Religion, Politics, Biology, and Economics:

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Religion, Politics, Biology, and Economics The
Struggle of Reason with Emotion September 28,
2009 copies of this presentation can be found
at www.antolin-davies.com
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Much valuable discussion fails to occur because
of pride and prejudice.
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• Prejudice
• Humans who work in private industry are greedy.
• Humans who work in public sector are altruistic.

• Pride
• Economic truths are opinion (relativism).
• Inability or unwillingness to admit limitations
  (hubris).

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Economic Truths

• Everything is scarce.
• Everything.

• Every choice includes a tradeoff.
• A choice to pursue something is a choice not to
  pursue something else.

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Economic Truths

• People respond to incentives.
• Airplanes and car seats
• Entrepreneurship and taxes
• Russians and dead light bulbs

• Exchange is a positive-sum game.
• Absent coercion and misrepresentation, people
  only exchange if they believe the exchange will
  make them better off.

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Economic Truths

• Profit happens when someone creates value for
  others.
• We think of wealth as the means to obtain stuff
  from others.
• In fact, wealth is the reflection of stuff we
  have already provided to others.

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Economic Truths

• Everything is scarce.
• Every choice involves a tradeoff.
• People respond to incentives.

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Economic Truths

• Everything is scarce.
• Every choice involves a tradeoff.
• People respond to incentives.
• Exchange is a positive-sum game.
• Profit happens when someone creates value for
  others.

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Socio-economic debates are heated because the two
sides proceed from a different underlying
assumption.
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• Some Markets-As-Exploitation Claims
• Globalization income disparity, exploitation,
  unemployment
• Markets rich get richer while the poor get
  poorer
• Minimum/living wage protects the poor in their
  working years
• Social Security protects the poor in their old
  age
• Godless markets reduce human lives to dollars

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• Globalization and Income
• Market-As-Exploitation Claim
• Globalization results in a transfer of income
  from the less wealthy to the more wealthy
  countries.

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Greater per-capita trade is associated with
greater per-capita income.
Source International Financial Statistics,
International Monetary Fund, December 2001
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Greater per-capita trade is associated with more
equitable income distributions.
Source International Financial Statistics,
International Monetary Fund, December 2001, and
Measuring Income Inequality A New Database,
Deininger, Klaus, and Lyn Squire, World Bank,
2002
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Greater per-capita trade is also associated with
more equitable income distributions among the
poorest countries.
Lithuania
Fiji
Thailand
Ukraine
Source International Financial Statistics,
International Monetary Fund, December 2001, and
Measuring Income Inequality A New Database,
Deininger, Klaus, and Lyn Squire, World Bank,
2002
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• Globalization and Income
• Reality
• Globalization results higher incomes and lesser
  income gaps.

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• Globalization and Exploitation
• Market-As-Exploitation
• Globalization results in an increased
  exploitation.

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GDI measures quality of life (longevity,
education, literacy, income) for women relative
to men. Greater per-capita trade is associated
with greater gender equality.
Source International Financial Statistics,
International Monetary Fund, December 2001, and
Human Development Report, United Nations
Development Programme, 2002
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Greater per-capita trade is associated with
reduced child labor.
Source International Financial Statistics,
International Monetary Fund, December 2001, and
World Development Indicators, World Bank, 2002
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Even among middle-lower and lower income
countries, greater per-capita trade is associated
with reduced child labor.
Source International Financial Statistics,
International Monetary Fund, December 2001, and
World Development Indicators, World Bank, 2002
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• Globalization and Exploitation
• Reality
• Globalization results in higher gender equality
  and lower incidence of child labor.

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• Globalization and Unemployment
• Market-As-Exploitation Claim
• Globalization results in an increased
  unemployment.

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Greater per-capita trade is associated with
reduced unemployment.
Source Bureau of Labor Statistics, and Bureau of
Economic Analysis
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Greater per-capita trade is associated with
increased real wages.
Source Bureau of Labor Statistics, and Bureau of
Economic Analysis
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• Globalization and Unemployment
• Reality
• Globalization results in reduced unemployment and
  higher wages.

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• Markets and the Income Gap
• Market-As-Exploitation Claim
• As markets grow, the rich get richer while the
  poor get poorer.

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of Households in Each Income Bracket (2006)
Source Statistical Abstract of the United
States, U.S. Bureau of the Census, 2009, Table
668.
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of Households in Each Income Bracket (2006)
From 1980 to 1990, the number of households with
purchasing power of at least 75,000 grew while
the number with purchasing power less than
75,000 declined.
Source Statistical Abstract of the United
States, U.S. Bureau of the Census, 2009, Table
668.
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of Households in Each Income Bracket (2006)
From 1990 to 2006, the number of households with
purchasing power of at least 75,000 grew while
the number with purchasing power less than
75,000 declined.
Source Statistical Abstract of the United
States, U.S. Bureau of the Census, 2009, Table
668.
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• Markets and the Income Gap
• Reality
• As markets grow, rich and poor get richer.

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• Markets, Wages, and the Poor
• Market-As-Exploitation Claim
• Minimum wage (or living wage) protects the poor
  in their working years.

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Increases in the minimum wage are not associated
with changes in unemployment for workers with
college educations.
Source Statistical Abstract of the United
States, and Bureau of Labor Statistics
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Increases in the minimum wage are associated with
increased unemployment rate for workers with only
high school diplomas.
Source Statistical Abstract of the United
States, and Bureau of Labor Statistics
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Increases in the minimum wage are associated with
increased unemployment for workers without high
school diplomas.
Source Statistical Abstract of the United
States, and Bureau of Labor Statistics
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Increases in the minimum wage are associated with
increases in unemployment for less skilled
workers.
Source Bureau of Labor Statistics
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• Markets, Wages, and the Poor
• Reality
• Minimum wage (or living wage) hurts the lesser
  educated and the lesser skilled.

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• Markets, Wages, and the Poor
• Market-As-Exploitation Claim
• Social Security protects the poor in their old
  age.

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Social Security Tax and Benefits (College
Graduate)
Retirement at age 66, wage growth 3, inflation
3, median probability of employment, median
mortality, 7 interest yield.
Compiled from data published in 2006 Statistical
Abstract of the United States, U.S. Bureau of the
Census
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Comparison of Social Security to Privatized Cash
Flows (College Graduate)
Average withdrawal from privatized account is 6
times the average Social Security payment.
Retirement at age 66, wage growth 3, inflation
3, median probability of employment, median
mortality, 7 interest yield.
Compiled from data published in 2006 Statistical
Abstract of the United States, U.S. Bureau of the
Census
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Comparison of Social Security to Privatized Cash
Flows (HS Graduate)
Average withdrawal from privatized account if 4
times the average Social Security payment.
Retirement at age 66, wage growth 3, inflation
3, median probability of employment, median
mortality, 7 interest yield.
Compiled from data published in 2006 Statistical
Abstract of the United States, U.S. Bureau of the
Census
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Net Present Value of Social Security Benefits by
Race and Gender
NPV is at age 20 and assumes retirement at age
66, median wages, median probability of
employment, 3 inflation, 5 discount rate.
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• Markets, Wages, and the Poor
• Reality
• Social Security is a net negative for all except
  those earning a wage below the poverty line and
  is a greater negative for minorities.

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• Lives and Dollars
• Market-As-Exploitation Claim
• Markets reduce human lives to dollars.

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Pick One Compact Car or SUV Price 23,000 Fatal
ities per million vehicles 117 Price 44,000 Fat
alities per million vehicles 56
Those who chose the compact car just valued their
lives at under 3 million.
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• Seat Belts on School Buses
• It costs (on average) 2.5 million for every
  childs life saved.
• Should we install seatbelts on school buses?

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Spend 2.5 million on Lives Saved
Annually Seatbelts on school buses 1 Airbags
in cars 3 Heart transplants 13 Malaria
prevention 975 Midwife training in third
world 310,000 HIV tests for sex workers 715,000
If our concern is saving lives, then we should
not spend money for seatbelts on school buses
because every 1 life saved will be offset by
715,000 lives we might otherwise have saved.
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• Lives and Dollars
• Reality
• Markets enable us to make the best decision in
  the face of distasteful tradeoffs.

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Some Major Themes from Catholic Social Thought
Option for the Poor the more fortunate should
renounce some of their rights so as to place
their goods more generously at the service of
others. (Octogesima Adveniens, Paul VI, 1971)
Rights and Responsibilities when people are
without a chance to earn a living, and must go
hungry and homeless, they are being denied basic
rights. (Economic Justice for All, US Catholic
Bishops, 1986) Economic Justice it is
necessary that economic undertaking be governed
by justice and charity as the principal laws of
social life. (Mater et Magistra, John XXIII,
1961)
Role of Government and Subsidiarity it is
gravely wrong to take from individuals what they
can accomplish by their own initiative and give
it to the community (Quadragesimo Anno, Pius
XI, 1931) A community of a higher order should
not interfere with the life of a community of a
lower level, taking over its functions.
(Centesimus Annus, John Paul II, 1991)
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Catholic Social Thought versus Economics
How can Catholic social teaching be consistent
with what we understand about economic truths?
What does it mean to be created in the image and
likeness of God?
? To be created with free will.
What is the prerequisite for behaving morally?
? To have freedom of action.
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Catholic Social Thought versus Economics
Freedom we must reappropriate the true
meaning of freedom, which is not an intoxication
with total autonomy, but a response to the call
of being, beginning with our own personal being.
(Caritas in Veritate, Benedict XVI, 2009)
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Catholic Social Thought, Economics, and Freedom

• In the four Gospels, the poor are mentioned
  twenty-one times
• Four times, the poor are mentioned as a fact.
• Six times, the poor are called blessed or
  singled out as a special group who will receive
  the Gospel.
• Eleven times, Jesus instructs the listener to
  give to the poor.

Question Why, at no point, do the Gospels justify
taking in the name of the poor?
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Catholic Social Thought, Economics, and Freedom
Question Why, at no point, do the Gospels justify
taking in the name of the poor?
Observation 1 To rely on coercion to feed the
poor dehumanizes the poor by regarding them as
mouths to be fed.
Observation 2 To rely on coercion to feed the
poor dehumanizes the rich by regarding them as
sources of revenue.
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Catholic Social Thought, Economics, and Freedom
Question Why, at no point, do the Gospels justify
taking in the name of the poor?
Proposition Poverty is a mechanism for forging a
bond between rich and poor. If we regard the
elimination of poverty as an end in itself, we
miss the greater opportunity that poverty offers
to bring the rich and poor together in
community.
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Catholic Social Thought, Economics, and Freedom
Question Why, at no point, do the Gospels justify
taking in the name of the poor?
Corollary Rights and responsibilities are
inextricably linked. If we give the state the
responsibility for fulfilling our moral
obligations, then we give the state the right to
determine what our moral obligations are.
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Catholic Social Thought, Economics, and Freedom
Epilogue The Nagging Doubt What if, in their
freedom, the rich dont give to the poor?
The poor you will always have with you, but you
will not always have me. (Matthew 2611) The
poor you will always have with you, and you can
help them any time you want. But you will not
always have me. (Mark 147)
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Religion, Politics, Biology, and Economics The
Struggle of Reason with Emotion September 28,
2009 copies of this presentation can be found
at www.antolin-davies.com