Tag Archives: Economics

Under “racist” Trump, black unemployment plunges to record low

In the 2016 presidential election, about 90% of black voters voted for higher taxes, more government spending, more regulations, and more government. President Trump slashed the individual and corporate tax rates, and greatly reduced regulations on job creators. Fortunately for black voters, they didn’t get the bad economic policies they voted for.

The Daily Caller explains:

Friday’s economic numbers were very good for America.

The numbers reveal that the U.S. economy is booming and many key indicators of economic health are trending in the right direction. According to the Labor Department, the unemployment rate is 3.8 percent, the lowest in nearly two decades.

223,000 jobs were created and the May increase in payroll was bullish, surprising economists, according to NPR.  However, the most historic data points seem to be centered around black unemployment. The unemployment rate for African-Americans plunged to 5.9 percent in May. That is a record low. Interestingly, the gap between white ad black unemployment has shrunk to the smallest since these numbers have been recorded. The white unemployment (3.5%) and black unemployment (5.9%) is the smallest gap since the release of these numbers, beginning in the early 1970s.

If you looked at who black voters tend to vote for, you would think that they favored gay rights, gay marriage, abortion through all 9 months of pregnancy, the destruction of the traditional family, and eradicating Christianity from the public square. Although there are a handful of black conservatives who connect their voting with their values, most black voters don’t.

It doesn’t make any difference if blacks identify as Christians. When the chips are down, most of them vote for abortion, gay rights and gay marriage:

Which Religions Voted for Obama in 2008?
Which Religions Voted for Obama in 2008?

If you include black voters who don’t identify as Protestants, the number voting for Democrats is even higher, if you can believe that. Black “Protestants” vote for Democrats at about the same rates as atheists. As a non-white Evangelical Christian, I am apparently in the minority because I vote pro-life and pro-marriage.

Should we expect black voters to know that Democrat policies do not work? Well, we should certainly expect the ones living in the largest American cities to know.

Do blacks do well when they get what they vote for?

The big cities like Detroit, Milwaukee, Philadelphia, Baltimore, etc. that are so awful for law-abiding blacks to live in have been run by Democrats for decades.

Investors Business Daily explains:

America is awash with troubled, dysfunctional cities that have been electing Democratic mayors for decades.

  • Detroit last elected a Republican mayor in 1957. It is now the model of urban failure — it’s recognized more for its poverty, crime, rot and bankruptcy than the great cars that it turned out into the early 1970s. It is the poorest big city in the nation, with almost 40% of the population living below the poverty line. The website Law Street actually ranks Detroit ahead of Flint as the country’s most dangerous city. Either way, it’s clear that both cities have institutionalized crime problems.

Detroit is also a pit of political corruption. Just in recent years, one mayor, Kwame Kilpatrick, was convicted of corruption and sent to federal prison for 28 years, while building inspectors have been indicted on federal felony bribery charges and a former city council member was investigated in a bribery and kickback scandal.

  • Chicago’s last GOP mayor was elected in 1927. The nation’s third-largest city is home to some of the worst inner-city violence imaginable. More than 2,300 people were shot there last year, and nearly 400 lost their lives to homicides.

Its finances are just as grim. “Chicago is so broke,” IBD contributor Stephen Moore explained months ago, “that its bonds are junk status, and Mayor Rahm Emanuel had to go hat in hand last week to the state capital, Springfield, for bailout money to pay the bills.” Things have been rotten enough, Moore said, to send “a record number of people … fleeing Cook County, home to Chicago.” Only a little more than half of the city’s pension liabilities are funded.

  • St. Louis has been electing Democratic mayors since 1949. The Gateway to the West has become the gateway for crime. Law Street says that it’s the fourth most dangerous city in the country, Forbes says it’s the second. It had the sixth-highest poverty rate among big cities in 2014.
  • The last GOP mayor of Philadelphia left office in 1952. A few years ago, Moore identified it as a favorite to follow Detroit into bankruptcy.
  • Both Baltimore and Oakland had Republican mayors as late as the 1960s. In the era of Democratic rule, both are now more well known for their crime and poverty problems than for their charm and character.
  • Newark, N.J., hasn’t had a GOP mayor in more than a century. It was ranked as the fifth-worst city to live in in 2015. Detroit, of course, was first.

When Democrats are in control, cities tend to go soft on crime, reward cronies with public funds, establish hostile business environments, heavily tax the most productive citizens and set up fat pensions for their union friends. Simply put, theirs is a Blue State blueprint for disaster.

If you want to blame someone for the failure of the black community to get ahead, blame Democrats. They are the ones who are running things in the cities where we see all this rioting. Their policies are the cause of the poverty. You don’t get job creation when you punish the job creators with high taxes and onerous regulations. You don’t get fathers in the homes when you reward single motherhood by choice with welfare checks.

Two black economists explain how to not be poor in America

Economist Walter Williams
Economist Walter Williams

Walter Wiliams is one of my two favorite economists, the other being Thomas Sowell.

Here is his article on wealth and poverty on Creators written by Dr. Williams.

First, real poverty is not common in America:

There is no material poverty in the U.S. Here are a few facts about people whom the Census Bureau labels as poor. Dr. Robert Rector and Rachel Sheffield, in their study “Understanding Poverty in the United States: Surprising Facts About America’s Poor”, report that 80 percent of poor households have air conditioning; nearly three-quarters have a car or truck, and 31 percent have two or more. Two-thirds have cable or satellite TV. Half have one or more computers. Forty-two percent own their homes. Poor Americans have more living space than the typical non-poor person in Sweden, France or the U.K. What we have in our nation are dependency and poverty of the spirit, with people making unwise choices and leading pathological lives aided and abetted by the welfare state.

Second, the “poverty” is not caused by racism, but by poor choices:

The Census Bureau pegs the poverty rate among blacks at 35 percent and among whites at 13 percent. The illegitimacy rate among blacks is 72 percent, and among whites it’s 30 percent. A statistic that one doesn’t hear much about is that the poverty rate among black married families has been in the single digits for more than two decades, currently at 8 percent. For married white families, it’s 5 percent. Now the politically incorrect questions: Whose fault is it to have children without the benefit of marriage and risk a life of dependency? Do people have free will, or are they governed by instincts?

There may be some pinhead sociologists who blame the weak black family structure on racial discrimination. But why was the black illegitimacy rate only 14 percent in 1940, and why, as Dr. Thomas Sowell reports, do we find that census data “going back a hundred years, when blacks were just one generation out of slavery … showed that a slightly higher percentage of black adults had married than white adults. This fact remained true in every census from 1890 to 1940”? Is anyone willing to advance the argument that the reason the illegitimacy rate among blacks was lower and marriage rates higher in earlier periods was there was less racial discrimination and greater opportunity?

Third, avoiding poverty is the result of good choices:

No one can blame a person if he starts out in life poor, because how one starts out is not his fault.

If he stays poor, he is to blame because it is his fault. Avoiding long-term poverty is not rocket science. First, graduate from high school. Second, get married before you have children, and stay married. Third, work at any kind of job, even one that starts out paying the minimum wage. And finally, avoid engaging in criminal behavior. It turns out that a married couple, each earning the minimum wage, would earn an annual combined income of $30,000. The Census Bureau poverty line for a family of two is $15,500, and for a family of four, it’s $23,000. By the way, no adult who starts out earning the minimum wage does so for very long.

Fourth, what stops people from making good choices is big government:

Since President Lyndon Johnson declared war on poverty, the nation has spent about $18 trillion at the federal, state and local levels of government on programs justified by the “need” to deal with some aspect of poverty. In a column of mine in 1995, I pointed out that at that time, the nation had spent $5.4 trillion on the War on Poverty, and with that princely sum, “you could purchase every U.S. factory, all manufacturing equipment, and every office building. With what’s left over, one could buy every airline, trucking company and our commercial maritime fleet. If you’re still in the shopping mood, you could also buy every television, radio and power company, plus every retail and wholesale store in the entire nation”. Today’s total of $18 trillion spent on poverty means you could purchase everything produced in our country each year and then some.

Regarding those last two points, here is Thomas Sowell:

Economist Thomas Sowell blames welfare for killing the black family
Economist Thomas Sowell blames welfare for killing the black family

To illustrate this point, I stole a graph from the Twitter feed of a famous man-blaming sociology professor who shall not be named (although his name rhymes with Vlad FillBox).

Black women were more likely to be married before welfare programs
Black women were more likely to be married before welfare programs

In fact, there is a whole video featuring Thomas Sowell to go with this graph:

And an article to go with it:

If we wanted to be serious about evidence, we might compare where blacks stood a hundred years after the end of slavery with where they stood after 30 years of the liberal welfare state. In other words, we could compare hard evidence on “the legacy of slavery” with hard evidence on the legacy of liberals.

Despite the grand myth that black economic progress began or accelerated with the passage of the civil rights laws and “war on poverty” programs of the 1960s, the cold fact is that the poverty rate among blacks fell from 87 percent in 1940 to 47 percent by 1960. This was before any of those programs began.

Over the next 20 years, the poverty rate among blacks fell another 18 percentage points, compared to the 40-point drop in the previous 20 years. This was the continuation of a previous economic trend, at a slower rate of progress, not the economic grand deliverance proclaimed by liberals and self-serving black “leaders.”

Ending the Jim Crow laws was a landmark achievement. But, despite the great proliferation of black political and other “leaders” that resulted from the laws and policies of the 1960s, nothing comparable happened economically. And there were serious retrogressions socially.

Nearly a hundred years of the supposed “legacy of slavery” found most black children being raised in two-parent families in 1960. But thirty years after the liberal welfare state found the great majority of black children being raised by a single parent.

The rest of the article points out how even crime rates among blacks were caused by the implementation of soft law enforcement policies by progressives. Just look at the big cities if you want to know what it is like for blacks to be ruled by Democrats. It sucks!

You might have heard about Thomas Sowell because some celebrity I don’t know anything about has been tweeting all kinds of stuff by Dr. Sowell:

Now this celebrity is tweeting my favorite economist Thomas Sowell
Now this celebrity is tweeting my favorite economist Thomas Sowell

If everybody started to read more Thomas Sowell books, we would be much better off as a country! Only good things happen when people stop watching TV and listening to music and watching movies, and instead settle down in a chair with a Thomas Sowell book. I recommended a bunch of them in this previous post.

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.

How did Obama’s plan to let government run student loans work out?

Obama nationalized student loan administration in 2010
Obama nationalized student loan administration in 2010

I’m a free-market capitalist, so I believe that economic decision-making is best done by the people it concerns, not the people in government. If it is a decision that affects the family, let the family decide. If it’s a decision that affects the business, let the business owner decide. Obama has a different view – he thinks that government should make all of the decisions, even though government earns none of the money.

Here is an article in Investor’s Business Daily about his policy of letting the government take over student loan decision-making.

Excerpt:

A report from the Department of Education notes that the net cost of the federal government’s direct loan program is quickly heading into the red. This program, mind you, was supposed to be a moneymaker for the government, as students paid back federal loans with interest.

But as it turns out, borrowers have been flocking toward various loan forgiveness programs, by which the government will lose money, erasing gains from other loans. The report shows that the direct loan program went from a $25 billion surplus in 2012 to less than $5 billion by 2015.

A separate report says that this program ran a $36 billion deficit last year, up from $8.4 billion in 2016.

This is not how this federal loan program was supposed to work when President Obama launched it eight years ago.

In 2010, President Obama effectively nationalized student lending by cutting banks — which had been offering government-backed loans to students — out of the equation and having the government make the loans itself.

“By cutting out the middleman, we’ll save the American taxpayers $68 billion in the coming years,” Obama said when he signed this change into law. “That’s real money.”

As a result, federal student loan debt shot up from $154.9 billion in 2009 to $1.1 trillion by the end of 2017.

As everyone knows, under Obama’s big government leadership, the national debt skyrocketed from $10 trillion to $20 trillion in only 8 years. Obama ran up as much debt in his 8 years as ALL the other presidents, combined. Why? It’s simple. Because government isn’t as careful with other people’s money as people are careful with their own money. People make better decisions than government because they care about the money more – they earned it. The right people to solve an economic problem are the people in the families, and the people at the local bank branches nearby. When government takes over economic decision-making, they use other people’s money to buy the votes of people who make poor decisions.

We shouldn’t be allowing students to take 4-year vacations at taxpayer expense, so that they can learn English or Women’s Studies and then stick taxpayers with the bill. Some of those taxpayers had to study hard things like engineering and pay their own way. Some of those taxpayers had to get jobs in the trades as electricians and plumbers to pay for the bad decisions of these spoiled brats. Student loan administration should not be something for big government to control. When government decides who gets loans, students feel no pressure to study subjects and get credentials that will allow them to pay back what they borrowed. I want the banks to make the lending decisions and loan out their own money, so that they can deny people who are studying nonsense that won’t get a return.

That’s why we should never have elected a big-government liberal to be president. They make a lot of promises about how great they are with money, but it never works out. Big government is never the answer to problems that are outside of what the Constitution describes as the boundaries of government.

(Image Source)

Making a difference as a Christian doesn’t mean doing dramatic, reckless things

Ratio Christi event at Ohio State University featuring Frank Turek
Ratio Christi event at Ohio State University featuring Frank Turek (10/12/2015)

What’s the ideal balance between work and missions? In this post, I will argue against going abroad to do full-time missions.

Do apologetics ministry in your spare time, and work full-time

A full-time job and part-time ministry makes the most sense from a cost-benefit point of view. I have friends who are software engineers who studied enough science, history, and philosophy part-time, who are able to do public debates with atheists, which influence many more people than one-on-one interactions. One of my friends has several Masters degrees, and is in a PhD program, but his full-time career is in software and network management. He is 100% self-funded. He has worked in a successful apologetics career with a full-time career in technology, and he is debt-free. This is the best option . Your debts get paid off. Your resume stays gap-free. You bring a nest egg to your future spouse. You can afford to have children. You can afford a stay-at-home mom. You can afford either homeschooling or private schools, should you decide to go that route.

You have to start saving and investing early if you want to be independent in your old age. With full-time work and part-time ministry, you still make a difference for Christ and His Kingdom over time, while avoiding a financial crisis that could cost you your family, your friends, and even your faith. This is an especially wise way to proceed, given the economic struggles we are likely to face from housing bubbles, student loan bubbles, rising interest rates, entitlement crises, state pension underfunding, environmental regulations, the ever increasing national debt, demographic crisis, etc. Read the culture and be cautious about the future.

Use the Internet to make a difference in other countries for free

One cost-effective way to make a difference is by using the Internet to reach other countries. You can work full-time, and then use your spare time to blog. This blog gets an average of 24,000 page views per week. About 45% of that traffic comes from NON-USA countries. If you keep working full-time and just start a blog for free, then you can maintain your gap-free resume and have a much easier time marrying and raising children.

The university next door is a great place to have an influence

I do think full-time ministry is OK in two cases: if you don’t go abroad, or if you go abroad with a full-time job or full-ride scholarship. My friend Eric Chabot was able to host Frank Turek at Ohio State University last night (see photo above), for example. He got a great crowd. He is donation-driven, but he runs a lean operation since he lives near the campus where he serves. When it comes to having an impact, the American university is the place to make a difference. We have enough trouble in our own country, especially in the universities, where so many young people lose the faith of their childhood – there’s no need to travel and incur heavy expenses.  I think it also makes sense financially to go abroad for missions, if you get a scholarship that pays your way or if you have a job offer where you can work full-time and do missions part-time. What does not make sense is sending an unskilled missionary to a foreign country at the cost of tens of thousands of dollars that could be used much more efficiently in smaller, effective Eric-Chabot-style operations.

Your feelings and desires are not God speaking to you

Now some people who want to go into overseas missions will tell me that they feel led to go. This method of decision making is not Biblical, as I explained in one of my previous posts. If you believe the Bible, then feelings are a pretty poor way of determining what God wants from you. In fact, left to themselves, humans typically choose what feels best for them, not what does best for God. If God really calls you to do something, like he called Jonah, then you probably won’t feel like doing it. Missionary work is especially suspect when God is supposedly calling you to go to a country that you always dreamed of traveling to while you were a non-Christian. Normally, conversion causes you to have different desires – not the same desires you had as a non-Christian. Unless you hear an audible voice, like an Old Testament prophet would, then it’s best not to think that God is speaking through your feelings and desires. A good book to read on this is “Decision Making and the Will of God“, by Garry Friesen.

Don’t go into missions in order to have fun or go on an adventure

I am suspicious of people who try to turn Christianity into a mechanism for achieving the same goals that non-Christians want to achieve. These days, it seems as if everyone wants to travel to exotic places. If there is evidence of hedonistic, fun-pursuing, thrill-seeking behavior in your past, then consider that you may just want an “adventure”. I have a friend who went to Russia for a year just after graduating college, and she admitted to me that she just went “to have an adventure”. To me, that’s not a good reason to spend thousands of dollars, and put gaps in your resume. It’s not a cost-effective way to make a difference, given the other alternatives. Your goal should be to make yourself defensible so that you can put out a sustained effort that lasts, not burn out and then be ineffective for the rest of your life. Think about what J. Warner Wallace says about living wisely and prudently so you position yourself to make a steady contribution in the second half of your life. Don’t wreck your long-term impact for short-term fun. God will not honor that.

Don’t go into missions to make up for an immoral past

Anyway, if you look in your past and see lots of wild behavior – drinking, drugs, premarital sex, cohabitation, abortions, gambling, divorces, etc., then consider that you may be interested in missions for the wrong reasons. You don’t need to go on a missions trip to dramatically declare to everyone that you are now completely reformed from your wild party days. I actually managed to talk a friend out of a short-term missions trip who felt that it was a good way to do something meaningful to “make up” for her past. By being responsible with her job and saving money, she’s managed to avoid burning out, and to instead put out a steady stream of effective activities. And she was financially stable enough to get married and have children, as well – another excellent way to make a difference.

Do not go into missions if your resume and balance sheet do not demonstrate maturity

We already talked about the need for sound planning in the Bible study we did with Wayne Grudem.  The Bible praises hard work, stewardship, prudence and wisdom. And this is especially true for people who are getting older and need to be thinking about marriage, children and retirement. It’s not a good witness for Christians to be financially unstable. When you are able to stand on your own two feet financially, and help others from your earnings, you gain credibility with non-Christians. We don’t want people to think that we are doing this for the money. The best option is to be self-funded, like Paul and his tent-making-funded ministry.

By the way, if you’d like to read a related post by Eric Chabot, this one is a good one.