Tag Archives: Economics

How well are Democrat Party economic policies working out in Venezuela?

I think that when we discuss economics, we should try to identify where specific policies have been tried and then we should observe the consequences to the people who tried them. Often, in college and university classrooms, one view of economics is sold to students by professors as the “nice” view. The professors, many of whom have never worked in the private sector in their entire lives, tell the students that socialism is the “nice” point of view, and anyone who disagrees is “mean”. Is that the right approach to teaching young people what to believe about economics?

Are Barack Obama and Hugo Chavez very different?
Are Barack Obama and Hugo Chavez very different?

Let’s take a look at this article from Yahoo News about socialist dictator Hugo Chavez’s country of Venezuela, a country much admired by people on the socialist left.

It says:

All the lady wanted was some chicken. But in shortage-plagued Venezuela, she waited in line five hours, only to go home empty-handed.

“I got here at 5:30 am and came away with nothing! It is just not fair that you have to work so hard — and then put up with these lines,” said an exasperated Lileana Diaz, a 49-year-old receptionist at a hospital emergency room.
Venezuelans have been enduring shortages of the most basic goods, such as toilet paper, for more than a year.

In Caracas, a cottage industry has emerged with people who will wait in line for you — at a price.

But things are even worse outside the capital.

The problems are staggering here in Valencia, an industrial city west of the capital of this oil-rich country.

Valencia has big factories that produce food and other essentials. Still, the list of goods in short supply is long.

It includes coffee, cooking oil, cornmeal, soap, detergent, you name it.

Chicken is one of the most coveted.

Frustrated shoppers like Diaz are legion.

One tells the story of people who climbed over a fence to get a good place in line outside a store, prompting police to intervene and stop scuffles that broke out.

Another lady shopper shows off a nasty bruise on her right leg, thanks to a fight she got into as she tried to buy disposable diapers.

In recent weeks, the lines of people waiting hopefully outside supermarkets and stores have grown longer in cities away from the coast, such as Maracaibo, Puerto Ordaz and Cumana.

Venezuelan media have reported situations of nerves running very, very high and shoppers coming close to looting.

At times it has gotten that bad, in fact. In late January, one person died and dozens were arrested in the chaos of a looting outbreak at stores in the town of San Felix in the southern state of Bolivar.

[…]In another supermarket in Valencia, a line 50 meters (yards) long snakes away from the entrance.

“We call these ‘holding out hope lines,’ because once you get inside, there is nothing on the shelves,” said Oscar Oroste, a 53-year-old chef.

Oroste said that until recently, people would wait in line knowing what was available to buy. “Now, people are in line but do not even know what they will be sold.”

Venezuelans go from supermarket to supermarket, and store to store, clamoring for basic necessities which have prices regulated by the leftist government.

But some buy just to resell at a handsome profit, and economists say that is another source of the shortages.

Egne Casano, a 28-year-old homemaker, said things are a bit better in Caracas. “I went there not long ago and saw that there is a better supply,” she said.

[…]In the long lines, people digest their woes with a mix of humor, resignation and anger.

At another supermarket in Valencia, a whopping 600 people stood in line under a blazing sun to buy powdered milk.

Graciela Duran, a retiree, got a kilo of it after waiting for four hours.

“I was lucky today, Sometimes I come and there is nothing,” she said.

“Waiting in huge lines is what we do all day, every day,” said Duran, shielding herself from the sun with an umbrella.

A dozen police were stationed at the entrance of the store and around the parking lot through which the queue moved.

A truck drove by and the driver shouted out sarcastically: “Homeland, homeland, beloved homeland.”

That comes from a song that late president Hugo Chavez used to sing and is heard often on government-run media and at official events.

If you’re interested in real statistics on Venezuela, I recommend this recent article from The Economist, which is as far left as Venezuela is, and endorsed Barack Obama.

In socialism, the main purpose of policies is to make the leftist leaders at the top receive applause. They say things that will get them applause from the people. The policies are not intended to lift people out of poverty, otherwise Zimbabwe, North Korea, Cuba, Venezuela, etc. would all be rich and prosperous. The policies are intended to make the leaders feel good about themselves. “If you like your doctor, you can keep your doctor”. “If you like your health plan, you can keep your health plan”. It’s not true, it’s just meant to make economically-illiterate people applaud.

So why do we keep voting for socialism, when we know it doesn’t work?

Related posts

Who’s better at managing money – Republicans or Democrats?

One of the best jobs for managing money is being governor of a state. So, let’s take a look at the 50 states and see which ones have the best governors for managing money.

Here’s a new report from George Mason University, and it’s written up in Investors Business Daily.

IBD says:

A new report from George Mason University’s Mercatus Center ranks all 50 states based on 14 measures designed to determine whether states can pay their short-term bills and meet their long-term obligations — debt, pension liabilities and such. The data go through 2013.

The best-run states have enough cash to pay its current bills, enough revenue coming in to meet its fiscal year needs, a cushion for economic shocks, and management long-term liabilities.

The worst states, in contrast, have “tens, if not hundreds, of billions of dollars in unfunded liabilities — constituting a significant risk to taxpayers in both the short and the long term.”

[…]There’s only one factor these fiscal winners and losers share in common. And that’s their political leanings. Of the top 10 states in the Mercatus ranking, just two — Florida and Ohio — voted for the Democratic presidential candidate in the past four elections, and just one — Montana — has a Democratic governor. Even if you look at the 25 best-performing states, only three could be considered reliably liberal.

At the other end of the list, just two of the 10 lowest-ranked states — Kentucky and West Virginia — have voted for the Republican in the past four presidential elections. And while four of them have Republican governors, they all are in solid blue states and all were elected to clean up messes left by their Democratic predecessors.

It’s also worth noting that these same states consistently show up at the top and bottom of other lists that measure business friendliness, tax burden and economic freedom.

In fact, six of the 10 worst-performing states in the Mercatus ranking — California, New York, Illinois, New Jersey, Massachusetts, and Connecticut — are also states with the heaviest tax burdens and rated the least business friendly, according to rankings from the Tax Foundation and Chief Executive magazine.

It would appear, then, that abiding by a philosophy of limited government, lower taxes and fewer regulations leads to growth, prosperity and fiscal soundness.

Here’s the full map from the George Mason University study:

George Mason University study on fiscal solvency
George Mason University study on fiscal solvency

At the state-level, everyone understands that Republican governors know what they are doing, because they understand economics. So then why do we forget that and elect a community organizer when it comes to the Presidency? Do we just not care about the debts we are piling onto our children when we elect wastrels and profligates?

Should Christians seek to help the poor by growing a secular government?

I found a paper (PDF) on the University of Washington web site that makes the case for why Christians ought to care about more than just social issues when it comes to politics and elections.

Here’s the abstract:

What accounts for cross-national variation in religiosity as measured by church attendance and non-religious rates? Examining answers from both secularization theory and the religious economy perspective, we assert that cross-national variation in religious participation is a function of government welfare spending and provide a theory that links macro-sociological outcomes with individual rationality. Churches historically have provided social welfare. As governments gradually assume many of these welfare functions, individuals with elastic preferences for spiritual goods will reduce their level of participation since the desired welfare goods can be obtained from secular sources. Cross-national data on welfare spending and religious participation show a strong negative relationship between these two variables after controlling for other aspects of modernization.

Here’s the conclusion:

It is quite apparent that there is a strong statistical relationship between state social welfare spending and religious participation and religiosity. Countries with higher levels of per capita welfare have a proclivity for less religious participation and tend to have higher percentages of non-religious individuals. People living in countries with high social welfare spending per capita even have less of a tendency to take comfort in religion, perhaps knowing that the state is there to help them in times of crisis.34 As laid out in the theory above, there is likely a substitution effect for some individuals between state-provided services and religious services. Religion will still be there to serve the spiritual needs of people seeking answers to the philosophic mysteries of life, but those who value those spiritual goods less than the tangible welfare benefits churches provide will be less likely to participate in religious services once secular substitutes become available. Given that religious practice and values are often passed down from generation to generation, the weakening of practice in one generation will likely translate into weaker practice in subsequent generations. Does this mean that secularization theory is correct in its prediction that religion will gradually fade away? Doubtful. Realizing that there is still a yearning among many people to understand the mysteries of life, religion is not likely to dissipate at any time soon. Government simply cannot offer credible substitutes for these less tangible, supernatural goods. The explosion in spirituality once religion was made legal in former Soviet bloc countries lends credence to this assertion (Greeley 1994). As religious markets become more deregulated in various parts of the world, it is likely that new religious movements will take advantage of increased liberty and discover ways to expand.

Perhaps one of the most important lessons from the findings above is that the religiosity of a society is not simply determined by sociological factors. Government policy can play an important role in shaping the religiosity of a nation. Policies aimed at regulating the activities of religious organizations — from tax laws to zoning regulations — have important effects on the firms that supply religious goods and services. Many of these policies are designed consciously to promote or inhibit religious practice. Alternatively, welfare policy has been shown here to unintentionally affect the demand for religious services, likely over the course of generations. And, finally, since an extensive welfare state is considered by many to be a hallmark of modernized societies, the microfoundational analysis presented above provides a way of incorporating a component part of the secularization thesis (which relies heavily on notions of modernization) into the religious economy perspective.

Have you ever heard a sermon that addresses the size of government and individual liberty and prosperity? I haven’t. You’d have to be reading Christian scholars like Wayne Grudem or Jay Richards to find that. The typical church you attend either praises big government or says nothing about it. After all, we can keep making withdrawals on the liberties we have right now without ever worrying about having to make any deposits, right? Everything will be fine, and it’s easier not to have to think about what’s down the road to serfdom, so long as the scenery is nice for us right now. Religion is primarily about comfort, not truth. Right?

The funny thing is that when I talk to most Christians about this, especially non-Americans, they simply don’t have the knowledge of economics to understand how big government affects liberty, prosperity and security. Few of my international friends read people like F.A. Hayek and Thomas Sowell, and there are not that many people reading them here at home, either. Maybe we should be, though.

J. Warner Wallace: practical advice on becoming an effective one-dollar apologist

As promised, below is my summary of J. Warner Wallace’s most recent Please Convince Me podcast, and my comments.

Details:

J. Warner continues examining the Christian life in light of God’s desire for all of us to become Christian Case Makers. Jim reads listener email highlighting some of the typical frustrations involved in starting an apologetics ministry and then provides a template to help you become the Case Maker you’ve always wanted to be. Jim also answers the question: Why Didn’t Jesus Reveal Scientific Facts to Demonstrate His Deity?

You can grab the MP3 file here.

This episode is probably one of the best episodes of the Please Convince Me podcast I’ve ever heard, because it’s practical. I like listening to the cold-case detective talk about practical things.

Summary:

  • e-mail from someone trying to start an apologetics ministry for college students and facing difficulties
  • the challenge of getting Christians to take an evidential approach to their faith
  • tips for getting Christians exposed to apologetics materials
  • there are a lot of Christians who are making a daily contribution to apologetics even with a full-time job
  • Wallace himself started his apologetics ministry while working full-time
  • Wallace, as an atheist, was initially skeptical of religion because he thought it was too focused on money
  • His plan as an apologist was to take money right out of it – do it for free, and  be self-funded
  • 1 Cor 9: “But I have made no use of any of these rights, nor am I writing these things to secure any such provision.”
  • People in ministry deserve to be supported, but Paul dispensed with that right to raise support for his ministry
  • Paul self-financed his ministry in order to avoid all appearance of doing his ministry for financial gain
  • Similarly, Wallace’s goal of being self-financed was to avoid the appearance of doing ministry for money
  • If you plan your life carefully enough in the first half, you’ll have the money you need to do ministry in the second half
  • Wallace wanted the liberty to pursue things without any financial need, and he achieved this by working full-time
  • The problem with money is that it often causes us to not cooperate well with other people
  • Ministries and churches sometimes avoid working with other people, like scholars and apologists
  • They do this because they are afraid of losing their own people to these scholars and apologists
  • Wallace wants to get the money out of it and be able to serve anyone with a need
  • Wallace: you need to work hard in the first half of life, in order to have freedom to serve in the second half
  • First area: financial preparation – you need to escape financial needs so that it doesn’t restrict your passion
  • Wallace married well, to a woman who was a good saver, very frugal, and not materialistic – he saved 30% of his income
  • Second area: need to prepare yourself educationally for being able to teach apologetics materially
  • That doesn’t always mean doing the MA in apologetics, but you do have master the material – continuous learning
  • Third area: try to focus on the parts of your career that might have some connection to apologetics
  • You want to have experiences in your work where you learn something that can be used in your ministry
  • Wallace actually made career choices to focus on evidence, case-making and teaching
  • It’s hard because men are naturally competitive – we focus on promotions, money and consumer goods
  • It’s not always the right move in your career to get promoted if it takes you away from skills related to apologetics
  • Christian apologists need to not neglect to develop leadership skills and to develop influence
  • He recommends a book called “Platform” by Michael Hyatt, which Doug Groothuis also recommended to me
  • If you are financially independent, then if an unpaid opportunity arises, you have the freedom to take it
  • You can volunteer for positions that you want to have, instead having to take what pays
  • Wallace writes for Breakpoint, and he is able to dispense with the 1000-word limit that gets a fee
  • Money opens up the danger of corruption, so it’s another reason to just take it out of the picture
  • You can be very effective in your apologetics ministry while still working full-time
  • The second half is a good time to have even more freedom because your kids are grown up
  • A good wife can really help you if she is picking up the slack so that you can work on your ministry
  • Jane Pantig works for Ratio Christi, an organization that promotes apologetics on campus
  • Jane’s model: she is in full-time ministry, with a BS in biology and an MA in apologetics (Biola)
  • Jane is able to get many high-quality speakers to speak for free/cheap at San Jose State University

The rest of the podcast deals a question that was asked at the San Jose State University event that Wallace did for Ratio Christi. I blogged about it this morning. I  laughed my butt off while listening to that podcast, starting at around 62:50 and on. It’s pretty funny when he does the role-pay between Jesus and the people listening to him.

My comments:

The reason I wanted to post this is because I think that a lot of people feel obligated to quit their jobs and raise support because they think that you have to do apologetics full time. It’s not true. Wallace explains that he worked as a cold-case detective until just recently when he took his pension. His pension is now underwriting his ministry. Similarly with me, I work a full-time job and run the blog out of my income. In addition, I probably donate a few thousand dollars each year to people who are organizing apologetics lectures, debates and conferences – events featuring speakers I like best.

This blog gets about 1 million page views per year, depending on the year (election years are better), so that’s not an insignificant impact. In addition, I meet a lot of young Christians in university in different countries who want advice or mentoring, so I spend a few hours here and there mentoring them, and sometimes sending them rewards (books) for doing difficult degrees at good universities and getting good grades. My full-time job helps me to do all of these things. And before I could have a full-time job in information technology, I had to put in the time and effort to get the Bachelor and Masters degree in computer science.

So I think that Christian men especially need to be thinking about how much the apologetics enterprise of a one-dollar apologist relies on money. We really need to be thinking about that early on, in high school, and choosing to study hard things and to do well in those hard subjects. The higher-paying jobs that are more secure tend to be in fields like science, math, technology and engineering. We need to be thinking of doing these courses in high school – especially the men, but also the women – in order to be able to pay for our apologetics ministry. In addition, my decision to not marry (unless I meet a woman who can support me in my plan) gives me even more freedom to work on my ministry while working full time.

I fully approve of what Wallace said about self-financing your apologetics ministry – and supporting other apologetics ministries – in order to avoid all appearance of self-interest. In fact, I have long admired Wallace for his intentional, practical way of doing his ministry. He doesn’t take donations, and he gives away tons of materials for free. I like that.

Jay Richards: why should Christians learn about economics?

Here’s a good basic introduction to the free enterprise system by Dr. Jay Richards:

In this lecture, Dr. Richards covers the following topics:

  • the piety myth – thinking that good intentions matter more than good results
  • the greed myth – thinking that capitalism is about greed instead of about innovation and serving others
  • the zero sum game myth – thinking that voluntary exchanges between buyers and sellers result in win-lose outcomes
  • the materialist myth – thinking that there is only a set amount of wealth to be divided by competition

It turns out that the best system for lifting the poor out of poverty – by work or charity – is the economic system that creates wealth through human ingenuity and hard work. That system is the free enterprise system.

Something to read?

If you can’t listen to the lecture and don’t want to buy the whole book “Money, Greed and God?” Then I have a series of posts on each chapter for you.

The index post is here.

Here are the posts in the series:

  • Part 1: The Eight Most Common Myths about Wealth, Poverty, and Free Enterprise
  • Part 2: Can’t We Build A Just Society?
  • Part 3: The Piety Myth
  • Part 4: The Myth of the Zero Sum Game
  • Part 5: Is Wealth Created or Transferred?
  • Part 6: Is Free Enterprise Based on Greed?
  • Part 7: Hasn’t Christianity Always Opposed Free Enterprise?
  • Part 8: Does Free Enterprise Lead to An Ugly Consumerist Culture?
  • Part 9: Will We Use Up All Our Resources?
  • Part 10: Are Markets An Example of Providence?

Parts 4 and 5 are my favorites. It’s so hard to choose one to excerpt, but I must. I will choose… Part 4.

Here’s the problem:

Myth #3: The Zero Sum Game Myth – believing that trade requires a winner and a loser. 

One reason people believe this myth is because they misunderstand how economic value is determined. Economic thinkers with views as diverse as Adam Smith and Karl Marx believed economic value was determined by the labor theory of value. This theory stipulates that the cost to produce an object determines its economic value.

According to this theory, if you build a house that costs you $500,000 to build, that house is worth $500,000. But what if no one can or wants to buy the house? Then what is it worth?

Medieval church scholars put forth a very different theory, one derived from human nature: economic value is in the eye of the beholder. The economic value of an object is determined by how much someone is willing to give up to get that object. This is the subjective theory of value.

And here’s an example of how to avoid the problem:

How you determine economic value affects whether you view free enterprise as a zero-sum game, or a win-win game in which both participants benefit.

Let’s return to the example of the $500,000 house. As the developer of the house, you hire workers to build the house. You then sell it for more than $500,000. According to the labor theory of value, you have taken more than the good is actually worth. You’ve exploited the buyer and your workers by taking this surplus value. You win, they lose.

Yet this situation looks different according to the subjective theory of value. Here, everybody wins. You market and sell the house for more than it cost to produce, but not more than customers will freely pay. The buyer is not forced to pay a cost he doesn’t agree to. You are rewarded for your entrepreneurial effort. Your workers benefit, because you paid them the wages they agreed to when you hired them.

This illustration brings up a couple important points about free enterprise that are often overlooked:

1. Free exchange is a win-win game.

In win-win games, some players may end up better off than others, but everyone ends up better off than they were at the beginning. As the developer, you might make more than your workers. Yet the workers determined they would be better off by freely exchanging their labor for wages, than if they didn’t have the job at all.

A free market doesn’t guarantee that everyone wins in every competition. Rather, it allows many more win-win encounters than any other alternative.

2. The game is win-win because of rules set-up beforehand. 

A free market is not a free-for-all in which everybody can do what they want. Any exchange must be free on both sides. Rule of law, contracts, and property rights are needed to ensure exchanges are conducted rightly. As the developer of the house, you’d be held accountable if you broke your contract and failed to pay workers what you promised.

An exchange that is free on both sides, in which no one is forced or tricked into participating, is a win-win game.

If you do get the book, be sure and skip the chapter on usury. It’s just not as engaging as the others, in my opinion.