Tag Archives: economic ethics

Data Driven Policy: More than One Science

Following the science in public policy decisions requires consulting all relevant data not just the findings of one or two disciplines. As in our personal lives, morally virtuous public policy balances different moral goods.

This means that, as valuable as epidemiology is for helping public official respond to COVID-19,  alone is an insufficient practical and moral basis for public policy. Limiting our appeal to data in this way means, as Victor V. Claar reminds us that overlooking the fact

… that saving lives through mitigation is costly in the same way that saving lives by outlawing driving is costly. As of April 30, some 30 million Americans had been laid off due to COVID-19, according to the U.S. Department of Labor, likely pushing the April unemployment rate to 19 percent, or even to 30 percent, according to a prediction by the head of the Federal Reserve Bank of St. Louis. And nearly 25 percent of American small businesses expect to close permanently within the next few months, a poll by the U.S. Chamber of Commerce and MetLife indicates.

Read the rest here: Coronavirus Florida mitigation efforts and economic impact jobs

In Christ,

+Fr Gregory

The Fathers Aren’t Enough

Another Orthodox priest took exception to my comment on Facebook that the Fathers are not sufficient for understanding our moral obligations in the marketplace. We need to know economics (among other things) if we are to be faithful to the Gospel in our circumstances of, frankly, material abundance. Here’s my response to Father’s criticism:

Certainly, Father, much to criticize about the free market and consumerism is toward the top of that list. The fathers are very helpful in crafting our criticisms. This is why when I wrote a monograph on consumerism I not only looked at the economic literature but also, and primarily, the fathers and the liturgical tradition of the Church.

We can and should criticize the moral failings of the market. Or to be more accurate, the failings of actors in the marketplace.

At the same time, the corrupt you mention is not limited to any one economic system or indeed any historical epoch. St Nelios the Ascetic writing in the early 5th century has similar complaints about the Christians of his time as you offer here.

As I said in my original post, we have an obligation to care for the poor. The fact that we are wealthier–and indeed even though many of the poor are wealthier–does not change this.

However, as I point out in my monograph, St John Chrysostom doesn’t recommend we simply give things to the poor. While there are some who are incapable of work and so of supporting themselves because of age or illness, those who can work should work. Not only that, their willingness to work is for the saint a precondition for receiving charity from the Church.

Yes, the fathers tell us to care for the poor but they also–as Chrysostom does–tell the poor that they must care for themselves and their families through honest labor. This means that SOME of us fulfill our obligation to care for the poor by direct philanthropy.

Other of us, however, care for the poor by creating businesses that make it possible for the poor to earn a wage. Often this wage is insufficient and, when it is, it is proper and right to offer the needed assistance. But, again, only on the condition that those who are able-bodied work.

The poor cannot find employment unless someone–primarily business owners– creates jobs by investing their time, treasure and talent to open sustainable (i.e., profitable) businesses.

When this happens, when wealth is created and the economy grows not only do the poor have the opportunity to leave poverty behind the natural environment is better cared for. Whatever might have been the other charms of pre-industrial society it was filthy and disease-ridden. Yes, coal and oil are dirty but so is wood and because wood is so inefficient relative to coal and oil (to say nothing of natural gas and atomic energy) we need more wood to do less work and our harvesting and burning of wood cause great harm to the environment.

I thank God you work with the poor and have the wealth to afford the luxury of traveling to [an overseas mission field]. And sincerely, good for you and may God bless you for your efforts.

But these good works and your concern for others don’t excuse the overly broad with which you criticize the labor of many faithful Christians who labor daily to create wealth through free exchange and technological innovation you use on a daily, really minute by minute, basis to preach the Gospel and care for the poor. Your work is good but it is no better than theirs. Yes they, like me, are sinners who often do good things for bad reasons. But this doesn’t negate the real economic, cultural and material benefit of their work. Or, as St Paul says,

Some indeed preach Christ even from envy and strife, and some also from goodwill: The former preach Christ from selfish ambition, not sincerely, supposing to add affliction to my chains; but the latter out of love, knowing that I am appointed for the defense of the gospel. What then? Only that in every way, whether in pretense or in truth, Christ is preached; and in this I rejoice, yes, and will rejoice (Philippians 1:15-18).

So faithful to the apostolic command, I rejoice at your philanthropy and their exchange in the marketplace and technological innovation. As a Christian, how can I do anything else since in both cases the poor are served?

As for how many coats I own, I have four winter coats. One dress coat I bought used, and lightweight, medium weight and heavyweight coats. While I’d rather have only one, the winters here are variable and can be so cold as to deadly. The clothing I need to go outside at -30 is inappropriate at warmer temperatures and my lighter weight gear useless when it gets that cold.

In Christ,

+Fr Gregory

Icons of Human Creativity

At AIER, the economist Donald J. Boudreaux writes that

The reality about innovation uncovered by [recent Noble Prize winner] William Nordhaus alone is sufficient proof that capitalism works magnificently. Of course, to say that capitalism works magnificently isn’t to say that it works without identifiable hitches, hiccups, and costs. But it is to say that those who today call for socialism to replace capitalism are ignorant not only of socialism’s well-documented history of failure and tyranny, but also of the enormous benefits that capitalism inspires in creative entrepreneurs to deliver.

Based on Nordhaus’s work, Boudreaux points out that all of us are better off because of entrepreneurs and innovators such as Amazon’s Jeff Bezos. Why? Because

…producers, on average, capture a mere 2.2 percent of the total benefits of their successful introduction into markets of technological advances. A whopping 97.8 percent of those benefits are enjoyed by people each of whom as a consumer did nothing other than exercise his right to spend his money on those options that he judges best for himself.

From: Business Today.in

To be sure, “each innovator would surely like to capture a much larger share than 2.2 percent.” But because of “the robust forces of market competition … even the most successful of innovators” will necessarily “give the bulk of the benefits of their innovations to strangers in the form of price cuts, expanded outputs, and improved quality.”

As a practical matter, this means that

If the social benefits of the typical successful innovation were a pie divided into 45 equally sized slices, those who creatively figure out how to innovate, and who bear the risks of doing so in competitive markets, are content to allow those who play no role in the entrepreneurial-innovative process to grab 44 of the 45 slices. The persons responsible for making the pie in the first place ultimately receive as payment for their efforts only one slice.

Christians and others of good will concerned with caring for the poor would do well to take a more serious–and sympathetic–look at the wealth-producing potential of the free market.

But this doesn’t mean, as Boudreaux observes, ignoring the practical and moral failures of the market.

However, we need to see these failures against the twin horizons of the market’s ability to create wealth AND the universal human tendency to misuse use (intentionally or not) our freedom.

The failures of the free market, or if you prefer, capitalism, are not unique to the market. They reflect rather our situation as fallen creatures living in a world marred by sin.

The Church’s role here is not to condemn wealth creation as if creating wealth is in and of itself is sinful.

Instead, I think the Church must continually call market actors (but especially innovators and entrepreneurs) to faithful uphold in all their economic activities the real moral goodness of their efforts as not only stewards of human wealth but icons of human creativity.

Let me explain.

Because we are social creatures, much of what we do, we do in imitation of others. Through their creativity actions in the market, innovators and entrepreneurs demonstrate concretely the human potential not simply to create wealth for themselves but for others.

And this wealth is not simply material. It is also culture and even spiritual.

While wealth can be used selfishly, it can just as easily be used to build schools, hospitals, churches and any number of social institutions that lift the human spirit and reveal our dignity as creatures created in the image of God.

In Christ,

+Fr Gregory

Doing Wrong by Doing Good

It today’s Wall Street Journal an interesting there’s an interesting article (The Stealth Pension Mortgage on Your House) on how sometimes even when well-intended policies can have unintended, unjust consequences. The specific issue is how government pensions hurt homeowners:

On average nationwide, unfunded state and local pension burdens represent 20% of real-estate values. This ratio can rival or exceed an owner’s home equity, depending on the size of his mortgage. If real-estate prices adjust to reflect unfunded pension obligations, many homeowners’ equity could be at risk. As we’ve seen in Detroit, the public pension stealth mortgage can ultimately devastate the housing market.

The essayists, Rob Arnott and Lisa Meulbroek, don’t argue that local and state pensions are in and of themselves unjust. Rather they highlight the hidden real estate costs to homeowners and renters:

It doesn’t matter if we own or rent; landlords pass higher taxes on to tenants. Nor does it matter if properties are mortgaged to the hilt or owned outright. In time, unfunded pension obligations will be reflected in real-estate prices, if they aren’t already. A state’s unfunded liabilities are effectively a stealth mortgage on private property. Think you can pass your property on to your heirs? Only net of the unfunded pension obligations.

For most Christians, one of the hardest concepts to grasp in the ethical analysis of economic issues is the unintended negative consequences of otherwise just policies. Sometimes along with the good we intend, we end up doing harm we don’t intend but nevertheless do.

In Christ,

+Fr Gregory

The Dilemma of Unintended Consequences of Public Policy on Health Care

Wealth & Poverty in St Luke

Recently, I posted an essay on Acton’s Transatlantic Blog reflecting on the economic implications of the Orthodox theologian David Bentley Hart’s recent translation of the New Testament. After reading my essay (David Bentley Hart’s Gospel of Cass Division), a friend of mine shared observation from his seminary New Testament professor that I think helps set the context for Jesus’ comments about wealth.

During the New Testament era, keeping the various laws of ritual purity was expensive and so beyond the economic reach of all but the wealthiest members of the Jewish community. We get hints of the economic burden of the Law in several places. The first, and maybe most notably, is in Luke 2:24 where Mary and Joseph offer “A pair of turtledoves or two young pigeons” (NKJV) in thanksgiving for the birth of Jesus. Historically, this was the minimally acceptable offering under the Law and so the typical offering of the poor who couldn’t afford either a bull or a sheep.

Another notable example is the widow in Luke 21:1-4:

And He [Jesus] looked up and saw the rich putting their gifts into the treasury, and He saw also a certain poor widow putting in two mites. So He said, ‘Truly I say to you that this poor widow has put in more than all; for all these out of their abundance have put in offerings for God, but she out of her poverty put in all the livelihood that she had.’

The critique of the wealthy is clear. Yes, they offer great sums of money. However, they do so not because they are generous but because they are able to do so with relatively little adverse economic impact. The widow, however, has very little money and so the more extravagant gifts and sacrifice necessary for the purification of serious sins are beyond her reach. Like the Mary and Joseph, all she can offer is the bare minimum and so cannot free herself from any weightier sins.

But the wealthy? They can buy ritual purity that is beyond the reach of the poor. For the rich, forgiveness and reconciliation of even the most serious of their sins is ready to hand. But the poor remain estranged from God because of their poverty!

Knowing that reconciliation with God under the Law was conditioned by personal wealth helps us make better sense of Jesus’ comment earlier in Luke 20:46-47.

Then, in the hearing of all the people, He said to His disciples, ‘Beware of the scribes, who desire to go around in long robes, love greetings in the marketplaces, the best seats in the synagogues, and the best places at feasts, who devour widows’ houses, and for a pretense make long prayers. These will receive greater condemnation.’

The wealthy are castigated then not for being wealthy as such but for using their wealth to create and perpetuate a two-tiered religious system in which because of their poverty the poor are excluded from intimacy with God.

Compounding the injustice even further, the various sacrifices need for ritual purity had become central to the economic system surrounding the Temple. It is as a sign that He has come not simply to correct this spiritual and economic injustice but overthrow it. “Then He went into the temple and began to drive out those who bought and sold in it, saying to them, “It is written, ‘My house is a house of prayer,’ but you have made it a ‘den of thieves’” (Luke 19:45-46).

Jesus comes to replace a system in which access to God is a function of wealth. Worse, acquiring the different sacrificial offerings gas becomes the heart of what in another context would be a morally legitimate system of free exchange. In effect, merchants are making a profit from a system that imposes an economic burden on those who would be reconciled with God on a spiritual level and re-integrated into the community on a social level.

In the events leading up to the cleanings of the Temple (Luke 19:1-10), we meet a man intimately involved in the economic injustice at the heart of the Roman Empire–the tax collector Zacchaeus. Though he works for the Romans–and so has placed himself outside the Jewish community–he nevertheless has access to Jesus and so grace. For this reason Zacchaeus “the sinner” (v. 7) stands, like Jesus Himself, as “a sign of contradiction” (Luke 2:34, Douay Rheims) for those who would limit ritual purity to the wealthy and the powerful.

Aware that he has committed injustices against his fellow Jews, Zacchaeus is willing to make amends: “Look, Lord, I give half of my goods to the poor; and if I have taken anything from anyone by false accusation, I restore fourfold” (v. 8). Two things are noteworthy here.

First, Zacchaeus doesn’t offer alms (which was a requirement for all Jews) but as a sacrifice for the harm he has done. He does this outside the formal sacrificial system to the Temple.  It isn’t a Temple priest but Jesus who both receives his offering and declares the sacrifice efficacious. “Jesus said to him, ‘Today salvation has come to this house because he also is a son of Abraham; for the Son of Man has come to seek and to save that which was lost.’”

Offering a sacrifice for sin is no longer limited to the priests in the Temple. Now, even those outside the community, those who are ritually impure (“sinners and tax collector”) are able to offer sacrifice. That Jesus, Who is not a member of the Temple priesthood, receives the sacrifice undermines the economic system that reinforces the religious authority of the wealthy. at the expense of the poor. With the coming of Jesus, the poor are no longer on the margins of Jewish society. They too have access to God and the forgiveness of their sins.

Immediately after the story of Zacchaeus, Jesus tells the parable of the talents. This serves to reinforce and extend the spiritual/economic lesson. Once again, the question is that of the right use of wealth. Troubling for critics of the free market, the moral legitimacy of profit is assumed. And yet to understand the parable as a New Testament endorsement of capitalism is an anachronistic reading of the text.

Jesus purpose in telling the story is to correct the many who wrongly “thought the kingdom of God would appear immediately.” Like the other passages in Luke, the concern is with announcing the end of an economic and spiritual system in which wealth is used to restrict the access of those on the social or economic margins of society from the Kingdom of God.

This chapter reaches a crescendo when in verses 28-40 Jesus enters Jerusalem not as a wealth King on a magnificent horse but as a poor man riding on a donkey. The symbolism isn’t lost on either the crowds or the Pharisees who “called to Him from the crowd, ‘Teacher, rebuke Your disciples'” (v. 39). Entering as He does on a donkey, “the foal of an ass” (Matthew 21:5 in Luke, “a colt”), Jesus announces a new dispensation in which the wealthy are no longer able to claim–and enforce–an exclusive right of access to God and His blessings.

Unfortunately, for all the enthusiasm with which He is greeted Jerusalem is unable to grasp the true meaning of what Jesus has accomplished.

Now as He drew near, He saw the city and wept over it, saying, “If you had known, even you, especially in this your day, the things that make for your peace! But now they are hidden from your eyes. For days will come upon you when your enemies will build an embankment around you, surround you and close you in on every side, and level you, and your children within you, to the ground; and they will not leave in you one stone upon another, because you did not know the time of your visitation.”(Luke 19: 41-42).

The Catholic biblical scholar Raymond Brown in his commentary of the infancy narratives in Matthew and Luke (The Birth of the Messiah) argues that a central message of Luke’s Gospel is that (among others) those excluded from the Jewish community because of poverty have now become the privileged witnesses to the Kingdom of God. To understand this as a proto-Marxist statement is as anachronistic as seeing the Parable of the Talents as an endorsement of the modern, free market.

Instead, Brown argues that in St Luke’s telling, economic poverty no longer excludes people from communion with God. It is this that raises, or maybe better, reveals, the dignity of the poor. They too have access to God. And just as God has done, the wealthy are obligated to extend grace to the poor. This grace isn’t limited to material assistance alone; it also must include respect. Philanthropy, no matter how generous, that fails to respect the dignity of the person falls short of what is required by God. In other words, it is unacceptable for out charity to leave the poor in undignified circumstances. Charity that keeps the poor, poor and so dependent, is unacceptable because it replicates the same economic, social and spiritual condition that Jesus came to overturn.

While good in itself, easing the burden of the poor is simply not enough. We fail the poor when we leave them poor. The reason is that wealth has a purpose: it is meant to protect human dignity, to foster human flourishing and serve the person’s growth in holiness.

Neither wealth nor the wealthy as such are condemned in the New Testament. If this were not the case, alleviating the poverty of the poor would be a sin.

What is condemned, however, is not wealth as such but (I would suggest) the willingness of the wealth (with some notable exceptions like Zacchaeus and a few others like Joseph of Arimathea in Luke and Nicodemus in John’s Gospel) to use their wealth to keep others from the Kingdom of God.

In Christ,

+Fr Gregory

For Consideration: Who Pays What?

Source: (WSJ)

Senator Phil Gramm writes:

When is the last time you heard a tax-reform advocate point out that today the top 10% of income earners in America pay a larger share of the overall tax burden than anywhere else in the developed world? The most recent study on the distribution of the tax burden among nations was conducted by the Organization for Economic Cooperation and Development in 2008, and covered all forms of taxes on income, including social-insurance taxes and state and local taxes. The top 10% of earners in the U.S. paid more than 45% of all taxes on income. In Sweden the top 10% of earners paid less than 27%; in France, less than 25%. Since Sweden and France both have large value-added taxes, a regressive levy, their top-10% earners bear an even smaller share of the total tax burden. The next time Bernie Sanders demands that the rich pay their fair share, somebody should ask him if he would be satisfied if the American rich paid the same share as their counterparts in Sweden and France.

For Consideration: Economic Winner & Losers

Richard Florida was right when he said that the “creative economy” is the new way of the world. But its development didn’t happen how he imagined. Rather than launching humanity into a new phase of prosperity, the new economy simply holds the different elements of late capitalism together — making it palatable for some but deepening its crises and contradictions for others.

Sam Wetherell, https://jacobinmag.com/2017/08/new-urban-crisis-review-richard-florida“>Richard Florida Is Sorry.

For Consideration

… while a member of the aspirational class is eating kale salad in his made-in-Brooklyn t-shirt, let’s not lose sight of the fact that the current elite consumer ethos is only possible because of the economic growth and affluence that industry created and the luxurious postmodern values it allows us to possess.

Elizabeth Currid-Halkett, http://a.co/fe5oySL“>The Sum of Small Things: A Theory of the Aspirational Class

For Consideration: Right Answers Require Right Questions

Paperback: $15.30

The first lesson to be taught is that when we run across a situation we don’t like – “outrageous exploitation of sick people,” for example – we should start by asking how the situation came about and why it persists. What’s actually going on here? That’s an extremely important lesson: for the dinner table, the conference room, the legislative hall, and the faculty lounge as well as the economics classroom. We all have a tendency, especially when we’re filled with indignation, to begin with the conclusions and subsequently to choose the facts that will enable us to reach our preestablished results. That does little to promote understanding; it merely hardens opinions already held. It does not lead to learning. And it fosters debate rather than discussion. Doesn’t it make far more sense to ask why, if the situation is as intolerable as it seems to be, it continues to exist? Social phenomena are not facts of nature, like mountains. They emerge from the choices individuals make in response to the situations they encounter, situations that are in turn largely created by the choices other people make. If we want to change society, we must first understand it. The first step toward understanding how markets work, and the beginning, I would say, of all social understanding, is the recognition that social phenomena are the product of particular choices in response to particular incentives. Incentives matter! To fix any social problem, we must alter the incentives. To do that, we must first discover what they are.

Paul Heyne (2008), “Teaching Economics By Telling Stories,” in in the 2008 collection of Heyne’s writings, “Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion (Geoffrey Brennan and A.M.C. Waterman, eds.), p. 322, emphasis in original.

For Consideration…

Bet nobody saw this coming.

Pope Francis has, perhaps inadvertently, made the moral case for tax cuts.

He is right that European Union governments should have aim to expand opportunity for all, so that everyone has the chance to lift himself out of poverty and provide for a family. Their failure to do so, the massive unemployment and even higher youth unemployment that have blighted much of Europe, is a scandal that deserves more attention.

But what the pope may not realise is that the best way governments can do this is to get out of the way, to cut public spending, reduce taxes, and allow the economy to flourish. This is not just theory; the evidence of the last couple of decades shows clearly the lower-taxed countries in Europe are far more successful at generating the economic growth and the jobs the pope knows that people need.

For more go here.