Americans are moving from restrictive economies in California and New York to free economies in Texas and Florida, much like the Israelites escaped captivity in Egypt. Let’s Vote! I had five grandkids in the van recently, and we were trying to decide which park to visit. One of the ten-year-olds suggested energetically, “Let’s vote!” Where did an American ten-year-old get the idea that she had the power to determine the market? Well, FROM the market. And, that’s what people moving from one state to another are proving, they have the power to vote about where they live. People are voting with their feet, as they move from one state to another, as explained in a recent WSJ article titled, “The Great Blue to Red State Migration Continues.” I discussed some of this topic in podcast #131 titled Abraham and Wealth Migration. And, the great economist Arthur Laffer explains state differences in his book, The Wealth of States. The WSJ explains in their article that in the category “Migration to other states,” the loss leader was California which lost the most residents to other states, about 340,000, and New York, about 220,000. Texas gained almost 475,000 and Florida gained just under 375,000. Quoting the WSJ article now, “You don’t need artificial intelligence to spot what the losing states have in common: High taxes, burdensome business regulation, and inflated energy and housing prices. Those states also have higher than average unemployment as a result of businesses moving out of state.” The WSJ article quotes a chapter from the Old Testament, “A big problem for Democratic-run states is that their affluent residents are leading the EXODUS, and they pay the majority of income tax that supports their expansive welfare programs. This is a major reason California’s tax revenue over the last five months has come in $24.5 billion below projections despite a rebounding stock market.” Hmmm, kind of reminds you of the scene from the old movie The Ten Commandments, where the Israelites are leaving Egyptian bondage. And, in an economic sense, the folks leaving those states were in economic bondage. You may have heard that Benjamin Franklin’s choice for the great seal of the US was those same Israelites fleeing Egypt, just as Americans are now fleeing California and New York. It’s a little difficult to read the image, but it reads “Rebellion to Tyrants is Obedience to God.” The image shows the Israelites being pursued by Pharoh’s army. People are moving to the Red States, and Moses parted the Red Sea… goodness, there are too many parallels that can’t be overlooked. In the Holy Land, I’ve heard the phrase “From the Med to the Red,” so we should expect a political cartoon soon, with Moses holding up his staff and parting “Red” and “Blue” seas, or the red and blue states. Freedom In my classroom at Dallas Baptist University, I have often crossed my arms and stated, “The Intersection of Christianity & Economics is freedom.” It’s such an important concept, that it’s the first of the ten Biblical Commandments of Economics that I found with Sergiy Saydometov, while writing the book Biblical Economic Policy. Well, that’s what we’re witnessing in the migration between states. You don’t have to survey the estimated eight million people who illegally crossed the Southern border of the US in the last three years. They are seeking freedom. Gee, I wonder how many have crossed the border the opposite way? Quoting the WSJ article again, “Democratic Governors such as California’s Gavin Newsom portray right-leaning states as benighted and undemocratic. But then how do they explain why so many of their states' residents are moving there?” People vote with their feet. The End Game Where does this all end? A good case study might be Yugoslavia, which after the fall of communism, split into six constituent republics. Each group has their own country. That’s the way the US was designed, with states’ rights.
#199 Hope for the New Year
Thursday, December 28, 2023 • Duration 10:12
There are Ten Reasons for Hope in the New Year I often explain that as an economist, I’m a pessimist, but as a Christian, I have hope. Hope is endemic to the Christian spirit and idea. We believe God is at work, even when the US debt clock shows that each individual’s share of the $34 trillion in national debt has increased from $85,000 to $100,000 in just the last three years. Think about it: Each of your children and grandchildren owes $100,000 in national debt. Still, there is hope. Here are some economic hopes we can have for 2024. The Omniscient God From seeing God as a small g to God with a big G God IS sovereign, so He can do whatever He wants, without our help, but He chooses to allow us to join Him in his great work. I explained this concept in my last economics lesson of the semester at Dallas Baptist University because it helps us understand HOW MUCH humans should do. That’s the whole ballgame in macroeconomics: How active should monetary and fiscal policy be? For an atheist, it’s easy: Since they don’t believe there IS a God, humans have to do everything, but for Christians, or really, anyone who believes in a greater being, we have decisions to make about how active fiscal and monetary policy should be. It’s pretty easy to see that Christians should hope for less active fiscal and monetary policies in 2024. Accepting responsibility When GK Chesterton was asked, “What’s wrong with the United Kingdom?” He answered, “Me.” Increasingly, people believe that there’s nothing wrong with individuals, and what’s wrong in society. That’s why liberal college professors train their students to be activists. Their objective is to change the regulatory systems of society. Well, THEY are wrong. What IS wrong is the fallen nature of individuals, not societal structure. If folks start to see that the problem is based on the fallen nature, 2024 would be a better year. A Free Economic System From Karl Marx to Adam Smith Adam Smith explained a free-market capitalist system, where both producers and consumers could benefit in the same exchange. Karl Marx countered it with a system that calls for the oppressed to rise up and throw off their oppressors. Guess what happens next? Another revolution, followed by guess what? Another revolution. Marxism is a system of continual battles because they can always find oppressed groups. It never ends in peace. I asked my students just last week, “Do they still make you read Animal Farm in high school?” Most heads nodded. There’s a lot of Marxist thinking in the world today: People who support Hamas against Israel have been duped into believing that the smaller, weaker group is always oppressed. From socialism to free-market capitalism A Christian Economist favors a middle position, typically somewhere near the free-market end of the spectrum, where there is enough freedom to exchange goods fairly, but where government has the role of maintaining competition, and preventing monopolies. Socialism always produces monopolies that serve the supplier at the expense of the demander. It’s not even a debatable subject. From spending to saving Brazil went through a period of sustained high inflation between about 1980 and the year 2000. During high inflationary cycles, it’s not wise to save, because your money becomes worth less, the longer you hold it. This period created a culture of spending and not saving, which is still obvious in Brazil today. The US is moving that way. Before the covid pandemic, in 2019, the US saving rate was about 7%. It’s now half that, about 3.5% and total consumer credit card debt crossed the $1 trillion threshold last month. I don’t have time to unpack all the various reasons for this, but one of them is inflation, and the other is a moral hazard. The government bailed out many folks during the pandemic, and now people assume the government will take care of them. So, why save?
#190 We've Never Run Out of Anything
Wednesday, October 25, 2023 • Duration 11:03
Scarcity thinkers tell us we are running out of resources. But Christians believe our "Made in the image of God creativity" will continue to find new ways of preserving resources. One of my favorite questions to ask groups is to complete this sentence, “Life was better before we ran out of: _____” You’re right, there’s no answer. At least, in years of asking the question, I’ve never heard an answer. If you know of a valuable resource that we’ve run out of, please send me an email. But here’s the problem, we are continually being told that we’re running out of things. Just one example for now: In 1976, Jimmy Carter intoned, “We have about 35 years of oil left in the world.” Oh, so we ran out in 2011? The Coming Ice Age In a video from 1976, frightening music plays as Leonard Nimoy speaks in a very worried tone, “There’s little doubt that someday, the ice will return.” More dramatic music plays, and he continues, “If we are unprepared for the next advance, the results could be hunger and death on a scale unprecedented in all of history. During the lifetime of our grandchildren, Arctic cold and perpetual snow could turn most of the habitable parts of our planet into a polar desert. The next ice age is on its way. At weather stations in the far north, temperatures have been dropping for 30 years. Seacoasts that used to be free of ice, are now blocked year-round. According to climatologists, within a lifetime, "we might be living in the next ice age.” Okay, let’s be simple about this. They were wrong in 1976. What makes you think the climate alarmists are right today? Progress “Nothing is more responsible for the good old days than a bad memory.” That’s the first line of the book Progress by Johan Norberg. The quote was attributed to Franklin Pierce Adams. Mr. Norberg goes on to write, “The truth is that the good old days were awful. The great story of our era is that we are witnessing the greatest improvement in global living standards ever to take place. Poverty, malnutrition, illiteracy, child labor, and infant mortality are falling faster than at any other time in human history.” In my lifetime, the percentage of the world living in extreme poverty has dropped from 44% to just over 8%. On its current trajectory, it will approach zero in the next ten years. When Karl Marx died in 1883, the average Englishman was three times richer than he was when Marx was born, in 1818. Abundance vs Scarcity, Will We Run Out? The magicians and entertainers Penn and Teller were playing a kind of poker game called Greatest Person in History, with pictures of great people on playing cards. Penn draws a card and pushes all his chips in on the bet because he KNEW that card would cause him to win the game. The face on the card….are you ready for this….Greatest person in history? Let me tell one more story to keep you in suspense. Goldman Sachs came up with the idea of the BRIC countries in 2001. The countries with the greatest supply of land, labor, and capital are Brazil, Russia, India, and China. So, I started on a plan to take MBA students from Dallas Baptist University to all four. Just before we left for India the Dallas Global Alliance was hosting a speech by the Indian ambassador to the US. The Indian representative strode to the podium. He didn’t even say hello, or good morning, or it’s good to be in Dallas. The first words he spoke were, “Please join me in a moment of silence in memory of…..are you ready…this is the guy’s picture on Penn’s poker card….. His name is …..Norman Borlaug. Borlaug grew up in Cresco, Iowa, and earned a Ph.D. in Agronomy from the University of Minnesota. First, he went to Mexico and showed them a dwarf wheat that matured in half the time, so they could double their crop in one year. Then he went to India and Pakistan and did the same thing. He’s known as the man who saved a billion lives. That’s abundance. Now for scarcity. That’s easy,
#189 Karl Marx and Hamas
Episode 189
Wednesday, October 18, 2023 • Duration 11:44
The powerful religion of Karl Marx and of Islam leads to the powerful political system of totalitarianism, which leads to the powerful economic system of Marxism, which impoverishes its people. How we see God has a lot to do with how we see our fellow man. Belief – Politics - Economics When I wrote the curriculum for International Economics at Dallas Baptist University, I used this simple diagram to begin each session. Belief systems produce political systems, which produce economic systems. I know, there is a lot of interplay and it goes back and forth. But the diagram is mostly correct. That’s why we should not be surprised that the Muslim Palestinians of Hamas have a totalitarian political system and a socialist economic system. Power begets power. All three of those systems are based on power structures. If Israel didn't exist, the Palestinians would still live in abject poverty. That is not Israel's fault. It's a cultural thing. In most cases, the powerful top-down religion of Islam does not produce a bottom-up political system like democracy, nor an economic system like free market capitalism that enriches the poor. What we study in social science is differences. That’s it. We want to know why there are differences in the world. Economics is a social science. So, we want to know why the Israelis make $55,000, their neighbors, the Jordanians and Lebanese make less than $13,000, and the Palestinians make under $7,000. Israelis make eight times more than their Palestinian neighbors. Why? Top-down religions like Islam identify more easily with top-down political ideas like totalitarianism, and top-down economics like Marxism. Karl Marx and the Devil That happens to be the title of my podcast #106. That one is based on some comments by Dr. David Jeremiah. I am struggling through a book right now titled The Devil and Karl Marx by Paul Kengor. The subtitle is “Communism’s long march of death, deception, and infiltration.” That sounds like the recent Hamas attack on Israel, doesn’t it? The book I’m currently reading is hard to read because Karl Marx was such an evil person. If you are sickened by the atrocities performed by Hamas against Israelis recently, then you won’t want to read the book. Karl Marx exercised power whenever he could. He impregnated his housemaid, who was about as close to an owned servant as you can get. Two of his daughters committed suicide. His personal life is as disordered and calamitous as the economic system he designed. He bullied people on many occasions, and very rarely worked. He lived off his partner, Friedrich Engels. Maybe I’ll explain more about his disastrous and immoral life in another podcast someday. For now, just be assured, that in his personal life and in Marxism, it’s all based on power. At the heart of Marxism is the idea of the oppressors and the oppressed. It’s such a lousy economic system because it fails to recognize that both parties in a transaction can benefit at the same time. Milton Friedman famously said, “Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.” Well, Marxism is one of those economic fallacies. The left thinks Israel’s prosperity was caused by the Jews stealing wealth from the Palestinians. That’s not how it works. About those oppressed and oppressors. There are about 475 million Arabs in the countries that surround Israel. Their population increased by 8.2 million last year alone. There are…. are you ready for it……just over 7 million Jews in Israel. Get it? The Arab population increase in ONE YEAR was greater than the entire Jewish population. But we’re being told that 7 million people oppress 475 million? You see, some of this misaligned sympathy for the Palestinians is because they are portrayed as the oppressed. That’s just nonsense. They are poor because their religion produces totalitarian polit...
#188 More Equal than you Think
Episode 188
Thursday, October 12, 2023 • Duration 11:01
American incomes are 3% more equal today than in 1947. That was the key data point from former Senator Phil Gramm’s recent speech about his new book, titled The Myth of American Inequality. Don’t Covet Just about every discussion that points out inequalities of outcomes is a violation of the tenth commandment against covetousness. From Thomas Picketty’s books and speeches to Black Lives Matter, to President Biden: The message is always rooted in wanting what others have. That’s why, when Sergiy Saydometov and I wrote the book Biblical Economic Policy, one of the ten Biblical Commandments of Economics we found was “Don’t Covet.” It’s so pervasive in our society. As I’m recording this podcast, the Union of Auto Workers is out on strike. Guess what their major talking point is: How rich the executives are. Who barred a production worker from seeking a C-Suite job? In fact, companies typically provide tuition assistance for those who desire to move “up” within the company. If any of the automakers discriminated against a qualified executive, their competitors would snatch her up in a second, seeking competitive advantage over the others. That’s the beauty of competition. When you discriminate in a competitive environment, you hurt yourself. The union toadies also use the phrase “fair shares.” That’s straight out of Ayn Rand’s book Atlas Shrugged. She does not use the term in a favorable way. Quintiles OK, anytime you talk about incomes, you have to use quintiles. That’s because the Census Bureau reports incomes in five different levels. Here’s the raw data point that the coveters trot out: The top quintile makes 16.7 time more than the bottom quintile. But that’s before you count transfers. A transfer is money that is taken from the folks in the top quintile and given to the bottom quintile. After transfers, the ratio is 4: 1. That’s actually a very narrow difference. I mean really, what would you like it to be? Another shocking fact from Senator Gramm, “In 2017 the bottom quintile spent TWICE what they earned. Hold it. As my friend says, “That don’t pencil out.” Where did the extra money come from? Well, people in the top quintile spent 40% less than they earned. Oh, now it makes sense. It was transferred from the rich to the poor. The Census Bureau data does not count 100 federal transfer programs. It overlooks 2/3 of transfer income. 88% of income to the bottom quintile is not counted. Now you see why the real ratio is 4:1. There are lies, damned lies, and government statistics. Oh, Senator Gramm’s speech that I’ve been quoting was sponsored by a think tank called the Institute for Policy Innovation. It was founded by then speaker of the house Dick Armey, for the expressed purpose of producing reliable data. The Wrong Motivations Back to those transfers: They instigate the wrong motives on both parties. When you take money from the rich folks, you motivate them to produce less. When you give money to the poor, you motivate them NOT to produce more. Production is the key driver of a nation’s wealth. The more you transfer, the poorer the nation gets. One of my favorite phrases is “Policies that Promote Production is what separates rich from poor nations.” Here’s how Winston Churchill said it, “You don’t make the poor rich by making the rich poor.” The Dave Arnott extension of that is: When you make the rich poor, you make the poor, poorer. Ronald Reagan quipped, “We fought a war on poverty, and poverty won.” The war on poverty ended up being a war on the economy. Poverty was reduced 50% between 1945-1960. That was BEFORE the war on poverty. THEN LBJ launched the “war on poverty” and it has not changed significantly since. The poverty rate without transfers ranges from about 11-16%. When you count the transfers received by those in poverty, only 2.5% are still qualified as being in poverty. And, again,
#187 ChatGPT has Assumptions
Wednesday, October 4, 2023 • Duration 09:45
ChatGPT leans liberal and can be deceptive, but Christians should not be afraid of it; It's simply another machine that will cause creative destruction that makes us economically richer. Toward the end of last semester, I wrote to my Dean in the College of Business, “I either have the best student in the history of our program, or he’s using ChatGPT to write his essay answers.” After noticing some similarity in a few students’ essays, I got something of a sense for what was written by students, and what was written by the Bot. I had asked a strategy question, and the guilty answers contained more financial information than I had asked for. This is not a huge deal. Students have been cheating on answers since Cain said he didn’t know where his brother was. Keeping up with cheating is what we do as teachers and professors. This is simply a new technique. It IS cheating, by the way. Passing off someone else’s work as your own, is cheating. Even if the “someone” is a computer program. There are many Biblical warnings about deception. Here’s just one from the Old Testament, and one from the New Testament. Job 15:31 “Let him not deceive himself by trusting what is worthless, for he will get nothing in return”. And in 2 Timothy 3:13-14, the apostle Paul warns us, “Evil people and impostors will go from bad to worse as they deceive others and are themselves deceived. But as for you, continue in what you have learned and found to be true, because you know from whom you learned it”. So we shouldn’t be alarmed by a bot trying to change our thinking. Assumptions An article in the Washington Post by Gerrit De Vynck is titled “ChatGPT leans liberal, research shows.” I assume Mr. De Vynck wrote the article, and that he didn’t use AI to write it for him. Now THAT would be interesting, wouldn’t it? Asking a bot to write an article criticizing a bot? He cited a research paper that said the following, “The paper adds to a growing body of research on chatbots showing that despite their designers trying to control potential biases, the bots are infused with assumptions, beliefs and stereotypes found in the reams of data scraped from the open internet that they are trained on.” So, it’s “garbage in – garbage out.” All computer programs are that way. The frightening thing about this one, is its apparent ability to teach itself. That’s reminiscent of the robot Hal’s response in the 1968 movie, 2001 A Space Odyssey, “Sorry Dave, ‘m afraid I can’t do that.” But for now, let’s look back – to assumptions – not forward. The Economics textbook I use in my Macro class at Dallas Baptist University was authored by Gregory Mankiw. He has a section in an early chapter about assumptions. As a warning about false assumptions, I tell this story. I bought this painting while waiting for the vaporetto – that’s the water bus – in Venice, Italy. In 1609, Galileo hauled the Doge – that’s the governor of the city state of Venice – up the 323 steps of San Marco tower to show him what he’d found in the night sky, using his newly refined telescope. It seemed to indicate that my predecessors – Catholic Priests – were wrong, and that the earth was NOT the center of the solar system. Galileo was tried by my predecessors, who claimed to contain all the information in the world at the time. He tried to defend himself by saying it was only a theory, and he didn’t really believe it. Well, he spent the rest of his life under house arrest. The message was pretty clear: Don’t mess with the folks who held the power of information. Legend has it that after his prosecution, he uttered the famous phrase, “Yet it moves.” You still hear that phrase used occasionally when someone thinks they are clearly correct after losing an argument. Maybe like a reasonable person who does the math and finds that the Inflation Reduction Act actually CAUSED inflation. But,
God Made Us Rich | Episode #186
Episode 186
Wednesday, September 27, 2023 • Duration 10:51
Our creativity comes from being made in the image of God. That creative innovation is best expressed in time-price, defined as how many hours we work to buy something. We're rich. Would you like to pay for your breakfast and get eight free? Wanna pay only 2% of your air conditioning bill? How about paying less than 5% of the marked price for a bicycle? God has made us rich by making us creative, in His image, and according to time price, you are getting those discounts on just about everything you buy. But first: How did we get here? Made in God’s Image Where does creativity come from? Well, for the Christian, the answer is pretty simple: We were made in God’s image. Another way of saying it is, we were created by the creator to be creative. That explanation is well-received by my students at Dallas Baptist University. I often wonder how creative innovation is explained at secular universities. It’s the first part of what’s sometimes called the three-chapter gospel: Creation, Fall, and Redemption. We were created in the Imago Dei, or in God’s image. We are NOT gods, we’re not even little gods, but we are made in His image, and we believe that’s the source of our creativity. The Hockey Stick of Prosperity Humans were poor in the Old Testament and the New Testament. Very few people were rich, and those are the ones we read about Abraham, Solomon, etc. However, a substantial percentage of the population was poor. By some estimates 25% of the first century population were slaves. We used to ask “Why are people rich?” And now we ask “Why are people poor?” Because such a small percentage of the world’s population is poor. People living in abject poverty has been reduced from 44% to just over 8% in MY lifetime. That’s one of the most astounding economic statistics you will ever hear. What changed? How did we accomplish The Great Escape, as 2013 Nobel Prize-winning economist Angus Deaton called it, in his book by that name? Jonathan Heidt has called it “The most important diagram in human history.” Don Boudreaux at George Mason explains it as the Hockey Stick of Human Prosperity in a very convincing YouTube video. Where does the hockey stick turn up? 1776. Three things happened in the same year. There was a political revolution, a technological revolution, and an economic revolution. First, political: Americans remember it was the year of arguably the greatest political revolution in history when the United States declared its independence from Britain. Scotsman James Wilson signed both the Declaration and the Constitution. Second, the technological revolution occurred when James Watt perfected the steam engine. It was the first form of non-muscle power that could be moved to any location. Third was the economic revolution instigated by the writing of The Wealth of Nations by Adam Smith. How about this: All three of these Scotsmen: James Wilson, James Watt, and Adam Smith were at Glasgow University from 1859-1762. Think about walking into a pub and asking, “Who are those three guys?” Would you arrive late for a lecture, when it featured a panel of futurists that included James Wilson, James Watt, and Adam Smith? Honestly, I just stumbled onto this amazing providence, and I’m not sure what to do with the information. I read a book titled How the Scots Invented the Modern World. However, it concentrated too much on the military battles and not enough on the three revolutions I was interested in. I think there was something going on in their religion, but I don’t have the details yet. I know they had been pretty strict Calvinists, who believed that their lives were predetermined for them. But somehow, the spirit of creative innovation was alive in the mid-18th century in Scotland, and the world is richer today because of it. Time Price How do we measure our wealth? Sometimes in my DBU class, I have claimed that gas is cheaper for my freshmen this year,
Perfection is Found Only in Heaven
Episode 185
Wednesday, September 20, 2023 • Duration 10:45
We can't make a perfect economic system. But we can make it better. God is perfect, we’re not. But that doesn’t stop people from striving for perfection. So how do we design an economic system for an imperfect world? That’s the subject of today’s podcast. There’s an article in the Wall Street Journal this week by Rachel Feintzeig titled “Try Hard, but Not That Hard.” She writes, “So many of us were raised in the gospel of hard work.” Okay, my first observation is that she called it “the gospel.” It makes a Christian Economist think about the book The Protestant Ethic and the Spirit of Capitalism by Max Weber way back in 1904. Ms. Feintzeig’s article contains long quotes from Greg McKeown who wrote the book Essentialism: The Disciplined Pursuit of Less. Mr. McKeown suggests we aim at about an 85% success rate. Both of these authors are writing about what economists call “Opportunity Cost.” So, my sophomore students at Dallas Baptist University will study until they know the chapter pretty well, but not perfectly. Why? They know the concept of declining marginal utility, that says that each additional minute spent studying produces less than the previous minute did. So, after a few hours of study, they go play flag football or have pizza with their friends. Facebook is the classic example of the old phrase from Voltaire, “Perfect is the enemy of good.” It features your friends and their perfect homes, vacations, children, food, etc. It is reminiscent of a guy whom Jesus encountered. Trying to be Perfect He was a rich young ruler who wanted to be perfect. Jesus told him, “If you want to be perfect, go, sell your possessions, and give to the poor, and you will have treasure in heaven. Then come, follow me.” In the book The Maker Versus the Takers, Jerry Bowyer explains that Jesus was talking about conversion, not entry into heaven. We can’t be perfect. The ways we might measure perfection are different than how God measures it. We seek perfection through our accomplishments, wealth, academic degrees, and social status. Jesus tells us to forget seeking perfection, and simply love God, and love your neighbor. It seems strange to me that so many protestants seek perfection, because of two events: Jesus came to save us because He knew we couldn’t perfectly keep the law. And Martin Luther led the Reformation because Luther found he could not keep the Catholic laws. Here’s what Martin Luther had to say about perfection, “We are not what we shall be, but we are growing toward it, the process is not yet finished.” Most Christians call that “sanctification,” meaning, we are becoming closer to perfect, but we can’t gain it on this side of heaven. We’re Fallen, and we Can’t Get Up. All have sinned and fallen short of the glory of God. The Christian Worldview says that God created a perfect world, fallen humans have messed it up, and it’s our job to redeem it, to the extent we can. We can’t make a perfect world, but we can make this broken world better. That’s our calling. So how do we design an economic system that we know is going to be implemented by fallen people? Christian Economics There is no perfect economic system. I get so tired of hearing people poke holes in the free-market capitalist system, but then fail to present a better alternative. There isn’t one. Of course, capitalism has its problems, as all human systems do. As Whole Foods founder John Mackey said, “Capitalism is humanity’s greatest invention.” It’s head and shoulders above its nearest competitor, socialism. The market is so complex, even the greatest economists have not been able to define it. Adam Smith called it “The invisible hand.” That’s not a scientific answer. Invisible?! Friedrich Hayek said it was “spontaneous order.” A freshman at DBU would ask the “first cause” question, which goes something like, “Who spontained it?” I like the answer from Jay Richards,
#184 Competition is More Effective Than Regulations
Episode 184
Wednesday, September 13, 2023 • Duration 10:49
Christians are called to take care of widows and orphans, because in the agrarian economy of Biblical times, those were the people who didn’t own land, so they were not capable of economically providing for themselves. In the 21st century, we as individuals can care for the less fortunate by two very different economic systems: Competition or Regulation. Regulations are regressive, harming the poor more than the rich. They also exercise taxation without representation, and they side-step the democratic process. University of Chicago economist Casey Mulligan has determined that the Biden administration’s rule-making has cost each American household more than $10,000, while the Trump administration’s reduction of rules saved each household $11,000. Every American household has $21,000 less in purchasing power as a result of the change from President Trump to President Biden. As President Obama noticed, “Elections have consequences.” And they matter most to the poor, who suffer a greater loss in purchasing power through regulations than the rich do. That’s because $21,000 represents a higher proportion of income to the poor, than the rich. But wait, it gets worse: To quote Mr. Mulligan directly from his letter to the Wall Street Journal, “That would be more than $10,000 in cost for the two years of President Biden’s rule-making that I examined, and almost $11,000 in savings for four years of President Trump’s. Mr. Biden is adding regulatory costs even faster than President Obama did, while Mr. Trump reduced them.” Opportunity Cost The simple economics question, “Is the juice worth the squeeze?” is what finance people term “Cost-Benefit analysis.” We all make those decisions, large and small, on a daily basis. You skimmed the headline of this podcast and decided the benefit you would receive from gaining the information is greater than the cost of spending the time to listen to it. In economics, we call that “Opportunity Cost.” You can’t listen to another podcast at this moment, because you’re listening to this one. The federal government goes through a similar analysis, performed by the Office of Management and Budget. They keep track of how many “significant regulatory actions” a President orders. That has been defined as an order that costs American taxpayers $100 million. That’s the squeeze. Now, the Biden administration wants to double it to $200 million. OMB also measures the “juice” that is produced from the order. In the past, that benefit was accrued only to Americans, but being the global citizens they are, the Biden administration says those benefits can accrue from outside the US. President Trump wanted to “Make America Great Again,” and the Biden Administration wants to “Make the World Great Again.” The current Administration is tilting at a very large economic windmill. Justice would say that money forcefully extracted from American taxpayers should benefit Americans. If you really think money spent by taxpayers in one country should benefit those in another country, please preach that sermon in another country, and convince them to appropriate funds that benefit Americans. No Taxation Without Representation The phrase “No taxation without representation” first appeared in a London newspaper in 1768. As you may remember, the phrase caught on in the colonies, and caused a revolution. It raised the question as to whether the Crown had the right to tax its colonial subjects. The colonists thought it did not. But that’s exactly what’s happening today. This is taxation without representation. Our forefathers fought a revolution over that idea. These are administrative orders that do not go through the democratic legislative process. They harm the poor - as mentioned earlier - and the young. Americans can’t vote until they are 18, but they have to pay for these regulatory costs in the form of decreased family spending power every year of their lives.
#183 Who Should Care for the Homeless
Episode 183
Thursday, September 7, 2023 • Duration 09:38
“Supply causes demand” was the summary statement by the French economist Jean Baptiste Say. The Biden administration has supplied more than $500 million to alleviate homelessness, and demand for it went up 11%. The allotment will be quickly consumed by the Homeless Industrial Complex, who will be back at the Government feeding trough for more, faster than you can say “Dwight Eisenhower.” Why “Dwight Eisenhower?” He invented the term Military Industrial Complex, from which the term Homeless Industrial Complex gets its name. The concept of the Homeless Industrial Complex is real. As far as I can tell, the term was first used by Joel John Roberts, who authored the cheeky-titled book How to Increase Homelessness in 2004. It sprang up to monetize homeless "services" nationally and their continued funding depends on sustaining the homeless population. They are not so much interested in solutions -- there's too much money in the problem. Nothing About Supply and Demand The Wall Street Journal is trying to blame the homeless problem on economics, “This year’s surge reflects a host of pressures around the U.S. such as rising housing costs, and lack of affordable rental units.” Oh, that’s why crackheads consume cocaine, opioids, and Mogen David by the gallon? Homelessness is the result, not the cause. Homelessness is largely caused by drug addiction and mental illness. It’s not an economic problem, it’s a moral violation for the homeless who make choices to fry their brains, and for the self-interested governmental bureaucrats who make a pretty nice living in the Homeless Industrial Complex that maintains the street carnival. Somewhere around 90% of homeless people have drug and alcohol addictions, and some degree of mental illness. In their book Extreme Leadership former Navy Seals Jocko Willink and Leif Babin, state the rather obvious, “You get the behavior you tolerate.” New York City has something called “A legal right to shelter,” which has caused its homeless population to explode. “The U.S. Interagency Council on Homelessness, a federal agency, also blamed growing homeless counts on housing costs and shortages.” The government is wrong again. Look, homelessness is NOT an economic problem. We can do ZERO to address the homeless problem until we stop claiming an association between homelessness and lack of affordable housing. They are unrelated. Homelessness has nothing to do with the availability of affordable housing. When shelter is supplied for many homeless people, they turn it down. Many homeless people are homeless because they don’t want to follow the rules that would be required to live in a house. If you’re thinking “that’s kinda crazy,” you would be correct. As I’ve stated, the majority of the homeless population have some kind of drug or alcohol dependence or mental illness. Noting that the unemployment rate is at 3.6%, well below what economists call the natural rate of 5%, we should notice that jobs are plentiful in this country for anyone who shows up on time and isn't stoned. The Capitalist Good Samaritan Finding a man injured on the road, the Good Samaritan, as described in Luke chapter 10 uses his own oil, wine, and bandages. He puts the man on his own donkey and pays the innkeeper with his own denarii. Socialists read the story to say: finding the man injured on the road, the Samaritan rushed into town and rounded up some Roman soldiers who went door-to-door, forcefully extracting taxes to buy public oil, wine, and bandages. They bought public donkeys and public inns. That’s not how Jesus told the story, and it’s not how we are commanded to care for the homeless. There is no room in the Good Samaritan story for the government. Defined by What They’re NOT Notice the title “homeless.” Interesting that these folks are identified by what they don’t have, instead of what they do have. Maybe I should start referring to the students in my class at Dal...
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