Article originally posted here by Inspire

by Shane Enete

As the Covid-19 crisis began to accelerate, my colleague proudly told me that he profited from buying Zoom stock. Another one of my friends boasted that he had made money selling short the stock market. Hearing these stories made me recall the words of the father from East of Eden, “Boys go out, and some die…do you think I could take a profit from that?”

“Boys go out, and some die…do you think I could take a profit from that?”

During late March, in a dark alley near Costco, there was a man selling toilet paper at marked-up prices. Seeing this man stirred in me two opposite reactions: anger for profiteering from other people’s suffering, and admiration for a man who was able to create a viable business model that both feeds his family and serves the community.

Which emotion should I feel when people make money from a pandemic: anger or admiration?

Ill-wind investing refers to making money on the account of “ill-winds” that sweep through a community, such as natural disasters, wars, or pandemics (Irvine, 2002). Is it morally wrong to make money from ill-winds?

Is it morally wrong to make money from ill-winds?

One simple way to argue against ill-wind investing would be to say that any activity that makes a profit from the suffering of others is morally wrong. While this may sound like a crystal clear rule to follow, it actually gets murky very quickly. For example, receiving an inheritance from an aunt who greatly suffered from Leukemia would be an example of a morally justified profit from the suffering of another person. Other murky examples include doctors who profit from ruptured spleens or boxers who receive money from knocking out their opponent.

Is it morally wrong to buy Zoom stock, short the stock market, or sell toilet paper at marked-up prices during a pandemic? One way to form a moral principle around this type of ill-wind investing would be to ask the question, “does this activity increase, have no effect, or diminish the suffering of others?” (Irvine, 2002).

Does this activity increase, have no effect, or diminish the suffering of others?

Regarding the Zoom stock, one could argue that it either has no effect, or actually diminishes the suffering of others. It is a good thing when the company of a needed product receives an increase in its stock value. Zoom’s access to capital, then, increases, helping the company expand its service to those in need.

Regarding shorting the stock market, one could argue all three cases. It may diminish the suffering of others by being a vehicle for greater price discovery. Price discovery, over a long period of time, helps to avoid destructive stock market bubbles. However, it may increase the suffering of others by encouraging a stock price drop that goes beyond price discovery. A stock market crash could then cause a panic that would cascade into business layoffs and premature retirement withdrawals.

Regarding selling toilet paper, it may diminish their suffering by being a provider of a needed commodity when every other provider, who is trying to be “fair,” has no more supply. It also may potentially increase the suffering of others by emptying the pockets of those who are at their most vulnerable financial state (perhaps unemployed, or furloughed).

Given that ill-wind investing is morally complex, Biblical wisdom, Holy Spirit discernment, and counsel from others is required. It is important to be fearful about making money from an event that is causing others to suffer. It is also important to look for ways to share any profit that is made with those who were not as fortunate.

“Your abundance at the present time should supply their need, so that their abundance may supply your need, that there may be fairness. As it is written, ‘Whoever gathered much had nothing left over, and whoever gathered little had no lack.’” 2 Corinthians 8:14-15, ESV.

There is a story about a man who would walk a mile to work everyday. His one mile walk was his favorite part of the day. One day he happened to look down at a gutter and found a five dollar bill. The man was so thrilled about finding the five dollar bill, that the next day he couldn’t help but peer into every gutter on his way to work. In fact, for the rest of the year, he spent most of his one mile walk staring at gutters.

Even if ill-wind investing is morally acceptable, if we do not watch our ways, we may actually spend our lives “staring at gutters” as we try and find ways to continue to make money from the ill-winds of global warming, pandemics, hurricanes, and droughts. And, if we are not careful, we may slip into a terrible place; namely, hoping that more ill-winds would happen so that we could make even more money.

If we are not careful, we may slip into a terrible place.

Investing is not just a matter of the mind and the wallet, but also of the heart and the community. When we invest in a business venture, it is important to consider the impact that it will have on our community and our hearts, as well as on our wallets. Do our investing opportunities diminish human suffering? When we invest, we should strive to enter into investing opportunities that bring about prosperity for both ourselves and our community.

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Article originally posted here by Christianity Today

by Hugh C. Whelchel

Over the last 30 years, we have witnessed the most significant movement out of poverty in human history. If this trend continues, we will see extreme poverty almost completely eradicated in the 21st century, according to a 2008 report from the World Bank. This historic economic movement was not the result of government programs, the United Nations’ national debt forgiveness, or even Christian charity. It was brought about by the spread of economic freedom and capitalism.

Economic freedom is important because it affects nearly every aspect of an individual’s life. Living in a society with high levels of economic freedom leads to higher incomes, less poverty, less unemployment, longer life expectancies, lower infant mortality, higher literacy, cleaner environments, and a host of other benefits. More economic freedom equals improved well-being and a better quality of life. Economic freedom, then, is one measure of what the Bible calls “flourishing.”

Yet, today, free-market economics has come under fire. Social activist Michael Moore’s critique of capitalism is embraced by many:

Capitalism is an organized system to guarantee that greed becomes the primary force of our economic system and allows the few at the top to get very wealthy and has the rest of us riding around thinking we can be that way, too—if we just work hard enough, sell enough Tupperware and Amway products, we can get a pink Cadillac.

Almost everywhere we turn, we can see examples of greed and abuse, which has many asking, “Are the evils of capitalism worth the benefits?”

Click here to read the full article

Article originally posted here by Paradiem

by Eric Dunavant

You may not realize this, but bear markets are like a bad horror movie.  You know, the ones that are so bad they end up on parody shows like Mystery Science Theater 3000?  Once you’ve seen it, you can end up losing sleep for countless nights because although you know the movie is over, you can’t shake the bad thoughts and memories from the event.

Our memories often confuse us and leave us in a place of being more fearful than we should be.  Each movie is unique, just as each bear market is unique, but in the end, most of them follow similar formulas.  One thing I’ve learned is, the fear of something begins to go away when I know the formula and how the movie (or bear market) turns out.

I cannot tell you how many times people begin conversations with how devastating bear markets are. If you know what you’re getting into, you can prepare and survive any bear market. If you know what to expect, the overall effect of a bear market is less devastating than your memory or the media might lead you to believe.

There are three perspective shifts that are important to preparing your mind to survive any future bear market.

First, an investor should set aside enough cash from the portfolio to survive five years of expenses. Said another way, you should never invest any money you know you might need access to in the next five years.

Bear markets are not predictable, but we find they typically happen one year out of every five.[1] By setting aside the cash for that five‑year period, you give yourself an opportunity to create a reserve that will allow you to survive when an unexpected bear market happens.

Second, you must carefully manage the cash reserves through the post-bear market recovery period. You’ve set aside five years’ worth of cash so you don’t have to sell your stocks when they’re at their low. As the market drops, you can live off the reserves until your stocks have time to recover.

Five years is not a hard‑and‑fast rule, but I’ve found that it gives you the flexibility to survive the uncertainty.  As the recovery begins you can wisely determine how to replenish your reserves.

I remember specifically using this strategy in the 2008 market drop. Many of our clients had consumed four years of cash and were down to their final year before we saw enough recovery to begin selling stocks.  We didn’t re-build the cash position over night, but over the next three years we were able to use the increasing market to re-create five years of cash position as the market continued its recovery.

Third, you must realize most bear markets recover faster than anyone expects. Historically, the average recovery from peak to peak of a bear market is 40 months.[2]

This means when you are at a peak and things begin to go down, the market will, on average, begin new highs again in a little over three‑and‑a‑half years. If you have five years of cash on hand during that period, you certainly have enough cash to survive the average bear market.

Despite what the distracted media will tell you, we’ve had two bear markets since 2008.  In 2011 and 2018 the markets dropped more than 20% from their peak. In each instance, those markets had recovered all their losses within six months.[3] The memories of most bear markets are often more devastating than the reality and most investors are surprised when they hear how quickly these bear markets recover.

The news media wants you to believe bear markets are so devastating that you would never be able to survive one, and therefore, you need to do act to avoid them. As you can see, surviving a bear market is easier than most would expect. Just like watching a bad horror movie, once you know the formula, the fear begins to subside.  The secret to your long‑term success will be driven by owning great companies and knowing how the movie ends.

At Paradiem, we hate “investing” and think you should too! We are not just investors; we are OWNERS and we believe WHAT you own and WHY you own it is a much more important consideration. If you would like more information on the importance of understanding what you OWN, email info@paradiem.org with the subject “Ownership” or give us a call at (985) 727-0770.

[1] https://www.wesmoss.com/news/understanding-market-corrections-frequency-length-recovery-time-and-depth/

[2] https://blog.wealthfront.com/stock-market-corrections-not-as-scary-as-you-think/

[3] https://finance.yahoo.com/quote/%5EGSPC/history/

Article originally posted here by The Gospel Coalition

by Greg Forster

Last week John Starke wrote for TGC about “The Myth of the Protestant Work Ethic.” I’m grateful to Starke for exposing the egregious theological errors in Max Weber’s theory of capitalism’s origins. But Weber’s theory of what happened next, the “cultural contradictions of capitalism” thesis, has done just as much damage. Christians ought to understand how Weber’s view of capitalism undermines the moral foundations of a humane and genuinely productive economy, promoting materialism, greed, faith/work dualism, debt, and crony capitalism.

Weber’s argument goes something like this: Teaching people to view productive work as a calling from God somehow (Weber is ambiguous about how) caused people to think their calling from God was to accumulate wealth for its own sake. Quickly, capitalism abandoned its Protestant foundations and became simply about the profit motive. This turned out to be an even more successful basis for the economic system, because it drove businesses to ruthlessly rationalize their operations to maximize profit. Thus we now live in a dehumanizing “iron cage” where every aspect of our daily work, down to the tiniest details, is controlled by the profit imperative.

I understand why many people find this account plausible. Recent events have made it clear that the spirit of greed predominates in some of our most prominent companies. In one part of the economy, the financial sector, greed seems to have spread beyond individual companies to become a systemic problem. And the iron cage resonates with many people unable to see how jobs on factory lines could be humanizing.

But does our greed problem really come from where Weber says it does? And is there really an iron cage?

Why Accumulate Wealth?

Weber’s reading of economic history is as selective, tone-deaf and sometimes outright fabricated as his reading of theological history. Weber scholars Peter Baehr and Gordon Wells note that from its first publication to the present day, historians and economists have almost unanimously rejected Weber’s Protestant Ethic. When I first picked it up, I was shocked at its cavalier treatment of the historical evidence.

Capitalism has not flourished most where there was a spirit of greed. It has flourished most where there was a spirit of stewardship—-a sense that we are responsible to make the world a better place. That—-not greed—-is what produces a capitalism that thrives.

The problem with Weber’s history begins at the beginning. He sees capitalism exploding into existence after the Reformation. In fact, the real historical scholarship shows it developed much earlier, and gradually.

As early capitalism grew, great theologians like Albertus Magnus and Thomas Aquinas wrestled with its implications. The theology they had inherited, influenced by Greco-Roman philosophies that looked down on work and wealth, said these practices should be morally corrupting and economically counterproductive. Yet the reverse was happening! People were serving each other, and the community was better off. Albertus and Thomas expressed reservations on some points, but on the whole they ended up embracing early capitalism. It facilitated good stewardship and human flourishing.

The Reformation did dramatically accelerate capitalism, in three ways. It permanently established fruitful human work and stewardship of creation at the forefront of Christian social teaching, thanks to the recovery of vocation. It demolished barriers to individual enterprise, empowering entrepreneurs. And it spread the spirit of stewardship beyond a few isolated cultural pockets, carrying it to all of Europe.

Yet even during the period Weber examines, he distorts the record. Weber makes a great deal out of one passage from Benjamin Franklin on the duty to accumulate wealth. Franklin wasn’t the only person talking about economics in early America; against that I would set this, from John Adams: “I must study politics and war that my sons may have liberty to study mathematics and philosophy. My sons ought to study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce and agriculture, in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry and porcelain.” Does that sound like the accumulation of wealth for its own sake?

Killing Business

Real-world familiarity with the way business and economics work will quickly demolish any idea that they thrive on greed. Nothing kills a business more reliably than a myopic focus on maximizing the quarterly earnings report. In the business world, this is old news.

True, in the short term you can get ahead by exploiting people and extracting their wealth. But in the long run, businesses only succeed in the market by maintaining a strong moral culture that humanizes work, builds trust with customers, and orients workers toward creating value and serving the customer with excellence. Large corporations can use crony capitalism and collude with politicians to stave off these market forces for a while, but not forever (as Wall Street, General Motors, and others are now learning). Likewise, a society can borrow trillions from its grandchildren to stave off the economic consequences of a materialistic economy, but not forever (as America is now learning).

This observation also refutes the iron cage. Weber wrote at a time when the latest fad among American businesses was the cockamamie idea that “scientific management” could identify the “one best way” to do every job, down to the tiniest details. But that whole movement collapsed. In the long run, the universe punishes hubristic rationalism and rewards humane social cooperation.

Talk to line workers in companies that are prospering long-term. They typically don’t think their work is dehumanizing. They’re right.

Christians know why humane approaches to work are more economically productive. God’s work creates things from nothing, and human work creates value (though not from nothing) because we’re made in his image. People were made to do fruitful work, cultivating more and more blessings for one another out of the creation order.

Vice and Virtue

At bottom, Weber’s core idea is that vice creates wealth more effectively than virtue. That’s not only false to history and contemporary experience; it’s also theologically unstainable. Weber could believe this view because it aligned with his Gnostic fact/value dualism. In that framework, it made sense that workers doing the same jobs would be identical and interchangeable for economic purposes (facts) regardless of their morals and motivations (values). Christ smashes this dualism. Economic growth is a moral and spiritual enterprise.

Why, then, do we see all this moral decay in our economy? Capitalism creates wealth, and there’s no denying wealth creates special temptations. You don’t have to accept Weber’s economic charlatanry to see that!

There are other factors. In a society with religious freedom, it is especially challenging to maintain a robust public moral culture. The academic discipline of economics has adopted a materialistic anthropology and utilitarian ethical assumptions. Our political system has adopted many policies and practices that incentivize materialism, exploitation, and crony capitalism.

But Weber’s influence itself is one of the most important causes. For a century, America’s cultural leaders have promoted the Weberian narrative that capitalism thrives on the profit motive. And as economist Arthur Brooks has recently written, societies tend to become what they describe themselves as being. If a society’s cultural leaders say the economy thrives on greed, people will internalize that expectation and act accordingly. Over time you will actually get an economy that runs (but not “thrives”) on greed.

Even some well-meaning people who promote the cultural contradictions narrative in order to warn us against greed are, I regret to say, part of the problem. Typically, they say something like: “Businesses thrive on the profit motive, so we need to do everything we can in cultural institutions outside the economy to counteract greed.” This signals to business leaders that they can go on ruthlessly maximizing profit with a clear conscience; they’re just doing their job.

The struggle to humanize capitalism is self-defeating if it assumes capitalism thrives on the profit motive. It can only succeed if it’s grounded in a moral affirmation of capitalism’s historic foundations in stewardship and value-creating work.

Article originally posted here by Jerry Bowyer

by Jerry Bowyer

One of the frequently overlooked little details of the Gospel is that when the wise men from the East announced that the birth of the Messiah, Herod was troubled, and all Jerusalem was troubled with him.

“Now after Jesus was born in Bethlehem of Judea in the days of Herod the king, behold, magi from the east arrived in Jerusalem, saying,

2 “Where is He who has been born King of the Jews? For we saw His star in the east, and have come to worship Him.  3 And when Herod the king heard it, he was troubled, and all Jerusalem with him.” (Matt. 2:1-3 NAS)

Why is that? Why would Jerusalem be troubled? It is understandable that Herod would be troubled. He was an unpopular and brutal tyrant who was so paranoid about being displaced that he had his own sons murdered. He had a kingdom to lose. The Messiah would be a king, and there could only be on king of the Jews. But what about all of Jerusalem being troubled with him?

It is not obvious that the city would be troubled by this news, because it is after all good news. The very prophecy which is used to determine that Messiah will come from Bethlehem, promises extraordinarily good things:

“2 “But as for you, Bethlehem Ephrathah, Too little to be among the clans of Judah, From you One will go forth for Me to be ruler in Israel. His goings forth are from long ago, From the days of eternity.

3 Therefore, He will give them up until the time When she who is in labor has borne a child. Then the remainder of His brethren Will return to the sons of Israel.

4 And He will arise and shepherd His flock In the strength of the LORD, In the majesty of the name of the LORD His God. And they will remain, Because at that time He will be great To the ends of the earth.

5 And this One will be our peace.” (Mic. 5:2-5 NAS)

These things would be good for the cause of Judaism, for Israel, and for the world. God great to the ends of the earth, and peace — what’s not to like?

What’s not to like is that the system in place at the time was good for Jerusalem at the expense of everybody else. As we have documented in great detail so far, Jerusalem was the center of economic exploitation.

The good news for the world is that the arrival of the Messiah would bring justice. The bad news for Jerusalem was that the arrival of the Messiah would bring justice.

The Herodian regime was based on economic exploitation, which means it represents a zero sum game mentality, and that led him, as it has led many, many tyrants after, to turn to genocide.

” 16 Then when Herod saw that he had been tricked by the magi, he became very enraged, and sent and slew all the male children who were in Bethlehem and in all its environs, from two years old and under, according to the time which he had ascertained from the magi.” (Matt. 2:16 NAS)

This puts Herod, the alleged king of the Jews, in parallel with the Pharaoh of the Exodus, who also held to a system of economic exploitation and a zero sum game economic system which caused him also to turn to genocide. Herod has become another Pharaoh, another murderer of young Hebrew boys.

Perhaps that is why the escape of Jesus’ family FROM Israel INTO Egypt is described as a fulfillment of a prophecy about the Exodus:

” 13 Now when they had departed, behold, an angel of the Lord appeared to Joseph in a dream, saying, “Arise and take the Child and His mother, and flee to Egypt, and remain there until I tell you; for Herod is going to search for the Child to destroy Him.”

14 And he arose and took the Child and His mother by night, and departed for Egypt;

15 and was there until the death of Herod, that what was spoken by the Lord through the prophet might be fulfilled, saying, “Out of Egypt did I call My Son.” (Matt. 2:12-15 NAS)

Things had become so morally twisted that now there is an Exodus from Israel to Egypt and not the other way around.

If you read what I wrote previously about the economic pronouncements of the Virgin Mary, you already know that Mary expected her son to trigger an upending of the economic order. She predicted that somehow the birth of Jesus would cause the arrogant elites to be deposed from power. Herod saw that too, but from the other side of that revolution. In a sense, Herod and Mary agree on the significance of the birth of the Messiah; they simply disagreed about whether to support or oppose it. In that sense, Herod, with his finely tuned sense of self-preservation, was able to see what so many pietistic and otherworld Christian commentators have failed to see since then: that the coming of the Messiah changes not just hearts and souls, but also the rise and fall of nations and their economic systems.

Recently, Henry Kaestner was on the Steve Deace Show to talk about how capitalism and entrepreneurship facilitate our ability to love our neighbors. In response to questions about socialism and marxism, Henry reminded us that the impetus is on individual citizens to love one another as opposed to outsourcing this type of selflessness to the government.

Watch the full segment starting at 31:28 below.