“There are three conversions necessary,” said Martin Luther, “the conversion of the heart, mind and purse.” Of these three the “purse” is often the most obdurate. The biblical word for conversion is “metanoia”, a Greek term meaning a change of mind. A change of mind and our way of thinking, however, becomes notably more difficult when it comes to issues of money and wealth.
Surprisingly, while Jesus often talked about the subject, we generally lack a theological foundation for our views on money. Too often we Christians simply baptize the economic assumptions that align with our side of the political spectrum. I’m no exception, of course, but because it is often easier to remove the speck from someone else’s eye than to remove the log from one’s own, I wanted to use an example from my friend Dan Edelen.
His post caught my attention because it was ostensibly about “economic justice issues.” Instead of being about the poor, though, the post was about injustice to the middle class. In his conclusion he writes:
Continue reading Conversion of the Purse:
Economic Injustice and the Middle Class
[Note: This article was originally posted in June 2004.]
In an article critiquing Samuel Huntington ‘
“Money,” said Wallace Stevens, “is a kind of poetry.” As a Pulitizer Prize-winning poet and president of the Hartford Accident and Indemnity Company, Stevens was familiar with both free verse and the free market. So if Stevens is correct, and money is a kind of poetry, then who are our epic monetary poets, the “poets of the economy?”
As the mid-term elections draw near we will hear countless debates over who is responsible for the flourishing (if a Republican politician) or stangating economiy. But while the President and Congress play a significant role in shaping our material fortunes, we often give politicians too much credit. The true leaders, the poets, of the economy are often found far from Washington, D.C.
I’ve made a list of the five individuals and the five organizations that I think have had the greatest impact on the economy since World War II. The completely arbitrary criteria I’ve laid out for the “poets” is that they must have been born after 1900 and cannot be a politician or elected official; for the companies/organizations that they must have been created after 1900 and that they are still in operation today.
My list includes the following:
1. Alan Greenspan (b. 1926) – Former chairman of the Federal Reserve
2. Bill Gates (b. 1955) – Founder of Microsoft
3. Sam Walton (b. 1918) – Founder of Wal-Mart
4. Tom Watson, Jr. – Leader of IBM
5. Ray Kroc (b. 1902) – Founder of McDonald’s Restaurants
1. Microsoft – developed software that had a significant impact on office productivity.
2. Wal-Mart Stores, Inc (1962) – transformed both retailing and corporate logistics
3. IBM (1924) – revolutionized mainframe computers and invented the personal computer
4. Bell Labs (1925) – invented the transistor, UNIX, C++ software, etc.
5. The American Legion (1919) — pushed for the introduction of the G.I. Bill
What names would you include and why?
[Note: I reserve the right to update my list if I find an answer that I like better.]
Earlier this year, the U.S. government’s implemented the Medicare Part D drug subsidy program which provides prescription drug coverage for the 42 million elderly and disabled Medicare beneficiaries. With the government now footing the bill, it is expected that the demand for prescription drugs will increase dramatically over the next several years.
In the short term this is good news. Higher demand means more profits which drives stock prices even higher, improving the economy and 401Ks. But the long term consequences may prove to be detrimental. Some financial analysts caution that the program could become a costly expense that could entice the government into imposing price controls on medicines.
There is a solution, however, that could benefit the government, the pharmaceutical companies, and, most importantly, the taxpayer. Rather than bore you with elaborate detail (which I admittedly don ‘
If the boy is father to the man, then I was raised by a profligate dunce. Even though I had learned the power of compound interest in high school, I foolishly squandered my trivial savings at a time when the “eighth wonder of the world,” as Albert Einstein called it, would have had the greatest impact. Had I invested a mere $2,000 in an index fund at the tender age of 22, I would now be $40,000 richer and well on my way to being a millionaire by the time I reach retirement. Economists might say my choice was rational, but it certainly wasn’t optimal.
Fortunately, I had a distant relative–Uncle Sam–that occasionally stepped in to save me from my own economic incompetence. For example, during my first week of Marine Corps boot camp I had to fill out a form in which I had the choice to “opt out” of the Montgomery GI Bill. If I did not check the box I would have $100 a month deducted from my pay for six months and in return I would have $36,000 to use for college. Although several of my fellow recruits chose not to participate, the majority of us took the lazy way out and left the box unchecked. That act of sloth made me $35,400 richer.
My experience was an example of an action taken by what The Economist refers to as the “avuncular state”: “worldly-wise, offering a nudge in the right direction, perhaps pulling strings on your behalf without your even noticing.” Advocates of this form of paternalistic governance include behavioral economists who term such approaches “asymmetric paternalism”, “benign paternalism”, “cautious paternalism”, or as Cass Sunstein and Richard Thaler, two University of Chicago professors who published an intriguing paper on the topic call it, “libertarian paternalism”:
Continue reading The Avuncular State:
In Praise of Libertarian Paternalism
As the only two certainties in life, we shouldn’t be surprised to find that both death and taxes share a mutual connection: Sin. While death usually make for more interesting reading, Fr. Robert Sirico, president and co-founder of the The Acton Institute for the Study of Religion and Liberty, has an instructive article in which he examines the economic and moral considerations of ‘
Almost everyone has heard economics referred to as “the dismal science.” And if you took a course in macroeconomics you probably recognize that the appellation was given by the Scottish historian Thomas Carlyle. But what few people realize is that Carlyle coined the term in an 1849 magazine article titled Occasional Discourse on the Negro Question in which he denounced the two groups within the UK who championed the cause of antislavery: market economists and evangelicals.
Today we have become so accustomed to hearing criticisms of free market economics from socialists, Marxists, and other extremes of the political left that we find it difficult to imagine that it being opposed by conservatives. Attitudes toward the market economy, however, have less to do with the political spectrum than they do with the conception of who should retain control over economic life. Progressives, fearing that no one is in control and that powerful will take advantage of the weak, believe the state must step in to prevent inequitable and unjust outcomes. Conservatives (as we would define them today), by contrast, put their faith in the system itself and believe that left unhindered by the state, is sufficient to lead to the best possible end result. Libertarians, who view markets as morally neutral, contend that the individual, when allowed total liberty, will usher in the ideal end state. While all of these positions have some merit, they all ultimately fail when they leave out the most significant reason for putting our trust in the markets: because all control ultimately belongs to God.
Recognizing this fact, however, does not release homo economicus from all responsibility. A market is, after all, merely a mechanism for buying and selling goods and services. And while it is often viewed as highly individualistic and selfish, the fact remains that markets cannot exist without a network of humans in relationship with one another. As with all human interactions, though, our natural proclivity to sin can have a detrimental effect. Market forces and outcomes are prone to injustice and inequitable distribution precisely because man is by nature a sinful creature.
As Christians, we can never embrace any system or institution without being wary of how we are likely to abuse it for our own depraved purposes and rationalize our reasons for doing so. This is the primary reason we cannot fully embrace either a conservative or libertarian view of market economics.
Continue reading Markets and Miracles:
What the Market Economy Needs to be �Moral�
In response to my most recent post on affirmative action, Nick Matzke of The Panda ‘
One of the most pernicious lies in America is the one we allow teachers, parents, and relatives to tell children: ‘