Sunday, June 28, 2015

Is Private Propety Biblical?

Anne Bradley of the Institute for Faith, Work, and Economics explains why the answer is yes.

Bradley cites various Scriptural passages and our theological tradition. She also points us to a better understanding of social justice. I have also written on this issue in my book Foundations of Economics: A Christian View and in an article, "The Scriptural Case for Private Property and a Free Economy" in the Aeropagus Journal.

Friday, June 26, 2015

Fixing Problems Requires Understanding Them

Dambisa Moyo thinks that one of the problems of the economics profession is that we spend too much fighting and not enough time actually fixing problems, especially regarding poverty and economic development. Her solution is to put down ideology and pragmatically embrace the virtues of any and all systems of economic thought.

She uses the competing ideas of Hayek and Keynes as a framework through which to illustrate her point. He perspective is demonstrated by the pragmatism she thinks we need:
A balanced economic approach that draws on the Hayekian incentive-based prescriptions, but also recognizes the critical role of strong central governments to act effectively in times of crisis, their role in boosting aggregate demand, putting to work underutilized resources and clearing markets when they won’t clear themselves.

While Moyo's goals are laudible--economics serves people as it provides them guidance for ameliorating economic problems--her prescription will achieve her ends only if both Keynesian and Austrian theory are relevant and applicable in different circumstances. There a plenty of reasons to question the soundness of Keynesian theory and the success of Keynesian economic policy. It may very well be that we need to fight the intellectual battles to discover and establish true theory, so we can then rightly apply it in economic policy. Formulating economic policy based on bad economic theory is a recipe for doing more harm than good.

Wednesday, June 24, 2015

Supreme Court Finds in Favor of Private Property?

As hard as it is to believe, that seems to be the case. Such a ruling is something to celebrate on our upcoming Independence Day. This Monday the Supreme Court ruled that a government program meant to increase raisin prices by keeping some of them off the market amounted to an unconstitutional taking of private property by the government. Let us hope that ruling may be used as a precedent spawning further rulings identifying that other federal regulations that constrain entrepreneurs from using their factors of production as they see fit is also unconstitutional. Not only do such regulations violate the Christian ethic of private property and makes us relatively impoverished by hampering the market division of labor.

Sunday, June 21, 2015

What Is Economic Freedom and Why Should We Care?

Anne Bradley from the Institute for Faith, Work, and Economics explains why.

The short answer is that it enables human flourishing. For a more in-depth exploration of the topic, see Bradley's paper, "Five Reasons Christians Should Embrace Economic Freedom."

Friday, June 19, 2015

Economic Wisdom on Renewable Fuel Standards

From Timothy Terrell posting at the Corwall Alliance. Terrel comes to the issue of government mandated renewable fuel standards from the same framework I use in my book, Foundations of Economics: A Christian View, and I expressed in my most recent op-ed about EPA Clean Energy Plan. Economics recognizes that prices are indications of relative scarcity. Therefore, when entrepreneurs arrange production according to profit and loss, they most strictly economize resources that are higher priced. Forcing the move to higher-priced alternatives make no economic sense for entrepreneurs seeking to reap profits. Importantly, they also make no sense for a society seeking to enjoy sustainable economic development. Terrell notes that such mandates make for bad stewardship.

As he explains,
Trying to force the adoption of another energy source, whether that is ethanol, wind energy, solar, or something else, means spending something valuable to conserve something cheap. Using “renewable” ethanol means using valuable farmland, water for irrigation, fertilizer (some of which is petroleum derived), tractors and tractor fuel for planting and harvesting, trucks for transportation of corn, fuel and water for distillation plants, and human labor. Cheaper energy sources are right under our noses.

But using ethanol means we’ll have more oil to use later, right? Yes. It means that we’ll use up the existing petroleum reserves at a somewhat slower rate, and will shift to other energy sources a little later. But it also means sacrificing all those valuable resources in the present—all the food that could have been grown on the farmland, all the water which could have irrigated other crops or increased stream flow for fishing and recreation, all the tractors and other vehicles, and the rest. It means, in short, less economic development now. It is economic development that gives us the tools to extract oil from harder-to-reach places, gives us innovations that increase the efficiency with which we use oil, and which will eventually replace petroleum. And it is economic development that saves lives. It is economic development from lower-cost energy today that reduces infant mortality and other causes of death, so that children have the chance to grow up, get an education, and become the innovators of the future.

Sunday, June 14, 2015

A Biblical Case for Economic Freedom

Anne Bradley of the Institute for Faith, Work, and Economics thinks there is one. Here is the introduction to a lecture she gave at Grove City College.

She highlights the importance for economic freedom and ameliorating poverty. That was also one of the conclusions of Francis Wayland. I encourage those interested in thinking about economics and how to help the poor to take a look at the book For the Least of These.

Saturday, June 13, 2015

Jonathan Nelson on Another Fascist Assault on Economic Freedom

Thomas Sowell, along with many others, has noted the inherently fascist nature of President Obama's economic policy. His administration and his helpers in Congress have been grabbing more and more control over larger and larger parts of our economy, all the while leaving nominal ownership of property in private hands.

Grove City College economics major Jonathan Nelson has just had a piece published that documents another attempt to force people to change the way they live according to the wishes of the President. His essay, "Uncle Sam's Assault on the Suburbs" Nelson explains the government's actions attempt to "force families into densely-populated housing, including a reliance on public transportation instead of individual automobiles" by HUD's implementation of the "Affirmatively Furthering Fair Housing (AFFH)" rule. Nelson notes that, not only will the rule have negative economic consequences, not surprisingly, such aggression flies in the face of the Constitution.
Not only does the proposed rule threaten the existence of some suburban neighborhoods, it abandons a core principle of our Constitution: federalism. If implemented, the AFFH rule would allow HUD, a federal agency, to override the zoning power of local governments. Without the ability for local and state governments to make their own sovereign decisions, the balancing power of federalism is lost.

Of course,we've been treating the Constitution with fascist-like tendencies for a long time now: Citizens have certain rights on paper, but in practice that state does whatever it wants.

Friday, June 12, 2015

David Howden Answers Critics of Austrian Business Cycle Theory

On the Tom Woods Show. Howden responds especially to claims that Mises and Rothbard were inconsistent when claiming that unemployment is do to real wages above the market wage and yet refusing to accept monetary inflation to remedy such situations. He also ably defends Austrian Business Cycle Theory (ABCT)  against claims that the theory depends on irrational expectations.

David Howden is chairman of the department of business and economics at the Madrid campus of St. Louis University. He is academic vice president of Mises Canada, editor of the journal Prices & Markets, and co-editor of The Fed at One Hundred, to which I contributed a chapter.

This episode is also relevant for readers of my book, Foundations of Economics: A Christian View, because I use ABCT to explain recessions in the chapters covering macroeconomic theory and policy.

Saturday, June 6, 2015

Whither the Population Bomb?

Fascinating retrospective of "The Unrealized Horrors of the Population Bomb" at the New York Times. 

The money quote from Gita Sen, development economist at the Centre for Public Policy, Indian Institute for Management in Bangalore:

"I know Paul Ehrlich reasonably well and I respect him as a biologist. I don't and never have, and he knows it, agree with his views on population. It's a tendency to apply to human beings the same sort of models that may apply for the insect world. The difference, of course, is that human beings are conscious beings and we do all kinds of things to change our destiny."

Friday, June 5, 2015

Here's How We Can Stop the EPA's War on the Poor

In his State of the Union Address, President Barack Obama promoted his vision of "middle-class economics."

As part of his program, he pledged to lower taxes for working families, "putting thousands of dollars back into their pockets each year."

Alas, what his budget proposal pledged to giveth, his energy policy taketh away. The industry regulations pushed by Obama's Environmental Protection Agency, conflict with his stated budget intentions by foisting higher household energy costs that fall disproportionately on the poorest among us.

In a free market, entrepreneurs serve society tremendously by coordinating the entire market division of labor, directing scarce resources toward their most highly valued use as determined by members of society.

The price system ensures that those who produce the most demanded goods in the most efficient way will reap profits, while those who fail to do so will reap losses.

Business regulations serve to hamper this beneficent market process. Regardless of any other purposes they serve, regulations constrain entrepreneurs from arranging production processes in their best, most efficient pattern.

They necessarily increase costs of production and decrease the quantity of products people have available to satisfy their ends. In short, business regulation results in relative impoverishment.