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Economics as if it Matters : an Interfaith Guide for Living, Loving . . . and Voting. Think , but think clearly - - Detachment is required 2. Assume ignorance rather than malevolence 3. False cause fallacy – correlation is not necessarily causation
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Economics as if it Matters:an Interfaith Guide for Living, Loving . . . and Voting
Think, but think clearly - - Detachment is required 2. Assume ignorance rather than malevolence 3. False cause fallacy – correlation is not necessarily causation 4. Fallacy of composition 5. Watch for group think Beware of anchors and the latest-and- greatest 7. Know “positive” and “normative” 8. Look fully
The age of chivalry is gone – that of sophisters, economists, and calculators, has succeeded; and the glory of Europe is extinguished forever. Edmund Burke, Reflections on the Revolution in France, (1790)
Why study economics?1A major structure of the world 2 A controller of human behavior 3 It deals with how we use our resources 4 G–d has some expectations about #3
. • Rational self-interest ≠ selfishness
“Cursed is the ground because of you; through painful toil you will eat food from it all the days of your life. It will produce thorns and thistles for you, and you will eat the plants of the field.By the sweat of your browyou will eat your food until you return to the ground.”G-d in Genesis 3: 17-19
What has G–d provided? 5,092,204,900,000 lbs – grains 532,066,500,000 lbs – beef, pork, chicken, turkey 339,570,000,000 lbs – fish Total - - - 5,963,841,400,000 pounds of food 851.98 pounds per person or 2.334 pounds per person per day
2,129,259,000,000 pounds of vegetables 304.18 pounds per person or .8334 pounds per person per day
Total food produced and availablefor distribution and usage 8,093,100,400,000 pounds 1,156.16 pounds per person 3.168 pounds per person per day Jehovah Jireh!
925,000,000 will go to bed hungry tonight 6,300,000 children under five will die this year from malnourishment
1,438 children will die during the two hours we are together tonight
. The Hebrew Scriptures (the Old Testament) are filledwith a call for justice in the world.
Micah 6:8 – What does the Lord require? Do justiceEzekiel 16:49 – Sodom’s real problemGenesis 18:16-33 – What it would have taken to save Sodom
“You shall not wrong a stranger or oppress him,for you were strangers in the land of Egypt.You shall not afflict any widow or orphan.If you afflict them in any way and they cry outin any way to me, I will surely hear their cry and my wrath will burn, andI will kill you;and your wives will be widowsand your children orphans. G–d in Exodus 22:21-24.
If you think you are safe because you“never oppressed anybody in your life,”read Hosea 4:1
The Christian Scriptures are the same James 2:14-17 – Faith without works is dead Matthew 25:31-46 – Judgment depends on it
Changing your faith to Islam will be no helpThe Prophet, peace be upon him, has said: “He who sleeps on a full stomach while hisneighbor is hungry is not one of us.”And one of the Pillars of Islam is the Zakat, the annual giving of 2½% of your wealth tothe care of the poor and needy.
. Buddhism is no help either - Poverty is bad because it involves dukkha, or suffering and “ill-being.” Unchosenpoverty is different from a renunciation of worldly matters. And for Hinduism - View the life of Mahatma Gandhi and you will know of the Hindu care for the poor.
Examples: economics helps clarify - - Jobless claims are up 46,000 last month. Bad? Not necessarily – it may be a good sign. The United States has a surplus of wheat. People are starving in Africa. Send wheat? Perhaps not – it may hurt Africa in the long run. Apartment rents are high. There are poor people who need housing. Rent controls? Probably not - it is likely to hurt the people we are trying to help. Economics can also explain why it takes so long to board an airplane today.
Average U. S. Government GS Rating by Race and Gender (Percent)
Raising taxes to support our programsmay disproportionately hit the poor. If taxes are “unjust” and fall more on the poor than the wealthy, increasing taxes will increase the burden on the working and taxpaying poor.
Economic Truths 1. People are rational 2. More is better than less 3. People respond to incentives 4. TANSTAAFL – There Ain’t No Such Thing As A Free Lunch 5. No thing is just one thing 6. Unanticipated effects reign 7. Unintended consequences exist 8. No one is in complete control 9. In a free exchange, everybody benefits
Economic Concepts and Theories Supply and demand Demand – desire backed up by the willingness – in appropriate situations – to spend our resources. .Law of demand – the quantity demanded is inversely related to price Two reasons – Price effect – at the new lower price, the good costs relatively less than other goods Income effect – when something costs less, people have relatively more money to spend
Artificially setting prices too high – price floor (minimum)
Attacking Discrimination • Personal action • Legislation • Laissez-faire
Three Types of Markets • Perfect Competition • Monopoly • Imperfect Competition / Oligopoly
. For Perfect Competition to exist: 1. Homogeneous product 2. Large number of buyers and sellers 3. No barriers to entry or exit 4. Perfect and free information
. For Monopoly to exist 1. Unique product with no or limited substitutes 2. Single seller 3. Barriers exist to entry 4. Information is neither perfect or free
Solutions to the Monopoly Problem 1. Prohibition 2. Price regulation 3. Government ownership 4. Laissez-faire
. For Oligopoly to exist 1. Any type of product 2. A few sellers 3. Barriers to entry exist 4. Information costs and is imperfect What one seller does affects other sellers and they will respond
. Types of economic Systems Capitalism– the means of production owned privately Socialism – the means of production owned by the government
Characteristics of Capitalism 1 Private property is protected 2 Free enterprise 3 Competitive markets 4 Limited role for government
Roles for Government in Capitalism 1 Antitrust and monopoly regulation 2 Externalities 3 Public goods 4 Common ownership 5 Income redistribution 6 Economic stabilization
Types of Taxes 1. Progressive 2. Neutral 3. Regressive
Why International Trade? • Differing resources • Comparative advantage
