Redistribution of Income Revisited

In my blog The Redistribution of Wealth I made comments about the redistribution of wealth taking place in America, not as a result of taxes or liberal/socialist policies, but as a result of intentional economic policy which seemed to favor the wealthy to become wealthier.  The article in the Summer 2011 WILSON QUARTERLY, shows that from 1976 to 2007, the top 1% wealthiest Americans went from earning 9% of America’s total income to 24% – a sizable redistribution of income.  The article did note that simultaneously the American economic pie got bigger, so even those lower on the wealth scale benefited from the growing economy, but still the growth in income for the top 1% wealthiest Americans  was increasing very rapidly.

In the comments to that blog, Brian searched the Internet to check those facts and found a very different set of numbers which he listed in his comment.  His numbers look at the distribution of wealth between the top 1% wealthiest Americans and the 99% rest of Americans.  There it is obvious that the wealthiest 1% have historically and consistently owned a disproportionately large percentage of America’s total wealth, but then that is exactly what puts them in the wealthiest 1%!

Dn. Marty in another comment to the blog was able to locate the original article referred to in the WQ and reports the article is talking about income not wealth and so those statistics are quite different from what Brian quotes.  Thus is the world of facts and statistics – it isn’t so much a redistribution of the total wealth but the incomes of the top 1% are increasing at a fairly phenomenal and accelerating rate over the 31 year period from 1976-2007.

I think Dn. Marty’s comments solve the legitimate issue and questions raised by Brian.  The two sets of numbers are apples and oranges:  wealth vs. income.

The numbers Brian provided from 1922 to 2007 caught my attention in another way, which is more related to the original point I wanted to make: we see that the top 1% wealthiest Americans controlled a portion of America’s wealth ranging from a low point of 19.9% in 1976 up to a high of 44.2% in 1929.   I know I’ve read from several sources that in terms of American economics, the economy is strongest when a greater number of people share the wealth – this makes sense in an economy driven by consumer spending.  If only the elite few have a lot of disposable income, there won’t be much consumer spending.  When many/most people have income to spend – the economy benefits, and merchants and manufacturers are kept busy and prosperous.

So the numbers quoted by Brian  show (in my mind at least) a kind of Freakonomics thing about the economy.

In 1929, the top 1% wealthiest Americans possessed 44.2% of Americas wealth.  That is the all time high on the chart.   What happened in 1929?   The Great Depression.   The concentration of wealth in the hands of the few was bad for the economy as a whole.

In those same statistics, in 1976, the wealthiest 1% of Americans owned only 19.9% of Americas wealth, the lowest on the chart given.   This occurs in the years right before America went on an unabated 25 year period of economic growth; this was an unprecedented period of growth for the country.

But this growth was accompanied by the wealthiest 1% gaining possession over an ever increasing portion of America’s total wealth, peaking between 1995-1998 at just over 38% of America’s wealth.  In that same time period (1976-2007) the share of the nation’s income of the wealthiest 1% increased from 9-24%.    And then we come to 2007 when the wealthiest 1% controlled just over 34% of the nation’s wealth (and those numbers were on a annual upward trend) AND now earned 24% of the nation’s income.  Result again?  The Great Recession of the 21st Century.

There are so many factors that enter into this picture, many events outside the U.S., but still the notion that the economy does benefit when wealth is shared by a greater number of individuals seems to be in these statistics.   From 1976 to 1995, the top 1% wealthiest Americans doubled their  share of America’s wealth from 19% to 38%.  Remember the pie also got bigger so many people lower on the scale also owned “more” but relative to the whole pie, the bottom 99% had a much smaller share of the larger pie to divide up. (see also my blog American Ingenuity and Re-inventing of Government).

It is something to think about – a freakish co-incidence or Freakonomics?  When the total of America’s wealth or income gets concentrated in the top 1% of wealthiest Americans to the tune of 34-45%, is that a good predictor that the country is in for another great recession/depression?

If it is, then the question becomes, since the economy is totally human made, and we can recognize the warning signs that the economy is reaching a point where a great recession/depression is imminent, should we form policies that prevent this scenario from ever arising by insuring that wealth and income are spread over a greater portion of the population?

America became immensely wealthier through the years, but even that gargantuan increase in wealth/capital could not prevent the economic collapse/disaster which hit the country over the past few years.   Could better economic policies have helped by recognizing the signs that the system was getting out of balance?

The economy is a human made product.  Are there not ways that humans can help regulate it so that it better serves us all?   I know today government regulation has a bad name, but the economy is not mother nature, it is completely human made and responds to and is  shaped by human speculation, human fears, lack of confidence, human error, human greed, political gridlock, and world events.  And while many don’t trust government to do any better with the economy than investors or Wall Street or the banking industry, government of, by and for the people is a potential force to check other forces we’ve created.

American Ingenuity and Re-inventing our Government

This blog offers some concluding thoughts to my previous blog, Redistributing Wealth.

In analyzing the political partisanship and implacable ideologues Fareed Zakaria  writing in the 15 August 2011 issue of TIME offers some thoughts about why the American system of government is not able to solve our current fiscal problems:

“American parties now function like European parliamentary ones, ideologically pure and with tight discipline. But we don’t have a European system. In parliamentary systems, power is united so that when, for example, the British Prime Minister’s coalition takes office, it controls the legislative branch as well as the executive. The Prime Minister is, in effect, chief legislator as well as chief executive. The ruling party gets a chance to implement its agenda, and then the public can either re-elect it or throw the bums out. The U.S. system is one of shared and overlapping powers. No one person or party is fully in control; everyone is checked and balanced. People have to cooperate for anything to get done. That is why the Tea Party’s insistence on holding the debt ceiling hostage in order to force its policies on the country–the first time the debt ceiling has been used this way–was so deeply un-American.

The strength of the Tea Party is part of a broader phenomenon: the rise of small, intensely motivated groups that have been able to capture American politics. The causes are by now familiar. The redistricting of Congress creates safe seats, so the incentive is to pander to the extremes to fend off primary challenges, rather than to work toward the center. Narrowcast media amplify strong voices at the ends of the spectrum and make politicians pay a price for any deviation from dogma. A more open and transparent Congress has meant a Congress more easily pressured by small interest groups and lobbyists. Ironically, during this period, more and more Americans identify as independents. Registered independents are at an all-time high. But that doesn’t matter. The system in Congress reflects not rule by the majority but rule by the minority–fanatical, organized minorities.

These dysfunctions have reached crisis levels at the very time the U.S. faces intense pressures from an aging population, technological change and globalization. We need smart policies in every field. We need to pare spending in areas like health care and pensions but invest in others like research and development, infrastructure and education in order to grow. In an age of budgetary limits, money needs to be spent wisely and only on projects that are effective. But in area after area–energy, immigration, infrastructure–government policy is suboptimal, a sad mixture of political payoffs and ideological positioning. Countries from Canada to Australia to Singapore implement smart policies and copy best practices from around the world. We bicker and remain paralyzed.

Some of those best practices used to be American. The world once looked at America with awe as we built the interstate highway system, created the best public education in the world, put a man on the moon and invested in the frontiers of knowledge. That is not how the world sees America today. People watched what happened over the past month and could not comprehend it. We have taken something that the world never doubted–the credibility of the U.S.–and put it into question. From now on, every time the debt ceiling has to be debated, the world will wonder, Will America honor its commitments? Will it keep its word? Will the system break down? We have taken our most precious resource, the trust of the world, and gambled with it. If, as a result of these congressional antics, interest rates on America’s debt rise by 1% –in other words, if the world asks for just a little bit more interest to lend us money–the budget deficit will rise by $1.3 trillion over 10 years. That would more than wipe out the entire 10 years of cuts proposed in the debt deal. That’s the American system at work these days.

Old Senate Chamber

Maybe we can rethink what we are doing.  American ingenuity both invented and grew out of the changing political world of the 18th Century.  That same ingenuity if it is allowed to thrive rather than be throttled by ideologues can re-invent the government which helped make America great.

If it is the case that our political system is becoming polarized to the point of being paralyzed, a former congressman offered his opinion about how we got to this point.

Congressman Jim Cooper (D-TN) first elected to congress  in 1982 made observations about a big change that occurred in congress that contributed to the polarization in congress and inability to work together.   Cooper writing in BOSTON REVIEW (May-June 2011) as reported in the Summer 2011 WILSON QUARTERLY commented to the effect:

“Speaker of the House Tip O’Neill (D-Mass.) saw himself as leader of the entire House, not just the Democratic caucus.  O’Neill’s was a House intent on making policy, not partisan mischief,’  Cooper recalls.”

There even was a time when “a group of elite staffers known as the Democratic Study Group provided authoritative memos before each important vote listing the pros and cons of the bill.  The quality of these reports was so high that even some Republicanss subscribed.”

Cooper says the system changed a great deal  “under the leadership of Newt Gingrich (R-Ga.)”.  “Gingrich centralized power in the office of the Speaker and politicized the position.   Committee chairs, powerful under O’Neill, were ’emasculated, their authority redirected to the Speaker.”  It was in this time the Democratic Study Group mentioned above ceased to exist.

It is possible that Gingrich made these changes to correct what were perceived as problems of congressional dysfunction in his day.  Don’t know that story, but I’m just following Cooper’s line of thinking.

The changes that Cooper claims occurred are still in effect to this day, and it has not mattered whether Republicans or Democrats have been in power, they now follow the precedent set by Gingrich.   Cooper notes, “The truth is that the [Gingrich] model works … if you are only interested in partisan control of Congress.”

This of course gets back to Fareed Zakariah’s point above that the U.S. political system is not a European parliamentary system.   So those who are demanding that we return to the Constitution in determing how government is to operate, maybe we have to demand that we abandon the polarizing parliamentary European system and return to our democratic system where disagreeing politicians are forced to sit down together and work out a compromise that solves our problems.

Cooper’s “solution” is that our congressmen get “merit” pay based on their ability to co-operate to make the system work – including merit pay for those who eliminate obsolete laws  and who work to cut spending.  Not sure how that idea would work.

I want to also acknowledge that some think the rancorous process which we witnessed in dealing with the debt ceiling problem is nothing but democracy at work.  Charles Krauthammer (Washington Post, 12 August 2011) thinks the system is working fine and we should quit complaining.  He notes what is an obvious truth of American politics, voters do react against both ideas and politicians they don’t like.  Thus we see swings in voters moving left and right whenever they think politicians have gone too far.  He feels confident the system is doing what it is supposed to do and the results in the debt ceiling debate did what they could do.  He wrote: “It was a triumph of democratic politics – a powerful shift in popular will finding concrete political expression.”

There is no doubt since the time of the election of 1800 in which Thomas Jefferson using dirty tricks defeated incumbent President John Adams.  It was a rancorous campaign that caused Adams and Jefferson, two of the heroes of the revolution and founding fathers of our country,  to have a complete falling out and become bitter political rivals.    There have been major issues at stake that endangered the American political system soon after its birth.   It exploded in the election of 1860 when Lincoln became President and American became a divided nation at war.

Enjoying the Quiet of the Library

And though this is nothing new, I personally don’t find the process to be to my liking at all.   But there is little doubt that the pitfalls of a bickering democracy are preferable to the dictatorship of a one party system.   I silence the negative campaign cacophony by living TV and commercial radio free.  I noticed that even a couple of my sons have basically quit watching TV and don’t have cable subscriptions.   There is hope for America!

It seems to me that since both political parties seem to think they have to play to the extremes of their constituencies in a circus media driven political culture,  most of what we receive from the partisan leadership is all heat and no light.  Maybe that is the only way politicians can get anything done public accusations but behind the scenes some effort to reach a solution.   But I know I would prefer hearing reasoned proposals rather than partisan rhetoric.

At one time some of the leaders of the two parties did agree that $4 Trillion in debt reduction was the goal.  That was a huge step forward.  But the resulting agreement was only about half that, which means we are going to have to listen to the rancor twice, and probably twice as much before they will come up with a package that will convince the world that the US is a safe place to invest your money because it is backed by the full faith and credit of the US government.

Next:  The Redistribution of Income Revisited

The Redistribution of Wealth

[My note – there is a discrepancy in facts between an article I mention, and some facts that are quoted in the comments from Brian attached to this blog.   The discrepancy as explained in the comment from Dn. Marty appears to be that the original article refers to income, not wealth, while the charts Brian refers to are talking about wealth not income.   The difference is significant and certainly which statistics one is looking at changes the conclusion one can make.  I have edited my original comments to better reflect the facts being offered in the original article.  Probably need to retitle this blog to “The Redistribution of Income.”   Thanks to Brian and Dn. Marty for their comments.]

In the ears of a number of Americans, “the redistribution of wealth” is an idea which is associated with notions of socialism, or the political left or the tax and spend folk of Washington, D.C.   These fears seems also to feed the anti-tax political movements in America.

Apparently the thinking is that if only the tax rates would go down, more Americans would be or become wealthier.   Statistics analyzed in the book PRESIMETRICS claim however from the time of Presidents Eisenhower to GW Bush that there is no statistical evidence to show “that lower taxes result in higher incomes” and amazingly enough “it is pretty evident” in that same time period that “higher taxes were not hurting people’s pocketbooks” as measured in real median income or net disposable income.   Lower taxes did not yield the higher economic growth some predict and lower taxes “at least by themselves– are not the way to increase economic growth.”   (You can analyze their statistics, pp 116-130 of the book:  Some say numbers don’t lie, others that statistics can be interpreted to mean anything.)

What is perhaps more notable economically, is an article by A. Atkinson, T. Piketty, and E. Saez in the March 2011 issue of JOURNAL OF ECONOMIC LITERATURE  (as reported in the Summer 2011 WILSON QUARTERLY).   According to this article, in the United States, “The top one percent of earners more than doubled their share of income between 1976 and 2007, from nine to 24 percent.”   [The discrepancy is in that the statistics in the comments below show in the increase in wealth going from 19% to 24%,  while the article is claiming “their share of income” increased from 9-24%.  That certainly changes the basis of my comments.]   This means that in this time period the 1% wealthiest Americans  in 30 years had their share of the nation’s income increase from  9%  to 24%.   The top 1% of the wealthiest now own almost 1/4 of  the income generated in America.  This is a redistribution of wealth not engineered by socialism, but certainly the direct result of American economic policies and capitalism as we practice it.

The article goes on to say,  “For the top 0.1 percent of earners, the concentration was even more extreme: They quadrupled their share, from three to 12 percent.”

The rich have been getting richer faster!   America, claimed to be the richest nation on earth, has an ever growing portion of its wealth controlled by one percent of its population.

So a redistribution of wealth actually does take place in America, one that is not the result of leftest policies or of increasing taxes: wealth is moving toward and pooling in the bank accounts of the wealthiest Americans.   Some may say that is just the nature of things, but this doesn’t happen “naturally”, it is purely manmade:  it happens as a result of the intentional economic policies to which we choose to adhere.  It is, I suppose, a form of economic Darwinism:  the strong not only survive, they thrive in the economic world they create and control.   It is a human-made selection that favors those who have created the conditions which determine who thrives.

Now to be fair to the entire picture, in that same time period, the 99% of Americans not in that wealthiest 1% saw their income rise 18% as well. (By comparison, in that same 99% of French citizens, their income rose 26% in that same time period).   So there was an overall income increase in America across the board, but an even faster growth in the income of the wealthiest American 1%.  (The statistics show worldwide the rate of concentration of wealth in the wealthiest few occurred much more in America than in Europe or Japan).

I have not been convinced that the US can reduce its deficit and debt by spending cuts alon; rather I think we actually will need tax revenue increases to pay down the debt.  It seems that also was the concern of S & P in lowering the credit rating of the U.S.:  budget cuts alone are not going to be able to get the U.S. to balance its budget and eliminate its massive debt.  Thus maybe the next impasse is going to be between the Tea Party adherents verse the Credit rating agencies and Wall Street.

I have read before that the U.S. and world economies have tended to fall into the hardest times when a disproportional amount of wealth gets concentrated in the few.  The economy works far better when wealth is widely distributed over a greater number of people.  So the current redistribution of the wealth toward the wealthiest few does not bode well for future economics in the U.S.   Fareed Zakaria  writing in the 15 August 2011 issue of TIME, said:

So far, the national debate has been built around the fantasy that we do not have to choose between big government and low taxes–that we can get both by cutting waste, fraud and abuse. But the money is in the big middle-class items, from Medicare to the mortgage-interest deduction. With federal taxes at 15% of GDP, a historic low, and spending at 24% of GDP, there is really no conceivable way to close the gap without increasing taxes–either raising rates or eliminating deductions and loopholes. And Republicans might find to their dismay that when forced to choose, Americans will decide that they like their government programs after all. Polls show that the public would rather raise taxes than, for example, cut Medicare. (In fact, we would have to do both.) The public may hate government in theory, but it has warm feelings about most individual government programs, from the space shuttle to Head Start to Pell Grants.

Whatever agreement our politicians cobbled together to increase the debt ceiling, they still neither solved the deficit and debt crisis facing the U.S., nor did they show enough good old American ingenuity in how to bring people together to solve a problem.   They were not able enough or bold enough to take on the size of the problem facing us.

Americans often were viewed in the past by the rest of the world with amusement and admiration for their can-do attitudes toward problem solving and our belief in the power of negotiation to create compromise solutions that bring some benefits to all parties.   Time will tell whether we still have that American spirit to solve our problems today.

Next:  American Ingenuity and Re-Inventing our Government

Representing Public Opinion or the Public?

Rutgers University Professor David Greenberg wrote an article about President Teddy Roosevelt, “Beyond the Bully Pulpit”, in the Summer 2011 issue of THE WILSON QUARTERLY.  Greenberg credits (or blames!) TR with being the president who made “spin” “a fundamental part of the American presidency.”   The article is a worthy read.

In our current political crisis of dealing with the US budget deficit and the growing national debt and the need to raise the debt ceiling, we can watch our politicians spinning the events every which way as part of the blame game.   They more often seem to have their eyes on the next election and what is good for their political party (what appeals to their party’s base) rather than on what is needed for America.  Greenberg writes about President T Roosevelt:

“Unlike most of his predecessors, Roosevelt saw himself as an instrument not of the party that elected him or of the coalition of blocs, but of the will of the people at large.  Deriving his power from the general public, however, did not mean slavishly following mass sentiment; TR, like Wilson after him, wanted to discern with his own judgment which policies would truly serve the electorate as a whole.  ‘I do not represent public opinion,’ he wrote to the journalist Ray Stannard Baker.  ‘I represent the public.  There is a wide difference between the two, between the real interests of the public and the public’s opinion of these interests.’  He spoke of the common good as if such a unitary thing were not hard to identify, at least for him.

Modern politicians are finely tuned to public opinion.   This certainly makes it seem that they place their own re-elections and the interests of their political parties ahead of what is needed and good and right for the country as a whole.  They too narrowly focus on things that have an immediate impact because that can help (or hurt) in the upcoming election, whereas long term solutions may be of no immediate help to their immediate re-election needs nor to their party’s gaining power now.  No doubt that is why we have the national debt problems we have – short term popular decisions are made with no regard to their long term consequences to the nation.

Our current debt crisis demands long term solutions, some of which may not benefit either major political party now and in fact might be so unpopular as to hurt both or either party now.  Voters want as many entitlements as they can get (and this includes wealthier voters who get all kinds of tax break entitlements and other benefits) and want all kinds of government benefits without having to pay for them or to bear the burden of the cost of them.  (Founding Father James Madison, for example, argued that the cost of all wars should be born by the generation that called for the war and these costs should not be postponed and then laid on future generations).   As a result of these wishes, public opinion often demands more from the government while simultaneously expecting less taxes.  The end result is politicians finely attuned to public opinion who find it easy to approve more government programs while simultaneously reducing the tax burden (This certainly was the formula followed by GW Bush and continued to this present day).

I’m still hoping to see our elected officials do the hard thing – adopt a 4 trillion dollar budget, deficit and debt reducing plan that has long term implications rather than a short term “fix”.  

To our congressman I say:  Serve the public interest not the fickleness of public opinion.  Be willing to sacrifice your re-election by making the hard decisions that must be made today for the US to have a stronger financial tomorrow.

Government by the Consent of the Governed

In the U.S. budget debates, I certainly favor a balanced budget.  It is an idea I felt was right even when Reagan was president and some conservatives were confident that debt wasn’t bad for the nation especially if the economy was growing.  That thinking seemed odd to me since Herbert Hoover got criticized for stopping government spending during the depression.  So the logic seems to be that whether good times (Reagan) or bad (Hoover), it is always time for deficit spending.  That’s how we went from a balanced budget (Clinton) to the debt we have today (Obama).

At the moment I certainly wish the congress would agree on the larger $4 Trillion dollar reduction in the U.S.’s spending habits. I am OK with some tax increases or eliminating some tax breaks/cuts.  Balancing the budget and using all of our tools to do it is more important to me than not raising taxes.  Getting the budget balanced more quickly justifies some tax increases in my mind.

Of course the problem with tax increases of any kind is that it can be treated by politicians as a quick and easier way to deal with things.  They don’t have to make the painful and painfully needed spending cuts if they can keep increasing taxes.

I just happen to think both are needed:  we need big time spending reductions, but we also need to pay for those programs that we all like.  If people want to keep Social Security and Medicare, I think we are going to have to ante-up more in taxes.  We must pay for these programs if we want the benefits we derive from them.  And there is polling evidence that Americans want to keep certain government programs funded.

Joe Klein writing in the 25 July 2011 issue of TIME (“The Power Broker”)  made a few concluding comments which make sense to me.  Writing about the anti-tax fervor among conservatives, Klein notes:

“Indeed, increasing taxes in a reasonable way doesn’t seem to have much effect on the economy at all. Reagan signed a tax increase — yes, a stiff tax increase, the first of three by the Gipper — as a deep recession was coming to an end in 1982 … and the economy boomed. The same thing happened after Bill Clinton’s 1993 tax increase. Confronted with the tax history of the past 30 years, Norquist concedes immediately, ‘Even if it’s a toss-up on that question, there’s still the question of liberty. Taxes are a limitation on liberty. You are stealing money from some people to give it to others.’

Stealing? Actually, in this democracy, there is something called the consent of the governed. If the public wants to provide health care for the elderly, as Newt Gingrich opined in the first Republican presidential debate, it is probably a good idea. In normal times, the corollary principle should be: if you decide to spend the money (on all but long-term capital investments), you have to figure out how to pay for it. That defines a brand more powerful than either party. It used to be called the American way.”

“The consent of the governed” is an operative phrase here which though enshrined in the Declaration of Independence is sometimes forgotten in the polarizing politics of America.  In American democracy, the governed – not just the ruling class or the wealthy or those of a particular political ideology – give certain powers to the government.  But if “we the people” want to keep certain government services, then we have to be willing to pay for them through taxes.  Such government is still according to President Lincoln, “of the people, by the people, and for the people” if it is in fact the consent of the people.

The Constitution limits the government but empowers the governed.  The problem of course is that the governed are sometimes unruly and unwise.   So if the people consent to government services like Social Security and Medicare it becomes the problem of the congress to raise enough taxes to fund the programs.  When the people decide they have had enough taxes they might decide to cut those programs they don’t want to fund.   That seems to be the nature of government run by the consent of the governed.

One word which has some negative overtones in our politically polarized times is “compromise.”  The concern is that compromise got us what we got, and so ideologues refuse to compromise.   They do have a point – it has been the endless series of compromises which led to our nation’s overspending, and deficit spending yields the burgeoning national debt.  We cannot afford to allow this to continue.  On the other hand, democracy by nature demands negotiations, coalitions and compromises.   The “consent of the governed” doesn’t translate into unanimity, but into majority.  We have a representative form of government which necessitates our representatives working out a budget plan that can get approval of the majority.  It will be a compromise.  For the “government” (namely, the representatives we elected) to do their job and govern with the consent of the governed, they are going to have to reach a deal.  The pain is it cannot be a deal that continues past bad habits.   It has to be a deal that not only shrinks the national debt, but also brings about fundamental change in how our elected representatives choose to spend our tax dollars.

Our civil authorities need the wisdom of Solomon and the courage of David to make the hard decisions and do the right thing for the American economy:  shrink the national debt and eliminate the yearly deficit (deal with the past) and curtail future spending so that “we the people” live within our means.    If we don’t deal with the past, the future will be bleak indeed.  If we fail to remember that the economy does go through cycles of good and bad, we also are doomed to repeat our mistakes and make very bad economic decisions.  If we try to reach national prosperity through government spending we will find ourselves at the bottom of an awfully deep and dark hole.

Whether good times or bad, it is always the right time to pray for our elected representatives that they may have the courage to make the hard decisions to correct the imbalances in our government today.

The Americanization of America

I finished reading Gordon Wood’s THE AMERICANIZATION OF BENJAMIN FRANKLIN.   An excellent biography of Franklin as well as a good American history book.  I had commented in a previous blog (Ben Franklin and the Americanization of Freedom ) about the opening chapters of the book in which Franklin was a loyal British citizen trying to preserve the unity of the British Empire.

The book traces the changes in Franklin’s thinking through time resulting in his becoming an American.  There is a parallel reality that America simultaneously was becoming American as well.  In many ways Franklin’s transformation happens as America itself is being born and transformed into an independent nation.

I want to offer a few quotes from the book  which were significant to me.  First, a quote about Britain, the nation Franklin loved but became totally disenchanted with.   Franklin criticized Britain for being blinded by

“… her Fondness for Conquest as a Warlike Nation, her Lust of Dominion as an Ambitious one, and her Thirst for a gainful Monopoly as a Commercial one.”  (p 166)

I have to wonder what he would have said about the USA today with our pride in being the greatest military power on earth and our constant willingness to make the military our main form of foreign policy.  Franklin saw in Britain what Eisenhower warned about in America – the military industrial complex.

The second quote deals with Franklin’s own self evaluation.

“… as Franklin disarmingly admitted, he  never had much success ‘in acquiring the Reality” of the virtue of humility, but he ‘had a good deal with regard to the Appearance of it.’  Humility, he said, had not been on his original list of virtues; he had added it only because a friend had told him that he was too proud.  Franklin was well aware of his pride and its near relation, vanity.  He had begun his Autobiography by admitting the overwhelming power of vanity.  ‘Most people,’ he had written in 1771, ‘dislike Vanity in others whatever Share they have of it themselves.’  But Franklin knew better.  ‘I give it fair Quarter whenever I meet with it, being persuaded that it is often productive of Good to the Possessor and to others that are within his Sphere of Action.’  … Pride, he conceded, was the hardest passion to subdue.  ‘Disguise it, struggle with it, beat it down, stifle it, mortify it as much as one pleases, it is still alive, and will every now and then peep out and show itself.’  ‘Even if he could completely overcome his pride, he would probably then be proud of his humility.’”  (p 207)

Wood points out in his book that interestingly America’s image and evaluation of Franklin through our history has changed as America changed.  As American attitudes toward agriculture, economy and capitalism morphed so did American ideas of who Franklin was and what he accomplished.  The notion of working hard to attain success amazingly enough was an American invention.  In Europe the rich did not work at all while the majority of people, the laborers, struggled to survive not to get ahead.

“… Franklin’s Autobiography had an inordinate influence on America’s understanding of itself.  Out of these repeated messages of striving and success not only did ordinary northern white men acquire a heightened appreciation of their work and their worth; they were also able to construct an enduring sense of American nationhood – a sense of America as the land of enterprise and opportunity, as the place where anybody who works hard can make it, as the nation of free and scrambling money-making individuals pursuing happiness.  This myth of American identity created during the several decades following the Revolution became so powerful that succeeding generations were scarcely able to question it.

Among the peoples of the world only Americans of the early republic, as their great observer Alexis de Tocqueville pointed out, celebrated work as ‘the necessary, natural, and honest condition of all men.’  What most astonished Tocqueville was that Americans thought not only that work itself was ‘honorable,’ but that ‘work specifically to gain money’ was ‘honorable.’” (p 243-244)

We no longer even have a sense of how radical an idea these notions of work for profit were to the 18th Century.  And it explains how “profit” became a virtue in America, perhaps the greatest and most important  virtue in American mythology.  Something which no one would have listed as a virtue prior to 19th Century America became central to the American value system.   Whereas prior to the Revolution Franklin with many other wealthy people believed it was only poverty and hunger which caused the working class to work (thus poverty was a positive motivating factor for the poor!), America changed the attitude of and toward the working class.  For it came to pass that working for profit became so highly valued in America.

“…said Tocqueville, ‘all see quite clearly that it is profit which, if not wholly then at least partially, prompts them to work.’”

Making profit a virtue is from an American point of view, America’s success.   It is the reinterpretation of Benjamin Franklin as an American that helped spur this development along.

Ben Franklin and the Americanization of Freedom

Every year about the 4th of July, I try to read a book on American history.  This year I finally got around to a book I’ve owned for a long time but never read, Gordon Wood’s THE AMERICANIZATION OF BENJAMIN FRANKLIN.   Despite my general love for reading, I’ve not found as much time to read as I would like and I’m only about ¼ of the way into the book.  However, my initial impressions are very positive and I’m enjoying the book.  I’ll quote two passages from what I’ve read so far both dealing with things Mr. Franklin valued highly.  The first is about the word “condescension.”   Ben Franklin strove to become a “gentleman,” part of that class of gentry, whose virtues he embraced and wished to instill in others.

“Only a hierarchical society that knew it distinctions well could have placed so much value on a gentleman’s capacity for condescension—that voluntary humiliation, that willing descent from superiority to equal terms with inferiors.  For us today condescension is a pejorative term, suggesting snobbery or haughtiness.  But for the eighteenth century it was a positive and complimentary terms, something that gentlemen aspired to possess and commoners valued in those above them.”  (p 38)

The virtue of a superior reaching down (condescending) to be with those inferior to him is also valued in Orthodoxy, as it is a very positive term used to describe Christ Himself who though God, condescended to become man in order to save us (Philippians 2:5-8).

The second quote deals with 18th Century ideas about what “freedom” means.   Dr. Franklin accepted and lived by a notion of freedom which was based in materialism.    It is wealth that enables us to be free, which makes us independent of the demands of society and of necessity.  Freedom enables us to become people of leisure.

“Ultimately, beneath all these strenuous efforts to define gentility was the fundamental classical quality of being free and independent.  The liberality for which gentlemen were known connoted freedom – freedom from material want, freedom from the caprice of others, freedom from ignorance, and freedom from having to work with one’s hands.  The gentry’s distinctiveness came from being independent in a world of dependences, learned in a world only partially literate, and a leisured in a world of laborers.  …    People labored out of necessity, out of poverty, and that necessity and poverty bred the contempt in which laboring people had been held for centuries.  Since servants, slaves, and bonded laborers did much of the work of society, it seemed natural to associate leisure with liberty and toil with bondage.  A gentleman’s freedom was valued because it was freedom from the necessity to labor, which came from being poor.      Indeed, only the need of ordinary people to feed themselves, it was thought, kept them busy working.”  (pp 38-39)

Franklin agreed with those who thought that poverty and hunger were the main motivators to keep the lower class working.  He however strove for freedom from such necessity.

So no doubt he would have favored a society which made the lives of the gentry easier and even more free from dependencies and necessity, but which would have kept the lower class working ever harder to help them avoid indolence, idleness and prodigality.  At least to the point I’ve read in the book, Ben Franklin does not conceive of freedom as belonging to everyone nor even good for everyone.   Freedom in Franklin’s thinking would lead the lower class into sloth and poverty.   But for the gentry class, freedom allowed them to live nobly and involve themselves in civil affairs.

A Consistent Pro-life Position in an Age of Shrinking Government

While America grapples with its national debt and huge deficit, it also faces a reality that much smaller economic growth may be in the forecast for the future.  These factors may contribute to politicians aiming their budgetary axes at those populations which can hurt them least at election time, rather than aiming for meaningful and significant cuts that will reduce the mammoth deficit.

Politicians have shown no real willingness to tackle issues related to Social Security or Medicare, though these are programs which contribute the biggest portion of federal spending and thus the deficit.  A reason is obvious:  these are programs that affect people who vote.   Politicians don’t usually get elected by ticking off voters.

So it is not surprising that congress voted to cut funding to the WIC program while deciding to continue to fund farm subsidies.  Infants and children don’t vote, and no doubt the mothers served by this program don’t vote much either.  Farmers and farm states on the other hand have powerful lobbies to defend their funds, and politicians need their votes and monies for their campaign coffers.

While I know the need to cut federal spending and the deficit, and support it, targeting the WIC program results from knowing this demographic has no political clout in America.  (In fact 90% of Americans – those who don’t belong to the 10% of the population who are the wealthiest – share only 18% of the total value of the stock markets.   One can imagine that those who belong to the 20% of Americans who are poorest own even a proportionately smaller percent of stock wealth)

At least for those of us with a consistent pro-life belief, we have to ponder whether the cuts that congress are willing to make to the budget are in fact opposed to a pro-life ethic.   Being pro-life, we need to support programs which help our fellow citizens bring their babies to birth and then help nurture them with healthy life styles.  If our policies result in cutting support to pregnant moms and new born infants, we are in fact dooming some of these women, infant and children to higher infant mortality rates.  This is not a consistent pro-life policy.

One argument Christian pro-life people have made through the years is that we must defend those who cannot defend themselves – including the unborn child in the mother’s womb.  There are also plenty of children already born into this world who cannot defend themselves, and who have no champions to defend them from those who measure everything in utilitarian terms.  We are to defend the unborn, but also we are to defend the widow and the fatherless and others who cannot defend themselves.

It may be that like in any government run program there is waste and even fraud.  Tightening up how such programs operate is a good thing.   But if we are going to be consistently pro-life, we need to support programs not only which restrict abortions but which encourage healthier life styles for pregnant women, and for infants and children.   Changing the budget does not mean we have to abandon our ethics and morality.

America & Capitalism: Dr. Frankenstein’s Demonic Lesson

I tend to see the economy as something I’m on the outside of looking in.  I know that is not the reality, like everyone I’m part of the economy, but it is governed by factors, forces and a logic that are beyond my understanding.  I feel the same way about the universe in general which leads me to believe there is a God – there is some kind of logic at work, I just can’t explain, describe or control it.  With the economy however I tend to lower my view of what governs it – it is far more humanly determined than divinely ordained.

Right now the world’s economy (or economies) seems to be under the sway of the gods of capitalism.  My rather limited understanding of capitalism is that its goal and purpose is to increase capital (money, wealth).   Capitalism is not naturally egalitarian – the distribution of this capital is not its main concern, and so it can happen that a few can gain disproportionate control of the vast majority of the capital  (the wealthiest 1% of Americans owns 38.3% of the stock market, the wealthiest 10% owns 81.2% of the stock market according to the Motley Fool.).

The U.S. in general has supported capitalism, and American leaders of all kinds (business, political, economic) believe that America controls capitalism or at least that America can harness capitalism for the good of America or that capitalism and America have the same goals, vision and purpose.  Recently, some very conservative political people have commented on how capitalism actually works for and serves its own purposes: it is most influenced and controlled by international bankers, financiers, and investors, not by American political (or perhaps even economic) interests.  The captains of capitalism may have at times an interest in America, but ultimately their real interest is in increasing capital:  if that parallels American interests OK, but if not they will pursue their goal anyway.  This is the effect of globalization on capitalism; investors, wherever they come from and whatever their interests, now push the worldwide capitalism.

Globalization has challenged the notion that capitalism and America are coterminous with each other.  Though many outside of America refer to globalization as “Americanization”, globalization is showing that it has a life and mind of its own.  Capitalism continues to pursue increasing capital and is quite willing to focus its attention on any part of the world where that can happen best or fastest.  Thus the rise of China, India or Brazil in world economics.

Rana Foroohar in the 20 June 2011 issue of TIME, What U.S. Economic Recovery?  Five Destructive Myths, wrote some ideas that caught my attention.

There is a fundamental disconnect between the fortunes of American companies, which are doing quite well, and American workers, most of whom are earning a lower hourly wage now than they did during the recession. The thing is, companies make plenty of money; they just don’t spend it on workers here.

Half of Americans say they couldn’t come up with $2,000 in 30 days without selling some of their possessions. Meanwhile, companies are flush: American firms generated $1.68 trillion in profit in the last quarter of 2010 alone. But many firms would think twice before putting their next factory or R&D center in the U.S. when they could put it in Brazil, China or India. These emerging-market nations are churning out 70 million new middle-class workers and consumers every year. That’s one reason unemployment is high and wages are constrained here at home. This was true well before the recession and even before Obama arrived in office. From 2000 to 2007, the U.S. saw its weakest period of job creation since the Great Depression.

Nobel laureate Michael Spence, author of The Next Convergence, has looked at which American companies created jobs at home from 1990 to 2008, a period of extreme globalization. The results are startling. The companies that did business in global markets, including manufacturers, banks, exporters, energy firms and financial services, contributed almost nothing to overall American job growth. The firms that did contribute were those operating mostly in the U.S. market, immune to global competition — health care companies, government agencies, retailers and hotels. Sadly, jobs in these sectors are lower paid and lower skilled than those that were outsourced.

In some ways what may be happening in world economics is that America has viewed Capitalism as its adoring child, but as Dr. Frankenstein discovered, his “demon” (a term he uses for his “invention”) had a mind of its own.  Dr. Frankenstein’s invention goes off into the world with the poor doctor pursuing his invention rather than controlling it.  It may be that the US is actually in pursuit of capitalism rather than controlling it.  Capitalism is turning its attention to emerging markets where there is more capital to be grown rather than focusing on America, where growth may be possible, but it will be limited growth as compared to these emerging markets.

This of course means that politicians who think they can revive the US economy to the growth levels of the late 20th Century by tax cuts which will lure capitalist interests back to the US may far underestimate what the real situation of the world economy is.  It is possible that America is just not able to produce the kind of capital growth which emerging markets can.  Capitalism’s interest is in growing capital: where its treasure is, so its heart will follow.  That is going to happen no matter how pro-business American politics become.   Investors want ever greater returns, and those are apparently found in emerging markets/economies.   It is not a matter that America’s tax structure are anti-business, the real issue is capitalism will go where it can increase capital the most quickly.

For those who feel that “big government” is the real problem for the American economy, distributist economist John Medaille (TOWARD A TRULY FREE MARKET) points out that between 1853 and 1940, the pre-Big Government era, the US economy was in recession or depression 40% of the time.  Since the age of big government, the US economy has been in recession 15% of the time.  He says for those who fantasize that there was some golden age before big government where the economy just hummed along without impediment, they had better study history and live in reality rather than in some fictional legend.

I have no solutions for the American economy, as I said at the beginning this is not my area of expertise, and so I’m much more the spectator.  I am also naturally skeptical, and am not at all convinced that politicians of any stripe have the fix for what ails our economy (though I did think The National Commission of Fiscal Responsibility and Reform took the problem seriously and recommends some of the hard decisions which most politicians want to avoid) .  I think some politicians simply underestimate the role globalization has had on capitalist interests, and some overestimate how much their policies can determine capitalism’s interest in the US.  Or maybe politicians just don’t like to acknowledge that there are forces in the world over which they have no control.  More hard realities voters don’t want to face.

Chri$tma$ $hopping for Chri$tian$


Mall of America

In America the “Christmas season” begins with consumer shopping – Black Friday and Cyber Monday.   The news about the season and throughout the season is all about how much money people are spending, borrowing, consuming and how happy or worried retailers are.

St. John Chrysostom writing in 387AD makes his own interesting comparisons and analogies of Christian economics and consumerism when he talks about the Christian life in terms of buying and selling.  For Chrysostom Christian consumerism and “retail trade” however have to do with giving charitably to the poor which according to the scriptures makes God a debtor to us.  Writing about repentance, Chrysostom says on the final Judgment Day, we will not be able to bribe God to give us a favorable judgment – His judgment will be just.  But then St. John mentions that we improve our standing before God through financial means – giving to the poor and needy.

“The same with God: you cannot persuade the Judge during the time of the tribunal. … He is not corrupted by money; and His righteous judgment is awesome and unpersuadable.  Here, therefore, let us beg and win Him over; here, with all our strength, let us frequently supplicate Him; but not with money. Or, better yet, to tell the truth, the Lover of Man is persuaded with money, although He does not accept it Himself but through the poor.  Give money to the poor and you have appeased the Judge.  And I say these things out of concern for you, because repentance without almsgiving is a corpse and is without wings.  Repentance cannot fly high without the wing of almsgiving. …  Today, therefore, the marketplace of almsgiving is open, because we see the captives and the poor; we see all who walk around in the marketplace; we see those who cry out; we see those who weep; we see those who sigh.  Before us is a marvelous festival, and the festival has no other purpose, and the merchant has no other thought, than to purchase the merchandise cheaply and to sell it expensively.  Is this not the purpose of every merchant?  …

God has such a festival before us; buy righteousness at a small price so you can resell it in the future at a great price, if someone can call repayment retail-trade.  Here, righteousness is purchased at a small price, with one insignificant morsel of bread, with a cheap piece of clothing, with a glass of cold water.  ‘He who gives one glass of cold water, truly I say to you,’ says the Teacher of spiritual commerce, ‘will not lose his reward’ (Mt 10:42).  One glass of cold water brings a reward; clothes and money, which are given for beneficence, do not grant a reward?  On the contrary, they bring a reward and, indeed, a big one.  Therefore, why did He call to mind a glass of cold water?  Almsgiving, He says, costs nothing; for cold water you neither spend firewood nor consume anything else.  If beneficence has such grace wherever the gift is inexpensive, how great a reward should someone expect from the Righteous Judge, when He gives clothes abundantly, when He provides with money, when He gives other surplus goods?  As long as the virtues are found before us and are sold cheaply, let us take form the Munificent One, let us grasp, let us purchase.  ‘You who thirst,’ He says, ‘Come to the water; and all who do not have money, go and purchase’ (Is 55:1).  As long as the festival lasts, let us buy alms, or, better yet, let us purchase salvation through almsgiving.  You clothe Christ when you clothe the poor.  … Whoever has mercy upon the poor lends to God.  Let us lend to God almsgiving so we may receive from Him clemency in exchange.  Oh, how wise is this statement! ‘Whoever has mercy upon the poor lends to God’ (Prv 19:17).  … Since God borrows from us, then, He is our debtor.  How do you want to have Him, as a judge or debtor?  The debtor is ashamed before his lender; the judge does not put to shame the one who borrows.”   (ST. JOHN CHRYSOSTOM ON REPENTANCE AND ALMSGIVING, pp 103-105)

St. John Chrysostom

Chrysostom might agree that Christmas is an excellent shopping season for Christians – time to purchase gifts for the poor and needy while simultaneously buying favor with God.  He sees the marketplace as a festival – it is of course filled with poor, the needy and the destitute – but what we should have eyes to see is how it is through these same folk that we make God our debtor through charitable giving; each opportunity to give charitably thus adds to the festival of salvation – that heavenly banquet to which we have been invited.