Thursday, November 29, 2012

Morality and economics are not necessarily two separate studies. In my opinion, they should inform one another to the degree that neither should be inconsistent with the other. Truths about economics are true independent of morality, except when defining "good" and "evil". For example, if morally we can determine that efficiency and productivity in a society is "good', then we should employ economic policies which be conducive to efficient and productive societies. If, however, it is determined that those attributes are "evil", we ought to introduce economic policies which will diminish the efficiency and productivity of a society. i.e. if we decide that freedom is good then we should strive for economic freedom, if chaos is good then economic chaos, etc.

Personally, I do not think that there are any points of morality directly related to economics beyond believing stealing is evil. Regardless, I believe that a forced action cannot be a good or evil action, and that it is necessarily evil to force someone to do something except when by forcing them not to do evil you can create good (in which case it would be neutral, as would being forced to do something); I think that freedom is good, and so I believe that freedom, even to choose to do evil, is better than being forced to do "good". I also believe that efficient and productive societies are at least desirable, not from a moral perspective but a pragmatic and self-interested one. I advocate for efficient and productive societies, but it is not morality that leads me to advocate for them.

Essentially, morality should inform economics in the same way that it informs everything else; It should define good, and economics, or whatever else, should be practiced in good ways.

Christian Economics

Economics as a science began with the publishing of "The Wealth of Nations" by Adam Smith in 1776. For the first time, someone had systematically deduced the cause and effect principles that operate in an economy. He did this not by conducting or observing an  experiment of trial and error, but by beginning with a set of truths that he attained by looking outside of himself and his limited reasoning capabilities. He saw political economy(as he called it) as sub-section of study under the broad subject of moral philosophy. Using this framework, he logically showed why free markets are more productive than any other alternative. But more than that, he showed that they were part of a system of laws that God ordained, which he called "natural law." His attempt to personify these laws was evident when he called the force that fueled market, not a "wind" or "force", but an invisible hand.
As time went on, scientists in other fields, also starting with the same premise, began proving some of these laws through observation of empirical evidence. A great example of these scientists is Newton. Economists began to adopt this approach of "trial and error" to help make their science more exact like the natural sciences. They began to attempt to keep economics value-free. Economics began to move from normative to positive economics.
Obviously, no one should put their biases and prejudices into their studies. To do so would violate the what it even means to be a scientist. But it is universally recognized that all science is based on a paradigm that shapes thinking and reasoning. To ignore special revelations revealed by God as a starting point in an effort to be completely unbiased would be to limit oneself to the reasoning of one person's brain as the sole source of  knowledge, never being able to search outside of one's own reasoning power for fear of becoming biased.
The Bible does not directly address all the problems that exist. There are not chapter-and-verse answers for many problems, but it would not take very much studying to realize that even God has an opinion on many economic policy issues, from tariffs to the system of socialism itself. Economics and morality are completely intertwined and inseparable. Economic principles show us the cause and effect relationship the tell us what works best, while at the same time showing us what we ought to do. Dr. Sennholz said it best in his book Three Economic Commandments: “In God’s world, causes and consequences are connected logically. To offend against an economic principle, or to disobey an ethical commandment is to suffer the inexorable consequences of our action… His eternal laws and principles invariably exact a price for all offenses."

Wednesday, November 28, 2012

Economics and Morality

     Although economics began with a side of morality the implementation of science as a replacement is something that does make sense. That is to the effect of saying it is constructing better models of  and making better predictions of changes in the economy. That said, morality in economics did play an important role when it was introduced many years ago. I believe that the reason it did is because in the early stages of economic introduction most of the people had rather common moral beliefs. Now, this would have resembled a code to live by or something you could govern yourself by. Therefore, morality in economics back in these early times would have been somewhat of a science for the people. In todays world there isn't a very straight forward set of moral beliefs. This is because I think many confuse morality with law. Perhaps they believe something to be bad more because it is against the law and less because it is morally bad. However, many religions institute moral guidelines and codes in which their followers are supposed to live. So, perhaps mini economies within churches are the modern example of economics and morality. It is not scientifically proven that giving money to a church collection will give the giver benefits yet the people of the congregation still give. Whats also interesting is the donations tend to be pretty steady and the economy of the church gets by on money individuals are not required to give yet their moral code compels them to because they believe in the benefits the church is providing.  In terms of America morality and economics would not work because of our population diversity. We have people of all religions that have many different moral codes. There are also many who do not get their moral code from religion at all. This isn't to say that not having a moral code based from a religion is bad or good but simply to say that when someones moral code is not structured on a belief system it in tern becomes nearly impossible to predict.
     The new economic system based with science is most certainly a better fit for todays world. That said morality and economics could serve as a much better economy for people who have common beliefs that they govern themselves by. In America though there would be too much controversy and the result would be a very unstable economy.

Economics, Morality, and Abortions



According the Merriam-Webster dictionary, a moral is defined as “of or relating to principals of right and wrong in behavior.” With that in mind, it is evident that a large part or rather most of the United States constitution is based on moral beliefs. Essentially, the belief that freedom is a right is really a moral issue. Most moral issues like this are cut and dry. We often here clich├ęd examples like murdering, stealing, fraud, et cetera. But, it isn’t often that people sit down and analyze both the moral and economic benefits of certain tricky subjects.


I would like to briefly discuss the issue of legalizing abortion and its economic impacts. Now, when Roe vs. Wade was passed into law and subsequently upheld in the courts of law, the judges made a clear statement when it came to morality.  But, it seems that they might not have been fully considering the economic impacts that a rise in abortions would cause.


 Since 1973, and the legalization of abortion, one in three children have been aborted. This has led to death of around 54 million babies, to date. This has caused the average rate of the U.S. population to increase more quickly than it would have had 54 million (plus or minus a few hundred thousand that would have died during childhood) children had been born. This has raised several questions about what is going to happen when all the baby boomers retire. “In 2006 Steven Mosher, president of the Population Research Institute (PRI), warned that the aging population will produce a dangerous imbalance between those who produce (GDP) and those are dependent on them.” Additionally, it is estimated that the U.S. lost a potential $35 trillion in GDP, $47 billion in Social Security payments, $11 billion in Medicare payments. On average, a baby born in the U.S. will participate in the workforce for 47 years, earn over $1 million, and pay $400,000 in taxes.  


However, besides the negative economic impacts, there does seem to be one cultural benefit to abortion: lower crime rates. Extensive studies have been conducted, and although none of the data is concrete, many researchers believe that increased abortions lead to lower crime rates. I would definitely have to agree, because it seems like the less people there are, the less opportunities for crime there are. In fact, if everyone in New York City died, the crime rate would drop substantially. And, if all humans babies died, the crime rate would definitely drop, because current criminals would die without replacements (excuse the sarcasm). Another interesting study has found that the rate of abortions may have actually increased due to our country’s economic woes. Wouldn’t it be interesting if something that could have been avoided completely is now compounding upon itself due to its own self-inflicted economic troubles? And of course I am in no way implying that the legalization of abortion is the sole cause of the United States’ economic troubles.


Despite your personal moral beliefs regarding abortion, it is clear that there have been certain economic impacts that came with the legalization of abortion. And, I think that Roe vs. Wade should be completely re-evaluated based solely on economics, it might do our country some good in the long run. Anyways, it was very interesting researching this topic, because basically all the pro-life sources focused on the negative economic impacts while pro-choice sources focused on decreased crime, quite the conundrum.


http://www.freakonomics.com/2005/05/15/abortion-and-crime-who-should-you-believe/

http://usatoday30.usatoday.com/news/health/2009-03-24-family-planning_N.htm
http://www.nrlc.org/Factsheets/FS04_MissingPersons.pdf
http://www.lifesitenews.com/news/archive//ldn/2008/oct/08102109

Wednesday, November 14, 2012

Puerto Rico joins the party and everyone leaves

In the recent election Puerto Rico passed a referendum that will display a preference to gain statehood. If congress and the President decide to recognize this preference it will have many interesting economic effects. US debt per capita will increase, not that that really matters, and millions of flags will need to be changed. But before you start picking your favorite 51 flag design a bill would actually have to pass granting Puerto Rico statehood. There is a strong (practical) government incentive to keep Puerto Rico as a territory though. Territories can be sold. With the "fiscal cliff' and the ever present debt crisis it might just be a good idea to find a good international realtor and ask China or Japan how much cheap labor and agricultural land are worth.
Perhaps fearing trade to a different authoritarian government (aren't they all?) all 50 states have started petitions to secede from the union. Perhaps that is Puerto Rico's goal, gain statehood and then use the constitutional right of secession to escape the clutches of the leviathan. At the time this is being written the lone star state is the only state to gain any real traction holding over 100,000 signatures on its online petition. Keep in mind that is less than 0.4% of the Texan population.

From an economic perspective is there a benefit to being a member of the union? For starters there is the credit rating associated with the largest economy in the world (not counting the EU), But that rating seems to be slipping. There is national defense  but that is kind of hard to quantify in economic terms other than the US must have the most. And there is federal money, for most states the ratio of tax allotments is between 1.5 times and 2 times the taxes collected by the federal government. So that isn't a good reason either.
After that is sovereignty, certainly many federal laws hinder economic growth for many states, but with the size of the us military and what happened 150 years ago it is unlikely to assume that the sovereignty would be respected.
So will any states secede? Likely no. But it wouldn't hurt to start looking at new flag designs, it really is hard to say what will result from the recent referendum.

I like this one.



http://visualizingeconomics.com/blog/2010/02/17/federal-taxes-paidreceived-for-each-state

De Economijl

The results of the 2012 elections are sure to have a profound impact on the American worker and the American mindset. But other factors are almost certain to have an immediate, profound impact on the US economy: the Fiscal Cliff. A dire term coined by Fed. Chairman Bernanke to describe a dire scenario, the Fiscal Cliff refers to the historically-large tax increases and spending reductions which will take affect on 1 January 2013.

On the tax side, the 2001 and 2003 Bush Tax Cuts are set to expire following nearly a dozen years of continuous extension. The 2010 payroll tax cut, which was twice renewed for a year, will also expire. With that comes the expiration of a miriad of other tax-relief measures enacted in the 2009 stimulus. Concurrently, the several new taxes introduced by the Affordable Care Act, a.k.a. "Obamacare, will also take effect in 2013.

With the expiration of the Bush Tax Cuts, taxes on ordinary income will rise from their current rates of 10, 15, 25, 28, 33, and 35 percent to their Clinton-era rates of 15, 28, 31, 36, and 39.6 percent. The impact will be a rate increase at every income level. Capital-gains and dividend taxes will also revert to their former rate, from their current 15 percent to 20 for the former and up-to 39.6 percent for the latter. The "AMT patch" also won't be renewed. The means the threshhold above which taxpayers are forced to comply with our second, less-friendly tax code will be lowered dramatically. A large swath of middle-income taxpayers will likely be subject to the AMT in 2013.

The partial payroll-tax holiday also ends on January 1. FICA taxes, nominally levied to pay for Social Security, Medicare, and Unemployment, Disability, and Survivors Insurance, will revert back from 13.3 percent of wages to 15.3 percent. Several other stimulus measures will also expire. Among them are tax provisions allowing for the full-expensing of capital equipment by businesses. This will force companies and self-employed individuals to revert to traditional depreciation tables when determining the tax-impact of their investments.

The combined impact of allowing these tax-relief provisions to expire and new taxes to be enacted will result in revenue increase of $494 Billion in 2013, according to the OMB. While this is might cut our deficit in half, such aggressive tax hikes are expected to shock our already-fragile economy. There remains the possibility, however, that repairing our long-term fiscal problems in such a manner will boost investor confidence enough to reverse any negative impact on growth. I am doubtful, but not wholly unconvinced, that this is true. If the world is still here on January 1st, I'll can start brainstorming a more definitive answer.

Economics and the Election

     Elections throughout history have always resulted in immediate economic fluctuations. These may be positive or negative but nevertheless always seem to surface. In relation to this current election the stock market plunged the next morning November 7th 316 points. Now, there is much speculation on why this happened. That said the reason supported by many economists is that the plunge was in relation to investors faith with the re-election and upcoming fiscal cliff. Another major factor is the current finical problems Europe and many other parts of the world aside from the United States are experiencing. My biggest question lies with what is to be done. What can be done? Leading economists are struggling over this question but a basic foundation for change lies in the government. This change always carries the most weight. That said, good change occurs when both parties can reach some sort of agreement. (Market watch) stated how, "President Obama’s ability to implement policy is constrained by Republican control of the House of Representatives. Republicans are reluctant to entertain tax increases or reductions in exemptions. Democrats are reluctant to consider reductions in entitlements and spending. " These disagreements are expected between parties but when they interfere with getting things done it becomes clear that they must be dissolved, at least temporarily to come to a viable solution. This is definitely easier said then done but without anything more then a bandaid fix from congress we are bound to experience the huge problems and the financial cliffs that loom ahead.      
     As with all elections everyone is bound to feel differently, to see differently, and act differently. The majority of the future lies with the people though. This is because it is the people who ultimately decide the future plans for this country. They decide wether or not to wake up early and bust their butt for a buck or sit back play video games and collect money from the government. This country was undisputedly built by hard working people. People who believed in what they had and what they were doing to better the future for not only themselves but for their children. So in times of finical cliffs and economic instability as a nation I'd say our best bet is to play it smart and hang tough because only the strong prosper through adversity and this nation is still strong.

The Economics of Our Society


Presidential elections have everything to do with economics. Besides the obvious things like the massive amount of money each participant spends, and the hundreds of campaign staffers that are out of work at the end; every president-hopeful carries within some plan or idea of how our economy should be run.  Thus, when people elect a certain individual they are basically voicing their economic opinion.

It seems after this past election that the majority of voting individuals within our fine country favor a Keynesian model for the economy. Whether or not they fully realize it, doesn’t matter, it is what they voted for.  For the next four years, our country is going to be run by one of the staunchest supporters of the Keynesian theory. Although I’ve never actually hear president Obama mention Keynes’ name, I don’t think anybody would disagree that Obama favors a Keynesian style for economy. In essences, Keynes believed in trickle-down economics, the idea that government spending leads to increased consumer spending, ultimately boosting GDP.

I don’t agree with this economic theory at all, I’d much rather implement a system of bottom-up economics. This style of economics aims to put more cash in the consumer’s hands by cutting taxes and government spending. This mode of thinking was defeated in the past election. It is obvious that many millions of people enjoy the various social welfare programs our government provides, and as such will almost always vote for the candidate who promises not to cut funding to said programs.

Trickle-down economics is immensely popular in our society. I fear that as long as millions of Americans accept governmental handouts and vote in favor of them, Keynesian theories will always prevail at the polling stations. On a lighter note, I'm fairly confident that everyone voted for Obama because he gave America the "Obamaphone" (reference the YouTube video).
http://www.youtube.com/watch?v=tpAOwJvTOio

Tuesday, November 13, 2012

The Effect of President Obama's Election on the Gun Industry

Every 4 years, presidential candidates spend millions of dollars to sell themselves to the American public. As part of this, candidates must convince their supporters that if their opponent is elected, it will be the end of America. As such, immediately following a presidential election, people are prone to paranoid and rash behavior, as was highlighted in South Park's "About Last Night..." episode (http://www.southparkstudios.com/full-episodes/s12e12-about-last-night)

The most recent presidential election was no different. Republicans had been told that if the incumbent President Obama was re-elected, gun rights would be going down the drain. They are right to fear, as President Obama said in a speech given on October 16th regarding gun control, "What I'm trying to do is to get a broader conversation about how do we reduce the violence generally. Part of it is seeing if we can get an assault weapons ban reintroduced." As a result, weapon retailers have reported that AK-47s (and similar assault weapons) have been flying off the shelves like hotcakes.

In October the number of background checks on people applying to buy guns, an indicator of future sales, increased by 18.4 per cent. Mel Bernstein, owner of Dragonman Arms in Colorado Springs, told KOAA-TV that sales of semi-automatic weapons had boomed in recent days, "We're going from normally six to eight guns a day to 25. I stocked up; I got a stockpile of these AK-47s; we're selling these like hot cakes. Luckily I had an idea of what was going on because it happened with Clinton."


This has caused a surge in the gun industry. Economists estimate that this buying of guns has boosted the dollar value of the industry by 20%. Some estimates are even higher. And if restrictions on automatic weapons are imposed? The value of the gun industry has the potential to become even bigger, as guns become more expensive. As soon as such a bill is proposed in congress which appears to hold popular (or near popular) support, it will likely unleash another surge of gun sales, potentially even larger than this one as the threat becomes more real.

Either way, President Obama's recent election has boosted the gun industry in the United States and throughout the world.

Tuesday, November 6, 2012

Economics and Law


I think the concepts behind economic analysis of law are sound. One of the key tenants of economics is efficiency, so it makes absolute sense to evaluate which legal rules are economically efficient and which ones aren’t.  As a society, we quite often evaluate laws purely based on how effective they are, or rather their ease of implementation. But, efficiency is a substantial matter because often times it correlates to money. There are two theories behind economics and law, the normative theory and the positive theory.  The positive theory of law stems from the idea that our current laws are, for the most part, already efficient. The normative theory of law posits that our law should be efficient, not that they necessarily are.

So, let us assume for a moment, that the normative theory is correct in saying that our laws are currently not as efficient as they could be. When analyzing law, economists are more than likely to turn their attention towards empirical (and often monetary) data. Where these theories run into problems though, is morality, or rather legislating morality. Currently, there several moral issues that our government has legislated, abortion, drug use, capital punishment. All of those issues can be argued on a purely moral level, and often times legislating or enforcing these laws isn’t efficient at all. Take for example the issue of legalizing marijuana use, many feel that this would save many millions of dollars in law enforcement expenses. But, if judged merely based on economics, the moral implications are ignored.

Because America has a deep moral vein running within itself, I would argue that sometimes efficiency in our legal system isn’t always the best idea. According to the American Religious Identification Survey, 73% of Americans claim they are Christians. As such, this vast majority of our population should certainly have strong inclinations when it comes to moral issues. And if legislators violate these inclinations in the name of efficiency, the majority of the population will be disgruntled. And that is never a good thing.

When law meets economics there are many varied theories about how one's government should proceed, ranging from communistic to capitalist, libertarian to authoritarian.

My argument is based on principle. I think that the most efficient and productive society can be developed when individuals are allowed to choose to do with themselves and their property as they choose, provided they do not harm another person. It doesn't matter how one one person will harm another or how that other person will harm the first. What matters is that neither person actively harm the other.

In Ronald Coase's example of the doctor and confectioner  the confectioner has begun actively harming the doctor through noise pollution. It doesn't matter that the confectioner will suffer because of the regulation imposed upon him, he is actively causing harm to another individual and therefore is at fault, regardless of the impact this will have on either the doctor or the confectioner.

When laws are formed to protect people from actively being harmed, the society as a whole will begin to flourish, as individuals will have more respect for the law and the government imposing those laws. Laws that favor one individual over another based on an economic perspective will always breed malcontents and will lose favor for the government with the people, ultimately reducing the growth of the society and its government.

Essentially, the most efficient economies develop not when laws are developed to grow economies but rather when laws are fair and protect individuals.

Monday, November 5, 2012

Law and Economics

     Law and Economics was interesting and complicated in its conception and continues to be so today. "It offers a framework with which to model legal outcomes, and common objectives with which to unify disparate areas of legal activity"(Butler, 2003). Combining legal issues with economic evidence is a great way to solve problems. For example the legal system can use economic evidence to determine the implementations that would result from a new regulation or a courts decision due on a legal issue. In result better formulated conclusions can be drawn that represent the repercussions as well as unintended consequences making everything much more apparent.
      Law and Economics is also advancing into many different fields some of which include, "tort, contract, family, intellectual property, constitutional, criminal, admiralty, labour, arbitration, and anti discrimination law"(Richard A. Posner, 2000). Although it is interesting reading of its advancement I can't help but worry about the many regulations it is bound to create. This is because economics provides a way for the law to substantiate its claims as evidence with statistically representation. Basically I feel that it can become both slanted and an efficient way to implement jaded regulations and policies. That said there are people who feel quite positive about it diversifying into other fields for example (Butler, 2003) states that Law and Economics, "Asserts the tools of economic reasoning and offers the best possibility for justified and consistent legal practice." So, perhaps there are underlying fundamentals that prevent what I was talking about above from happening. 
     An excerpt I found interesting while researching was Legal Philosophy and its relationship to Law and Economics. It said that it, "It is important for a philosophical theory of law to define the core aspects of proper legal practice in order to fulfill the function of philosophical jurisprudence"(Butler, 2003). This is something that I feel is important to Law and Economics core building block as well as the law itself. An example that sparked my attention was where, "The question of how properly to interpret the U.S. Constitution belongs to democratic theory (and hence falls under the heading of political philosophy), the analysis of legal interpretation falls under the heading of legal philosophy. Likewise, whereas the question of whether capital punishment is morally permissible falls under the heading of applied ethics, the question of whether the institution of punishment can be justified falls under the heading of legal philosophy"(Himma, 2009). All relating back to Law and Economics.
     In all I found that Law and Economics is a very interesting topic but vast in its uses and somewhat complicated in its practice. Looking forward to the discussion. 


Sources:

Himma, K. E. (2009). Philosophy of law. Retrieved from http://www.iep.utm.edu/law-phil/

Richard A. Posner. (2000). Encyclopedia of law and economics. Retrieved from http://encyclo.findlaw.com/foreword.html

Lourdes A. Sereno. (n.d.). Understanding law and economics: A primer for judges. Retrieved from http://cjei.org/publications/sereno.htm

Butler, B. E. (2003). Internet encyclopedia of philosophy. In Retrieved from http://www.iep.utm.edu/law-econ/