Tag Archives: Economics

The pilgrims experiment with communism before the second Thanksgiving

The First Thanksgiving
Less than half the original pilgrims made it to the the first Thanksgiving

Here’s an article from The Stream about the second Thanksgiving, by Dante Witt. I like this article because it tells us so much about the character of the United States of America. Why are we so conservative about economics?

She briefly retells the story of how the pilgrims were helped by Squanto, which I blogged about in my previous post, then she talks about the troubles they had next.


Although Squanto’s farming techniques worked better than their old ones, the pilgrims still could not produce enough food. Was it bad luck? Bad soil? No. The Mayflower pilgrims were part of a joint stock company which stipulated that the pilgrims would pool their resources, and receive a share of the profit.

The strategy turned out to be deeply misguided, working about as well as various communist economic schemes hundreds of years later. The sad state of the colony after two years of communism, wrote William Bradford, “may well evidence the vanity of that conceit of Plato’s and the other ancients applauded by some of later times; that the taking away of property and the bringing of community into a commonwealth would make them happy and flourishing; as if they were wiser than God” (p. 121).

So the pilgrims amended their contract so that each family was now responsible for its own provision. The difference was stark. Bradford explained:

This had good success, for it made all hands very industrious, so that more corn was planted than could have been by any other means the Governor could use, and saved him a great deal of trouble, and gave far better content. The women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability; whom to have compelled would have been thought great tyranny and oppression.

In fact, it’s estimated the colonists planted about six times the crops they would have planted otherwise.

That shows where Americans get their views of economics, but what about the praying and the gratitude?


With new farming techniques and an amended government, the pilgrims did all they humanly could to ward off starvation. But they could not control the weather. A drought settled on the colony and threatened to kill the corn before the harvest. Recognizing with the Psalmist that “except the Lord build the house, they labor in vain that build it,” the colonists turned to God. According to Bradford, they “set apart a solemn day of humiliation to seek the Lord by humble & fervent prayer, in this great distress.” What was the outcome?

And he was pleased to give them a gracious & speedy answer, both to their own & the Indians admiration, that lived amongst them. For all the morning, and greatest part of the day, it was clear weather & very hot, and not a cloud or any sign of rain to be seen, yet toward evening it began to overcast, and shortly after to rain, with such sweet and gentle showers, as gave them cause of rejoicing, & blessing God. It came, without either wind, or thunder, or any violence, and by degrees in that abundance, as that the earth was thoroughly wet and soaked therewith. Which did so apparently revive & quicken the decayed corn & other fruits, as was wonderful to see, and made the Indians astonished to behold. (p. 131)

Seeing the speedy results of the Puritans’ prayers, an Indian named Hobanak said, “Now I see that the Englishman’s God is a good God, for he hath heard you, and sent you rain, and that without storms and tempests and thunder, which usually we have with our rain, which breaks down our corn, but yours stands whole and good still; surely your God is a good God.” (pp. 64-5)

Then William Bradford again proclaimed a day of Thanksgiving to God, the forerunner of the American tradition of Thanksgiving.

So, this story explains why the United States has this character that values the free enterprise system, hard work, individual achievement, prayer, and gratitude. These are the values that make us American, that made us into such a great nation.

Wayne Grudem debates Richard Glover on the Bible, poverty and foreign aid

Two horses fight it out, may the best horse win!
Two horses fight it out, may the best horse win!

A great episode of the Unbelievable podcast. This is a great debate. I really enjoyed it. All three speakers were excellent putting forward their points. It’s nice to hear an American voice, a British voice and an Australian voice debating an important issue. HIGHLY RECOMMENDED.


Wayne Grudem is a theologian known for his conservative approach to both doctrine and economics. His new book “The Poverty of Nations: A Sustainable Solution” (co-authored with economist Barry Asmus) makes the case that pouring aid into developing countries is a failed strategy. Grudem debates whether the Bible supports free market, capitalist economics with Australian economist and theologian Richard Glover who wrote a critique of the book for the Australian Bible Society.

 The MP3 file is here.



  • The Bible speaks to all of life, including economics, stewardship, government
  • The study of economics helps us to understand how to take care of the poor
  • My job is to apply the teachings of the Bible to all of life


  • What’s your thesis in the book?


  • A good system is one where the poor have the opportunity to earn and save from their labor
  • Book is a response to a Kenyan couple Grudem met at a London conference on business and Christianity
  • Book is not concerned with how individuals and groups can do charity to help the poor
  • Our church already does that and we support individuals and groups doing charity
  • The book is concerned with how should nations be transformed in order to grow economically
  • What should the laws, policies and cultural beliefs of a nation be in order for it to not be poor?
  • The book lists factors that have moved nations from poverty to prosperity in different times and places
  • The thesis of the book is this: government should set their people free to be able to produce more
  • We advocate freedom in economics: freedom to work, freedom to save, freedom to start businesses
  • We believe that this free enterprise view is consistent with the Bible in a number of places
  • E.g. – private property is good for prosperity (thou shall not steal) but forbidden by communism


  • What about the church sharing in communities in Acts 2 and Acts 4?


  • That is not redistribution of wealth among individuals and businesses by a secular government
  • Those passages showed that there was voluntary sharing among Christians, which is not communism


  • What’s wrong with Grudem’s book?


  • The book emphasizes the Bible and the goal is to help the poor in poor countries
  • Criticism 1: the book doesn’t engage with non-free-market perspectives on economics
  • Criticism 2: the book doesn’t survey all that the Bible says about economics


  • For 1) what is one of the views that is not considered?


  • Jeffrey Sachs says that nations need a leg up before they can grow economically
  • Ha-Joon Chang says that free enterprise was not how the wealthy nations became wealthy


  • We do engage with other points of view, especially Jeffrey Sachs in the book
  • The trouble with leftist views on economic development is that it does not work in practice
  • NO COUNTRY has even been lifted out of poverty by foreign aid
  • He says we don’t cite enough from the wisdom literature: we have 64 citations in the index
  • He says we don’t cite enough from the gospels: we have 42 citations in the index
  • He says we don’t cite enough from the epistles: we cite 22 of 27 epistles in the index
  • Some economists won’t criticize cultural and moral values that hurt prosperity
  • As Christians, we think that moral and cultural values are part of the problem that needs solving


  • What about foreign aid?


  • Foreign aid doesn’t help: a lot of the money goes into government and rulers can be corrupt
  • Instead of encouraging people to start businesses, it tells people to go into government to get aid money
  • Economists (lists 3) are saying that foreign aid entrenches corrupt government in power, does no good


  • If it’s not working, should we keep doing it?


  • When there is an immediate need, we should do it, even if it is not a long-term solution: we need both


  • Should we stop foreign aid completely?


  • Voluntary charitable giving from individuals and churches to help poor countries is good
  • Me and my co-author are both active on our church board that helps poor countries with urgent needs
  • Food and doctors are urgent needs, and we should help, but it doesn’t lift countries out of poverty
  • We need a long-term solution that helps poor countries produce their own food and doctors
  • We are criticizing 1) government to government aid and 2) IMF/World bank to government aid
  • We have had pushback because 500,000 people make a living from this foreign aid industry
  • No country has ever been lifted out of poverty into sustainable prosperity
  • That’s the definition of insanity: continuing to do the same thing that has never worked


  • Does the Bible support free enterprise as a way of creating sustainable prosperity?


  • When I said the Bible was absent from his book, absent was a bad choice of words
  • But the hundreds of references he listed were not dealth with *in depth*
  • In the Scriptures, God is the one who provides (e.g. – in Ephesians, Sermon on the Mount)
  • The Bible is less focused on his people making money, and more focus on sharing basics, like food
  • Secular governments should just take it from people who have food and give it to hungry people
  • In 2 Cor 8-9, Paul talks about voluntary sharing so everyone will be equal


  • Does 2 Cor 8-9 undermine the free enterprise system you champion in the book?


  • The sharing in the Bible solves cases of urgent need, it does not lift countries from poverty to sustainable prosperity
  • Some older translations say “equality” in 2 Cor 8:13-14, but newer translations (e.g. – ESV) say “fairness”
  • The Greek word is translated as “fairly” the only other place it appears in the NT (Col 4:1), in every translation
  • God uses the means of human work and productivity to provide (daily bread is baked, doesn’t just fall from Heaven)
  • In general, there’s no provision in Scripture for a person to be dependent on donations for their entire lives
  • God promises Israel fields and mountains to tend and mine, but prosperity is from work, not depending on others


  • Does the Bible support this focus on work?


  • Working is highly praised in Scripture, (lists Bible passages that favor work over dependency)
  • Countries that were exposed to this notion of work and productivity have been more prosperous


  • Jeffrey Sachs and other development economists don’t say you can be prosperous through dependence
  • They say that it is a necessary part of leading to nations out of poverty into poverty


  • It’s never worked. What nation has become prosperous through foreign aid?


  • There are lots of nations, especially in Africa, where foreign aid has helped lift them out of poverty


  • Name one country in Africa where foreign aud has lifted them out of poverty into sustainable prosperity


  • I can’t think of one right now.


  • Our book contains a map of Africa and we looked at every nation’s per capita income
  • No nation has been able to rise out of poverty through dependence on foreign aid
  • The only close one is Botswana, but they have abundant freedoms, Christian morals, less corrupt government
  • So Botswana is the best case and they became prosperous through becoming productive, not foreign aid


  • Is he right to say that charity is a short-term solution, but that it’s not good long-term for prosperity?


  • Yes, and work is a very important focus in the Scriptures as he says.
  • But since the Fall work has been much harder, and may not have the outcomes that we would like


  • I also believe in emergency aid for when catastrophies happen, like floods and famines
  • But dependence on foreign aid enriches corrupt rulers and does not create the productivity that leads to sustained prosperity


  • Can foreign aid be used to give poor nations a leg up on becoming prosperous?


  • Dambisa Moyo, Oxford-educated economist from Zambia, says stop the aid, it’s doing more harm than good
  • Jeffrey Sachs’ view is that foreign aid hasn’t worked yet, but just keep trying a bit more
  • What works: limited government, rule of law, fair courts, documented property rights, low taxes, stable currency
  • People are creative and want to work, we just have to get government out of the way and let people work, earn and save


  • Is this free enterprise system supported by the Bible?


  • The wealthy nations of the world did not become wealthy through productive work and free enterprise policies
  • Ha-Joon Chang: free enterprise policies have never brought a country from poverty to wealth
  • E.g. – wealth is created through tariffs (not by innovating and by economic freedom?)


  • I’ve read Ha-Joon Chang’s book, and his examples are very selective and limited
  • Index of Economic Freedom: the freest countries are the most prosperous, the least free countries are the most poor
  • When you look at macro data, instead of very selective examples, the free enterprise system is best for prosperity


  • The book doesn’t do enough to engage with leftist economists (he doesn’t say which ones)
  • Just because nations who are free are rich, doesn’t mean freedom causes productivity
  • There are parts of the Bible that doesn’t support the free enterprise system (he names none)


  • The Bible is focused on work not dependency, and charity not government redistribution
  • The best way to help the poor in other countries is by encouraging work and productivity

Wage gap: are women paid less than men because of discrimination?

Hillary Clinton look bored about the deaths of 4 Americans who asked for her help
Hillary Clinton thinks that women are not paid fairly compared to men: is it true?

Liberal feminist Hanna Rosin takes a look at this question in the far-left Slate, of all places.


The official Bureau of Labor Department statistics show that the median earnings of full-time female workers is 77 percent of the median earnings of full-time male workers. But that is very different than “77 cents on the dollar for doing the same work as men.” The latter gives the impression that a man and a woman standing next to each other doing the same job for the same number of hours get paid different salaries. That’s not at all the case. “Full time” officially means 35 hours, but men work more hours than women. That’s the first problem: We could be comparing men working 40 hours to women working 35.

How to get a more accurate measure? First, instead of comparing annual wages, start by comparing average weekly wages. This is considered a slightly more accurate measure because it eliminates variables like time off during the year or annual bonuses (and yes, men get higher bonuses, but let’s shelve that for a moment in our quest for a pure wage gap number). By this measure, women earn 81 percent of what men earn, although it varies widely by race. African-American women, for example, earn 94 percent of what African-American men earn in a typical week. Then, when you restrict the comparison to men and women working 40 hours a week, the gap narrows to 87 percent.

But we’re still not close to measuring women “doing the same work as men.” For that, we’d have to adjust for many other factors that go into determining salary. Economists Francine Blau and Lawrence Kahn did that in a recent paper, “The Gender Pay Gap.”.”They first accounted for education and experience. That didn’t shift the gap very much, because women generally have at least as much and usually more education than men, and since the 1980s they have been gaining the experience. The fact that men are more likely to be in unions and have their salaries protected accounts for about 4 percent of the gap. The big differences are in occupation and industry. Women congregate in different professions than men do, and the largely male professions tend to be higher-paying. If you account for those differences, and then compare a woman and a man doing the same job, the pay gap narrows to 91 percent. So, you could accurately say in that Obama ad that, “women get paid 91 cents on the dollar for doing the same work as men.”

I believe that the remainder of the gap can be accounted for by looking at other voluntary factors that differentiate men and women.

The Heritage Foundation says that a recent study puts the number at 95 cents per dollar.


Women are more likely than men to work in industries with more flexible schedules. Women are also more likely to spend time outside the labor force to care for children. These choices have benefits, but they also reduce pay—for both men and women. When economists control for such factors, they find the gender gap largely disappears.

A 2009 study commissioned by the Department of Labor found that after controlling for occupation, experience, and other choices, women earn 95 percent as much as men do. In 2005, June O’Neil, the former director of the Congressional Budget Office, found that “There is no gender gap in wages among men and women with similar family roles.” Different choices—not discrimination—account for different employment and wage outcomes.

A popular article by Carrie Lukas in the Wall Street Journal agrees.


The Department of Labor’s Time Use survey shows that full-time working women spend an average of 8.01 hours per day on the job, compared to 8.75 hours for full-time working men. One would expect that someone who works 9% more would also earn more. This one fact alone accounts for more than a third of the wage gap.

[…]Recent studies have shown that the wage gap shrinks—or even reverses—when relevant factors are taken into account and comparisons are made between men and women in similar circumstances. In a 2010 study of single, childless urban workers between the ages of 22 and 30, the research firm Reach Advisors found that women earned an average of 8% more than their male counterparts. Given that women are outpacing men in educational attainment, and that our economy is increasingly geared toward knowledge-based jobs, it makes sense that women’s earnings are going up compared to men’s.

When women make different choices about education and labor that are more like what men choose, they earn just as much or more than men.

Now back to Hillary Clinton. How much does she pay the women on her staff?

The Washington Times reports:

During her time as senator of New York, Hillary Rodham Clinton paid her female staffers 72 cents for every dollar she paid men, according to a new Washington Free Beacon report.

From 2002 to 2008, the median annual salary for Mrs. Clinton’s female staffers was $15,708.38 less than what was paid to men, the report said. Women earned a slightly higher median salary than men in 2005, coming in at $1.04. But in 2006, they earned 65 cents for each dollar men earned, and in 2008, they earned only 63 cents on the dollar, The Free Beacon reported.

[…]Mrs. Clinton has spoken against wage inequality in the past. In April, she ironically tweeted that “20 years ago, women made 72 cents on the dollar to men. Today it’s still just 77 cents. More work to do. #EqualPay #NoCeilings.”

Think of this next time Hillary Clinton talks about “the wage gap”. She is talking about the women on her staff, and no one else.

If you want to know what’s ahead for America, look north to Canada

Canada election results 2015
Canada election results 2015 (click for larger image)

A friend of mine pointed out this post by a pro-life woman based in Calgary, Alberta named McKenzie. As you all know, Canada lurched hard left last Monday, electing a strongly pro-abortion Liberal Party government, led by a man who insisted that candidates in his party swear their allegiance to abortion on demand, through all 9 months of pregnancy.

I took a look at some of the pro-life Members of Parliament and noticed that a bunch of them stepped down this election, and many others were defeated by Liberals. So, McKenzie is looking forward and seeing where the pro-abortion Liberal Party is going next now that they have a majority government.

She writes:

As tempting as it is to write a semi-encouraging post about the state of affairs for the next two to four years, the reality is that the political sphere of the pro-life movement has been dealt a treacherous blow in seeking to protect the most defenseless lives among us.

In the foreseeable future, here are three possible federal pressures we can expect from our Parliament over the next few months and years:

1. Legislation inhibiting, directly or indirectly, the freedom and mobility of life-affirming organizations, including pregnancy resource centres, and their ability to reach women seeking abortions. We’ve had zero laws restricting abortion access throughout all nine months of pregnancy since 1988, but that hasn’t stopped our new Prime Minister from enforcing a strictly pro-choice view among his party. The question at the front of their minds seems to be, “how much further could we go in promoting abortion in our society – and overseas?” A reasonable prediction is that the CRA and Human Rights Commissions will put additional pressure on Christian or pro-life charities to comply with any new laws enacted, regardless of their protections under the Charter – similar to our friends in California presently forced to give out abortion information alongside life-affirming options at pregnancy resource centres, though abortion clinics are not required to reciprocate.

CRA = Canada Revenue Agency, their IRS. We’ve already had a scandal where the IRS, probably under the direction of the White House, went after charities that were working against the Democrats on certain issues like stopping voter fraud. She is expecting to see the CRA used similarly to go after pro-lifers. As you know, the Human Rights Commissions are tools used by the secular left to punish conservatives for offending people on the secular left. The laws are only ever applied against conservatives, and they almost always lose their cases. Well, pro-lifers are offensive. McKenzie thinks that the HRCs are going to go after them.

Another one:

3. Economic policies directly and/or indirectly inhibiting our ability to donate towards charities and charitable causes, especially pro-life or pro-family causes. Less money in the hands of private donors (especially those in the middle class) in a recession, coupled with higher redistribution through taxes, hits families the hardest when men and women are in their peak income-earning years. Less resources to go around means less charitable giving when mom and dad need to put their own needs for bills, food, and shelter first.

This is not surprising. The left is always anxious to go after charitable giving, because people are giving their money to causes they care about and the left doesn’t get any benefit. What the left prefers is that they take the money from potential charitable donors and then use it to buy votes. Obama’s latest budget of 2015 was the latest attempt to limit charitable contributions. She is expecting that pro-life donors will be targeted by the new Liberal majority government. And she undertstands that whatever impact she is going to have as a Christian is going to be funded by her own efforts to work for money, he husbands efforts to work for money, and the charitable donations she can get. The government never funds the efforts of Christians and/or conservatives to push Christian or conservative views. Which is why it makes zero sense for Christians to vote to expand the federal government outside of its Constitutional responsibilities.

So what are my thoughts on all this?

Well, I wish more pro-lifers down here were as aware of the effects of laws and policies on life plans. If you read the rest of her post, McKenzie clearly has some kind of pro-life plan there, and it’s a good one in that it’s practical and evidence based. She intends to get results. But she’s not looking inside at her own feelings and thoughts when she makes these life plans, she’s looking at politics and laws and trying to anticipate where the threats will come from, and how to adjust. I wish pro-lifers here were more like that… especially when it comes to size of government. We need to keep our own money and not give it to the government. We need to keep the government away from our rights, e.g. – free speech and religious liberty.

Anyway, if you follow the gay rights vs religious liberties battles we are having now with florists, bakers, photographers, etc., then you might recall that similar things were happening in Canada 10-20 years ago. Canada was going through these problems in the late 90s, early 2000s, when the Liberals were in charge. It sort of died out when the Conservatives took over, but there’s no reason I can see for it not to come back now that Canada has elected a Liberal majority. I’m going to be watching the situation closely up there, because whatever the Liberals do up there now is likely to make its way down here in the next 10-15 years – if we elect Democrats.

In fact, with respect to what she said about restricting pro-lifers, the Democrat Party already introduced a bill to remove all restrictions on abortion at the state and local levels. This is what they do. Laws, taxes and politics do matter.

Is there any downside to raising the minimum wage to $15 an hour?

They told me if I voted Republican, we'd lose jobs, and they were right!
They told me if I voted Republican, we’d lose jobs, and they were right!

This article is from the libertarian Reason.com. They’re terrible at social issues, but really really good at economics.

They write:

Raising the minimum wage like this is an idea that’s become increasingly common amongst more liberal Democratic politicians and policymakers: The city of Seattle, Washington passed a law raising its minimum wage to $15 last year, and the Los Angeles city council voted to follow suit. Soon after, New York state announced a plan to raise the minimum wage of all fast food workers to $15, and the state’s governor, Andrew Cuomo, recently said he believes it should apply to all workers.

Many of these plans start from the assumption, implicitly or explicitly, that these minimum wage hikes would be relatively cost-free, pointing to several studies seeming to show that increases in the minimum wage don’t have much effect on jobs.

Here is what the author of some of the most influential of those studies, former Obama administration economic adviser Alan B. Krueger, had to say about raising the federal minimum wage to $15 an hour in an op-ed for The New York Times last week:

15 an hour is beyond international experience, and could well be counterproductive. Although some high-wage cities and states could probably absorb a $15-an-hour minimum wage with little or no job loss, it is far from clear that the same could be said for every state, city and town in the United States.

Krueger goes on to warn of greater risk, and the potential for “severe” trade-offs, if policymakers pursue a $15 minimum wage, warning that it would go beyond what any research supports. Ultimately, he concludes, it is  “a risk not worth taking.”

Krueger wasn’t disowning his own work or abandoning his position. He still supports raising the minimum wage to $12 an hour over a period of years, which he thinks could be done with essentially no job loss.

There are some reasons to be skeptical of that claim too: The Congressional Budget Office, which generally tries to take a moderate approach to economic evidence and put its estimates right in the middle of the consensus range, found that even a more modest hike to $10.10 an hour nationally would most likely cost about a half a million jobs, and while it’s possible such a raise might produce minimal job loss, it’s equally possible that it would cost a million jobs.

Overall, as David Neumark and William Wascher have found, the bulk of the evidence from research into the minimum wage suggests that hikes tend to decrease employment.

Let’s review the facts on minimum wage.

Abstract from a National Bureau of Economic Research study:

We estimate the minimum wage’s effects on low-skilled workers’ employment and income trajectories. Our approach exploits two dimensions of the data we analyze. First, we compare workers in states that were bound by recent increases in the federal minimum wage to workers in states that were not. Second, we use 12 months of baseline data to divide low-skilled workers into a “target” group, whose baseline wage rates were directly affected, and a “within-state control” group with slightly higher baseline wage rates. Over three subsequent years, we find that binding minimum wage increases had significant, negative effects on the employment and income growth of targeted workers.

[…]Over the late 2000s, the average effective minimum wage rose by 30 percent across the United States. We estimate that these minimum wage increases reduced the national employment-to-population ratio by 0.7 percentage point.

That comes out to 1.4 million workers who lost their jobs, thanks to minimum wage mandates. And those are primarily young, unskilled workers who are affected – people trying to get a start in the workplace and build their resumes, so they can move up.

Harvard economist Greg Mankiw explains the top 14 views that a majority professional economists agree on, and here’s #12:

12. A minimum wage increases unemployment among young and unskilled workers. (79%)

This is not controversial. This is the kind of basic “how America works” economics stuff that people used to learn in their civics classes before the schools became so politicized.