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Samuel Gregg

Posts by Samuel Gregg:

Latin America: After the Left

Wednesday, January 27, 2010

This week’s Acton commentary:

The left is in trouble in Latin America. Sebastián Piñera’s recent election as Chile’s first elected center-right president in decades owes much to the inability of the center-left coalition that governed Chile after 1990 to rejuvenate itself. Yet across Latin America there is, as the Washington Post’s Jackson Diel perceptively observes, a sense that the left’s decade of dominance is unraveling.

Future historians may trace the beginning of this decline to the refusal of Honduras’s Congress, Supreme Court, Administrative Law Tribunal, independent Human Rights Ombudsman, Supreme Electoral Tribunal, two main political parties, and Catholic bishops to allow ex-President Manuel Zelaya to subvert Honduras’s constitutional order “from within” Chávista-style in 2009.

In truth, however, the populist-left is wilting because their economic policies are collapsing. The most prominent example is Venezuela. Hugo Chávez’s regime was recently forced to devalue the currency, thereby undermining the purchasing power of ordinary Venezuelans’ bolivars in an already recessionary inflation-riddled economy. He is also rationing basic commodities such as electricity. (more…)

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Forgive us our deficits

Saturday, January 23, 2010

This week’s Acton commentary:

As 2010 unfolds, many countries are confronting a public deficit crisis of disturbing proportions. Since 2008, countless politicians have underscored that a cavalier attitude to debt on the part of Main St. and Wall St. contributed significantly to the recent financial crisis. It’s therefore ironic to observe these contemporary preachers of thrift plunging developed economies into an abyss of public liabilities.

In 2009, for example, the Obama Administration spent more money on new programs in nine months than the Clinton Administration did in eight years, thereby increasing America’s annual deficit to $1.4 trillion.

To be fair, the federal government’s annual deficit rose steadily under the Bush Administration. Indeed, this spending-pattern helped create an atmosphere which made it easier for politicians to push through the stimulus packages of late 2008 and 2009. America’s long-term annual federal deficit is now at its highest level since the early 1990s. The Office of Management and Budget presently predicts that by 2019 America’s public debt will be $18.4 trillion – approximately 148 percent of America’s GDP.

In an age when political, civic, and religious leaders endlessly invoke “intergenerational solidarity,” that’s hardly a proud legacy to bequeath our children. It’s akin to forcing them into a form of indentured servitude to us which will last long after we’ve gone to meet our maker.

A former American Vice-President once reportedly stated: “Deficits don’t matter”. Actually, they do. For one thing, much economic policy of the 2010s is going to be dominated by efforts to reduce government deficits. This assumes, of course, that our political masters have retained some lingering sense of fiscal prudence. Here the Federal government’s recent lifting of borrowing limits for financially-disgraced Fannie Mae and Freddie Mac does not inspire confidence. Nor does Congress’s quiet Christmas Eve raising of the federal debt limit to $12.394 trillion.

Deficits also matter because reducing them presents us with difficult choices. One is to raise taxes. This, however, reduces incentives to create wealth. A second is simply to inflate the deficit away. But apart from poisoning a currency, inflation discourages savings and negatively impacts those on fixed incomes: i.e., the elderly and the poor.

Another option is to reduce government expenditures. But politicians would then not have as much taxpayer money available to pay off the various interest groups that support them during elections. Unsurprisingly, they’re not so inspired by this, all protestations to the contrary.

Naturally, it’s very easy to blame politicians for the deficit nightmare confronting America and other developed countries. But one of the Bible’s most useful pieces of advice is to “remove the wooden beam from your eye first; then you will see clearly to remove the splinter from your brother’s eye” (Matthew 7:5).

It’s true that many politicians in America and Western Europe consistently vote for public expenditures not covered by revenue. But they are not in office because they inherited their positions. They hold public office because many of us vote for them.

Some of us do so because we’re happy for them to use their legislative powers to make others to pay for particular projects that we can’t or won’t pay for ourselves. It’s part of an unspoken agreement between politicians and the rest of us. We want to have our pork and eat it too.

Others vote for such political candidates because we actually want the state to take care of us rather than assume responsibility for ourselves and our families. Yet others vote for deficit-enhancing politicians because we think we can have mutually-exclusive things, such as countless entitlement programs and low taxes.

And then there are those of us who vote on the strange basis of identity-politics or emotionally-satisfying-but-content-less slogans like “Hope and Change,” while ignoring the woeful fiscal records of politicians of all parties espousing such mottos. The same politicians habitually make absurd promises to solve all our problems, and we go along with it. In short, we routinely throw our reason out the door and succumb to messianic sentiment and utopian daydreaming. That’s what adolescents do – not mature, responsible citizens.

At some point, however, the irreconcilable must be reconciled. All those promises and pork-barrels must be paid for. Neither raising taxes nor cutting expenditures are electorally-palatable solutions for most politicians. So why not run large deficits?

But in the end, out-of-control deficits matter because they tell us something about who we are, what we want, and our unwillingness to make the necessary sacrifices to achieve our goals. Ultimately, it’s not just politicians who need to be held accountable and repent for our deficit crisis. It’s us.

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Recommended: Belloc’s Puzzling Manifesto

Wednesday, January 13, 2010

Hilaire Belloc

Hilaire Belloc

Over the past five years, many conservatives and religiously-inclined people have been turning to the works of Hilaire Belloc and G.K. Chesterton as part of an effort to rethink the nature of economic life. Both these figures wrote about many other things than economics – and some would say that, for all their insights as Christian apologists, economics was never their strong point. Indeed many of their economic writings were heavily criticized when they were initially published in Britain and the United States. Here is an example of one such critique that appeared when Belloc’s The Servile State was first published under an American imprint in 1947. It repays close reading.

From Mises Daily: Belloc’s Puzzling Manifesto by Garet Garrett.

Having proved by logic that capitalism, socialism and collectivism all tend inevitably to bring the servile state to pass, Belloc comes to speak of the solution and there his distributive state fails him. The way back to that state of society in which ownership of “the springs of life” shall be happily universal is a road of appalling difficulties. They are perhaps insurmountable. Suppose you think of doing it boldly, as to say, “all shall own,” instead of saying, as the collectivists would, “none shall own.” Very good. But by what scale of justice shall this new ownership be apportioned among the people? What will the people do with it? How would you keep the many from selling it back to the few?

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Not so separate after all

Tuesday, January 5, 2010

The New York Times is not known to be the most reliable or informed commentator on matters religious, but a recent Times article (marred, unfortunately, by a couple of inaccuracies) highlighted that France’s claim to have separated religion from the state is only true in parts. French cities and the countryside are dotted with beautiful churches, but few realize that the state is responsible for the physical upkeep of many of them. This is a legacy of the famous (or, infamous, depending on your perspective) 1905 law - Loi du 9 décembre 1905 concernant la séparation des Églises et de l’État - in which a militantly anti-Catholic French government unilaterally abrogated the Concordat of 1801 and ended state-funding of religious groups (which meant, in overwhelmingly Catholic France, the Catholic Church).

But it didn’t quite cut all the ties. As part of the 1905 law, the French government declared that all then-existing religious buildings were the property of the state (specifically, local government), thereby legalizing the greatest theft of private property owned by a religious organization since Henry VIII’s dissolution (or, more accurately, government-sanctioned sacking, pillaging, and destruction) of the monasteries. Unlike King Henry, however, the French state allowed Catholics to keep using these places of worship and even today maintains their upkeep - something that lends itself to all sorts of mischief-making on the part of politicians.

A good example of this was highlighted in the Times article which reports that a beautiful 19th century church in the town of Gesté in the province of Anjou is scheduled for demolition because the local council has decided that it is too costly to maintain and cheaper to build a new one. But many opposing the council’s decision say that it has nothing to do with government budgets and everything to do with trying to reduce local unemployment.

Given the state of much post-1960s church architecture, it’s likely that the new church will be just as hideously ugly as most other churches (of any confession) built since 1960. The wider point, however, is that it should surely be up to the local bishop and the parish itself as to whether to renovate the church or build a new one. Instead, the choice has been made by Gesté’s local council, of whom one can safely presume a good number (even in the still very Catholic province of Anjou) are not believers or haven’t darkened a church door in several decades. Christians presumably would not expect to have a say in the building or demolition of the local Communist party headquarters, feminist collective, or Masonic temple. Yet in France if the local village atheist gets elected to the local council, he is henceforth in a position to make decisions about the fate of many houses of worship.

Such are the perils of government funding for churches – or mosques or synagogues for that matter. Inevitably, one’s independence is unjustly circumscribed.

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Not So Liberating: The Twilight of Liberation Theology

Tuesday, December 22, 2009

NRO’s Corner published my article on Pope Benedict’s recent remarks to Brazilian bishops on liberation theology:

It went almost unnoticed, but on December 5, Benedict XVI articulated one of the most stinging rebukes of a particular theological school ever made by a pope. Addressing a visiting group of Brazilian bishops, Benedict followed some mild comments about Catholic education with some very sharp and deeply critical remarks about liberation theology and its effects upon the Catholic Church.

After stressing how certain liberation theologians drew heavily upon Marxist concepts, the pope described these ideas as “deceitful.” This is very strong language for a pope. But Benedict then underscored the damage that liberation theology did to the Catholic Church. “The more or less visible consequences,” he told the bishops, “of that approach — characterised by rebellion, division, dissent, offence and anarchy — still linger today, producing great suffering and a serious loss of vital energies in your diocesan communities.”

Today, even some of liberation theology’s most outspoken advocates freely admit that it has collapsed, including in Latin America. Once considered avant-garde, it is now generally confined to clergy and laity of a certain age who wield ever-decreasing influence within the Church. Nonetheless, Benedict XVI clearly believes it’s worth underscoring just how much harm it inflicted upon the Catholic Church.

For a start, there’s little question that liberation theology was a disaster for Catholic evangelization. There’s a saying in Latin America that sums this up: “The Church opted for the poor, and the poor opted for the Pentecostals.”

In short, while many Catholic clergy were preaching class war, many of those on whose behalf the war was supposedly being waged decided that they weren’t so interested in learning about Marx or listening to a language of hate. They simply wanted to learn about Jesus Christ and his love for all people (regardless of economic status). They found this in many evangelical communities.

A second major impact was upon the formation of Catholic clergy in parts of Latin America. Instead of being immersed in the fullness of the Catholic faith’s intellectual richness, many Catholic seminarians in the 1970s and 1980s read Marx’s Das Kapital and refused to look at such “bourgeois” literature such Augustine’s City of God or Aquinas’s Summa Theologiae.

This undermined the Church’s ability to witness to Christ in Latin America, not least because some clergy reduced Christ to the status of a heroic but less than divine urban guerrilla and weren’t especially interested in explaining Catholicism’s tenets to their flocks.

Then there has been the effect upon the Church’s ability to engage the new Latin American economic world that emerged as the region opened itself to markets in the 1990s. Certainly much of this liberalization was poorly executed and marred by corruption. Nonetheless, as The Economist recently reported, countries like Brazil — once liberation theology’s epicenter — are emerging as global economic players and helping millions of people out of poverty in the process. The smartest thing that Brazil’s left-wing President Lula da Silva ever did was to not dismantle most of his predecessor’s economic reforms.

Unfortunately, one legacy of liberation theology is the inability of some Catholic clergy to relate to people working in the business world. Ironically, business executives are far more likely to practice their Catholicism than many other Latin Americans. Yet liberation theology has left a residue of distrust of business leaders among some Catholic clergy — and vice versa. Distrust is no basis for engagement, let alone evangelization.

The good news is that the Church in Latin America is more than halfway along the road to recovery. Anyone who talks to younger priests and seminarians there today quickly learns that they have absorbed the devastating critiques of liberation theology produced by then-Cardinal Joseph Ratzinger in the 1980s. If anything, they tend to regard liberation theologians, like the ex-priest Leonardo Boff, as heretical irrelevancies.

Indeed, figures such as Boff must be dismayed that the Catholic Church has emerged as the most outspoken opponent of populist-leftists such as Venezuela’s Hugo Chávez. As Michael Novak observed in Will It Liberate? (1986), liberation theologians were notoriously vague when it came to practical policy proposals. But if any group embodies the liberationists’ economic agenda, it is surely the populist Left, which is currently providing us with case studies of how to drive economies into the ground faster than you can say “Fidel Castro.”

As time passes, liberation theology is well on its way to being consigned to the long list of Christian heterodoxies, ranging from Arianism to Hans-Küngism. But as Benedict XVI understands, ideas matter — including incoherent and destructive ideas such as liberation theology. Until the Catholic Church addresses the legacy of this defunct ideology — to give liberation theology its proper designation — its ability to speak to the Latin America of the future will be impaired.

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Commentary — Chavez: Desperate, Delusional, and Dangerous

Wednesday, November 25, 2009

It’s ironic – and tragic – that as the world celebrates the twentieth anniversary of Communism’s defeat in Europe, the comic-opera that is Hugo Chavez’s “21st century socialist” Venezuela is descending to new lows of absurdity. Beneath the buffoonery, however, there’s evidence that life in Venezuela is about to take a turn for the worse.

By buffoonery, I mean President Chavez’s decidedly weird statements of late. These include threatening war against Columbia, advising Venezuelans that it is “more socialist” to shower for only three minutes a day, telling his fellow citizens to eat less because “there are lots of fat people” in Venezuela, eulogizing convicted murderer Carlos the Jackal as “a revolutionary fighter”, defending Zimbabwean dictator Robert Mugabe as a “brother”, and wondering whether Idi Amin was so bad after all.

It’s not unusual for Latin American caudillos to say things that suggest a growing detachment from reality. The truth, however, is that for all Chavez’s eccentricities, it would be a mistake to dismiss these comments as nothing more than egomaniacal ravings. (more…)

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The Financial Crisis: What We (Still) Haven’t Learned

Thursday, November 19, 2009

It’s over a year now since the 2008 financial crisis spread havoc throughout the global economy. Dozens of books and articles have appeared to explain what went wrong. They identify culprits ranging from Wall Street financiers overleveraging assets, to ACORN lobbying policy-makers to lower mortgage standards, to politicians closely connected to government-sponsored enterprises such as Freddie Mac and Fannie Mae failing to exercise oversight of those agencies.

As time passes, armies of doctoral students will explore every nook and cranny of the 2008 meltdown. But if most governments’ policy responses to the crisis are any guide, it’s apparent that many lessons from the financial crisis are being ignored or escaping most policy-makers’ attention. Here are five of them.

Perhaps the most prominent unlearned lesson is the danger of moral hazard. The message conveyed to business by many governments’ reactions to the financial crisis is this: if you are big enough (or enjoy extensive connections with influential politicians) and behave irresponsibly, you may reasonably expect that governments will shield you from the consequences of your actions. What other message could businesses such as AIG, Citigroup, Royal Bank of Scotland, Lloyds, and Bank of America have possibly received from all the bailouts and virtual nationalizations?

A second unlearned lesson is that once you allow governments to increase their involvement in the economy to address a crisis, it is extremely difficult to wind that involvement back. Indeed, the exact opposite usually occurs.

Who today remembers the stimulus and bailout packages so heatedly debated in late-2008? They pale next to the fiscal excesses of governments in America and Britain throughout 2009. Recessions and subsequent government interventions create an atmosphere in which the hitherto implausible – such as trillion-dollar, 1900 pages-long healthcare legislation in an era of record deficits – becomes thinkable. Likewise the Bush Administration’s bailout of Chrysler and GM morphed into the Obama Administration’s virtual appropriation of the same two companies. (more…)

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Economic Liberalism and its Discontents

Monday, November 16, 2009

How do we restore confidence in free markets? Formulate a robust explanation of their moral value. Read Economic Liberalism and its Discontents on Public Discourse.

In his recent book The Creation and Destruction of Value, Princeton University’s Harold James observes that the 2008 financial crisis resulted in more than the devastation of economic value. It also facilitated a collapse of values in the sense of people’s faith in particular ideas, institutions, and practices. Among these, few would question that economic Liberalism’s credibility was significantly undermined.

As time passes, more people may recognize that the financial crisis owed much to factors that had little to do with markets as such. As several scholars illustrated in the 2009 monograph Verdict on the Crash, the causes included regulations that encouraged irresponsible behavior by banks, imprudent central bank policies, not to mention outright collusion between politicians and government-sponsored enterprises such as Fannie Mae and Freddie Mac.

Unfortunately for promoters of free markets, knowledge of these facts will take time to counter the widespread perception that economic liberalism—manifested in financial liberalization, privatization, deregulation, and increased competition—contributed significantly to the 2008 crisis.

In the meantime, those committed to economic liberalism have a chance to rethink and reformulate the case for markets. Certainly the efficiency arguments for economic freedom will be revisited, refined, and rearticulated. But it’s also an opportunity for economic liberals to reexamine what is often a weakness in their position—the principled case for markets.

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