Give us clean hands
Topic: Faith

Faith and Credit
Topic: Economics

Max Weber theorized about the influence of faith on economic behavior, leading to tests of his theory by Sascha Becker and Peter Becker.  I find those tests interesting, but incomplete.  All these sociologists looked for the indirect influences of faith with too little scrutiny of overt differences in economic systems stemming from religious practices.

I would posit, as does Hernando DeSoto in The Mystery of Capitalism, that the different banking, inheritance and property laws found in various regions affected by differing faiths strongly influence the extent of economic development and equity for each area.  Regions affected by the Protestant movement attained the most useful forms of lending and property rights.  Jewish traditions and external influences on them limited usury in ways that constrained utility of capital.  Catholicism, and Moorish influences led to Anticretico or weaker property rights and lending through convoluted leasing.  Muslim influences led to Ijara, the shariah-compliant leasing, in lieu of lending.  While avoiding gharar (uncertainty asociated with gambling by Islam), this specialized usufruct leasing curtails much risk exposure, and therefore often causes borrowers and investors to lose or overlook potential rewards routinely gained elsewhere under less capital-restrictive regimes.

Although the religious assumptions about the nature of man (total depravity, predestination, et al) may seem to provide some explanations for disparites in development and equity between peoples of differing faiths, I think the more obvious religious constraints on capital utility present an almost quantifiable cause and effect relationship.  Except for cross-infuences in places like India, Moorish-Hispanic regions and Turkey, one might be able to test the relationship with relatively simple economic measures such as a Granger Causality test.  Timur Kuran at Duke University seems to find these overt differences stemming from religious differences and to characterize them as economically beneficial or hamful.  He points to Hindu laws that strengthen families economically and Islamic laws that weaken family wealth.  Like Hernando DeSoto, Kuran contrasts the economic well-being of different cultures with an eye for attributable causation.  I find the arguments of DeSoto and Kuran quite compelling and I look forward to statistical tests of their assertions.

State Entrepreneurship Ranking
Topic: Economics

The 2011 State Entrepreneurship rankings have arrived fresh from the University of Nebraska.  Like so many other state comparisons, this one has its flaws.  The recent spate of patent wars between corporations dueling for litigation rights skews the results with Oregon jumping from 45th to fifth with no real increase in that state's entrepreneurship involved. 

Neither does the study help the reader understand the complex relationship between entrepreneurship and downturns in the general economy.  In North Dakota for example, the comparisons do not reflect the entrepreneurship borne of necessity after the massive layoffs experienced recently in other states.  The rankings don't always account for such fine points.

The rankings also tend to promote entrepreneurship as an economic panacea akin to improved innovation or productivity gains.  This would be fine, except that so many fledgling entrepreneurs must settle for a decrease in personal income when they become their own bosses. 

The greatest gains to the economy come from businesses growing out of the sole owner and operator mode into an organization of three or more employees.  The rankings reveal little as to how well a state does in helping businesses achieve this important transition.  A bit more attention to detail, statistical outliers and important disclaimer notes will have to appear with these rankings before this reader puts much stock in the University of Nebraska findings.

 

Real love: sophisticated cooperation, or more?
Topic: Faith

Real love: sophisticated cooperation, or more?

Some behavioral theorists and researchers regard love as no more than a sophisticated form of human cooperation.  Economic game theory predicts that individuals generally find advantages in cooperating with another person until one of the two stops.  As soon as the one individual stops cooperating, economic game theory predicts that the other should also stop.  Although this falls far short of any well accepted definition of love, behavioral psychologists have long counted cooperation as one of the most basic tenets of human interactions.  Mathematician and behavioral researcher, Martin Nowak considers five types of human cooperation, first, direct reciprocity (simple quid pro quo); second, indirect reciprocity (cooperating to enhance reputation); third, spatial selection (cooperating with thy neighbor); fourth, group selection (cooperators perceiving and realizing an advantage over defectors); and fifth, kin selection (cooperating with thy brother).

The question suggested to me in all this becomes, whether love is merely a combination of the aforementioned forms of cooperation, or if it transcends these types.  Luke 6:27 - 35 commands the followers of Jesus to cooperate not only in the circumstances enumerated above but further, to love their enemies. Specifically, the Contemporary English Version translates the words of Jesus as follows.

This is what I say to all who will listen to me: Love your enemies, and be good to everyone who hates you. Ask God to bless anyone who curses you, and pray for everyone who is cruel to you. If someone slaps you on one cheek, don't stop that person from slapping you on the other cheek. If someone wants to take your coat, don't try to keep back your shirt. Give to everyone who asks and don't ask people to return what they have taken from you. Treat others just as you want to be treated. If you love only someone who loves you, will God praise you for that? Even sinners love people who love them. If you are kind only to someone who is kind to you, will God be pleased with you for that? Even sinners are kind to people who are kind to them. If you lend money only to someone you think will pay you back, will God be pleased with you for that? Even sinners lend to sinners because they think they will get it all back. But love your enemies and be good to them. Lend without expecting to be paid back. Then you will get a great reward, and you will be the true children of God in heaven. He is good even to people who are unthankful and cruel.

(Luk 6:27-35 CEV)

 

These words of Jesus serve not as some secondary consideration or optional suggestion. His directive here instructs his followers unequivocally and carries direct connection to the verse which names for his disciples their most basic identifying characteristic, found specifically in John 13:34 - 35.

And now I give you a new commandment: love one another. As I have loved you, so you must love one another. If you have love for one another, then everyone will know that you are my disciples."

(Joh 13:34-35)

 

By setting this irrational and inexplicable standard and commanding us to emulate the standard, Jesus shows that real love comes from the divine, not out of any normal human standard of behavior. No game theory or psychological hypothesis can explain the love that emanates from God and causes us to want to know him. We begin to know of him when we learn that he and his love are inextricably entwined as is written in 1^st John 4:8.

God is love, and anyone who doesn't love others has never known him.

(1Jo 4:8 CEV)

 

And yes, by others, these words mean all others.

Then Jesus asked, "Which one of these three people was a real neighbor to the man who was beaten up by robbers?" The teacher answered, "The one who showed pity." Jesus said, "Go and do the same!"

(Luk 10:36-37 CEV)

 

By the standard set in Jesus' example I suggest that real love, truly unconditional and God-like love does transcend archetypical models of cooperation. Jesus' love defies rational explanation in that he said and showed that:

The greatest love you can have for your friends is to give your life for them.

(Joh 15:13 GNB)

 

For even the Son of Man did not come to be served; he came to serve and to give his life to redeem many people."

(Mar 10:45 GNB)

 

These were the strongest words ever recorded on the subject of love, and these were acted upon in complete consistency and purpose. Thus love was forever proven more than just sophisticated cooperation.

The Labor of Love
Topic: Faith

Theologians have long sought a satisfactory answer to a slightly misunderstood question.  When Jesus died on the cross to pay for our sins, how, and to whom was the payment made?  The Father commanded that Jesus should go to the cross because our sin presented such an affront that only a perfect sacrifice could suffice to offset the offensiveness before a holy God. So why and how did God receive an acceptable settlement for our sin from what must also have been a sacrifice on His part, namely watching His only-begotten son die a criminal’s death for the unworthy creation He loved.

 

This query cannot be answered within this limited frame of reference because the question is flawed by the lack of context.  Fortunately, we can better understand the question and thereby perceive the answer by examining God’s economy.  We can do that by borrowing the first of three economic principles written by Adam Smith.  Smith informs us that money has no intrinsic value.  He wrote that the only value that can be assigned to money, or to any other good or service is the value of a person’s labor.  Now we can see that paper money is worth only the value assigned to it by hourly wage as easily as we witness inflation. Adam Smith assures us that the same is true of silver and gold.  Gold is only worth its weight in gold unless someone is willing to work for it.

 

So how does labor-assigned value relate to the atonement made by Jesus on the cross?  When Jesus died on the cross he did not simply pay for our sins, more importantly, he set the price.  His labor of sacrifice established inestimable, unmistakable, and permanent value.  Let us examine those things to which his death assigned this unprecedented value.

 

First, Jesus’ death showed the inestimable and permanent value of a right relationship with God the Father.  By remaining obedient to his Father, Jesus demonstrated that his relationship with his Father was worth his very life.  That was what he traded in obeying the wishes of his Father.  Jesus made a distinct impression on the apostles in so doing.  Like him, most of them also exchanged their lives to obey God, their heavenly Father.  Subsequently, unnumbered martyrs have followed his example when their lives were required in obedience to the God they loved.  Even today in some parts of the world Christians still forfeit their lives rather than disobey or disavow the God who loves them.

 

Second, his death unmistakably set the price of sin.  Finally people could see that sin required more than just the death of the offending sinner.  Now we know that sin is so antithetical to God’s holiness that it requires a perfect sacrifice.  The payment for our sin imposed on a perfect person a sacrifice so terrible that the most abject sinner and the most plebian sinner must take notice and begin to understand how great a debtor they must be.

 

Third, Jesus’ death declared the inestimable value that God places on each of us.  The love which God shows to us in exchanging Jesus’ life to offer us a right relationship with Him cannot be compared to any earthly love.  John 3:16 and 17 tells us everything we need to know about this rate of exchange.

 

Now, as any wise shopper will tell you, no price is truly set by a tag or a manufacturer’s recommendation.  People do not consider full price the true value if some bargain hunter still thinks they can find a discount somewhere, it’s just part of our human nature.  Some Old Testament followers openly showed their desire to stay on the cheaper annual installment plan when it came to paying for sin.  Jesus knew the Father’s answer about paying the full price when he asked about letting the cup pass.  In order to set a price as a known quantity, someone must pay the price.

 

So when someone asks how God was recompensed for the cost of your sin by accepting the death of His son on the cross, the answer is simpler than you might think.  Remember John 3:16 and recall that you were bought with a price.  God asked the price, and Jesus paid it, not simply because it was due, but because it had to become set. This imponderable and incomparable price has become permanently, inestimably and unmistakably set for all people by Jesus’ own labor of love.  It is the labor of love that no one else could undertake.  His obedient labor established forever the values which only God could assign.

Econ for Educators
Topic: Education

An open letter to local educators:

As a former teacher, I know that most educators don't study economics unless they plan to teach business or social studies.  Therefore, it seems likely that many teachers and administrators may miss a few interesting tidbits about economics, including those related to the teaching profession.

First, it seems important that teachers and administrators remember that a school holds tremendous monopoly power compared to other local businesses.  Many communities without parochial education experience the effects of this monopoly.  Business leaders often complain that recent graduates lack the skills needed to build local business and that the schools prepare too many of the brightest students to leave the community for college rather than to stay and succeed in local companies.  

These complaints seem to fall on deaf ears because present-day school administrators answer largely to state authorities and less specifically to their local board.  Board members are also currently encouraged to attend to state requirements rather than thinking locally.  The lack of educational alternatives in many communities exacerbates these perceptions by strengthening the real and perceived monopoly power of the local schools.

Second, as an economic developer, I find that business leaders wish that school administrators and teachers would remember a few important things about improving the local economy.
A school can only increase local tax revenue (and educator salaries) by a few means:  1. by soliciting increased tax rates while hoping not to drive away too many property owners over time,  2. by providing outstanding general education to children and managing the regional perception of the school to increase the value and attractiveness of the community in hopes that resulting strong growth will lift everyone's economic situation, or 3. by training and teaching students to succeed in specific existing local businesses and adding direct value to the community and its tax base year after year.

Obviously, I recommend choices two and three in combination.  As a former educator, I know that a well-rounded education seems infinitely preferable to specific training for a local industry.  That said, the business community has a point in asserting that too little of the current primary and secondary school curriculum adds value to the local economy through students.  Educators need to consult business leaders about curriculum now more than ever if our communities and graduates hope to stay competitive in a global economy.  I only hope it is not too late for educators to think globally and act locally.  Any educator willing to take up this challenge may do so easily by joining their local P-20 council to solicit curriculum ideas directly from local business owners.

Norm Lucas