Really? The "Dismal Science" and the increasingly irrelevant discipline of theology?

Tag Archives: Planet Money

What is Occupy Wall Street All About?

This is an honest question. I have no idea what this is all about. All Things Considered did a bit on it. They shed some light on the issue. The people they interviewed said they wanted more democracy. They wanted everybody to have a say in any decisions made. Who has time for this?
The guy was a computer science major in college. I am sure that if I could hear more from him he would talk about how because of the internet and the increase of communication channels more people would be able to vote on governmental issues. Seriously though, after just listening to the 5 minute segment I was tired of hearing them vote and talk about what kind of sleeping bags they wanted. Can you imagine if 300 million people had to decide on every blessed issue that came before a legislature? The United States is aREPUBLIC for a reason. We don’t want every person to have to decide on every freaking issue. Finally, what has this got to do with Wall Street? The dude in the interview made some point about not wanting any financial institutions to be “Too Big Too Fail,” (I am paraphrasing. He wasn’t that well spoken). It sounds like his bigger problem is with the government. Sure the two are interrelated and it was the government who bailed out the banks (which many institutions have paid back in full with interest, and possibly too soon), but shouldn’t these people be in Washington?
Cornell West added his voice to the protests, but again his issue was with the way that the government spends their money. Why is he on Wall Street?
It is little surprise to me that most of these people are academics and people without jobs. They have time. I know its not easy in our economy to get a job, but the least that these people with all of this time on their hands can do is put together some kind of proposal and actually protest at the appropriate venue.
I don’t get it.


The Oracle of Omaha Strikes Again

As the economy continues to sputter and estimates continue to be revised, one man seems to be able to stir up the media and the web 2.0 world. That man, the “Oracle of Omaha,” “the Woodstock of Capitalism”, Warren Buffett.
Yesterday, as many of you have probably heard, Buffett’s Berkshire Hathaway will invest $5 billion in Bank of America, rising the stock of BoA nearly 25%. As the Bloomberg article relates in the previous link, this is of course not the first time Buffett has made major investments in companies and made huge returns. In the middle of the mortgage crisis, Buffett made a $5 billion investment in Goldman Sachs and made a sweet little return of $1.7 billion.
Buffett also made news in the last few weeks by his seemingly strange challenge to Congress, “Buffett said the rich are “coddled” by Congress “as if we were spotted owls or some other endangered species. While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks,” Buffett wrote in a Sunday New York Times Op-ed.” Liberals cheered everywhere on my Facebook news feed. This is one area where the Sage of St. Louis, or my dad, and Buffett part ways. But, be that as it may…
Why I am bringing this up? When is the last time in history one man has had so much power? One investment, one statement, and the world pays total attention. Of course, through history, there have been many men, and women, of power who usually assert their strength through military might, i.e. Alexander the Great, Julius Caesar, Napoleon, Hitler etc. Their have been men who have had great ideas that in the long term have changed the course of Western history, Socrates, Plato, Jesus, Muhammad, etc. But, what makes Buffett so incredible is the age that he lives in allows him to change multi billion dollar corporations in one quick moment. Some of these corporations are the very ones that in the past have been deemed “too big to fail,” for the good of the rest of the country and by relation the world. If America goes down, so does China, so does Europe and on and on. We have seen this domino effect in full force over the length of this recession (which looks like it is moving towards a double dip). Americans often pride themselves on their individualism and their belief that their actions effect only themselves. This is the way we talk about our ethics. “I am going to do what’s right for me.” Or, “I need to do what I need to do.” Granted, Buffett is in a pretty special role, and that is why I brought him up. He seems to have a unique interconnectedness to the world. But, through our decisions we have given people like him that power. We continue to be dependent on large banks and the government to provide credit for our schooling and our mortgages. Especially Americans have banked on the idea that credit is good in all cases and we are beginning to see that this might not be the best long term perspective.
This is a crucial intersection to me of theology and economics. People like Warren Buffett make decisions that will effect the entire country. I am actually somewhat comfortable with Buffett at that helm. Freakonomics has run a podcast about the way Buffett raised his children and seems to be an extremely ethical and conscientious person. Paul in the New Testament writes, “each of you should look not only into your own interests but also to the interests of others.” The whole Levitical legal code in the Hebrew Bible was given in order for them to live together and live well as a community. The 7 year jubilee and many other laws depict a community that is looking out for all people who will be effected. The problem with the American mentality is that we don’t think like a community. We think like individuals. Our perspectives are too often about instant gratification for ourselves and not up the impending disaster that will come not only to others but us too. I am not saying we are always going to act altruistically or without some self-interest. We have to act in some way with a delayed self-interest but it has to be in a larger community self-interest. What happens to us a people at large, will ultimately effect us as individuals. My dad often says, “a rising tide sinks all ships.” This delayed self-interest has to be able to think beyond what feels good at the moment, despite the difficulty that ensues. Another one of my favorite podcasts, not related to economics, is Radiolab from WNYC. They did a show about the difficulty of forcing that part of ourselves that only seeks instant fulfillment at the expense of long term health.
So what am I arguing for? Economics looks primarily at incentive. I am thankful that Warren Buffett’s incentives are to make money, but he is also concerned about the good of the community he is looking in. I am holding him up as an example, for Americans to consider how their actions although seemingly only effecting themselves have a much larger impact. And this large impact will in some cases turn back on them. I think that theology and ethics should guide the interests that Economics studies. But these interests should be long view interests. Not immediate self-gratifying ones. Thoughts? Please make a comment! I might be totally wrong.

The Catholic Church’s Place in Spain’s Economic Problems

I guess this is as good of place as any to start this blog.  If you would like to read a little more on how a theology student got interested in economics, see my About Me section .  Anyways…

It is rare that these two topics intersect so well as they did in this article from Pope Arrives in Spain .  Basically, the story does capture a one sentence line from the Pope’s perspective on what is going wrong in Spain he says, “the market doesn’t function with market self-regulation but needs an ethical reason to work for mankind.”  He added that “a moral dimension is ‘interior and fundamental to economic problems.'”  What exactly does this mean?  Sure enough, the purview of Economics does not include “ought,” or ethics.  The “market” helps see you what is in demand or not.  What occurs in the market is only regulated by certain laws like the “invisible hand” and the like.  The other factor that I think economics often overlooks is human error or inability to act logically, but certainly it is not concerned with ethics.  This is not to say that people should not be.  We act in a market and ethics should play a role.  But, I wonder if the Pope is aware of what has happened in Spain in particular when the Catholic church has been directly involved with financial dealings?

One of my favorite blogs and podcasts is Planet Money.  Several months ago, they ran a podcast on the “cajas” in Spain which are basically medieval savings accounts that are often run by people in a community who know nothing of banking.  You can listen to the full podcast here:  One of the major cajas was run by the Catholic Church.  Planet Money goes so far as to call them “the poster child of what went wrong in Spain.”  These priests run this not-for-profit banks and start lending at money and giving credit to people who were not reliable, including mortgage problems.  Cajasur was the name of this caja.  They even started taking on loans themselves in order to start expanding.  Its hard to predict exactly what it means that these cajas are failing, but they are part of the larger issue going on in Spain’s debt problems.  Over 50% of Spanish people deposit there moeny in these cajas.

If Spain defaults on its loans, these cajas will be part of the problem.  It seems that the Pope should have investigated more on what is actually going on in Spain before making a broad claim.  Surely, the criticism he leveled could be leveled against these Priests, maybe they need to be regulated as well, but the Pope, as head of the Catholic Church, could have had some jurisdiction.  Part of the problem falls on his head as well.  The question to be asked is, if the Pope sees it as so clear that ethics should be guiding our markets, why are his own priests part of the problem?  I am not saying it was all these priests fault but the Church is the place that the Pope wants people to look for ethical behavior and they clearly failed in this very country.  It would have been interesting to hear the Pope expands his comments to include the issues that even his Church was involved in.

If anyone is reading this, do they have any thoughts on the way in which churches like the Catholic church should be involved in economic decisions?  Would we have been better off in this case if churches were more involved in market decisions?  Or would that have created a worse problem as did in Spain?  These are some of the issues that I would like to explore in this blog.  I will be working more on these objectives but I was also just hoping to have a place to write my thoughts and work out some of what has been running through my own head.  Will see if anyone else finds it interesting too.  Thanks for reading.