Tag Archives: Inequality

Videos

Richard Epstein explains why economic inequality is required in order to promote innovation

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My friend Matt, who blogs at The Conscience of  a Young Conservative, posted this on Facebook.

Epstein explains how the profit motive creates economic value that raises the standard of living of all people, who are able to exchange their money for valuable products and services that they did not create. He explains how wealth redistribution is wasteful and harmful to economic growth.

(Found here)

Now let’s look at some myths that Christians believe about economics.

We need to understand basic economics

Christian philosopher Jay Richards explains basic economics.

Excerpt:

THE ZERO-SUM GAME MYTH.

There are three kinds of games: win-lose, lose-lose, and win-win. Win-lose games, like basketball, are sometimes called “zero-sum games.” When the Celtics and the Bulls compete, if the Celtics are up, then the Bulls are down, and vice versa. The scales balance. It’s a zero-sum.

Besides lose-lose games, which most of us avoid, there are positive-sum, or win-win, games. In these games, some players may end up better off than others, but everyone ends up at least the same if not better off than they were at the beginning.

Millions of people think that the free trade in capitalism is a dog-eat-dog competition, where winners always create losers. This is the zero-sum game myth, which leads many to think that the government should somehow redistribute wealth. While some competition is a part of any economy, of course, an exchange that is free on both sides, in which no one is forced or tricked into participating, is a win-win game. When I pay my barber $18 for a haircut, I value the haircut more than the $18. My barber values the $18 more than the time and effort it took her to cut my hair. We’re both better off. Win-win.

THE MATERIALIST MYTH.

A similar myth leads people to think of the economy as some fixed amount of material stuff—money in safes or gold bars in a vault. Since two firms competing for one customer can’t both get the customer’s money, we might think the whole economy looks that way: wealth itself isn’t created, it’s merely transferred from one party to another.

A common image of this “Materialist Myth” is a pie. If one person gets too big a slice, someone else will get just a sliver. To serve it fairly, you have to slice equal pieces.

This isn’t how a free economy works, however. Over the long run, the total amount of wealth in free economies grows. We can create wealth that wasn’t there before. The “pie” doesn’t stay the same size. Under capitalism, someone can get wealthy not merely by having someone else’s wealth transferred to his account, but by creating new wealth, not only for himself, but for others as well.

THE GREED MYTH.

Friends and foes of capitalism often claim that it is based on greed. Writer Ayn Rand even claimed that selfishness is a virtue (see the accompanying feature article). But greed is one of the seven deadly sins. If capitalism is based on it, then Christians can’t be capitalists.

In truth, Adam Smith and other capitalist thinkers did not believe this “Greed Myth.” Rather, Smith argued that capitalism, unlike static economies, channels even greedy motives into socially beneficial outcomes. “In spite of their natural selfishness and rapacity,” Smith wrote, business people “are led by an invisible hand…and thus without intending it, without knowing it, advance the interest of the society.”3

Rather than inspire miserliness, capitalism encourages enterprise. Entrepreneurs, including greedy ones, succeed by delaying their own gratification, by investing their wealth in creative but risky ventures that may or may not pan out. Before they ever profit, they must first create.

In a fallen world, we should want an economic system that not only channels greed into productive purposes, but unleashes human ingenuity, creativity, and willingness to risk as well.

I think Christians who don’t understand economics really need to make the effort to understand the basics. I recommend Robert Murphy’s “The Politically Incorrect Guide to Capitalism” and Thomas Sowell’s “Basic Economics“. If you want to see how economics works together with Christianity, then you also want Jay Richards “Money, Greed and God” and Wayne Grudem’s “Politics According to the Bible“.

Commentary

What is the “root cause” of poverty and inequalities of wealth?

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The Heritage Foundation explains – it’s not what you think.

Excerpt:

New data released today by the U.S. Census Bureau show the largest increase in poverty in U.S. recorded history. Under President Obama’s watch, an additional 3.7 million Americans fell into poverty in 2009.

Buried in the Census report are startling figures revealing the principal cause of child poverty: the collapse of marriage. Single mother families are almost five times more likely to be poor than are married couples with children; overall, nearly 70 percent of poor families with children are headed by single parents.

The big secret in the Census report is that marriage is America’s number-one weapon against child poverty. But marriage has been rapidly declining in our society as the number of women who have children without being married has skyrocketed.

Historically, unwed childbearing was rare. In 1964, when the federal government launched its War on Poverty, 6.8 percent of births were to single mothers. Today, the unwed birth rate has soared to 40 percent: four of every 10 births are to a single mother. For Hispanics and African Americans, it’s significantly higher.

This trend is extremely detrimental for society. When compared to children raised by married parents, children raised by single parents are more likely to have emotional and behavioral problems; be physically abused; smoke, drink, and use drugs; be aggressive; engage in violent delinquent and criminal behavior; have poor school performance; and drop out of school.

Contrary to conventional wisdom, nearly all unwed fathers are employed, and most earn enough to lift mother and child from poverty. Tragically, however, few unwed parents marry.

Many commentators will say teen pregnancy accounts for most single motherhood, but this is false. Less than 8 percent of new single moms are under 18. In fact, most unwed births are to young adult women in their 20s. The majority of unwed moms don’t have much education; most end up on welfare.

If Americans are serious about reducing poverty and getting control of federal welfare spending, we must strengthen marriage. We can do this in several ways, beginning with reducing anti-marriage penalties currently in welfare programs and providing factual information to low-income communities about the benefits of marriage.

Do you know who is pretty good on this issue? Maggie Gallagher, that’s who. She knows everything about why people should get married.

Excerpt:

5. YOU WILL EARN MORE MONEY. Men today tend to think of marriage as a consumption item—a financial burden. But a broad and deep body of scientific literature suggests that for men especially, marriage is a productive institution—as important as education in boosting a man’s earnings. In fact, getting a wife may increase an American male’s salary by about as much as a college education. Married men make, by some estimates, as much as 40 percent more money than comparable single guys, even after controlling for education and job history. The longer a man stays married, the higher the marriage premium he receives. Wives’ earnings also benefit from marriage, but they decline when motherhood enters the picture. Childless white wives get a marriage wage premium of 4 percent, and black wives earn 10 percent more than comparable single women.

6. DID I MENTION YOU’LL GET MUCH RICHER? Married people not only make more money, they manage money better and build more wealth together than either would alone. At identical income levels, for example, married people are less likely to report “economic hardship” or trouble paying basic bills. The longer you stay married, the more assets you build; by contrast, length of cohabitation has no relationship to wealth accumulation. On the verge of retirement, the average married couple has accumulated assets worth about $410,000, compared with $167,000 for the never-married and $154,000 for the divorced. Couples who stayed married in one study saw their assets increase twice as fast as those who had remained divorced over a five-year period.

Yet another reason for fiscal conservatives to take social conservatives seriously. Marriage makes people more independent, and that means smaller government, lower taxes, and more liberty. What we need to do is block feminists from undermining marriage to serve their gender-neutral ideology, and stop socialists from undermining marriage with the welfare programs which incentivize single motherhood.

Commentary

What should we think about Obama’s use of the Bible?

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Story here on the NewsReal blog. (H/T Mary)

Excerpt:

Dr. Jeffrey Siker, professor of religion at Loyola University and a liberal Presbyterian minister, was featured in the LA Times yesterday for an academic paper he did on Obama’s use of the Bible in public speeches and writings.  His findings show a candidate and President willing to pick and choose scripture that Obama considers pluralistic and in support of his policies.  Siker presents this fact as positive pragmatism instead of what it really may be – sacrilegious ambition.

[…]Obama uses “brother’s keeper” to convince Americans to support socialist policies.

“This vision of being my brother’s keeper has important political and social consequences when it comes to such issues as healthcare, consumer protection or education reform.” – Siker

The problem with that interpretation is that the “brother’s keeper” passage has nothing to do with supporting welfare policies.  Cain has just killed his brother Abel, and God was condemning Cain for the sin by asking Cain where his brother was.  Cain said he didn’t know where Abel was because he’s not responsible for him.  God does not respond by saying, “Yes you are Cain.  You are responsible to make enough money to pay not only for your healthcare but also Abel’s.”

Quoting the Bible to teach socialism only works on people who haven’t read the Bible. You can’t get socialism from the Bible, because there is no passage that teaches that Jews and Christians should embrace the idea of wealth redistribution by government. The Bible teaches private, voluntary charity.

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