Tag Archives: Capitalism

Jay Richards: eight common myths about wealth, poverty and the free market

I have a key that will unlock a puzzling mystery
I have a key that will unlock a puzzling mystery

Have you read Jay Richards’ book “Money, Greed and God?” Because if you haven’t, he’s written a series of articles that summarize the main points of the book.

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.

On this view, what you really need to fear as a consumer is government intervention that restricts your choices in the marketplace, or makes some choices more expensive than they need to be (tariffs).

If you care about poverty, it’s often tempting to think that it can only be solved one way – by transferring wealth from the rich to the poor. But that is a very mistaken view, as any economist will tell you. The right way to create prosperity is by creating laws and policies that unleash individual creativity. Letting individuals create innovative products and services, letting them keep what they earn, making sure that the law doesn’t punish entrepreneurs – that incentivizes wealth creation. Fixing poverty does not mean transferring wealth, it means giving people more freedom to create wealth on their own. Free trade between nations is an important way that we encourage people to create better products and services that what they have available in their own countries.

Economists agree on the benefits of free trade

Who could possibly disagree with free trade? Well, many people on the left do. But economists across the spectrum of ideology (university and private sector and public sector) agree on the benefits of free trade.

Harvard economist Greg Mankiw explains what most professional economists agree on.

Excerpt:

Here is the list, together with the percentage of economists who agree:

  1. A ceiling on rents reduces the quantity and quality of housing available. (93%)
  2. Tariffs and import quotas usually reduce general economic welfare. (93%)
  3. Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
  4. Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
  5. The United States should not restrict employers from outsourcing work to foreign countries. (90%)
  6. The United States should eliminate agricultural subsidies. (85%)
  7. Local and state governments should eliminate subsidies to professional sports franchises. (85%)
  8. If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
  9. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
  10. Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
  11. A large federal budget deficit has an adverse effect on the economy. (83%)
  12. A minimum wage increases unemployment among young and unskilled workers. (79%)
  13. The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
  14. Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)

Socialist economic policies don’t work because they are making policies that are based on economic myths. We know that these myths are myths because of economics is a mathematical science, and because we have tried good and bad policies in different times and places. We have calculations and we have experience to know what works and what doesn’t work. If you want to help the poor, you have to respect what economists know about how wealth is created. The solution is not to “spread the wealth around”, it’s to encourage people to create more wealth by inventing things that people freely choose to buy.

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.

Was Hitler a Christian? Is Nazism similar to Christianity?

A conflict of worldviews
A conflict of worldviews

One of the strangest things I have heard from atheists is the assertion that Christianity is somehow connected to the fascism, such as the fascism that existed under Adolf Hitler. Two posts by Jewish author Jonah Goldberg from National Review supply us with the facts to set the record straight.

Let’s start with the first post.

Here are some of the points:

1) Hitler wanted Christianity removed from the public square

Like the engineers of that proverbial railway bridge, the Nazis worked relentlessly to replace the nuts and bolts of traditional Christianity with a new political religion. The shrewdest way to accomplish this was to co-opt Christianity via the Gleichschaltung while at the same time shrinking traditional religion’s role in civil society.

2) Hitler banned the giving of donations to churches

Hitler banned religious charity, crippling the churches’ role as a counterweight to the state. Clergy were put on government salary, hence subjected to state authority. “The parsons will be made to dig their own graves,” Hitler cackled. “They will betray their God to us. They will betray anything for the sake of their miserable little jobs and incomes.”

3) Hitler replaced Christian celebrations with celebrations of the state

Following the Jacobin example, the Nazis replaced the traditional Christian calendar. The new year began on January 30 with the Day of the Seizure of Power. Each November the streets of central Munich were dedicated to a Nazi Passion play depicting Hitler’s Beer Hall Putsch. The martyrdom of Horst Wessel and his “old fighters” replaced Jesus and the apostles. Plays and official histories were rewritten to glorify pagan Aryans bravely fighting against Christianizing foreign armies. Anticipating some feminist pseudo history, witches became martyrs to the bloodthirsty oppression of Christianity.

4) Hitler favored the complete elimination of Christianity

When some Protestant bishops visited the Fuhrer to register complaints, Hitler’s rage got the better of him. “Christianity will disappear from Germany just as it has done in Russia . . . The Germanrace has existed without Christianity for thousands of years . . . and will continue after Christianity has disappeared . . . We must get used to the teachings of blood and race.”

5) Hitler favored the removal of mandatory prayers in schools

In 1935 mandatory prayer in school was abolished…

6) Hitler favored the banning of Christmas carols and nativity plays

…and in 1938 carols and Nativity plays were banned entirely.

7) Hitler abolished religious instruction for children

By 1941 religious instruction for children fourteen years and up had been abolished altogether….

And now the second post.

8) Hitler opposed the ideas of universal truth and objective moral absolutes

…Just as the Nazi attack on Christianity was part of a larger war on the idea of universal truth, whole postmodern cosmologies have been created to prove that traditional religious morality is a scam, that there are no fixed truths or “natural” categories, and that all knowledge is socially constructed.

Practically everything this man believed was 100% anti-Christian. But he fits in fine on the secular left.

Conclusion

Adolf Hitler was a man influenced by two big ideas: evolution and socialism. His party was the national SOCIALIST party. He favored a strong role for the state in interfering with the free market. He was in favor of regulating the family so that the state could have a bigger influence on children. And he favored the idea of survival of the fittest. His ideas are 100% incompatible with Christianity and with capitalism as well. Christians value individual rights and freedoms, small government and the autonomy of the family against the state. The commandments about not coveting and not stealing are incompatible with redistribution of wealth from those who produce to those who “need”. The differences are clear and significant. The Bible favors voluntary charity by individuals and churches. It does not favor redistribution of wealth by a secular government to equalize life outcomes regardless of personal responsibility.

Ignorant atheists and their myths

In a recent debate between Matt Dillahunty and David Robertson, Dillahunty made the claim that Hitler was a Christian, because in a campaign speech, he told a Catholic audience that secular schools were bad, and religious schools were good. Dillahunty thought that this meant that Hitler was a Christian. Robertson asked him when those words were spoken, and whether they formed the basis of any POLICY after Hitler was elected. Dillahunty didn’t know, because he just cited the quotation without knowing anything about the context, or about the historical period. Robertson informed him that the words were spoken in a campaign speech, prior to Hitler’s rise to power, and that nothing in Hitler’s policies ever took the words seriously after he came to power. It was the equivalent of Obama claiming to support natural marriage, then legalizing same-sex marriage once elected. He lied in order to be elected. This kind of ignorance is very prominent in the atheist (“secular humanist”) community, which survives on mythology which is never subjected to rational inquiry. Here’s another good example of this ignorance.

Incidentally, Dillahunty later said, in the same debate no less, that he “didn’t know” if the Holocaust was morally wrong. Right – because on atheism right and wrong are meaningless concepts, rationally speaking. They are reduced to personal preferences only, where each opinion is as valid as the opposite opinion, since there is no objective standard by which to judge different opinions. That’s why atheists can’t make moral judgements about anything, they just have preferences, like their preference for certain foods and certain clothes. Very important to realize this when talking to atheists, because they use moral language to describe their personal feelings and opinions.

Whenever I hear atheists speculating about whether Hitler was a Christian, I immediately know that they have not investigated anything very carefully, and are merely being insulting. It’s not worth having a conversation with people who are stupid AND insulting.

Happy Independence Day 2017!

The Stars and Stripes
The Stars and Stripes

The Declaration of Independence

Here’s the complete text of the Declaration of Independence here.

And now let’s take a look at an article at The Federalist which talks about what the Declaration of Independence tells us about the character of America.

It says:

The Declaration of Independence, Thomas Jefferson famously wrote, was “intended to be an expression of the American mind.” Although not intended as such, it was also an expression of the American character. Woven throughout the text are insights into the minds and virtues of those Lincoln called the “once hardy, brave, and patriotic, but now lamented and departed race of ancestors” who fought for the independence we still enjoy.

This aspect of the Declaration of Independence receives scant attention from scholars and citizens, yet it must be understood. The theory of government elaborated in that text presupposes the existence of citizens who know how to govern themselves and are willing to assert their rights. The American character is the unstated premise of the argument, without which the theory, though still true, doesn’t work in practice.

So, what’s the American character?

What sets us Americans apart is that we do not merely declare for liberty. We staunchly stand for it. To be an American is not only to know that you are born free, it is to have the courage to defend your freedom. This admirable aspect of the American character is evident in the fifth grievance the Declaration levels against the king.

It reads: “He has dissolved representative houses repeatedly, for opposing, with manly firmness, his invasions on the rights of the people.” The king acted as monarchs are wont to do. Our forefathers, although they were subjects, did not take his abuses passively. They resisted—with manly firmness.

Today, King George III is long gone. Our representative houses are no longer dissolved at will (although they have unconstitutionally been declared to be in recess). Our rights, however, are still encroached upon, whether by the U.S. Department of Health and Human Services or the Environmental Protection Agency. Thankfully, courageous Americans still push back, like the Green family, who challenged Obamacare’s abortifacient mandate, or the Sacketts, who fought the EPA’s effective seizure of their property.

No charter of liberties or Constitution—not even one handed down by God himself—could ever, on its own, protect the rights of the people. James Madison, the father of our own Constitution, was not so foolish as to place his trust in mere “parchment barriers against the encroaching spirit of power.”

In Federalist No. 57, Madison takes up the question of “what is to restrain the House of Representatives from making legal discriminations in favor of themselves and a particular class of the society?” His answer: “the genius of the whole system; the nature of just and constitutional laws; and above all, the vigilant and manly spirit which actuates the people of America—a spirit which nourishes freedom, and in return is nourished by it.”

The 56 men who signed our Declaration of Independence set the example for their fellow countrymen and for future generations. They did not simply proclaim the universal rights of man. They also pledged “to each other, our Lives, our Fortunes, and our sacred Honor.” And they meant it. Twelve served as combat commanders during the Revolutionary War. Five were captured and imprisoned by the British. Seventeen lost part of their fortunes.

America is not a country for servile men and women. We not only have a right to be free, but a duty to be free. For “when a long train of abuses and usurpations, pursuing invariably the same object evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security.” Free as we are, we have no liberty to choose despotism—even if it is sugarcoated, as it is today, with material comfort and license.

[…]Two centuries later, the American character endures, battered and bruised though it may be. It has been corroded by the Progressive faith in government, the sixties ethos of “if it feels good, do it,” and the mindlessness and vulgarity of pop culture. But we can still readily discern among many Americans the habits of mind and the virtues of a free people. For this, we should be grateful on this Fourth of July.

To love liberty means to be willing to stand up for liberty, and that can mean something as simple as 1) not voting for bigger government just because they are handing out money to you and 2) not voting for bigger government because they are letting you do immoral things.

Standing up for liberty means standing up for your own personal responsibility. It means looking primarily to yourself for earning a living. It means choosing to behave morally so that you don’t create a situation where you need the government to bail you out of your own immoral decisions with someone else’s money.

Watch Ted Cruz debate Bernie Sanders on health care policy and repealing Obamacare

This debate happened on CNN earlier in the week. Thankfully, I was out traveling, so I actually had a TV to watch this in my hotel room.

Here is the full video:

It’s 90 minutes long. No commercials. This was basically a debate of similar substance to the William Lane Craig debates, where actual economic evidence was continuously produced in order to show who was telling the truth, and who was just trying to be popular by saying what people who are uneducated at economics want to hear. In short: there was a clear winner and loser in this debate, and it was clear all the way through, and was reinforced over and over every time evidence was produced. The person producing the evidence would turn his back on the camera, and return to his podium to get the evidence. That person won the debate by being grounded in reality.

Also, the questions were excellent, especially from the small business owners who were impacted by Obamacare. The moderators were biased towards Sanders, but not excessively.

For those who cannot watch, there is an article at the Daily Signal.

Full text:

In a prime-time debate on CNN this week, Sens. Bernie Sanders, I-Vt., and Ted Cruz, R-Texas, discussed “The Future of Obamacare” in America. Cruz, a leading critic of the law, used the moment to outline the law’s failures.

Here are four things Cruz said about Obamacare:

1) “Now, nobody thinks we’re done once Obamacare is repealed. Once Obamacare is repealed, we need commonsense reform that increases competition, that empowers patients, that gives you more choices, that puts you in charge of your health care, rather than empowering government bureaucrats to get in the way. And these have been commonsense ideas.”

2) “Indeed, I don’t know if the cameras can see this, but in 70 percent of the counties in America, on Obamacare exchanges, you have a choice of one or two health insurance plans, that’s it … It’s interesting. You look at this map, this also very much looks like the electoral map that elected Donald Trump. It’s really quite striking that the communities that have been hammered by this disaster of a law said enough already.”

During one of the more powerful moments in the debate, Cruz held up aHeritage Foundation chart showing viewers how many counties in the U.S. have access to only one or two insurers under Obamacare. Additionally, only 11 percent of counties have access to four or more insurance providers.

3) “Whenever you put government in charge of health care, what it means is they ration. They decide you get care and you don’t. I don’t think the government has any business telling you you’re not entitled to receive health care.”

The U.S. should not envy other health care systems, especially Canada and the United Kingdom, Cruz said. He referred to a governor from Canada who came to the U.S. specifically to have heart surgery.

4) “That’s why I think the answer is not more of Obamacare, more government control, more of what got us in this mess. Rather, the answer is empower you. Give you choices. Lower prices. Lower premiums. Lower deductibles. Empower you and put you back in charge of your health care.”

Obamacare is burdening Americans. The average deductible for a family on a bronze plan is $12,393, according to a HealthPocket analysis. According to aneHealth report, the average nationwide premium increase for individuals is 99 percent and 140 percent for families from 2013-2017.

I really recommend you watch this debate, because it these things were done on a weekly or monthly basis, then people would be able to think critically about what they are presented with from the mainstream media, Hollywood elites and liberal academics.