About Timothy Terrell

Timothy Terrell is associate professor of economics at Wofford College in Spartanburg, SC, and is an Associated Scholar with the Ludwig von Mises Institute in Auburn, AL. He has his Ph.D. in economics from Auburn University.

You Can Teach Basic Economics to Your Kids: Part 3

March 13, 2013 By Leave a Comment

In this 5-part guide, I’m providing help for parents who want their children to understand economics better, but don’t know where to start. Prior posts include: Part 1: Scarcity and Stewardship and Part 2 – Production.

Part 3: Money, Markets, and Trade

Market function is the heart of economics. We would like to understand what the role of money is, and how prices come to be. Countries that make it easier to trade tend to be far more prosperous than those that make market activity difficult.

Key Concepts You’ll Be Explaining

Trade occurs where people value the same goods differently.

Suppose I have a violin, which I don’t know how to play. You are a violin prodigy who accidentally destroyed your only violin while backing out of the driveway. Suppose you also have an iPad given to you as a gift. It’s an extra for which you don’t have much use. I value the iPad more than the violin, and you value the violin more than the iPad. We might be able to arrange a trade which would leave both of us better off.

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You Can Teach Basic Economics to Your Kids: A 5-Part Guide (Part 2)

February 26, 2013 By 1 Comment

In this five-part guide, I’m providing some help for parents who want to teach their children basic economics, but aren’t sure where to begin. In each part, I provide a small set of accessible resources to help explain the basics to parents and students. Here are the five parts:

Part 1: Scarcity and the Necessity of Stewardship
Part 2: Production
Part 3: Money, Markets, and Trade
Part 4: Entrepreneurship, Profits, and Losses
Part 5: Economics and Government

Part 2: Production

Producing any good requires mixing three ingredients: human effort, tools, and raw materials. Economists refer to these three ingredients as labor, capital, and land (or resources).

Key Concepts You’ll Be Explaining:

Production tends to be higher when people have more and better tools to work with–economists call these tools capital–and therefore an economic system that makes it easier to develop and accumulate these tools will tend to result in greater prosperity. [Read more...]

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You Can Teach Basic Economics to Your Kids: A 5-Part Guide (Part 1)

February 19, 2013 By 2 Comments

When people ask what I do, I confess that I teach economics. They often respond with a comment about how awful or difficult their high school or college economics classes were.

It’s true that few people enjoyed economics in high school or college. (There’s actually a good reason for that, but it’s too long to explain here.) The fact is, economics is one of the most important subjects to understand because we make economic decisions every day. Our world is profoundly affected by economics.

Basic economic principles are not beyond the understanding of most bright middle school and high school students. In earlier posts, we’ve talked about 10 Simple Ways to Teach Your Kids about Economics. There are other posts on this blog as well as our Economics for Everybody video series with R.C. Sproul Jr., that explains economics.

In this 5-part guide, my goal is to provide help for parents whose economics is a little rusty (or a lot rusty!) and who don’t know where to start when covering economics.

I’m not trying to explain economics as a textbook would. What I hope to do is provide some navigation through the vast amount of material available online and elsewhere in order to make the subject less overwhelming. The resources are chosen for their accessibility. Some are good for young readers, others are more suited for older students and non-economist parents. Here are the five parts:

Part 1: Scarcity and the Necessity of Stewardship
Part 2: Production
Part 3: Money, Markets, and Trade
Part 4: Entrepreneurship, Profits, and Losses
Part 5: Economics and Government

In each part, I’ll provide a few resources that might be of some help for parents. (BTW – much of this fits into the National Council for Economic Education’s 51 economic concepts common to all state high school standards for economics classes, particularly the “Fundamental Economics” and “Microeconomics” categories.)  [Read more...]

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The “Rights of the Poor,” Justice, and Protection (Part 3 of 3)

February 14, 2013 By 2 Comments

In two earlier posts (Part 1 and Part 2), I addressed concerns about the libertarian view that taxation for the purpose of transferring wealth to the poor is equivalent to theft. I’m looking at Matthew Tuininga’s posts on this in particular, but I think his thoughts are pretty widespread among Christians.

I believe Tuininga’s main point was to show that this view is not consistent with the Christian tradition, but there is a lot packed into his posts on this subject that I would also like to address.

In a discussion following his initial blog post, Tuininga says that “if the poor are not receiving justice, then the government has to intervene to ensure that they do.” By this he means that if the poor have not received sufficient charity from those who are able to give, the civil magistrate should (as a last resort, he grants) tax them and transfer the proceeds to the needy.

What about Tuininga’s use of the term “justice”?

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The “Rights of the Poor” and John Calvin (Part 2 of 3)

February 13, 2013 By Leave a Comment

In an earlier post, I discussed Matthew Tuininga’s complaint that libertarian-style arguments on taxes are not consistent with the Christian tradition. Tuininga tries to show that Ambrose, Augustine, Aquinas and Calvin would not have supported libertarian views on taxation for welfare.

The libertarian argument Tuininga is arguing against says that taxation for welfare programs is equivalent to theft. (Hard-core libertarians would say that taxation for any programs is equivalent to theft, but we’ll go along with Tuininga here and deal with “lite” libertarianism.) Tuininga followed up his initial post with another that discussed, in part, the views of John Calvin.

In this post, I’d like to look briefly at the views of Calvin on charity and welfare. I’ll follow up in the next post about Tuininga’s use of the terms “justice” and “protection,” as well as the importance of the question of whose responsibility it is to deal with uncharitable people.

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What about the “Rights of the Poor”? (Part 1 of 3)

January 18, 2013 By 3 Comments

Last fall, I came across a blog post on Matthew Tuininga’s blog “Christian in America” titled “Does the Christian tradition agree that property rights trump the rights of the poor?” Tuininga disagrees with the libertarian-like argument that he summarizes as follows:

My money is my own property that I earned. The government did not give it to me. Therefore, the government has no right to confiscate my property in order to give it to someone else, except for purposes of protection, national defense, or associated government functions. For the government to confiscate my property for purposes of poor relief is not legitimate taxation. It is theft.

Tuininga “take[s] issue with arguments that suggest people have absolute property rights that the government cannot infringe upon, not even for the sake of justice for the poor.” He then takes a quick trip through church history in an effort to show that Ambrose, Augustine, Aquinas, and Calvin would not have supported that libertarian-style argument.

The sound-bite defenses of socialism, libertarianism, or conservatism that we often see in Facebook feeds, memes, and blogs have their limits. I think there are some problems with the view Tuininga is criticizing, as it is stated. But I think Tuininga is a long way from showing that the State has any role in welfare programs.

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The Economics of John Calvin

October 10, 2012 By 2 Comments

Ask someone what Calvinism has to do with economics, and you’ll probably get a blank stare.

Some might remember the phrase “Protestant work ethic” that is vaguely associated with an image of a plainly dressed, dour-faced Puritan. Or a few might think of Calvinists as being generally business-minded, perhaps because of a book by Max Weber entitled The Protestant Ethic and the Spirit of Capitalism.

But Calvin’s work has had such a powerful impact on the way we live in the freer countries of the world that we should become a little more familiar with what he said about business, economics, and politics. [Read more...]

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QE3 and Crony Capitalism

October 8, 2012 By Leave a Comment

What should we think about news that QE3 – the latest round of bond-buying by the Federal Reserve – has boosted bank profits?

The London Financial Times reported that the Fed’s QE3 program has resulted in a larger “spread” between what banks pay for the money they use for mortgage lending and what banks earn from those loans.

To put it in perspective, the spread is now about 1.6%, up from 1.44% prior to QE3. Of course, both of these numbers are considerably higher than the 0.5% spread banks earned on average from 2000 to 2010. This shouldn’t surprise us, though.

Recently, I posted that the Fed’s commitment to “quantitative easing” (or money creation) not only had ethical problems, but was likely to result in further economic difficulty. I wrote that “[s]ome, who benefit from the government’s access to newly created dollars, will be enriched by the policy, but many others suffer from higher prices.”

Clearly, banks are already benefiting. And those few who are able to refinance homes at lower interest rates will see a gain, as well as those homeowners who may see increases in home prices as a result of the easier access to mortgage loans.

But we should not make the mistake of thinking this is good for the overall economy.

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Is QE3 Ethical?

September 19, 2012 By 4 Comments

Last week, the Federal Reserve announced it would engage in bond buying in a new effort to stimulate the economy.  Officially, this is “QE3,” or the third round of “quantitative easing.”

What that means is that the Fed will increase the money supply in order to drive down interest rates and make it easier for Americans to borrow and spend. For QE3, the Fed said it would buy $40 billion of bonds a month of indefinitely. And that’s on top of an additional $45 billion a month the Fed is spending on another program to stimulate the economy (it will continue to do this until the end of 2012.)

But let’s be honest: there are both ethical and practical problems involved with expanding the money supply. Most people don’t think about the ethics of inflation, but it’s our duty as Christians to recognize the ethical implications of our central bank’s economic actions. [Read more...]

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Misunderstanding Markets

September 6, 2012 By 2 Comments

Often in the economics classes I teach, as well as in the other discussions I have on economics and government, I face an array of misunderstandings of what free markets mean. Let’s look quickly at two:

First, there is the idea that “economic power” is in the same category as “government power.” Equating the two is an effort to turn around a common complaint of market advocates and use it to support the the expansion of government. Jim Wallis, CEO of the left-wing Christian “Sojourners” ministry, writes:

The radically anti-government ideology of the current right wing Tea Party ideology is simply contrary to a more biblical view of government, the need for checks and balances, the sinfulness of too much concentrated power in either the government or the market, the responsibilities we have for our neighbor and the God-ordained purposes of government — in addition to the churches — in serving the common good and, in particular, to protect the poor.

Although the initial language about a biblical view of government sounds convincing, it is fraught with misunderstanding. One mistake is this: “serving the common good” and “protecting the poor” in the sense of invasive government regulation and redistribution of wealth [something Wallis and others are quick to advocate] are not “the God-ordained purposes of government.” They are the province of churches, organizations, and individuals. Such government expansion just concentrates more power in government hands.

And we all know what “concentrated power” looks like in the hands of government. There is a long history of dictatorships, autocracies, oligarchies, and expansive, smothering socialist bureaucracies in this world. Ultimately, that power is a power of the sword: threatening, coercive, and violent.

But what is “concentrated power” in the market? Is it amassed wealth? [Read more...]

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