Tag Archives: Innovation

News

Arthur Brooks: true fairness means rewarding merit, not spreading the wealth

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Arthur Brooks is an economist, a Christian and the President of my third favorite think tank, the American Enterprise Institute. He has been making a push lately to convince conservatives to become more articulate when making the case for the free enterprise system. One of his major ideas is that happiness is not related to the amount of money you have, but it’s related to how well you can achieve your own prosperity and independence by your own labor. His research shows that people are happiest when they feel in control of their own prosperity, even if they have less wealthy than people who depend on the government to take money away from others so they don’t have to work.

Here’s an article he posted on AEI entitled “True fairness means rewarding merit, not spreading the wealth”.

Excerpt:

There are two main ways to define fairness: fairness in terms of opportunity, and fairness in terms of outcomes. The first means leveling the playing field, and the second means spreading the wealth around. The first means lifting people up on the basis of merit, and the second means bringing successful people down.

[…]In a 2005 Syracuse University poll, researchers asked a cross-section of Americans if they b14elieve that “everyone in American society has an opportunity to succeed, most do, or only some have this opportunity.” Some 71 percent of respondents said that all or most Americans can get ahead.

This is consistent with most of our experiences. It’s almost impossible to argue that American success is not earned. We can all think of times when our hard work has gotten us ahead or when we’ve been punished at work or in life for making poor decisions. Even if America’s not perfectly meritocratic, we all see how hard work pays off.

Now, of course, America is far from perfectly fair. But that‘s because life isn’t fair. For instance, all other things being equal, taller men and prettier women make higher salaries than their shorter, plainer counterparts. Believe it or not, there are studies that show these things (as if we needed them). More seriously, some people have substandard elementary education or childhood nutrition, which creates a lifelong disadvantage. Worse still, some children are born into families that don’t emphasize the values that beget opportunity: honesty, hard work, and education.

We need to address these inequities. Still, we shouldn’t abandon the idea of meritocratic fairness just because not everybody has completely equal opportunity. But this is what the president appears to be asking us to do.

America is built around the shared values and aspirations of mobility, opportunity, and merit. Even if only, say, half the outcomes in our life are due to merit, that’s still the half within our control. We should focus on increasing the role of merit, not dismiss the idea because it’s imperfect. Without a belief in meritocratic fairness, we have little incentive to work hard, be honest and optimistic, and create value in our lives and the lives of others. Fatalism and envy are simply not American values.

We need to make the case for the free enterprise system now, using moral arguments like this, otherwise we are going to find ourselves treading the path of countries like Greece, where almost no one works and almost everyone depends on the government to take care of them. It’s not sustainable.

News

Evaluating common criticisms of American health care

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Here is a must-read article from my friend Matt Palumbo at the American Thinker. It’s extremely high quality. (I removed the links in my excerpt – but he linked all the sources in his post)

Excerpt:

The oft-cited “46 million uninsured” is breathtakingly easy to break down to size.  Keep in mind that there is overlap in the following statistics, as many people listed in them belong to multiple categories.  Around 10 million of the uninsured aren’t even citizens.  Another 8 million are aged 18-24, which is the group least prone to medical problems.  The average salary of a person in this age group is $31,790, so affording health care would not be a problem.  Seventeen million of the uninsured make over $50,000 a year, and within that group, 8 million make over $75,000.  These people are usually referred to as the “voluntarily uninsured.”  Another large group of these 46 million are uninsured in name only, as they are eligible for government programs that they haven’t signed up for.  Estimates on how large this group is vary, the range being from 5.4 million as estimated by the Kaiser Family Foundation to as large as one third of all the uninsured, as estimated by BlueCross BlueShield.  The number of people without care because they cannot afford it is around 6 million — still a large number, but a fraction of 46 million, and no reason to restructure the entire health care system.

Then comes the issue of lifespan.  Of all attempts to discredit the American system, lifespan has been the worst.  Although lifespan gives a good indicator of a nation’s health at a glance, it does have its problems under analysis.  We get a strange paradox when examining two statistics: life expectancy and cancer survival rates.  Estimates vary on how we rank exactly; the World Fact Book showing that we rank as poorly as 50th worldwide.  Even the best estimates in our favor place us far behind most developed nations.  Despite this, the United States excels at cancer survival.  Of the 16 most common cancers, the United States has the highest survival rate for 13 of them.  Overall, the five-year cancer survival rate for men in the States is 66.3%, and 47.3% in Europe.  Women have an advantage too, with a survival rate of 62.9% in the States, and 55.8% in Europe.  So that said, how is it that our system takes better care of us, and doesn’t grant added lifespan to boot?  Quite simply, the lifespan measurement commonly cited doesn’t factor in many variables which shorten lifespan, many of which medical care cannot prevent.  Among these factors are murders, suicides, obesity, and accidents.

He looks at the uninsured number, the infant mortality rate, and other interesting things in the article, showing how the statistics that impugn the US health care system have been misused. There are some good articles linked, like this post from Commentary magazine by Scott Atlas, entitled “The Worst Study Ever?”. Atlas is the same guy who listed out how the US health care system compares to others, which I blogged about before.

You can check out Matt’s blog “The Conscience of a Young Conservative“. Not sure how scalable that blog name is. Because of the “young” part, not because of the conscience or conservative part.

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“.