Paying for the Free Market

I read in the Winter 2016 issue of THE WHEEL (a new journal of Orthodox literature and thought) the article by Anthony Artuso, “On Dominion and Progress: Sacramental Action in a Secular World.”     Artuso makes a few interesting claims that I piqued my interests.  He says that …

“The original political idea of the  Enlightenment was to create a religiously neutral public sphere where governments supported by the will of the people, would make decisions to enhance  overall welfare.”

The proponents of the 18th Century European Enlightenment and their successors felt some oppression from the existing religious structures in Europe and the wars between Christians which were frequent at that time.   The movement toward separating church and state was an effort to disentangle society, government and religion in the hope that people might behave more rationally and less passionately in disagreements.  By pushing religion to a more private sphere, some thought people would behave more rationally.  The reality is that people don’t need religion to become passionately driven on issues as a number of communist atheist tyrants have shown.  Religion does not automatically lead to irrationality, nor does the absence of religion guarantee humans will be reasonable.

But relying purely on human reason, allowed them to imagine that commerce/ the market/ capitalism would serve the people by keeping individual greed in check.  The market had an interest in a moral order and in spreading the benefits it brought about to a wide range of people (or so they believed).   Artuso says the market was to be

“always under the guidance and management of the state, which alone was entrusted with safeguarding the interests of all.”

The state was in their idealist view the preserver of reason.  This may have been the ideal, but this ideal  in the 18th and 19th Centuries for Enligtenment advocates, but it must not have been working which led President Reagan to identify the government as the problem, not the solution to the problem.  But then, even under Reagan, the government grew and the national debt doubled.  The government may have been the problem, but his policies enlarged the problem.

Artuso says the drive for deregulation of the market was a response to a feeling that the government wasn’t in fact a benevolent guide for the free market but could be turned into a monstrous tool of political interest groups.  So the new idea came to be to free the market from government oversight.  Artuso puts it this way:

“We have entrusted ourselves to the invisible hand of the market which we vaguely conceive as being wielded for our benefit by the god of progress.”

Therein is a dilemma.  Adam Smith, the patron of the free market, apparently thought the government was to manage the market for the public good.  But in modern America, the government came to be viewed as part of the problem because the government proved not to be a neutral force in the free enterprise system.  It was a huge force that could be manipulated by interest groups to carry out agendas other than the general welfare.

But, the market freed to move as it wishes without government oversight becomes a large and largely undirected force.   What or who guides the market and for what purpose?   Perhaps we are to think that the unguided force of commerce is always benevolent, but what would make us believe that is not clear.  The market can be manipulated by organized forces with particular agendas.  Is it too big to allow it to go where it will?  Or in fact  will some clever folks be able to guide it to their own benefit without regard to the general welfare?

The market is driven by greed if by anything, and certainly does not want to keep greed in check.  The market imagines unbounded growth which, at least in recent years, certainly has benefited the wealthiest people.  Unbridled growth in the market (as well as in the government!) seems to fit the American attitude that wealth is a god which we should always serve.

Our money says on it, “In God we Trust“, but perhaps the god we trust in is money itself.   St. Paul warned that “the love of money is a root of all kinds of evil” (1 Timothy 6:10).  We tend to think on the other hand that money is THE solution to every problem.  [Think also about how much money gets invested in our elections – some do think money can influence the direction of governement].   Wealth and more wealth are assumed to be always a good, the more the better.   The notion of any kind of self-control by individuals, commerce or the government is out of favor these days, or perhaps in America always is.

Wealth of course is not a god, is not infinitely wise and can, as we have experienced throughout history, suddenly disappear throwing the world into depressions and recessions.    Wealth is not a neutral force unaffected by the greed and powerlust of people.   It certainly is a major force in human life and history, but it never claims to be benevolent towards humans.   It is always being pushed and pulled in various directions.  And to imagine that ever increasing wealth can only produce more good, we might ask: Would an infinitely rich Hitler have created a better world?  To imagine that wealth or the market are simply neutral, and unmanipulable is to ignore history where people were always striving to use the market for their own goals.

Besides all of this, studies have continuously shown that increasing wealth does not automatically equate with people being  happier.   Certainly it doesn’t guarantee people being wiser, kinder, more generous, more humane, more civic minded.  Money can be a good servant, but it is a bad master.

People are attracted to power, and the free market represents a huge power in the world.  People have and will continue to attempt to use government, wealth, the market, for their own ends  This is the fact that we have to be aware of and prepare for.

Three Political Thoughts

I have not commented on the political developments in this Presidential election year because I have not had a lot to say.  There is something about the American form of democracy that I don’t like.  The campaigns are completely media driven with sound bites far more important than substance. Negative campaign ads seem to rule the day.  Being little attuned to the media since I almost never watch TV, I find it hard to attune to campaigns that are totally designed for TV and the media.   The campaigns generate more heat than light, as they say.  Some of course contend that democracy when it works is messy, loud, based in ad hominem attacks, appealing to fears and emotions rather than to real policy (one can see these signs all the way back in the Adams vs. Jefferson election of 1800).  And obviously if everyone were simply in agreement a one party system works fine.  When, however, there are real disagreements, one should expect contentious campaigns.  I realize all of this but still am not fond of the way we do elections.  I think I heard in France that in the last several days of a campaign, no TV or radio ads are permitted at all.  That idea would suit me.  Let the candidates stand on their own words not on the hundred millions of dollars spent on media imaging and spin.

The Spring 2012 edition of THE WILSON QUARTERLY cited two studies which cast doubt on whether the whole series of Republican debates really benefited the voters in any meaningful way.  One criticism is that  “debate moderators of 2011 sometimes  seemed more interested in stoking conflict than in eliciting meaningful answers—and the candidates weren’t given enough time for meaningful answers anyway.”  Of course that makes for better television drama than having candidates calmly state their positions.  Maybe that is what the newspapers are for!    Additionally, “Debates have allowed the press to elbow their way in front of voters for commercial purposes.”  It’s as if the press to justify its own existence,  not to mention is self-importance, makes sure its presence in the debates is known.  Everything is mediated through the press who also digests it all and feels the need to interpret everything to the voters who apparently can’t think of anything to ask and wouldn’t understand the answers anyway.  “During the  20 debates between May 5, 2011, and mid-February, 2012, the NYU team counted 46 questions about social issues (abortion and gay rights), four about the Arab Spring, two about climate change, one about small business – and 113 about campaign strategy and negative advertising.”    So apparently the biggest concern for the future leader of the free world has to do with campaign strategies and the media.  The media inserts itself as the biggest issue for Americans to be concerned about.

Media Nation - "Television the drug of the nation"

The media makes sure that people pay attention to the media and wants to ensure that our only access to the candidates is through the media.    “Pay attention to us,” is their motto.  Voters would do well to turn them off completely.  As voters, we won’t take time to read speeches or position papers.  We want sound bites and bullet points, which the media and the candidates obligingly provide.  No wonder candidates give stump speeches even in answer to debate questions.  They know what the media will focus on and we the voters seem willing to accept that impoverished campaign diet.

I found more encouraging the 23 April 2012 TIME magazine article, Inside The Presidents Club­­­­ by Nancy  Gibbs and Michael Duffy.   It is a glimpse into their new book, The Presidents Club: Inside the World’s Most Exclusive Fraternity.   What I saw (maybe because it is what I wish were true) is that despite all the adversarial political rhetoric which may occur between the various presidents especially when they campaigned against each other,  the presidents do find a way to cooperate with and use the experience of their predecessors.  Some have become friends but all found ways to work with each other.   They do realize they are the president of the United States and all its people, not just the leader of their party’s ideological wing.  That is far more appealing to me then the attack ads they use to get elected.  I know many who prefer that our presidents remain ideological enemies with presidents from a different political party.  I find no particular comfort in that partisanship.  I prefer presidential statesmanship to political brinkmanship.

Finally, and with a little sense of humor I enjoyed from science, DISCOVER’s web page article, 5 Ways to Turn a Liberal Into a Conservative (At Least Until the Hangover Sets In)  by Chris Mooney. 

Mooney says research has shown that there are five things that can make a liberal vote Republican.  First, liberals become more conservative when something consumes more of their mental attention.  When liberals are distracted with things that demand their attention they think more like conservatives.  On the other hand, “Cognitive load did not appear to change the view of conservatives in the study.”

Second, “Alcohol intoxication is not unlike cognitive load, in that it cuts down the capacity for in-depth, nuanced thinking, and privileges economical, quick responses. Sure enough, in a recent study of 85 bar patrons, blood alcohol content was related to increased political conservatism for liberals and conservatives alike. … higher blood alcohol content was associated with giving more conservative answers.”

Third, “Subjects under time pressure were more likely to endorse conservative terms.”

Fourth, when people were asked political questions near a hand sanitizer or were asked to use a hand wipe before responding, they became more conservative in their opinions.

Fifth, studies show that fear causes us to become more conservative.  Being afraid moves us politically to being more pro-military and with favoring the death penalty.

So, “priming people to feel either fear or disgust (or the need for cleanliness) seems to favor political conservatism, and politically conservative candidates.”  Research on the other hand, does not show any similar ways to make conservative become more liberal.

Such is the nature of politics.

The Great Depression and the Great Recession (2)

This blog is the conclusion of The Great Depression and the Great Recession (1) in which we consider two articles which compare and contrast the 20^th Century’s  Great Depression with the 21^st Century’s Great Recession.  In this blog we are looking at “The Debt Bomb” by Louis Hyman from the Winter 2012 edition of the WILSON QUARTERLY.   Hyman sets the scenario:

“In the last hundred years, economic inequality in America has peaked twice: in 1928 and in 2007. It is no coincidence that our periods of greatest inequality have coincided with excessive lending. An industrial economy based on mass production requires mass consumption. Either credit or wages must be provided to keep the wheels of industry turning. When wages stagnate and inequality widens, debt gains nearly unstoppable momentum.”

The Great Depression came to an end during WWII after which there was a great economic boom in America and other parts of the world.

“Living in mortgaged homes, driving in financed cars, postwar Americans relaxed at new shopping centers. They borrowed more but also earned more, which meant that while the habit of borrowing grew, debt as a share of income remained relatively stable. Consumer credit kept factories humming, and those well-paid industrial jobs kept the debt burden contained. Banks and finance companies rather than capital markets funded the borrowing, which kept a leash on the credit available. The lender always had skin in the game.

The origins of the shift from a relatively egalitarian manufacturing economy to an unequal financial economy can be seen in the midst of this prosperity.”

The boom, as history has shown in capitalist countries is only part of a cycle which also has a down side.  The prosperity following WWII  changed as “…consumers also began to rely more on borrowing to make ends meet. The careful balance between rising debt and rising income was coming undone.”

The modern American economy began to shift away from manufacturing and more toward profit making through financing – investing and lending which tempted people with potential huge profits over short periods of time.

“As profits in other parts of the economy receded, the profits of this kind of lending exploded. And as consumer debt began to crowd out business debt, less money was available to invest in productive businesses and create the kinds of good jobs that had made America’s postwar formula work.”

“When Jack Welch took the helm at General Electric in 1981, largely on the strength of his success in managing the company’s consumer finance division, his vision was clear, he would later write: ‘Finance is not an institution—it has to be . . . the driving force behind making General Electric ‘the most competitive enterprise on earth.”’  Some older divisions, such as the lighting operations, would be continued, but the profits would be reinvested in financial products.”

“While GE’s profits grew, its manufacturing businesses shrank. In 1980, the year before Welch took control, the company had employed 285,000 people in the United States. By 1998, the U.S. payroll was down to 165,000. For Welch, and for successful American corporations generally, profits mattered more than all those well-paid factory jobs. The incentive was plain. CEOs had a responsibility to the shareholders to produce more profit. A dollar invested in debt made more money than a dollar invested in a factory. For the country as a whole, however, the rising profitability of finance came at a devastating cost.

As finance gained in strength and in its importance to the American economy, bankers increasingly complained that their creativity was being hampered by those pesky regulations that had safeguarded the economy since the 1930s.”

To me what Hyman is portraying is that manufacturing creates jobs that pay well and thus prosperity is spread to a great number of people (the workforce).  On the other hand, the movement in an economy to becoming increasingly based in financial products reduces the workforce thus causing  a loss in good paying jobs and concentrating wealth in the few.   The effects on the nation’s economic well being is negative – as was seen in the 1928 and 2007, both years in which the American capitalistic economy collapsed.

“Contrary to what many politicians and pundits have claimed, the upsurge of securitization was not simply a product of ‘deregulation.’ Regulations may have changed to promote a certain kind of financial system, but at no point did the state abandon the market to itself. It was the interplay of public and private purposes and mechanisms—Freddie Mac, S&Ls, mortgage-backed securities—that made these new sources of capital possible.”

Hyman offers a warning that there are lessons to be learned, or history will simply repeat itself.

“That structural connection between economic inequality and the nation’s financial crisis is still largely ignored. The dangerous investment choices that precipitated the crisis are but a symptom of this underlying cause. Income stagnation continues, pushing Americans toward greater borrowing and less saving. Unemployment remains extraordinarily high. And those who do find work often have to accept lower wages.

Meanwhile, as those at the bottom hang on, profits continue to concentrate at the top. Without a good alternative, capital continues to be invested in consumer debt rather than in the businesses—big and small—that provide jobs. Bankers are once again skittish about lending. If we are to find solutions to the crisis, it is more important to ask why so much money flowed into mortgage-backed securities and so little into productive businesses than to search for villains to blame for what went wrong.

During the Great Depression, New Deal policymakers figured out ways to harness the resale of debt, but they recognized that increasing the supply of credit without also increasing wages would only lead to another crash. But in the last 40 years, debt levels have climbed while wages have remained stagnant because securitization made it much easier to lend to consumers than to businesses. That continuing imbalance is a threat to the long-run stability of the American economy.”

The Great Depression and the Great Recession (1)

Blogging for me is a way to express some thoughts and reactions to things I read or learn about.  As I’ve note before one doesn’t have to know something to blog, one only has to have an opinion which one is willing to express.  So I’m going to venture off onto economic issues because I recently read about them, first in  the WILSON QUARTERLY 2012 article “Revisiting the Great Depression” by Robert J. Samuelson.   I found interesting his thesis that

“The role of the welfare state in today’s economic crisis recalls the part played by the gold standard in the calamitous 1930s.”

“Just as the gold standard amplified and transmitted the effects of the Depression, so the modern welfare state is magnifying the effects of the recession.”

I’ve read different comparisons between the 20^th Century’s Great Depression and the recent Great Recession of the 21^st Century, but Samuelson is the first I’ve seen indicate that the current “welfare state” may have the same drag on the economy that the gold standard had in the 1930’s.   The gold standard is thought by some to have hamstrung the economy in the 1920’s and 30’s limiting growth by limiting the amount of capital available to be invested in the economy.    Samuelson defends comparing the effects of the gold standard on the economy of the 1920’s with the effects of the modern welfare state on the modern economy:

 “Casting the welfare state in this role will strike many as outrageous. After all, the welfare state—what Americans blandly call ‘social spending’—didn’t cause the 2007–09 financial crisis. This dubious distinction belongs to the huge credit bubble that formed in the United States and elsewhere, symbolized by inflated real estate prices and large losses on mortgage-related securities. But neither did the gold standard directly cause the 1929 stock market crash. Wall Street’s collapse stemmed, most simply, from speculative excesses. Stock prices were too high for an economy that was already (we now know) entering recession. But once the slump started, the gold standard spread and perpetuated it. Today, the weakened welfare state is perpetuating and spreading the slump.

What has brought the welfare state to grief is not an excess of compassion, but an excess of debt.”

Samuelson goes on to describe how the US pulled out of the depression because of certain demographic truths.  But he also notes what factors today are not exactly the same as in the time after the Great Depression.  Our climb out of the Great Depression had some factors in its favor which are not true today.

“But this system required favorable economics and demographics—and both have moved adversely. A younger population was needed to lighten the burden of supporting the old, the largest claimants of benefits. Rapid economic growth was needed to generate the tax revenues to pay for benefits. Indeed, the great expansion of benefits started in the 1950s and ’60s, when annual economic growth in Europe and the United States averaged about four percent or more, and the expectation was that this would continue indefinitely. Long-term economic growth is now reckoned closer to two percent a year…”

But the unfavorable demographics in Europe and the US during the current economic crisis are not those of the post-Great Depression times.  So modern governments have tried a different set of solutions to the economic crisis:

“The means of escape from these unhappy trends was to borrow. Some countries with extensive welfare systems that didn’t borrow heavily (examples: Sweden and Finland) have fared well. But most governments became dependent on bond markets.”

The results of government efforts have to date not been totally successful, though some would argue a point harder to prove: what was done prevented an even worse economic disaster.    Samuelson offers a moral to the story:

“The mistake, popularized largely by economists, was to believe that regulation of the economy could be derived from theory and converted into practical precepts for policy. The reality is that economic life is not solely described or dictated by rhythms suggested by economic models. It moves in response to institutions, technologies, beliefs, and cultures that follow their own logic, sometimes with completely unexpected, mystifying, and terrifying consequences.”

The world’s economy has proven to be more difficult to push into recovery than many had hoped.  President Hoover in the 20th Century was criticized for not doing enough to stimulate the economy because of his conservatism; President Obama has been criticized for doing too much because of his being liberal.  But the two crises represent different times with efforts made having results that cannot exactly be compared to each other.   As in chaos theory, there are so many factors, and so many unpredictable factors that shape the world’s economy that trying to predict the exact effects of certain “stimulus” efforts  may not be possible.

In the next blog I will look at another WILSON QUARTERLY article, “The Debt Bomb”,  which analyzes the causes of the ongoing Great Recession.

Next:  The Great Depression and the Great Recession (2)

Resolutions for the Year of the Lord 2012

The old & the new

Some people make New Year’s Resolutions, but for many of us Christians, the resolve is one that we make related to our sacramental confessions – to do God’s will in all things.  Here are a few ideas from St. John Chrysostom for what we might commit ourselves to this year in our effort to follow Christ:

“The sources of our existence have been made common so that we all might live more securely. God has made you rich; why do you make yourself poor?   He has given you money, not to shut it away to feed your own destruction, but that you can pour it forth to the benefit of others and for your salvation.”

It is hard to convince ourselves that we can afford to tithe – or that we cannot afford not to tithe, since the tithe is the Lord’s to begin with.  Thankfulness of spirit can lead to joyful, generous giving.   Entitlement thinking – “everything I have is mine” – can lead to that poverty which Chrysostom mentions above – “you’ll never be rich because you are greedy” (as was told the baker in one of the legends explaining why he abandoned greed and began giving a baker’s dozen to his customers).  Thoughts like “I deserve wealth and prosperity” are also a form of entitlement thinking.  Entitlement thinking leads to seeing others as a threat – “they” want to take away my entitlements” – which causes us to lose love for one another.

“God has also made the possession of riches unstable so that the intensity of man’s madness for it might slacken. Let us not consider riches to be a great good.”

The instability of the economy, the stock market, investments and retirement funds – this is not merely the risks of capitalism, but Chrysostom says is part of God’s plan to teach us not to greedily trust in riches.  Obsessing over profit and prosperity is for St. John a form of insanity which possesses a great many people.   Wealth does not equal virtue.  Wealth in itself is not the greatest virtue (= good).  Love is the greatest virtue and good.

“The great good is not the possession of money, but to posses the fear of God and piety. A righteous man, even if he were the poorest of mortals, would need to but spread forth his hands toward heaven and call upon God, and the clouds would pass away! But gold, saved in abundance, is more useless than clay for delivering one from impending calamities.”  (St. John Chrysostom,The Rich in this World, pgs. 6-7)

The pursuit of happiness – a declared right for Americans.  Yet often we mistake the pursuit of wealth for this happiness.   Indeed wealth can give us a sense of power and well being, but that also can be deceptive.  Wealth is one of those things for which an appetite is never satisfied.  When is enough enough?   What are we willing to sacrifice to gain just 10% more?   Freedom or friendship or faith?  Are we willing to kill or force others into slavery and poverty so we can have 10% more wealth?

What is the relationship between loving God and neighbor and our own wealth or pursuit of happiness?   This is the moral question we must ask ourselves for our personal wealth can never be separated from the ethics taught by Christ in the Gospel.

Ethics and Economics

I’ve been slowly reading through John Medaille’s TOWARD A TRULY FREE MARKET: A DISTRIBUTIST PERSPECTIVE ON THE ROLE OF GOVERNMENT, TAXES, HEALTH CARE, DEFICITS, AND MORE.    As I’ve acknowledged in previous blogs I have no formal education in economics, so it often is incomprehensible to me, and I will not here defend or critique the book.

Medaille offers a rather somber evaluation of modern economics and thinks the ongoing economic crisis worldwide is not an aberration but really the end result of modern economic, capitalistic policies.  One thesis of the book is that in an effort to make economics a hard science (rather than a mere social science) economists jettisoned ideas of morality.  Economics void of morality becomes a strange animal indeed creating many of the problems we see all around the world.  Some people defend as the greatest good whatever is “good for the economy.”   But of course exactly what constitutes the economy is not completely accounted for (is it people or businesses?  citizens or corporations?), nor is “good” defined especially in a system of thinking which wants to avoid moral judgments.  Medaille for example points out that while current economic thinking assumes the existence of labor, it cannot account for the existence of labor because it totally ignores the existence of families.

Modern economics does not account at all for what it costs to produce a labor force, thus families are left to scramble on their own to earn enough to survive meanwhile “the economy”  (economic leaders and forces) feel no responsibility for the survival let alone thriving of families.  So economic policies often ignore what is good for the family.    Additionally the labor force is also the consumer force – the rich get richer off the labor and consumption of these people.   But those leaders of economic ideas see no connection between the cost of producing a labor force and their own profitability.    Medaille offers many ideas about how to correct some of the problems that beset the world economy today, ideas based in distributist economics.  Some of his ideas would resonate with conservatives (especially he advocates a significantly smaller federal government) but his arguments on the moral issues of economics might not make conservatives feel so comfortable.  The keystone to his ideas is the notion of the just wage (you can read more on distributist ideas at http://distributistreview.com/mag/)

I suppose because I’ve been thinking about Medaille’s ideas connecting ethics to economics, I paid attention to a 20 December 2011 NY Times Op-Ed piece by Charles Blow, Deep Pockets, Deeply Political.   Blow is sounding a recently familiar alarm:

 A tiny number of wealthy Americans are playing an ever-increasing role in financing our politics. This is not a good thing for a democracy.

Last week, the Sunlight Foundation, a non-profit, nonpartisan organization dedicated to making government “transparent and accountable,” issued a report, which said:

In the 2010 election cycle, 26,783 individuals (or slightly less than one in ten thousand Americans) each contributed more than $10,000 to federal political campaigns. Combined, these donors spent $774 million. That’s 24.3% of the total from individuals to politicians, parties, PACs, and independent expenditure groups. …

The report also pointed out that “overwhelmingly, they are corporate executives, investors, lobbyists and lawyers” and that “a good number appear to be highly ideological.” In the 2010 election cycle, the report revealed, “the average one percent of one percenter spent $28,913, more than the median invdividual income of $26,364.”

But perhaps even more disturbing was this:

The community of donors giving more than $10,000 (in 2010 dollars) has more than quadrupled, from 6,456 in 1990 to 26,783 in 2010. In 1990, they accounted for 28.1% of all itemized (over $200) donations. By 2010, that number had risen to 44.1%. These donors are also accounting for an increasing number of all donations. And they’re giving more, too. In 1990, the average donation was $13,443. By 2010, it was more than double: $28,913.

James Madison

That the top  1% of  the well-to-do are financially more influential in politics than the rest of the country is not new.  Certainly Jefferson’s call that “all men are created equal” was not really a declaration of the equality of every human being but rather a demand that the limited number of landed gentry should be considered equals with the king.  The founding fathers envisioned some sense of the upper class ruling the country (as I recall James Madison even made mention at one point that the wealthy actually constitute a minority in the country and they had to be protected under minority rights against majority rule!).   There seems to have been in fact some notion among America’s creators that the well-to-do get to retire from work early and then can nobly serve the country in political office (This was an idea entertained by Ben Franklin).   So the wealthy being more influential in government than the majority of people is part of our democracy by and for the people from the beginnings of these United States!

I find myself connecting the statistics which Blow mentions to the ideas of morality in economics raised by Medaille.  People who are willing to drop nearly $30,000 down to influence politics are the ones who are fighting against paying taxes.  They would rather give $30,000 to political parties to promote their own interests (though this political donation is a form of a tax – the price to prosper in America) than to give that same amount of money to the government for the common good.  And they will give that same amount of money year after to year to political causes to avoid paying even less than that amount in taxes.

In the ancient Roman republic the imperial family and their slaves staffed the government at no public expense.  Senators and the equestrian class did the same out of a sense of duty – it was they who paid out of their own wealth for public buildings and services.  The landed elites of the provincial cities in turn paid for public services out of a sense of their own responsibility for the public good.

Is this civic sense, the sense of the common good,  what is so lacking in the current process of the wealthy paying for the politics of America?  Now, sadly people are willing to pay only for their own self interest – which often means exactly avoiding contributing to the common good.  A civic pride seems to be lacking.  The Romans thought patriotism meant working for the common good of all citizens which entailed spending their own money to build up (=edify) society.   Belonging to the wealthy class and owning property was considered a privilege which carried great responsibility for the common good of every citizen.  They believed all citizens should benefit from prosperity of the empire and of the wealthy.

Americans love to criticize entitlements – generally of any subgroup of Americans to which they don’t belong.  But entitlement thinking exists in the upper echelons of wealth too – it is entitlement which says the wealth is mine alone and no part of it is to be used for the common good.   It is entitlement thinking which fails to see the land on which we stand as a natural resource which is a shared good which profits all Americans.

George Washington

The common good does not mean socialism.  Medaille certainly opposes socialism which he actually thinks is really a necessary offshoot of capitalism because  current capitalism fails to consider that all economic issues are ethical issues as well.  Patriotism as valuing all citizens and working for the common good is in short supply in America these days.   Patriotism which values civic duty  is not a nationalistic exclusivism or exceptionalism.  It is a virtue which the founding fathers did embrace as they imagined citizen statesmen and citizen soldiers.   These same founding fathers thought the wealthiest Americans would come forward and support the common good for all citizens – such were their ethical beliefs.

None of this means we cannot question the size of the federal government, or work to reduce its size.  Certainly the size of the government is a question worth debating – and for Medaille this is part of the ethical discussion which needs to take place.  The issue I raise is whether our extreme individualism doesn’t in the end hurt the very basis of civil society as we cease to have any sense of responsibility for others.

ECOnomics

Whenever I blog on economics or statistics, I know I make some folk uneasy with my comments.  But the joy of blogging is commenting on things I read or think about for which I don’t have to be right.  That appears to be the job of the rest of the world, who lets me know where my economic thinking goes astray.

Super Committee inaction

First a comment on the failure of the “Super Committee” to come up with a budget reduction plan which supposedly now will trigger mandatory cuts in government spending, including mandatory cuts for the military (this last phrase,  I think, is always thrown in to make conservatives nervous).

In our pluralistic society, the “consent of the governed” is going to mean that those who govern have to come up with compromises so that they can form majority coalitions to approve of legislation.  But in America this also has come under criticism as “business as usual” and Americans politically are perpetually in favor of change.    So the legislators can’t compromise and they can’t get anything done (which means they can’t govern reasonably either).  So  mandatory cuts in government spending are the only kind of cuts that are going to be agreed upon.  Americans are fed up with this political gridlock as well, at least based upon polls rating Congress (I heard one commentator note that communism gets a higher approval rating in America than Congress – 11% to 9%).

Cutting both the annual deficit and the national debt seem like proper goals to me.  The deficit can be cut/eliminated by cuts in spending, but to reduce the national debt, I believe, is going to require some tax increases (even if temporary).   Since I favor a balanced budget for the government and a reduction in the national debt, I believe we have to talk both spending cuts and tax increases.     I think that means talking about how to make Medicare and Social Security solvent as well.  Apparently none of these ideas is very popular with our national legislators and so they cannot come up with a reasoned planned and only seem to be able to acquiesce to a mandated reduction in spending (and even at that some are not comfortable with the mandatory reductions and seem to want to avoid them as well).    It seems obvious enough that continuing on the current path is not going to reduce the national debt, so the legislators decided to take those decisions out of their own hands and allow mandatory cuts to do their work for them.  But it is also true if we send our elected congressional leaders to Washington and tell them not to compromise to resolve the deficit and debt we are going to get what we got: an inability to govern reasonably.   In a democracy, compromise is not always a bad word as it means bi-partisan.   We might remember that ‘partisans’ from one point of view are ‘terrorists’ from another point of view.  Governments are said not to negotiate with terrorists.

What isn’t needed is more blame, but there always seems plenty of that around; a super  abundance of blame will not reduce the national debt or deficit one penny.  We waste our money when we send to congress people who have nothing to offer but blame.

My intent in this blog is not to belabor our government (“we the people”) and our inability to reasonably solve problems because of our ideological rigidities.

Instead, I want to comment on was a graph I saw in the 14 November issue of TIME with an article by Stephen Gandel titled “The Deregulation Myth.”   The gist of the graph is that despite a popular notion in the US that government regulations are hurting economic growth, worldwide the statistics show a different picture.  For the five years ending in 2010, the US is ranked 4^th out of 183 countries as being the most business friendly (Singapore is 1^st, Hong Kong 2^nd, New Zealand 3^rd).   In that time period the US had an increase in GDP of 15%.   But in that same time period China had a GDP increase of 160%, Russia of 94%, Brazil  135%, and Indonesia 147%.   These are countries in which businesses  are more regulated than US businesses.   Being more business friendly and government deregulation of business do not automatically create jobs or economic growth.  Capitalism moves money to where capitalism believes there is money to be made.   It is an oversimplification for politicians to promise Americans significant economic growth by further reducing government regulations.  America is already one of the most business friendly nations on earth.

The reality is America cannot control all of the economic factors in the world.   Politicians have limited powers as to what they are able to do to improve the economy.

If America cannot control world economics, what is our best strategy for living with, in and as part of the family of nations (which maybe we can influence even when we can’t control them)?   If politicians really have limited power to change the American economy, what are our best domestic strategies for creating sustainable economic growth?

Things to ponder.

For me there are also ethical questions regarding the relationship between profit and greed and the balance between sustainable economic growth and environmental stewardship.  We are after all not merely consumers on earth, but stewards of the earth.   God so loved the world, we believe, and we too are to love His creation, not just greedily use it for profit but for the benefit of all.   We Americans certainly believe that no tyrant anywhere on earth should control its resources.  So too, we have to abide on earth in peace with the rest of the world sharing the earth’s resources following that same principle as well.

See also my blog America and Capitalism: Dr. Frankenstein’s Demonic Lesson

Why WE NEED a Fast before Christmas

Why do we American Christians NEED a fast during the Christmas season?   One reason is because we embrace the values of capitalism as championed by Adam Smith.

“Adam Smith championed the social value of harnessing the instinctual drives of curiosity and self-interest within the framework of the marketplace to create a self-regulating economic order. […]Smith worried in his writings, as did many other thinkers of the time, that human envy  and our tendency towards compulsive craving, if left unchecked, would destroy the empathic feeling and neighborly concerns that are essential to his economic model and a free market’s successful operation.[…]In America, living with such an abundance of choice, we have discovered some disturbing facts about human behavior – facts that from knowledge of modern neurobiology are predictable and that confirm Smith’s worst fears. In times of material affluence, when desire is no longer constrained by limited resources, the evidence from our contemporary American experiment suggests that we humans have trouble setting limits to our instinctual craving.

This comes as little surprise to the behavioral neuroscientist, for it is now well established that under certain contingencies it is possible to ‘overload’ the reward circuits of the brain, triggering craving and insatiable desire. As the quintessential reward driven culture, America bears witness to this truth, for there is considerable evidence suggesting that unchecked consumption fosters our social malaise, eroding self-constraint and pulling the cultural pendulum toward excessive indulgence and greed. “(Peter C. Whybrow, American Mania: When More is not Enough, pgs. 7-8)

The Cost of Living

The 10 October 2011 issue of TIME had a few statistical graphs giving a financial picture of our lives today.   The statistical graphs I found most interesting were the ones dealing with how we Americans allocated our personal budgets through the last 60 years.  The statistics were measuring the “Percentage of Total Personal Consumption Spending.”

In 1950 Americans spent :

22% of Personal Consumption Spending on Food,

13% on housing,

10% on clothing,

3% on health care,

3% on financial services and insurance.

By 1970 we were spending

17% on housing,

16% on food,

7% on clothing,

7% on health care,

5% on financial services and insurance.

In 1990 our personal consumption spending looked like this:

18% on housing,

13% on health care,

10% on food,

7% on financial services and insurance,

5% on clothing.

Finally by 2010 our spending looked like this:

18% on housing,

16% on health care,

8% on financial services and insurance,

7% on food,

3% on clothing.

Of course the stats don’t give us a clear picture as to why these changes.  Obviously the percent of our personal consumption spending on food and clothes has declined significantly.  The stats don’t say whether that is because the actual price of these goods has fallen, or if we choose to spend less on these items, or if we simply have more disposable income and so we can devote a smaller portion of our budget to food and clothes.

What stands out in my mind is the soaring cost of health care.  As a percentage of total personal consumption spending, health care spending jumped from 3% in 1950, to 7% in 1970, to 13% in 1990, to 16% in 2010.  So while I hear some Americans claim the American health care industry is the best in the world, it appears we will have to add the caveat “for those who can afford it.”    In difficult financial times how many Americans cannot afford to give 16% of their spending to health care.  Health care is rapidly approaching taking up as much of our spending as housing.   Maybe we value our health that much, or maybe we will all have to start choosing between having a home or being able to participate in the American health care system.

Our diseases will be treated but we will have to cope with the “dis-ease” that we can not afford both health care and having a home.

Related to the above numbers, 27% of Americans have gone without health insurance which might indicate that they cannot afford to spend such a high percentage of their personal consumption on health.  But interestingly, having adequate health insurance is less a concern today – only 47%  mention worrying about having adequate health care while 77% are worried about outsourcing jobs to other countries.  Again no explanation is offered as to why people are less concerned about having adequate health insurance – it could be that they feel they can do nothing about it anyway or that health care is so expensive that they know they can’t afford to worry about as it is beyond their reach.

While I know many Americans hate government involvement in things like health care, I wonder has the insurance industry or the health care industry put forth any viable plans which do not involve government and which lower the costs of health care to make them more affordable to and more accessible to more/all Americans?  If health care is driven by wall street, the only concern is going to be profit.  Can the industry create a system whose real concerns are the American people themselves?   Are people more than simply consumers of health care?  How can we create within capitalism a system in which the benefit of the people is the concern and in which this doesn’t end up having to be what government advocates for?   The people often feel when compared to the big money of the health care industry their only hope for an advocate is big government.  What do the health care and insurance industries have to change/do to make the health of the American people the obvious focus of their concern – the real bottom line?

The Economy: Could it get worse?

The economy is stalled, Obama’s approval ratings are sagging.  The Gallup organization is wondering whether it is going to have to use negative numbers to measure Congress’s approval ratings.

Could things get worse?

As the Pessimist says, “Things are never so bad as they can’t get worse.”

This Labor Day, I’ve labored to find some humor in our sad state of affairs.

So time for a comic moment of relief, and since we can’t blame him for conditions any more (or so political wisdom says), here is a quote from memory lane.  Just to remind us of where we were and why we’re here, a quote from President G W Bush, 24 February 2001:

“My plan reduces the national debt, and fast.  So fast, in fact, that economists worry that we’re going to run out of debt to retire.”

I guess that was just politically speaking – a little spin for the party faithful.

But maybe there is yet hope!    Maybe his plan hasn’t fully taken effect yet – I think Congress has kept the Bush tax cuts.  Maybe this is the year they’ll reduce the debt.

And just to add a little more humor, 3 days after promising to reduce the debt on 27 Februrary 2001 GW gave us this Bushism:

“My pan plays down an unprecedented amount of our national debt.”

Ah, those were the days and we thought they’d never end.  Playing down the national debt became a political pastime in America.  Now we are paying for all that pleasure.

So, if the economy has got you down, lighten up a bit, the politicians are promising they will fix it.

Happy Labor Day!