Wintery Knight

…integrating Christian faith and knowledge in the public square

Does the free market work to reduce poverty?

Economist Walter Williams

Economist Walter Williams

From Investors Business Daily.

Excerpt:

There has never been a purely free market economic system, just as there has never been a purely communist system. However, we can rank economies and see whether ones that are closer to the free market end of the economic spectrum are better than ones that are closer to the communist end.

Let’s try it.

First, list countries according to whether they are closer to the free market or the communist end of the economic spectrum. Then rank countries according to per capita gross domestic product. Finally, rank countries according to Freedom House’s “Freedom in the World” report.

People who live in countries closer to the free market end of the economic spectrum have far greater income than people who live in countries toward the communist end — and enjoy far greater human rights protection.

According to the 2012 “Economic Freedom of the World” report by James Gwartney, Robert Lawson and Joshua Hall, nations ranking in the top quartile with regard to economic freedom had average per capita GDP of $37,691 in 2010 compared with $5,188 for those in the bottom quartile.

In the freest nations, the average income of the poorest 10% of their populations was $11,382. In the least free nations, it was $1,209.

Remarkably, the average income of the poorest 10% in the economically freer nations is more than twice the average of those in the least free nations.

Free market benefits aren’t only measured in dollars and cents.

Life expectancy is 79.5 years in the freest nations and 61.6 years in the least free.

Political and civil liberties are considerably greater in the economically free nations than in unfree nations.

Leftists might argue that the free market doesn’t help the poor. That argument can’t even pass the smell test.

Imagine that you are an unborn spirit and God condemned you to a life of poverty but gave you a choice of the country in which to be poor. Which country would you choose?

To help with your choice, here are facts provided by Robert Rector and Rachel Sheffield in their report “Understanding Poverty in the United States: Surprising Facts About America’s Poor.”

  • Eighty percent of American poor households have air conditioning.
  • Nearly three-fourths have a car or truck, and 31% have two or more.
  • Almost two-thirds have cable or satellite TV.
  • Half have one or more computers.
  • Forty-two percent own their homes.
  • The average poor American has more living space than the typical non-poor person in Sweden, France and the U.K. Ninety-six percent of poor parents stated that their children were never hungry; in other words, they could afford food.

The bottom line is that there is little or no material poverty in the U.S.

At the time of our nation’s birth, we were poor, but we established an institutional structure of free markets and limited government and became rich.

This might be a good article send along to people who want to bash our free-market system. It’s easy for them to make assertions that we have to do this or that policy to redistribute wealth. But the real solution to helping the poor is not to take from one and give to another, it’s to put into place a system that causes wealth to be created for all. That’s what happened in the United States, and you can see how it happened in other capitalist economies like Chile, Hong Kong and Singapore. Capitalism turns poor nations into rich nations.

Filed under: Commentary, , , , , , , ,

Dennis Prager: why the left doesn’t care about bad economic news

This was posted last night on Investors Business Daily.

Excerpt:

Almost everywhere the left is in control — in California, for example — the economic news is awful. But this has no effect on the ruling Democrats, the Los Angeles Times editorial page, New York Times economics columnist Paul Krugman or others on the left.

There is one overriding philosophical reason and one political reason for this.

He lists a number of the economic problems in California – a state that is controlled top to bottom by Democrats.

Why doesn’t it bother Democrats that economies decline when they are in control?

He writes:

Why do these state-crushing economic statistics — nearly every one of which is the result of left-wing policies — have no effect on California’s Democrats, the Los Angeles Times editorial page, New York Times economics columnist Paul Krugman or almost anyone else on the left?

The answer is that they don’t care.

Yes, of course, as individuals with a heart, most people, right and left, care about people losing their jobs.

But in terms of what matters to the left and the policies they pursue, they don’t care. The left and the political party it controls do not care if their policies force companies to leave the state (or the country).

They don’t care about the coming high inflation caused by quantitative easing (printing money) — Krugman calls it the inflation obsession — or the job-depressing effects of high taxes or energy prices that hurt the middle class or compelling businesses to leave.

They don’t care because the left is not interested in prosperity; the left is interested in inequality and in the environment.

Furthermore, the worse the economic situation, the more voters are likely to vote Democrat. The worse the economic situation, the greater the number of people receiving government assistance; the greater the number of people receiving government assistance, the greater the number of people who will vote Democrat.

Therefore, both philosophically and politically, the left has no reason to be troubled by bad economic news. And it isn’t. It is troubled by inequality and carbon emissions.

He could have done the same analysis in Detroit, where Democrats govern unopposed by Republicans, and have for years.

The main problem of the left is “inequality”. If they put in place policies that make everyone earn minimum wage, regardless of what they do, that would be a great victory for them. If the price of prosperity is “economic inequality”, then so much the worse for prosperity. If you tax people who produce more value than a minimum wage worker so that they make the same as a minimum wage worker, you can forget about the kinds of businesses that produce cars, computers and appliances. People invent these things and start businesses in order to make a profit. That’s why they spend their savings and take the risk to start a business. But if everything they earn is taxed away, then we will have to do without new products and services. This is understood in the private sector, but not by the government, nor by the low-information voters who vote for bigger government.

We have to stop allowing the Left to pain themselves as saints because they talk about the poor. What they don’t like about the poor is the rich. If everyone were poor, they wouldn’t talk about the poor – because everyone would be equal. That’s their goal.

Filed under: Commentary, , , , , , , , ,

My disagreements with a trendy, hip pastor on missions and witnessing

So I am visiting my parents and my pet bird today in the city I grew up in, and I went to church as usual. The church in my hometown just got a new senior pastor who is one of those hip, trendy pastors. So far, my friends and I who attend this church have some concerns about him.

So the pastor two points in this sermon today: 1) we should be concerned with world missions and 2) we should be “witnessing” in non-cognitive ways. You’ll see what he means by these in a minute.

Missions

Now to be fair to the pastor, I don’t really know his full philosophy on missions. He was giving a sermon, and he had time for one example. His example of missions was that “wealthy” Christians in the West should give money to groups like World Vision that provide for the immediate physical needs of poor people in other countries. So his target for evangelism is not a wealthy Western professional who lives next door to him and isn’t impressed with food. His target for evangelism is someone who is starving in another country, who is at a disadvantage when it comes to education and poverty. And his preferred missionary is not someone who has studied to know how to persuade using knowledge, it’s someone nice and kind who is bringing food to starving people and then presenting the gospel to them through an interpreter as they eat the food.

Witnessing

The example the pastor gave for witnessing to non-Christians was to pray with them. He said that there would be less room for “hate” (his actual word) if Christians spent more time praying with non-Christians. The first thing I thought of when he said this was Mormon missionaries establishing the truth of their religion with people by praying for a “burning in the bosom”. Regarding his mention of “hate”, he didn’t mention gay marriage specifically, but I think that is the most reasonable context for the word “hate” in this culture. If we prayed with people and started caring for them and being nice to them (no mention of sin and repentance, note), then our “hate” for them would decrease.

So I want to make some basic points about what was said and what was left out.

Truth

At no point in this sermon or any any other sermon I have seen delivered by this pastor has the issue of how we know truth, or how we demonstrate that something is true, ever been addressed. I have not ever heard this pastor give a sermon on how he knows that God exists, how he knows that the Bible is reliable, and how he knows who Jesus is.

Persuasion

I was very careful today to pay attention to how the pastor was getting the audience on board with what he is saying. And I think I’ve hit on his method of persuading. It’s not to make arguments and to supply evidence, or even to quote the Bible in context. He relied a lot on hipness and emotional resonance with his audience. I think he expects us to accept what he is saying because he is able to 1) share illustrations from his life experiences (farming, this time), or 2) name rock bands like “Cold Play”. So his approach is more like “I’m just like you, so you should believe what I’m telling you”.

Evangelism

His two strategies for evangelism above seemed to be 1) giving money to Christian groups who can then travel to other countries to discuss Christianity with people who are receiving gifts from them and 2) offering to pray with non-Christians. I do not think that merely expressing theological opinions and then handing someone food or clothing is a good strategy for evangelism. I think it is permissible, it’s just not the way I see it being done in the Bible. I realize that there are going to be cases where someone accepts Jesus on the basis of this sort of evangelism, and in the best case, they might even go on to become a great Christian scholar who understands the truth of these matters so well that they can present it to non-Christians with authority. That would be the ideal case. But I think when I read the New Testament, the appeal to non-Christians in evangelism is an appeal to truth, based on the historical event of the resurrection, for example. I asked a friend of mine who knows the Bible well, about whether giving charity to people is ever a method of evangelism, and he said he couldn’t think of any. His preference for this evangelism-by-charity makes me wonder about people who have non-Christians living right next to them in the West, or even in secular Europe, who nevertheless choose to go to places where they can use the leverage of financial goods to get into conversations with people about spiritual things. It’s easy to go to a foreign country and talk to someone uneducated who can’t challenge you because they want the food you brought. It’s harder to evangelize your neighbor who is an atheist and a medical doctor – you would have to read books, and demonstrate the truth of things. Maybe that’s why so many people prefer the former to the latter – it’s easier.

His second method of evangelism (praying with non-Christians) seems to me to be impractical. It seems to me that it would work on people who do not have questions, and who are looking to decide theological / spiritual claims by their emotions. Prayer is not able to establish the historical fact of the resurrection in a debate situation, for example. You should pray before and after making a case for the resurrection, but you should at least know how to make the case for the resurrection to a non-Christian. Again, I am not familiar with a case in the New Testament in which a non-Christian, non-theist was ever approached with prayer alone. I know that Paul reasons from the Scriptures with people (Acts 16-17), and Peter appeals to the resurrection (Acts 2). His approach is more like what Mormons do, because they can’t demonstrate truth using arguments and facts. If this guy can only use Mormon techniques, that’s disturbing – like he has reduced Christianity to a flavor of ice cream that you either like or not, depending on your feelings or whether people are nice to you. Prayer is not used to demonstrate the truth of anything in any other context in real-life. Why is he trying to use it with Christianity? Is Christianity not the same as any other area of knowledge?

Economics

Now, I sense that this pastor has a concern for the poor, and I agree with him that charity is Biblical, and even that we can give money to big organizations like World Vision to help the poor in other countries, (although I don’t like World Vision). But I think where I get annoyed is that this is his only stated method of helping the poor. But I prefer a different method of helping the poor, namely the method that you see in countries like Hong Kong or Chile. That method is free market capitalism. And all you need to do to push that method is to sit with an economics book, learn what policies drive economic growth, and then push them in the public square. I’m being frank here. I think it can be demonstrated that foreign aid, for example, accomplishes little or nothing to help the poor, and often hurts the poor. What we need to do is to trade with these countries, promote economic growth in these countries, in the same sustainable, organic way that growth occurred in countries like Hong Kong and Chile. But what I get from this pastor is a kind of naive “Michael Moore” anti-corporation vibe. I think I can say without being proved wrong that we will never here any presentation from him that addresses the need to learn economics in order to promote the policies that will drive organic, sustainable economic growth in these counties, (e.g. – micro-loans, free trade, etc.). I do think it’s important to give to charity, though.

Advice for this pastor

If he read this post, then my advice to this pastor would be to take a two-pronged approach. If his concern is evangelism, then I recommend that he speak to some non-Christians in this country, and then when he sees that they have questions about God’s existence, gay marriage, the resurrection, abortion, sexual ethics, religious pluralism, miracles, evolution, creation, the reliability of the NT documents, etc., then he can do something different than Mormons do – he can embrace apologetics. Then he will be able to do missionary work right here in the West, with the educated professionals that God providentially placed right next door to him and right next door to his flock, too. Also, instead of worrying about how much we “hate” others, maybe he can offer Christians some advice on how to explain and defend religious liberty, which is under attack from the very groups he implies, in my opinion, that we are “hating” Also, it might be good for him to bash McDonald’s chicken nuggets less, and to defend the unborn more, in his sermons.

Second, if his other concern is to help the poor, then I recommend that he focus on promoting economic growth and individual charity. I think the big problem I have with this guy is that everything he says is so childish and simplistic. I agree we should want to help the poor, and that we should be charitable. But I think that when you are talking about poverty in other countries, then we should do everything possible. And everything possible certainly includes becoming educated about economics and the policies that are known to lift poor nations out of poverty. This is what people who are really interested in solving the problem would focus on. If you’re going to talk about poverty, then talk about it based on knowledge. Don’t leave it at a kindergarten level.

Filed under: News, , , , , , , , , , , , , , ,

Jay Richards: How to end poverty in 10 tough steps

I saw that Stand to Reason’s Amy Hall blogged about a new lecture by Jay Richards, a Christian expert in economics. Amy linked to this post by Justin Taylor which summarizes the talk (above).

Summary:

  1. Establish and maintain the rule of law.
  2. Focus the jurisdiction of government on maintaining the rule of law, and limit its jurisdiction over the economy and the institutions of civil society.
  3. Implement a formal property system with consistent and accessible means for securing a clear title to property one owns.
  4. Encourage economic freedom: Allow people to trade goods and services unencumbered by tariffs, subsidies, price controls, undue regulation, and restrictive immigration policies.
  5. Encourage stable families and other important private institutions that mediate between the individual and the state.
  6. Encourage belief in the truth that the universe is purposeful and makes sense.
  7. Encourage the right cultural mores—orientation to the future and the belief that progress but not utopia is possible in this life; willingness to save and delay gratification; willingness to risk, to respect the rights and property of others, to be diligent, to be thrifty.
  8. Instill a proper understanding of the nature of wealth and poverty—that wealth is created, that free trade is win-win, that risk is essential to enterprise, that trade-offs are unavoidable, that the success of others need not come at your expense, and that you can pursue legitimate self-interest and the common good at the same time.
  9. Focus on your comparative advantage rather than protecting what used to be your competitive advantage.
  10. Work hard.

I’m currently working my way through Money, Greed and God with a friend, and we are going through it chapter by chapter. If you don’t have the book, it’s a perfect introduction to economics and how it relates to the Christian worldview. I always encourage Christians to move beyond good intentions to good results by studying economics. We are supposed to be helping the poor, but how should we do it? Economics is the science that allows us to understand which policies we should support to do that.

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Questions for proponents of government-controlled redistribution of wealth

George Mason University economist Donald Boudreaux wrote a couple of articles asking people who complain about income inequality whether their solution of letting government redistribute wealth from some people to others makes sense. After he is done asking his questions, I am going to complain a little about what it is like to study hard things and do hard work

In the first article, he asked a series of questions to the wealth redistributers.

Here were a few that caught my eye:

Do you teach your children to envy what other children have? Do you encourage your children to form gangs with their playmates to “redistribute” toys away from richer kids on the schoolyard toward kids not so rich? If not, what reason have you to suppose that envy and “redistribution” become acceptable when carried out on a large scale by government?

Suppose that Jones chooses a career as a poet. Jones treasures the time he spends walking in the woods and strolling city streets in leisurely reflection; his reflections lead him to write poetry critical of capitalist materialism. Working as a poet, Jones earns $20,000 annually. Smith chooses a career as an emergency-room physician. She works an average of 60 hours weekly and seldom takes a vacation. Her annual salary is $400,000. Is this “distribution” of income unfair? Is Smith responsible for Jones’ relatively low salary? Does Smith owe Jones money? If so, how much? And what is the formula you use to determine Smith’s debt to Jones?

While Dr. Smith earns more money than does poet Jones, poet Jones earns more leisure than does Dr. Smith. Do you believe leisure has value to those who possess it? If so, are you disturbed by the inequality of leisure that separates leisure-rich Jones from leisure-poor Smith? Do you advocate policies to “redistribute” leisure from Jones to Smith — say, by forcing Jones to wash Smith’s dinner dishes or to chauffeur Smith to and from work? If not, why not?

In the second article, he had even more questions for the wealth redistributers.

Here are the two that I liked best:

When you describe growing income inequality in the United States, you typically look only at the incomes of the rich before they pay taxes and at the incomes of the poor before they receive noncash transfers from government such as food stamps, Medicare and Medicaid. You also ignore noncash transfers that the poor receive from private charities. Why? If you’re trying to determine whether or not more income redistribution is warranted, doesn’t it make more sense to look at income differences after the rich have paid their taxes and after the poor have received all of their benefits from government and private sources?

Do you not share Thomas Sowell’s concern that efforts to “de-concentrate” incomes among the people require concentrating power among the politicians? Asked differently, if you worry that abuses of power are encouraged by concentrations of income, shouldn’t you worry even more that abuses of power are encouraged by concentrations of power?

Mark Perry of AEI saw this column, and he had two more questions.

Many extremely wealthy people (movie stars, celebrities like Oprah, businessmen like Warren Buffet, filmmaker Michael Moore, and Robert Reich for example) who are in America’s “top 1%” by income (some are easily in the top 1/0 of 1%), often complain about income and wealth inequality in America. And yet these wealthy individuals rarely take any direct actions themselves that could reduce income inequality immediately, e.g. giving away a majority of their multi-million dollar annual salaries and unburdening themselves of millions of dollars of their wealth (stocks, real estate, cars, airplanes, etc.) and living on a modest, but still very comfortable incomes of say, $200,000 per year. Isn’t it inconsistent that most of these individuals hoard a majority of their income and wealth to live lavishly without taking immediate steps to redistribute their largess to those less fortunate and reduce the income/wealth inequality they complain about?  If not, why?

Many Americans express great concern about income inequality in the United States, but seem relatively unconcerned about global income inequality. For example, nearly half of the world’s richest 1% of people live in the U.S., and the threshold required to make it into that elite group is only $34,000 per person, according to World Bank economist Branko Milanovic.  Is it inconsistent for an American making $34,000 to complain about the incomes and wealth of the top 1% in the United States and yet show no concern for the fact that he himself is in the top 1% of the world’s population based on income? Many Americans making $34,000 and above support income redistribution schemes (e.g. raising taxes on the top 1%) to reduce income inequality in America. Because they are themselves in the top 1% of the world’s population by income, shouldn’t these Americans also support redistribution of income and wealth from themselves (the world’s top 1%) to dirt-poor countries like Zimbabwe? If not, why not?

One quick point about who pays taxes in this country as it is now.

CNS News reports on a study by the Congressional Budget Office (CBO).

Excerpt:

The top 40 percent of households by before-tax income actually paid 106.2 percent of the nation’s net income taxes in 2010, according to a new study by the Congressional Budget Office.

At the same time, households in the bottom 40 percent took in an average of $18,950 in what the CBO called “government transfers” in 2010.

Taxpayers in the top 40 percent of households were able to pay more than 100 percent of net federal income taxes in 2010 because Americans in the bottom 40 percent actually paid negative income taxes, according to the CBO study entitled, “The Distribution of Household Income and Federal Taxes, 2010.”

This is where the money comes from for all our lavish social programs, which I do not even use.

My choices

I remember growing up as the son of poor immigrants and having to struggle to do well in school. When I was growing up, I didn’t learn to ride  bicycle until very late. We didn’t have a car to drive anywhere. We had a black and white TV. We took public transportation to go anywhere. I remember that we used to eat macaroni and cheese with sliced hot dogs quite a lot. We went to a sit-down restaurant for dinner less than five times as a family. I always took school very seriously from the beginning, and I remember having conflicts with the popular students, who were having more fun than me because they had more wealth and more friends and they did more expensive things for fun. I chose not to drop math, even though I struggled with it more than English and computer science. I remember my friends buying Apple IIe and Commodore 64 computers, and I didn’t have any video game system much less a computer. I would go over to their houses and play games at their houses. I never had a summer off. I was always in summer school or working, and that working summers continued through my undergraduate degree.

When the time came to go to college, I chose computer science. Some of the courses I took during that time were so hard that I cried. I had not been well-prepared for college in high school, it was a big stretch for me. I remember failing a test in second year calculus, the first test I ever failed. I can remember doing calculus problems and crying about how hard it was, and my Dad looking on wondering if he had made the right decision when he snudged me toward computer science, when I wanted to do something easy like English. But I graduated with a 3.4 GPA, and went on to graduate school, where I finished with a 3.9 GPA. I chose to do both of my degrees locally, and lived at home. I never went out drinking or to a club or anything like that. The school I chose was not the best, but I saved money, and graduating with a few thousand dollars in the bank was important to me. I didn’t want to go into debt in order to learn how to program a computer.

When I graduated, I started working in a different city, and I remember that my apartment had firebrats, which is a kind of insect infestation. I chose a modest apartment because I wanted to save money. I saved most of what I earned because I anticipated that I would soon be married and starting a family. During my career to this day, I have seen politicians express their desire to take what I earn and give it to people who were born in this country, but who made different decisions from me. Some of them dropped out of high school. Some of them had sex before marriage. Some of them drank alcohol. Some of them smoked. Some of them dropped math. Some of them chased women. Some of them drank and smoked and did drugs. Some of them went on expensive trips. Some of them went to movie theaters and bought popcorn. But I never saw these people in the computer lab at 3 AM trying to help me with my assignments. I never saw these people show up to work weekends when I was working 70-hour weeks in a startup company trying to build sweat equity.

Somehow, people in government, at all levels, have decided that I don’t deserve to keep what I earn. They have decided that other people can get subsidies, but I have to pay full price. I walk into the grocery store and see people buying better food than me, and paying with food stamps. I am paying for my groceries and paying for theirs, too. Somehow, a significant number of people in our society have decided that I should not be allowed to keep what I earn, buy the things I want, and live my life the way that I planned to live it. My earned income is my freedom to express myself, and the politicians have decided that I am allowed to get up and go to work to earn the money, but that I am not allowed to express myself using my earned income. They get to take the money I earned and express their views, instead.

To learn more about why income inequality is not something for government to solve, read this article from the American Enterprise Institute.

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