Is Price Gouging Immoral? Should It Be Illegal?
April 30, 2012 § 1 Comment
Is Price Gouging Immoral? Should It Be Illegal?
The folks at LearnLiberty.org are creating some excellent and rather entertaining videos on liberty and free markets. This short video shows how price gauging during an emergency—an act commonly viewed as inspired from the devil himself—is merely a function of the market finding a way to deliver goods to the people who need them most.
I heard a great EconTalk podcast a while back with Russ Roberts and Mike Munger on this very topic. Paradoxes like these are one reason I enjoy economics. The bigger reason is learning how to actually help people in need instead of making situations worse.
The “What Would Jesus Cut?” debate
August 4, 2011 § Leave a Comment
While elected officials in Washington have been debating over the debt ceiling, another robust conversation has been materializing at the intersection of faith, poverty and economic policy.
In July, an ecumenical coalition of Christian leaders met with President Obama to present a statement—the “Circle of Protection“—casting welfare programs as a moral imperative. Claiming a commitment to the values outlined in Matthew 25 (“…whatever you did not do for one of the least of these, you did not do for me.”), groups like Sojourners, led by God’s Politics author Jim Wallis, insist that “funding focused on reducing poverty should not be cut.” This initiative reflects a larger movement among young Christians toward a view of wealth redistribution as “social justice.”
While the moral appeal for welfare is nothing new, the boldness of couching it as an explicit commandment of Christ adds a new log to the fire. After a bloody culture war in which the church fought at the front lines, many young evangelicals resented the pigeonholing of Christians as a right-wing voting block. Those sentiments were intensified as Republicans in the Bush era were characterized as ignorant and bigoted. The current fiscal debate has provided an opportunity to set up camp alongside the progressive wing in a way that emphasizes compassion. Unfortunately, while they are right in suggesting that “budgets are moral documents,” they confuse individual responsibility with collective coercion.
In response to this shift, and recognizing the lack of sound economic principle in the church, a countermovement has emerged declaring the virtue of free enterprise and the danger of bloated government. Throughout the Twittosphere, Christian capitalists have been critiquing the agenda of the Circle of Protection, making the case that government programs frequently exacerbate and prolong poverty, and that Christ calls us to serve one another as voluntary individuals, not through a bureaucratically adulterated political game. Furthermore, they argue, a burdensome regulatory and tax system slows economic growth and makes it more difficult for individuals at every income level to pursue a fruitful life.
“Christ calls us to serve one another as voluntary individuals, not through a bureaucratically adulterated political game.”
A full-page ad by the American Enterprise Institute’s Values & Capitalism project appeared in Politico, in opposition to a previous ad by Wallis. In turn, Sojourners’ communications director Tim King attempted to clarify the Circle’s position, albeit ineffectively. King writes that the Circle does not seek a “blanket exception for all poverty programs under any and all cuts,” yet everything in the statement communicates otherwise—including the aforementioned quote that such programs “should not be cut.” If what King says is true, the authors of the Circle’s statement were merely sloppy and irresponsible in their prose.
Adding depth to the conversation, the Values & Capitalism project, represented by Eric Teetsel, is helping to build a new coalition—Christians for a Sustainable Economy (CASE)—to provide a counterweight to the Circle. Teetsel co-authored CASE’s Letter to the President, requesting their own meeting with Obama. The letter dismisses the idea that the Circle of Protection represents a majority view among Christians, and provides a freedom-oriented, values-based approach to fiscal responsibility. The letter, like the Circle, is signed by a wide array of respected Christian leaders. The letter was made available for the public to sign, and continues to add names. (You will find my moniker at #33. sign here)
This discussion is a very important one for the Church body, though there is a tendency to shy from such complex and controversial topics. Religion and politics are ostensibly forbidden from friendly discourse—especially in the same sentence. But there are some issues that cannot be passed over. Public policy must be rooted in ethical purpose, and if the church is silent, others will fill the gap. We must engage fully in a search for understanding about humanity and social institutions, and we must do so with grace and cordiality. We are first and foremost brothers and sisters in Christ, and secondly agents of His justice on Earth.
For those interested in exploring this debate, Remnant Culture has posted a convenient round-up of responses from various Christian writers on the “What Would Jesus Cut?” question.
Purpose & Prosperity: Linking Christian Ideals with Sound Public Policy
June 17, 2011 § 3 Comments
C.S. Lewis wrote in Mere Christianity that God wants “a child’s heart but a grown-up’s head.” Followers of Christ are charged, by the ethos of our calling, with a high standard of practical reason, fused with compassion. When we carry our faith to the political sphere, we must do so with grounded understanding, not idealistic, emotive or superficial thinking. This means that the abdication of our duty to educate ourselves in the unsightly “secular” forces of politics and economics is morally unacceptable.
To the detriment of our own effectiveness, the Church has largely overlooked the relevance of these studies to the Christian mission. Through political philosophy, we examine the relationship of power and protection, and the proper extent of the state. There are important implications here for those who believe the individual has a right to free will. But it is the economic sphere that seems to have caused a phobia in religious discourse, even though the central concern of economics is, in fact, human needs and how they are met through voluntary service—an arrangement far preferable to political coercion.
While many people—including religious leaders—have spoken against capitalism for its ability to amplify greed and materialism, a number of Christian scholars and organizations are helping to reverse that view and to make the case that economic liberty is not only efficient, but morally superior to any other known system. Tragically, the intellectual overlap of theology, economics and politics is near absent in Christian higher education, leaving society in the dark as it seeks ethical answers to practical problems.
“…the intellectual overlap of theology, economics and politics is near absent in Christian higher education, leaving society in the dark as it seeks ethical answers to practical problems.”
I visited two organizations over the last two weeks that are trying to fill this gap and alter the national dialogue. The Acton Institute has been building a case for the “moral foundations of a free society” for twenty years. Their “Acton University” conference in Grand Rapids, Michigan has become an ecumenical Mecca for Judeo-Christian thinkers who affirm the value of ordered liberty. The American Enterprise Institute is also beginning a new initiative on values and capitalism. Their “Purpose & Prosperity” conference brings evangelical undergraduate students to this established DC think tank to engage with scholars on the critical issues of our day, and learn how to evaluate them through sound principles.
Both groups are proclaiming the same, as I call it, freedom gospel: our Creator values the person and his/her talents, and desires hearts of humility, responsibility, service and stewardship. From this basic premise, the individual is the central decision-maker, not the state, and the dignity of responsible human creativity and work ethic replaces government mechanisms for the distribution of wealth and opportunity. The latter method is spiritually void, and robs the soul of social value. Our faith also has meaningful implications on the roles of the family, Rule of Law and personal accountability in a healthy economic society.
“Our Creator values the person and his/her talents, and desires hearts of humility, responsibility, service and stewardship. From this basic premise, the individual is the central decision-maker…”
Christians should resist state-run solutions characterized by imposed charity and resentful class warfare, where the vulnerable are cast as victims, incapable of achievement and disconnected from their own choices. We should instead advocate a system that rewards service and selflessness, minimizes political controls and increases well-being at all levels of society.
To apply the old adage, the Church has largely embraced the idea that if a man is hungry, a bureaucrat ought to transfer to him a fish from someone else’s catch. It seems more consistent with Christian virtue, however, to teach him how to catch fish himself, then ensure that he can keep the rewards of his labor, not only so that he can eat, but so that he can feed his family and perhaps open his own fish market, providing employment to his neighbors and prospering his community.
I encourage those interested in public policy issues to familiarize themselves with the Acton Institute (www.acton.org) and the American Enterprise Institute (www.aei.org). Surely other groups are doing similar things, but my personal experience working with these great organizations allows me to lend personal endorsement, which I am very eager to do.
Video: Debate on FDR’s Depression Policies
July 30, 2010 § Leave a Comment
This is an important discussion to have in our current crisis, and in trying to decide just how much the government should be doing, if anything, to pull us out of the recession.
Economists have spent 80 years trying to understand the causes of the Great Depression, but the debate that has gained attention in recent years centers on the reasons why it was so deep and so prolonged. America has seen many depressions, and historically, we are in and out in a matter of 2 or 3 years. But the Great Depression is so “great” because it was so unusual. The prevailing wisdom is that Franklin Delano Roosevelt’s “New Deal” policies saved us from certain economic disaster, but many critics point to these very policies—massive federal “stimulus” spending, public works projects and social safety-nets, etc.—as the very factors which pushed the depression through an entire decade, and that America would have been back on track years earlier if the market had been allowed to correct itself.
On July 9, 2010 at the FreedomFest Conference in Las Vegas (www.freedomfest.com), FEE president Lawrence W. Reed debated University of Nevada-Las Vegas economist Bernard Malamud on the subject of the New Deal policies of Franklin Roosevelt. This is a video recording of that 50-minute debate. (link below)
I had the opportunity to have lunch with Dr. Reed while in Atlanta a couple of months ago, and he was very warm and welcoming. I would advise anyone interested in economics—particularly of the free-market sort—to look into one of FEE’s economic seminars. It was enlightening, to say the least.
FDR’s Depression Policies: Good Deal or Raw Deal? from FEE on Vimeo.
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The Case for Capitalism
June 7, 2010 § Leave a Comment
Having returned from my week-long seminar on free-market economics, it feels like a good time to address a question that seems to be at the forefront of the public mind—is Capitalism helping or hurting our society? Those who pose this question are typically concerned that in an economic system where human actions are motivated by profits, the businessmen will always cheat, the wealthy will always win, and everyone else will spend their lives trying to keep their heads above water and have a decent life. There is also a deep concern for the poor, who—without the means to “pay up”—will be marginalized and forgotten. And, of course, we recognize the unattractiveness of incessant advertising and self-gratification, envisioning a future world similar to the one depicted in Pixar’s WALL-E, in which overweight and ignorant pseudo-humanoids are carted around a corporate space-city while the earth lies rotting from over-consumption.
Fear not, my friends—that world will only exist in a movie script. Capitalism certainly has its drawbacks, but as I hope to explain, it is the most effective and least dangerous method of human progress known to man.
WHAT IS CAPITALISM?
Free trade, free enterprise, free markets… they all mean the same thing: voluntary exchange. It’s the idea that each person has the right to save, invest or spend their resources in whatever manner they see fit. You could put this under the “pursuit of happiness” column, but we have to recognize that “happiness” (quality of life) is completely subjective. Given limited choices, one person might prefer ice cream over cake, while another prefers cake over ice cream. For some, the choices are less luxurious, as they must decide between clean water and bread. Nevertheless, we exchange our time, talents, energy and goods for the things we value at any given moment. The freedom to do this without government regulation is the essence of Capitalism.
THE ECONOMIC ARGUMENT
Imagine two farmers. Person A has a goat, and person B has a donkey. They are both useful, but for different things. It just so happens that they each have what the other needs, so they trade. The word “trade” tends to connote an even exchange; one thing for another thing of equal value. But this is false. People don’t trade if they see absolutely zero benefit. Rather, they exchange for something more valuable to them than what they had to begin with. Trade—whether farm animals or standardized currency—always results in both parties gaining something. The end result is a net increase in wealth/happiness/quality of life/standard of living.
The very fact that trade has this effect makes people want to participate, but trade is impossible without something to offer. Therefore, the opportunity to pursue trade without limitation provides a valuable incentive to be productive—to labor and create. When millions of people are striving to do this, there is real growth in the economy, and an increase in the standard of living for all who participate (imagine a system where that incentive does not exist). Thus, one might ask, “what about those who don’t, or can’t, participate?” They benefit too, since as goods become more available, they also become more affordable. This is only one of several ways the poor actually end up better off.
THE MORAL ARGUMENT
The moral aspect of capitalism is apparent on at least two fronts: one in its cause, and the other in its effect. While the driving force of free trade is ultimately to improve one’s own life, it is inherently and entirely dependent on service to others. If you intend to make an exchange, the good or service you offer must be of some value to the other person. That’s just common sense. Therefore, the only way to acquire wealth—outside of inheritance or gambling—is by looking for ways to meet the needs of others in such a way the makes an exchange mutually beneficial. This requires the businessman to know what his customers are willing to pay, and keep his costs down below that mark. Thus, the wealthy CEO can get his burger for $20 at the best place in town, and the janitor can get his for $1 at the fast-food joint. You can look at this with disdain because the wealthy get to live so much “better”, but you can also look at this with thanks because the hungry are eating burgers instead of cornmeal. The opportunity and competition provided in a free market results in more people having more things at lower prices—not just the wealthy.
For those that are so unproductive that they cannot acquire even the essentials of life, it is feared that they must be left to government assistance through tax dollars. But in a world where goods are cheap, economic mobility is wide open, and massive wealth can be achieved by more individuals, the old, sick and/or destitute can be supported by voluntary gifts. Thousands of hospitals, libraries, schools, food pantries, shelters and other services are provided every day through the generous donations of wealthy and many middle-class individuals. Private organizations range from neighborhood community groups and centers to nation-wide entities like the Red Cross, Salvation Army and YMCA. This type of charity giving is only prevalent in a capitalist economy where financial growth is a constant and personal responsibility is the cornerstone. The private “market” has been far better at addressing the issues of disease and poverty than any government agency. Just look at the Texas Medical Center, here in Houston—where people come from all over the world to receive the very best treatment available, and new methods are being developed every year. The situation for the poor would be immensely better if government regulation had not already impeded advancements in many areas.
THE LIBERTY ARGUMENT
There is but one alternative to a system where choices are made by the individual, and that is a system where choices are given to the individual. And who is the giver? To say “government” is too ambiguous, so we can be more specific by saying “people who are elected or appointed to public office, who are paid in taxes, and who have many different interests and influencing pressures.” That seems a bit more accurate. So the idea behind placing government in charge of economic activity is that politicians and bureaucrats are better equipped to judge the what, when, where and how of everyone else’s needs and wants. That’s both insane and dangerous.
“But,” the advocates of government regulation say, “someone’s got to stop companies from doing harmful things!” And this is true. But the proper judge of good or bad business is the consumer—not government. Why must we trade a power that is temporary and voluntary for one that is permanent and requisite? All that is done by placing government over business is the trading of one selfish interest for a greater one—denying the rights of buyers and sellers, while increasing the power of politicians and the associations which influence them.
Did the Federal agency who examined the BP well prevent the explosion and subsequent leak? Has the Department of Education improved U.S. schools? Has the War on Drugs or the War on Poverty reduced either one of these in the last 30 years? Not at all. For reasons that need not be included here, government agencies are both expensive and ineffective—especially when compared to the private market. This isn’t an epiphany. Washington D.C. is widely criticized for its corruption and deal-making. If all of this is true, then where does the demand for more government control come from? Well, we can name at least one place: Washington D.C.
Liberty is a precious and valuable thing that is easily taken for granted. There is a constant temptation to use the tool of law and regulation to achieve the changes we want to see in society, but we must be extremely careful about what keys we choose to hand to political authorities. Eventually we will find that we are the ones inside the cell, at which point it will be too late.
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A special keynote/discussion titled “Is Capitalism Worth Saving?” will be held on June 30th at Houston Baptist University and will include Dr. Arthur C. Brooks, President of the American Enterprise Institute, and Dr. Paul Bonicelli, HBU Provost. Go here for more info.
Special thanks to BureauCrash.com for the “Enjoy Capitalism” image.
Popcorn Economics: the analysis of a ripoff
February 28, 2010 § Leave a Comment
I don’t buy popcorn at the movies.
Don’t get me wrong – I love that buttery junk, but the thrill just isn’t worth five bucks. Apparently, the iconic movie snack has reached a spot on BillShrink’s “12 biggest ripoffs in America” list. Amusing. But it begs the question: are things like movie popcorn and hotel mini-bar snacks really ripoffs?
You hear it all the time: “I can’t believe you guys are charging that much for something I can buy down the road for half that!” This usually precedes “I’ll take two of them.” The unsettling truth is this: as long as there’s a line, the price is just right. In fact, if the line is too long maybe it’s time for a price hike!
The question here is one of value. What sets the value of any given product? If you say “the guy selling it” you’re wrong, but only half wrong. Doing business requires trade. Have you ever tried to trade with yourself? It really gets you nowhere. Like dating, it takes two. The moment someone decides they want something – voila! – a market is born. The next step is for someone to realize the market is there and try to provide for those wants and needs. So we have a demander and a supplier… all that is left is negotiation. Value is the product of negotiation.
Personally, I haven’t taken much advantage of negotiation when shopping, as Dave Ramsey insists I can. It doesn’t mean some negotiation hasn’t taken place. Thousands, or millions of people have come before me to buy that shiny new iPod I have my eye on. Before it was released the company had the price-point tested to see what people would be willing to pay… for a shiny new iPod with this feature or that feature. So until people stop buying the iPod, Apple will be able to say that they’ve set the price perfectly – and they’d be right.
When sales do slow and the price drops it may begin approaching the cost that Apple has paid to create the product in the first place, and ship it to your local Apple Store, and pay the sales people to explain to customers where the “start” menu is. When that happens Apple has three choices: lower the quality, drop the product, or add some new features and hike the price back up. Their decision will be based on what consumers want.
Now, we’ve concluded that value is the product of negotiation, and that companies have to find what people want and give it to them. Let’s apply that to the $5 popcorn. Let’s say you and I are going to the Alice and Wonderland premier this Thursday with the free tickets our friend Clay gave us. I walk in and head to the auditorium while you make a bee-line for the concession area. We both know the popcorn is expensive, but while I’m fine doing without, you are of the opinion that a movie simply isn’t complete without a bucket of buttery popcorn and an obscenely large soda. Where exactly is the ripoff? Other than the few times I stole a handful during the movie, you got exactly what you paid for. You traded the extra $5 for a better movie-going experience. In the process the theater made a little money so they can continue to provide movies, popcorn and soda, and we both had a great time.
Ok, so maybe it’s not a ripoff as long as customers are willing to pay up, but earlier I mentioned that if the line is long, perhaps the price should be hiked. That seems unnecessary, if not immoral. Sellers should just figure out what it costs them and add a little more for profit, right? Wrong. High prices have a function, and it’s not just to make you angry.
First, it is a method of distribution. The number of people who end up with the product are the same, but it will be those who want it most or can afford it most. The alternative is simply the first-come-first-served method. I doubt that such a system holds any higher moral justification than the first. Secondly, and perhaps more importantly, high prices signal to competitors that there is a booming market, and with competition comes all the wonderful things competition brings. In the end you’ve got more of the product (so more people are able to get it) with more variety and a more affordable price.
All of this aside, it’s still no fun paying extra for movie theater snacks. But we can’t blame them. The most important votes we cast are made with our wallets.
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Update: An Isreali lawmaker is pushing to outlaw high prices on popcorn at the theater. Yes, it’s a downright crime to charge people too much for candy and sodas. Oh wait,… what was it about that soda tax?
Classism: The burning of a hillside city
January 5, 2010 § 1 Comment
Stocks are down, home values are down, jobs are down. People in every corner of America are struggling to get health care and a decent meal, and the poor and destitute around the world are suffering. All the while, the rich CEOs, doctors, insurance companies, your boss, and the guy down the street who recently renovated his home are all stuffing their pockets. America is a nation ruled by greed, apathetic toward any person or cause which doesn’t provide a financial advantage.
Or so goes the narrative.
As the fog of racism fades into our national past there is a new cancer looming in society that threatens to destabilize our nation through the tyranny of the masses. It goes by the name of Classism – prejudice on the basis of social and economic achievement. The term, like “racism” is commonly and mistakenly used to condemn hate from one group and ignore hate from another, when in fact the prejudice runs both ways. Many people are quick to point out the advantages of the affluent, and demonizing them works to advance their cause of wealth redistribution. There is typically a solid majority of our society that values hard work and innovation, and seeks to preserve the values of capitalism. However, in recent years fragments of this group have begun to break away, casting a shadow of doubt over the future of liberty and prosperity in America – and, by extension, the world.
One of these groups is formed by pseudo-anarchists who – largely fueled by conspiracy propaganda – have come to see nearly all authority as invalid and corrupt. They believe that economic, social, or political power is achieved only through making corrupt deals and stepping all over the rest of us. Hence, their authority cannot be trusted, as it will surely be used to make the “rich richer, and the poor poorer.” To be clear, they aren’t opposed to capitalism as a system. They like freedom and low taxes. But they see themselves as righteous enemies of corruption, and those “enemies” usually take the form of anyone who is financially successful. Their rants tend to sound a bit like the last lines of Marx’s Communist Manifesto: “Let the ruling classes tremble at a Communistic revolution. The proletarians have nothing to lose but their chains. They have a world to win.”
You simply cannot be pro-capitalism and anti-wealth at the same time. This “us” versus “them” approach has the net effect of working against private enterprise – a mentality which is the very cause of government expansion. It is a tragic irony.
During the French Revolution, a printer named Jean-Paul Marat became a leading voice for the revolution by filling his newspaper distorted rumors and vitriolic rhetoric against the ruling class. He advocated no other solution in the name of liberty than the severed heads of the practically the entire aristocracy and anyone that spoke against the revolution. While many modern-day anti-government activists have taken on this role, I believe a better persona by which to model the cause of limited government is that of John Adams, who deplored the violence in France, pointing to justice and reason as the appropriate ends of revolution. What is a revolution worth if justice is not the end result?
Another section of the typically pro-capitalist group that is taking up arms on the other side is a wave of Christians who have been influenced by books such as Don Miller’s Blue Like Jazz, and Jim Wallis’ God’s Politics, which preach a message of Christian utopianism; that if we will only change the way we live, we can rid the world of hunger, pain, poverty and war. How should we change? By adopting practices and policies that mirror the selflessness of Christ – seeking only to serve and never to gain. They criticize American culture for it’s over-consumption and capitalist system, which “promotes greed”, and is directly in opposition to the call of Christ.
While there is merit to the demand for moderation, this view goes above and beyond, subtly demoralizing any act through which an individual seeks financial or social gain. This view naively posits that gain for one person equals loss for another, therefore it is un-Christian to seek prosperity or advantage. After all, Christ never sought political power, and he told his disciples on several occasions that they should not expect financial rewards, or any sense of stability or security, for their service to God. Therefore, our government should increase welfare programs, stop military action and open the borders, among other things.
This argument is deeply flawed. As Jay Richard’s points out in his recent book Money, Greed & God, there is a difference between selfishness and self-interest, and that through self-interest we must pursue the course of wisdom. Is getting an education an act of selfishness? Protecting one’s family? Pursuing a promotion on the job? Of course not, they are goals which any reasonable man would seek. If, in fact, we are concerned with wisdom and not simply off-the-cuff judgments, we will see that capitalism is far more preferable, when compared to its alternatives, for the alleviation of poverty and disease in the U.S. and the world. I’ve written posts on this before, and surely will in the future.
Both of these segments of society have turned against our leaders in both the private and public sectors. Why did I refer to classism as cancerous? Two reasons: first, it is heavily influenced by lies, which it passes on to others in society. Second, it threatens the sustainability of our nation, which serves as a beacon of liberty, justice and the message of Christ, in the world. To many such a statement may sound extreme, but it’s quite simple really: By crippling our current leaders and stifling the ambitions and development of a generation of Americans, the City on a Hill will be reduced to something more akin to a village on the plain.
Perhaps the biggest lie on which these destructive arguments rest is that the economic “pie” is finite, so if a large piece given to one person necessarily means a smaller piece given to someone else – hence, capitalism is inherently selfish. In reality, wealth is created. How much total wealth was there 1000 years ago, compared to today? Most people in the middle ages were poor, except for a very small ruling class, but even then, middle class families today enjoy many of the royal luxuries of previous centuries. The total volume of wealth circulating among all classes is vastly more, and continues to grow – thanks to capitalism. America’s poor are better off than they were even 100 years ago. Because of progressive social programs? No. Socialism never made anyone better off, though it did manage to kill countless millions in Russia, China, Germany, Cambodia, Cuba, et cetera. The poor are in better condition because of the freedom to invest, innovate, compete and provide services and products as society demands.
It is a system on which our nation has been built, and from which it has acquired significant wealth. Everyone in the society benefits from this wealth, even if not proportionately. To think that it should be proportionate is to ignore the reality of the free society. There will always be the poor and the rich, and this is almost entirely based on whether a person can provide a valuable service to another. I find it an interesting phenomena that the building of wealth and the service one provides to society are so closely related. (“give and it shall be given…)
The true cause of poverty is that some among us fail to provide any service which would provide balance to a basic cost of living, by their own choice or not. They either cannot work, or their work simply isn’t of value. The way to fix this is not through forcing income redistribution and limiting individuals from seeking their full potential, but rather, allowing the system to function properly, raising the standard of health and well being for all. For those who simply cannot find valuable work, it is sensible to have programs to assist them through various means, but this does not have to be entirely funded – and therefore controlled – by the state.
The more taxes are taken up for government programs the less of a responsibility is placed upon the individual to be directly involved in the choices of sacrifice. If we remove personal choice from charity, what moral achievement have we made? People should be allowed to give directly to a person in need, or to a local church or charity who knows the needs of the community best, and are not restricted to the limitations of the state – most importantly, the full and unhindered message of liberation through the gospel of Christ.
Classism, which has taken hold of much of europe in the last century, comes with an inherent desire to weaken the influence of leaders in society, attempting a transfer of power to “the people.” Two very important illusions are created by those who advocate this. One, that the “people” are, in fact, a unified group with entirely unified goals. The second is that the very nature of power is the same, regardless of who fills the position. While the people may be unified in a common enemy at first, their common bonds will dissolve at the very moment of victory. Power of the “people” merely means that the will of some over the will of others.
Friedrich Hayek, in his book, The Road to Serfdom, written during the fight against Nazi Germany, argued that socialist ideology, spurred by classism and anti-capitalist resentment, attempted to create a more just world by using a powerful government to “organize” the economy so that each would get a more “fair” share. The very things which socialists leaders from Germany, Russia, Italy and elsewhere hoped to achieve in the early 1900s–liberty and equality–were effectively stamped out by their radical collectivist reforms, which brought only massacre. We must learn from these lessons, so not to repeat the mistakes.
Protagonists of the class war also fail to see the hypocrisy among its advocates. They condemn the wealthy for owning expensive vehicles or purchasing front-row seats at the ball game, but they feel they have a right to spend their money on the latest tech gadgets and the very new hit movie – on the big IMAX screen. They condemn CEOs for making a million dollars as they employ thousands of people and provide valuable services, but gladly endorse actors and athletes who make much more. They condemn government officials from making deals and funding wars, though they ignore the fact that we all make deals every day and protect our own homes and property from harm. This double standard is a puzzle which America’s affluent must constantly try to navigate. No one wants to be seen as elitist, selfish or arrogant. It is assumed that as you have a better job you will buy the things you really want but couldn’t afford before, but it seems there is a curve to this. If you make a good amount of money you are expected to buy only what everyone else does, lest you be labeled a snob.
Here are some sobering facts: Every nation is greedy. Every nation wants the economic and military strength America has. Every person would rather be wealthy than poor. Every person wants things they can’t afford. Every person seeks to protect what is valuable to them, and pursues the path in life that will help accomplish their goals.
These are not new, nor are they unique to Americans or to wealthy people. Humanity is kind and it is corrupt; generous and greedy; loving and hating; serving and controlling. To cast blame for evil on any race, nation, class or any other social group is not only wrong, but terribly destructive. But when we embrace what is wise and good, and celebrate the leaders of our society – immoral behavior notwithstanding – we are creating a unified body politic, moving toward peace, justice and prosperity, that can effectively bring about these things in every corner of the globe, wherever they are welcomed.
Balancing the Obama Budget with a Mandatory Gorilla
October 9, 2009 § 1 Comment
I had to pass this one on from the blog “Political Math.”
Explaining the Economic Collapse
August 11, 2010 § Leave a Comment
I haven’t seen the movie yet, but if your recent cinematic experiences include The Other Guys, and you stayed until the very end, you probably saw this sequence, about how wealthy people hunt starving little children in Bagladesh and trade them for yachts and pigmy giraffes.
Well, Josh Tyler at cinemablend.com, I can’t say whether or not the creators of this clip are trying to explain the economic collapse, as you say, but I can assure you that the information propaganda found therein has absolutely nothing to do with it. I don’t blame you—few people really understand what the heck happened to the U.S. financial system, and why we’re still in this mess. For you, and many others, I’ll try to put this into plain english.
The Housing Oops
For decades there has been a lot of talk about how home ownership is the key to the American Dream, and how we needed to open that opportunity to more people. To make a long story short, getting more people into homes meant reducing loan requirements. Of course, that comes with huge risks… risks that companies don’t take unless they want to go out of business. No one wants to give someone a loan they can’t pay back, right? Wrong. What’s the one entity who has a virtually endless money supply, and who can never go out of business? That’s right,… the Federal Government.
You’ve probably heard of Fannie Mae and Freddie Mac. They were created and financially backed by Congress. Over time, presidents and congresses pushed these companies to take on more and more “risky” mortgages, in the name of helping the poor. In order to compete, other mortgage companies started putting their neck on the line. This pushed up the demand for homes, which also pushed up prices. And with increased prices, came more building and more bad loans. An artificial cycle had been created, and people were trying to find ways to make money from it.
Wall Street bankers and investors were packaging bad loans together and selling them off. Sometimes the buyers were intentionally buying up the risky loans—after all, home prices were skyrocketing! But not everyone who had money in the game knew exactly what they were investing in. Millions of people were just throwing their money at the stock market, through IRAs, 401(k)s and the like. But while the getting was good, the market for homes and home loans—the good and the bad—looked like a safe bet.
The Crash
By the time home builders realized that the rising prices and rising demand were artificial, it was too late. Home prices started falling fast. Like a one-two punch, people who couldn’t really afford their amazing new homes stopped making payments, and were forced into foreclosure. The result? A whole lot of banks with a whole lot of homes that were worth a whole lot less than they paid for them. Some of them went bankrupt and some got a bailout from the government. And anyone with any cash invested in housing and mortgages lost bigtime.
Banks failing left and right sent shock waves through the entire financial system, and even those who hadn’t lost money yet pulled out of the market, and stocks fell. That’s when most of us felt it. If you were a typical middle-class citizen with your own home and a decent retirement savings in your 401(k), you woke up one day to find that your net worth had decreased by 20%-30%. On top of that, you hear news of enormous bailouts, larger national debt, and higher taxes. You stop spending so much, reduced your charitable giving, and if you owned a business, you either let people go or stopped hiring.
Now What?
With so much uncertainty hanging out there about our economic future—the stability of the system, how new federal regulations are going to effect our lives, and what types of new taxes are coming our way—the economy is extremely sluggish, and is spooked every time an oil rig explodes or a European country spends its way into bankruptcy. Companies are slow to open their budgets and investors are slow to open their wallets, so to use a really sophisticated economic phrase, there ain’t much goin’ on. And when there’s nothing to do, you’ve got unemployment.
Getting employment back is the key to kick-starting the economy, and I can almost guarantee the one single issue that will determine whether the groundhog sees its shadow: the Bush Tax Cuts. If Obama and the Congress decide to extend them, things will turn around very quickly. If they allow them to expire, it will be a slow and painful growth.
Brief Remarks on Government Spending
People talk about how the government can spend billions of dollars generating jobs. But where do we get the money for this? Isn’t it just someone else’s income? It’s just been zapped out of one part of the economy and dropped somewhere else! That money would’ve been spent giving a plumber, roofer or shoe salesman a job, and the person benefitting would pay the cost. Or perhaps it would be put into an investment account where it would’ve been accessed by companies who could use it to produce goods, generate wealth, and… create jobs. This reminds me of a children’s joke: “you’re so dumb that you sold your car for gas money!” Hmmm… isn’t half of our country demanding just that?