Mark and Doug are two Christian economists seeking to combine economics and theology in a fun, thoughtful, and inviting fashion. The name of the blog is a reference to Jesus' admonition to his disciples to be "wise as serpents and innocent as doves" (Matthew 10:16) when going forth into the world. We hope you join the conversation.
Tuesday, July 31, 2007
Green Acres is the Place to Be
Friday, July 27, 2007
Optimal Punishment
She proposed that a 15 year old just stole a thousand dollars worth of goods from someone. I needed to administer the punishment. Go. The obvious is that they need to repay every bit they stole. But, the punishment, should not be levied by me upon the 15 year old. Instead the punishment should be against the parents (because the child is still legally under their dominion) and the parents can distribute whatever quantity of punishment they deem appropriate. She then chimed, "Thanks," and ran away.
However, I was wondering soon after I answered whether what I said was even biblical. The person only pays back what they owe but in the Old Testament (Exodus 22:1) they pay back more and in economic theory they pay back more as well. Here's Mark with the theory behind it.
There has been a lot of work on economic models of crime and punishment. Governments have two tools at their disposal: resources to get an apprehension and conviction, and resources for punishment. So, economists have looked at where is the best allocation of resources. To give one stark example, I often saw highway patrol cars between Tucson and Phoenix. Should the Arizona government put resources in catching a lot of people and less into punishment? Or should it ctach fewer people and add to costly jail time? What is the optimal DETERRENT? Obviously, for a property crime, punishment has to be on top of the loss. Consider the jerk who stole Doug's guitar. Let's say that this guy faces a 95 percent probability of never getting caught and a 5 percent probability of apprehension, with a punishment by the court of "please return the guitar." What a deal! I wish starting a legitimate, productive business or investing in the stock market had such returns. Punishment has to be on top of making the victim whole.
Now I'm asking you the question: What do you think is appropriate?
Thursday, July 26, 2007
Who is Poor?
We recall the lawyer who asked Jesus “Who is my neighbor?” In the meeting with the rich young man, Jesus said “Go, sell everything you have and give to the poor,” but did anyone think to ask Jesus “Who is poor?” I’ve always thought that was an important, and relatively unexplored, question. From my inexpert reading of the Bible I suspect that very few in Jesus’ party were likely thought to be “poor” according to the meaning of this encounter (think about the possessions and occupations of Jesus friends, family, and acquaintances). And, likewise, is a person “poor” in
The American Enterprise Institute has posted a pair of truly thought-provoking articles from its scholars from the past couple of years on the topic of poverty. One is by Douglas Besharov, another is by Nicholas Eberstadt. The following observations jumped out at me.
1 ) Although income indicators for African Americans have grown impressively, a disproportionate number of African Americans, especially young men, remained detached from the formal American economy.
2 ) The explosive growth of college enrollments in recent years mirrors a perverse de-emphasis on skilled, technical employment. These skilled occupations have traditionally been a way out of poverty of millions of Americans over the years.
3 ) Income is our primary statistical basis for measuring poverty, and formerly income closely tracked consumption. Consumption, after all, is what actually defines daily life for a poor person. But the relationship has radically changed. A “poor” family today is more likely to have central air conditioning than a “non poor” family was in the 1980. A poor family in 2004, on average, spends approximately 95 percent more than their income. This suggests such things as an increasing volatility in episodes of poverty.
Each of these articles is thought provoking in addressing the question, “Who is poor in
Wednesday, July 25, 2007
Giving: A Dialogue
Throughout the summer the FSU Wesley Foundation has been studying 2 Corinthians every Wednesday night (Not because of some divine revelation but because the chapters matched up with the number of weeks in the summer). Last week we entered into a discussion about giving. Preface: The subject of giving can be dissonant to members of the congregation and because generosity is mentioned so much it’s easy to get a sense that, “All the church wants from me is my money.” It’s not true, they want your heart, sweat, tears, and so much more. However, it would be difficult for the church to maintain its operation without funds. It was a fruitful dialogue so I will attempt to enumerate some of the talking points.
Person 1:How much are we to give?
Person 2: Ten percent, duh.
Person 1: Okay, that’s the . . .
Person 2: Is it before taxes or after taxes? You know since some of our tax money goes to things like welfare programs and such aren’t we helping the poor in our taxation?
See, I believe that people have that innate desire to do good for other people; I’m just not sure that innate desire when quantified lines up to ten percent of their income. People (including myself) enjoy generosity when it is convenient. Notice in that dialogue that people gravitate towards the bare minimum. In fact, ten percent is the baseline, not the ceiling. The theological argument for tithe is that all the money you are giving back to God is what God gave to you. All of the work of your hands, physical or mental, is from the blessing God has bestowed on your life. To give is also a form of dying to self.
Person 1: Give unto Caesar what is Caesar’s and God what is God’s.Person 2 (Thought Bubble): I really hate that verse. Does God not want to me to care about tax reform?
Person 1: It’s an issue of first fruits. We’re not just to give God the ten percent, but the first ten percent.
Person 2: I understand. Don’t give God the scraps but make Him the priority.
Over time I've developed a real aversion to the Caesar verse. Really, strongly, disliked that verse because I’ve only heard it being used when I’m bickering about taxes. I still don’t like the government taking my money but I do understand that it isn’t about government. It is about God. Regardless of much the government takes from me I will continue to honor God with that ten percent.
Person 1: Whomever sows sparingly will reap sparingly, but whomever sows generously will reap generously. The harvest is righteousness.
Person 2: By the way, don’t give out of compulsion for the Lord loves a joyful gift.
Person 3: But I give to joyfully outside the church to a cause my heart breaks over because the church is so limited in the compassionate activities that they’re a part of. The church has limitations.
I don’t in fact believe that the church has limitations. It was meant to be much more than it is right now. The limitations came in the form of us treating the church like our secret club and our spirituality as an individual sized cocktail that each person ought to have their own recipe for. The church can be more than we see it as today.
Person 1: Gee, I feel bad. We just talked about giving and I’m going to Starbucks to get a latte.
Person 2: It’s not a bad thing to want some coffee. One day this week when you would go to get coffee save the money instead and give it away. By the way, this is the marketing plan of Invisible Children to donate by drinking one less Starbucks concoction per week https://secure.invisiblechildren.com/donate/tri/
Person 3: Maybe some day when there are retained earnings maximizing non profits you’ll be able to go get a cup of coffee and feel better about the fact that the money is going towards digging clean water wells in Africa.
Monday, July 23, 2007
Smug Alert IV: Granola Wars
Many people, even if they don’t remember the actual episodes, are aware of the TV show
I find this humorous because I find that shopping at this type of store rivals driving hybrids as a lifestyle statement among the smug set. Never mind, I guess, that the profit margins at these stores are higher than among regular food stores. Never mind, that the Whole Foods-Wild Oats Merger is being investigated for violation of the antitrust laws. Just let me spend more money for that free range chicken and those organic bananas.
Another part of the crunchy-grocery mystique is the fact that Whole Foods promises to donate 5 percent of net income (essentially profit) to charitable causes. So here’s the model: 1) drive further across town in order to 2) pay more money to a store with 3) higher profit margins whose CEO 4) reminds you of everyone from John D. Rockefeller to Charles Foster Kane just so 5) you can say you are shopping at a store that donates 5 percent of the resulting profits to charity. Doug is my resident expert on organization of non-profit giving, and I suspected that he would have some problems with this model, so I’ve asked him to jump in here. The following are his comments:
Statement 1: What about the cost of pollution in driving further for organic foods?
Statement 2 & 3: What is the opportunity cost of spending a greater amount of money at Whole Foods? Maybe buyers flat-out prefer the taste of organic over alternatives; however, if buyers shop there because of the charity and the feel-goodness of it, they could get more bang for their buck in helping people by shopping at low profit margin stores and then giving the extra money directly to a charity.
Statement 4: The Whole Foods CEO sounds like everything that the people that shop at organic food stores hate about other “big businesses”.
Statement 5: Say that I have a book about third-world poverty out and it sells for $20 at most book stores but one store announced that they would sell it for $22 and donate two of those dollars to a charity. The charity represents issues of poverty outlined in the book. The buyer feels great about the donation and good about the store but the store isn’t really doing anything kind at all because they are just collecting the donations to write into one big check (which results in them looking terrific in the press). I think that captures what is going on here.
Friday, July 20, 2007
Under Your Nose: A semi-rant
I'm not a student but will qualify for student status in a couple of weeks. Thagard Health Center wouldn't treat me and I couldn't get on my Dad's insurance policy until I'm officially a student. Skin cancer was a real possibility and I couldn't get it checked out unless I wanted to pay big bucks out of pocket. "I'll wait until my health insurance kicks in," I said, but the severity of the swelling and discoloration couldn't be ignored any longer. Alas, I have a strong support system: Mother and Father, friends, mentors, and more, I know would help me in my time of need. But it got me thinking,
What about the people without strong support systems? If I didn't have one I surely would be disadvantaged in many ways. I caught a glimpse of what it is like knowing that something costs X but you can't afford it. It's not the same as saying, "That's a sweet lap top, I'd like to have it but I can't afford it," because I could very well have had cancer and there were really no other alternatives to be treated other than the walk-in clinic, it was a need not a want.
Mark tells me over and over that to have health insurance tied to our jobs (or our status as students) is ridiculous. We would never tie another necessity like food consumption to whether or not we were employed. And what about the fact that these treatments cost twice as much as they should because of malpractice insurance being built into the cost of our doctor visits? I realize some of these are delicate issues but major overhaul is necessary with our courts and our healthcare system. To be near the poverty line is extremely uncomfortable, and like I said, what I got was only a glimpse. I'm certain this is the kind of experience that changes people.
We need a transformed society that is more interested in the well-being of others than their own luxury items. This means less conspicuous consumption, better institutions (That don't oppress the poor in the name of the poor), and more generous sowing. I'm not proposing Marxism but I am proposing a mission to equipping our country with the necessary institutions and heart. We could be a city on a hill if the people that represent our interests cared more about repairing the healthcare and court systems than getting re-elected or lining their pockets. It's kind of sudsy on my soap box I think I'll get off now.
Wednesday, July 18, 2007
10 Items or Fewer
I think that Doug has already quoted our Dean, David Rasmussen, as stating that the market mechanism has more to do with trust than it does with greed. I saw a perfect example of this last weekend. My wife in I were in a very busy express check-out line at Publix. Needless to predict, it was one of our couple of items that wouldn’t scan. I don’t know how many times I have been in this position in other stores that the checker has been required to shut down the entire line, find an available employee, and hope that the employee could find the price of the identical product back on the shelves. On this day, however, the checker asked if we remembered the price. It turns out that we had discussed the price, so Sue recalled it. The checker entered the price into the register. Publix got what it was owed. We paid what we were obligated. And all of those people behind us in the line had a more pleasant day, all because Public allowed this checker to engage in some trust.
This is not to suggest that if we had said “5 cents” that the checker would have been obligated to accept our assertion. There was some implicit monitoring in the background. Nevertheless, I suspect that there is some way to incorporate the implicit monitoring and still predict sub-optimal outcomes from a game-theoretic model. But as Doug has repeatedly told me, we are not simply colonies of game theorists; instead we are also anchored by a moral compass. And as Dean Rasmussen says, markets are about trust. Over some ranges of the environment, Publix allows trust, and everyone in this market situation is better off. If this is a global phenomenon, I would predict that Publix has higher profits than otherwise. So one question I have is: Why don’t other stores also allow their checkers some discretion for trust? Is it geographic area? Headquarters corporate culture? Local manager option?
Sunday, July 15, 2007
Non Profits Part 3: Accountability is See-Through
This is some of the issue that many take with non-profit organizations. In many instances it may be unfounded but there is a sense that the stewardship is not up to snuff on some of these organizations and people don't like it. The bank would never give money to some of these folks, but we're supposed to be nicer than the bank so we continue to give. Perhaps the bank is onto something . . .
During the aftermath of Hurricane Katrina my professor told me that he donated some money to the Samaritan's Purse (A non-profit headed up by Franklin, son of Billy, Graham). He said that they sent him back a brochure of sorts that had the amount of money he sent and the amount of total money collected, where the money was allocated in the support of Katrina victims (as a percentage of all money collected) and a thank you for his support. That is an important aspect that should not be overlooked. A good non-profit should be transparent and open about where it's money is going. The bank has insight into the finances of a privately held organization that must be accountable to the bank for taking its money on loan. Publicly held companies have share-holders to be accountable to. Non-profits must be accountable to those writing checks to their cause in good faith.
This will be discussed in greater detail but I want to point out that my model of a non profit looks just like a business, but rather than a profit maximizer it would be a retained earnings maximizer. In order to do this the manager must run it like a business. The better he runs it the more money the charity receives. In the end the manager will likely get more customers too because they work hard and they're transparent so people can see in. Because of that transparency they will need to be accountable to the customers. More on the way. Hope you had a great weekend.
Saturday, July 14, 2007
Go Directly to Church. Do Not Pass Go.
However, the tools of the economics of religion were on display today in the Wall Street Journal (no link available). A front page article raises the question as to whether some flickering embers of Christian revival in deChristianized Europe may be due to the collapse of the state-church systems (think Church of England, Church of Scotland, Lutheran churches in Scandinavia). These European countries, so the argument goes, are only now discovering what Americans knew in 1789: religion thrives on competition in the religious marketplace, not with a monopoly provider.
It's a intriguing argument, but the article is mainly anecdotal in connecting all the dots. Nevertheless, it provides good reason to recall the various fundamental Constitutional provisions involving religion and the state: "the non-establishment" clause, the "free exercise" clause, and the "no religious tests" clause. There seems to be an urban legend around that our founders were a bunch of Enlightenment deists determined to put a non-religious wall around our new government. While some of our elites were deists (think Franklin and Jefferson), deism was a waning influence. The U.S. in the 1775 -1789 period was feeling the maturity of the First Great Awakening (remember "Sinners in the Hands of an Angry God"). The Revolutionary War was known to some in Britain as the "Presbyterian Rebellion" because of the fervor with which these "frozen chosen" volunteered for service in the Continental Army. And one of the most important members of the Continental Congress and later of the process of ratifying the Constitution was John Witherspoon, President of Princeton Seminary.
The fact is, regardless of what we believe about the correctness of recent Supreme Court interpretations of these clauses, it was a very religious America that decided not to allow the establishment of a monopoly religion. If the economic model is correct, then the collapse of religious monopolies in Europe is a hopeful sign.
Friday, July 13, 2007
Stumbling Blocks
The intensity and devotion of intentional Christian communities such as that of Shane Claiborne (see Doug’s post below) can sometimes in and of itself be a stumbling block to others to even begin to think about realignment of values. We can think also along this line of Dietrich Bonhoeffer and the semi-exile pastoral community, realizing that they were under the constant threat of Nazi imprisonment.
There are people with the same concerns who have staked out an intermediate path. Rod Dreher, a columnist for the Dallas Morning News and frequent contributor to National Review Online, now wears the label “Crunchy [as in granola-eating] Conservative” given by his NRO friends for his intentional path of simultaneous suspicions of traditional government liberalism and the excesses of our materialistic consumer culture.
First, there is no conflict between Crunchy Christianity and an appreciation for the market. In the market, preferences are what they are. There is no market-based economic reason to care if I, for example, drop my subscription to Sports Illustrated in order to donate more money to Compassion International. The economic outcome will be different, there will be winners and losers, but it is not better or worse according to any market criteria.
Likewise, those who undertake a personal values transformation must be careful not to be a stumbling block for others. Different people might consider SUVs, Sports Illustrated, big screen TVs, iPhones, back-packing trips in
Finally, I do detect in some of these types of writings a transference of hostility towards consumerism as such to a hostility of the marketplace itself. Rod Dreher comes closes in this article by misusing the word capitalism, but I can still see his distinction between an admiration for the market as an institution and a dislike of the look of our consumer culture. Nevertheless, it's no stretch that Jonah Goldberg at NRO captioned Dreher's article "The Left-Right Anti-Market Convergence". One might reject the necessity of an SUV for one's own single-person commuting, but if one is using an SUV to transport many homeless people to a shelter, or if a family has several children, the decentralized market process that provides for the production, distribution, and eventually the purchaser's choice between a Durango and a Yukon remains a marvelous economic feat.
Thursday, July 12, 2007
The Irresistible Revolution: Living as an Ordinary Radical
My same friend Matt told me that I may not agree with all of the author’s economics but I would find the book fascinating. I’m not sure about all his fiscal fancies because I'm not that far into the book, he is however described as an anarchist . . . so he has that going for him. One of the messages in his book thus far reminds me of a quote by Tony Campolo,
I don't know how your theology works, but if Jesus has a choice between stained glass windows and feeding starving kids in Haiti, I have a feeling he'd choose the starving kids in Haiti.
Tuesday, July 10, 2007
The Rain Fell In Torrents
“It was a dark and stormy night: the rain fell in torrents--except at occasional intervals, when it was checked by a violent gust of wind which swept up the streets (for it is in
has been memorialized everywhere from the The Bulwer-Lytton Fiction Contest to Snoopy’s famous parody, “He was a dark and stormy knight.”
Tonight I was watching a Space Channel program on scenarios for the colonization of Mars (those who know me well may be amazed to know that my childhood dream, cut short by bad eyesight, was to be an astronaut). The closing segment was regarding the possibilities of life elsewhere in the solar system, either indigenous or brought by humans. Whenever I think of questions such as this, my thoughts are inevitably drawn back to two of the absolutely greatest, most awesome opening paragraphs anywhere. Forget how many times you have read them or heard them…imagine that you are hearing them for the first time, and that you are hearing them together:
In the beginning, God created the heavens and the earth. The earth was without form and void, and darkness was over the face of the deep. And the Spirit of God was hovering over the face of the waters. And in the beginning, the Logos was with God, and the Logos was God. He was in the beginning with God. All things were made through him, and without him was not anything made that was made. In him was life, and the life was the light of men. The light shines on in the darkness, and the darkness has not overcome it.
(based on the English Standard Version)
Friday, July 6, 2007
Reverse Crowd Out
In 1926 churches spent more than twice as much as all governments (state and local) combined on charitable activity. By the end of the depression charitable activity in church spending had declined by at least 30%. Adjusted with the CPI the 150 million spent in 1926 becomes 1.7 billion dollars today and the 60 million dollars spent by all local and state governments adjusts to 680 million (but of course the growth of government programs means that current government spending in charitable activities is far in excess of that).
In other words, the church forfeited its mission of charity to the government. Many would say that the church is far from what it was intended to be – yes, it is still a place of worship – but – no it is not the blessing it was intended to be for the rest of the world. How much different are most of the churches we attend different than monasteries? Are our Christian identities and charitable acts mostly cloistered? What would it take for the church or private organizations such as non-profits to reclaim their former position as the chief distributor of charitable giving?
Almost true: the only people that have interaction with poorest of the poor are those in our government handing out the checks in the welfare line. We were meant to be in relationship with these people, to see them face to face. Famous economist Alfred Marshall once had a poster on the wall in his office of a homeless man, that’s because he wanted to remind himself of his motives. Who was he doing economics for?
At Marshall’s time and thereafter, the growth of government charity programs was supported by arguments that private markets failed to address the problems of Marshall’s unnamed man. But this viewpoint ignored the billions of dollars (in current terms) of church spending. Perhaps because the Great Depression was so cataclysmic, the transfer of primary responsibility for charitable programs away from churches and the federal government was accomplished with substantial majority support. But now, with years in between, economists are asking new questions.
Is our government really that much better at providing these goods? It isn’t all about the money and the taxes its about maximum impact. You can have big impact with smaller dollars. Wall Street Journal writer Julia Virtullo-Martin penned "Homeless in America," in January of this year and cited that with less resources homelessness actually decreased in several cities because of changed institutions.
I’m convinced that the only reason that government welfare programs exist right now is because people don’t believe that other people would give if it wasn’t enforced. But what if people did start to give, how much would they need to give in order to overtake the government? And because it’s not all about the money but really about the impact, how much impact would they need? Surely it has to be an equal impact but more likely it will need to be an even greater impact than the government already is having. Then when the government bows out it can move back to equilibrium. In the coming weeks Mark and I will be doing many other things but we’ll put some effort towards designing an experiment to model this idea. It feels like it’s going to be a lot of fun.
Thursday, July 5, 2007
Smug Alert III
"A riddle: Why has the Toyota Prius enjoyed such success, with sales of more than 400,000 in the United States, when most other hybrid models struggle to find buyers? One answer may be that buyers of the Prius want everyone to know they are driving a hybrid."
and
"In fact, more than half of the Prius buyers surveyed this spring by CNW Marketing Research of Bandon, Ore., said the main reason they purchased their car was that 'it makes a statement about me.'"
(Thanks to reader Sean for the tip).
Wednesday, July 4, 2007
For the 4th, the Navy Hymn
Eternal Father, strong to save,
Whose arm hath bound the restless wave,
Who biddest the mighty ocean deep
Its own appointed limits keep;
Oh, hear us when we cry to Thee,
For those in peril on the sea!
O Christ! Whose voice the waters heard
And hushed their raging at Thy Word,
Who walked on the foaming deep,
And calm amidst its rage didst sleep;
Oh, hear us when we cry to Thee,
For those in peril on the sea!
Most Holy Spirit! Who didst brood
Upon the chaos dark and rude,
And bid its angry tumult cease,
And give, for wild confusion, peace;
Oh, hear us when we cry to Thee,
For those in peril on the sea!
O Trinity of love and power!
Our family shield in danger’s hour;
From rock and tempest, fire and foe,
Protect us wheresoever we go;
Thus evermore shall rise to Thee
Glad hymns of praise from land and sea.
Words by William Whiting, Tune by John B. Dykes, source: Cyberhymnal
Sunday, July 1, 2007
God is Not "not great"
I have been reading transcripts and discussions of the debate between (Presbyterian pastor) Mark D. Roberts and Christopher Hitchens on the latter's book "god is not great." I was thinking about Hitchens when we sang an old Psalter hymn this morning "God Moves in a Mysterious Way" by William Cowper.
The last verse is the following:
Blind unbelief is sure to err
And scan his work in vain;
God is His own interpreter,
And He will make it plain.
Also, for fans (like me) of Jars of Clay's "There is a River", another verse of the hymn is interesting:
Ye Fearful saints, fresh courage take;
The clouds ye so much dread
Are big with mercy and shall break
In blessings on your head.
Of course, because this hymn is written in common meter, you can sing it to the tune of the Gilligan's Island theme song.
We also sang "Morning Has Broken" and "I Have Decided to Follow Jesus" --- a beautiful service at First Havana.