely economic consequences of the minimum wage, for example, and then advocate raising, lowering, or abolishing it, we must incorporate some ethical standard, because we are now entering the dimension of the should or should not. Continue reading →
Market function is the heart of economics. We would like to understand what the role of money is, and how prices come to be. Countries that make it easier to trade tend to be far more prosperous than those that make market activity difficult.
Key Concepts You’ll Be Explaining
Trade occurs where people value the same goods differently.
Suppose I have a violin, which I don’t know how to play. You are a violin prodigy who accidentally destroyed your only violin while backing out of the driveway. Suppose you also have an iPad given to you as a gift. It’s an extra for which you don’t have much use. I value the iPad more than the violin, and you value the violin more than the iPad. We might be able to arrange a trade which would leave both of us better off.
A mirage, wrapped in propaganda, surrounded by demagogues. It is Chicken Little running around crying out that the end is near because she stubbed her toe, while the sky was actually falling. It is sound and fury, signifying nothing, while MacBeth hawks the crown jewels to buy more knives to kill more enemies.
Not long ago the Republicans and Democrats could not agree on how quickly to file for bankruptcy. Unable to agree, but needing to move on, they agreed that if they couldn’t agree on when to file for bankruptcy, they would spend a week buying Grande’s instead of Venti’s (that’s mediums, instead of larges for those who don’t speak Starbucks).
Their reasoning was two-fold. On the one hand, the horror of going down a size on our coffee was thought to be a great motivator to settle the issue. Second, if the issue wasn’t settled, when we should file for bankruptcy, prudence would mean getting the smaller cup of coffee. (Or in this case, to cut $85 billion from an unpassed budget that was more than $85 billion dollars bigger than the last unpassed budget.) Continue reading →
In this five-part guide, I’m providing some help for parents who want to teach their children basic economics, but aren’t sure where to begin. In each part, I provide a small set of accessible resources to help explain the basics to parents and students. Here are the five parts:
Producing any good requires mixing three ingredients: human effort, tools, and raw materials. Economists refer to these three ingredients as labor, capital, and land (or resources).
Key Concepts You’ll Be Explaining:
Production tends to be higher when people have more and better tools to work with–economists call these tools capital–and therefore an economic system that makes it easier to develop and accumulate these tools will tend to result in greater prosperity. Continue reading →
No, on both counts. Our labor is a service. Its value is determined neither by law nor by wish but by the market.
All of us, I suspect, would love to be paid $1,000 an hour. Given that all of us would want this, why don’t we pass a law stating no one could be paid less than $1,000 an hour? Were we to do so, I suspect that some athletes, some rock stars and perhaps a few actors would still be employed.
The rest of us, however, would be out of work. There is no employer out there willing to pay me that much. (If you disagree, by all means, let me know who they are.)
I would, of course, also have to let go my butcher, my baker and my candlestick maker. As much as I like them, and value their services, I would rather keep $1000 in my pocket than hire any of them for even an hour. Is this not easy to see?
The question is, why do we think adjusting the number to $9 an hour would make any difference to the principle? The concepts do not change simply by plugging in different numbers. I’m grateful my employers value my labor more than $9 an hour. That is, they gladly give up more than $9 in exchange for an hour of my labor.
When people ask what I do, I confess that I teach economics. They often respond with a comment about how awful or difficult their high school or college economics classes were.
It’s true that few people enjoyed economics in high school or college. (There’s actually a good reason for that, but it’s too long to explain here.) The fact is, economics is one of the most important subjects to understand because we make economic decisions every day. Our world is profoundly affected by economics.
In this 5-part guide, my goal is to provide help for parents whose economics is a little rusty (or a lot rusty!) and who don’t know where to start when covering economics.
I’m not trying to explain economics as a textbook would. What I hope to do is provide some navigation through the vast amount of material available online and elsewhere in order to make the subject less overwhelming. The resources are chosen for their accessibility. Some are good for young readers, others are more suited for older students and non-economist parents. Here are the five parts:
Part 1: Scarcity and the Necessity of Stewardship
Part 2: Production
Part 3: Money, Markets, and Trade
Part 4: Entrepreneurship, Profits, and Losses
Part 5: Economics and Government
In two earlier posts (Part 1 and Part 2), I addressed concerns about the libertarian view that taxation for the purpose of transferring wealth to the poor is equivalent to theft. I’m looking at Matthew Tuininga’s posts on this in particular, but I think his thoughts are pretty widespread among Christians.
I believe Tuininga’s main point was to show that this view is not consistent with the Christian tradition, but there is a lot packed into his posts on this subject that I would also like to address.
In a discussion following his initial blog post, Tuininga says that “if the poor are not receiving justice, then the government has to intervene to ensure that they do.” By this he means that if the poor have not received sufficient charity from those who are able to give, the civil magistrate should (as a last resort, he grants) tax them and transfer the proceeds to the needy.
In an earlier post, I discussed Matthew Tuininga’s complaint that libertarian-style arguments on taxes are not consistent with the Christian tradition. Tuininga tries to show that Ambrose, Augustine, Aquinas and Calvin would not have supported libertarian views on taxation for welfare.
The libertarian argument Tuininga is arguing against says that taxation for welfare programs is equivalent to theft. (Hard-core libertarians would say that taxation for any programs is equivalent to theft, but we’ll go along with Tuininga here and deal with “lite” libertarianism.) Tuininga followed up his initial post with another that discussed, in part, the views of John Calvin.
In this post, I’d like to look briefly at the views of Calvin on charity and welfare. I’ll follow up in the next post about Tuininga’s use of the terms “justice” and “protection,” as well as the importance of the question of whose responsibility it is to deal with uncharitable people.
We had a friend recommend that we edit the full series of Economics for Everybody into a two-hour version. It took us longer than we expected (such things always do), but here it is. You can watch it free on YouTube through the end of February. Hope you enjoy it!
My money is my own property that I earned. The government did not give it to me. Therefore, the government has no right to confiscate my property in order to give it to someone else, except for purposes of protection, national defense, or associated government functions. For the government to confiscate my property for purposes of poor relief is not legitimate taxation. It is theft.
Tuininga “take[s] issue with arguments that suggest people have absolute property rights that the government cannot infringe upon, not even for the sake of justice for the poor.” He then takes a quick trip through church history in an effort to show that Ambrose, Augustine, Aquinas, and Calvin would not have supported that libertarian-style argument.
The sound-bite defenses of socialism, libertarianism, or conservatism that we often see in Facebook feeds, memes, and blogs have their limits. I think there are some problems with the view Tuininga is criticizing, as it is stated. But I think Tuininga is a long way from showing that the State has any role in welfare programs.