Kruse Kronicle

Another Market-Based Healthcare Solution

Carpe Diem: Another Market-Based Healthcare Solution

The No Insurance Club is the creation of an Arizona physician. The annual individual membership fee is $480 for up to 12 physician visits ($680 covers up to 16 visits per family). Most services during the office visits are free, including immunizations. Generic prescriptions are $4 or less.

Dynamic Versus Static Perspectives on Economic Justice

This comes from Social Welfare and Individual Responsibility: For and Against by David Schmidtz and Robert E. Goodin. (This is Schmidtz writing.)

From a static perspective, we see society as a snapshot, and what is wrong with the picture is that some people have unmet needs while others have plenty. The question defining the static perspective is, How do we get needed resources to needy people? How can we help those whom the system has left behind? From a more dynamic perspective, though, society is a process by which one snapshot evolves into another. The question defining the dynamic perspective is, Which institutions make people less likely to need help in the first place?

From a static perspective, our task it to rearrange the resources visible in the snapshot, frame by frame. From a dynamic perspective, our task is to nurture the processes that produce the resources, and thereby produce better snapshots in the future. From a dynamic perspective, we might worry about the consequences of rearranging resources for purposes other than the purposes for which producers are producing them. When we worry about that, we appear from a static perspective to be willfully out of touch. We are talking about history or economic theory, perhaps, but not about the real world. The real world is the snapshot.

To people who see things from a purely static perspective, it will seem that those who take a dynamic perspective want people to suffer. Why else would people hesitate to rearrange resources? Those who see things from both perspectives, though, see a complicated dance of incentives, opportunities, evolving culture, and fragile personal values. They see that many things happen when we reshuffle, resources, and not all of them are good. …

…When I refer to the static perspective as static, I mean no insult. I mean only to suggest that an exclusively static perspective is not enough. A static perspective looks at how things change. Each perspective is legitimate in its own way. The suffering we see from a static perspective is, after all, really there. Unfortunately, there are things we do not see from a static perspective. We do no see long-term progress. We do not see what causes long-term progress. Those things are abstract. They lack the visceral urgency of the crises of the day. But they are no less real.

If it is only from a static perspective that we fully appreciate the problems, it is only from a dynamic perspective that we fully appreciate what it takes to solve them. (6-7)

Schmidtz nails the most persistent challenge I face in discussing economic issues with people who have not worked to understand basic economic thought. There is obliviousness to the need to answer the societal question of how many of which things shall we make today? There is a profound tendency to view wealth and goods as pre-existing (static); they merely need to be distributed better. Because of this, markets are seen as evil. Markets are merely about some people hoarding from others what should more equally be shared. The reality that prices negotiated between buyers and sellers is a realtime dynamic information system coordinating how much of which things to produce is not understood. It truly is a "complicated dance of incentives, opportunities, evolving culture, and fragile personal values."

New Economics Themed Blog

Last year I did a book review of an excellent book called Economics in Christian Perspective: Theory, Policy and Life Choices by Victor Claar and Robin Klay. (See my review by clicking here.) The authors are economics professors at Hope College in Holland, MI.

Well, I just learned that Victor Claar has begun his own blog called:

Victor Claar's Economics Blog (and other thoughts)

For a great radio interview of Claar by Brent Siddall for Trans World Radio in the U. K., click here. How I wish more Christians who are actual economists (as opposed to wannabes like me) would venture into cyberspace with their expertise.

Be sure to check out the new blog.

Primates on Facebook

The Economist: Primates on Facebook

THAT Facebook, Twitter and other online social networks will increase the size of human social groups is an obvious hypothesis, given that they reduce a lot of the friction and cost involved in keeping in touch with other people. Once you join and gather your “friends” online, you can share in their lives as recorded by photographs, “status updates” and other titbits, and, with your permission, they can share in yours. Additional friends are free, so why not say the more the merrier?

But perhaps additional friends are not free. Primatologists call at least some of the things that happen on social networks “grooming”. In the wild, grooming is time-consuming and here computerisation certainly helps. But keeping track of who to groom—and why—demands quite a bit of mental computation. You need to remember who is allied with, hostile to, or lusts after whom, and act accordingly. Several years ago, therefore, Robin Dunbar, an anthropologist who now works at Oxford University, concluded that the cognitive power of the brain limits the size of the social network that an individual of any given species can develop. Extrapolating from the brain sizes and social networks of apes, Dr Dunbar suggested that the size of the human brain allows stable networks of about 148. Rounded to 150, this has become famous as “the Dunbar number”.

Many institutions, from neolithic villages to the maniples of the Roman army, seem to be organised around the Dunbar number. Because everybody knows everybody else, such groups can run with a minimum of bureaucracy. But that does not prove Dr Dunbar’s hypothesis is correct, and other anthropologists, such as Russell Bernard and Peter Killworth, have come up with estimates of almost double the Dunbar number for the upper limit of human groups. Moreover, sociologists also distinguish between a person’s wider network, as described by the Dunbar number or something similar, and his social “core”. Peter Marsden, of Harvard University, found that Americans, even if they socialise a lot, tend to have only a handful of individuals with whom they “can discuss important matters”. A subsequent study found, to widespread concern, that this number is on a downward trend. ...

Two sexes 'sin in different ways'

BBC: Two sexes 'sin in different ways'

Women are prouder than men, but men are more lustful, according to a Vatican report which states that the two sexes sin differently.

A Catholic survey found that the most common sin for women was pride, while for men, the urge for food was only surpassed by the urge for sex.

The report was based on a study of confessions carried out by Fr Roberto Busa, a 95-year-old Jesuit scholar.

The Pope's personal theologian backed up the report in the Vatican newspaper. ...

Nice Work If You Can Get It

The New Yorker: Nice Work If You Can Get It

This is the Age of the Incredible Shrinking Everything. Home prices, the stock market, G.D.P., corporate profits, employment: they’re all a fraction of what they once were. Yet amid this carnage there is one thing that, surprisingly, has continued to grow: the paycheck of the average worker. Companies are slashing payrolls: 3.6 million people have lost their jobs since the recession started, with half of those getting laid off in just the past three months. Yet average hourly wages jumped almost four per cent in the past year. It’s harder and harder to find and keep a job, but if you’ve got one you may well be making more than you did twelve months ago. ...

...Today’s sticky wages aren’t just the result of custom, though. They’ve also stayed high because of the most unusual aspect of this recession: even as the economy has cratered, American workers have become more productive, not less. Productivity—how much output workers produce per hour of work—is the key to a healthy economy. Historically, productivity has been “procyclical”: it rose during booms and fell during recessions. But not this time. Even as the economy did a cliff dive in the last quarter, productivity rose an impressive 3.1 per cent. And since, in theory, workers get paid more the more productive they are, their increased productivity has helped them avoid pay cuts.

In times as grim as these, stable wages and higher productivity seem like good things. But they come at a price. The reason that companies have remained so productive despite the slowdown has a lot to do with one of the most celebrated efficiency gains of recent years: the so-called just-in-time economy. ...

Self-Interest and Benevolence: Partners, not Antonyms (Part 8)

[Link to Part 7]

The Dark Side of Benevolence

Critics of market economies rightly point out that markets alone will not achieve a perfectly just society. We have investigated why this is so. We do not leave people completely at the mercy of market forces. Doing so would be an economic version of Darwin’s “survival of the fittest” determinism. You can almost hear Ebenezer Scrooge, “Are there no prisons? Are there no workhouses? If the poor are to die, better that they get on with it and decrease the surplus population.” Human beings cease to be God’s image bearers and become mere animals. They are objects. Critics of free markets like to tar and feather advocates of free markets as Social Darwinists but as we have seen, markets have been essential to our modern phenomenon of widespread affluence and economic freedom is essential to legitimately practicing stewardship. Still, the danger that we might dehumanize others with indifference to their economic plight is very real. Benevolence must be nurtured.

Yet, what many who are critics of market economies fail to appreciate is that benevolence has a dark side. Robert Lupton, writes in his excellent book Compassion, Justice, and Christian Life: Rethinking Ministry to the Poor:

Remember your last garage sale? Or the last antique bargain you purchased at a flea market? Or the last car you traded? How is it that when a transaction is done well both purchaser and seller come away with a sense of gain? It’s the magic of exchange. And it transcends the boundaries of age and gender, race and class. Whether the find is a rare Babe Ruth baseball card, a silk blouse reduced for quick sale or the perfect piece of land at the right price, the ecstasy of exchange is for all to enjoy.

Exchange is remarkably invigorating process. The very thought of acquiring a new treasure motivates us to calculate value, rearrange priorities, juggle finances, analyze past performance and make predictions about the future. And ultimately, it pushes us to the risky edge of letting go of something valued in the hopes of gaining that which will be of greater worth to us.

However, when the labor you offer is unneeded in the marketplace of when your abilities area worth less to employers than the amount of your welfare check, you are exchange-less. Indeed, poverty may be defined as having little of value to exchange. And when society subsidizes you for being a noncontributor, it has added insult to your already injured self-esteem. (43-44)

Human community normally includes economic production and exchange for able bodied and able minded folks. When we are exchange-less, our dignity as God’s stewards. We were made for stewardship. We were made to be integrated into human community of stewardship.

The challenge for benevolence, private or government, is that it can become every bit as a objectifying and dehumanizing as Social Darwinism. Caring for the poor simply becomes an exercise in making sure the poor get to consume at some minimal standard. The co-creative stewardship quality, so central to our humanity, is ignored. Arthur Brooks points out in his book Who Really Cares that the demographic group that is most generous with its time and money (as a percentage of income) is the working poor. The least generous is people making the same amount as the working poor but living entirely on assistance. Social bonds become dramatically weakened. “Benevolence” of this type is really dehumanization.

Activism aimed at championing benevolence toward the poor can also become dehumanizing. Many middle class and wealthier folks are seeking to establish an identity that presents them as a caring and compassionate. The actual outcomes for the poor from the measures being championed are less consequential than the impact of A) being seen as compassionate, and B) not being seen as one of the evil greedy business people who caused poverty in the first place. It is really a form of consumerism where activists organizations market causes people can join to meet their felt need for a compassionate identity. “The poor” cease to be human beings to be restored as co-creative stewards and become objects for the identity market. Even our church mission trips too frequently fall into this. Over a summer, six different youth groups visit the same church in Mexico and repaint it six times. It serves no practical benefit to the poor but was that ever really the issue? (See Lupton’s piece on Religious Tourism.)

Market economies are tremendous advance in creating large societies with widespread affluence. They are remarkable integrators that help match people with wants and needs with those who want to supply them. They are far from perfect. They are just as effective at meeting the legitimate needs that are feed into them as they are meeting the illegitimate ones. They will not usher in the Kingdom of God and they have their dark side.

We need benevolence. It is among the highest virtues. It is the central counter-balance to injustices and misfortunes that happen in the world. But we also need to hear that benevolence has its dehumanizing dark side as well. Just as markets can be bent toward destructive ends, sometimes in spite of the intentions of the people involved, so can benevolence also result in destructive ends. We must think clearly about both markets and benevolence, not pitting one against the other as virtue versus vice.

[Continued]

Uncovering Yenikapi

Saudi Aramco World: Uncovering Yenikapi (HT: Ben Witherington)

Inside a long shed covered with white plastic sheeting a team of archeological students from Istanbul University is struggling in the mud to dismantle a cargo ship dating back to the eighth or ninth century.

Outside, the brilliant June sunshine beats down mercilessly on Turkey’s largest city. But the shed is kept cool by a fine mist sprayed from suspended hoses; the mist keeps the exposed wood moist and prevents it from shrinking. Ever so gently, the five women and four men slide a three-meter (10'), L-shaped frame beneath a waterlogged plank too fragile to be lifted directly. One of them gives the go-ahead and they raise the plank in unison, then place it into a wooden case, where it rests on a pine support specially designed to ensure that the plank keeps its shape. Later, the case containing the plank and the support will be lowered into a concrete-lined pool of slowly circulating fresh water. Eventually, after conservation and reassembly, the ancient ship, one of 32 uncovered so far in the run-down Istanbul neighborhood of Yenikapi, will likely go on display in a new museum dedicated to what many experts are calling the greatest nautical archeological site ever discovered: a vast excavation covering more than 58,000 square meters (nearly 625,000 sq ft), the equivalent of 10 city blocks, on what was once the edge of medieval Constantinople.

“It’s the most phenomenal ancient harbor in the world, and it’s absolutely revolutionizing our knowledge of ship construction during Byzantine times,” declares Sheila Matthews, who is unearthing and researching eight boats for the Institute of Nautical Archaeology at Texas A&M University. “There is no other place that has so many shipwrecks in context with one another.” From brick-transport vessels to round-hulled cargo boats 19 meters (60') long and small lighters used to off-load larger ships, Yenikapii is yielding up the full gamut of ships that once busied one of the most active harbors of the middle ages. Among the site’s astonishing prizes are the first Byzantine naval craft ever brought to light.

Lost for more than 800 years, Yenikapii’s fourth-century port dates back to Theodosius i, the last emperor to rule over both the eastern and western portions of a unified Roman Empire, and it was active until around 1200. ...

The Thermian Hermeneutic

There has been a fascinating discussion over at Jesus Creed in recent days about science and scripture concerning Genesis 1-11. It is being led by RJS who is a chemistry professor at a premiere university.

A recurring topic in the comments is the historical nature of Genesis 1-11. RJS has described them as mytho-historical, a characterization I share. The stories are about historical realities and historical events but they are not literal "fact-to-fact" history. Mythical elements and patterns of communication are used to make complex realities accessible to the ancient audience.

Claiming this mytho-historical quality for these chapters disturbs some readers. If qualities in the stories are characterized as mythical, where does it end? If there really was no talking snake or magical trees, then don't we begin the slippery slope toward denying the virgin birth and even the very diety of Christ?

In reflecting on the persistent insistence for literal-historical readings of Genesis 1-11, I’ve come up with a new hermeneutic. I’m calling it the Thermian Hermenuetic.

Back 1999, there was a movie called Galaxy Quest. As Wikipedia explains:

“The movie (a parody inspired by the television series Star Trek) is about the washed-up stars of a fictional 1978–1982 TV series called Galaxy Quest. On the show, the actors played the crew of a spaceship, the NSEA Protector and are recruited by aliens who believe that their fictional adventures were real.”

TV broadcasts have traveled through space to Thermia, a distant planet where the inhabitants have no concept of acting or fictional stories. They simply refer to the shows as the “historical documents.” They have built their entire culture based on the “historical documents.”

When the Galaxy Quest TV crew realizes what the Thermians have done, they are in disbelief. One of the actors, Gwen DeMarco (Sigourney Weaver) has this exchange:

Gwen DeMarco: They're not ALL "historical documents." Surely, you don't think Gilligan's Island is a...
[All the Thermians moan in despair]
Mathesar [a Thermian]: Those poor people.

Acknowledging the mytho-historical qualities of Genesis 1-11 no more undercuts miracle claims in the gospels than does acknowledging the fictional qualities of Gilligan’s Island undercut the historical legitimacy of a History Channel documentary. There are different genres of books, and passages within books, in the Bible, just like there are different genres of television programs.

The reason for the insistence on the strict literal-reading of Genesis 1-11 is because of pre-determined conclusions that have been brought to the text, not because of anything the text claims for itself. The Thermian’s Giligan’s Island folly is the same folly we bring to the world with our rigid insistence on “historical documents” and it undermines the witness of the church.

Insisting that each and every document in the Bible is a literal-historical account leads to the Thermian error of mistaking Gilligan’s Island for an historical event.

Auto team drives imports

Detroit News: Auto team drives imports

WASHINGTON -- The vehicles owned by the Obama administration's auto team could reflect one reason why Detroit's Big Three automakers are in trouble: The list includes few new American cars.

Among the eight members named Friday to the Presidential Task Force on the Auto Industry and the 10 senior policy aides who will assist them in their work, two own American models. Add the Treasury Department's special adviser to the task force and the total jumps to three. ...

Beauty is in the sex of the beholder, study finds

Reuters: Beauty is in the sex of the beholder, study finds

WASHINGTON (Reuters) - The brains of men and women respond differently to beautiful objects such as paintings, researchers reported on Monday.

They used imaging technology called magnetoencephalography to look at the brain activity of 20 volunteers while looking at pretty paintings and ugly pictures of cities and found clear sex differences when the test subjects saw images they described as beautiful.

Women use more of the whole brain when appreciating a nice piece of art, while men use mostly the right side, Francisco Ayala of the University of California, Irvine and colleagues in Spain found. ...

Philadelphia Newspapers Seeking Bankruptcy

New York Times: Philadelphia Newspapers Seeking Bankruptcy

The owners of The Philadelphia Inquirer and The Philadelphia Daily News filed for bankruptcy late Sunday night after talks aimed at restructuring their heavy debt load broke down, executives said.

The papers will continue to operate and will remain under local control, said Brian Tierney, publisher of The Inquirer and the leader of a group of local investors who bought the papers in 2006, one of several newspaper deals from that era that have gone bad as the industry’s revenues have plunged. ...

Self-Interest and Benevolence: Partners, not Antonyms (Part 7)

[Link to Part 6]

It Takes More Than Markets to Address Poverty

A frequent critique of market economies is that some people end up poor. Depending on your definition of “poor,” this is a truism. If “poor” means the bottom 1%, 10%, or 20% of the wealth distribution, and you aren’t going to equally distribute wealth to all members of society, then by definition you will always have poverty. There is no way to eliminate it.

But, if by “poor” we mean insufficient resources to be reasonably well fed, clothed, and sheltered, and to have basic customary amenities, then we can talk about eliminating poverty. We can compare economic systems based on incidence of poverty.

When it comes to the two dominant economic systems of the 20th Century, Winston Churchill quipped:

“The inherent vice of Capitalism is the unequal sharing of blessings; the inherent virtue of Socialism is the equal sharing of miseries.”

What he says of socialism could be expanded to most other economies prior to the rise of market economies. Across cultures and time, the historical norm has been bare subsistence living for the masses, with a very small group controlling nearly all the wealth. With market economies we see a wide continuum in the size of wealth holdings with even the vast majority of people living at the low end of the continuum better off than the subsistence level existence of masses in our ancestors’ days. Some will no doubt bring up an isolated case like Scandinavian socialism. It is an interesting comparative debate but I want to ask a more fundamental question. Is elimination of all vestiges of poverty in society a realistic measure of an economic system’s validity? Let’ apply this criteria to the Bible.

There is no systematic economic model laid out in the Bible but the Old Testament Law books are filled with instruction about economic issues. Deuteronomy is one such book. It is a long discourse on the covenant God made with Israel. Toward the end (chapters 27-30), God spells out the curses and blessings that come from not following or following the covenant. One aspect of the blessing is promises like this one:

“The Lord will grant you abundant prosperity – in the fruit of your womb, the young of your livestock and the crops of your ground – in the land he swore to your forefathers to give you.” (28:11)

But as we read through books like Deuteronomy and Leviticus we see specific laws pertaining to treatment of the poor as the Israelites live out this covenant. There are laws requiring farmers to leave uharvested grain at the edge of the fields so the poor can glean some food. There are laws requiring the periodic collection of offerings for the poor. There is the provision for a kinsman redeemer where Israelites could redeem a relative who had been sold into slavery.

Of course the most striking provision is the Jubilee Code in Leviticus 25. If someone fell into need, they could “sell” their land and labor to cover their need. I put “sell” in quotation marks because in the strictest sense it wasn’t a sale.

God had apportioned the land of Israel to the tribes and clans as a permanent inheritance. Every fifty years, all agreements to indentured servitude were to end and all land was to revert back to the original owners. The purchase price of labor was limited to the amount of labor that could be done between the transaction and the next jubilee. The purchase price of land was limited to the number of crops that could be harvested between the transaction and the next jubilee. These were essentially lease agreements, not sales. The labor or property eventually reverted back to the owner. Similar limitations existed for debts.

Now keep in mind that these provisions existed as part of a world where the Israelites were living by God’s covenant and God was blessing them with “abundant prosperity.” Yet in this abundance, it is clearly assumed that some people will fall upon hard times. Whether though events out their control or through having made imprudent decisions, the economic system was assumed to result in poverty for some. The economic system did not result in equal outcomes and poverty occurred. If elimination of all vestiges of poverty in society is a realistic measure of an economic system, then the biblical system that God gave under his covenant fails. Other provisions outside the mode of economic exchange were needed.

All through the Old Testament law we see admonitions toward generosity toward the poor. Benevolence is key. The kinsman redeemer custom allowed for families to rescue less fortunate members. Leaving grain at the edge of the field was a mandated provision for the poor at large. There were mandatory offerings that were brought into a storehouse and then used to aid the poor. So there were some parallels to our present methods for assisting the poor today, including a mandatory collection of resources to assist the poor. But the Bible goes far beyond subsidizing the material needs of the poor. Just look at the jubilee.

The jubilee is frequently characterized as a redistribution of wealth. This is false. The jubilee prevented the permanent alienation of Israelites from the economic means of production (i. e., land and labor.) Real estate within cities was unaffected as was the wealth families had amassed through their own prudent behavior.  God’s vision was to have each Israelite family participating with him in co-creative dominion over creation. His vision was to have each Israelite participating in his or her own material provision and in the material provision for others. This was the ultimate vision.

Thus, the covenant instructions providing for those who did not come out well in the economic system were not aimed at achieving a sub-culture of subsidized consumers, as though they were so many cattle to be fed and cared for. It was rather to restore each person to their image-bearer calling. Yet failure to grasp the limitations of economic systems (and thus solve all distribution problems by managing market outcomes) and the tendency to reduce assistance to the poor to a mere exercise in increasing their consumptive powers, is prevalent inside and outside the church. More on that in the next post.

[Continued]

Manufacturing Goes High-End and the USA is Still the Global Leader

Carpe Diem (Mark Perry): Made in USA Is Alive and Well: Manufacturing Goes High-End and the USA is Still the Global Leader

Despite downturn and dire outlook for factories, value of American-made goods still leads world.

WASHINGTON(AP) -- It may seem like the country that used to make everything is on the brink of making nothing. In January, 207,000 U.S. manufacturing jobs vanished in the largest one-month drop since October 1982 (see chart above). Factory activity is hovering at a 28-year low. Even before the recession, plants were hemorrhaging work to foreign competitors with cheap labor. And some companies were moving production overseas.

But manufacturing in the United States isn't dead or even dying. It's moving upscale, following the biggest profits, and becoming more efficient, just like Henry Ford did when he created the assembly line to make the Model T.

The U.S. by far remains the world's leading manufacturer by value of goods produced. It hit a record $1.6 trillion in 2007 -- nearly double the $811 billion in 1987. For every $1 of value produced in China's factories, America generates $2.50.

So what's made in the USA these days? ...

U.S. Protestants more loyal to toothpaste brand than church?

USA Today: U.S. Protestants more loyal to toothpaste brand than church?

Some Americans are more loyal to their toothpaste or toilet paper than to their religious denomination, making those consumers more choosy about Charmin or Colgate than they are about church, according to a new survey.

According to a Phoenix-based research firm, 16% of Protestants say they would consider only one denomination, while 22% of them would use only one brand of toothpaste and 19% would use just one brand of bathroom tissue.

Experts say the findings may be more telling about Americans' views of the plethora of Protestant groups than how they choose between Quilted Northern and, say, Cottonelle.

"When you have a whole bunch of different brands out there and not a lot of differentiation among some of them — and not a lot of knowledge about them — the denominational world is facing the same problem as many other brands," said Ron Sellers, president of Ellison Research, which conducted the survey. ...

Creative, Emerging Theological Words

Jesus the Radical Pastor (John Frye): Creative, Emerging Theological Words

From my expansive reading, I’ve come to see the need for some new, emerging theological vocabulary.

wishional church– those faith communities longing to be a missional church

hermesleuthtics– the process of finding “secrets” in the biblical text, i.e., the “secrets” of a successful marriage, the “secrets” of overcoming all doubt, the “secrets” of the End Times, etc.

Calvinblistic– description of vitriolic language used by classical determinists to excoriate others

Empireronomics– the results of detecting the concept of “empire” permeating the biblical text ...

Great post. Check out the rest of the Lexicon.

Forests absorb 20 percent of fossil fuel emissions: study

Reuters: Forests absorb 20 percent of fossil fuel emissions: study

LONDON (Reuters) - Tropical trees have grown bigger over the past 40 years and now absorb 20 percent of fossil fuel emissions from the atmosphere, highlighting the need to preserve threatened forests, British researchers said Wednesday.

Using data collected from nearly 250,000 trees in the world's tropical forests over the past 40 years, their study found that tropical forests across the world remove 4.8 billion metric tons of carbon dioxide emissions each year.

"To get an idea of the value of the sink, the removal of nearly 5 billion tons of carbon dioxide from the atmosphere by intact tropical forests, based on realistic prices for a ton of carbon, should be valued at around 13 billion pounds per year," said Lee White, Gabon's chief climate change scientist, who co-led the study, said in a statement.

The researchers do not know exactly why trees are getting bigger and mopping up more carbon but they suspect that extra carbon dioxide in the atmosphere may be acting like a fertilizer. ...

Turning their backs on the world: Globalisation

The Economist: Turning their backs on the world: Globalisation

The integration of the world economy is in retreat on almost every front.

THE economic meltdown has popularised a new term: deglobalisation. Some critics of capitalism seem happy about it—like Walden Bello, a Philippine economist, who can perhaps claim to have coined the word with his book, “Deglobalisation, Ideas for a New World Economy”. Britain’s prime minister, Gordon Brown, is among those who fear the results will be bad.

But is globalisation really ending? The world’s economies are certainly slowing fast. And the speed and scale of this recession are raising doubts about the assumptions that had underpinned the drive to integrate world markets. At the end of 2008 the IMF said the world economy would grow 2.2% in 2009, less than half the rate in 2007. Now it thinks growth will be just 0.5% this year, the lowest for 60 years. Even that may be optimistic; in the last quarter of 2008, some economies shrank at annualised rates of over 10%.

Nobody ever said globalisation had ended economic ups and downs, but this feels different: prima facie evidence of big problems at least, and possibly of the failure of globalisation to deliver many of its advertised benefits, especially to the poor. True, economic slowdown is not the same as deglobalisation. And the slowdown has yet to affect one thing. For years, poor countries have been growing faster than rich ones; so far, they still are. The gap between real GDP growth in emerging markets and in rich countries widened from nothing in 1991 to about five points in 2007—and, says the IMF, it will stay at 5.3 points in 2008 and 2009. Helping poorer countries catch up has long been among the benefits touted for globalisation.

And yet the process is going into reverse. ...

Meager Harvest

Christianity Today: Meager Harvest

The Green Bible promises to grow our understanding of creation care. Unfortunately, its results don't satisfy.

Environmental crisis is a cliché whose connotations of divine judgment we no longer notice. But the term is apt for what is happening to the earth today. Habitats are disappearing and species going extinct at unprecedented rates. Artificial chemicals in ecosystems worldwide are lowering sperm counts and upsetting the gender balance of newborn vertebrates, including humans. The situation is grave even if we table the contested issue of global warming. Pioneering evolutionary biologist E. O. Wilson even set aside his longstanding differences with fundamentalists over human origins to pen The Creation, a plea for conservative Christians to embrace their responsibilities as stewards of God's earth. Ironically, Wilson is preaching to the choir: a recent study by the Barna Group found that nine in ten American evangelicals would like Christians to care more actively for creation. We are turning green.

With the release of The Green Bible (Harper One, 2008), the Scriptures are turning green too—literally. This "green-letter edition," says its publisher, "is the definitive Bible for the growing creation care movement." Its green ink highlights more than 1,000 passages chosen by The Green Bible's editorial team to demonstrate God's involvement in creation, the interdependence of its elements, its response to God, and how we are called to care for it.

The Green Bible's packaging almost parodies itself: soy-based inks, recycled paper, and a stylish, earthy cotton/linen cover made through a process in which "all air is purified before exhausting into the atmosphere and all water is purified and recycled." Surely this was a marketing necessity; the publisher could not afford the charges of hypocrisy that would follow if it printed The Green Bible the way it prints … well, its other books. But The Green Bible is not a self-parody. It's offered as a serious Bible, with introductory essays by an ecumenical mix of voices such as N. T. Wright, Desmond Tutu, Pope John Paul II, Brian McLaren, and Barbara Brown Taylor, and an epilogue with topical studies and an environmental subject index. All these resources aim to orient readers to Scripture's concern for the natural world, along with its calls for social justice and poverty relief. ...

Self-Interest and Benevolence: Partners, not Antonyms (Part 6)

[Link to Part 5]

Co-creators and Partners in Our Own Provision

Over the last five posts I’ve made the case that economic freedom has generated unprecedented abundance. People acting on what they believe to be in their best interests bid for goods and service, and people acting on their perceived best interest freely chose to provide goods and services to others. Without self-interest (i.e., being interested in one’s self) there would be no way for the market to coordinate the many needs people have with supplies. The market integrates us into a community.

Regrettably, there are those who pit the market economy against something called a gift economy. In theological circles, the reasoning goes something like this. God created the world with abundance. It is his gift freely given to us. Therefore, giving in expectation of return, much less profit, is counter to a godly character. Gift economy is godly, market economy bad.

But as we saw in the second post, this “gift economy” or “God’s abundance” mindset utterly ignores issues of production.  How is a society to answer the questions of how much of which things to produce? In the third post I explained how markets have produced abundance through free market exchange. But is market exchange in keeping with godly character? I would answer strongly in the affirmative.

Lost in so many discussions about these matters is the commission given to humanity by God in the opening chapters of Genesis. Humans are charged with exercising dominion over the earth. They are to “work the garden.” Dominion is neither about rampant destruction nor pristine preservation. It means bringing the earth to its fullness, and that includes humanity. Theologians have understood the stewardship mandate to include the development of culture that facilitates human flourishing and community.

The scriptural narrative begins in a garden but ends, not in some ethereal immaterial spirit world, but in a new creation, the New Jerusalem, a garden city. Cities were the symbol of human achievement in ancient days, including as they did the highest expressions of government, commerce, art, education and community. The biblical narrative shows God adding that which humans have created to his created order, purging it of all impurity, and making it his new creation.

If we were made purely for relationship with God and with each other, then why would we need a material existence? Our materiality is not some peripheral quality. We were made material beings for a material world,  which we are to work and exercise dominion over. This co-creative stewardship of material matters is intrinsic to out being God’s image bearers. We will be raised with new material bodies (although apparently transformed in some way) to work a new material world.

Individually and collectively, we are called to stewardship. Private property, held in trust for God,  is a given among Old and New Testament Christians. One of the constant refrains of the prophets was denouncement of the failure to protect property rights (i. e., there was no justice for the poor in the "city gates," or courts, who were being deprived of their property and liberty; unjust scales were used to measure grain.) The Jubilee Code in Leviticus 25 ensured (if obeyed) that no Israelite would be permanently alienated from his land and labor. (For more, see my brief series on Leviticus 25.) Each person was to work their land in service to God and to each other. They were partners with God in their own material provision and in the provision made for their neighbors.

Jesus and Paul make several allusions to Christians being the oikonomos, or the household manager. The wealthy Greco-Roman householder had a slave or free servant that he trusted above all others who served as his household manager. In his absence, he would place his oikonomos over the whole household. He had the same authority as the master but he was always to do his master’s will. Keep in mind that these households were not just domiciles but major business enterprises. The idea of doing economic labor in provision for one’s self and others in service to God is present throughout the biblical narrative.

Most people understand that transforming matter, energy, and knowledge from less useful states to more useful states creates something of value. As individuals we can relate to this process. But many fail to see the enormous wealth that is created through trade and it is in trade that we see communities integrated into each other’s lives and enhancing each other’s existence. Let’s take a moment to illustrate this.

There is grade-school game used to teach economics called the Trading-Game. There are three phases to this game:

Phase 1:  Each member of a class, say thirty students, is given at random an item worth about $1. Each student is told to right down on a scale of 1 to 10 how much they value the item with ten being the highest value. The teacher polls the class and gets and aggregate score.

Phase 2:  The class is divided into six groups of five. Each student is allowed to trade with any other student in their group. Sally got a pack of baseball cards and Joe got wrist bracelets. They make a trade. Other students do likewise. The teacher has each rate the value of what they now have. She aggregates the score and the new score is always higher.

Phase 3:  Students are now allowed to trade with anyone in the class. More trades are made. The final aggregate score goes still higher.

Notice that nothing was produced here, but because people had different values and wants, trade enabled most folks to increase their wealth at no loss to anyone, thus increasing the wealth of the whole community. It was win-win (or at least break-even) for each trader and a great win for the whole community.

Personal responsibility (looking after one’s own interests), working to produce something of value so you will have something to exchange, and then exchanging the fruits of our labor creates, integrates each of us into a wealth building community. The dynamic information exchange between buyers and sellers, and the competition of people to better serve each other’s needs, drives the economy toward an ever more efficient use of resources. We individually and corporately are pressed to be good stewards of the resources in our care. Thus, a market economy where people see themselves as stewards of God’s resources is thoroughly compatible with the Genesis image of humanity exercising dominion and being co-creators with God in caring for human needs and the needs of all creation.

The operative words are, of course, “where people see themselves as stewards of God’s resources.” Without this, the powerful integrative forces of the market are bent toward creating an economic city of Babel, unifying and magnifying our distorted images of who we think we are and what we deserve.

[Continued]

The Miracle of Coordinating Complex Markets

Townhall: Economic Miracle Walter Williams

... Imagine you are trying to understand a system consisting of six elements. That means there would be 30, or n(n-1), possible relationships between these elements. Now suppose each element can be characterized by being either on or off. That means the number of possible relationships among those elements grows to the number 2 raised to the 30th power; that's well over a billion possible relationships among those six elements.

Our economic system consists of billions of different elements that include members of our population, businesses, schools, parcels of land and homes. A list of possible relationships defies imagination and even more so if we include international relationships. Miraculously, there is a tendency for all of these relationships to operate smoothly without congressional meddling. Let's think about it. ...

"Smoothly"? Yes. But with perfect shalom? Hardly. But as I've written elsewhere, what is the alternative?

The article goes on to give a great supermarket illustration. However, he goes on at the end of the article to misappropriate Adam Smith's "invisible hand" metaphor. See Gavin Kennedy's A Good Case for Markets Spoiled by Misuse of Quotations.

Self-Interest and Benevolence: Partners, not Antonyms (Part 5)

[Link to Part 4]

The Indispensable Role of Government

Modern market economies create an incredible abundance, due in large part to the dynamic interchange of information. People have the freedom to bid for goods and services based on their wants and needs, and people have the freedom to organize resources to meet the needs of others. Vast numbers of free people integrated by markets is an extraordinary achievement. This generally what we mean by free markets

Yet the “free” in free markets does not mean anarchy or unbridled freedom. This is a misconception, one intentionally fostered by some detractors. Markets do not exist in vacuum, but rather in relationship to host of societal institutions and traditions.

At the most elemental level, a transaction is not free unless the both parties are non-coerced, both parties have sufficient knowledge of a transaction to be able to make an informed decision, and both parties know that there are authorities who will protect their right of ownership and impartially compel compliance with contracts. In short, there must be trust and in particular the ability to trust that even anonymous people will honor their commitments. There clearly is a role for government in this regard. But there are other roles as well.

Markets don’t always allocate costs effectively. Sometimes a person who isn’t party to a transaction ends up benefiting or being harmed by the transaction. If I hire a landscaper to do some work on my front lawn, it will likely improve the value of not only my property, but my neighbor’s property. Similarly if I hire a contractor to build a pig sty in my front yard, the stench and noise will not only affect me but my neighbor who had no part in transaction.

Pollution is one of the most frequently given examples of an externality. A factory pumps pollutants into the air at no charge but diminishes the air quality for everyone else around. Either through taxation or regulation, government plays a role in trying to reallocate the cost back to those who are unfairly benefiting. Government plays a critical role in this regard.

Capitalist economies, by definition, create large complex entities, an abundance of sophisticated financial instruments, and very complex market relationships between firms. There is no way most citizens can comprehend these features. Some regulation and oversight is needed, particularly to ensure transparency so that regulators and watchdog groups can scrutinize behavior.  This is another critical role that government plays.

Furthermore, government plays a critical role in international trade. It helps establish the ground rules for trading with citizens and business in other nations. When other nations engage in unfair trade practices (like placing exorbitant tariffs on American goods while deeply subsidizing the production of competitor goods for export to America) the government can use a number of actions to address this problem. Government can also use trade rules as a carrot and stick to work for more just working conditions and economic freedom in emerging nations.

In many ways, the government is a critically needed referee in the economic “game.” When players can have a reasonable level of trust that the rules will be consistently and fairly enforced it facilitates the flow of economic freedom. However, when the referee begins crossing over the line into head coach, (calling plays, making decisions about personnel, and taking positions on who should be given preferential treatment) chaos ensues. Markets become distorted and buyers and sellers can no longer correctly evaluate how to engage one another. Abundance dwindles.

Finally, government must intervene to prohibit transactions that are ultimately destructive to human life or societal health. While some libertarian friends disagree, I would continue to legislate against things like prostitution. While some people who have other legitimate economic choices may freely choose to engage in prostitution, many will succumb to the pressure to debase themselves, rather than do what is needed to avail themselves of legitimate economic options. Prostitution debases human beings (buyer and seller) into a commodity and that debasement tends to engender other destructive trends.

In broad terms, many people have little problem recognizing the need for this distinction. The challenge comes at the margins of these issues. For example, when is an externality truly an externality, or merely an inconsequential annoyance to a third party? What is “enough justice” when we are talking about trading justly with emerging nations that don’t entirely share our cultural institutions and values? There is room for reasonable people to disagree. Where I part ways is with those who believe in something approaching anarchy or those that think that economy should essentially be an extension of government agendas.

[Continued]

Centering on Poverty

Christianity Today: Centering on Poverty

A coalition of the Right and Left launches a new project to reduce poverty.

Just before President Obama signed the $787 billion stimulus bill into law, an intentionally diverse group of religious leaders gathered in Washington today to announce a new project to reduce poverty.

President George W. Bush's former speechwriter Michael Gerson called it "an orgy of strange bedfellows" as he and Sojourners founder Jim Wallis launched the Poverty Forum, a shared commitment to help the poor during an international financial crisis.

"It's a serious, substantive, innovative list of policy ideas that I think are going to be taken quite seriously," Gerson said at a press conference at the National Press Club. "It was a real opportunity to make sure that this set of issues was part of a broader dialogue on the economy in a time when our economy is a major topic of discussion." ...

Economic Decoupling?

For several decades the United States has been the driver of the world economy. Decoupling happens when nations economic fortunes are no longer directly driven by USA markets. Here are a couple of recent interesting stories from Mark Perry:

Carpe Diem: Bustling Shopping Malls in Brazil Are A Far Cry from the Consumer Gloom in Europe and the U.S.

The Brazilian stock market (Bovespa Index) has increased 20% since late October to 41,674, during a period when the U.S. stock market (S&P 500) has dropped by more than 10% (see chart above, click to enlarge).

Carpe Diem: China Looks Set to Be the First Major Economy to Recover from the Global Meltdown

Since the first of the year, China's Shanghai SE Composite Index is up by 23.5%, and is up 36% from the early November bottom (see chart above).

Back in March of 2008, this article in the Economist reported that for the first time more trade was done with China by emerging nations than with the United states. This Economist article from last month also alludes to a possible decoupling.

With the GDP of emerging nations growing at double the rate for the United States and developed world over the past decade it has seemed inevitable that decoupling would someday occur. We will see what the near future holds.

Forecasters: Economic Recovery in Q3 2009

Carpe Diem: Forecasters: Economic Recovery in Q3 2009

The U.S. economy is headed for two quarters of negative growth in the first half of 2009, according to 43 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters project that real GDP will contract at an annual rate of 5.2% in the first quarter and 1.8% in the second quarter of 2009. The survey participants expect economic recovery to begin in the third quarter of 2009. On a year-over-year basis, growth is expected to be -2.0% in 2009 and 2.2% in 2010. See chart above.

I wonder if these forecasters figured in the impact of the disastrous stimulus bill signed today. I suspect the economy will overcome the negative consequences in the short run but the potential impact beyond this year is disconcerting.

The More Choice Women Have, the More They Diverge From Men

Gruntled Center: The More Choice Women Have, the More They Diverge From Men

“The richer the country, the more likely women and men choose different types of jobs.”

This is the very interesting finding reported by Susan Pinker in The Sexual Paradox. She is specifically studying the problem that got Laurence Summers into so much undeserved trouble: why are there many fewer women than men at the highest levels of math, science, and engineering? Her answer: when given the choice, women with high aptitude for math, science, and engineering are more likely than similarly gifted men to choose something else.

In fact, Pinker argues, it is not that the women are discriminated against or diverted, where men are not. Rather, women with high math aptitude are also likely to have high verbal aptitude and high empathy, whereas math-minded men are not. It is the men who are channeled into science and engineering because they do not have as many other choices. The women, given the choice, are more likely to take their math skill to clinical medicine. They want to do work with people that makes more of a difference in people's lives.

The countries with the highest rates of women in science and engineering are not the ones in which women are most free, but in poor and authoritarian countries where math-competent women are pushed into science and engineering by families that want them to have higher salaries, and states that want more scientists and engineers.

Interesting stuff. Beau is doing an interesting  series of posts on this book.

Prison Entrepreneurship Program

One of the programs I've devoted some to time to over the years is the First Step Fund, a program offered through Fast Trac at the Kauffman Foundation. As the website says:

"First Step Fund is a nonprofit agency that has been providing business training and support to low- to moderate-income entrepreneurs in the metro Kansas City area since 1994."

I was one of the original business counselors back in 1994 and I've volunteered in various ways with the program ever since. It is a great program.

A more recent addition to the Fast Trac family of programs is Prison Entrepreneurship Program. The BBC just did a story (Turning crack dealers into chief executives) on Catherine Rohr who founded PEP because of calling she sensed from God. She dropped out of her Wall Street venture capital firm to teach convicts business skills. It is a truly inspiring story. Read the article. Below are a couple of clips that I believe were made in conjunction with Willow Creek's Leadership Summit program.

Self-Interest and Benevolence: Partners, not Antonyms (Part 4)

[Link to Part 3]

Imperfect Markets: Too little freedom or too much?

I ended my last post with this observation:

“Market economies are creating unprecedented abundance and that can be celebrated.  But tremendous evil and mischief is also done by people having the freedom to act on their perceived self-interest. The dilemma is that economies without this freedom do not create abundance and still tend to create just as much, if not more, evil and mischief. Trusting to self-interest alone is not enough.”

Market economies create incredible economic information exchange systems. Assuming everyone were perfectly virtuous, that they truly knew what was in their best interest, and that they acted upon that knowledge with every transaction, you might be able to say that we could achieve a near utopian society. In fact, some libertarian folks see the obstacle to a virtuous society as being virtually anything that impinges on personal choice. Absent government interference, they see markets acting with near perfect fairness and efficiency.

As Christians we know that all have sinned and fall short of the glory of God. No one is perfectly virtuous and the great majority of us are far from it. Furthermore, being finite beings with limited knowledge, we can’t always correctly determine what is in our best interest. Capitalist economies create large corporations and complex transactions where adequate knowledge is difficult to garner even when there is no attempt at deception, much less when there is an intention to mislead and conceal. Many libertarians esteem both human nature and human discernment too highly.

So, we know that market economies do an astounding job of integrating all our decisions (virtuous and bad, well informed and errant) into one organic feedback loop. Maybe we can just filter out the bad stuff. Enter the liberal thinkers.

 One possibility for filtering out the bad is to have someone oversee everything, making sure bad stuff doesn’t happen. They can look out for the common good. The obvious candidate for the job would be a representative government.

At first blush this looks quite encouraging but it does not bear up under scrutiny. First, government is drawn from the same less than virtuous pool of folks as the ones who are behaving less than virtuously in the marketplace. While many people enter politics with noble motives, the opportunity to wield power also draws in those he seek power for less than noble reasons.

Second, let’s assume we do have a government of only noble servants. I demonstrated in the previous post the incomprehensibly complex nature of the market. What makes these government officials specially qualified to comprehend how their decisions will reverberate through the market and to know that any given policy is going to be an improvement on the common good over what the market delivers?

We know that some well-intentioned government interventions have had perverse consequences that harm the common good. For example, a city has a homeless problem so it institutes rent controls in order to keep housing affordable. The city tells landlords how much rent they can charge and how much they can increase rent each year. Housing demand rises so fast that it drives the amount renters are willing to pay to a level beyond that which landlords can charge. Renters have an incentive not to surrender their leases. Instead, when they decide to live elsewhere, they keep the lease and sublet the apartment. They charge the new tenant the rent they owe the landlord plus a premium above the landlord’s rent that the landlord is forbidden to charge. People already with apartments are less inclined to move because usually the one time the landlord can bump up the rent is when a new renter moves in. It is cheaper for the renter to stay put so turnover comes to a halt.

As a consequence of these actions, developers stop building new dwellings because they know they won’t be able to collect the full value of the rental property. Existing landlords began to skimp on maintenance because they can’t collect what the market dictates should be paid. As the situation deteriorates, some landlords go bankrupt, others turn to nefarious strategies like arson in order to collect insurance, while others just walk away. The net result is greater homelessness from a dwindling housing supply. The shortage drives prices still higher, freezing up turnover even more and the cycle continues.

We don’t have to look farther than today’s headlines to see evidence. The present financial crisis was brought on in part by good intentions of both Democrats and Republicans to expand home ownership. One theory also has it that just as multiple uncoordinated intelligence gathering entities led to mistakes prior to 9/11, multiple uncoordinated financial regulatory entities led to failure to detect problems in financial markets. Now congressional Democrats are on the populist bandwagon of protectionism, which 90% of economists of all stripes deem to be a bad idea. Politicians are just like the rest of us, prone to do corrupt things and fallible finite human beings.

Third, politics nearly always generates less than optimal solutions. Political solutions usually factor in the impact on the intended targets of legislation, but political solutions are always a product of appeasing and balancing competing groups with an interest in the legislation. Thus, political solutions are nearly always skewed one way or the other from optimal solutions.

So to summarize, the ability of people to feed their wants and needs into the real-time complex information system called the markets has created an unprecedented (and that is an understatement) ability of the economy to function as a dynamic generator of abundance, meeting a wider portion of the population’s basic needs than ever before. But because people do not always correctly evaluate what is in their best interests with regard to wants and needs, either due to corrupt minds or the simple finitude of our faculties, the market economy is also a prodigious producer of bad things as well.

Getting more freedom into the system isn’t going to bring us into some quasi-utopian new age. Neither are government control and regulation.  The Right is persuaded that government is a bigger obstacle to a better world than is economic freedom. The Left is persuaded that economic freedom is a greater threat than government intervention. While greater freedom might lessen some dysfunctions of government and more government might lessen some dysfunctions of destructive decisions in the market, neither deal with the underlying character of the participants in the market and the government. From a Christian perspective, both agendas are quibbling at some important margins of the fundamental problem, but they are still only at the margins. That problem is human nature.

[Continued]

Where Economists Agree

Greg Mankiw: News Flash: Economists Agree  (Mankiw is the author of the leading college textbooks on economics. )

... My favorite textbook covers business cycle theory toward the end of the book (the last four chapters) precisely because that theory is controversial. I believe it is better to introduce students to economics with topics about which there is more of a professional consensus. In chapter two of the book, I include a table of propositions to which most economists subscribe, based on various polls of the profession. Here is the list, together with the percentage of economists who agree:

1. A ceiling on rents reduces the quantity and quality of housing available. (93%)
2. Tariffs and import quotas usually reduce general economic welfare. (93%)
3. Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
4. Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
5. The United States should not restrict employers from outsourcing work to foreign countries. (90%)
6. The United States should eliminate agricultural subsidies. (85%)
7. Local and state governments should eliminate subsidies to professional sports franchises. (85%)
8. If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
9. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
10. Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
11. A large federal budget deficit has an adverse effect on the economy. (83%)
12. A minimum wage increases unemployment among young and unskilled workers. (79%)
13. The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
14. Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)

If we could get the American public to endorse all these propositions, I am sure their leaders would quickly follow, and public policy would be much improved. That is why economics education is so important. ...

Belief in Evolution by Country

The Economist: Untouched by the hand of God (HT: Brad Wright)

I suspect the low numbers in Turkey are due to Islamic beliefs. The low numbers in the United States are likely due the persistent residual impact of Scottish Common Sense Realism, which so heavily influenced American Christianity in the 18th and 19th Centuries,  with its insistence of a "fact-to-fact" utterly historical reading of the early chapter of Genesis.

G7 pledges to avoid protectionism

BBC: G7 pledges to avoid protectionism

Leading industrial countries have pledged to avoid protectionism as they battle the global economic crisis.

Finance ministers at a G7 meeting in Italy said raising barriers to free trade would make the downturn worse.

Hours earlier, the US Congress approved an $787bn economic recovery plan that includes a 'Buy American' clause.

G7 ministers said stabilising the world economy and financial markets was their priority. They said they would work together to support growth and jobs.

The 'Buy American' clause has raised fears that protectionism could be growing in the world's largest economy.

But in a statement after the meeting, new US Treasury Secretary Timothy Geithner dismissed such concerns.

"All countries need to sustain a commitment to open trade and investment policies which are essential to economic growth and prosperity," he said.  ...

So let me get this straight. Obama's administration and the Democrats in congress are opposed to protectionism ... except for the part where they mandate American businesses will buy only American.

Reminds me a little of this exchange from Casa Blanca:

Rick: How can you close me up? On what grounds?

Captain Renault: I'm shocked, shocked to find that gambling is going on in here!

[a croupier hands Renault a pile of money]

Croupier: Your winnings, sir.

Captain Renault: [sotto voce] Oh, thank you very much.

Orwell lives!

New Pastor's Job Description

Our congregation has been without a pastor for a few months. We've been conducting small group listening sessions to determine what the congregation thinks we need in terms of a new pastor. I've led two of these groups. This information will be put into a PCUSA Church Information Form as the first step in trying to match a pastor with our congregation.

After two listening sessions, and hearing what is going on in other groups, I've already been able to synthesize the new pastor's job description:

The perfect pastor preaches exactly ten minutes. He condemns sin, but never hurts anybody's feelings. He works from eight in the morning until midnight and is also the church janitor. He is twenty-nine years old and has forty years experience. He makes fifteen house calls a day and is always in the office. (This actually comes from Jan Karon's These High, Green Hills, p. 37)

Any other qualifications you would add?

Two billion more bourgeois: The middle class in emerging markets

The Economist: Two billion more bourgeois: The middle class in emerging markets

The rise of a new middle class has changed the world. What if they sink back into poverty?

PEOPLE love to mock the middle class. Its narrow-mindedness, complacency and conformism are the mother lode of material for sitcom writers and novelists. But Marx thought “the bourgeoisie…has played a most revolutionary part” in history. And although The Economist rarely sees eye to eye with the father of communism, on this Marx was right.

During the past 15 years a new middle class has sprung up in emerging markets, producing a silent revolution in human affairs—a revolution of wealth-creation and new aspirations. The change has been silent because its beneficiaries have gone about transforming countries unobtrusively while enjoying the fruits of success. But that success has been a product of growth. As growth collapses, the way the new middle class reacts to the thwarting of its expectations could change history in a direction that is still impossible to foresee.

The new middle consists of people with about a third of their income left for discretionary spending after providing basic food and shelter. They are neither rich, inheriting enough to escape the struggle for existence, nor poor, living from hand to mouth, or season to season. One of their most important characteristics is variety: middle-class people vary hugely by background, profession and income. As our special report in this week’s issue argues, their numbers do not grow gently, shadowing economic growth and rising 2%, or 5%, or 10% a year. At some point, they surge. That happened in China about ten years ago. It is happening in India now. In emerging markets as a whole, it has propelled the middle class from a third of the developing world’s population in 1990 to over half today. The developing world is no longer simply poor. ...

Unix Lovers to Party Like It's 1234567890

Wired: Unix Lovers to Party Like It's 1234567890

Unix weenies everywhere will be partying like it's 1234567890 this Friday.

That's because, at precisely 3:31:30 p.m. Pacific time on February 13, 2009, the 10-digit "epoch time" clock used by most Unix computers will display all ten decimal digits in sequence. (That's 6:31:30 Eastern, or 23:31:30 UTC.)

Unlike time systems intended for humans, Unix time simply counts the number of seconds since midnight UTC on January 1, 1970. ...

Now aren't you glad you read the Kronicle. Where else could you be pointed to such vital information?

At 200, Darwin Evolves Beyond Evolution

Wired: At 200, Darwin Evolves Beyond Evolution

Two hundred years after Darwin's birth, the theory of evolution is still evolving — and finding relevance in realms far outside the biological.

Evolution is being scaled up to the level of populations, even whole ecosystems. Moreover, scientists say evolution is intertwined with other dynamics in ways science is just starting to understand.

"The process of evolution is fundamental to the universe,” said Carl Woese, a University of Illinois at Urbana-Champaign microbiologist and one of the first proponents of this newly revised evolutionary framework. “Biology is the most obvious manifestation of it.”

Darwin described how changes in an organism are  passed from generation to generation depending on their contribution to survival. Biologists later combined this with genetics, which hadn’t been discovered in Darwin's time.

The fusion — called neo-Darwinian evolution — describes evolution as we know it today: Genetic mutations produce changes that can become part of a species' heritage and, when enough changes accumulate, produce new species.

It’s one of the most powerful descriptions of the world dreamed up by humans, central to understanding the natural world and applicable to engineering, economics and even software design. ...

The Money Liberal Conspiracy At Work

Slate: The Money Liberal Conspiracy At Work Mickey Kaus

As promised, here are the gory mechanics of the liberal conspiracy to expand welfare rolls through an insufficiently publicized provision in the stimulus bill: ...

... P.S.: On bloggingheads my colleague Bob Wright routinely ridiculed me as paranoid for worrying that if Democrats got back in power they would unravel welfare reform. Even I thought I was paranoid. If only for political purposes, I figured, Dems would have to wait a few months or years before sabotaging Bill Clinton's major domestic achievement. It took them two weeks. ...

**--By "Money Liberals" I mean liberals who define the equality they seek entirely in economistic terms. Confronted with the indignity of poverty, Money Liberals seek to end it by the simple expedient of sending cash to the poor. Money Liberalism, in this definition, ignores non-material distinctions, like those between those who work and those who don't, that (in an alternative, more Clintonian view) are fundamentally bound up in our ideas of dignity and civic respect (i.e. social equality). Specifically, an able-bodied person who fails to work and relies instead on the dole can't have full respect in our society, and shouldn't. The attempt to confer equal respect by spreading around cash--as opposed to guaranteeing work, and making work pay--is doomed. (More here, esp. the exciting footnote 2 on page 192).

The Shrine of FDR

National Review: The Shrine of FDR

Why the Left worships there. ...

...Sirota’s point about high-school civics classes helps explain the vitriol. The glory of the New Deal is, for liberals, settled dogma. To question it is akin to casting doubt on geocentrism in the 14th century. Worse, it is an attempt to erase liberalism’s most usable past. ...

...In fairness to Sirota, DeLong, and Gross, their argument is more empirical. They rebut the charge that the New Deal “prolonged” the Great Depression by pointing to FDR’s efforts to stabilize the banking system. And they’re right to make that argument. Many of those efforts did help end the Depression, as even Milton Friedman and Federal Reserve chairman Ben Bernanke have argued. But some of those efforts didn’t help. ...

...Both these defenses are representative of the general approach of New Deal apologists: Whenever challenged, they simply change the terms of the argument. While it’s certainly true that there is no consensus that the New Deal prolonged the Great Depression, there is a sweeping consensus that the New Deal didn’t end it. The vast majority of historians and economists—including Paul Krugman—will concede that the Great Depression didn’t end until either World War II or the post-war economic boom (that’s a whole other argument). In other words, only after FDR himself admitted he was no longer going to play the role of “Dr. New Deal” and instead became “Dr. Win-the-War” was there any real chance of ending the Great Depression. If a golfer can’t hit the ball to save his life with a five-iron, but smacks the dickens out of it with a seven-iron, it’s hard to see how his improved score demonstrates the effectiveness of five-irons....

...Yet, again, from the liberal perspective, this misses the point entirely. Some of the New Deal surely helped, and much of it definitely hurt, they might grudgingly concede; but to get mired in such questions is to overlook the true meaning and majesty of it all. This was the first time while the country was not at war that the American people gave war powers to liberals to do whatever they thought best. That’s what liberals love about the New Deal, and that’s the real reason they want to bring it back.

Bingo!

Deflation Fears Subside

Greg Mankiw: Deflation Fears Subside

Here (in blue) is the yield on an inflation-adjusted bond and (in red) the yield on a nominal bond of approximately the same time-to-maturity. The negative inflation compensation that showed up a few months ago (when the blue line was well above the red) has shrunk to about zero. These relative yields are moving back toward a more normal, and healthier, alignment.

Self-Interest and Benevolence: Partners, not Antonyms (Part 3)

[Link to Part 2]

The Miracle of the Market

For the first time in human history, we’ve seen societies emerge with widespread material abundance. Innovations in economic production have far outpaced the Malthusian scarcity trap. There are many reasons for this. Advances in technology, radically improved infrastructure for communication and transportation, improvement in food production and storage, investments in human capital, and ever expanding trade have all played roles. But at the core of it all is a dynamic economic information system.

In the previous post I said that the biggest macro-economic questions a society faces are how much of which things should be produced and how to achieve a just distribution. The production question requires that we have some way of determining how much people need of a particular item, determine how much capacity we need to allocate to meet the need, and find the resources required to produce it. The problem is that in any given nano-second, some needs are met while others emerge. In the next nano-second, it shifts again. And this is just one product. Multiply this by millions, if not billions, of individual items. There is simply no way to monitor what level of need exists at any precise moment in time and assuming we could know it would be obsolete a nano-second later. We need a real-time dynamic feedback loop. Fortunately, we have one. It is called the market.

Let’s take a practical example. Who should determines how many number 2 wooden pencils I need right now? I should. I’m the one best positioned to weigh competing demands and opportunities in my life. I’m best positioned to know my self-interest. For whatever reason, I’ve decided I need a box of two dozen pencils.

Off I go to the business-supply store. I find a box of number 2 pencils. If they’re priced higher then I think they should be, I might look elsewhere or I might rethink my need. If they are lower than I expected, I might be enticed to buy more than I thought. They cost about what I expected them to, so I buy them.

The business-supply store’s computer tracks how many boxes of pencils have been sold. When it falls to a certain level, the store determines that it is in their self-interest to buy more pencils from pencil manufactures, likely tracking multiple suppliers to see who is offering the best deal at the moment. The store orders the pencils.

The pencil manufacturer takes the order from the business-supply stoare, along with orders from other buyers, and determines how many pencils are going to be needed to fill the orders at the agreed upon price. She then determines that it is in her self-interest to fill this order. She determines how much of the following are required: The wood and the lead, the paint that goes on the pencil, the metal tip that goes on the end of the pencil to hold an eraser, the eraser, the cardboard box to hold the pencils, the shrink wrap material to wrap the boxes, the number of lager boxes to hold the smaller boxes, the number of pallets to hold the larger boxes …. you get the picture.

Then the lumber mill, the lead mine, the paint manufacturer, the tin seller, the eraser producer, the box manufacturer, the shrink wrap supplier, the pallet company, etc., take the order they got from the pencil manufacturer and combine it with others they have received from other businesses and decide if it is in their self-interest to supply their goods at the price the pencil manufacturer is offering. They place their orders with their many suppliers and the whole process becomes incomprehensibly complex. The pencil is a very simple product and I’ve way oversimplified things here. (See I Pencil for a more intriguing essay.) Now multiply this scenario times millions and millions of products and there is no way to appreciate the magnitude of what is happening across the economy.

At any point in these transactions buyers and suppliers can bid prices in either direction depending on what they think is in their self-interest. Each bid causes a ripple to hit the market and requires players to adjust. Our economy has no pencil Czar to oversee that an adequate supply of pencils are made and distributed. Yet day after day a sufficient number of pencils are produced and sold at a reasonable price. Pencil production is achieved by a massively complex information system with a real-time feedback loop communicated through bids and sells. Those bids and sells are a product of each individual player weighing what is in their self-interest. And, assuming no deception or coercion, if both parties agree that a transaction is in their self-interests, then it is a win-win situation.

People being responsible for themselves and then acting on their self-interest in the marketplace is the most effective way to manage the production and distribution of goods in an unfathomably complex economy like ours. To the degree that economies move more to this economic communication system (supported by things like communication and transportation infrastructure, and appropriate legal structures), they create an economy that produces material abundance and meets basic needs well. In historical terms, it is something truly to be marveled at.

Therefore, if we just get out of the way and let people freely act on their self-interest we can achieve a Utopian world approaching the coming shalom of the Kingdom of God, right? Categorically and unequivocally wrong! Earlier I said the individual is the one who is in the best position to know what is in his or her self-interest. Clearly we know we need food, shelter, and clothing, but when we get much beyond that, how many of truly know what our self-interest ultimately is? It is one thing to acknowledge that we are each best positioned to know what is in our self-interest but it is profoundly another to say that we truly do know our ultimate self-interest, much less that we act on it.

Market economies are creating unprecedented abundance and that can be celebrated.  But tremendous evil and mischief is also done by people having the freedom to act on their perceived self-interest. The dilemma is that economies without this freedom do not create abundance and still tend to create just as much, if not more, evil and mischief. Trusting to self-interest alone is not enough.

[Continued]

China pursues Latin America ties

BBC: China pursues Latin America ties

Two top Chinese officials have started visits to Latin America as part of an intensified effort to strengthen ties with the region.

Chinese Vice-Premier Hui Liangyu is to visit Argentina, Ecuador, Barbados and the Bahamas.

Vice-President Xi Jinping is visiting Jamaica, Colombia, Venezuela and China's two biggest trading partners in the region, Brazil and Mexico.

China has stepped up its efforts to strengthen ties with Latin America.

It is rare for two of its top leaders to descend on the region almost at the same time. ...

Khomeini revered as Iran's revolution hits 30

Christian Science Monitor: Khomeini revered as Iran's revolution hits 30

Iran marks the anniversary of its 1979 Islamic revolution on Tuesday.

Tehran, Iran -  In dim light from high windows, the stream of schoolchildren never stops. Class after class of pupils, herded by their teachers, make their pilgrimage to the place where Ayatollah Ruhollah Khomeini, the founder of Iran's 1979 Islamic revolution, once preached.

A banner leaves no doubt about today's lesson: "This revolution is not known anywhere in the world without the name Khomeini."

As Iran marks the 30th anniversary of its revolution on Tuesday, the ayatollah's defiant spirit still towers above all. From Iran's opposition to America as the "Great Satan," to the spread of its ideology of resistance – as well as loving family moments – Khomeini's legacy lives on in fact and myth. ...

Judgment Day: Intelligent Design on Trial

John H. Armstrong: Judgment Day: Intelligent Design on Trial

No subject stirs up more fear and opposition among a lot of conservative and fundamentalist Christians than science and faith. And nothing stirred up passions, at least in recent years, quite like the famous Dover (PA) court case regarding the school board's mandate to teach Intelligent Design (ID) alongside of evolution. In 2004 the school board ordered teachers of science to read a statement to their high school biology students about an ID alternative to Darwin's theory of evolution.

For those who do not know the term Intelligent Design (ID) is the argument that life is too complex to have evolved naturally and thus there must be an intelligent agent behind the forces of nature. In Dover a textbook was donated to the school district, a book that taught ID. This prompted the teachers to sue the school board. The town was deeply and bitterly divided and the rage and emotional tempest reached a boiling point that finally impacted people and school boards all across the nation. The court case played itself out in a place where there was no jury. A lone judge, who was appointed by President Bush and was a man with a conservative judicial philosophy, heard the arguments and wrote the ruling.

The celebrated case of Kitzmiller vs. Dover School District produced arguments advanced by expert lawyers, scientists and witnesses for both sides in the debate. Judgment Day: Intelligent Design on Trial is the television program that just aired on Public Broadcast (PBS), and is now available on DVD. (The link in the previous sentence will take you to the site where the entire presentation is discussed and argued.) This documentary, in my estimation, is both riveting and well done. ...

It’s No Time for Protectionism

New York Times: It’s No Time for Protectionism  Greg Mankiw

WHAT approach will the Obama administration and the Democratic majority in Congress take on international economic policy? It is too early to say for sure, but the signs so far are worrying.

Just before his confirmation as Treasury secretary, Timothy F. Geithner turned up the heat on the Chinese regarding the dollar-yuan exchange rate. President Obama, he said, “believes that China is manipulating its currency. Countries like China cannot continue to get a free pass for undermining fair-trade principles.”

Like many economists, I cringe whenever I hear the term “fair trade.” It is not that I am against fairness — who is? — but the word “fair” is so amorphous in this context as to defy definition. Most often, the slogan “fair trade” is little more than a rallying cry for protectionism.  ...

... This may be a good time to recall the legacy of Senator Reed Smoot of Utah and Representative Willis Hawley of Oregon, both Republicans. The 1930 tariff bill that bears their name did not cause the Great Depression, but it contributed to a plunge in world trade and undoubtedly was a step in the wrong direction.

As we sort through the wreckage of our own financial crisis, a retreat into economic isolationism is one mistake we want to be sure not to repeat.

One of the most troubling things I heard from Obama during the campaign, that was given minimal press coverage, was his strong affinity for protectionism. I have been hoping that the recent financial crisis would cool his jets on this a bit. The evidence is to the contrary. This does not bode well for world economy and for the poorest of the world's poor in particular.

The "Man-Cession" Worsens, Record M-F Gap

Carpe Diem: The "Man-Cession" Worsens, Record M-F Gap

According to today's BLS labor report, the gap between the male jobless rate (8.3%) and female jobless rate (6.7%) widened to 1.6%, which is the largest male-female jobless rate gap in BLS history (back to 1948).

Oldest Animal Fossils Discovered

Wired: Oldest Animal Fossils Discovered

Fossil traces found in an oil field on the Arabian Peninsula are the oldest evidence yet of animals, pushing back the known origins of higher life to more than 635 million years ago.

The animals' remains don't look like traditional fossils. They're more like fossil echoes: chemical traces of a compound only produced — at least in modern times — by demosponges, descendants of what some scientists consider to be the last common ancestor of all animals. ...

Self-Interest and Benevolence: Partners, not Antonyms (Part 2)

[Link to Part 1]

Scarcity and Abundance

I ended the previous post noting that free and virtuous pursuit of self-interest is absolutely essential to just economic production and to human flourishing, but I also noted self-interest alone is insufficient. We will deal with the latter qualification in due time but first we need to look at economic production.

Most economics textbooks will tell you that economics studies how societies manage scare resources. Two key aspects of economics are production and distribution. Each society must determine how much of any good or service is to be produced and each society must decide on what basis goods and services will be distributed.

Yet when intellectuals, theologians, and activists turn their attention to economic issues, there is a pervasive tendency to focus on economic distribution to the near exclusion of economic production. Particular aim is taken at the notion of scarcity, claiming instead that we live in abundance. Read these selections from Douglass Meeks’ God the Economist: The Doctrine of God and Political Economy, a popular theological text on economics written twenty years ago and still used in some seminaries and colleges today:

Christianity will therefore be subversive in calling into question the deepest assumption of modern economics, namely scarcity. Nothing is deeper in the spirit of capitalism, and of socialism as well, than the belief that there is not enough to go around. (Meeks, 171)

What the market mechanisms actually require is scarcity in the sense of blocked access to what people need for livelihood and work. Scarcity in this sense is the conditions for exclusive private property. (Meeks, 172)

Scarcity may not be made the starting point of a system of economic justice. As a starting point, scarcity is an illusion. In almost all situations of human life scarcity has been caused by human injustice. (Meeks, 174)

Either by ignorance or by design, this line reasoning is oblivious to economic production. One might be forgiven for thinking, based on this reasoning above, that cars, cell phones, loaves of bread, clothes, and all other goods we buy simply exist somewhere. All we need is a better distribution mechanism to make sure everyone has some.

Assuming you live to be eighty years old, and assuming you had the aptitude for all the following, why would you not learn to be a concert pianist, a physicist, a lawyer, an expert auto mechanic, a professional athlete, a business mogul, a senator, and a movie star? Because even with an aptitude for each of these, you would not have the time to pursue all them in one lifetime.

Let’s bring the lens in even tighter. When you awoke this morning you likely charted out a set of activities you would do today. In choosing to arise at 6:00 a.m. you chose not to arise at 5:00 or 7:00. In eating your Cheerios, you chose not to fix scrambled eggs or make waffles. In choosing to go to work you chose not to play golf, go shopping, or rob a bank. We can’t everything all at once. We have a limited number of hours in each day and a limited number of days in our lives. Scarcity is inescapable. The fundamental reality of human existence is that time is a scarce resource. We must choose some things and not others.

Furthermore, as we take a global view we can observe that on any given day there is a relatively fixed number of people with a fixed set of skills and knowledge, a fixed amount of productive capacity (technology and infrastructure), and a fixed amount of raw materials that can be accessed in a 24 hour period. Each day our world collectively decides how it will allocate limited labor, limited productive capacity, and limited raw materials. In short, we manage scarcity.

When Meeks writes, “Nothing is deeper in the spirit of capitalism, and of socialism as well, than the belief that there is not enough to go around,” the “enough” seems to imply the basic goods to sustain life. This is just plain silly. Within capitalism or socialism there is the belief that there is not enough of everything everyone might conceivably want to go around. Both ideologies presume that basic needs can be met with their systems. Meeks’ pejorative misrepresentation of economics is really inexcusable yet I find it regularly reflected in the mindsets of people who identify with progressive Christianity (and even some who aren’t progressive.)

Now if by scarcity we simply mean everyone not having enough to sustain life at some basic level, then only in recent years have some societies found ways to eliminate scarcity. But societies around the world have also been mired in the Malthusian Trap. Thomas Malthus, writing 200 years ago, noticed that across history societal prosperity tended to lead toward population growth. Population would eventually outstrip the resources to sustain itself (i.e., scarcity), causing famine and disease (sometimes conflict and war.) Population would decline back to manageable levels, prosperity would again take root, and the whole process would endlessly repeat itself.

Only in the past two or three centuries have some societies broken through the Malthusian trap. How did they escape? They found a way to produce an abundance that outstripped Malthus’ scarcity trap, not a better way to allocate some mythical pre-existing abundance that some had kept away from others. Contrary to Meeks’ notion that abundance is the norm and scarcity an illusion, scarcity is the inescapable human condition and abundance is the product of human beings transforming matter, energy, and knowledge from less useful states into more useful ones. Without sufficient economic production, there is no abundance to distribute. Critical to achieving sufficient economic production has been the freedom of individuals to act on their own self-interest in the marketplace. We turn to the importance of this in the next post.

[Continued]

Blogging Obstacle

Some Kronicle readers will notice that my original posts are somewhat erratic lately. There are multiple reasons for this. One is that I do my best blogging sitting in my recliner in my office but unfortunately, sometimes after I get up to do some chores, I come back and this has happened:

What's a blogger to do?

Kansas City Chiefs hire Todd Haley as coach

Yahoo! Sports: Kansas City Chiefs hire Todd Haley as coach

KANSAS CITY, Mo. (AP)—Todd Haley was hired as coach of the Kansas City Chiefs on Friday after helping the Arizona Cardinals reach the Super Bowl as coordinator of one of the NFL’s most exciting offenses.

Haley joins a team that went a franchise-worst 2-14 under coach Herm Edwards, who was fired Jan. 23. Edwards lost all but two of his last 25 games and launched a rebuilding project that made the Chiefs the league’s youngest team this season. ...

Woo hoo!

Adam Smith On Selfishness and Public Spirit

Adam Smith's Lost Legacy: Adam Smith On Selfishness and Public Spirit

Roland Patrick states in his piece:

“Well over two centuries ago Adam Smith explained, in Wealth of Nations, how the public got what they needed, and it wasn't usually through 'public service'. It was by appealing to the selfish interests of producers of food, clothing and shelter. i.e., by offering money in return.”

Comment

If your are going to quote from Adam Smith (or, indeed, anybody) you ought to get the quotation correct. Slipping in the word ‘selfish’ before interests is, er, naughty. There is quite a lot of difference between ‘self interest’ and ‘selfish interest’.

You may be selfish as your fancy takes you, but that’s no way to engaged with other people. Selfishness begets selfishness. But in exchange transactions, especially when bargaining for something, Adam Smith made it clear exactly what is involved:

‘But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.’ (WN I.ii.2: p 26-7)

You get what you need, not be being selfish but by interesting their [NOT your] self-love in his [NOT your] favour, and show them that it is for their [NOT your] own advantage to do for him [You] what he [You] requires of them [Him].

It’s a two-way, not a one-way, street. It’s his self-interest you address, not your own. And you do this by using a conditional proposition, ‘If you..Then I’:

“Give me that which I want, and you shall have this which you want”

The important element of bargaining is to convince the other party how and why she benefits from the transaction. You have to be ‘other-centred’, not selfishly self-centred.

Nobody selling you a television would be successful if he told you that you should buy because he, the seller, will be able to afford a new car. The buyer wants to hear what benefits she gets from the deal, not what the seller gets, and the seller should tell her why it is beneficial to her not him for her to agree a purchase. ...

The return of economic nationalism

The Economist: The return of economic nationalism

A spectre is rising. To bury it again, Barack Obama needs to take the lead.

MANAGING a crisis as complex as this one has so far called for nuance and pragmatism rather than stridency and principle. Should governments prop up credit markets by offering guarantees or creating bad banks? Probably both. What package of fiscal stimulus would be most effective? It varies from one country to the next. Should banks be nationalised? Yes, in some circumstances. Only the foolish and the partisan have rejected (or embraced) any solutions categorically.

But the re-emergence of a spectre from the darkest period of modern history argues for a different, indeed strident, response. Economic nationalism—the urge to keep jobs and capital at home—is both turning the economic crisis into a political one and threatening the world with depression. If it is not buried again forthwith, the consequences will be dire. ...

Amen to this article!