God is a Capitalist

Saturday, January 6, 2018

Why executives make the big bucks

Socialists suffer seizures when the subject of CEO salaries surfaces. They never tell us how much more money than a janitor a CEO should make, so it’s clear that no matter what the salary they will harm themselves by their extreme response if it is any higher.

British socialists are advertising their envy in a new report “of companies that Theresa May said risk damaging ‘the social fabric of our country’ by paying bosses too much money,” according to comments by the Adam Smith Institute. The author explained,

"The public register was published on Tuesday by the Investment Association, a trade body of investment firms that manage the pensions of millions of Britons."
The register lists every company in the FTSE All-Share Index which has suffered at least a 20% shareholder rebellion against proposals for executive pay, re-election of directors or other resolution at their shareholder meetings.
Of course, the source of the outrage is pure envy and no amount of economic reasoning or facts will dissuade the left. But can free marketeers justify the highest CEO salaries? There are two reasons that CEOs earn such salaries: 1) marginal revenue and 2) knowledge.

Tuesday, December 26, 2017

Distributism ideology always leads to socialism

Christians are concerned about the rise to dominance of transgenderism and same-sex marriage in the US. But they shouldn’t worry because R.R. Reno, editor-in-chief of First Things, has the solution: a kinder, gentler capitalism. His essay last October spawned a series of rigorous rebuttals at Public Discourse, the last of which is here. Reno lamented the economic “freedom” that Michael Novak promoted in his classic book, The Spirit of Democratic Capitalism, has destroyed morality in the country:
The “new birth of freedom” that Michael championed largely came to pass. And it has tended to weaken the two other legs holding up society: democratic institutions and a vital religious and moral culture. Michael observes that “greater incentives will stimulate greater economic activism.” True, but he did not recognize that ever-greater economic activity can crowd out political engagement and sideline religious and moral authority. This is what has happened. Capitalism, now global in scope, is swallowing up more and more of civic life, so much so that in some contexts economists and policymakers present free market principles as ironclad laws about which we have no choice. Dwindling manufacturing jobs, technological displacement, global flows of labor and capital—we are told we have no alternative. This is a cruel reversal of what Michael commended as the source of freedom and openness...We are drowning in freedom... Age-old expectations of marriage and children have become choices. We can even choose to become male or female.

Tuesday, December 19, 2017

The dismal science gets morality

Several authors want to make an honest woman of dismal science. Among them are Nobel Prize winner George Akerlof and Rachel Kranton who wrote Identity Economics, and Sam Bowles who penned The Moral Economy. Project Syndicate posted a quick review by Ricardo Hausmann who wrote, “Two recent books indicate that a quiet revolution is challenging the foundations of the dismal science, promising radical changes in how we view many aspects of organizations, public policy, and even social life. As with the rise of behavioral economics, this revolution emanates from psychology.”

Cognitive psychology spawned behavioral economics and its proponents have grabbed six Nobel prizes for telling us that humans are not always rational. Behavioral economists tried to corral the older Efficient Market Hypothesis (EMF), which actually said that in the long run professionals make the market behave rationally. EMFers always knew that in the short run people could act irrationally and often did. Behavioral and EMF economists talked past each other for the most part because the first dealt with the short run and the latter with the long run.

The new economics proposed by Akerlof and company want to improve behavioral perspectives by adding morality to the dismal science, which hasn’t been a part of mainstream economics since Adam Smith. Behavioral economics led to calls for the state to nudge people in the direction economists thought best for them,
such as forcing them to opt out of rather than into better choices....The new revolution assumes that when we make choices, we do not merely consider which of the available options we like the most. We are also asking ourselves what we ought to do.”
Akerlof and Kranton propose a simple addition to the conventional economic model of human behavior. Besides the standard selfish elements that define our preferences, they argue that people see themselves as members of “social categories” with which they identify. Each of these social categories – for example, being a Christian, a father, a mason, a neighbor, or a sportsman – has an associated norm or ideal. And, because people derive satisfaction from behaving in accordance with the ideal, they behave not just to acquire, but also to become....In the process, we may understand that we vote because that is what citizens ought to do, and we excel at our jobs because we strive for respect and self-realization, not just a raise.

Monday, December 11, 2017

Will political polarization cause divorce?

A few writers have wondered since the election of President Trump if the country is so fractured that another great divorce like that of the Civil War is in our future. Pew Research has provided the statistics to fuel the debate. Recently, John Hawkins wrote “Do Conservatives And Liberals Have Enough in Common to Keep A Country Together Anymore?” on Town Hall. As if counseling troubled marriage partners, Hawkins asked what we have in common?
The Constitution? Conservatives believe in it. Liberals believe in a “living Constitution” which is fundamentally no different than having no Constitution at all.
Religion? Conservatives tend to believe in Judeo-Christian values. Even atheists who are conservative tend to at least be friendly to those values. Liberals mock Judeo-Christian values.
What about patriotism? Conservatives tend to love their country. Liberals love this country like a wife-beater loves his spouse.

Thursday, November 30, 2017

Capitalism creates psychos according to professor

Socialists continually flail stuffed monster versions of capitalism they have sewn together from pieces of their fevered imaginations. Usually I just ignore them because their versions of reality are irrational and I don’t want to be the greater fool who debates with a fool. But a recent assault on capitalism caught my attention because it came from the University of Chicago, Hayek’s old haunt.

John Rollert, an adjunct assistant professor of behavioral science at Chicago Booth and in-house ethicist, wrote “The savage ethics of ‘American Psycho’” for the Booth School of Business blog. Now it’s hard enough to get the average US citizen to watch a You-Tube video on economics, let alone read a book. When they do, they often come across nonsense such as this from Rollert:

Monday, November 20, 2017

Don't let socialists ruin Thanksgiving

The socialist who claims to be an evangelical, Jim Wallis, posted an article in his Sojourners magazine recently encouraging families to debate politics while trying to digest turkey and dressing, cranberry sauce and pumpkin pie. Here is a portion:
A sad reality in the past year or more has been our ongoing struggle to engage in difficult conversations — with our longtime friends, with coworkers, or even with family members across the Thanksgiving table. We’ve always had differences around social and political issues — racial justice, immigration, religious identity, health care, guns, etc. — but those divisions are starker than ever. Our traditional and social media have become so fragmented and polarized that we find ourselves practically inhabiting a different reality than those we disagree with; we only really hear or engage with the perspectives of those with whom we already largely agree. This is not a tenable situation for our country — or for our families. If we are to maintain meaningful relationships, we need to actively engage in difficult conversations with people we disagree with and find some common ground for the common good.
I believe that there are moral issues, values choices, and faith matters that lie just beneath the political headlines. Conversations around those — leading to action — can get us further than our political debates. I also believe there are two great hungers in our world today: the hunger for spirituality and the hunger for justice, and the connection between the two is absolutely vital now.
Socialists like Wallis want to politicize every aspect of life. Socialists should put on the left pant leg first, and condemn as racist everyone who does the right first. Socialists should brush their teeth from left to right and those who go the opposite direction are guilty of hating the poor and wanting them dead. The left hates all police so the right has to defend them even if they’re guilty. The right supports the military so the left feels compelled to trash it.

Wednesday, November 15, 2017

The Jekyll and Hyde nature of individualism and what is means for China

Nobel-prize winning economist Edmund Phelps ties economic growth to the spread of individualism in his forthcoming book. A November 3 Streetwise column by James Mackintosh, “What Martin Luther Says About Capitalism,” summarizes Phelps’ book:
The more individualistic a country is, the better it has used its labor and capital. ...even in recent years, countries with more individualistic cultures have more innovative economies. They demonstrate a link between countries that surveys show are more individualist and total factor productivity, a proxy for innovation measuring growth due to more-efficient use of labor and capital. Less-individualistic cultures, such as France, Spain and Japan, showed less innovation than the individualistic U.S. 
In God is a Capitalist I summarize the work of Geert Hofstede who trail blazed research on the connection between individualism and economic growth in the 1970s, Shalom Schwartz in the 1990s, and William Easterly in 2011. All found very strong correlations between individualism and economic growth.