Archive for category Economics
Zhang Xin on China: We Are Only Allowed to Make Money
Posted by Joseph Sunde in Business, Economics, Politics, Remnant Videos, Sociology on September 7, 2010
Last Sunday, I caught an interesting interview with Zhang Xin, the billionaire Chinese developer and CEO of SOHO China.
In the interview, Fareed Zakaria asks a lot of important questions, but what is most striking are Zhang’s opinions about what the Chinese system lacks.
Zhang had very humble beginnings, spending much of her late childhood working in shoe and electronics factories trying to save money for her education. She eventually met her goals.
Here’s a brief bio from Bloomberg:
Zhang, 44, personifies the explosive rise of China, from the poverty of Mao Zedong’s communist rule to the riches of state-controlled capitalism in the world’s third-biggest economy. At age 30, armed with a master’s degree from the University of Cambridge in England and connections from working at Goldman Sachs Group Inc. in New York and Hong Kong, Zhang founded Soho China with Read the rest of this entry »
Morality and Economics: How Do We Discuss the Two?
Posted by Joseph Sunde in Economics, Philosophy, Politics, Site News on September 1, 2010
I will now be writing a bi-monthly column for Ethika Politika, the blog of the Center for Morality in Public Life. Since the discussion will usually overlap with the one taking place here, I will be cross-posting excerpts to keep you in the loop.
To stay connected with Ethika Politika outside of these posts, follow them on Facebook, Twitter, or via RSS.
My first column is about the proper placement of economics in discussions of morality.
Here’s a taste:
If we want to advance economic freedom in the belief that it leads to “authentic human flourishing,” we must recognize that the actual economics are secondary to the actual morality behind them. We must understand that the most fundamental moral framework behind the free enterprise system is reinforced by the economic data — it is not defined by it.
But how are we to go about this? If we are to analyze economic issues primarily on moral grounds, where should we begin?
To hear my answer, read the full article.
Meltdown: Moral Hazard and the Financial Crisis
We are all aware of the current economic crisis. Whether we’ve experienced job loss, a devalued mortgage, or simply a higher price tag on our groceries, we all know that uncertainty is in the air.
In such extreme circumstances, it’s hard to maintain a clear perception. We all feel wronged, and we all want someone to blame.
It may be fitting, then, to begin by playing a little blame game.
First of all, it’s the bankers’ fault because they’re greedy. They lent too much money to people who made too little, and they should’ve been stopped. Then again, maybe it’s their customers’ fault. After all, isn’t it a bit greedy to buy a house you can’t afford? But wait a minute, aren’t the financial speculators to blame? Just think about it. There they were, crouching like vultures, waiting to feed on the failures of poor innocents.
Conclusion? (Duh!)
“The problem is greed.” says Politician A (or Media Pundit B). “And we all know who we can thank for that. Capitalism!”
It this confused, muddled mess that Thomas E. Woods hopes to permeate with his recent book, Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse (quite a laborious subtitle, if you ask me).
As far as my fun little game goes, Woods thinks there is plenty of truth behind it. Indeed, the narrative is filled with people who were overly hasty, downright foolish, and yes, excessively greedy.
But not all bankers loaned unwisely and not all homeowners went beyond their means, so why did such greed manifest so suddenly, and why didn’t we have this problem before? If bankers are Read the rest of this entry »
The Age of Adolescence: Peter Pan Syndrome in a Free Society
Posted by Joseph Sunde in Christianity, Economics, Politics, Remnant Reads, Sociology on August 26, 2010
I’m about one week late to the Web frenzy surrounding The New York Times Magazine’s most recent piece on “emerging adulthood.” I had a variety of reactions to the article (both positive and negative), but I wasn’t interested in saying much until I read Mark Driscoll’s provocative article in The Washington Post (“The world is filled with boys who can shave”).
The Times piece focuses on today’s “emerging adults” and tries to answer why so many are taking so long to reach adulthood. Driscoll seems to accept most of the article’s root analysis, but he uses it more as a launching pad for his own discussion of adolescence as it relates to today’s young men.
Historically, a guy would go through two life phases: boy, then man…But here’s what’s happened. Rather than moving from boy to man by this succession of sociological transitions, we’ve created something called adolescence…
Today, adolescence starts somewhere in the teen years and continues indefinitely. There is no foreseeable end. The problem with adolescence is guys don’t know when they’re ever going to grow up and be men, and no pressure is exerted on them to do so.
Driscoll goes on to label this trend a “Peter Pan Syndrome epidemic” in which “men want to be boys forever.”
For me, as a twenty-something who has (hopefully) completed the transition through modern-day adolescence, it’s hard to deny the reality of what Driscoll is describing. It was always difficult to identify the exact time I was supposed to Read the rest of this entry »
Business as Philanthropy: Gates, Buffett, and Transformative Change
Posted by Joseph Sunde in Business, Economics, Remnant Reads, Sociology on August 24, 2010
Bill Gates and Warren Buffett recently pledged to join 40 of America’s wealthiest people in donating at least half of their riches to charity. For Gates and Buffett alone, such a pledge will translate into at least $115 billion in charity.
This sounds wonderful on the surface, but philanthropist Kimberly O. Dennis is a bit skeptical. In last week’s Wall Street Journal, Dennis argued that “the wealthy may help humanity more as businessmen and women than as philanthropists.”
As Dennis explains:
What are the chances, after all, that the two forces behind the Giving Pledge will contribute anywhere near as much to the betterment of society through their charity as they have through their business pursuits? In building Microsoft, Bill Gates changed the way the world creates and shares knowledge. Warren Buffett’s investments have birthed and grown innumerable profitable enterprises, making capital markets work more efficiently and enriching many in the process.
In the end, Dennis’ criticism seems to serve as a simple reminder of which approach is most promising when it comes to bringing about transformative change.
While businesses may do more for the public good than they’re given credit for, philanthropies may do less. Think about it for a moment: Can you point to a single charitable accomplishment that has been as transformative as, say, the cell phone or the birth-control pill?
On this last question there is bound to be disagreement, particularly because we all view value differently. For one person the birth control pill is extremely important. For another, feeding one hungry mouth is Read the rest of this entry »
Culinary Luddites: The Historical Distortions of 21st-Century Food Faith
Posted by Joseph Sunde in Economics, History, Remnant Reads, Sociology on August 16, 2010
For many culinary Luddites, hot dogs are the ultimate blasphemy.
Rachel Laudan has a great post over at Utne Reader called “In Praise of Fast Food,” which is actually an excerpt from the book The Gastronomica Reader. I came across the article via Nick Schulz over at the Enterprise Blog.
In the article, Laudan criticizes what she calls “culinary Luddism” — a creative spin on the term used to describe anti-industrialists in 19th-century Britain.
Where the original Luddites had an irrational fear of free trade and technological advancement, the new “culinary Luddites” have an irrational fear of processed and preserved foods.
As Laudan explains:
Modern, fast, processed food is a disaster. That, at least, is the message conveyed by newspapers and magazines, on television programs, and in cookbooks. It is a mark of sophistication to bemoan the steel roller mill and supermarket bread while yearning for stone-ground flour and brick ovens; to seek out heirloom apples while despising modern tomatoes; to be hostile to agronomists who develop high-yielding crops and to home economists who invent recipes for General Mills.
The strange part is that Laudan describes her culinary background as being rooted in the very principles of such anti-industrialization. Why then does she depart from her Luddite collegues?
Culinary Luddism has come to involve more than just taste, however; it has also presented itself as a moral and political crusade — and it is here that I begin to back off. The reason is not far to seek: because I am a historian.
Wait a minute. Isn’t “history” what this is all about? Aren’t we supposed to hearken back to the good old days when everyone knew how to Read the rest of this entry »
Milton Friedman on Greed: Where In the World Do You Find These Angels?
Posted by Joseph Sunde in Christianity, Economics, Politics, Remnant Videos on August 13, 2010
This classic Milton Friedman interview has now been seen by many on the Web, but since it deals with topics commonly discussed on this blog I thought I’d post it for your weekend enjoyment.
Watch the video here:
Donahue’s first question is this:
Did you ever have a moment of doubt about capitalism, and whether greed is a good idea to run on?
Friedman responds with this:
Is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? …The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus.
Friedman goes on to point out a few of these achievements (e.g. Einstein’s theory of relativity, Henry Ford’s automobile), and emphasizes that Read the rest of this entry »
The New Holy Wars: Economic Religion vs. Environmental Religion
Posted by Joseph Sunde in Christianity, Economics, Politics, Reviews, Science, Theology on August 4, 2010
We have all argued or debated with someone who resists facts and resorts to emotional or idealistic rhetoric. Conversely, we have all found ourselves in positions where we want to ignore the real-world implications of our beliefs for the sake of some perceived justice or goodness.
Whether we’re talking about the foods we eat, the medicines we take, or the public policies we support, we all have a tendency to get religious about the material.
For Robert H. Nelson, author of The New Holy Wars: Economic Religion vs. Environmental Religion in Contemporary America, these examples represent various forms of secular religion. If you look close enough into somebody’s core ideology, Nelson argues, you will surely find parallels to the holy books, priesthoods, and dogmas typically found in “regular” religions.
Nelson acknowledges that there are plenty of competing secular religions in the public sphere; however, he believes that two religions in particular have engaged in what is now the most prominent conflict in American society — namely, economic religion and environmental religion.
But why these religions, and why now?
Nelson argues that both religions emerged during the nineteenth century as a result of the Industrial Revolution. During this time, technological innovation boomed, living standards soared, and access to education expanded.
As Nelson explains:
For the first time ever, one of earth’s creatures — human beings — had literally acquired the capacity to remake ‘the creation’…Astonishingly enough, human beings had now acquired knowledge and powers previously reserved for God.
In other words, the dream of creating heaven on earth was suddenly realistic for those who thought such a feat was actually attainable or desirable. Over time, Nelson argues, the successes of the Industrial Revolution resulted in the emergence of two factions — one that “exalted human control over Read the rest of this entry »
Nullification: Federalism, Societal Innovation, and the Church
Posted by Joseph Sunde in Christianity, Economics, Politics, Remnant Videos, Sociology on July 28, 2010
Historian Thomas E. Woods has a new book out titled Nullification: How to Resist Federal Tyranny in the 21st Century, in which he argues for a return to the Jeffersonian idea of nullification.
For those who are unfamiliar with nullification, Christopher Oppermann provides a good description in his review of the book:
The concept of nullification is simple, yet powerful: That individual states can and should refuse to enforce unconstitutional federal laws; and that the states, not the federal government, should have the final word on constitutional interpretation.
If you’re interested in learning more about Woods’ perspective, I recommend watching his interview with Jeffrey Tucker (courtesy of the Mises Blog):
I have yet to read the book, so for now I’d simply like to use this as a springboard for discussing the merits of federalism when it comes to societal innovation.
Woods’ primary argument for nullification is that it provides a check on the federal government, but nullification can also enhance competition among the states.
As an example, Woods points to Virginia and Kentucky’s nullification of the Alien and Sedition Acts. In this case, the argument for nullification was that the acts were in violation of the First Amendment. Even though nearly every Northern state disagreed with Virginia and Kentucky, nullification allowed them to take a Read the rest of this entry »
Pay What You Wish: The Origins of Consumeristic Charity
Posted by Joseph Sunde in Business, Economics, Remnant Reads, Science, Sociology on July 26, 2010
I previously wrote a post discussing Panera Bread Co.’s new pay-what-you-wish business model and its macro implications.
Here’s a brief summary of how the new store works (from USA Today):
While the store does have cashiers, they don’t collect money. They simply hand each customer a receipt that says what their food would cost at a conventional Panera. The receipt directs customers with cash to donation boxes (there are five in the store). Cashiers do accept credit cards.
Last week, the Freakonomics blog posted a new study on pay-what-you-wish pricing, which suggests that the best way to maximize profits in such models is to “combine pay-what-you-wish pricing with an appeal to charity” (quoted from Freakonomics).
Marketing professor Ayelet Gneezy reached this conclusion by presenting 113,000+ theme park visitors with several pricing schemes for purchasing souvenir photos.
The four schemes, as summarized by Freakonomics, were as follows (and I quote):
- A flat fee of $12.95
- A flat fee of $12.95 with half going to charity
- Pay-what-you-wish
- Pay-what-you-wish with half going to charity
When it came to profitability, the “charity” factor provided a healthy boost in demand for photos sold under the pay-what-you-wish option.
As Gneezy explains in the abstract:
At a standard fixed price, the charitable component only slightly increased demand, as similar studies have also found. However, when participants could pay what they wanted, the same charitable component created a treatment that was substantially more profitable.
This would seem to bode well for the Panera model, even though Panera is far less explicit when it comes to the actual amount devoted to charity. Although “all profits” will go to charity, the consumer has no idea Read the rest of this entry »
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