Posts Tagged inflation

Embracing God’s Message, Ignoring His Method

In what serves as a nice complement to my recent posts on obedience and the spiritual side of socio-economic decision making, PovertyCure recently posted a video of Peter Greer (HT), in which he adequately captures the church’s unfortunate tendency to embrace God’s message without seeking God’s method.

Watch the video here:

Economist Victor Claar captures similar activity in the first part of his critique of fair trade, documenting the modern church’s impulsive, near-trendy promotion of counterproductive trade schemes.

My question: When we see “good intentions” (quotes intended) result in something like the temporary inflation of a market — not to mention the subsequent destruction of otherwise beneficial and growing enterprises — what are we to assume the driving motivations are behind those specific decisions? Are such efforts to “help people” really taking a holistic Biblical approach? When our “charitable” endeavors fail miserably, should we use our Bibles to justify those actions, or should we deeply question whether those actions were all that “Biblical” in the first place?

Yes, Jesus told us to help the poor, but how do we do that, and what else did he tell us to do?

In the case Greer describes, the church may have achieved its short-term aim, but in the process, it did some serious damage to a local provider, and probably many others. This would seem to make the given community’s long-term prospects worse.

Is this what God wanted? Was it God’s intention to temporarily flood the egg market and put people out of business, only for the need to reemerge the very next year, but this time with a lack of suppliers? Was it the voice of the Holy Spirit that told this church to “give x to y!” or was it the voice of “Hey, I’ve got Read the rest of this entry »

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A Real Fair Trade Solution: Kill the Big Ag Behemoth

I have routinely criticized “fair trade” schemes as ineffective, inefficient and counterproductive — a convoluted form of temporary charity that would be better if treated as temporary charity.

The real problems that cause poverty are deep and complicated, and they cannot be fixed by magical price inflation by Westerners (particularly when our own view of value is as distorted as it is).

As I pointed out in my review of Victor Claar’s book on the subject, one of these problems is often the nature of the given market. When it comes to coffee, for example, Claar explains that “coffee growers are poor because there is too much coffee.” The solution is hardly, “more coffee!”

Many of these realities are difficult to change for good reason: accurate, voluntarily determined prices reflect the real preferences of real people who are just trying to create real value. This includes both the consumer and the creator (the coffee grower). Yet other realities are stubborn because they are involuntarily determined.

This is where we should be setting our sights, and this week at AEI’s newly rebranded project, Values and Capitalism (formerly Common Sense Concept), I focus on one of the biggies: agricultural subsidies.

Here’s a taste:

Although the aims of “fair traders” are often noble (e.g. when “equality of outcome” doesn’t masquerade as “fairness”), their efforts would be much better spent tackling the real problems that impact economic development in the long term. If we’re looking for a game of Demolish the Western Privilege Machine, agricultural subsidies are a marvelous piñata.

The price distortion caused by such subsidies is summed up nicely by Daniel Sumner in an AEI paper on the subject:

Farm commodity subsidies—including price and income supports—crop insurance subsidies, and disaster aid encourage US production and disadvantage farmers who attempt to compete with subsidized production from the United States. These programs stimulate more production when Read the rest of this entry »

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Meltdown: Moral Hazard and the Financial Crisis

Meltdown by Thomas E. Woods, Jr.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 »

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