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Adult non-fiction, Book Reviews, Economics

There’s No Free Lunch: 250 Economic Truths

by David L. Bahnsen
2021 / 308 pages

This is a wonderful primer on economics from a conservative Christian perspective (and the second There’s No Free Lunch book I’ve read this year).

Bahnsen is the son of famed Reformed presuppositional apologist Greg Bahnsen, and is famed in his own right as a hedge fund manager for a billion-dollar fund. Here he’s collected 250 concise quotes by a host of famed conservative economists, one per page, and then expanded on each point being made. The quotes are grouped under headings like: Crony Capitalism, Minimum Wage, Division of Labor, and Socialism.

To give you a taste, here’s a couple shorter quotes, this one from Milton Friedman:

“One of the great mistakes is to judge policies and programs by their intentions rather than their results.”

Here’s another, this time from Thomas Sowell:

“The first lesson of economics is scarcity. There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.”

These are worth chewing on, and both show why No Free Lunch should be read slowly. But as meaty as these thought are, Bahnsen has made them digestible to all by packaging them into one-page, bite-size servings. Well done!

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Economics

Investing in Eternity: thinking 30 million years ahead

In Matthew 13:44 we find a single verse that captures the heart and soul of following Christ: “The kingdom of heaven is like treasure hidden in a field. When a man found it, he hid it again, and then in his joy went and sold all he had and bought that field.” Picture an average guy, leading a routine life. One day something happens that changes his life forever. While crossing a field, aimlessly thrusting his staff into the ground, he hears a thud. He gets down on his knees, digs with his hands, and finds treasure. He realizes this is very old – way too old to have been buried by the current landowner, who wouldn’t have any idea it’s even there. He has found unclaimed treasure, waiting for someone to unearth it. The treasure captures his imagination. It becomes the reference point, the center of gravity of his life. He is single-mindedly bent on obtaining that treasure. He is willing to pay any price. This is a man who experiences the ultimate paradigm shift. He takes on a new perspective and sees life through different eyes. Incomparable joy Of course, Jesus is simply using the treasure in the field as an illustration of heavenly treasure. No matter how great an earthly treasure is, it’s still worthless in the eyes of eternity. In fact, it is exactly this kind of treasure that people waste their lives on. Jesus is appealing to what people do value – temporary earthly treasure – in order to make an analogy to what they should value: eternal heavenly treasure. Today, Christians desperately need such a radical paradigm shift. God doesn’t just raise up donors; He raises up disciples whose lives are so filled with a vision for eternity that they wouldn’t dream of not investing their money and their time and their lives where they will matter most. Once they see the treasures of eternity and become consumed by them, nobody will be able to keep them from giving. The only joy I know comparable to leading a person to Christ is giving generously to the kingdom of God. That through my giving, people might be won to Christ, the hungry fed, and the suffering helped in the name of Christ is a joy beyond comprehension. Let me ask you a question about this man in Matthew 13, the one who found the treasure: are we supposed to feel sorry for him? I mean, we’re told he went and sold all that he had – and in the original Greek “all” means all; that’s why it’s translated that way! We might think, “It cost him everything. Poor man. Think of his sacrifices!” No. We are not to pity this man – we are to envy him. The sacrifice paled in comparison to the reward. The payoff was much greater than the cost. The man who found the treasure would be a fool not to do exactly what he did. He made short-term sacrifices for long-term rewards. “But it cost him everything he had.” Yes, and it gained him everything that mattered. The key word is “joy.” “In his joy” – not in his misery – he made sacrifices! How can you sacrifice with joy? Because of the relative worth of what is given up versus what is gained. When you catch a vision for what it means to God, any feeling of sacrifice is overwhelmed with pure joy and excitement. To hear the applause of heaven, to hear pleasure in the voice of God, to hear him say “Well done, my good and faithful servant” – nothing else compares. Smart investing In Matthew 6:19-24, we see that Jesus always lived with two Kingdoms in mind: the kingdom of this world and the kingdom of Heaven. He speaks here of the Two Treasuries, Two Perspectives, and Two Masters of these two kingdoms. Verse 20 tells us to “store up treasures in heaven.” God values treasures, but He defines them differently than we do. We consider things treasures that are nothing but junk in the eyes of eternity. John Wesley said, “I judge all things only by the price they shall gain in eternity.” “Store up treasures” demonstrates that God is not against an investment mentality. In fact, He commands us to store up treasures! But He tells us to stop storing them up in the wrong place, and start storing them up in the right place. God is not against us acting in our own interests. He commands us to act not in our immediate short-term interests, but our eternal long-term interests. That which is to God’s ultimate glory is to our ultimate good. It’s just the pay-off isn’t now; it’s then. The problem with prosperity theology, also called the health and wealth gospel, and with lots of our Christian radio and television programs, is that they look for material payoffs in the present age. God’s provision of wealth is seen as a call to increase our standard of living – while Scripture presents it as a call to increase our standard of giving. Ironically, looking for the payoff now is never in our best interests, because it robs us of eternal reward. We’ll be rewarded for giving – but the real and lasting rewards will come in eternity. It all comes down to delayed gratification. I think Paul was alluding to Christ’s words in Matthew 6 when he wrote 1 Timothy 6:17-19: “Command those who are rich in this present world not to be arrogant nor to put their hope in wealth, which is so uncertain, but to put their hope in God , who richly provides us with everything for our enjoyment. Command them to do good, to be rich in good deeds , and to be generous and willing to share. In this way they will lay up treasure for themselves as a firm foundation for the coming age, so that they may take hold of the life that is truly life .” Christ gives us an incredible investment opportunity. He gives us the opportunity to cash in earthly treasure for heavenly treasure. It’s like trading a sack of old rusty bottle caps for ownership of the Coca-Cola company. You’re so excited about what you now own that the last thing you’d do is stand around whining about giving up your bottle caps. Notice Christ’s reasoning: “Store up treasures in heaven...” Why? Because it’s right? No, because it’s smart. Because it will last. It won’t be consumed by moths and rust or taken by thieves. You’ll never see a hearse pulling a U-Haul. Why? Because you can’t take it with you. John D. Rockefeller was one of the wealthiest men who ever lived. After he died his accountant was asked, “How much money did John D. leave?” His reply was classic: “He left... all of it.” You can’t take it with you. But in Matthew 6 Jesus adds something profound, something life changing. You can’t take it with you, but... you can send it on ahead. Anything we try to hang onto will be lost. Anything we put in His hands will be ours for eternity. Not just insured up to $100,000. Insured without limit by the FDIC – Father’s Deposit Insurance Corporation. John Wesley was shown around a vast estate by a proud plantation owner. They rode their horses all day and saw only a fraction of the estate. At the end of the day when they sat down to dinner he said, “Well, Mr. Wesley, what do you think?” Wesley thought about it and said, “I think you’re going to have a hard time leaving all this.” The way to lay up treasures in Heaven includes giving away our money and possessions but is not limited to it. The Bible teaches that those things which we keep can also serve kingdom purposes. They can be generously shared and invested and used in ways that serve eternal purposes, that further God’s kingdom for His glory rather than just building our own little kingdoms for our own glory. Think thirty million years ahead Missionary Jim Elliot was killed by the Auca Indians in the 50’s. His philosophy of life was expressed in those great words, “He is no fool who gives what he cannot keep to gain what he cannot lose.” Does it sound like Jim Elliot didn’t care about gain? No, he cared about the right kind of gain – gain that would last, not just for the short today but for what A. W. Tozer called “the long tomorrow.” Are you an investor? Great. Invest in what counts the most. You have the desire to succeed? Fine, succeed in servanthood, in giving, in praying, in reaching out to the lost and needy. You have ambitions? Fine. Make them kingdom ambitions. You have dreams? Great. Are you willing to trade in your short-term dreams for the eternal dreams of the risen Christ? In investments they say, “If it sounds too good to be true, it probably is.” But in this case, it sounds too good to be true, but it is true, because it is the promise of God. Financial planners tell us, “When it comes to your money, don’t just think just three days ahead, or three months or three years. Think 30 years.” Christ, the ultimate investment counselor, takes it one step further. He says, “Don’t just ask yourself, how will this investment be paying off in thirty years. Ask, how will this investment be paying off in thirty million years?” In Mathew 6, verse 22 and 23, Jesus also talks about two perspectives – the good eye and the bad eye. We must train our vision, put on the corrective lens of God’s Word, and learn not to be limited by the horizons of this world. We need to learn to see, think, and act in light of eternity. (This is the theme of my novels Deadline and Dominion, and Edge of Eternity.) Perspective is what John Wesley had when he said, “I judge all things only by the price they shall gain in eternity.” It’s what C. T. Studd had when he said, “Only one life, ‘twill soon be past, only what’s done for Christ will last.” For fourteen years I was a pastor. One Sunday morning I stood before my church and said, “I have bad news – I have a terminal disease. I’m going to die.” Then I added, “But the news gets even worse. You have the same disease. You’re going to die too.” The disease is mortality. We’re all going to die. One day very soon we will each stand before our Lord, the Audience of One. He will sift out our lives – some will burn as what 1 Corinthians 3 calls wood, hay, and stubble. Some will remain, as what he calls gold, silver, and precious stones. How much will burn and how much will remain depends on how we have used our lives and our resources here. Imagine for a moment that you are alive at the very end of the American Civil War. You are living in the South, but your home is really in the North. While in the South you have accumulated a good amount of Confederate currency. Suppose you also know for a fact that the North is going to win the war, and that the end could come at any time. What will you do with your Confederate money? If you were smart, there is only one answer to the question. You would cash in your Confederate currency for U.S. currency – the only money that will have value once the war is over. You would keep only enough Confederate currency to meet your basic needs for that short period until the war was over and the money would be worthless. Likewise, as believers we have inside knowledge of an eventual upheaval in the worldwide social and economic situation. The currency of this world will be worthless at our death or Christ’s return. This knowledge should radically affect our investment strategy. For us to accumulate vast earthly treasures in the face of the inevitable future is equivalent to stockpiling Confederate money despite our awareness of its eventual worthlessness. It’s not only wrong – it’s just plain stupid! Kingdom currency, backed by the eternal treasury, is the only medium of exchange recognized by the Son of God, whose government will last forever. The currency of His kingdom is our present faithful service and sacrificial use of our resources for Him. In the investment world there are experts and advisors known as “Market Timers.” When they read the signs that the stock market is about to take a downward turn, they recommend switching funds immediately into more dependable or consistent investments, such as money markets or T-Bills, or certificates of deposit. In Matthew 6 Jesus functions as the foremost investment advisor, the ultimate expert in the economies of earth and Heaven. His strategy is simple – He tells us to once and for all switch investment vehicles. He tells us to transfer our funds from earth (which is volatile and ready to take a permanent dive) to Heaven (which is totally dependable, insured by God Himself, and is coming soon to forever replace the economy of earth). Second Peter 3 gives us a financial forecast, or maybe you could call it an insider tip. It tells us that this world and everything in it is going to burn. There is a coming holocaust of things. Revelation 18 speaks of the economic world system of materialism, called “Babylon the Great.” If that’s the kingdom you’re investing your life in, then go ahead and be depressed. You’ve got a lot to be depressed about. Babylon is going down! If your treasures are in Heaven, there is good news. Heaven is coming and anything you’ve put in God’s hands is safe. What you’ve used for the glory of God will have counted for eternity. What you’ve given to God on earth will be there in Heaven. What you clung on to for yourself won’t be. Where’s your heart? In verse 21 Jesus says, “Where your treasure is, there your heart will be also.” He’s saying, “Show me your checkbook, your Visa statement, and your receipts, and I’ll show you where your heart is. Your heart follows your money.” Want a heart for Microsoft? Put your money in it! Want a heart for General Motors? Buy up shares. Want a heart for God? Put your treasures where God is at work. Want a heart for missions? Put your treasures in missions. Want a heart for your church’s ministry? Invest your money in your church’s ministry. Develop vested interests in the work of God. Every day, buy up more shares in God’s kingdom! Years ago, when I was a pastor, we decided our church didn’t have God’s heart for the poor and needy. We asked around to find out who was doing the best job in famine relief, chose World Relief, and decided to invest some treasure in Heaven. Though our missions budget was only $60,000 at the time, we took a famine relief offering of $25,000 and were informed that made us World Relief’s largest church supporter. In the years since, God has grabbed a hold of our church, and we have gone from being a church with a small heart for missions to a church with a great heart for missions. In 1998, our church’s missions budget was $384,000. Above that we gave $200,000 to various missions projects and a famine relief offering of $253,000 to World Relief, for a total of $830,000. Our expanding giving to missions has resulted in an expanding heart for missions. That’s what giving does – you put your treasure somewhere, and it takes your heart there. When our missions pastor returned from Sudan one November and told us of the opportunity to rescue Christians taken into slavery, family after family spontaneously decided to forgo Christmas presents and give instead to free slaves. The fourth-grade class at our school came up with projects to raise thousands of dollars. A sixth-grade girl took the $50 she’d saved up to play basketball and gave it to Sudan. One family had several hundred dollars they’d been saving for years to go to Disneyland, and their child asked if they could give the money to help slaves. Before long people had given $60,000 to redeem slaves, and we never even had a special offering. It was contagious. If we increase people’s vision for investing in eternity and help them see opportunities to make a difference, God will take care of raising funds. Now’s our opportunity Five minutes after we die, we’ll know exactly how we should have lived, but it will be too late to go back and change anything. God has given us His Word so we don’t have to wait until we die to know how we should have lived. There’s no second chance for the unbeliever – but also no second chance for the believer! You and I have one life on earth to invest in Heaven. Let’s not miss the opportunity. Here’s a prayer for us: May what will be most important to us five minutes after we die, become most important to us now. I have one final question: Why are so many Christians today afraid to die? It’s because we have made this world our home. The Bible tells us something else – that we are pilgrims, strangers, aliens, ambassadors. Our citizenship is in Heaven. But we’ve become so attached to this world – our roots are so deep – that we live for the wrong kingdom. We forget our true home, built for us by the Carpenter from Nazareth, waiting for us in a far better place. Most Christians have laid up their treasures on earth. Consequently, every day that brings them closer to death takes them further from their treasures. They end up backing into eternity, not wanting to let go of the mudpies they’ve accumulated. Christ calls us to turn it around – to store up our treasures in Heaven so instead of backing away from our treasures, we’re always moving toward our treasures. He who spends his life moving away from his treasures has reason to despair; he who spends his life moving toward his treasures has reason to rejoice. Are you moving toward your treasures or away from them? Alfred Nobel was a Swedish chemist who made his fortune by inventing dynamite and other powerful explosives, which were bought by governments to produce weapons. When Nobel’s brother died, one newspaper accidentally printed Alfred’s obituary instead. He was described as a man who became rich from enabling people to kill each other in unprecedented quantities. Shaken from this assessment, Nobel resolved to use his fortune to reward accomplishments that benefited humanity, including what we now know as the Nobel Peace Prize. Nobel had a rare opportunity – to look at the assessment of his life at its end, but to still be alive and have the opportunity to change that assessment. The same is true for us. Right now, we live on earth, the land of second chances. Let’s put ourselves in Nobel’s place. Let’s read our own obituary, not as written by uninformed or biased men, but as an onlooking angel might write it from Heaven’s point of view. Let’s look at it carefully. Then let’s use the rest of our lives to edit that obituary into what we really want it to be, and to live each day with the knowledge that every moment we get closer to death, we get closer to our treasures rather than further from them. God, give us an eternal perspective, to change the way we think and the way we give, the degree to which we invest all that we are and have into eternity. Help us to invest our resources in your kingdom purposes, now and forever. Help us not to serve our own agendas, but yours, and to live our lives for your glory and hear you say to us one day, “Well done my good and faithful servant.” We ask this in the name of Jesus. Amen. A version of this article first appeared on Randy Alcorn’s Eternal Perspective Ministries website EPM.org. He is the author of more than two dozen books, fiction and non-fiction, many of which we’ve reviewed including: Heaven, Lord Foulgrin's Letters, and The Grace and Truth Paradox. He's also made two past editions of his (especially concise) pro-life books available for free – Does the Birth-Control Pill Cause Abortions? and Why Pro-life? – so be sure to check those out. Strangely, we haven't reviewed the one of this books that might be most akin to this article, The Treasure Principle, even though it's a favorite of both editor Jon Dykstra and Executive Director Mark Penninga. ...

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Adult non-fiction, Book Reviews, Economics

Christian Economics in One Lesson

by Gary North 2015 / 268 pages Henry Hazlitt’s Economics in One Lesson is what its title suggests, just one economic lesson explained in the first chapter – that we focus on the obvious impact of a government program, and don’t consider what otherwise might have happened with those dollars. It’s the seen vs. the unseen. That one lesson is then repeatedly applied to different situations in the 24 chapters that follow. In chapter 4, it is applied to public work projects: when the government builds a new sports stadium we can see the job created by its construction. What’s unseen is all the jobs that might have been created by businesses if they hadn’t had to pay the taxes to build that stadium. Overall, Hazlitt is making a general argument for less government and more economic freedom, but is making it on the basis of practicality: that a free market approach will make us all, overall, more prosperous (download the book for free). Effectiveness is the fruit, not the goal In his Christian Economics in One Lesson, Gary North makes his argument for free market economics on a very different basis: obedience. He also thinks the free market is the most effective way of making us all richer, but he sees that, not as a goal, but as a side effect – the fruit – of being obedient to God’s commands do not covet, and do not to steal. As his title suggests, he is riffing off of Hazlitt, and his chapters are a reworking of each of Hazlitt's. Economics is sometimes treated as a being simply about the math, about some sort of neutral accounting, pitting the different economic systems against each other to find out which creates the greatest benefit for society. Both socialists and capitalists could even agree that economics is about dealing with the problem of scarcity – there is only so much to go around, so how do we make the most of it? But North is arguing that economics is really a matter of ethics, and applying God's guidance on money, work, property, and covetousness to the real world. Then the better way is the way that obeys God’s commands. Now, like Hazlitt, North thinks the best system is the free market, and not the sort of so-called capitalism that involves getting government contracts and special favors. None of that crony "capitalism." This is, instead, a free market where people make exchanges voluntarily, and consequently, both sides benefit. No temptation to tweak But even as Hazlitt and North both hold to the free market system, it is significant that they got there very different ways. Hazlitt got there because the free market works – it is the most prosperous of all systems, doing more to raise people out of poverty than any other economic system before it. North arrives there because the free market is what results when we are obedient to God, respecting our neighbor's property and pushing back against our own covetousness. So, both support the free market. But for those like Hazlitt who arrived there for practical reasons, there will always be the temptation to tweak, and in doing so, to succumb to socialism. If capitalism works best, who's to say if capitalism plus just a smidge of socialism might not be better? Maybe just 5%? Or 10? How can we know unless we try? But there isn't the same temptation to tinker for Christians who choose the free market for its alignment with God's Word. We won't want to be 5% or 10% less obedient. And it is worth noting it is no coincidence that the economic system that most aligns with God's Word is also the one that best raises people out of poverty. That's simply God's love – He knows what is best for us, and when we obey, especially when we do so on a societal level, it goes better for us. Conclusion North's insight – that economics is about ethics, not efficiency; it is about obedience, and not prosperity – is a brilliant one, and worth the reinforcement that comes in the repeated applications that follow. If this isn’t the most important book I read last year, it is certainly in contention… and it can be downloaded for free here....

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Adult non-fiction, Book Reviews, Economics

Economics in One Lesson

by Henry Hazlitt 1946 / 193 pages Universal basic income, a four-day work week, and government-funded daycare are just a few big-ticket proposals that are gaining momentum nationally, and even within our own church circles. All these proposals boil down to getting more while doing less. Promises have been made that middle and lower class families will not have to pay a cent more in taxes but the wealthy 1% will do all the heavy lifting.  In Economics in One Lesson, Henry Hazlitt argues that all these policies can’t deliver what they promise. He argues that many of these proposals only focus on a special interest group in the present and fail to consider how the proposal will affect the general populace both now and in the future.  For example, when a government announces a multitude of public “make-work” projects, at first glance these projects seem like a good idea, or at least seem like they couldn’t do any harm. The citizens get: An employment opportunity  Tangible infrastructure But Hazlitt warns that although these benefits look attractive, there are many indirect consequences that are not considered.  First, someone must pay for these employment opportunities. For every dollar spent on a public work project, a dollar will be taken away from a taxpaying citizen. Not only are the citizens as a whole worse off, there is now less money for them to create new jobs. Second, now that the infrastructure exists it is easy to assume that without that piece of infrastructure the country would be worse off – having a bridge would seem obviously better than not having a bridge. But in reality, one thing has been created instead of others. Instead of the government-built bridge there could’ve been citizen-built houses, or cars, or dresses and coats. All of these items are unrealized because the bridge is now standing. Although Hazlitt wrote this over 70 years ago, many of the issues he deals with are just as relevant as ever. We should be wary of governmental promises to ease our daily tasks. Our sinful nature yearns for an easy life; that is why these promises are so alluring to us. However, as Christians we are not called to an easy life. That does not mean that we should always seek out the hard way, but we shouldn’t become entangled in false promises of an easy way. To get Economics in One Lesson as a free pdf book, click here....

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Economics, Science - Environment

Thinking on the margin, or why some pollution is better than none

Another economic principle Christian teens (& adults) need to know ***** An important aspect of economics is counting the costs of an action or purchase, and, on the flipside, also evaluating the benefit that could result. With these two concepts, cost and benefit, we can understand how people make their decisions. When the benefit of taking an action is greater than the cost, people will take that action. For example, if buying a soda would bring you $3 worth of enjoyment, but it only costs $1, then you’ll choose to buy the soda. And afterwards, if you’ve had your fill of soda, you might hardly enjoy another soda, and perhaps value it at just a quarter. So of course you then won’t buy it for $1. What is “marginal thinking"? This example illustrates the meaning of the concept of marginality. When economists use the term “marginal benefit,” they are referring to the benefit added by the last unit purchased – in this case the last soda. Another example: when you decide whether to work for another hour, you don’t consider the cost and benefit of all the hours you already worked. Instead, you consider the cost and benefit associated with the final (or marginal) hour under consideration. So when you “think marginal," then think about the cost and benefit of “one more unit.” And whether people realize it or not, we all engage in marginal thinking. Imagine you’re deciding to buy an ice cream cone. Let’s say a single scoop cone costs $2, and every additional scoop costs 50 cents. When deciding whether to buy a single scoop you have to compare how much benefit you get from the single cone to the cost of the cone ($2). So long as you value the single scoop cone at more than $2 you buy it. When the marginal benefit of an action is greater than the cost, people will do that action. What about the second scoop? Well, each scoop is 50 cents, so you’ll choose to buy the second scoop if you enjoy it at a value more than 50 cents. You’ll keep purchasing more scoops but at some point, another scoop just won’t be worth another 50 cents to you, so you’ll stop. Why does it matter? So hopefully you understand marginal thinking, because now we have to consider why it matters. Marginal thinking is valuable in all sorts of applications. For students, marginal thinking can help you prioritize your studying. I always tell my students that, if their goal is a good GPA, they shouldn’t spend much time trying to improve their grade from a 96% to a 98%. Why? First, both grades are an “A” so the marginal benefit to your GPA is nothing. Also, once your grade is already high, it’s much more difficult to move it up. Therefore, the cost is high and the marginal benefit is low. Most students would be better off dedicating their time to working on a class where they have a 79% since the cost is lower – just a little more study could boost them up a letter grade – and the marginal benefit is higher. In Luke 16, Jesus tells the story of a man who manages the money of a rich man. The manager is going to be fired because of his wasteful practices. When he discovers this, he forgives the debtors of his master to make friends before he’s fired. Jesus tells us in Luke 16:8a, “The master commended the dishonest manager because he had acted shrewdly.” In 16:9 He goes on to give the meaning of the parable, “I tell you, use worldly wealth to gain friends for yourselves, so that when it is gone, you will be welcomed into eternal dwellings.” The point of the parable is not that we should be dishonest in our dealings. Instead, it’s that we should use our resources shrewdly for the Kingdom. Christians are called to be good stewards of the resources we are given, which includes our time. As the studying example above illustrates, effective use of time requires the ability to consider the relevant costs and benefits of a given decision. There’s a “good” amount of pollution and crime? Marginal thinking is also valuable when it comes to thinking about policy. Economists have a pithy saying: the efficient amount of anything is not zero. It’s tempting to believe bad things should be eliminated completely. For example, many people would likely support the phrase, “politicians should eliminate pollution.” But imagine what it would mean to eliminate the very last “units” of pollution. Almost every vehicle, either personal or those used for transporting goods and services, relies on some form of pollution to operate. If we had zero pollution, our grocery stores would receive zero food deliveries because we wouldn’t have semi-trucks, and they would receive zero visits from us, because we wouldn’t have cars.  Elimination of all pollution, at least at this point, would result in most of humanity returning to subsistence conditions – the cost is too high, and thus that is a “purchase” we shouldn’t make. Of course, some pollution should be eliminated. If a factory is dumping toxic waste into a public river, the cost of allowing the pollution to continue is very high. As strange as it might sound, the efficient amount of crime is also not zero. Imagine how much money and how many resources would need to be spent to ensure zero crime. We’d need a police officer on every street corner 24/7. Think of how high your taxes would need to be to support those pensions! Surely taxpayers have other priorities with higher marginal benefits than preventing some minor traffic violation. No Nirvana naivete This sort of logic can be summarized neatly by saying economics as a field is inherently opposed to the Nirvana fallacy. The Nirvana fallacy is the mistake that is made when people compare the real world to an unrealistically ideal alternative. We would all like to get a grade of 100% in every class and live in a world without crime or pollution. But these are unrealistic desires for this world. A solid understanding of marginal analysis complements the Christian understanding of our fallen world. When politicians offer us a vision of a world where all bad is eliminated, a clear understanding of marginal analysis provides us with an argument for why such a world is out of reach. Economists Armen Alchian and William Allen rightly summarize this in the foreword of their book Universal Economics. They say: “since the discouraging fiasco in the Garden of Eden, all the world has been a place conspicuous in its scarcity of resources, contributing heavily to an abundance of various sorrows and sins. People have had to adjust and adapt to limitations of what is available to satisfy unlimited desires.” In sum, marginal thinking helps us better understand the nature of our own decisions. When applied properly, this way of thinking provides a more sober view of the important decisions we make in our personal lives and in the public square. Peter Jacobsen is an Assistant Professor of Economics at Ottawa University and the Gwartney Professor of Economic Education and Research at the Gwartney Institute. He has previously written for both the Foundation for Economic Education and the Institute for Faith, Work, and Economics....

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Economics

The art of the apology

In the middle of a leaders’ coaching session, focusing on how they engaged in difficult conversations with their teams, I began to notice a theme. These leaders were frustrated with the lack of ownership for bad attitudes on the part of some of their team members. I was also not “hearing” much, if any, sense of ownership regarding their own attitudes with these frustrating team members. I asked a couple of questions: Have you ever delivered a “bad” attitude in response to a team members’ “bad” attitude? What did you do when you realized your error (assuming you did)? Most in the group had not done anything regarding their own gap in attitude. Another question was asked: When is the last time you offered an apology to someone with whom you made a mistake?  To my very great surprise over half of the group had never apologized – EVER!! Even the boss isn't perfect This was a group of leaders with spouses, kids, involved in the community and entrusted with the leadership of people in the business they were helping to lead. How could this be? This was a group in which almost all claimed faith in Christ and yet most had never owned up to their mistakes at work, home, or in their communities. It became clear that something was really wrong! The lack of character in this group was troubling. The feeling of unease became palpable as they realized the hypocrisy of what was just confessed. I felt for them. The planned agenda was dropped and I proceeded to “teach” this group the “Art of the Apology.” Until they were willing to model the way and “own” an error in judgment or attitude, there was little sense in teaching anything else. Before going further, I admit that in teaching the “Art of the Apology” it is not because I have it all figured out or find it easy to do. To be authentic and consistent has required much inner work on my part – and this work is surely a lifelong journey! Our egos, left to their own devices, crave being right, being in charge, being in control. However, the way of our God & His kingdom is so very different. His way is one of letting go of those human drives and humbling oneself before Him and others. His way is one of fully embracing one’s identity in Him. When we find ourselves in Him our sense of security and significance is bolstered. Our capacity to love, and not operate with fear, is strengthened. Because of Him we can own our mistakes and take the needed steps to apologize, forgive and potentially reconcile. 9 important words On June 15, 1985, my good friend Luch Delmonte spoke at my wedding. In his charge to me and my bride, he included 9 words. He repeated these same 9 words at the weddings of each of our 4 kids. How’s that for a legacy!! Here are the 9 words that can change your life should you choose to live them: “I am sorry, I was wrong, Please forgive me!” These 9 words have provided such a wonderful framework to help ensure relational ease at work and at home.  I cannot imagine the impact on me and on others without them.  Can you? A Deliberate application When is the last time you apologized for an attitude, words, and/or actions that were “offside”? How did you know they were “offside”? Describe what you were sensing in you and between you, God, and the other person? What does your internal conversation sound like when you work at avoiding an apology? What keeps you from living out Romans 12:18 – from taking responsibility in helping ensure peace between you and others? If you are responsible for any part of a relational disconnect, what is your part? When will you approach the person and offer the 9 words? This is the 7th in a series on “Leadership of People and Culture” that have been appearing on the DeliberateU.com blog, and it is reprinted here with permission. DeliberateU is a Christian business leaders mentorship group. ...

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Economics

The hidden tax of inflation

Prices are on the rise in many countries around the world. Price increases are measured by a statistic called inflation, which expresses the percent prices have increased on average over some period of time. Canada saw its highest rate of inflation in over a decade in July when the annual pace of inflation hit 3.7%. Compared to the U.S., though, Canada is in a relatively good spot. The Consumer Price Index (CPI), which measures inflation by comparing a fixed group of goods over time, rose to 5.4% for the month of July. This ties with June’s numbers for being the largest rate of price increase since 2008. An alternative measure of inflation, the Personal Consumption Expenditures Index, reached its highest rate in 30 years. Economists have mixed feelings about how long inflation will last, but one thing is clear. Prices are on the rise, and you’ve likely noticed your money isn’t stretching as far as it used to. So why is this happening now? Well, Nobel-price-winning economist Milton Friedman famously commented, “inflation is always and everywhere a monetary phenomenon.” In other words, if you want to see why prices are rising, follow the money. Money-printing mania When a central bank prints more currency and puts it into circulation, those who get first access to the money are in for an unexpected payday. So, what will they do with this new money? Well, some of it will be saved, but some will be spent. Suddenly the newly printed money in your pocket might let you buy something you’ve had your eyes on for a while. The store then generates more revenue which can go to investors or paying new workers. So, spending increases, and this might not sound so bad so far. But this is when the problems began. As that new money goes into the pockets of new workers or investors, they spend some of it too. But, as demand increases while this new money circulates, prices begin to rise. There are more dollars in the economy, but the same amount of stuff. So, the value of dollars decreases relative to the value of goods and services. Money loses some of its value, and prices rise to reflect the money’s lower value. When the central bank prints money, it creates this process whereby money loses its value. This is exactly what’s happening around the world. In Canada, a common measure of the quantity of money in circulation shows an increase from $1.8 trillion at the beginning of 2020 to $2.2 trillion today. That’s approximately a 22% increase in the quantity of Canadian dollars in circulation in less than two years! As you might expect from the higher rate of inflation, the increase in the supply of US dollars has been even more alarming. The supply of US dollars has increased by 32% in the same period. Nearly one-fourth of all U.S. dollars in circulation today were printed since January 2020. This money printing, unprecedented in recent history, was in a large part to prop up economies being damaged by COVID-19 lockdowns. However, we’re beginning to feel the effects of this temporary solution, and Christians should recognize the consequences of money-printing. Inflation hurts savers… especially among the poor The problem isn’t simply that, after a period of having more money, consumers now have to face higher prices. Remember, the first person to receive new dollars is able to benefit from spending them. However, as the money circulates more, prices begin to rise. This means not everyone gets the benefit from this newly printed money. And this new money comes at a cost. As prices rise, the money in people’s savings account loses value too. In this way, inflation acts as a tax on savings. By taking future purchasing power from the thrifty, government can print money and give it to private banks to lend to businesses today. Inflation hurts savers. There are a few work-arounds to this problem. There are financial tools which help savers to shield the value of their money from the degradation to inflation, but, unfortunately, these tools and methods are costly to learn about and utilize. As such, we should expect inflation to be especially deleterious to poor and middle-class savers who don’t have time to focus on protecting their wealth since their weeks are consumed by making enough wealth to survive until the next paycheck. The problems don’t end there. While some have the luxury of a job where pay can be re-negotiated easily, this is not true for everyone. Many jobs involve contracts wherein workers agree to a specified wage rate for a definite period. In this case, not only is the savings account of these workers losing value due to inflation, but the weekly paycheck they receive will also be hurt. If you receive the same paycheck every two weeks, but the paycheck can buy you fewer goods and services due to price increases, you’re worse off. Economists call this a decline in the real wage. Why would the government inflate? So what is the benefit to government lowering the purchasing power of citizens? Well, there are a couple of benefits to government. First, a government can lower its debt burden. Governments often finance spending by selling government bonds. These bonds are promises to pay back the purchaser with interest. When inflation strikes, prices and nominal wages rise. As a result, the amount of tax revenue the government collects increases. This makes it easier to pay back debt which remains stagnant as prices and incomes rise. Second, remember that the “new” money maintains high value before it circulates widely. As a result, government can appease special interest groups in the financial industry by putting the newly printed money into banks first. The new money in banks provides access for large corporations to take the high-powered money out as loans for new projects. Be wary of the inflation tax Christians should be especially wary of the tax imposed via inflation for two major reasons. First, inflation disproportionately impacts the poor. When prices on everyday goods like groceries, energy, and transportation rise, this disproportionately hurts the poor. While 5% more expensive food is a relatively small increase for a millionaire, food can easily make up a huge percentage of monthly pay. Someone living paycheck-to-paycheck can’t afford a rise in prices. Further, the wealthy often receive income through financial assets like stocks. Stock prices also tend to increase during times of inflation, so the income of the rich stays relatively stable. The poor, often locked into prior wage agreements, don’t see their incomes rise immediately with inflation. Second, inflationary policies encourage behavior the Bible explicitly calls foolish. Proverbs 21:20 (ESV) tells us, “precious treasure and oil are in a wise man's dwelling, but a foolish man devours it.” This verse is descriptive. A fool consumes all of his wealth, whereas a wise man saves it in his dwelling. However, remember that inflation destroys the value of savings. If someone was keeping $1,000 in savings, and a grocery store trip costs $200 before inflation, and $250 after inflation, the saver goes from being able to afford five trips to being able to afford four. If instead, the consumer had used the $1,000 to buy a new flatscreen TV, inflation would not have had any effect. This example illustrates an important point. Because inflation taxes savers, it discourages frugality and encourages consumerism. Why save for tomorrow if money-printing is going to make savings worthless? Unfortunately, monetary policy is hardly, if ever, discussed on political debate stages let alone Christian churches. However, if we believe our role as Christians in democracy involves looking out for the poor among us, we should watch out for policies which seem tailor-made to harm their interests. Peter Jacobsen is an Assistant Professor of Economics at Ottawa University and the Gwartney Professor of Economic Education and Research at the Gwartney Institute. He has previously written for both the Foundation for Economic Education and the Institute for Faith, Works, and Economics. References https://fred.stlouisfed.org/series/M2SL https://ycharts.com/indicators/canada_m2_money_supply...

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Economics

What does a Reformed entrepreneur look like?

What is it about Reformed Christians that has so many wired to be entrepreneurs? Think about all the landscape professionals and nursery operators in Ontario, the construction companies and dairy farms in BC, and the myriad cabinet shops in southwestern Australia! Very different businesses, but every company began with the dream of an individual or team that saw a need in the marketplace for their expertise: “We can do this better than others, and we can provide for our families and employees by sharing our expertise with the public, and charging the right prices for what we do.” That concept might sound mundane to some, but it’s incredibly invigorating and challenging to an entrepreneur! But what should we as Reformed Christians look like as entrepreneurs and employers? And how can we use God’s Word to guide us as leaders in the workplace? How can we be effective witnesses for the Lord, and conscientious stewards of what He provides for us? Be willing to take on responsibility Along with the excitement of starting something new, the Christian entrepreneur will also face many hurdles and pressures. When you work for someone else, you are rarely confronted with the realities of making sure there are enough funds in the bank to make payroll, or worrying that your biggest account won’t pay their bill on time so that you can send out checks to your vendors and partners. Especially early in a company’s life, the owners have many decisions to make and can feel like they are the only one worried about whether or not their enterprise will survive. These pressures multiply when the owners hire their first employee: we have to recruit the right people with the right skills so the company can grow; we need to file reams of paperwork with multiple government agencies; we need to choose and purchase benefit packages we might never have thought about. Despite the additional pressures, entrepreneurs who have a team can be many times more effective than when they are on their own. Be ambitious Throughout the Scriptures, the Lord commands His people to be hard-working, diligent, and industrious, not so that they would become rich, but because He wants us to use for His glory the gifts He has given us. In Matthew 24, the Lord Jesus praises the work of the two servants who managed well the funds their master entrusted to them. The master is furious with the servant who just buried his treasure in the ground: “You wicked and slothful servant!” And he commands that this “worthless” man be cast into the outer darkness. We do not know specifically what the two righteous servants did with the money they received (the first “traded with them,” and the second “made two talents more,”) but we do know that they were commended for their diligence. “Well done, good and faithful servant!” While some in today’s culture may look askance at profit-making, the Bible never condemns this basic tenet of capitalism that makes a free market function. Use your growing influence to aid and not exploit As they worked hard, and aimed for a return on their investments, God’s people were also to deal righteously with their servants and laborers. In Deuteronomy 24:15, the Lord through Moses instructs landowners: “You shall not oppress a hired worker who is poor and needy, whether he is one of your brothers, or one of the sojourners who are in your land within your towns. You shall give him his wages on the same day, before the sun sets (for he is poor and counts on it), lest he cry against you to the Lord, and you be guilty of sin…” The Lord is angered when profits are made by those who mistreat or cheat their employees. In James 5, those who have “hoarded wealth” are warned that “the wages you failed to pay the workers who mowed your fields are crying out against you… The cries of the harvesters have reached the ears of the Lord Almighty.” Pay others as you would like to be paid In a recent issue of Reformed Perspective, Peter Jacobsen wrote about the negative effects of minimum wage policies – unintended consequences such as higher unemployment among the young and less skilled, and even intentionally evil consequences such as economic punishment of recent immigrants willing to work for lower wages than native-born employees. Jacobsen cited the writings of economist Thomas Sowell, a black American economist who delights in using real data to debunk “woke,” generally accepted theories about socialism, communism, racism, and more. Christian business leaders need wisdom to discern what is best for their employees, for the health of their company, and for their customers. Since we are commanded to be righteous and generous in how we treat our fellow workers, hopefully a hike in a mandated minimum wage does not have a significant impact on our businesses, since we are likely being far more generous with most of our workforce. Create opportunities for others to be fruitful Not only must we never withhold the wages earned by employees, we are also not to be so focused on profit that we leave no opportunities for others to profit from our enterprise. After instructing about paying wages on the same day as earned, Moses commands that farmers should leave enough crops in their fields for others to glean: “When you reap your harvest in your field and forget a sheaf in the field, you shall not go back to get it. It shall be for the sojourner, the fatherless, and the widow, that the Lord your God may bless you in all the work of your hands” (Deut. 24:19). King David’s great-grandmother benefited from this generosity to the poor! Are there ways that we in our modern workplaces can put in place similar policies that would help our neighbors, and our brothers and sisters? In my hometown, a local company owns and maintains a scenic, rural retreat and training center that it makes available for no cost to Christian organizations. This same company has hired a part-time chaplain to be available for their employees as they need a listening ear, and invites other local employers to avail themselves of this minister’s services. Another company nearby hires mentally disabled employees for janitorial work. Might the floors be cleaner and the windows sparkle more if a contract service were used? Possibly. But what a joy to be able to provide work and routine for those who otherwise might not have such opportunities. Seize the charitable opportunities that come with business success The principle of tithing and charitable giving also has a place in this discussion. Christians are expected to be generous with what the Lord has given. In 2 Corinthians 9, Paul reminds his readers “Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously.” And in 1 Corinthians 16, Paul writes “On the first day of every week, each one of you should set aside a sum of money in keeping with your income” (NIV). The phrase “in keeping with your income” (or “as he may prosper” in the ESV) is telling: business owners often enjoy seasons of prosperity beyond what a typical wage earner may experience, and should be known for their generosity to causes that benefit their church community, and their neighbors’ well being.  May the Lord continue to bless the businesses in our church communities, and give wisdom to those entrusted to run them for his glory. Marty VanDriel is the CEO of a manufacturing company in Ferndale, Washington. Comments, feedback, and also suggestions for future topics dealing with business, employment, and finance are more than welcome at [email protected]....

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Economics

The impact of saying, “I’m so busy”

How many times have you asked someone “How are you doing?” and they respond with “Busy!”? In that response, they did not actually answer your caring inquiry and they unknowingly sabotaged their credibility as a leader.  Further, in their hurriedness, they potentially hijacked an opportunity to bless.  As Christ-following leaders, here’s why I suggest we do well to remove this response from our repertoire… and learn better ways.  Let me explain. We’re all busy. That comes with the position of being any sort of leader. However, even as deliberate leaders are often busy, they are not hurried.  Jesus himself was very busy, but not hurried.  I would suggest that responding with, “I’m so busy” does three things: Reveals our leadership Drains our credibility Limits the God-story 1. It reveals our leadership Newsflash: We are not a “hero” by being busier than others. Being busy is not a badge of honor. Our culture has hoisted the notion of "busyness" onto such a pedestal that many have simply learned to respond this way merely as a status symbol. In the past, I would work ridiculous hours – and be sure to let others know (subtly of course to maintain my “martyr syndrome”).  I burned the candle at both ends with noble church and community work.  I would even brag about my lack of sleep that week, or not attending my family’s vacation because “I have so much to do.”  Worse yet, I thought less of others who didn’t.  I viewed them as lazy or irresponsible.  I was unaware and delusional, arrogant, and prideful.  I wore my hurriedness as a badge of honor. Not only was it destructively sad, but it was also poor thinking.  More yet, it was weak theology, because I didn’t have my identity in Jesus.  My sense of worth came from what I did and accomplished… and what it took to get there.  I would even show up to public functions late and rushed, hoping guests would think, “Man, that guy sure works hard. Look at all his obligations and responsibilities. He’s so industrious… such a servant-heart.” Does that mean all who respond with “I’m so busy” are like I was?  Of course not…  but an addict can easily spot another addict. It doesn’t have to be this way.  Hang around effective leaders for a while and you’ll notice an inner calm and resolve, despite being in the press. A Christ-following leader rests in the unresolved.  They offer a vulnerable, gracious, or inquisitive response… despite being busy. 2. It drains my credibility Rather than being a badge of honor, responding with “I’m so busy” can actually convey: I’m not helping others grow: Show me someone who keeps telling everyone they're busy, and you often see a leader who needs to grow in investing in others.  Effective leaders know how to build, enable, and inspire people to accomplish something bigger and better than they could do on their own.  They look for smarter ways. I'm disorganized: In a lot of cases, a frantic pace is simply a lack of organization and healthy habits. I don't have clarity of what matters most: Without clarity of purpose, and focusing on what’s most important, it's easy to get lured into the frenzy of putting out fires because “I’m so” It might look like hard work, but in many cases, it's just squandered energy. I can’t say no: Enough said. 3. It limits the God-story Starting conversations about how busy you are is a great way to miss an opportunity to witness and bless others.  Why?  Unknowingly, you put up a wall with someone who cared enough to genuinely see how you’re doing.  We’ve also stunted the opportunity to share deeper reflections about where God is at work in your life.   We’ve limited others to see His beauty in the middle of trial or challenge. Ultimately, by saying, “Oh, I’m so busy”, others don’t get to be blessed by the work God is doing in this challenging season of life you’re in. Deliberate application  So, what might be a better way to respond when someone asks, “Hey, how are you doing?” Be thoughtfully deliberate.  Because being real opens meaningful conversation.  Maybe something like, “I’m doing well. Life’s a bit challenging right now, but it is well with my soul. Pressed but not crushed. You know, God is really showing me… Be vulnerable and curious. Because vulnerability builds trust and invites in a God-story.  “I’m actually in a season of struggle right now. Doing well, but feel stretched too thin. How do you manage to juggle all your roles these days? …Could we pray together?” Be a hope dispenser.  Because everyone needs encouragement in their busyness.   “Yes, well I’m really enjoying where God has me right now. What that looks like is…” This one of a ten-part series, “Moving from Hurried to Purposeful” that Darren Bosch has written for DeliberateU, a Christian business leaders mentorship group. ...

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Economics, Watch for free

It's A Wonderful Loaf: why free enterprise makes bread in abundance

In the illustrated economic poem below, the author shows how the free enterprise system – with supposedly no one in control – can deliver bread in a great variety, and more cheaply than a socialist system. A socialist system would have some "bread czar" making decisions about what sort, and how much, bread would be made, but then he'd also have to decide how much rye or wheat would have to be planted, and also what other crops would have to be curtailed to make room for the wheat crops. To keep everyone happy, from the rye lover to the white bread aficionado, to the gluten intolerant chap, the number of decisions this bread czar would have to make would be beyond the ability of any single human being – or even a government department – to manage competently. The video is fantastic, but it's missing something vital – the author, Russ Roberts, doesn't see the Christian connection. He says that the ability of the free enterprise system to deliver hot, fresh, affordable bread in an abundance of varieties each and every day is something "no one intends" and "no one has to orchestrate it. It’s the product of our actions but no single mind’s designed it." The truth is different. No human mind designed it, but the foundational principles of the free market system – what makes it work – are Christian principles given by God. Do not worship other gods – Whereas the 1st Commandment (Ex. 20:3) teaches us not to turn to other gods, Socialism is dependent on someone at the top being near-omnipotent, knowing all the right moves to make for the betterment of everyone. Don't steal – The 8th Commandment (Ex. 20:15) make clear God's intent for us to be able to own property, while Socialism takes away property rights. Don't covet – Socialism wants to know what everyone makes while the 10th Commandment (Ex. 20:17) forbids us from looking over the fence to see what our neighbor has got. This commandment frees us to develop what God has given us (Matt 25:14-30) instead of minding our neighbor's business. Other biblical texts could be highlighted and explored but the point is, the reason the free market works as well as it does is that, in these commandments and more, it better lines up with what God commands. And when we obey these commands, then His is the "invisible hand" guiding farmers, mills, bakers, and consumers to arrive at this wonderful loaf. (h/t to Albert Van der Linden)...

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Economics

Two tales of trade: how free trade creates wealth

As Christians we know that man is prone to all sorts of evil, but we often forget that man is also prone to all sorts of stupidity. Much damage is done by well meaning people who embrace a bad cause – they aren’t trying to do evil, just the opposite in fact, but evil is done because these “good” people are acting out of their ignorance. In Economics this well-meant ignorance often causes serious harm. One telling example involves child labor. We abhor child labor, especially when the alternative is sending these same kids to school instead. But some years back, when a compassionate campaign against child labor moved Nike and Reebok to close plants in Pakistan and lay off 50,000 child workers in Bangladesh, these children didn’t go to school instead. The reason they were working in the first place was because they needed the very basics of life, so when they were laid off, thousands of them turned to prostitution, crime or simply starved to death1. Compassion, coupled with ignorance, forced these children from a barely tolerable situation to one that was much, much worse. Youth are even more susceptible to doing the wrong thing for the right reasons. Enthusiasm combined with inexperience results in an ardent teen who just wants to “Do something!” and off they go, in exactly the wrong direction. Christian youth might be even more inclined to this, since they know that “the love of money is the root of all kinds of evil” (1 Tim. 6:10). That seems to leave them prone to a specific type of economic error – some are deeply suspicious of the rich and their own rich First World countries, convinced that when a rich country trades with a poor country, if the rich get a good deal, it must have been at the expense of the poor. This in turn leaves them leery of free trade. The truth is, it is not through trade, but through the lack of it that rich countries victimize the poor. Now, if there was only a fixed amount of wealth to go around, then any country that got more wealth could only have done so by taking wealth away from someone else. But wealth can be created – there can be more to go around. And trade is one important way to create more wealth. Create wealth via trade? How can that be done? Let me demonstrate by way of a couple of illustrations. How trade creates wealth One day, in his economics class, a university professor was trying to explain to his students the benefits of trade. After lecturing on the subject for an entire week he found his students were still unconvinced. Thinking about it over the weekend he had a flash of insight and headed down to the local dollar store where he bought a range of small inexpensive toys. He bought 20 different toys in all, ranging from a whoopee cushion to a bag of marbles. When the students entered their Economics 101 classroom that Monday they were each given one of the small toys. Most of the students thought their presents were kind of neat, all except for the girl who received the whoopee cushion. She wasn’t quite sure why, but she was offended. The professor then began the class by asking each student to rate their present on a scale of 0-5 with a 5 meaning they really liked it. The twenty students gave their presents a combined rating of 38. The whoopee cushion girl rated hers a zero. Then the professor allowed the students five minutes to trade their presents...but only with students immediately to the right or left of them. The unhappy whoopee cushion girl managed a trade with a frat boy to her right, for a pack of giant playing cards. She was much happier with the cards, and the frat boy was strangely ecstatic with his new possession. Five minutes later the students were asked to rate their presents again, and the combined rating improved to 56. The frat boy gave his whoopee cushion a five. Finally the professor allowed the students to trade with anyone in the room. Once again the overall score went up – the combined rating after this exchange was boosted to 72. From round one to three, no new products were created, and yet people rated their toy higher each round. To put it another way, after making trades they felt what they were left with was worth more than what they originally had. They were getting wealthier. And the freer the trade, the more students were able to obtain what they really wanted, by doing just as the whoopee girl did, offering in exchange something they didn't value as highly. With the trading completed, the professor was overjoyed – his students finally understood how trade could create wealth! He let out a contented sigh and dropped down into his chair…which then produced another, decidedly more rude, sound. The frat boy loved free trade. ****** When I first published this illustration in the Canadian Student Review some students responded by insisting that while trade might benefit First World countries, that didn't mean it was good for everyone. They argued it didn't help the poorest countries since they have absolutely nothing of value to offer in trade. This objection simply isn't true. Whether it is natural resources, or simply cheap labor (even cheap child labor), every country has something to offer. It is true that wars, and corrupt governments, may make it impossible for citizens of a particular country to engage in trade. But that doesn't underscore a shortcoming with free trade, but instead highlights the devastating impacts of wars and corruption. So, as a response, I ended up writing a second story to illustrate how free trade would help even when some countries have much less to offer than others. How trade helps even poor countries It was a regular lunch hour in Mrs. Embargo’s grade 6 classroom and the kids were trading their snacks behind the teacher’s back. One of the kids, Ulysses Sam Austin (USA for short) always had at least a hundred Oreo cookies. He had so many he didn’t value them like he once did when his mom only packed five or ten in his lunch. Canada’s mom (some kids have names like Dallas and Dakota, so why not Canada?) always stuck an entire banana bread loaf in his lunch. The other kids weren’t quite so well off, and had a variety of snacks ranging from a handful of chips to a couple of carrot sticks. The carrot stick kid desperately wanted some banana bread because his mom didn’t have an oven so she couldn’t make it. It took a bit of bartering but eventually he managed to trade one of his carrot sticks for a small slice. It wasn’t a lot, but it was more than he could have gotten any other way. USA was getting quite sick of Oreos and was practically giving them away. It wasn’t that he was softhearted – some even accused him of being the class bully – but he had a surplus of cookies, and they weren’t very useful to him. He traded ten of them to the carrot stick boy for his last carrot. The next day Mrs. Embargo decided to crack down, “You children are going to have to eat what your parents packed in your lunch!” That made all the children very sad: USA because he was now stuck with only Oreos, Canada because he had nothing orange to eat, and especially the carrot stick kid, because Mrs. Embargo’s protectionist stance prevented him from trading for the banana bread he loved so dearly. ****** The truth is, it is not through trade, but through restrictions on trade that rich countries victimize the poor. In this illustration, without trade the poor carrot stick kid/country would never have gotten a slice of banana bread, as he was completely incapable of manufacturing it at home. In the real world, poor countries in Africa can produce some agricultural goods at a lower cost than we can in the West, yet instead of allowing them to compete with us, we may well slap a tariffs on their goods, in addition to spending billions on subsidizing our farmers. As columnist Elizabeth Nickson puts it, “these barriers dramatically reduce what poor countries can earn from farming, which is what most of their people do." She went on to note that, back in 2004, it was "estimated that protecting our markets from African produce costs these countries $100 billion US a year, or twice what they receive in aid.”2 Free, fair trade is a win-win prospect for both sides – the poorer nations wouldn’t trade at all if they didn’t think they were getting a benefit. And if we as Christians want to help the developing world in a substantial manner – far in excess of any material good we can do through our charitable giving – one of the most compassionate things we can do is tell our government to reduce tariffs and agricultural subsidies that, while helping our own farmers, do so at the expense of the poor. End notes 1 “Green power, black death” by Elizabeth Nickson, National Post Jan. 9, 2004 2 “Green power, black death” This article was first published in Feb. 2004 in Reformed Perspective magazine...

the 99 percent
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Economics

5 things Christians should know about income inequality

Income inequality is still at the forefront of conversation for many people. Thankfully, there are biblical principles that help Christians understand whether income inequality is a problem, and if so, how we are to respond. At the Christian research organization I work for – the Institute for Faith, Work & Economics – we talk a lot about various aspects of income inequality and how to think about it. Today, I’d like to summarize this tough topic through these five points dealing with the best approach to bringing about flourishing, especially for the poor. 1. HOW INCOME INEQUALITY IS MEASURED Income inequality measures income differences across groups of people using a statistical tool called the Gini coefficient. It ranges between zero and one. A score of one indicates perfect inequality: one person makes all the income and everyone else makes zero. A score of zero indicates perfect equality: everyone earns exactly the same amount. The U.S. Gini coefficient is 0.45 according to the CIA World Fact Book. For the sake of context, the impoverished country of Bangladesh has less income inequality than the U.S. (Gini of 0.32). Meanwhile Hong Kong has slightly more income inequality than the U.S. (Gini of 0.54).  Alone, income inequality data doesn’t tell us that much about whether one country is “better” than another. 2. CRONYISM MAKES INCOME INEQUALITY WORSE, AND IT'S UNFAIR Cronyism occurs when corporations pursue the government for benefits, protections, or subsidies benefiting their business at the expense of competing firms and consumers. It is a growing trend evidenced by the hundreds of lobbying firms popping up on K Street. Politicians have responded quite favorably to these lobbying efforts and have created a culture in which the most well-connected win. This is inherently unfair. An unjust system is prevailing where ordinary businesses and entrepreneurs are failing because they lack the resources to buy off politicians. The unfortunate result is that they can’t succeed, and the well-connected rich get richer and stifle more opportunities for the poor. 3. DIVERSITY IS A BIBLICAL PREMISE OF CREATION. WE ARE BORN WITH DIFFERENT GIFTS, RESULTING IN DIFFERENT INCOMES. We are created in God’s image (Gen 1:27) and, while we bear many physical similarities, we are all distinct. That means that, by definition, we are unequal. God knew that our uniqueness makes our work and talents inherently dignifying and brings us into community with one another. Our interdependence makes us able to achieve things we never could on our own. We use our gifts and skills to provide goods and services that others need. We then trade for goods and services that we need but aren’t able to provide ourselves. The market return for our services is our income, and that income is based on the market supply of what we provide and the value people place on it. This means that our incomes will be different. However, because we do not operate in a vacuum, those who do earn high incomes tend to create lots of value for everyone, including lots of job opportunities. High incomes are not a sign that the rich have stolen from the poor. Quite the contrary, wealthy individuals have often innovated products and services that make us all richer and ease our way of life. 4. INCOME MOBILITY IS A BETTER MEASURE OF PROSPERITY Income mobility is quite different from income inequality. Income mobility tracks the lifetime income of a person. It’s a way of understanding if people are able to earn more income over their lives as a result of increases in their education, skills, and productivity. The trouble with the data on income inequality is that it doesn’t track individuals over time. If we look at the poorest income bracket in 1990 and again in 2014, we have no idea if the people who were poor in 1990 are still poor today simply by looking at the data. In fact, mobility data suggests that almost sixty percent of individuals who were in the lower income brackets moved into higher brackets in under a decade. 5. WE SHOULD FOCUS ON WHAT GOD HAS CALLED US TO DO, NOT ON WHAT OTHERS ARE DOING In a flourishing society, there are going to be lots of people who make high levels of income. Think how different the Congo or Vietnam would look if local entrepreneurs had the opportunity to create and innovate. The world would have a lot more people like Bill Gates and a lot more wealth and opportunity for all – not just the rich. It’s easy to want for ourselves what others have, but we can’t all be Bill Gates. God has gifted each of us to do something specific and special. We need to focus on our unique callings and do them with excellence rather than focusing on what others have. Unfortunately, some of the talk around income inequality is about coveting what others have rather than wanting more for the poor. I can tell you from living in a county with the highest per-capita income in the country that it is easy to want what others have: the newest car, the bigger house, the better wardrobe. It is a deceptive trap to believe that if we have these things, we will feel better or live better. WHAT CAN YOU DO ABOUT INCOME INEQUALITY? Be aware of the cronyism all around us that often shows up in seemingly benign programs like laws mandating certain light bulbs, sugar subsidies, and occupational licensing. Government is increasingly giving in to the entitlement culture of lobbying. We need businesses to stop asking for favors and political leaders who will stop the handouts. Furthermore, prayerfully discern the path to which God calls you and pursue it with integrity, hard work, and faith. No matter what income it brings, it gives you a chance to serve others in the here and now and achieve everlasting significance for God’s kingdom. This article is reprinted, with minor edits, with permission from the Institute for Faith, Work & Economics (www.tifwe.org). The original article appears here. IFWE is a Christian research organization committed to advancing biblical and economic principles that help individuals find fulfillment in their work and contribute to a free and flourishing society. Go here to subscribe to the free IFWE Daily Blog. Dr. Anne Bradley "is the Vice President of Economic Initiatives at the Institute, where she develops and commissions research toward a systematic biblical theology of economic freedom." RedPanel.com comic used with permission....

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Economics

I started my business for the wrong reasons

Why did you start your business? When people ask me that question, I often respond with, “So I could spend more time with my family while providing for them.” Or, “So I could work part-time while recovering for chemo.” Or, “So I can build up a bank account and get back to my plans for seminary.” They all sounds like noble answers, right? Well, this morning during my devotions, I read a verse that struck a chord. It was Ephesians 4:28: Let the thief no longer steal, but rather let him labor, doing honest work with his own hands, so that he may have something to share with anyone in need.   Ok, so what does that verse have to do with my running a business?  Well sure, I am not to steal, or be engaged in dishonest things in business, and yes, it says that we are to give to those in need. But what is the thing that struck a chord and made me realize that that “to provide for my family” is the wrong reason? I mean, the Bible does tell us that we are to provide. In 1 Timothy 5:8 we read: Anyone who does not provide for their relatives, and especially for their own household, has denied the faith and is worse than an unbeliever. Jesus has told us to provide for our families. So we must.  But that is not the ultimate reason we work.  As a Christian, saying, “I work to provide for my family” is incomplete and is an unscriptural view of work. We should work, whether it’s at my business, or at your job at the office, or at your job digging a ditch, because working is the Lord’s will concerning us. The thief is to perform honest work and share with those in need, not because he was a thief, not because it is some sort of punishment, but because it is the Lord’s will for all of us! Working is the Lord’s will concerning us. Boom. It’s that simple. As this revelation (one that I am sure I already knew) resounded in my head and my coffee got cold….I remembered 1 Corinthians 10:31: So, whether you eat or drink, or whatever you do, do all to the glory of God. We are to live our entire lives to the glory of God. Work…to the glory of God. Rest… to the glory of God. Eat…to the glory of God. Ride that mountain bike…to the glory of God. Drink that beer…to the glory of God. Dig that ditch…to the glory of God! Post that selfie on Instagram…to the glory of…uh. Well, you get my point. Everything we do is to be done for God’s glory. What do most of us actually work for? When I worked at a regular job, most of my colleagues spoke about working towards retirement, saving for a trip, working for the weekend to go on that mountain biking trip, buying beer, working OT to get that renovation on the house, or buying the Big House to keep up with the Jonses. Unfortunately, many Christians view work in exactly the same way.  Many of us are in it for what we get out of it.  Unfortunately, I fell in the trap of viewing work as merely a means to an end. Sure, some of you may argue that we use our work to do things that glorify God. It is true that God may be honored in the results of our work, through tithing, helping the needy...saving so I can go to seminary and become a pastor… even as He may not be supreme in our view of work itself. Is He supreme in your view of work? If I am honest with myself, He has not been my ultimate focus in this business. Starting this business may not have been for his glory; but that changes today. Why do you work? Ryan Smith blogs at OneChristianDad.com where this first appeared. It is reprinted here with permission....

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