Wintery Knight

…integrating Christian faith and knowledge in the public square

New study: the longer people live under socialism, the less moral they become

From Values and Capitalism blog. (H/T Amy Hall tweet)

Excerpt:

The longer people live under socialism, the more their value system erodes. So concludes a recent study of 259 Germans randomly picked to play a simple dice game.

Researchers from the University of Munich and Duke University asked participants to throw a die 40 times and write each result down on a piece of paper. Those with the highest totals received winnings of up to $8. The twist was that each participant had to commit to picking the top or bottom number before rolling the die. They didn’t have to tell anyone beforehand which side they favored, giving them the opportunity to lie when they saw which way the die had turned up.

If no one had cheated, there should have been a roughly equal assortment of rolls from one to six. Instead, when researchers studied the results, they saw disproportionately more high rolls than low. Players were saying they’d picked in advance more fours, fives, and sixes than should have been possible. In short, many were cheating.

Participants were then asked their age and the part of Germany where they’d lived throughout their lives. Some had spent years behind the Iron Curtain, while others had only known life in a unified Germany. When researchers placed the results of the die rolls next to where and when the participants had been born, they came to a stark conclusion.

Those who hailed from socialist East Germany were twice as likely to cheat as those who’d grown up in West Germany under capitalism. Time also played a factor, for the longer a participant had lived in a socialist system the greater their likelihood for being dishonest. Those who’d lived for 20 years or more in East Germany were 65 percent more likely to cheat than their West German counterparts. And the ill-effect of socialism lingered in people’s values long after its demise. Those born in the east after the fall of the Berlin Wall still showed a greater propensity for cheating than their western counterparts.

You can kind of see how socialism works by look at how Obama is taking the country away from capitalism here at home. When the basics of a capitalist economy decline, it’s less attractive to try to make your own fortune, and more attractive to look to government to give you someone else’s money.

The study offers some reasons for their findings:

Participants were then asked their age and the part of Germany where they’d lived throughout their lives. Some had spent years behind the Iron Curtain, while others had only known life in a unified Germany. When researchers placed the results of the die rolls next to where and when the participants had been born, they came to a stark conclusion.

Those who hailed from socialist East Germany were twice as likely to cheat as those who’d grown up in West Germany under capitalism. Time also played a factor, for the longer a participant had lived in a socialist system the greater their likelihood for being dishonest. Those who’d lived for 20 years or more in East Germany were 65 percent more likely to cheat than their West German counterparts. And the ill-effect of socialism lingered in people’s values long after its demise. Those born in the east after the fall of the Berlin Wall still showed a greater propensity for cheating than their western counterparts.

Interesting to note that under Obama’s leadership, fewer people are starting businesses than in previous administrations.

Breitbart explains:

Startup businesses represent the heart of the American economy, but a new report by the Hudson Institute shows the rate of startup jobs during the last two years has been at a record low.

According to the report, Under President George H.W. Bush, who essentially won Ronald Reagan’s third term, there were 11.3 startup jobs per 1000 Americans. Under President Bill Clinton, there were 11.2. Under George W. Bush, there were 10.8. But under President Barack Obama, there have been 7.8 startup jobs per 1000 Americans.

The study “documents a disturbing weakness in startup job creation,” but “does not explain the cause of decline,” even though “there is anecdotal evidence that the U.S. policy environment has become inadvertently hostile to entrepreneurial employment.”

You can’t argue with those numbers. Higher taxes and more regulations are not good for business.

Filed under: News, , , , , , ,

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

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“.

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Why are Egyptians wealthier in America than they are in Egypt?

Walter Williams

Walter Williams

This is from Walter Williams, my second most favorite economist after Thomas Sowell.

Excerpt:

Why is it that Egyptians do well in the U.S. but not Egypt? We could make that same observation and pose that same question about Nigerians, Cambodians, Jamaicans and others of the underdeveloped world who migrate to the U.S. Until recently, we could make the same observation about Indians in India, and the Chinese citizens of the People’s Republic of China, but not Chinese citizens of Hong Kong and Taiwan.

[...]Much of Egypt’s economic problems are directly related to government interference and control that have resulted in weak institutions vital to prosperity. Hernando De Soto, president of Peru’s Institute for Liberty and Democracy (www.ild.org.pe), laid out much of Egypt’s problem in his Wall Street Journal article (Feb. 3, 2011), “Egypt’s Economic Apartheid.” More than 90 percent of Egyptians hold their property without legal title.

De Soto says, “Without clear legal title to their assets and real estate, in short, these entrepreneurs own what I have called ‘dead capital’ — property that cannot be leveraged as collateral for loans, to obtain investment capital, or as security for long-term contractual deals. And so the majority of these Egyptian enterprises remain small and relatively poor.”

Egypt’s legal private sector employs 6.8 million people and the public sector 5.9 million. More than 9 million people work in the extralegal sector, making Egypt’s underground economy the nation’s biggest employer.

Why are so many Egyptians in the underground economy? De Soto, who’s done extensive study of hampered entrepreneurship, gives a typical example: “To open a small bakery, our investigators found, would take more than 500 days. To get legal title to a vacant piece of land would take more than 10 years of dealing with red tape. To do business in Egypt, an aspiring poor entrepreneur would have to deal with 56 government agencies and repetitive government inspections.”

Poverty in Egypt, or anywhere else, is not very difficult to explain. There are three basic causes: People are poor because they cannot produce anything highly valued by others. They can produce things highly valued by others but are hampered or prevented from doing so. Or, they volunteer to be poor.

Some people use the excuse of colonialism to explain Third World poverty, but that’s nonsense. Some the world’s richest countries are former colonies: United States, Canada, Australia, New Zealand and Hong Kong. Some of the world’s poorest countries were never colonies, at least for not long, such as Ethiopia, Liberia, Tibet and Nepal. Pointing to the U.S., some say that it’s bountiful natural resources that explain wealth. Again nonsense. The two natural resources richest continents, Africa and South America, are home to the world’s most miserably poor. Hong Kong, Great Britain and Japan, poor in natural resources, are among the world’s richest nations.

What is necessary for wealth is a capitalist economy, that emphasizes the rule of law, private property, judicial restraint, limited government, etc. Egypt has none of those, and that’s why Egypt is poor. India and Chile used to be like Egypt, but then they revamped their societies to be more like America. Now India and Chile are more prosperous. Economics is not rocket science.

Capitalism creates wealth, and raises the standard of living of the poor and the wealthy. It doesn’t matter what rung of the social ladder someone is on – as long as they can keep what they earn, instead of having it redistributed by socialists, then they will work hard to create something of value to share with others. Poverty is caused by economic ignorance.

More Walter Williams stuff here, and more Thomas Sowell stuff here. These are the clearest-thinking economists operating today.

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Meet a small business owner – the enemy of Democrats

Here’s an interesting video. (H/T Ari)

See that guy? He’s your potential boss. Stop messing with this business and maybe he’ll hire you.

Filed under: Videos, , , , , , , , , , , , , , , , , , , , , ,

What is natural law and why do conservatives believe in it?

Bill Whittle has posted part 4 of his excellent series on what conservatives believe.

Today’s episode is on natural law and the rule of law.

Here are the previous parts:

This is wonderful for Christians to watch. When you watch them, think about how your life goals are much easier with these policies as opposed the policies in North Korea or Cuba. Your liberties, including your precious religious liberty, all hangs on these ideas. You cannot conduct a Christian life if you are taxed too much, or if the government indoctrinates your children in government-run schools, or if you cannot even afford books on apologetics and theology because you have no money left over after buying food. Think about your Christian life as an enterprise – what do you need from the government, the courts and the private sector in order to succeed?

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