I think I will stop this

Leave a reply

So disappointed with myself for entering the world of blogging without sufficient technical knowledge. After less than a week that this site has been down due to reason that I don’t know what it has to do with me, I am thinking of stopping this project. It’s not worth my time.

I lost my work from February to April. I have no one to blame, but myself. I no longer trust WordPress and Solid Hosting. This already happened twice.

Maybe, I just need to rest. And I hope that after some time, my interest will return. But for now, If ever I will write, I will try Blogger.

Free State Project and the Wonders of Free Enterprise

2 Replies

Wow! That’s the only word I can say after several days of reading The Freeman December 2012 issue. I find all the articles in it truly educational that is not readily accessible in mainstream education. In sharing my reading on the December issue, I just selected one from each major section except the Book Reviews.

The Free State Project

 Among ten Features’ articles, Bill Walker’s “From the Trenches – The Free State Project” impressed me. I am tempted to copy its entire content and post it on this site. Of course, I am thinking of doing that after asking the permission of Walker himself.

And then I think of another way to directly refer my readers to the source. But as I checked The Freeman, the article is not available. The only way to read it is by downloading the entire December issue. So I have to be satisfied with simply restating here the content of that short article.

The center of the action is New Hampshire. The goal is to gather 20,000 people to move to New Hampshire with the aim of creating a model libertarian community. As of the writing of the article, 1,100 people have moved so far.

Solar System as Part of Humanity’s Economic Activity

Proceeding to the next section, the Interview, I could not believe what I am reading. It is about space transportation becoming part of global economy.

At first reading, the ideas of Dr. Lee Valentine appear strange to me. They include ideas like the government’s primary defensive task, the existence of space hotels, orbital tourism market, and asteroid mining. It seems that I am reading a review of a science fiction movie.

But I think Dr. Lee is serious in claiming that the most important defensive job of the government related to space exploration is protection from asteroid impact. He expects that the number of private astronauts would increase in the coming years. He mentioned the rocket plane, “Lynx was designed to serve three markets: private astronaut flights, scientific missions, and small satellite launch…”

Global Positioning System Device

Among the Columns, I like Jeffrey A. Tucker’s “How We Found Ourselves”. He mentioned another example of the wonders created by the free enterprise – the Global Positioning System (GPS) device. This device is very beneficial for those who suffer “spatial disorientation” when in unfamiliar location.

The technology behind GPS was a product of the creativity of several scientists serving educational institutions. But when the US “Government saw its usefulness for espionage”, she kept it “under extreme secrecy for decades…” GPS only reached the market when the US government set it free for commercial purpose. It was only then that humanity’s problem of spatial disorientation was solved. This is a typical example of the continuing struggle between the expanding power of the government and the free enterprise.

Relevant Links:

The Freeman December 2012 Issue

Free State Project

Revolution within IMF?

Leave a reply

I don’t know if one of the editorials from The Korea Herald should be an occasion for rejoicing. While reading Stephen Richter’s “The silent revolution underway inside the IMF”, my emotion is mixed. The writer is talking about reform and revolution. I assume Austrian economists would question even the very existence of the IMF and would go for its abolition.

Image

The writer himself is negative towards the IMF for he describes it as an institution “whose machinations have proven to have effects similar to nuclear radiation.” However, the irony here is that a destructive institution such as the IMF is now criticizing another destructive financial institution, the Federal Reserve.

New voices within the IMF are now exposing the negative impact of the Fed’s financial stimulus on emerging markets. Quantitative easing is said to have failed in boosting the real economy and “has mainly boosted the stock market.” And now, even the effect of the stimulus package on the stock market is “wearing off”.

The writer identified these new voices.  They are Tharman Shanmugaratnam of Singapore and Guido Mantega of Brazil. Richter even praised Brazil and South Korea for their “counter-cyclical capital account regulations” (I do not know exactly the meaning of these regulations).

In concluding the editorial, Richter is happy. He invites the world to rejoice with him:

“The world at large has reason to rejoice in the fact that the IMF is taking off its self-imposed ideological blinders. If the current trend of change continues, and all indications are that it will, it would represent a big step forward for better global governance.”

Will you accept Richter’s invitation?

Reference: Richter, Stephan. January 13, 2012. “The silent revolution underway inside the IMF”. The Korea Herald.

A Prosperous 2013!?

Leave a reply

As 2013 starts, it is common to hear the greeting “Happy and Prosperous New Year!” However, after watching Overdose: The Next Financial Crisis, I am wondering about the suitability of the greeting.

Here in South Korea, 2013 is perceived as another gloomy year. The Korea Herald considered this year economically darker than 2012. Financial Services Commission and the Korea Institute of Finance mentioned about 570, 000 Koreans who were potentially loan defaulters (January 1, 2013). The Editorials today also mentioned about the stormy year that senior college students and urban settlers will face. It was forecasted that “the number of new job openings will decline from 440,000 last year to 320,000 this year.” The new graduates will find it tough to compete to find a job. Home rentals will also rise this year especially in Seoul’s metropolitan area.

With the kind of economic scenario here in South Korea and the one showed in the above video, can we consider it mentally sound to say and expect that a prosperous 2013 is really possible?

Introducing the Idea of the Covenant

I have been reading the answer of the Austrian economists on this subject. I agree with them that economic prosperity is an outcome of following natural economic laws. However, as a theological educator, I do not believe like the deists do that economic laws are self-operating. I still believe that regardless of the chaos we see, the Creator of nature is still here and is never silent. His will remains sovereign even in economic realm.

In the Bible, we read that Moses told Israel that their economic prosperity is closely connected to fidelity in fulfilling the terms of the covenant, the legal expression of God’s will (Deuteronomy 29:9). In the book of 2 Kings, we find that King Josiah started both religious and social reforms by gathering the entire nation to renew their pledge to the Book of the Covenant (23:1-3).

This idea of the covenant is strange for most people today. They reason out that the Bible and the covenant have nothing to do with economic prosperity. But that is not what we find in reading the Bible.

Interestingly, an Old Testament scholar by the name of Meredith G. Kline wrote a groundbreaking study proving the covenant structure of the book of Deuteronomy. Its structure is similar to the structures of the legal treaties in the ancient near east. Ray Sutton and Gary North utilized this discovery in writing their own books.

In simple terms, the structural similarity of Deuteronomy with ancient near east treaties includes the following:  the One who is really in control, authority based on representative government, moral standard, blessing and curse, and continuity.

Both Sutton and North argued that the terms of the covenant are not only limited to Israel. Since the God of the Bible is the Creator of all, no one can escape the terms of the covenant. Each one of us is either a covenant breaker or a covenant keeper. This declaration holds true even for the three most important human institutions: state, church, and family.

The Widespread Violation of the Covenant

There is a saying, “Ignorance of the law excuses no one.” The same truth applies to the demand of God’s covenant. Whether we accept the existence and the terms of God’s covenant, this does not change the truth that we remain accountable to God and His covenant. If we will assess today’s generation, ignorance of God’s covenant is pervasive and so is the violation of its terms.

Take the state for instance. Today, many libertarians and reformed theologians claimed that the government has been heading towards totalitarianism. It is claiming divinity to itself. There is no one higher than the state. And add to it the fact that people today look to the state as their savior.

This dictatorial tendency of the state is evident towards its attitude to private property and personal freedom. And there are indications today that even the Lordship of Christ over the church is now being usurped by the state. It is also noteworthy that Ray Sutton wrote another book, “Who Owns the Family?” identifying the coercive power of the state over the family.

Taking the third component in the covenant, you will see that the standard of morality today is blurred. Absolute ethical standard no longer exists. Polls and majority votes decide morality. Abortion is no longer considered murder. Theft in the form of currency debasement is now termed quantitative easing. Internet pornography is not perceived as adultery. Divorce is now becoming the norm. Same sex marriage is now allowed. LGBT (lesbians, gay, bi-sexual, and transgender) is now increasingly gaining a voice and becoming more influential. We are living in a licentious world. Almost everything is allowed. Each one has his own standard of what is right and wrong.

And since people no longer believe in absolute moral standard, the idea of obedience and disobedience, curses and blessings is unacceptable. People do not believe in divine judgment both in time and eternity. It is primitive and foolish to believe in such things. Global economic crisis and escalating violence around the world are considered natural.

As to continuity, the basic unit of society is breaking down. Fathers are abandoning their children. Rate of crime is increasing. The recent Connecticut massacre is just one example. It appears that the social fabric around the world is about to collapse. We just wonder what the world would look like 10 to 20 years from now if these trends will continue to escalate.

Renewal of Pledge to the Covenant

Returning to our question, I personally believe that economic prosperity is promised to those who will renew their pledge to the covenant. As of now, I cannot elaborate in this article the distinction between the covenant of works and the covenant of grace. It is sufficient to note that all men are under the covenant of works whether they accept it or not.

As far as King Josiah’s generation was concerned, economic prosperity started in the renewal of pledge to the covenant (2 Kings 23:1-3). Such renewal manifested in religious and social reforms. But it all started with a national gathering. I describe this gathering as a “holy gathering”, a gathering in the presence of the Lord, a gathering centered on the Book of the Covenant.

King Josiah gathered all the elders, priests, prophets, and all the people from the least to the greatest. We need the same kind of gathering today, but ignorance of God’s covenant is the primary obstacle. Even the Church is no longer aware about the existence of such covenant.

In our time, there are so many gatherings of powerful people including politicians, bankers, and economists, and all they can provide is false hope and phony prosperity.

I still believe that education holds the answer to present day economic crisis, but not the type of education that we have right now. The ultimate goal is biblical education. Education in free market ideas and libertarian principles is part of this. I understand this as education in natural revelation. The Bible affirms such type of education. And the best place to start this is among Christian homes. Fathers will play a vital role in this education.

Conclusion:

Moses showed the connection between national greatness and following the terms of the covenant. He declared to his generation: “See, I have taught you decrees and laws as the Lord my God commanded me, so that you may follow them in the land you are entering to take possession of it. Observe them carefully, for this will show your wisdom and understanding to the nations, who will hear about all these decrees and say, ‘Surely this great nation is a wise and understanding people.’ What other nations is so great as to have their gods near them the way the Lord our God is near us whenever we pray to him? And what other nation is so great as to have such righteous decrees and laws as this body of laws I am setting before you today?” (Deuteronomy 4:5-8).

Reference: Sutton, Ray R. 1987. That You May Prosper: Dominion by Covenant. Tyler Texas: Institute for Christian Economics.

“Enlightened Free Enterprise”

Leave a reply

Intending to write a series of articles about various business cycle theories, I encountered a book originally published in 1978 and copyrighted in 1996. The title of the book is “The Austrian Theory of Trade Cycle and Other Essays”. It was edited by Richard M. Ebeling. The book has six essays and the contributors include F. A. Hayek, Ludwig von Mises, Murray Rothbard, Gottfried Haberler, and Roger Garrison.

The six essays are:

  • Introduction: The Austrian Theory in Perspective by Roger W. Garrison
  • The Austrian Theory of the Trade Cycle by Ludwig von Mises
  • Money and the Business Cycle by Gottfried Haberler
  • Economic Depressions: Their Cause and Cure by Murray N. Rothbard
  • Can We Still Avoid Inflation? By Friedrich A. Hayek
  • The Austrian Theory: A Summary by Roger W. Garrison

Let me start with essay number 4, “Economic Depressions: Their Cause and Cure” by Murray N. Rothbard. It has 26 pages.

My strategy is to write about any idea that I personally consider striking and important without regard to the total structure of the essay. Of course, I will do my best to be considerate about the essay’s structure. However, that’s not my primary concern. And here are the ideas I considered important:

  • The reality of the world of euphemism
  • Socialism’s disguise
  • Three economic questions

Euphemism

Reading the first paragraph, I encounter a difficult word – euphemism. Usually, encountering an unfamiliar term, I do not go immediately to the dictionary to look for its meaning. This kind of reading slows down my goal to finish an essay or a book. However, I could not help myself, but look for its meaning for I consider the word central to understand the entire essay. It’s the basic assumption of the writer.

Paraphrasing the definition I encounter in the web, I understand euphemism as a way to make offensive words acceptable. This could be done both negatively and positively. As positive expression, this could be considered polite. However, as negative expression this is a good strategy to hide something and if done using the mainstream avenues of information could be used as a tool of misinformation and social control.

The examples from this site of euphemism are surprising. I will just select few: “passed away” instead of “died”; “correctional facility” instead of “jail”; “ethnic cleansing” instead of “genocide”; “relocation center” instead of “prison camp”; “pregnancy termination” instead of “abortion”, and; “on the streets” instead of “homeless”.

Remember who use and throw these words out there. Think also what the intention behind the replacement of words. Who use those words and for what purpose? This is a relevant question especially in our generation where almost all the things we believe to be true are in reality utilized to control the mind of the majority so that the powers that pull the string could do their own thing unnoticed. This is particularly true in the writing of history.

Murray N. Rothbard used the word “euphemism” in the sense we describe above and this is most evident in the field of economics. The terms “depression” and “recession” are too strong and offensive for the public. Better replace the terms with acceptable ones. In this task, professional economists succeeded. Economic reality is hidden from the public and “the planners” go on with their usual business of planning people’s lives. If you do not believe this to be true, for your children’s sake, take a serious look once again. You do not have any excuse for not knowing for the Internet is before you. Reality is just a click away.

Instead of “depressions” and “recessions”, Murray Rothbard claims that “New Economics” formulated new terms. These are “downturns”, “slowdowns”, and “sidewise movements”. Praise the Lord! We will no longer have depressions and recessions! Professional economists have created wonders!

Keynesian Socialism Disguising as “Enlightened Free Enterprise”

After reading the first few paragraphs of the essay, I encountered familiar and intriguing ideas particularly relevant to our present global economic situation. Karl Marx is the dominant personality that influenced the prevailing perception that business cycle is an inherent flaw within free market capitalism. Most people are unaware that by accepting this thesis, they already embraced the Marxist’s interpretation.

However, economists like David Hume and David Ricardo refused to blame the free market for business cycle. They identify the critical role of commercial banks and government intervention on the economy as the real source of economic depression.

Governments of the world operate on the Keynesian economic framework.  Based on this framework, government intervention is justified to address both inflation and recession.

Based on Keynesian framework, inflation is caused by excessive public spending. It is the solemn duty of the government therefore to find a way to force people to spend less. The strategy of course is difficult to detect and visible only from an Austrian lens.

Moreover, for Keynesian, recession is caused by insufficient private spending. To address this problem, the government has to increase spending.

Except for the above solutions, other Keynesian remedies include bailing out bankrupt firms, inflating credit, propping up prices, and bolstering wage rates above the free-market level.

On the other hand, from Austrian perspective, government interventionism is the primary cause for economic decline. The idea therefore of coming to the government to aid the economy is insane. Rothbard argued that in the recent past this kind of acts on the part of the government was designated as socialism. Most people are not aware that socialism is the air we breath in the name of course of “enlightened free enterprise”.

Three Critical Problems

Any theory trying to explain economic depression must answer three critical problems:

  • Why business cycle exists?
  • Why all entrepreneurs lose their forecasting ability at the same time during economic recession? What’s the real reason for this sudden widespread of entrepreneurial blindness?
  • Why capital good industries suffer the most in time of depression compared to consumer goods industries? And why the same industries soar in time of economic boom?

Both the Marxist and the Keynesian schools provide insufficient answers to the above problems.  The answer provided by the Austrian school is now considered the most reliable. David Ricardo answered the first question. Ludwig von Mises completed the answer in his book “Theory of Money and Credit” published in 1912. Rothbard still considered this book as the best book on the theory of money and banking.

For Austrian economists, inflation and depression are not inherent flaws within free market capitalism. It is the result of the acts of “enlightened free enterprise” more accurately described as socialism or government interventionism.

For Mises, the proper actions of the government in time of depression can be enumerated as follows: never bail out business firms in trouble, do not intervene with laborers’ wage and price of producers’ goods, do not encourage consumption, do not increase government expenditures, and cut the government budget. It is better if the government encourage more saving rather than more consumption.  But the best act on the part of the government is to do nothing, to take her hands off from the free economy. Let the laissez-faire work. Rothbard wrote: “The Misesian prescription is thus the exact opposite of the Keynesian: It is for the government to keep absolute hands off the economy and to confine itself to stopping its own inflation and to cutting its own budget” (p. 89).

Reading the last paragraph of the essay, I see that the only way not to fall victim into the world of euphemism is to recover the Austrian explanation of the business cycle. Once we see this thing happening, socialism’s real color will be exposed and Rothbard foresaw that the government will certainly withdraw its hand from the free market economy.

Let us hear what Rothbard has to say about this intellectual recovery:

“Once again, the money supply and bank credit are being grudgingly acknowledged to play a leading role in the cycle. The time is ripe for a rediscovery; a renaissance of the Mises theory of the business cycle. It can come none too soon; if it ever does, the whole concept of a Council of Economic Advisors would be swept away; and we would see a massive retreat of government from the economic sphere. But for all this to happen, the world of economics and the public at large, must be made aware of the existence of an explanation of the business cycle that has lain neglected on the shelf for all too many tragic years” (p. 91).

Austrian Business Cycle Theory Reaching Mainstream Economists

Leave a reply

It is good to know that the Austrian Business Cycle Theory has finally reached mainstream economists. The response varies. Thanks to 2008 global financial crisis. To me this is an indication of the fulfillment of a foresight.

Beginning 2010, I have been encountering in the web that existing economics will undergo transformation. Mainstream economists can no longer afford to ignore the voice of the Austrian school.

A paper written by Jerry H. Tempelman is an example of the influence of such voice. His topic is the “Austrian Business Cycle Theory and the Global Financial Crisis: Confessions of a Mainstream Economist”. He wrote it in 2010.

The paper is structured around three parts: the identity of those who oppose the business cycle theory, the summary of the theory, and the influence of the theory on several mainstream economists. I just want to follow this order in sharing my own understanding of Tempelman’s paper.

Opponents of Austrian Business Cycle Theory

Milton Friedman tops the list of those who oppose the Austrian Business Cycle Theory. For Friedman, the theory does not provide an accurate explanation of economic recession. It lacks verifiable evidence in actual practice.

Unfortunately, Friedman was not able to witness the 2008 global financial crisis. He passed away in 2006. He was no longer there to witness the specific fulfillment of the theory.

Allan Greenspan is another key personality that opposed the Austrian school. He is a Keynesian. Due to his influence, the voice of William R. White, an Austrian influenced economist was ignored.

Prior to 2008 crisis, White predicted an economic crisis that would result from real estate bubble. His warning was not seriously taken. He actually identified central banks as primary responsible for the crisis due to monetary easing policies. The response to White changed when his prediction happened.

Overview of Business Cycle Theory

Tempelman acknowledged that among several schools of economics, the Austrian school is now considered the most reliable source of interpretation of the 2008 global financial crisis with its business cycle theory. He gave an overview of this theory. It is good that he distinguished between two types of economic booms – sustainable and unsustainable. I find it very helpful.

An economic boom is considered sustainable if it is an outcome of escalation in investment funded by growth in saving. On the other hand, it is unsustainable if the resulting escalation in investment is derived from credit expansion by monetary authorities. This kind of economic boom will certainly end in bust.

Ordinary people find it difficult to identify the dynamics that follow after credit expansion. They include lending money at low interest rates, distortion of vital economic information, negative impact on entrepreneurial decision, and unproductive use of capital. The end of the process is economic decline.

The Austrian Business Cycle Theory described above was proven true in the 2008 economic crisis. The credit expansion and mal-investment that characterized the years prior to 2008 was the primary cause for the decline both in financial market and the total global economy.

The Influence of Business Cycle Theory on Mainstream Economists

The names of mainstream economists mentioned in the paper include William Dudley and Paul Krugman. The Economist is also mentioned. Other mainstream economists using different methodology and whose economic researches are classified as “on the cutting edge” are also identified.

Tempelman noted William Dudley’s analysis of the Federal Reserve has many features common in the Austrian school. Paul Krugman also voiced out his criticism of the Fed for its ability to create boom and bust, an idea borrowed from the Austrian school. The Economist even cited the analysis of Ludwig von Mises criticizing the Fed’s monetary stimulation policy. The economic website also recognized that numerous qualities from Austrian business cycle theory characterized the economic decline both in the US and Japan.

Mainstream economists who utilized different methods include Taylor (2007), Jarocinski and Smets (2008), Smithers (2009), and Vogel (2010). All of them, though they used different approach arrived to a conclusion almost similar to the ideas of the Austrian school. Taylor for instance identified the correlation between the Fed’s monetary policy and the boom in the housing industry. Jarocinski and Smets confirmed this findings using “Bayesian vector auto-regression”. Furthermore, Smithers identified the connection between the irresponsible action of central bankers and global financial crisis. Finally, Vogel observed a sequence of events leading to financial crisis. It all started with the Fed’s monetary policy followed by 2001 economic recession leading to house bubble, which collapse finally resulted to the global crisis.

Tempelman mentioned three among cutting edge mainstream economic research. The first type of research focused on financial leverage and liquidity. Someone mentioned in the paper that a growing body of literature has been focused on this important subject. The works of Tobias Adrian and Hyun Song Shin (2009) is just one example of this type of research. Again the works of these scholars appear to be an echo of the message of Austrian business cycle theory.

Another type of research resonates the voice of the Austrian school is simply focused on liquidity. Brunnermeier (2009) argues that the face of macroeconomics will certainly change and a new economics will emerge considering the contribution coming from the macro, the micro, and financial economics.

The third type of cutting edge research concentrates on behavioral interpretations of business cycle. This one is considered complementary to Austrian Business Cycle Theory.

Conclusion

Tempelman wrote that since 2008 crisis, Federal Reserve officials have shown some “positive signs” acknowledging the mistake of their monetary policy. They admitted that low interest rates for too long does not really help, but has made the crisis more severe.

Some ideas for monetary reform are now considered. Unfortunately, in spite of the accuracy of the Austrian school, its proposal is still considered too radical and therefore rejected. The proposal includes closure of central banks, return to gold standard, free banking, and monetary competition.   

Personal Response

Immediately after the crisis, central banks escaped public blame. All fingers are pointing to free market capitalism. That’s the power of mainstream media. Statist interventionism is doing its best to find a scapegoat.

Thanks to alternative media and bloggers. Thanks also to the influence of Ron Paul. Central banks now are exposed. In time, the role of statist interventionism on the global crisis will also become part of mainstream consciousness.

Regarding the paper, I observe that despite the fact that core features of Austrian Business Cycle Theory were fulfilled in 2008 crisis, mainstream economists are still hesitant to acknowledge the direct influence of the Austrian school in their economic interpretation. This is my personal impression after reading the paper. I think this observation also applies to Templeman’s position. Even though he was in favor of the Austrian school, somehow he remains reserve in the way he presented his material.

As a whole, I appreciate the fact that the Austrian Business Cycle Theory is making an impact among mainstream economists. How I wish that such impact would lead to a thorough study of the Austrian school of economics and the abandonment of the Keynesian economic framework. I also wish to see the fulfillment of George Reisman’s vision in our generation: the spread of Austrian economics literature into the library of universities worldwide. I believe that such education would enable economists to see the real colors of dominant ideologies behind our present political and economic turmoil around the world. I am hopeful that the exposure of the schemes of socialism and statist interventionism would lead to a new appreciation of genuine free market capitalism. And this would mean a better future for global economy based on personal liberty, honest money, and private property.

Expecting Quality Content from Christian Writers

Leave a reply

Distracted is an appropriate description for me this month of December for I really find it hard to concentrate writing articles for this site. I have two topics in mind, which I find interesting, but I could not push myself to start writing. These are about the approaching events on January 1, 2013 and comparison between Obama’s victory speech and Ron Paul’s farewell speech from US Congress.  I have eight days more to write about the first topic. I think the second topic can wait.

I prefer trolling instead of writing, that’s my struggle. And then suddenly, while trolling on the net I just bumped one thread forum about RH bill. I had exchanges of ideas with the initiator until discussing about the topic in economic terms. At the middle of the discussion, the thread initiator shared to me a link to a Christian website about economics and business.

After reading a dozen of articles from that website, I felt dissatisfied with the shallowness of the content. Such dissatisfaction afflicts me every time I read economic and financial articles from Christian sources. There are exceptions of course. North is one of them.

Most of the writers I encountered are simply promoting their books. It appears to me that these writers are unaware that anyone could access content far superior and more accurate at no cost.

Comparing the content of Ludwig von Mises and LewRockwell with Seven Mountains and Center for Christian Business Ethics Today, I could not control my dissatisfaction, and that’s why I am writing this article. I think these latter sites could have improved their “theologizing” if they would just devote some time learning first the Austrian school of economics.

Those who want to see an example of great discrepancy in quality of content, why not try reading “God and the Financial Crisis” and compare it to any related article from either Ludwig von Mises or LewRockwell. Or try watching videos by Wayne Grudem and David Cowan. Then compare them to “Fight of the Centuries” and “Fear the Boom and Bust”.

Despite my unfairness in my comparison and my failure to see the differences in context of the two types of content, I am still craving for solid information coming from Christian writers. How I wish that the “authority” in Christian circles should stop their half-baked analysis and start thinking hard about global finance and economy.  Why not start learning the Austrian school of economics?

Nothing can stop us

Leave a reply

Today, November 16, 2012, I received an email from a certain “Tea Party Economist”. I do not know of any other Tea Party economist except Gary North. The fact that North’s name is on the letterhead of the email made me curious to read the entire message from George Rayburn, the publisher of Stansberry Research.

The provided link led me to a video. Such type of video is familiar to me; it is an investment video, a video that predicts about the future of economy and calls for investors.

The basic insights are popular especially among libertarians and Austrian economic bloggers, but the conclusion is different. I did not finish the video. It’s too long for me.

I think the video is about oil and natural gas. Contrary to the analysis coming from alternative media that US will certainly suffer economic collapse, the speaker predicts an unstoppable trend that will make the US the number one oil supplier of the world. The general message is one of expanding economic and political power for President Obama and with it, a new level of prosperity for the US.

Which one to believe? Is the US about to collapse in the coming years or to soar further in power?

You can find the partial transcription of the message of the video here:

http://planet.infowars.com/politics/the-secret-plan-to-retain-power-through-2020

The Role of Christianity in the National Development of South Korea

Leave a reply

Following three forum threads and reading two articles from Ludwig von Mises Institute, I came up with different answers explaining the phenomenal growth of South Korea’s economy. The answers I received are due to government leadership, collaboration between the government and the chaebols, intervention of the US, an ongoing experiment between socialism and free market, and the chaebols using the government.

South Korea and Taiwan

Post War South Korean Economy

North Korea: A land of milk and honey

In Korea, Bureaucrats lead the technology charge

Coming from theological education, I am not satisfied with the above answers. I am looking for a connection between the growth of Christianity in South Korea and her economic development. And I find Kirsteen Kim’s paper, “Christianity and modernization in twentieth-century Korea: perspectives on new religious movements and the revitalization of society” helpful. The paper primarily focused on Protestant Christianity’s impact on Korea’s national development. And national development is incomprehensible apart from a robust national economy.

Kim is critical of developmental theory that left out the significant role of religion. Basing on the works of Scott M. Thomas, Kim claims that religion actually played a vital role in social development. The assumptions therefore of developmental theories leaving out religion are inaccurate. Those theories stigmatize religion as primitive, confined in institutional concepts and beliefs, and a matter of personal preference. Those theories fail to see the public importance of religion as a force to create change in the lives of people, the economy, and the entire society.

Kim identifies ten ways Protestant Christianity has impacted the country:

  • Holistic view of life
  • Developmental approach
  • Transforming socio-cultural practices
  • Correlation between Christianity and independence movement
  • Church gatherings as avenues for resistance
  • Witnessing through various social services.
  • Influence of the corporate world in the way church leaders manage church ministries
  • The development of Minjung theology
  • Reunification of two Koreas as a concrete application of biblical Jubilee.
  • Global mission

Protestantism shares the holistic view of life with Catholicism. Both of them offered vision of a better life than the one given by both Confucianism and Buddhism.  This vision of a better life goes beyond “spiritual’ concerns such as the salvation of soul. Christianity during its early stage in South Korea was understood as a force for change affecting family and the society.  It has power to solve political and economic problems. It is actually understood as an important component in nationalism. It even serves as an economic motivation for it provides a way to protect the living standard of the people and Christian connection offers diverse economic advantages.

The concrete application of establishing the kingdom of God through developmental approach is the second way Christianity impacted South Korea. Early Protestant missionaries established schools, hospitals, and churches. Through the influence of Nevius method, church leadership was nationalized and democratized. Consequently, Korean Christians were quick to imitate the example of Protestant missionaries resulting to the multiplication of schools, hospitals, and churches throughout the country. In fact, as of 2002, among the top five universities in the country, the roots of three of them could be traced in Christian tradition.

Socio-cultural practices especially related to gender and age underwent change through the influence of Christianity. Superstitious beliefs collapsed, domestic abuses were exposed, and Korean Christians developed a “social consciousness” resulting from emphasis on education.

The role of Christian leaders and churches in the nationalist and independence movement was the fourth way Christianity influenced the development of South Korea. Historically, Christians suffered a lot for their active participation in this independence movement.

Due to Japanese suppression, early Korean Christians found prayer and revival meetings as ways to resist Japanese cultural imposition. However, when the colonial government made Shinto worship compulsory in schools, resistance became public, which resulted to persecution, imprisonment, and death. Church buildings were even closed down.

Church ministries in South Korea have been managed like the corporate world. They invest on impressive buildings and cutting edge technology. Church leaders never criticize capitalism. In fact, the growth of Korean churches is closely associated with the growth of businesses.

Minjung theology consists of three threads: Catholicism’s liberation theology, insights of folk history movement of the 1960s, and re-reading of the Bible from economic and political perspectives. Minjung theologians played a significant role in the overthrow of Korea’s military government. They displayed openness to collaborate with other groups advocating the protection of human rights.

I find that there is no need for further elaboration on the sixth and the last two influences of Christianity – witnessing through various social services, reunification of North and South Korea, and missionary work around the world.

Based on Kim’s paper, it is now clear that Christianity indeed played a significant role in the national development of South Korea. And part of that development, I suggest that the economic boom of the country could never be explained completely apart from the religious influence coming from Christianity.

Source: Kirsteen Kim 

Economic Prosperity of South Korea

Leave a reply

In this post, I want to summarize the key ideas from two forum threads and two articles that provided answer to the forum question, “Why is South Korea so successful?”  I think the attribution of the primary cause to the “meteoric rise” of the economy of South Korea is the central contention in this question. Is the economic success of South Korea really the product of government’s intervention? Or is it the work of the free market?

Collaboration between the Government and the Chaebol

The initiator of the first forum thread acknowledged the limitation of his knowledge concerning the history and status of Korean economy. He is so concerned about the question for refuting the mainstream story about Korea’s economic miracle due to government intervention would provide a strong defense for the free market.

The first responder identified the vital role of the ties between the “chaebol” and the government explaining Korea’s economic success. Such ties started during the regime of Park Chung Hee (1961-1979) where the government recruited the “chaebol” to boost the national economy through industrialization and giving priority to export industry. The government is capable to provide the necessary huge funds for the “chaebol” to accomplish these economic ends through the nationalization of banks of Korea. The “chaebol” enjoyed special privileges from the government by receiving huge loans with low interest rates. This deprived medium-sized enterprises to avail of necessary capital. All of this was made possible by inflating the money supply.

However, the dominance of the “chaebol” was greatly affected due to two critical changes – the end of Park’s regime and the financial crisis in the late 1990s. South Korea now is looking for economic alternative to “chaebol” system since 1999.

Result of US Intervention on Korea’s Economy

The second thread deals with a difficult subject. It is about the impact of US intervention on Korean economy. One thread contributor recognized the difficulty of the subject for dealing with speculation and alternative history are difficult to avoid.

The dominant sentiment in the thread is that simply describing South Korean economic explosion as the total outcome of US intervention is a distortion of the picture. This is because the story of North Korea is intentionally left out. It appears to me that the picture closer to reality is that US intervention actually results both to economic prosperity of South Korea and economic poverty of North Korea. So basing on this second thread, the answer to our central question about the economic development of South Korea is closely connected to US intervention.

An Experimental Period

The third link is more focused on the situation in North Korea. However, I choose to limit my comment on the data concerning South Korea.

The writer, Tim Swanson, identifies that the situation in South Korea is still under experimental period between two ideological forces – pure socialism and relatively free market. Historically, South Korea “flirted” with dictators, but still the free market has survived for five decades. The economic miracle of South Korea is a product of neither the ideal libertarianism nor pure capitalism. If my understanding is correct, the writer is saying that Korea’s economic miracle is an outcome of the combination of these two forces. Moreover, the writer predicts that the free market will triumph over socialism in the end.

Chaebol Using the Government

The fourth answer came from George Reisman. He refused to buy the mainstream story about the economic success of South Korea attributed to government intervention. To him, accepting the mainstream story is tantamount to biblical miracles like raising the dead person to life or the virgin birth. In his mind, the New York Times actually reported the result of a defiance of an economic law, which is impossible to happen. Instead of uncritically accepting such misleading report, Reisman offered a different story. He saw the real cause of the success of South Korea’s economy from the fact that big businesses used the government for their own ends.

For Reisman, the story of big businesses using the government is not new. This has been happening in the US and similar scenario is also true in South Korea; the “chaebol” dictates the decision of the government. Two quotations from Reisman’s article support this assertion:

“The same principle of businessmen using the government for their own ends undoubtedly applies …to every other case of alleged government responsibility for the economic success of a country.”

“It’s sign of the corruption of our culture that today, businessmen feel the need to hide behind the mantle of corrupt ideology and pretend that what springs from their fundamentally life-giving self-interest comes instead from the government, the agency that can give only destruction and death.”

Answering our central question about the economic prosperity of South Korea, we came up with four different but interrelated answers. The chaebol’s collaboration with the government, American intervention, an outcome of economic experiment between socialism and the free market, and chaebol using the government are the answers we gathered from the two forum threads and two articles taken from Ludwig von Mises Institute.