Talking Government Spending, Debt, and Economics on The Exceptional Conservative Show

Two days ago I appeared on the Exceptional Conservative Show, hosted by Kenneth McClenton.

A good time was had by all. You can give the program a listen by clicking on the  program below.

My thanks also goes out to Mark Thornton for bringing Mr. McClenton and myself together.

Bradley on the Real Social Justice

As reported earlier, Anne Rathbone Bradley, Vice President of Economic Initiatives at the Institute for Faith, Work, and Economics, spoke here at Grove City College in its Center for Vision and Values' Freedom Readers Series. Her lecture was entitled "The Real Social Justice: A Christian Response to Poverty and Inequality." Here is the video of the provocative and inspiring lecture:


100813 FreedomReaders Vimeo from Center for Vision and Values on Vimeo.

These are issues that I also tackle in my book Foundations of Economics: A Christian View. Interested parties should look at Chapters 4, 16, and 19.

Economics Is Part of God's Created Order

It is not uncommon to hear Christians call for economic policy designed to relieve human suffering. Certainly, as Christians who are called to love our neighbors as ourselves, we should and do have compassion on our suffering neighbor. Yet some approaches, while well-intended, may in fact lead to more economic hardship and less human flourishing.

This is unfortunate, because such fanciful thought only leads to frustration and the furtherance of economic woe. We cannot afford to recommend solutions to suffering that are in conflict with economic principles.

There is such a thing as economic law that cannot be thwarted without consequence. Laws of economics, such as the law of marginal utility, the law of comparative advantage, and the law of demand, are not mere ideological biases, but rather are part of the created order sustained by our Maker.

Read the rest

Is There Life After Default?

Peter Klein thinks so. He argues in a daily article at Mises.org that

Treasuries are bonds just like any other bonds. There’s nothing magic, mythical, or sacred about them. A default on US government debt is no more or less radical than a default on any other kind of debt.

In his provocative piece Klein points to various historical episodes of government default that did not bring on the end of the world.

Here is Klein discussing the same topic a few days ago:



See also Klein's addendum responding to his critics!

Why Don't They Go to Work for Trader Joe's Then?

Lorraine Devon Wilke at something called Addicting Info posted a piece with the headline, "Rejecting Walmart Strategy, Trader Joe’s Pays Employees A Living Wage And Wins" In it she makes the claim that while businesses like Walmart, Papa John's Target, and Applebee's continue with "Scroogian thinking" by paying the minimum wage,

a handful of smarter businesses have stepped to the forefront to reject this “austerity” model for a different philosophy right in line with research: pay a good living wage, offer benefits and maximize one of your most important “assets”: your valued workforce. Top on that list of smart retailers is Costco; Tulsa-based convenience chain, QuikTrip, and consumer favorite, Trader Joe’s.

One question I have is, why don't all of the employees who work for the alleged exploiters quit and go to work for Trader Joe's? Perhaps because the "smarter businesses" cannot afford to hire any more employees.

Economic reality remains reality regardless of our feelings. We may not like it, but the truth is the truth. As I explain in Chapter 9 of my Foundations of Economics, if an entrepreneur continues to pay workers more than their financial contribution to his business, he will eventually go broke. It is neither wise nor charitable to bully firms who pay the minimum wage into paying more. If it truly will be beneficial, those profit-seeking firms will figure that out for themselves quite soon. If it is not profitable, intimidating them to pay wages above what they are willing effectively gives some of their least productive workers the pink slip.

The fact that some firms like Trader Joe's can afford to pay their workers above the minimum wage is merely evidence that the market wage for their workers is above the minimum. It would be nice if that were true for every worker, but such is not the case. Do not blame the Wal-Mart's and the Targets of the world for the state of the market. They are paying wages as high as their competition demands.

Five Reasons Christians Should Embrace Private Property

Ann Bradley

This evening the Center for Vision and Values at Grove City College will host Ann Bradley for this month's Freedom Readers Lecture. Her lecture is entitled "The Real Social Justice? A Christian Response to Poverty and Economic Inequality." She will be explaining, among other things, why Christians should embrace private property.

In a recent white paper, Bradley explains that Christians should support private property for the following reasons:

• We are called to work.
• We are called to serve the poor.
• We are called to flourish.
• Private Property Rights are Biblical
• Minimum Government is Biblical

As Bradley begins:

What is economic freedom, and why do we need to embrace it? As Christians, we are called to be good stewards of the resources that God gives us. Stewardship is not just about tithing or caring for the earth; it is about every choice we make. It is then inextricably tied to flourishing. If we are not good stewards, we cannot possibly practice true sustainability by creating more than we are given and caring for one another. Markets facilitate stewardship by helping us to fulfill the great commandment, which calls us to love our neighbor.

Read the rest here.

John Tamny Explaining Where Have All the Jobs Gone

A couple of weeks ago, Grove City College's Center for Vision and Values was privileged to host John Tamny, opinion editor at Forbes.com, as a speaker in their Freedom Readers series.. He gave an excellent and engaging lecture answering the question, "Where Have all the Jobs Gone?" He rightly stresses the importance of investment and entrepreneurial activity and how the government is actively hampering both.

Eating Away at GDP Growth Is Not the Same As Eating Away at Economic Progress

This distinction is lost way too often at Business Insider.  Sam Ro reproduces the following chart to make his point:

The good news is that less government spending means less government consumption. It means fewer scarce economic goods controlled by bureaucrats. This is not something to be distraught about. Of course, if one is a tax consumer, less government spending impinges on one's lifestyle.  The best thing that could happen is for the 800,000 furloughed government employees to seek employment apart from the leviathan state. The are already recognized as "non-essential." If that is the case, perhaps they should find an employer for whom their labor is essential.

Ritenour on the Dan Rivers Show on Debt

On Thursday I was a guest on the Dan Rivers Show at 570AM in Youngstown, OH. We talked about our government debt problem and the partial government shutdown.



My segment begins at about the 7:30 mark.

Today We Will Learn that We Can Survive without a Government Jobs Report

Instead, a chief economist and strategist with Gluskin Sheff & Associates Inc. is going work out, visiting his personal trainer.

According to its website, The Bureau of Labor Statistics “will not collect data, issue reports or respond to public inquires.” As Murray Rothbard noted a long time ago, this could be a good thing.

Cochran on the Real Lessons Learned from Government Rescue Attempts

John Cochran has written an excellent essay "New Lessons from the 'Rescue' and the Failed Stimulus" correcting a faulty Wall Street Journal piece by David Wessell that seeks to uncover the lessons we have learned since the financial meltdown and recession of 2008.

Cochran notes:

Wessel appears totally oblivious to the fact that absent the Fed as an enabler with its overly expansionary credit creation policy, first in the 1990s, and then in the mid-2000s, neither the dot-com boom-bust with its unfinished recession, nor the housing bubble, general boom and subsequent bust, which precipitated the financial crisis, would have happened.

Cochran explains why both Fed intervention and fiscal stimulus were not merely useless, but actually destructive hindering recovery.

Such a conclusion is not a throwing up of the hands and embracing a do nothing policy. As I explain in my book Foundations of Economics, there are many things that the state can due to help usher in a quicker, sustainable recovery:

In order for entrepreneurs to redirect resources toward their most productive use, they must be able to calculate profit and loss using market prices. Therefore, the markets for all goods should be allowed to adjust to their new equilibrium levels. The money stock should in no way be inflated. Taxation, government spending, and regulation on business should be reduced.

Take Hostages Over Debt Ceiling

That is the advice to Congress by David Stockman, who is always worth listening to:

“The fiscal process doesn’t work. It’s broken and the only way to get the wheels of this thing to stop turning is for a determined minority to grab the bull by the horns. And if they want to call it 'hostage taking' they can use that term but why do people think we can keep adding to the national debt?”

Read the rest here.

I Heard the Government Was Shut Down

. . . At least partially. According to USA Today "An estimated 800,000 federal employees have been furloughed, the lights are turned off in many government offices, and clinical drug trials and disease-prevention work have been hampered."

On the other hand, 40,487 Pirates fans didn't seem to mind:

Government Bureaucracies Do Not Have to Economize Like Other People

In F. Scott Fitzgerald's short story "The Rich Boy," the narrator says that the rich "are different than you and me." To what extent that is true about the rich I cannot say, but I would say it applies to government bureaucrats, of whom I was one a long time ago.

Craig Eyerman at MyGovCost has a brilliant post documenting how government agencies turn economizing on its head the last week of the fiscal year as they scramble to spend every dime in their budget. 

Because this past week was the last of the fiscal year, "the U.S. federal government’s bureaucrats are attempting to spend more money this week than in any other week of the year!" One of the phrases I heard most often in the bureaucracy was "That's okay, we don't have to make a profit." And they never try. As Mises pointed out in his Bureaucracy, government agencies really cannot. They must operate based on rules and policy and cannot use profit and loss as their guide. Trying to make government as efficient as business is an unachievable pipe dream.

The Earth Is Still Spinning

Even during a partial shut down of the government. This is a good lesson for us all. About 800,000 government workers will stay home today and yet food, clothing, shelter, and a cornucopia of other goods will still be produced by a host of entrepreneurs. Classes will still be taught. Students will still learn. Church meetings will still take place. Children will still play with their grandparents. People will still engage in commerce and make the world a better place through voluntary exchange.