Money

Where is the Good Samaritan?

The Rev. B. P. Campbell

[In this sermon Ben explores the dark side of individualism, isolation, and fragmentation—the unnecessary consequences of economic growth—in the aftermath of the tragedies in Dallas, St. Paul, Baton Rouge, and other cities last week.  --JW]

Reference: The Good Samaritan (Luke 10:25-37)

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"Now in the 21st century, as the mobility and disloyalty of money take over, we are slipping into greater fragmentation.  Too many ditches.  Too many robbers.  Too little community.  Too much despair."

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            Just then a lawyer stood up to test Jesus. “Teacher,” he said, “what must I do to inherit eternal life?” He said to him, “What is written in the law? What do you read there?” He answered, “You shall love the Lord your God with all your heart, and with all your soul, and with all your strength, and with all your mind; and your neighbor as yourself.” And he said to him, “You have given the right answer; do this, and you will live.” But wanting to justify himself, he asked Jesus, “And who is my neighbor?”

            Jesus replied, “A man was going down from Jerusalem to Jericho, and fell into the hands of robbers, who stripped him, beat him, and went away, leaving him half dead. Now by chance a priest was going down that road; and when he saw him, he passed by on the other side. So likewise a Levite, when he came to the place and saw him, passed by on the other side. But a Samaritan while traveling came near him; and when he saw him, he was moved with pity.
He went to him and bandaged his wounds, having poured oil and wine on them. Then he put him on his own animal, brought him to an inn, and took care of him. The next day he took out two denarii, gave them to the innkeeper, and said, ‘Take care of him; and when I come back, I will repay you whatever more you spend.’ Which of these three, do you think, was a neighbor to the man who fell into the hands of the robbers?” He said, “The one who showed him mercy.”

            Jesus said to him, “Go and do likewise.”

            This week, maybe this year, we’ve all been living on the Jericho Road.

            We’ve built a nation of Jericho Roads.

            Where is the Good Samaritan?

            It’s as if we were living right in the middle of the story which Jesus told the lawyer.  “Teacher,” he said, “what must I do to inherit eternal life?”  “What have you been taught?”  Jesus asks.  The man gives the right answer – Love God and your neighbor.  But then he asks another question.  It is on this question, and Jesus’ answer to it, that God’s Holy Spirit builds the kingdom of God.

            “Who is my neighbor,” the man asks.

            Jesus’ answer is a story – a story that breaks the rules of religion and sets men and women free – a story whose basic commandment is to Live, to Live imaginatively, to tackle the issues that present themselves today without prescription or instruction – only the instruction to love our neighbor as ourselves.

            This week, maybe this year, we’ve all been living on the Jericho Road.

            We’ve built a nation of Jericho Roads.

            Where is the Good Samaritan?

Continue reading "Where is the Good Samaritan?" »


Zywicki and Smith examine the effect of behavioral law-and-economics on consumer financial protection

Mark D. White

Courtesy of the Mercatus Center at George Mason University, Todd Zywicki and Adam C. Smith have a new paper titled "Behavior, Paternalism, and Policy: Evaluating Consumer Finance Protection," in which they critique the impact of behavioral law-and-economics on the creation and operation of the Consumer Financial Protection Bureau:

This paper examines the relationship between behavioral law and economics (BLE) as a policy
prescription platform and its influence on the regulations emerging from the Consumer Financial Protection Bureau (CFPB). We show how these regulations are inconsistent with the intent and purpose of improving consumer choices. We further demonstrate that the selective modeling of behavioral bias in the BLE framework causes an overestimation of the ability of regulators, who in actuality use inefficient, heavy-handed rules based on little if any real empirical findings of “consumer irrationality.” Accordingly, the broader lesson on the misapplication of behavioral economics goes beyond the ill-considered policies emerging from the CFPB.

Near the end of the introduction (on p. 7), they detail their issues with this approach to consumer protection:

1. Political realities belie the attempts of behavioral theorists to construct policy corrections.
2. Actual political decision-making is susceptible to a number of distorting influences, most importantly bureaucratic overreach, behavioral bias on the part of the policymaker, and lack of appropriate information regarding consumer choices.
3. Bureaucrats do not hold the same preferences about political outcomes as behavioral theorists do. They are affected by self-interest like anyone else, which can cause deviations from prescribed policy measures.
4. Regulations based on behavioral findings tend to lean toward heavier forms of intervention that eliminate viable, alternative forms of exchange, thus impeding innovation and creativity in the marketplace. This in turn limits the overall amount of market activity (in this case consumer credit).
5. Policymakers are unlikely to incorporate evidence-based analysis into their decisionmaking in a manner consistent with the scientific method. Instead, policymakers are susceptible to “confirmation bias” in evaluating evidence.

I emphasize #2 and #5 and the CFPB itself in The Manipulation of Choice—in particular the last point in #2 about information—but Zywicki and Smith delve much more deeply and broadly into problems with the CFPB itself, contributing a much needed public choice perspective to the issue and concluding with recommendations to improve the operation of the CFPB. This is an essential read for anyone interested in behavioral law-and-economics or "nudges," regulation, or paternalism in general, as well as the CFPB in particular.


The Currency of Justice and Freedom?

Mark D. White

OmalleyWhen economists debate the neutality of money, they are concerned with its effects on real output and growth. But other scholars, such as philosophers and sociologists, consider the social neutrality of money--that is, whether the pervasive use of money in society has a qualitative effect on the way we think about both market and nonmarket transactions.

A particularly fascinating element of this discussion deals with money's role in the legal system, such as in tort damages, contract remedies and criminal fines. The reliance on monetary compensation is rarely questioned in tort or contract cases, and law-and-economics scholars in particular favor the use of fines over imprisonment in most cases because of the trivial resource costs and deadweight losses. But they also recognize that imposing fines for many crimes, such as violent crimes, is inappropriate and unjust.

In his 2009 book The Currency of Justice: Fines and Damages in Consumer Societies, Pat O'Malley critically examines this neglected aspect of the legal system:

Fines and monetary damages account for the majority of legal sanctions across the whole spectrum of legal governance. Money is, in key respects, the primary tool law has to achieve compliance. Yet money has largely been ignored by social analyses of law, and especially by social theory.

The Currency of Justice examines the differing rationalities, aims and assumptions built into money’s deployment in diverse legal fields and sanctions. This raises major questions about the extent to which money appears as an abstract universal or whether it takes on more particular meanings when deployed in various areas of law. Indeed, money may be unique in that it can take on the meanings of punishment, compensation, denunciation or regulation.

The Currency of Justice examines the implications of the ‘monetization of justice’ as life is increasingly regulated through this single medium. Money not only links diverse domains of law; it also links legal sanctions to other monetary techniques which govern everyday life. Like these, the concern with monetary sanctions is not who pays, but that money is paid. Money is perhaps the only form of legal sanction where the burden need not be borne by the wrongdoer. In this respect, this book explores the view that contemporary governance is less concerned with disciplining individuals and more concerned with regulating distributions and flows of behaviours and the harms and costs linked with these.

I admit I was made aware of this book only by a mini-symposium in the latest issue of Social & Legal Studies (20/4, December 2011) titled "The Currency of Freedom," in which three scholars from different areas of the law discuss O'Malley's book, offering unique and opposing viewpoints. From David Campbell's introduction:

In The Currency of Justice which appeared in 2009, Pat O’Malley made a number of extremely interesting observations about the effect of the institution of money as a form of governance on the legal and social systems of the advanced capitalist societies. By making possible the use of damages in civil law and fines in criminal law, money has had a profound impact on the form and substance of tort, contract and criminal law, the nature of which is insufficiently understood or even researched, O’Malley’s own previous work notwithstanding. Though he discusses many of the criticisms of money’s effect on the legal and social systems, and these are further discussed in the course of this Dialogue and Debate, in my own view the particular importance of O’Malley’s argument is that it calls into question the essentially negative evaluation which left-wing social and legal thought places on money. In a passage which is quoted in my contribution, O’Malley says:

Perhaps monetisation, the saturation of life by money, is after all not antithetical to the valuation of individual uniqueness and its high estimation. Maybe money is a medium through which new forms of liberalism, new forms of freedom, simultaneously constitute meaning and are constituted by it. (O’Malley, 2009: 15)

In this Dialogue and Debate, comments on the implications of The Currency of Justice for our understanding of tort (Jenny Steele), contract (myself) and criminal law (David McCallum) are followed by a response by O’Malley. A synopsis of the argument of The Currency of Justice is given at the beginning of this response.

The individual papers in the symposium are: