Where do Economics and Social Justice meet?

1,128 Views | 11 Replies | Last: 7 yr ago by tehmackdaddy
Sq16Aggie2006
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To start off, I'm a business owner, and I've typically looked at labor from a purely human capital perspective, as an input that goes into the cost of my widget production. That companies had a fiduciary responsibility to their shareholders, and that's pretty much it. It wasn't until I read Rerum Novarum and Centissimus Annus a few years ago where my views started to change.

The current Pope Francis, has a record for being a bit harsh on consumerism (which is appropriate I feel), which leaks over into free market capitalism (which I don't feel is fair). The Pope is admittedly not an economist, and I think does a bit of a disservice to Catholic businessmen when he gives blanket statements bereft of nuance.

With that being said, I've been struggling with the idea of sweatshops and companies outsourcing labor to low paying, low overhead, low safety countries; and of high-end luxury goods.

I understand that the people in these countries really have no other options; and that any sort of pay, regardless of how backbreaking or how dangerous must be worthwhile to them; or the positions would go unfilled. I understand that. However, I also understand that in some cases that they are able to improve the pay and the conditions of these areas without severely impacting their profit; which would enormously benefit their workforce. Then you have the argument that the pay that is being given to these people which is above market rate could be used to further invest in other areas, or give bonus to executive employees, etc etc and around and around we go. You've also less efficient which may allow your competition to undercut your prices, but outsourcing and paying market rates. You go out of business, all your employees are fired.

As an example, If I roll up to a starving laborer in 1 of my 4 Escalades ( I drive a Tundra, this is just an example), and absolutely beat him down to the lowest possible rate for which he'll cut my lawn, literally the penny to which the scale tips his marginal utility to positive, you wouldn't say I'm a shrewd businessman; I'm an *******. "Throw the guy a $20 why don't you" most people would say, and I think they'd be right. Sure, I'm paying over the clearing price for labor when I don't have to, money that I could theoretically be using to purchase goods or other laborers; but it still seems assholish, whether that matters or not.

Now take my 4 escalades, if instead of buying these Escalades, I buy 1 used Kia, and donate the rest to buy food for the hungry, what have I done? Yes, I've fed the hungry; but those Escalades also filled the pockets of the Salesmen at the Car Dealership; the Dealership itself, the assembly line crew, the design engineers and so on and so on. The escalades will need regular maintenance and gas and servicing etc, which will also go to create jobs.


Where do you strike the balance?
Martin Q. Blank
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Something else to consider is the strength of the economy on the number of children people have - more/less people in the workforce (e.g. baby boom).

As a matter of policy, free market capitalism benefits the most people overall. Individual circumstances will differ by market, situation, job, etc. so I don't think there is a "balance" you can point to. Economics is a soft science and does not follow "scientific" rules because human psychology is so fluid and mutable.

I have missionary friends who are in southeast Asia. Even though most foreigners hire servants to clean the house and cook meals, they did not out of principle. However, this "principle" made the locals angry because several people were excited to see the newcomers and hoping to get the job. Was what they did a "social injustice?"
PacifistAg
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AG

Quote:

Now take my 4 escalades, if instead of buying these Escalades, I buy 1 used Kia, and donate the rest to buy food for the hungry, what have I done? Yes, I've fed the hungry; but those Escalades also filled the pockets of the Salesmen at the Car Dealership; the Dealership itself, the assembly line crew, the design engineers and so on and so on. The escalades will need regular maintenance and gas and servicing etc, which will also go to create jobs.
I'll offer my take on this question. We are charged to feed the hungry. We aren't called to prop up the supply chain. So, I'd say start with what we are explicitly charged to do as Christians, then go from there. If the salesmen lose their jobs as a result, then be there for them to help them as needed.
Sq16Aggie2006
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RetiredAg said:


Quote:

Now take my 4 escalades, if instead of buying these Escalades, I buy 1 used Kia, and donate the rest to buy food for the hungry, what have I done? Yes, I've fed the hungry; but those Escalades also filled the pockets of the Salesmen at the Car Dealership; the Dealership itself, the assembly line crew, the design engineers and so on and so on. The escalades will need regular maintenance and gas and servicing etc, which will also go to create jobs.
I'll offer my take on this question. We are charged to feed the hungry. We aren't called to prop up the supply chain. So, I'd say start with what we are explicitly charged to do as Christians, then go from there. If the salesmen lose their jobs as a result, then be there for them to help them as needed.

Sure, and I can see both sides of the argument, but playing devil's advocate I think we can also use reason and our intellect to get "more bang for our buck" so to speak. Instead of the oft repeated "give a man a fish, feed him for a day, teach a man to fish, feed him for life", I'd change that to "give a man a fish, feed him for a day, save your fish, invest in a cannery and a fleet of fishing boats, pay the man market rate to where he can barely buy a fish, reinvest your profits into expanding and getting more people their one fish a day for backbreaking labor".
PacifistAg
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AG
Sq16Aggie2006 said:

RetiredAg said:


Quote:

Now take my 4 escalades, if instead of buying these Escalades, I buy 1 used Kia, and donate the rest to buy food for the hungry, what have I done? Yes, I've fed the hungry; but those Escalades also filled the pockets of the Salesmen at the Car Dealership; the Dealership itself, the assembly line crew, the design engineers and so on and so on. The escalades will need regular maintenance and gas and servicing etc, which will also go to create jobs.
I'll offer my take on this question. We are charged to feed the hungry. We aren't called to prop up the supply chain. So, I'd say start with what we are explicitly charged to do as Christians, then go from there. If the salesmen lose their jobs as a result, then be there for them to help them as needed.

Sure, and I can see both sides of the argument, but playing devil's advocate I think we can also use reason and our intellect to get "more bang for our buck" so to speak. Instead of the oft repeated "give a man a fish, feed him for a day, teach a man to fish, feed him for life", I'd change that to "give a man a fish, feed him for a day, save your fish, invest in a cannery and a fleet of fishing boats, pay the man market rate to where he can barely buy a fish, reinvest your profits into expanding and getting more people their one fish a day for backbreaking labor".
I do get that. It's entirely rational. But, this is where we will differ. I would change it to: "give a man a fish, eat with him, build relationship with him, teach him to fish, pool resources to catch more fish, feed more people, teach more people to fish, increase community". Yours makes total economic sense. But, I love the communal nature of the church we see in Acts. I think oftentimes we, w/ the best of intentions, begin to focus on efficiency and reason so much that we miss the importance of relationships and community.
Frok
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AG
There's a difference between individual and society. As an individual we are called to take care of the poor. As a society we want to operate the system that gives us the least poverty.

Capitalism has saved more people from poverty than anything. Sure it operates off greed, but so does every other system unless you have angels running them.

Government mandated charity is not efficient however we as a society have become accustomed to the government doing what we should be doing on our own.
UTExan
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1 Timothy 5:18 has some guidance to be liberal with workers and their wages/benefits:


Quote:

For the Scripture saith, "Thou shalt not muzzle the ox that treadeth out the corn," and, "The laborer is worthy of his reward."

I would rely on the Holy Spirit for wisdom. It is better to overpay workers than to underpay them.

Deuteronomy 24:14-15
Quote:

"You shall not oppress a hired servant who is poor and needy, whether he is one of your brothers or one of the sojourners who are in your land within your towns. You shall give him his wages on the same day, before the sun sets (for he is poor and counts on it), lest he cry against you to the Lord, and you be guilty of sin."
James 5:4
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Behold, the wages of the laborers who mowed your fields, which you kept back by fraud, are crying out against you, and the cries of the harvesters have reached the ears of the Lord of hosts.
Jeremiah 22:13
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"Woe to him who builds his house by unrighteousness, and his upper rooms by injustice, who makes his neighbor serve him for nothing and does not give him his wages, "
There are other passages about this. I am no SJW moonbat, but the God is very clear about how he views the intentional underpayment of wages to workers.

I guess my inclination is market rate plus whatever you can pay to insure a happy, secure employee.

Years ago, I worked for an unnamed Texas police department which made a practice of paying as little to employees as they could. The phenomenal turnover rate (and associated costs) and the poor quality of people they retained was obvious and I left as soon as my 2 years commitment was done with the agency.
Zosima
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I have not read Rerun Novarum in several years, but I do think it is one of the greatest encyclicals written. It has changed my view on how the economy works and business should be conducted, but I am working for the man so what do I know of if it's practicality.

That said, my understanding of it is that everything we have is God's. We are asked to be stewards of the gifts and blessings that He has given in the manner which we believe best Him. We have a responsibility to the poor, and you as a business owner have a responsibility to your employees. Pope Leo proposed distributism (My guess) because it encourages you to think locally and communally. It is pretty tough to pay the guy the minimum, or turn a blind eye to someone when you know their money struggles/ problrms, regardless of how many future employees you may have.

I don't have a good answer, but to say Christians should view money they've earned as God's money, and decide what to do with it. I don't think, it is a sin to have a nice house or a car, but it is a sin to turn a blind eye to poor Lazarus, especially if the workers are allowing you to lead a lavish life.
Drum5343
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AG
RetiredAg said:


Quote:

Now take my 4 escalades, if instead of buying these Escalades, I buy 1 used Kia, and donate the rest to buy food for the hungry, what have I done? Yes, I've fed the hungry; but those Escalades also filled the pockets of the Salesmen at the Car Dealership; the Dealership itself, the assembly line crew, the design engineers and so on and so on. The escalades will need regular maintenance and gas and servicing etc, which will also go to create jobs.
I'll offer my take on this question. We are charged to feed the hungry. We aren't called to prop up the supply chain. So, I'd say start with what we are explicitly charged to do as Christians, then go from there. If the salesmen lose their jobs as a result, then be there for them to help them as needed.



This. Also wise to heed the voice of popes and saints on this matter.

Once the demands of necessity and propriety have been met, the rest that one owns belongs to the poor. - Pope Leo XIII



And he answered them, "Whoever has two tunics is to share with him who has none, and whoever has food is to do likewise." - The greatest man ever born of a woman aka St John the Baptist in John chapter 3.

We have no obligation to buy consumer goods. We do have an obligation to help those who we are able to help.
747Ag
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AG
Relevant here is what is called the preferential option for the poor, something I learned about my senior year of high school. In the example of the Escalades, the better choice is that which assists the poor, not necessarily the salesman etc...
Ulrich
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I'm not very churchy so I won't comment on the religious aspect, but as a general rule when people try to artificially interfere in the labor market they make things worse. It's not necessarily easy to see because the effects can be diffuse over time and population.

In your third world sweat shop example. The typical path for improving quality of life from subsistence to modernity is something like this: the populace starts out with no skills, the country with no infrastructure, and all located distant from markets without substantial natural resources. What they do have is super cheap labor that draws companies in. The first operations are crapholes, no doubt. But over time, exposure to industry, first world management, and intellectual property helps the populace gradually develop useful skills and experience worth more. Infrastructure is built. Infrastructure, cheap labor, and developing skills draw more companies in. Competition leads to increasing salaries to match the increasing skills; dont forget that the developing world is advancing too and therefore vacating ever-better higher jobs. Often a region develops a concentration of talent in an industry that leads to a true differentiation in the market like India's IT or Asian Tiger electronic manufacturing.

If the government (or worse, an outside government) imposes minimum wages and working conditions, this geographically remote country with no skills or infrastructure loses its single advantage. Instead of new investments beginning, the old investment and development process stop. And the country becomes a ward of the international economy, forever buried under IMF loans and a toxic reputation in the international business community.

If a company wants to increase pay, great! If they don't increase pay/conditions to match value addition and employment alternatives, someone else will... eventually. Sometimes economic development isn't as fast as we would hope, but interfering in the process only sets it back.
Ulrich
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Only other thing I'll add is that a period of apparently outsized profits while there is a lack of competition is the company's compensation for taking the risk of investing capital in a place with very little going for it. Sometimes these operations don't work out.
tehmackdaddy
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AG
The balance is struck when each individual honestly searches himself and responds by acting morally , which may be different for different individuals.
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