Kruse Kronicle

Making Faith Relevant to Economic Life: Is The Church Up to The Challenge?

The author of this article is John C. Knapp, Ph.D., University Professor and Mann Family Professor of Ethics and Leadership at Samford University.  He also is adjunct professor of Christian ethics at Columbia Theological Seminary.  He is author of a forthcoming book, Worlds Apart: How the Church Fails Businesspeople (and what can be done about it). He presently serves on the PCUSA Advisory Committee on Social Witness Policy. This article was first published in Church & Society journal of the Presbyterian Church (USA), spring 2006, and is republished here, in a slightly edited form, with the permission of the author and the journal.

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Making Faith Relevant to Economic Life: Is The Church Up to The Challenge?

A store manager is ordered by corporate headquarters to reduce the number of full-time workers at her location, making it her responsibility to decide which employees will lose their jobs.

A sales representative for a television station feels conflicted about selling advertising to sponsor programming with content he considers sexually exploitive.

A hospital employee worries that elderly, lower income patients are often neglected and given less post-operative care than others, yet her coworkers accept this inequity as “just the way the system works.”

The owner of a failing business struggles to meet his obligations to creditors, employees and suppliers, while privately weighing the option of a bankruptcy filing.

These thorny situations are among nearly 200 real-life dilemmas recounted by Christians across the country in personal interviews about life in today’s workplace.  The research, conducted by doctoral students at Columbia Theological Seminary, explored how church members relate their faith to their daily experiences in occupations ranging from corporate CEOs and elected officials to barbers and bookkeepers.

The diverse respondents had little trouble recalling work-related challenges that were sources of emotional and spiritual stress in their lives.¹ Yet few, if any, had turned to a member of clergy for counsel in such a matter.  Though most expressed a sincere desire to strengthen the connection between their weekday jobs and their Christian faith, only a handful could recall a single sermon, Sunday school lesson or other effort by the church to bridge these two spheres of their lives. 

A study by Doug Sherman and William Hendricks produced similar findings.  In a survey of 2,000 people who regularly attend church, 90 percent responded “no” to the question, “Have you ever in your life heard a sermon, read a book, listened to a tape, or been to a seminar that applied biblical principles to everyday work issues?”  Their conclusion: “the church has grown virtually silent on the subject of work.”²

The Church’s Responsibilities

Rebecca Blank (see article on page 34) suggests three primary responsibilities of the church in a market-based economic system, which may be summarized as: (1) to help individual Christians participate in economic life in ways that are beneficial to others who may be affected by their actions; (2) to promote the deeply held values of our faith in the marketplace and public square; and (3) to model these values through the conduct of the church’s own business as employer, purchaser and investor.  These roles for the church do indeed resonate as appropriate and vital for today’s society.  But we must ask ourselves, how well are they actually performed?

Of the three, it is the second – making public statements – that seems most comfortable for mainline denominations.  It may also be argued that it is the easiest.  Our leading denominations do not hesitate to issue pronouncements on macro-systemic concerns like fair trade, environmental sustainability and global human rights.  To be sure, these are critical issues on which the church’s voice should be heard.  But how often, and how well, do we connect the dots from grand policy statements to real people in the pews?

There is much evidence, including our field study with lay people, to suggest shortcomings in the other two areas of responsibility.  Asked why they had not turned to the church for help navigating the ethical waters of their work lives, our interviewees voiced several common concerns, from a perceived lack of interest by clergy to misgivings about the church’s own business practices.

Our researchers – nearly all of whom were parish ministers pursuing the Doctor of Ministry degree – were astonished to discover a widespread perception that pastors have little or no interest in church members’ work lives.  One respondent summed it up this way:  “I did not approach the church because ethical issues in business are not of interest to any preacher I know.  There is more of an emphasis on your family and how you live your personal life.”  Another echoed this view; “My pastor has no idea what I do for a living, and has never shown any interest in finding out by starting a conversation on the subject.  He knows a great deal about my family though.”  A woman executive was even more frank.  “[My] minister is not in tune with today’s workplace and could not relate,” she said.  “So it would be better to talk with someone who would automatically understand without getting me frustrated.”

There were also many who thought their churches’ own way of doing business left much to be desired.  One active church member asked, “How well does the church conduct its business affairs?  Would any of their practices be relevant for the world?”  Another complained, “The church’s support comes from businesspeople, but we are not always confident the church uses that money responsibly.”  And one said simply, “The church is not a good example itself.”

For nearly all the pastors conducting these interviews, these were the first serious conversations they had initiated with lay people on the subject of ethics in business life.  Not coincidentally, the conversations were also the first on this topic that most lay people ever had with a member of clergy.  “Ethical and moral issues seem to abound within the business community, both profit and non-profit,” noted one pastor, “and the overwhelming conclusion is that the church is not addressing these concerns.  But the reason why is still a difficult question to answer.”

It may be difficult, but it is not a new question for writers and scholars who have given it renewed attention in recent years.  Edward R. Dayton observes, “Few churches appreciate their business people as a window on the world and fewer still provide business people with opportunities to discuss in depth the integration of business and Christian values.”³ Similarly, research by Harvard Professor Laura Nash and Scotty McLennan found that many Christians are “looking for ways to live their Christian beliefs and values at work, as they do at home and at church.”   Yet despite their best efforts, “even deeply faithful Christians in business tend to feel a strong disconnect between their experience of the church or private faith, and the spirit-challenging conditions of the workplace.”⁴

Embracing the Tension

Some Christians in business cope with this feeling by concluding the claims of faith and the realities of business life are irreconcilable, finally relegating them to separate compartments.  The dangerous result, as the theologian Helmut Thielicke warns, is the “establishment of a temporal sphere in which the radical commandments of the Sermon on the Mount do not seem to apply, a sphere which consequently cannot be called into question.”⁵

Observes David A. Krueger, “For some people religious life and business practice are integrally related in a creative tension.  For others – both clergy and business professionals – the worlds of church and corporate life are galaxies apart, separated by ignorance, hostility, apathy, language, interests, values.”  The solution, he argues, is to forge “a proper connection between the church and the world of business . . . that is both prophetic and supportive, critical and constructive.”⁶

In other words, we must embrace the tension inherent in the relationship.  This is no easy task for the individual Christian.  And it can be even more challenging for the church, since embracing this tension requires us to come to grips with our own personal and institutional complicity in the very things we condemn.  It also means we must let go of any naïve illusion that we are somehow in a position to critique the economic system from a safe distance.

Given the demographics of our membership, the Presbyterian Church (USA) is ideally positioned to engage business and professional leaders in actively exploring the relevance of the gospel to human existence in a global, increasingly market-driven economy.  While we are issuing bold public statements on macro-systemic issues, should not Presbyterians also be in conversation with one another about the realities of economic life at the micro level?   Can we really hope to combat economic injustice without enrolling business leaders in the effort?  After all, aren’t all of us – clergy and laity alike – willing participants (and beneficiaries of) this unjust system?

There is inevitably more tension and discomfort as we move the conversation closer to the micro level where each of us actually live.  Yet it is a tension that we must not seek to escape as we bring the proclaimed gospel to a hurting world.

Opportunity and Hope

Courageous conversations of this kind may not come naturally for many of in the church.  They require openness to mutual learning by clergy and laity alike.  Our field interviews confirmed and expanded upon what other researchers have learned:  That most pastors are ill prepared to assist parishioners in their efforts to connect their faith and work lives.  This weakness emerges in sharp relief against the broad landscape of ethical challenges routinely encountered in the workplace.  For when the Christian is in the teeth of an ethical dilemma, he or she often feels a heightened tension between the claims of faith and demands of work, a circumstance that may actually give rise to a greater opportunity for meaningful engagement with the church.  But this will only be achieved if many in the church alter their thinking about ministry with businesspeople, approaching them as willing listeners, mutual learners and valued partners in bringing justice and love to others struggling to be human in our digitized, super sized, globalized economic system.

For clergy, several lessons emerge from our conversations with church members.  Many working people struggle to make their faith relevant to the activity that involves most of their waking hours and productive years, yet there is a common feeling that the church is somewhat indifferent to their plight.  This perception has deep roots in the history and culture of our churches; and many pastors unwittingly reinforce it by failing to take an active interest in parishioners’ work lives.  Those who wish to make ministry more relevant to economic life might begin by asking two questions: How often – and how well – do I preach about the relationship of Christian faith to the sometimes-harsh realities of today’s workplaces?  And, how much do I know – and care – about the weekday challenges and aspirations of the people with whom I minister on Sunday morning?

The lessons for the denomination are just as essential.  Our current situation is apparent in the dearth of resources provided to support local churches and pastors in relating the gospel to the challenges of economic life experienced by most Presbyterians.  Our priorities may also be inferred from the slew of position papers and other denominational documents calling for actions by the United Nations or the White House, but saying little or nothing about the opportunity for individual Presbyterians to influence the corporations, professional firms, government offices and other institutions that so many inhabit in their daily lives.

Seldom has the church been so tested by its economic context.  Yet we do have special responsibilities.  Responsibilities to help individual Christians participate as agents of the gospel in a system that so often fosters injustice.  And responsibilities to model, as an institution, the values and practices we aspire to see others adopt.

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¹ Other issues cited were financial fraud, product safety, race discrimination, conflicts of interest, employee dismissals, bankruptcy, tax evasion, privacy violations, fair pricing, debt collection, resume fraud and sex harassment, among others.

² Doug Sherman and William Hendricks, Your Work Matters to God, Your Work Matters to God (Colorado Springs: Navpress, 1987), 16.

³ Edward R. Dayton, Succeeding in Business Without Losing Your Faith (Grand Rapids: Baker Book House, 1992), 123-24.

⁴ Laura Nash and Scotty McClennan, Church on Sunday, Work on Monday: The Challenge of Fusing Christian Values with Business Life (San Francisco: Jossey-Bass, 2001), 5.

⁵ Helmut Thielicke, Theological Ethics, Vol. I, ed. William H. Lazareth (Philadelphia: Fortress Press, 1966), 364.

⁶ David A Krueger, “Connecting Ministry with the Corporate World,” in On Moral Business, ed. Max L. Stackhouse, et. al. (Grand Rapids: William B. Eerdmans, 1995), 882.

Would You Rent Your Car Here? (asymmetric information)

Victor Claar: Would You Rent Your Car Here? (On asymmetric information.)

... Most of the time, in a market of any kind, both potential trading parties know exactly what they will be getting from the exchange. When you buy a cup of coffee, especially from a vendor you know and trust, you know what you will be getting (the coffee), and the barista knows what she will be getting (your money). Moreover, once the money and coffee have been handed over, both of you are the better for it. You obviously wanted (needed?) the coffee more than your money, and the barista was much more interested in your money than in keeping the coffee for herself.

Economists love these kinds of interactions, by the way. Two people are now happier (you, with your hot caffeine jolt) and the barista (with your money, and hopefully a nice tip besides). As evidence, the two of you probably both say, "Thank you." And life goes on for the rest of us, in our ignorant bliss.

But there are some markets where potential buyers and potential sellers do not both have access to all of the information relevant to a potential transaction. That's a case of "asymmetric information" (see above)....

You Can Call Me Colonel Kruse

I became a Kentucky Colonel while in Louisville at the General Assembly Council meetings last week. Joey Bailey, chief financial officer for the GAC, has this honor bestowed on the GAC chair and vice-chair. Moderator Bruce Reyes-Chow also was so honored. Pretty cool. Thanks Joey.

GAC Meeting Reflection

General Assembly Council wrapped up their spring meeting last week. It was a mixture of bad news and good news.

The bad news is that there is $10 million shortfall (out of $110 million) in income anticipated for 2009. Through a variety of efforts, approximately $6 million in income was found and $4 million dollars is cost savings were realized. Since last September, 14 occupied positions have been eliminated and another 14 were eliminated on Friday. Another 28 vacant positions have also been eliminated. (A few new positions were also created.) Other measures have been taken to reduce costs across all operations like a one week mandatory furlough, decreases in postal and travel expenditures, and a reduced number of hours the Presbyterian Center will be open.

There is nothing joyful in eliminating positions. Neither is it desirable to reduce folks’ pay through furloughs. That is the bad news and prayers are lifted for those who have lost their employment.

The good news is that in the midst of this bad economy we are talking about less than 4% decrease in our budget. The really good news is the basis on which positions were eliminated. The changes over recent weeks and months are really the result of events set in motion three years ago. The cuts were made on a highly strategic basis.

In the spring of 2006, there was an unexpected $10 million shortfall. Dozens of staff positions were eliminated. Attempts were made to be strategic but there were many challenges that made that process difficult. It was also during this time that the board adopted a new streamlined governance model. All the senior staff resigned and made way for new Executive Director who would create a new staffing design.

Linda Valentine became the Executive Director in July of 2006. She formulated a high level staff structure, which the board approved. She went to work over the next few months recruiting and hiring senior level staff. In 2007, the board went to work on developing its 2009-2012 Mission Work Plan. As the plan was finalized in early 2008, the new senior staff had time to come to grips with what GAC work was being done. They began work on organizing staff and ministry units in ways that would most effectively carry out the objectives of the Mission Work Plan. That has meant eliminating duplication, filling gaps, aligning complementary ministries with each, making changes in personnel, and occasionally creating new positions.

Pieces of this change have been evident in recent months in redesigns of the Media Services, Racial Ethnic and Women’s Ministry areas, Church Financial Campaign Services, and in Information Technology. The recent economic crisis accelerated the rate at which other planned changes needed to be made, resulting in the changes that were announced on Friday.

Unlike anytime in the past, we are closer than ever to having a well-developed staffing strategy that is shaped by the goals and objectives of a mission work plan. There is more work to be done but these changes have made a significant contribution toward moving us toward that goal. That is something to be celebrated! Effectiveness and accountability have been greatly enhanced.

Future challenges remain. Now that we have begun to get our arms around all the pieces and see how they relate to each other, and the larger vision of the mission work plan, we must develop priority setting practices that will help guide future decision. We continue to wrestle with how the GAC should interrelate with other facets of the denomination. From a more adaptive standpoint, we have to find better models for discerning what things we should be doing that we are not presently doing.

The predicted collapse of denominations and their ministry is, I believe, premature. Yet I don’t believe any of us know exactly what the nature of this ministry will look like in the future. I suspect there is going to be some radical redefinition. I don’t know when and I don’t know how but it seems to be that in the meantime we must be highly intentional about understanding our rationale for what we are presently doing and taking a generative posture as we look to the future.

I’ll confess that last weeks meeting of the General Assembly Council meeting was difficult for me. I’ve been through the closing of two urban congregations. Long time congregational loyalists didn’t want the church to die but could not bring themselves to make the adaptive leap needed for the church to die unto a rebirth. A desperate attempt was made to find technical fixes when only substantial adaptation would do. Only when it was too late would the remaining remnant embrace real change. Too often GAC meetings feel a little too familiar.

Some members seem to me to be anxious about protecting programming and persons they highly value. Others want to live in a regulatory mode, tightly directing staff programming and staffing decisions. Still, others are looking for the technical fix like better communications or maybe a new fundraising strategy. It’s not that anyone of these may play some legitimate role but absent an appreciation for the adaptive challenge in front of us they are death to the institution.

While I’ve been encouraged at the trajectory of change over the five years I’ve been on the General Assembly Council I will say that I found last week’s meeting disappointing in some ways. It just felt too much like we were slipping back into those old fearful dying church behaviors at times. Maybe it was just the anxiety of knowing we would have to make hard budget decision that would cost jobs. Institutional change is always an ebb and flow. I just want to believe that the tide is coming in.

GAC Budget Strategy Video.

The General Assembly Council of the Presbyterian Church (U.S.A.) approves revised 2009 mission budget

Presbyterian News Service: The General Assembly Council of the Presbyterian Church (U.S.A.) approves revised 2009 mission budget

(This is a pretty good summary. Questions anyone? Not that I promise to have any answers. :-)  )

LOUISVILLE, Ky. — Today, the General Assembly Council (GAC) approved a revised 2009 budget of $106,914,584. The new budget reduces expenses by $3.99 million. Additional revenue from prior year accumulations (unused funds from previous years) of $5.93 million will cover the remainder of a projected $9.92 million shortfall. In September, the GAC had approved a 2009 mission budget of $110,885,317.

“The staff of the General Assembly Council has worked for more than two years to articulate a common vision that will help us to reshape, focus and unify our ministries,” said Linda Valentine, GAC executive director. “The national economic situation has accelerated some of that work, and has also made it imperative to reduce expenses immediately.”

“Some of the changes to our budget were made to improve our flexibility, effectiveness and responsiveness, while others are purely cost-cutting measures,” said Joey Bailey, chief financial officer. “Overall, I think the new budget reflects our commitment to being responsible stewards of the funds that are entrusted to us, being accountable to the church, and to our constituents.”

The council approved a number of measures, including the following.

Collegiate and Youth Ministries were consolidated and moved to the Evangelism and Church Growth ministry area; the Multicultural Ministry Office was renamed Multicultural Congregational Support and moved into Racial Ethnic and Women’s Ministries /Presbyterian Women; the National Health Ministries Office was eliminated; and a new Environmental Office was launched.

Across-the-board cuts in postage (10 percent) and travel (15 percent) were implemented.

Some positions were eliminated; 14 employees were notified today that their positions are being eliminated and 14 other positions have been eliminated since September 2008. Also, 28 vacant positions were eliminated. Because of the reshaping of the GAC, 12 new positions have been added since that time. With these changes, the total GAC workforce numbers just over 400, not including mission co-workers, conference center staff, and other GAC-related entities.

The 2009 budget maintains efforts to accomplish our commitment to increase the number of mission co-workers in 2009, for the first time in 50 years.

“The decision to eliminate positions was difficult,” said Valentine. “We know it will have a real-life impact on people for whom we care and with whom we have worked side by side. We truly appreciate the work of all of our employees. I want to personally thank those who are leaving us for their efforts on behalf of the Presbyterian Church (U.S.A.).”

All employees whose positions were eliminated will be offered separation agreements that include notice pay, severance and outplacement service.

In previously announced decisions, the GAC executive committee approved a mandatory staff furlough that will impact the 2009 budget and eliminated planned salary increases in 2010.

In other business at the Louisville meeting, the GAC heard reports from committees on evangelism, discipleship, justice, stewardship, and vocation, as well as advocacy and advisory committees; and a presentation on the form of government task force.

The council meets again in September, when it will address the 2010 budget.

“We have addressed the 2009 budget now because we are working in a climate of economic uncertainty,” said Valentine. “For 2010, we’ll be looking at a number of programs and asking the same kind of questions – what are the church’s needs and what can the GAC do uniquely and best? We know we face a similar projected shortfall next year. This year, we were able to make up for some of the shortfall with unspent funds from past years; we cannot count on that again, so we will be looking closely at program areas. However, let’s not lose sight of the long view. We will continue to do an incredible amount of ministry this year and into the future.”

The Presbyterian Church (U.S.A.) serves about 2.2 million members in mission and ministry in approximately 10,800 congregations throughout the United States and around the world. National offices are located in Louisville, Ky.

See this article for more details: GAC closes $9.92 million 2009 mission budget gap

UPDATE: Presbyterian Outlook has a good article: Budget cuts lead to more restructuring, downsizing of General Assembly Council staff

Headed toward extinction?

USA Today: Headed toward extinction?

World depopulation — rather than overpopulation — is the troublesome trend that should concern the entire planet.

World population will hit 7 billion by 2012, according to a recent United Nations report. Given that we just hit the 6 billion mark in October 1999, it is easy to conclude that there are just too many people in the world. How are we ever going to overcome global warming, feed the masses, get that beachfront property, let alone find parking, if the population keeps jumping by nearly one billion per decade?

The good news is that's not going to happen again. If you need another megatrend to worry about, fixate instead on the growing prospects for world depopulation and what it means for you and your children (assuming you have any).

Yes, human population is still growing in some places dramatically so. But at the same time, a strange new phenomenon is spreading around the globe, one whose very existence contradicts the deepest foundations of our modern mind-set.

Darwinism presupposes, and modern biology teaches, that all organisms breed to the limit of their available resources. Yet starting in the world's richest, best-fed nations during the 1970s,and now spreading throughout the developing world, we find birthrates falling below the levels needed to avoid long-term, and in many instances, short-term, population loss. The phenomenon has spread beyond Europe and Asia to Latin America.

Brazil, a land once known for its celebration of dental-floss bikinis and youthful carnival exuberance, is an aging nation that no longer produces enough children to replace its population.The same is true of Chile and Costa Rica. Joining them over the next 10 to 20 years, the U.N. projects, will be many other countries Americans still tend to associate with youth bulges including Mexico, Argentina, Indonesia, India, Vietnam, Algeria, Kuwait, Libya and Morocco. Think we need to build a wall on the southern border? Birthrates have declined so quickly in Mexico that its population of children younger than 15 has been in free-fall since 2000 and is expected to drop by one-third over the next 40 years. ...

The pleasures and sorrows of work

The Economist: The pleasures and sorrows of work

The oddities of the daily grind

ALAIN DE BOTTON is a British essayist, novelist and, if one uses the term somewhat expansively, philosopher. Over the past decade or so he has cast a world-weary eye over travel, status and architecture, as well as writing a fine book about philosophers and an excellent meditation on Proust. His new book, “The Pleasures and Sorrows of Work”, takes on that odd thing that most of us do for so many of our waking hours on Earth. ...

... First of all, Mr de Botton is rather witty. Here, for instance, is what he has to say about the swimming pool at his Mojave desert hotel (where he has repaired in the course of a visit to a scrapyard for aeroplanes): “Unfortunately, most of the budget for the pool had apparently been squandered on proclaiming, in an enormous illuminated display by the roadside, that it existed, leaving few resources for it actually to do so.”

Secondly, Mr de Botton is surely right when he reminds us that we rarely if ever think about where our Moments and our fluffy slippers, our 16-gigabyte iPhones and our Thai red chicken curry ready-meals come from, or what an immense concatenation of individual efforts is required to ensure that a fish swimming in the Indian Ocean off the Maldives can be converted, in a couple of days, into individually packaged tuna steaks in the refrigerated-foods aisle of a supermarket in the Bristol suburbs. It is, of course, a marvel, and Mr de Botton rightly marvels at it.

And finally, the author has plenty of thought-provoking things to say about work itself, the most absurd examples of what he scathingly calls “the culmination of a long history of the division of labour, which began in Ancient Egypt three millennia ago”. Unlike other animals, we need not struggle to find our next meal. But instead of using the time to master Swedish or calculus, we often choose to devote it to the utterly banal.

Yet even the most soulless of offices has its vital part to play. The “start of work means an end to freedom, but also to doubt, intensity and wayward desires... How satisfying it is to be held in check by the assumptions of colleagues, instead of being forced to contemplate, in the loneliness of the early hours, all that one might have been, and now never will be.” This last observation seems so heartfelt, so poignantly rendered, that one can only advise Mr de Botton himself to cease his solitary endeavours and take the plunge into the pleasures of office life.

I'm an Emerging Presbyterian ...

... After a solid week of Committee on the General Assembly and General Assembly Council I'm emerging from stacks of reports.

I'm wait for our budget decisions to be made public in a press release before commenting on the meeting. Since I'll be on a plan this afternoon, I may wait until Saturday.

Its the Big Five-0 for the Kronicler

Today, the Kronicler turns 50 years old. That's right. A perfect 10 times five.

I'm at General Assembly Mission Council meetings in Louisville today, but tomorrow I'll be back home for a celebration with friends where Mrs. Kronicle has prepared a pictorial retrospective of moi. The pic above is just one sample. Being the youngest of four, it is one of maybe three solo shoots of me as a kid. :-) (Oldest children readers may now roll their eyes.)

Anyway, its good to be fifty. I'm appreciating more and more the adage, "Age and treachery will overcome youth and vigor any day." :-) A motto to live by. However, I do have the nagging thought that maybe I should get around to deciding what I want to be when I grow up.

GAC Business Begins Today

This is my metaphor for the experience. :-)

Why Foreign Aid Is Hurting Africa

Wall Street Journal: Why Foreign Aid Is Hurting Africa

... Giving alms to Africa remains one of the biggest ideas of our time -- millions march for it, governments are judged by it, celebrities proselytize the need for it. Calls for more aid to Africa are growing louder, with advocates pushing for doubling the roughly $50 billion of international assistance that already goes to Africa each year.

Yet evidence overwhelmingly demonstrates that aid to Africa has made the poor poorer, and the growth slower. The insidious aid culture has left African countries more debt-laden, more inflation-prone, more vulnerable to the vagaries of the currency markets and more unattractive to higher-quality investment. It's increased the risk of civil conflict and unrest (the fact that over 60% of sub-Saharan Africa's population is under the age of 24 with few economic prospects is a cause for worry). Aid is an unmitigated political, economic and humanitarian disaster.

Few will deny that there is a clear moral imperative for humanitarian and charity-based aid to step in when necessary, such as during the 2004 tsunami in Asia. Nevertheless, it's worth reminding ourselves what emergency and charity-based aid can and cannot do. Aid-supported scholarships have certainly helped send African girls to school (never mind that they won't be able to find a job in their own countries once they have graduated). This kind of aid can provide band-aid solutions to alleviate immediate suffering, but by its very nature cannot be the platform for long-term sustainable growth. ...

Interesting piece. It seems to me that aid is appropriate where it is targeted, where there is accountability in terms of feed back loops that can indicate actual results, and where there is transparency in allocations. The problem is, most aid appears not to be of this variety.

US Makes Plans to Monetize Debt

Victor Claar's Economics Blog: US Makes Plans to Monetize Debt

In the nations with the worst inflation rates (historical examples include Brazil, Bolivia, and now, Zimbabwe), there is often little independence between the central bank the the nation's treasury. In such a circumstance, it becomes easy--too easy--for the country's government to pay its own bills by simply printing money. And in such a case, the money printing is real, literal, waiting-for-the-ink-to-dry money printing. Need to purchase some new rocket launchers? Print some currency. Or pave a few roads heading into a general election to help your party's popularity? Start the money-printing presses.

A fairly obvious implication of such a strategy is that the nations with the highest rates of inflation rarely have annual budget deficits of any significance. After all, why would a nation need to borrow anything to meet current budget shortfalls, when it has no budget shortfalls? A country with lots of money printing rarely borrows much, if at all.

Now, most nations are far too principled to resort to plain old money printing to finance some of their current spending. And to guard against such temptations, countries arrange their governmental financial institutions to limit the likelihood of such activity. The simplest way--and the arrangement we have here in the United States--to forestall such misdeeds is to make the nation's fiscal authorities (the ones in charge of taxing, spending, and borrowing) independent from the monetary authority (the central bank). So we have an independent Fed: a central bank that calls its own shots in the conduct of monetary policy.

Nevertheless, there is a way for a nation to do the equivalent of "money printing" even if the nation has constructed its institutional arrangement to make literal money printing either difficult or illegal. That is, even with a Fed and Treasury that operate independently, it is possible for virtual money printing to take place.

That practice is called debt monetization (or "monetizing the debt"). And here's how it would work. ...

India's Tata rolls out world's cheapest car

Yahoo!: India's Tata rolls out world's cheapest car

MUMBAI (AFP) – India's Tata Motors on Monday launched the world's cheapest car, the Nano, hoping to revolutionise travel for millions and buck a slump in auto sales caused by the global economic crisis.

Company boss Ratan Tata said the no-frills vehicle, slated to cost just 100,000 rupees (2,000 dollars) for the basic model, will get India's middle-class urban population off motorcycles and into safer, affordable cars.

"I think we are at the gates of offering a new form of transport to the people of India and later, I hope, other markets elsewhere in the world," he said, describing the launch as a "milestone."

"The present economic situation makes it somewhat... more attractive to the buying public," he told reporters in Mumbai ahead of a glitzy official unveiling ceremony at 7:30 pm (1400 GMT).

Potential owners of the car -- which is just over three metres (10 feet) long and has a top speed of 105 kilometres (65 miles) per hour -- can apply between April 9 and 25, Tata managing director Ravi Kant said. ...

My Response to Brueggemann's Biblical Economics.

Scot McKnight recently linked a piece by Walter Brueggemann's called A Biblical Approach to the Economic Crisis. I've read and generally liked a number of things Brueggemann has written and that is part of why I find articles like this one so irksome. Here is what I wrote at the Jesus Creed blog.

**********

Thanks for the link to the article by Burggemann. It is yet another example of what makes me want to pull my hair out when theologians start talking economics. :-)

There are two basic questions every society has to wrestle with: “How many of which things shall we produce today?” and “On what basis shall things be distributed?” Theologians almost invariably dwell on the second question to the exclusion of the first. The mindset is that material goods simply exist. The only obstacle to abundance is greed and lack of generosity. If we were just more giving, then inequities would just melt away.

But material goods do not simply exist. Economic labor is about transforming matter, energy, and data from less useful states into more useful states. On any given day a society has X number of people, with X amount of productive capacity, and X amount resources. Which things shall we produce today? While a small community (i.e., family, small commune) may be able to know each other’s needs well enough to come to some communal decision about what to produce how to distribute, you cannot do this when the community grows to more than a few dozen. How to coordinate the productive capacities millions of people who are complete strangers? Markets.

Markets create instantaneous feedback loops about what is wanted and what should be supplied. Markets are far from perfect. They process people’s bad choices just as well as people’s good choices. Alone, they will not lead to an entirely just production and distribution. The must be constrained by effect juridical systems and supplemented with a populous that values generosity. But they are absolutely essential to creating abundance the theologians like Bruggemann want us to share with each other.

Bruggeman is right that viewing the individual as the basic economic element is wrong. He does not precisely articulate what the basic element should be, but based on his “common good” motif it appears that national government might be his preferred economic element. But the only alternatives are not individual versus national control. The Torah has families living in community with other families as the basic element. The jubilee prohibits the permanent alienation of families from their allotted land. Land is privately held in trust for God to provide for the family and to be used in making available goods for trade and sharing. Levels of societal administration beyond these local communities exist largely in service to these communities. They are not the focal point of societal functioning or economics.

Autonomous individualism is a product of the Enlightenment. But so is the notion that a national government entity can correctly comprehend massive complexity, act with greater wisdom toward the common good than what emerges from people freely engaging one another, and that it can do so with greater moral rectitude than would otherwise be the case.

Bruggeman’s economic vision is too small. Generosity? Yes. But we were created to be co-creators with God. There is scarcity. We are finite beings with finite time, capabilities, and resources on any given day. We participate in the generation of our individual and communal abundance. When we celebrate communion we don’t take of the grain and grape but rather of the bread and the wine. Human labor is integral. But because theologians like Bruggeman see only existing goods to be justly distributed, the productive aspect of dominion … transforming matter, energy, and data from less useful states to more useful states … is lost. The basic question is not generosity but how rather how do we create a mutually advantageous cooperative venture that both justly produces and distributes abundance. Generosity and markets are essential to such a venture.

What we need from theologians is a carefully thought out understanding of how to engage basic economic questions in creating the cooperative venture. We need to rediscover the high calling of work in the marketplace and understand it in other than purely instrumental terms. Instead, we get moralist platitudes like, “Whereas autonomous economics begins with a premise of scarcity, biblical faith is grounded in the generosity of God who wills and provides abundance.” We deserve far better from our best theological minds.

Rationale for Upcoming GAMC Budget Decisions

If you are Presbyterian, you probably already know that the economic downturn is having an impact on national offices, just as it is throughout the rest of the church. When the GAMC meets Wednesday through Friday we will have to make some hard budget decisions. Here is a short video where Tom Taylor and Linda Valentine lay out the thinking that went into the budget we will be considering. Prayers are welcomed. 

Mikey Goes to Louisville ... Episode 12

I off to Louisville this afternoon for PCUSA stuff. I'll be attending overlapping meetings of COGA (Committee on the Office of the General Assembly) and GAMC (General Assembly Mission Council.) I attend COGA as corresponding member from the GAMC.

By my calculation this is my 12th GAMC meeting since being elected to the board in June of 2004. These last five years have been a time of incredible change and more is in the wings. As I reflect on how to describe the experience of being on the GAMC, and now being vice-chair, I haven't been able to come up with any better metaphor than the following.

Sweden Says No to Saving Saab

New York Times: Sweden Says No to Saving Saab

TROLLHATTAN, Sweden — Saab Automobile may be just another crisis-ridden car company in an industry full of them. But just as the fortunes of Flint, Mich., are permanently entangled with General Motors, so it is impossible to find anyone in this city in southwest Sweden who is not somehow connected to Saab.

Which makes it all the more wrenching that the Swedish government has responded to Saab’s desperate financial situation by saying, essentially, tough luck. Or, as the enterprise minister, Maud Olofsson, put it recently, “The Swedish state is not prepared to own car factories.”

Such a view might seem jarring, coming as it does from a country with a reputation for a paternalistic view of workers and companies. The “Swedish model” for dealing with a banking crisis — nationalizing the banks, recapitalizing them and selling them — has been much debated lately in the United States, with free-market defenders warning of a slippery slope of Nordic socialism.

But Sweden has a right-leaning government, elected in 2006 after a long period of Social Democratic rule, that prefers market forces to state intervention and ownership. That fact has made the workers of Trollhattan wish the old socialist model were more in evidence. ...

Curious isn't? That just as the largest nation practicing Nordic socialism is moving away from it, our U. S. leaders seemed to have embraced it as the hope of the future. It just make me want to Saab  ... I mean ... sob.  :-)

Self-Interest and Benevolence: Partners, not Antonyms (Part 12: Conclusion)

(Link to Part 11)

Concluding Thoughts

As we wrap up this series refletions, what can we say about the relationship between self-interest and benevolence?

The Goal of Abundance

The biblical image of a just society is one of widespread abundance where humanity participates with God in co-creative stewardship over creation.

Individual and Communal Stewardship

The Old Testament law envisioned families and small communities where people are stewards of resources entrusted to them by God to be employed for their own provision. These resources were also intended to generate wealth for economic exchange and for expressions of generosity.  Elements of self-interested (not selfish) provision are present alongside an ethic of generosity and other-centeredness.

The Two Big Economic Questions

Given a finite amount of labor, productive capacity, and resources, on any given day, the two big questions every society must answer are “How many of which things shall we produce today?” and “How should wealth be distributed?” In short, how do we cooperatively coordinate our lives to balance needs and wants against our economic constraints?

The Limits of Communal Life

Assuming a family or small community living in isolation could be a self-sustaining community, communal ownership of property is plausible only so long as the population remains no more than a few dozen people, there is a high degree of solidarity, and there is a high degree of daily interaction by all members creating high degrees of accountability. Such communities can economically envelop those who can’t be economically productive, and the caretakers who serve them, spreading resources as needed. As the community grows much beyond 100, communal community breaks down. For this reason, from an economic perspective, it is untenable to view society as family writ large.

Market Coordination

Markets create a real-time feedback loop between buyers and sellers consisting of millions of people. This allows people to specialize in what they do best in order to earn an income, or create products and services, that they can exchange for what other people do better. Markets are grounded in win-win transactions where each party gives up something they value less than what they receive. Markets are rooted in the phenomenon of people orienting their daily activity to produce things people want as a means to create wealth that will meet their own needs. Self-interest (i.e., reflecting on one’s own situation) and taking responsibility for ourselves is essential to the appropriate allocation of societal resources.

Market Limitations

Markets alone are insufficient for a just economic life. First, markets are based on the notion of all parties trading without coercion and with all relevant information being known. While many transactions sufficiently approximate this ideal, probably no transaction ever meets these criteria perfectly. Sometimes, considerable injustice results. A strong juridical system is needed to protect property rights and resolve injustices.

Second, markets sometimes have an adverse impact on people who were not part of transactions (i.e., a company polluting a town’s air as they produce products for market.) This is called an externality. Government regulation or taxation is sometimes needed to shift the cost back on to those who created the externality.

Third, even when markets work well, they robustly process the illegitimate needs that are fed into the system every bit as much as they do the legitimate ones. Garbage in, garbage out. This technically is not a dysfunction of the markets. On the contrary, it is a testament to their efficiency. But it is evidence of the importance of the moral fiber and wisdom of the people who are feeding their wants and needs into the market. Because we are fallen and finite, market outcomes will always be a mixed bag.

Fourth, markets only benefit those who have something to offer for economic exchange. Children, the elderly, and a variety of others who are without this capacity are human beings created in the image of God and deserve economic support. This support would also apply to those who devote their lives to the care of such people.

Benevolence: Redeeming Stewards

Co-creative stewardship with God is integral to our human existence. The mere provision of material needs without equipping people to engage in productive stewardship is dehumanizing. Children need to be nurtured into leading economically responsible lives and adults with reasonably sound bodies and minds need to be equipped as well. They need to be able to provide for their own needs and to have something to share with others.

Benevolence: Doing Justice

There are many among us who are not, and never will be,  able to participate in economic exchange. Additionally, there are those who are precluded from engaging in economic exchange in order to take care of these folks. These folks are God’s image bearers and need the economic support of others. Additionally, there are those who through bad decisions or uncontrollable circumstances have encountered hard times. Many of these folks have a claim on the help of others.

Benevolence: Loving Others

Sometimes we have resources that can be used simply to elevate the lives of others. It can be as simple as sending a card in acknowledgement of a significant event or as extravagant as giving millions for a performing arts theater. This too is an important expression of benevolence and we would hope it would be natural outgrowth of maturing as a disciple of Jesus.

Outsourcing Benevolence

Some have not internalized the idea of benevolence and generosity. Some take a “live and let die” approach to life, believing that each person is responsible for their own destiny. They want to be free to pursue their own lives without a thought about others. Others folks externalize benevolence. They speak highly of benevolence when what they actually want is for government to take care of others so they may be free from others’ needs. This is not to say there might not be roles for government to play in addressing needs but this is not benevolence.

Common Good Through Government

Some believe we have some role in benevolence but that government, through its democratic processes, is the preferred way of addressing market fairness and the concerns about benevolence. This is problematic. First, no individual or group of people is remotely capable of monitoring and reacting to the dynamic change of demand and supply throughout the economy. Similarly, no government can accurately assess the need for benevolent acts. It’s too complex. That’s why the real-time information system of the market is so superior. Second, government is made up of finite and fallen human beings every bit as much as the marketplace is. There is no basis for assuming superior moral behavior. Finally, political solutions are almost never the optimal solution because they are pieced together to satisfy constituencies, not achieve optimal outcomes. Thus, while there is a role for government, it’s a subsidiary player to markets and benevolence.

Nurturing Benevolence

The primary nurturer of benevolence is the family. From the family we learn to communally share space and resources. We learn other-centeredness. That other-centeredness spills over into other relationships we have with people. The challenge, just as with markets, is that the more distant we get from our immediate relationships, the harder it is to assess real need and allocate resources appropriately. We form extra-familial entities, like churches and civic organizations, to care for each other at broader levels. Thus, the nature of our benevolence can take many forms depending on the proximity of the need to our context. But what will be present in any just society is the virtue of benevolence deeply internalized within the populace.

Self-Interest and Benevolence are Partners

There have been some thinkers who have argued that free markets guided purely by people acting in their self-interest will lead to a just society. Benevolence is an afterthought, if it is a thought at all. This is idealistic in that we know that markets do not function with perfection. Fallen and finite people frequently don’t know what is in their best interest even though they are usually best positioned to interpret it. What gives the markets merit is not that they give us utopia but that they give us far better than we’ve ever had or better than anything else we have to date been able to devise.

Regrettably, what we now have among so many mainline, emerging, and left leaning Evangelical theologians and activists is an equally destructive reactive idealism that deprecates markets and economic labor (i.e., transforming matter, energy, and data from less useful states to more useful states ) in favor of seeking “the common good.” (The “common good” is most typically a proxy for achieving ends through state action.) It rejects notions of scarcity in order to live in “gift economies” of abundance and mutual generosity.

As you read these thinkers and activists it becomes clear that they are myopically focused on issues of distribution to the exclusion of production; they have no answer for how much of which things we will produce today. It is as if the goods and wealth of the world simply exist. Our only mission is to discern how to distribute them. They fail to appreciate that we are co-creators with God in whatever abundance we may enjoy.

Our central endeavor as Christians seeking the shalom of the world in economic terms must be to discern how to produce other-centered stewards joined in a cooperative venture of generating and spreading abundance. The biblical witness calls us to reflect on what is truly in our best interest … to be self-interested. We are to see our interests in the light of eternity and in the light being in communion with God and his people.  As we saw in the opening post, God repeatedly appeals to our self-interest in shaping us but we must be transformed by God to see what our true interests are. Yet that same self-interest will lead us to see that if we wish to be first in the Kingdom of God, then we will put everyone else ahead of ourselves.

As stewards of God’s resources, transformed self-interest will guide us in the work we do, and in our economic exchanges, as we participate in creating abundance. It will also guide is into benevolence and generosity. Self-interest and benevolence are not opposites. When transformed by God they are partners in creating a shalom filled world.

How China sees the world

The Economist: How China sees the world

And how the world should see China



IT IS an ill wind that blows no one any good. For many in China even the buffeting by the gale that has hit the global economy has a bracing message. The rise of China over the past three decades has been astonishing. But it has lacked the one feature it needed fully to satisfy the ultranationalist fringe: an accompanying decline of the West. Now capitalism is in a funk in its heartlands. Europe and Japan, embroiled in the deepest post-war recession, are barely worth consideration as rivals. America, the superpower, has passed its peak. Although in public China’s leaders eschew triumphalism, there is a sense in Beijing that the reassertion of the Middle Kingdom’s global ascendancy is at hand ...

... Already a big idea has spread far beyond China: that geopolitics is now a bipolar affair, with America and China the only two that matter. Thus in London next month the real business will not be the G20 meeting but the “G2” summit between Presidents Barack Obama and Hu Jintao. This not only worries the Europeans, who, having got rid of George Bush’s unipolar politics, have no wish to see it replaced by a Pacific duopoly, and the Japanese, who have long been paranoid about their rivals in Asia. It also seems to be having an effect in Washington, where Congress’s fascination with America’s nearest rival risks acquiring a protectionist edge. ...

A brilliant new approach: Lighting

The Economist: A brilliant new approach: Lighting

Light-emitting diodes will transform the business of illumination, especially with new production breakthroughs.

“INCANDESCENT” might well describe the rage of those who prefer traditional light bulbs to their low-energy alternatives. This week, the European Commission formally adopted new regulations that will phase such bulbs out in Europe by 2012. America will do so by 2014. Some countries, such as Australia, Brazil and Switzerland, have got rid of them already. When a voluntary agreement came into force in Britain, at the start of the year, people rushed out to buy the last 100-watt light bulbs. Next to go are lower-wattage bulbs.

But what will replace the light bulb? Although obtaining illumination by incandescence (ie, heating something up) goes back to prehistory, it was not until 1879 that Thomas Edison demonstrated a practical example that used a wire filament encased in glass. Modern bulbs, the descendants of that demonstration, are cheap (around 50 cents) but inefficient, because only about 5% of the energy they use is turned into light and the rest is wasted as heat. A typical bulb also has to be replaced every 1,000 hours or so.

Without changing light fittings, the cheapest direct replacement for an incandescent bulb at the moment is a compact fluorescent light (CFL). These use up to 75% less power and last ten times longer, but they cost around $3 each. ...

... The most promising alternatives are light-emitting diodes (LEDs). An LED is made from two layers of semiconductor, an “n-type” with an excess of negatively charged electrons, and a positive “p-type” which has an abundance of “holes” where electrons should be but aren’t. When a current is applied across the sandwich, the electrons and holes team up at the junction of the two materials and release energy in the form of light. The colour depends on the properties of the semiconductor, and these can be tuned to produce light that is similar to natural daylight but with virtually no ultraviolet or heat.

Light-emitting diodes have progressed from simple red indicators on electronic products to become torches, streetlights and car headlights. Now the first mains-voltage LEDs designed as direct replacements for incandescent bulbs are arriving on the market. Some, such as the Philips Master LED range, promise energy savings of up to 80% and a working life of 45,000 hours. But they are not cheap: around £40 ($56) in Britain.

Even so, LEDs can still be economical. Only a quarter of lighting is domestic. Businesses and public organisations are more aware of running costs than householders are—and besides the electricity bill they also have to pay people to change bulbs that have failed. For the bulbs to be embraced by households, though, LED costs will need to come down. ...

Scrambled Eggs: Aborting a fetus because it's not yours

Slate: Scrambled Eggs: Aborting a fetus because it's not yours (HT: Scot McKnight)

Would you abort a fetus just because it wasn't yours?

The question sounds crazy. How could it not be yours? If it's in your body, you must be the mom, right?

Wrong. Through in vitro fertilization, you can get pregnant with somebody else's fetus. Thousands of surrogates already have. You can also carry an unrelated child using donor eggs and sperm. But these are things you'd have to sign up for. The scary scenario is the one you never expect: going through IVF and discovering, weeks into your pregnancy, that your doctor put the wrong embryo in your womb.

If you think this can't happen, I have bad news: It just did. A public hospital did it to a woman in Japan. Now she's suing the local government for more than $200,000, claiming mental anguish. ...

Fascinating article. Welcome to our brave new world.

Cultural Matters in Economic Development

Aid Watch: "If You Don't Trust People You Know, It's Over!"

NYU Professor Leonard Wantchekon recently made a presentation about the impact of slavery on intra-community trust in Benin. Trust is essential to economic development and Wantchekon points out that the legacy of slavery in nations such as Benin is mistrust.

Willaim Easterly writes:

Stories like these point to the importance of bottom-up approaches to development. One-size-fits-all grand plans inevitably lack the cultural specificity to tease out and cope with these potential barriers.

Here is a video clip:

Leonard Wantchekon on the Lack of Intra-Community Trust in Benin from DRI on Vimeo.

Is access to clean water a basic human right?

Christian Science Monitor: Is access to clean water a basic human right?

ISTANBUL, Turkey -  With fresh water resources becoming scarcer worldwide due to population growth and climate change, a growing movement is working to make access to clean water a basic universal human right.

But it's a contentious issue, experts say. Especially difficult is how to safely mesh public-sector interests with public ownership of resources – and determine the legal and economic ramifications of enshrining the right to water by law.

"It's an issue that is snowballing," says Tobias Schmitz, a water-resources expert with Both Ends, a Dutch environmental and development organization. Some 30 countries have a constitutional or legal provision ensuring individuals' access to water, up from a handful a few years ago, he says.

"Everybody is grappling with the issue, knowing that we need to secure this right. But the question now is over the practical application of this right," Dr. Schmitz says.  ...

David Schmidtz has some interesting thoughts about this tendency to classify basic needs as rights. From Social Welfare and Individual Responsibility: For and Against, page 9:

Collective responsibility as such is not a problem, but the urge to externalize responsibility is. Naturally, it would be comforting to know that if we lost our jobs tomorrow, strangers would be forced, against their will if necessary, to take care of us. So, why not say everyone has a guaranteed right to enjoy the kind of life-style that goes with being a productive member of society, whether or not one actually is a productive member? Edwin Baker claims, “If the practices of the society indicate that certain things are necessary in order to be a full member, then the community must assure the provision of these things to all who are expected to be part of the community.

Baker leaps straight from the premise that some things are necessary to the conclusion that guaranteed provision of those things is necessary. That leap is a mistake. Our need for food, clothing, and shelter is beyond question; our need for guaranteed provision is not. Nor is guaranteed provision guaranteed to make people better off. After all, the guarantee does not mean the goods are free. What it means is someone else has to pay. It means people have to pay for other people’s needs and other people’s mistakes instead of their own.

Origins of the Myths of the Invisible Hand

Adam Smith's Lost Legacy: Origins of the Myths of the Invisible Hand

I was looking for a reference in a book in my library and came across, at the back, as you do, my rather battered copy of Paul Samuelson’s popular textbook, ‘Economics’ (which I had looked unsuccessfully for many years).

In the 1960s, later edition of this book was the class textbook at my university, and I had also bought a first edition of it in a book fair in the 70s.

I knew that Samuelson had mentioned the ‘invisible hand’ in his textbook and he is, in my view, more than anyone else, responsible for popularising the incorrect notion that Smith believed there was an invisible hand at work in the general economy, which in the minds of modern economists somehow, mysteriously, was behind the undoubted success of capitalism in masking possible unprecedented living standards. (The Cold War was on and many academics and their students were more impressed with Marxism than capitalsm.) ...

...Smith did not proclaim ‘the mystical principle of “the invisible hand” ’. He was so reticent about it that he mentioned it only once in Wealth Of Nations, more than half-way through his book, buried in a chapter about how some cautious (risk-averse) merchants preferred the ‘home trade’ to ‘foreign trade’ in pursuit of their ‘own security’.

Smith never proclaimed in favour of ‘selfishness’, nor did he describe the actions of such merchants ‘selfish; he always recognised self-interest’ which he never confused with ‘selfishness’.

Smith never regarded or stated that ‘any interference with free competition by government was almost certain to be injurious’; he identified the circumstances where government policies, such as the dominant policy of mercantile political economy since the 15th century, had slowed ‘progress towards opulence’ and identified which of these policies should be changed.

Smith didn't think much good came from sovereigns and legislators telling merchants what to do - he didn't think governments were up to the task

In fact, Smith identified that the main ‘interference’ with ‘free competition’ came from the ‘merchants and manufactures’ themselves, with their agitation for legislators, and those who influenced them, to demand monopolies and trade protection, which were against the public interest in general and the interests of consumers in particular.

I conclude, given the misunderstanding of Adam Smith’s political economy that began in the mid-twentieth century, which led to ideological protection of much corporate behaviour (not much different from their behaviours in his day) that if Samuelson had read Moral Sentiments and Wealth Of Nations for himself, instead of recalling what he was taught as a student in the 1930s, he could have prevented tens of thousands of students, who in the 16 editions of his textbook were taught by it well into the 1970s, from ‘remembering’ the same error he passed on to them, many of whom became teachers of yet more students.

Turning Unassisted

IBD Editorials: Turning Unassisted

Recovery: Don't look now, but the economy is starting to turn. Recent data suggest it may start making up lost ground as early as the third quarter. A triumph of government policy? Hardly.

The economy's hard take-down last year was due almost entirely to a longstanding government policy that forced banks to lend to unworthy borrowers plus missteps in Fed interest-rate policy.

The combination of soaring oil prices, bad mortgages, a collapsing housing market and rising interest rates crushed much of our financial infrastructure, causing mass bankruptcies, layoffs and a financial crisis that hammered economies around the globe.

But now, after months of seemingly nonstop bad news, there are hopeful signs on the horizon. They include:

• A broad rally in stocks, confirmed last Thursday, continuing into this week and led by the beaten-down financials.

• A surprising 22% surge in February housing starts to a seasonally adjusted annual rate of 583,000 units.

• A back-to-back jump in retail sales ex autos, in both January and February.

• A return to profitability at several major banks, including Citigroup, Bank of America and JPMorgan.

• A doubling in the obscure but important Baltic Dry Index, a key indicator of global trade flows.

• An upwardly sloping yield curve, which Fed research suggests all but ensures a rebound by year-end.

• A Housing Affordability Index that has hit an all-time high.

• A two-month improvement in wholesale used-car prices, measured by the Manheim Index.

• A rise in Monster's Employment Index in February, suggesting a turn in the job market may be around the corner.

• A 4 1/2-year high in the dollar against other major currencies, on a trade-weighted basis.

• A sharp increase in the money supply, as measured by M2 and M1. Weekly M2 growth has averaged 10.1% year-over-year since the start of 2009, while M1 has grown at a 14.6% rate.

• A two-month rally in the Index of Leading Indicators.

• A growing body of evidence that the "liquidity crunch" is dead. Data show nearly $14 trillion in liquidity on the sidelines of the markets, ready to boost consumer spending, credit growth or further stock market gains.

This list could go on, but you get the general idea: Below the surface of gloom, there are signs of a new vibrancy. ...

Fossil hints at fuzzy dinosaurs

BBC: Fossil hints at fuzzy dinosaurs

A discovery in China has prompted researchers to question the scaly image of dinosaurs.

Previously, experts thought the first feathered dinosaurs appeared about 150 million years ago, but the find suggests feathers evolved much earlier.

This has raised the question of whether many more of the creatures may have been covered with similar bristles, or "dino-fuzz".

The team describe the fossil in the journal Nature.

Fuzzy dinos? You mean dinosaurs may actually have looked like this?

Self-Interest and Benevolence: Partners, not Antonyms (Part 11)

(Link to Part 10)

Benevolence in Family and Beyond

I concluded the last post by characterizing the family as a benevolence oriented commune. There is communal property. There are laborers who produce goods for trade. There is a place for those without the capacity to do economic labor and a place for caregivers. Biological bonds and the bonds established through formal inclusion into the family usually create a high degree of affinity. Living in close proximity, sharing common space, and eating at table to together, nurtures benevolence and empathy. There is much to commend about this communal existence. And that raises a question. If this is so good for a small community, then when not just make society, indeed humanity, a family writ large?

With precious few exceptions, communal groups dissolve within a few years or last a couple of generations at most. Why is this so? In large part it is due to the tragedy of the commons. Wikipedia says that it is:

“… a dilemma in which multiple individuals acting independently in their own self-interest can ultimately destroy a shared limited resource even where it is clear that it is not in anyone's long term interest for this to happen.”

The example Garrett Hardin (who coined the phrase) uses is this:

“Central to Hardin's article is a metaphor of herders sharing a common parcel of land (the commons), on which they are all entitled to let their cows graze. In Hardin's view, it is in each herder's interest to put as many cows as possible onto the land, even if the commons is damaged as a result. The herder receives all of the benefits from the additional cows, while the damage to the commons is shared by the entire group. If all herders make this individually rational decision, however, the commons is destroyed and all herders suffer.”

From a pure economic standpoint, each herder as an incentive to use the land to its fullest and to do so as quickly as possible before others do the same. No one has an incentive to nurture the commons unless all are going to nurture the commons. Individual work done to enrich the commons simply aids those who take no responsibility. The reality is that it doesn’t take a very high percentage of free-riders before the system breaks down.

There are some ways to avoid the tragedy of the commons. First, make sure that whatever is held in common is larger than the aggregate demand of the people who hold it common. When this can be accomplished, it is usually done by excluding new members from the commons. The commune essentially becomes the private owner of resources, making them no longer common to outsiders, but common to a fixed and exclusive number of people.

Second, if you arrange for a community to have constant and repetitive interaction where formal and informal surveillance of each other’s behavior is the norm, and you can ingrain high levels of internalized commitment to the community, then you may be able to avoid the tragedy of the commons. The problem is that there are human limits to this type of community. Social network research reveals that the upper end of the number of people an individual can include in a social network is 150 people. Practically, it is probably much smaller. Surveillance and solidarity breaks down.

This is why few communal groups have been able to expand and continue over more than a generation or two. A notable exception is the Hutterites. The Hutterites limit the size of their communities to 120. When they become larger, they must divide. Furthermore, children do not receive an education that would equip them to survive in the outside world. Group solidarity is enhanced through joint labor, joint meals, and regular worship together.

Most communes grow bigger than their common property can handle. Free-riders become a problem and the most productive workers limit their labor. Solidarity breaks down from the size of the network. Privatization emerges. The most productive are able to reap the full rewards of their labor. They use resources most effectively and produce an abundance that frees less productive workers to do work they are more productive at. Free-riders are compelled to produce something for exchange. What was once held in common is now better and more productively managed.

For these reasons, it is not possible to project the communal family to a large community, much less an entire society. Communal living requires very high levels of trust and familiarity. Markets, combined with a strong juridical framework, facilitate the ability of complete strangers to trade with each other in confidence.

Hernando DeSoto, in The Mystery of Capital, notes that the world’s poor probably control ten trillion dollars of hidden assets. The probably is they live outside the formal economy in their country. Land and property titles are not officially held but neighbors in a community can usually attest to who owns what. While that works on a very micro-level, it effectively removes these resources from the market as loan collateral or as an asset that can be sold to anyone other than immediate neighbors. Such assets are invisible to the national and global economy. Markets and juridical frameworks are what bring these assets into the larger market and give them value.

All this directly connects with benevolence. The size of the community constrains not only our ability to engage in responsible communal economic labor but also our ability to engage in responsible benevolent acts. A handful of people with a high level of solidarity can usually adjudicate the need for benevolence among themselves. The larger the group becomes the more difficult it becomes to make well-informed decisions and the greater the opportunity for free-riders to exploit the information deficit.

Communities are without unlimited resources to give toward benevolence so a tragedy of the commons quickly emerges, absent constraints being placed on how benevolence will be used. What that usually means is smaller subgroups are made responsible for benevolent care and the larger community uses a more abstract impersonal set of criteria for allocation of resources to these small benevolent groups.

This is where mediating institutions like the church and voluntary associations become so critical. They create broader “markets” for benevolence. When mediating institutions work well they provide a means where people with little specialized information can pool their resources and “buy” the expertise of a community of folks with more specialized information who can effectively address needs. When mediating institutions work poorly they can be every bit as capricious and ineffective (if not destructive) as if we had given without such institutions.

To summarize, person to person interaction inside the “commune” of the family is probably the most formative part of our lives in developing other-centeredness and benevolence. This style of benevolence can probably be extended to multiple families and individuals but only to a limit of, at the most, a few dozen people. When we get beyond that, mediating institutions are needed to fill the information gap we have about other’s needs. This doesn’t preclude the episodic case of personally helping a stranger in need but it does highlight that such benevolence is insufficient to be truly effective on a large scale.

The other-centeredness learned in the family and nurtured through the church should compel us to look to the need of strangers but it should also compel us to do so in ways that bring dignity to others and recognizes the centrality of families and social networks in nurturing benevolence (not dependence or free-riding) in the recipients of benevolent acts. As we are stewards of God’s resources, it should compel us toward generosity. While we will always be taken advantage of from time to time through our generosity that is not an excuse for carelessness in how we are benevolent to ward others.

[Continued]

Irish in the Hood

Many people don't realize that the Irish have played a central role in Kansas City history from the beginning. Our St. Patty's Day parade is the third largest behind New York and Boston. After thirty years of holding the parade downtown, they moved it to Midtown Kansas City on Broadway within just a few blocks of my house. I walked over to 34th Terrace and Broadway, near the start of the parade, and snapped these shots.

First, you must have bagpipes.

Then you must have the mayor. So here is Mark Funkhouser.

Irish politics was also on display.

You also need a little craziness.

Of course, you can't forget this guy.

BTW, the church in the background above is Redemptorist, where most of my neighbors attend. The congregation now has a predominately Mexican-American feel but in the early days this neighborhood (and where I live a few blocks west) was largely Irish and I'm told Redemptorist was largely Irish as well.

Below is the Marine color guard.

These dancers stopped to show their moves every block or so.

You can't have a K. C. parade without cowboys.

I loved the dog hitching a ride in this one.

Every K. C. parade must have the Marching Cobras.

Toward the end of the parade was the International House of Prayer with a contingent of people stretching more than a city block, dancing and singing to music that sounded like Delirious. They would yell out "Happy St. Patrick's Day" and "Jesus loves you."

Here is evidence the Kronicler was actually there.

As I walked back home I passed Browne's Irish Deli about four blocks from my house. To say they were doing a brisk business would be an understatement.

It was sunny, temp was around 70, and there was just a light breeze. God was smiling on the Irish in K. C. today.

U.S. housing starts surge, inflation slower

Yahoo! News: U.S. housing starts surge, inflation slower

WASHINGTON (Reuters) – New U.S. housing starts and permits unexpectedly rebounded in February, according to data on Tuesday that provided a rare dose of good news for the recession-hit economy and fractured housing market.

The Commerce Department said housing starts jumped 22.2 percent to a seasonally adjusted annual rate of 583,000 units from 477,000 units in January. That was the biggest percentage rise since January 1990 and also marked the first increase since last April.

"That is an encouraging sign for the U.S. economy. It is good signal of what is to come. With the rally in equities we hopefully have seen a bottom for the economy here," said Matt Esteve, foreign exchange trader at Tempus Consulting in Washington.

U.S. stocks have been on the rise over the last several days and the major indexes opened flat on Tuesday. U.S. government bond prices trimmed gains after the data and the U.S. dollar fell against the euro as risk aversion eased.

Also, from Mark Perry's blog: Housing Affordability Hits Record Highs in Dec. and Jan.; Why Does The Media Ignore The Good News?

China seeks export carbon relief

BBC: China seeks export carbon relief

China has proposed that importers of Chinese-made goods should be responsible for the carbon dioxide emitted during their manufacture.

China's top climate change negotiator, Li Gao, said his country should not pay for cutting emissions caused by the high demands of other countries.

In recent years China has overtaken the US as the world's largest producer of greenhouse gases. ...

Jay Leno disses the free market

Greg Mankiw: Jay Leno disses the free market

This is an amusing story, good for generating class discussion. As I understand it, here are the facts:

1. Comedian Jay Leno takes his show to Michigan to help "not just the autoworkers -- anybody out of work in Detroit."

2. He gives away tickets for free.

3. Someone tries to sell his ticket on ebay.

4. Mr Leno objects.

So I wonder: If a person down on his luck prefers the cash to the opportunity to watch Leno live, why would Leno object? Is it altruism that is really motivating Leno here? Is he really sure that the unemployed person in Detroit would be better off with an evening of laughs than $800 in his pocket? Or does Leno want to play to a live audience of unemployed workers so he will seem altruistic to his television audience?

Absent externalities, markets improve the allocation of resources. Both the buyer and the seller of the ticket must be better off: otherwise they would not engage in the transaction. The only significant negative externality that I can see here is on Mr Leno himself. In other words, Leno's objection to the ebay sale is an understandable and fundamentally self-interested act in that the sale impedes his abilty to appear selfless.

Presbyterian Captivity

I've been tied up in meetings (or travel connected to them) with Presbyterians since Saturday morning and I will continue to be in meetings until this afternoon. My blogging suffers during these episodes but I should freed from Presbyterian captivity later today. Ya'll pray from release.

N.T. Wright on the End Times and YouTube 6

How Well Can You Spell?

Regular readers of the Kronicle know how spelling challenged the Kronicler is. Well I just took the test below and only got 17 out 27 questions correct. How well can you do?

The 25 Most Commonly Misspelled Words

When Will There Be Good News? Does it Help There Already Was Some?

Aid Watch: When Will There Be Good News? Does it Help There Already Was Some? William Easterly

In the midst of the general doom and gloom, fears about how the crisis will affect poor countries, and fierce criticism of markets, states, and aid agencies, perhaps it’s healthy to step back to the big picture, to recognize there has already been some very real good news. The graph below shows some overall statistics for the developing world:

This graph has a mixture of good news that all of the much-criticized triad of markets, states, and aid can take partial credit for. Markets obviously get at least some credit for the reduction in global poverty and increase of global average income. States supply public goods like education, water, and health, and there has been progress on all of these. Aid deserves some credit for successes in health, as already stressed in a previous blog post.

One group that doesn’t deserve much credit is “development experts,” because there is a terrible crisis of confidence in development economics now, where we all freely confess we don’t really know what to advise governments on how to speed up development. ...

The Good Bishop Weighs In-- Tom Wright on 'Surprised by Hope'

Ben Witherington: The Good Bishop Weighs In-- Tom Wright on 'Surprised by Hope'

N.T. Wright's "Surprised by Hope" has been called an instant classic, and now with two years of positive reviews under its belt, it was time to sit down with the Bishop and ask some follow up questions which arise from some of the things he has said in the book and some of the responses he has gotten.

I caught up with Tom in Prague, but he delayed answering for a day until he could get home to Bishop Auckland Palace, where you find him safely ensconced in the picture above (coupled with a picture of Durham Cathedral at dawn, looking over the Wear river bridge).

QUESTION ONE

Since both Europe and America are rapidly becoming more multi-cultural and emphasizing the goodness of religious diversity, it is natural to expect an increasing diversity of afterlife views even in the West. In light of this fact, how would you approach taking your message of hope to the streets, how would you do evangelism on this important topic in this post-modern post-Christian setting and era?

ANSWER

1. Diversity of afterlife views. Yes, indeed, we are becoming more diverse (though not hugely so I think in the UK -- there tends to be an assumption that Christians believe in heaven and hell, some other religions believe in reincarnation, and most people are either agnostic or think death is final). There aren't actually too many options, really, in either the ancient or the modern world; just variations on well-known themes. ...

Capitalism Beyond the Crisis

New York Review of Books: Capitalism Beyond the Crisis  Amartya Sen (Economics Nobel Prize winner in 1998)

2008 was a year of crises. First, we had a food crisis, particularly threatening to poor consumers, especially in Africa. Along with that came a record increase in oil prices, threatening all oil-importing countries. Finally, rather suddenly in the fall, came the global economic downturn, and it is now gathering speed at a frightening rate. The year 2009 seems likely to offer a sharp intensification of the downturn, and many economists are anticipating a full-scale depression, perhaps even one as large as in the 1930s. While substantial fortunes have suffered steep declines, the people most affected are those who were already worst off.

The question that arises most forcefully now concerns the nature of capitalism and whether it needs to be changed. ...

...Ideas about changing the organization of society in the long run are clearly needed, quite apart from strategies for dealing with an immediate crisis. I would separate out three questions from the many that can be raised. First, do we really need some kind of "new capitalism" rather than an economic system that is not monolithic, draws on a variety of institutions chosen pragmatically, and is based on social values that we can defend ethically? Should we search for a new capitalism or for a "new world"—to use the other term mentioned at the Paris meeting—that would take a different form? ...

...The present economic crises do not, I would argue, call for a "new capitalism," but they do demand a new understanding of older ideas, such as those of Smith and, nearer our time, of Pigou, many of which have been sadly neglected. What is also needed is a clearheaded perception of how different institutions actually work, and of how a variety of organizations—from the market to the institutions of the state—can go beyond short-term solutions and contribute to producing a more decent economic world.

A very thought provoking piece.

Bush Stem Cell Ban Wrong, But Not Anti-Science

Wired: Bush Stem Cell Ban Wrong, But Not Anti-Science

President Bush's stem cell policy may have been restrictive and misguided, but it wasn't anti-science.

In the wake of Obama's decision to lift Bush's funding ban, many scientists are celebrating the freedom of science from ideology. Their relief is understandable, but the rhetoric is disturbing.

The Bush administration didn't skew stem cell research like it did environmental science: It simply said it wasn't right. Bush's limitations on embryonic research were ethical and legitimate — but not, as many observers have noted, anti-science.

"Some scientists may take home the wrong message: that moral concerns should not restrict what scientists can do. But that's clearly false," said Tom Murray, director of the Hastings Center, a nonpartisan bioethics think tank.

There are good reasons why society puts ethical boundaries on science.

The Nuremberg code is the best-known example of this.  ...

Blogs: A Window to Our Souls

Christianity Today: Blogs: A Window to Our Souls

Nearly three years ago, Alan Jacobs wrote in Books and Culture, "Right now, and for the foreseeable future, the blogosphere is the friend of information but the enemy of thought." First drawn to blogs for news, Jacobs hoped the blogosphere could become a forum for developing and exchanging ideas. Yet like so many bloggers who start with big hopes, his enthusiasm waned after he became better acquainted with the medium.

Every other week, this column aims to introduce you to theology stories and theological angles on stories in the news. Thus, I regularly scour theology blogs to see what professors, pastors, students, and laypeople are saying about the latest books and current events. I value the indispensable work of bloggers who direct readers to good content and theologians who popularize work that otherwise would never have escaped libraries. Two blogs, Out of Ur and Christian History, even allow me to share my thoughts on pastoral ministry and the great cloud of witnesses.

But when friends ask me about blogging, I usually discourage them from taking on this responsibility. If you run your own blog, there is constant pressure to post so you won't lose regular readers. The Internet never shuts off. Then when you post, you frequently check the comments, worried what "Bob" thinks of you. And you better believe Bob won't hold back. He doesn't know you, and you don't know him, so anonymity emboldens him to state opinions, however uninformed, boldly. Afterward you wonder why, again, you care what Bob thinks. If this is the future of theological discourse, then we have entered the worst of times. Can you imagine Martin Luther hiding in Wartburg Castle, distracted from translating the Bible because "Chuck5" didn't like his post on the virtues of ale-aided exegesis?

On second thought, Luther was exactly the kind of personality who might have thrived on the Internet. ...

Intelligent Design on Trial

Last month I linked a review by John Armstrong of a Nova documentary on the Dover School Board case concerning intelligent design called Intelligent Design on Trial, filmed in 2007. I finally had a chance to watch all two hours of the documentary (in 12 segments) and I agree with John, it is really quite good.

My dad was research chemist all his life and I've been around science and scientists all my life. I'm fully aware that any number of scientists have let there methodological naturalism (which is essential to science) spillover into philosophical materialism. I sympathize with Christians who find such scientists arrogant and offensive. They often are. But intelligent design does not fit the strictures of science the attempt to insert errant scientific methods to counteract obnoxious philosophical materialists is of little benefit. Personally, I'm a theistic evolutionist and I think this documentary does a great job of illustrating the reasons I find ID unhelpful. I'm sure some ID enthusiasts would differ with me but I felt, for the most part, it was a respectful treatment of the events in Dover and of ID. If you haven't seen it, I'd really encourage you to give it a whirl.

Times Techie Envisions the Future of News

Wired: Times Techie Envisions the Future of News

Nick Bilton, an editor in the New York Times research and development lab, doesn't think much of newspaper. In fact, he doesn't even get the Sunday paper delivered to his house.

Thankfully for Bilton and his employer, he's bullish on news. It's just the paper he hates.

"Paper is dying, but it's just a device," Bilton told Wired.com ahead of his talk Tuesday at the O'Reilly Emerging Technology conference in San Jose, California. "Replacing it with pixels is a better experience."

Bilton, a youthful technologist who programs mashups in his free time, is charged with inventing the future for the Gray Lady in an era of troubled times for newspapers. Fewer people are subscribing, classified ads are decamping for the internet and online revenues aren't making up for lost print ads.

But Bilton envisions a world where news is freed from the confines of newsprint and becomes better.

He speaks of smart content, smart sensors, avatars reading the news to you from your television and even interactive newspaper boxes that print out a personalized paper and automagically orders your customary drink at a nearby Starbucks.

That means Bilton is thinking of a world where traditional news stories show up on little mobile screens, laptops, e-book readers and television screens. ...

Drive-Through Church Model

After considerable research I've stumbled upon a new church growth model: The Drive-Through Church. Here is an illustration of how it works. Enjoy. (HT: Parchment and Pen)

"Enough" - Book Review

You may have noticed we’ve entered some financially challenging times lately. (It has been in all the papers … those that are still printing.) The challenges we face can be quite disorienting. It’s scary. We may now realize that the way we oriented our life was unhealthy but what would a healthy approach to finances look like?

Enter Enough: Discovering Joy Through Simplicity and Generosity. Enough is the latest book by Adam Hamilton, pastor of the Church of the Resurrection (United Methodist) in suburban Kansas City. In this little gem (barely 100 pages), Hamilton offers some very helpful wisdom on financial practices. This is not a theological treatise on wealth, a moralistic pamphlet on the evils of materials goods, nor a gimmicky self-help guide. Hamilton looks squarely at the impact of “affluenza” and of fear on our lives, and challenges us to rediscover God’s purpose for us and to find our identity in him.

The three themes that permeate the book are trusting God, offering gratitude, and living a life of service and generosity of service to others.  In some ways, they are so simple. Yet they are deceptively hard to live out. The book offers very practical spiritual and financial practices that help inoculate us from affluenza and fear, and bring us closer to God.

The book is exceptionally well written. While I think it applies to people of all ages, it struck me that this book might be particularly helpful for young adults who are beginning to set up their own lives. It would make an excellent high school or college graduation gift. If your congregation gives graduation gifts in May, then at $8 a piece (at Amazon) this book might be something you should consider.

I encourage you to pick up a copy for yourself.

Most religious groups in USA have lost ground, survey finds

USA Today: Most religious groups in USA have lost ground, survey finds

When it comes to religion, the USA is now land of the freelancers.

The percentage. of people who call themselves in some way Christian has dropped more than 11% in a generation. The faithful have scattered out of their traditional bases: The Bible Belt is less Baptist. The Rust Belt is less Catholic. And everywhere, more people are exploring spiritual frontiers — or falling off the faith map completely.

These dramatic shifts in just 18 years are detailed in the new American Religious Identification Survey (ARIS), to be released today. It finds that, despite growth and immigration that has added nearly 50 million adults to the U.S. population, almost all religious denominations have lost ground since the first ARIS survey in 1990.

"More than ever before, people are just making up their own stories of who they are. They say, 'I'm everything. I'm nothing. I believe in myself,' " says Barry Kosmin, survey co-author. ...

We are the Presbyterians

A new Presbyterian hymn to the tune of The Church's One Foundation. Click Here

Self-Interest and Benevolence: Partners, not Antonyms (Part 10)

(Link to Part 9)

The Practical Need for Benevolence

So far we’ve seen how important markets are to a thriving society. They provide the real-time information feedback loop that matches wants and needs with supply.  Self-interested people (who may or may not be selfish) make bids for goods and services. Businesses compete to be the best at meeting their demands. Markets integrate people into an economic community of win-win transactions. Economic production and exchange, even in the Old Testament biblical context, are integral elements to the idea of stewardship of God’s resources. Markets enhance these qualities.

We’ve also observed that markets simply don’t operate with pristine perfection. Market transactions sometimes have an impact (sometimes quite negative) on people who were not a party to the transaction. Complex economies frequently lead to situations where buyers or sellers are at a relative information disadvantage to the other party in the transaction. Since markets function best where people are reasonably well informed and they have high expectations that their property rights will be respected by government and others, these issues represent serious challenges. It is not possible to talk about a truly “free market” without a strong juridical framework that will referee and regulate these problems.

Furthermore, as Christians, we have to acknowledge that whenever fallen finite people act on what they perceive to be in their best interest, the frequently err. Erroneous decisions are also processed into the market feedback loop. Economic outcomes will reflect these values. A frequent inclination is to propose government solutions that will “even out” the bad market outcomes. But this inclination frequently fails to account for the fact that governments are made up of the same fallen finite people trying to manage incomprehensibly complex and dynamic markets with insufficient information using a process that is oriented toward compromise positions between power brokers. It often doesn’t result in the best “common good” either. Our real choice is between fallen finite people with decentralized power participating in a markets that efficiently produce good and bad, or fallen finite people with centralized coercive power who answer to political (not economic or ethical) pressures. In short, perfect outcomes are not possible.

What is challenging is that we believe human beings have inestimable value beyond their economic capacities. We’re unwilling to leave people completely at the mercy economic outcomes. We realize that some of us occasionally make imprudent decisions. Some us are harmed by circumstances that are beyond our control. Others of us may be (temporarily or permanently) without the physical or mental capacities needed to produce something for economic exchange. We are morally compelled to devote resources to nurture fundamental capacities in those needing nurture.  We are compelled to aid those who can’t participate in economic activity at all. The caregivers in both cases frequently need our economic support as well. So how will we provide this care?

And here is a related question: Where does someone learn to practice benevolence and internalize benevolence as a virtue? If we are nothing but a society of individuals engaging each other purely as parties to market transactions, then where will we learn to include others in our consideration of what is truly in our self-interest? Where will we learn the virtues of love and compassion that motivates us to devote a portion of our resources toward those who are in hardship or are without the capacities to participate in the economy? I want to suggest that the answer is in small benevolence oriented communes. You might call them families.

[Continued]

Obama's Tax Plan Could Cause Giving by the Wealthy to Drop by Several Billion Dollars Annually

The Chronicles of Philanthropy: Obama's Tax Plan Could Cause Giving by the Wealthy to Drop by Several Billion Dollars Annually (HT: Victor Claar)

President Obama’s tax proposals — including a limit on charitable giving deductions that could be taken by America’s wealthiest people — could cause giving by America’s wealthy to drop by several billion dollars a year, according to estimates released today by the Indiana University Center on Philanthropy.

The center looked at how the proposals Mr. Obama released on Thursday would have affected giving based on 2006 data showing how much taxpayers deducted for charitable contributions. It said that if Mr. Obama’s tax plan had been in effect, Americans with incomes of $250,000 or more would have decreased their giving by 4.6 percent or nearly $3.9-billion. People at that income level claimed more than $81-billion in charitable gifts in 2006.

The drop in giving is less stark when looked at in the context of how it would affect all Americans who itemize on their tax forms and claim charitable deductions. Total giving by people who itemize would have dropped just 2.1 percent if the Obama plan had been in effect in 2006, the center estimated. Itemized charitable contributions totaled nearly $187-billion that year.

But the center cautioned that giving is far more likely to be affected by the condition of the stock market than by President Obama’s tax proposals. It noted that every time the stock market declines by 100 points, giving declines by $1.85-billion. Charitable donations rise by that same amount when the stock market increases. ...

Signs of Life From the Real Estate Market

Yahoo! Finance: Signs of Life From the Real Estate Market

In ZIP codes across the country, as once-inflated property prices bottom out housing sales are increasing dramatically

Earlier this year Herson and Liz Enerio put in a $400,000 bid on a four-bedroom house on a private street in Fairfield, Calif., with three pine trees and a backyard that opens onto a hiking trail.

One would think that the 30-year-old police officer and his wife, who works as a nurse, were well positioned to negotiate, especially in a market like Fairfield, a town about 40 miles from both San Francisco and Sacramento where more than 80% of homes for sale are owned by banks or by homeowners facing foreclosure. For one thing, the people selling the home are under water on their mortgage and are trying for a so-called short sale, where the lender agrees to take less than what's owed to prevent a foreclosure. But the Enerios decided to play it safe, bidding $1,000 above the asking price and offering to cover some of the closing costs, because Fairfield—like many of the most battered areas of California, Florida, Nevada, and Arizona—is suddenly hot again.

Prices have dropped so low that cash-ready investors and first-time buyers are making multiple offers on distressed properties. Fairfield sales jumped 226% in the fourth quarter of last year compared to the same quarter in 2007 and home prices during that period fell 19% to $179,500, according to mortgage and housing data analytics company First American CoreLogic. ...

Kruse Kronicle gets a nice hat tip

Kruse Kronicle got a nice hat tip. Victor Claar, an actual economist (as opposed to posers like me), whose blog I wrote about a few days ago, had a nice post about my blog today.

I want to highlight that Victor noted my "great sense of humor." This just confirms what I've always suspected about how professional economists might evaluate my attempts to describe serious economic issues.  :-)

Seriously, thanks Victor.