Category: Acton Commentary

I introduced this week’s Acton Commentary yesterday with some thoughts about “The Audacity of Austerity.” In today’s “‘A’ for Austerity: The New Scarlet Letter,” I take to task the attitude embodied by Paul Krugman’s vilification of proponents of austerity measures.

Most recently Krugman called such advocates “debt moralizers,” implicitly drawing the connection between austerity measures and “puritanical” virtues like thrift. In this Krugman follows in the spirit of Nathaniel Hawthorne, who indeed has much to answer for in forming the popular, and mistaken, understanding of the Puritans and joyless, dour, and rigid.

But the joke is, of course, that in denouncing the “debt moralizers” Krugman is himself “moralizing.” It just so happens that instead of moralizing against wanton debt and deficit spending, he is moralizing against commonsense “puritanical” wisdom. He is moralizing against those who dare to think that government bureaucrats and the public intelligentsia aren’t fit to rule the political economy by virtue of their “expertise.”

Krugman’s message amounts to the view that the hoi polloi don’t really know what’s best for them, and it is up to the few enlightened planners of civilization to run things properly.

If I might be allowed to make another literary comparison, in this Krugman is a bit like Shift, the Ape from The Last Battle, the concluding book of C. S. Lewis’ Chronicles of Narnia series. The book beings by describing the relationship between Shift the Ape and Puzzle the Donkey (or Ass), and although both would say they are friends, the nature of the friendship is rather suspect, for “from the way things went on you might have thought Puzzle was more like Shift’s servant than his friend.”

Indeed, it quickly becomes clear that Shift uses his superior way with words and quick wit to manipulate Puzzle into doing what he wants. All the while Shift reiterates the same message to Puzzle.

Puzzle never complained, because he knew that Shift was far cleverer than himself and he thought it was very kind of Shift to be friends with him at all. And if ever Puzzle did try to argue about anything, Shift would always say, “Now Puzzle, I understand what needs to be done better than you. You know you’re not clever, Puzzle.” And Puzzle always said, “No, Shift. It’s quite true. I’m not clever.” Then he would sigh and do whatever Shift had said.

This all too often is the message from K Street (and Wall Street) to Main Street: We understand what needs to be done better than you. On the heels of yesterday’s election, it is up to the new legislators not to simply sigh on behalf of their constituents and go along with the way things always go inside the Beltway.

As I argue in today’s commentary, contrary to Krugman, we ought to think of the ‘A’ for austerity not as a scarlet letter but rather as a red badge of political courage.

Blog author: jballor
posted by on Tuesday, November 2, 2010

The title of this post borrows from a phrase I employ in the conclusion of tomorrow’s Acton Commentary on the prospects for austerity in America after today’s mid-term elections. (I can’t claim to have coined the term, since about 4,270 other instances of the phrase show up in a Google search, but I like it nonetheless.)

Today I’ll simply highlight a few of the relevant stories that I’ve noted on this theme over recent weeks and months.

As Samuelson notes, austerity is by its very nature unpopular. Speaking of the dilemma facing governments, he writes, “Without unpopular spending cuts and tax increases, unmanageable deficits may choke their economies.”

Tomorrow I’ll discuss the treatment of austerity as a leitmotif in the writings of Paul Krugman, who most recently dubbed austerity proponents “moralizers.” The significance of this will be made more clear tomorrow in relation to my commentary, “‘A’ for Austerity: The New Scarlet Letter.”

Blog author: abradley
posted by on Wednesday, October 27, 2010

Published today in Acton News & Commentary. Sign up for the free weekly email newsletter from the Acton Institute here.

Barack von Bismarck

By Anthony Bradley

The November congressional elections are not so much a referendum on the Obama administration as a check on whether President Barack Obama’s implementation of a Bismarckian vision of government will continue.

Otto von Bismarck, the Prussian prime minister/German chancellor from 1862 to 1890, is the father of the welfare state. He advanced the vision that government should serve as a social services institution by taking earned wealth from the rich and from businesses to deliver services to those who are not as advantaged. Bismarck’s Kulturkampf campaign intended both to keep radical socialists at bay and undermine the church’s role in meeting the needs of local citizens by positioning government to be the primary source of social services. He initiated the ideal of an ever-expanding, beneficent government, which was subsequently imported to the United States in Franklin Roosevelt’s New Deal, expanded further with Lyndon Johnson’s War on Poverty, and currently drives the policies of the Obama administration. Barack Obama is not a 19th-century socialist, but his agenda is unquestionably Bismarckian.

The Iron Chancellor

In 1891, William Dawson, in Bismarck and State Socialism, explained that Bismarck believed it was the duty of the state to promote the welfare of all its members. On November 22, 1888, in response to Germany’s 1873 economic crisis, Bismarck proclaimed, “I regard it as the duty of the State to endeavor to ameliorate existing economic evils.” In Bismarck-like fashion, commenting on America’s economic crisis, President Obama declared in January 2009 that,  “It is true that we cannot depend on government alone to create jobs or long-term growth, but at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe. Only government can break the cycle that are crippling our economy—where a lack of spending leads to lost jobs which leads to even less spending; where inability to lend and borrow stops growth and leads to even less credit.” In a Bismarckian world, “only” government can set the national economy right.

Regarding universal health insurance, on March 15th, 1884, Bismarck asked, “Is it the duty of the State, or is it not, to provide for its helpless citizens?” He answered, “I maintain that it is its duty.” It is the duty of the state to “the seek the cheapest form of insurance, and, not aiming at profit for itself, must keep primarily in view the benefit for the poor and needy.” Similarly, under the federal healthcare reform law, Congress forbids health insurance companies from raising insurance premiums until insurers submit to Obamacare officials “a justification for an unreasonable premium increase prior to the implementation of the increase.” In effect, government determines health insurance premiums.

On unemployment, Bismarck believed that government is ultimately responsible for finding jobs for those unemployed through no fault of their own, those lacking opportunity to work and thus prohibited from properly sustaining themselves. On March 15, 1884 Bismarck exclaimed, “If an establishment employing twenty thousand or more workpeople were to be ruined . . . we could not allow these men to hunger”—even if it means creating government jobs for national infrastructure improvements. “In such cases we build railways,” says Bismarck. “We carry out improvements which otherwise would be left to private initiative.” Likewise, in July, President Obama proclaimed, “I believe it’s critical we extend unemployment insurance for several more months, so that Americans who’ve been laid off through no fault of their own get the support they need to provide for their families and can maintain their health insurance until they’re rehired.” Then, in September, President Obama announced a six-year, $50 billion infrastructure proposal “to rebuild 150,000 miles of our roads,” “maintain 4,000 miles of our railways,” and “restore 150 miles of runways.” To keep America working, Obama is channeling Bismarck’s vision of government as creator of jobs.

By the 1890s, for several reasons, Germany was forced to abandon many of Bismarck’s specific reforms. However, Bismarck’s method of using of government as the ultimate provider of social services paid for by the earned wealth of others is the modus operandi of the Obama administration. The outcome of contests for congressional seats will determine whether the nation continues down the path chosen by Barack Obama, but blazed long ago by the visionary of the omnicompetent state, Otto von Bismarck.

Published today in Acton News & Commentary. Sign up for the free weekly email newsletter from the Acton Institute here.

Juan Williams’ Firing Might Produce Desired Results

By Bruce Edward Walker

It was a tough few days last week in Radio Wobegone. And it promises to get tougher in the days, weeks and months ahead. The base of operations for Prairie Home Companion and Car Talk is in serious hot water.

National Public Radio dismissed newsman Juan Williams for an on-air discussion he conducted with Fox News host Bill O’Reilly in which Williams confessed discomfort when observing fellow airline passengers dressed in Muslim garb. Although the conversation occurred on another network, NPR’s reaction was swift: Williams was fired, and a hailstorm ensued.

Imagine if HBO’s Bill Maher had made a similar confession: That, as an atheist, he was disturbed to see Lake Wobegone’s Pastor Inkfist boarding a plane, wearing Lutheran clerical garb. Oh, wait, Maher takes potshots at clergy, church and religion, in general, whenever his lips are moving. True, the ABC Network fired Maher shortly after 9/11 – but his remarks were far more egregiously offensive than Williams’.

Perhaps an unfair analogy, since Maher is ostensibly a comic and Williams a newsman, but it does present a comparative basis on how thin-skinned and politically correct the suits at NPR have become. When it serves their purposes, that is.

You see, I don’t believe Williams’ comments caused his firing. His words only granted cover for his firing, a move long-desired by NPR’s leadership in light of Williams’ too-often straying from the leftwing party line. Whatever the reason, it is NPR’s method that is especially deplorable. One would be more inclined to understand the executives’ decision if only they would have considered their actions in relation to the dignity that their employees deserve. Pope Leo XIII, writing in his 1891 encyclical Rerum Novarum, provided a perfect vaccine against NPR’s current public relations debacle.

Leo wrote: “Should it happen that either a master or a workman believes himself injured, nothing would be more desirable than that a committee should be appointed, composed of reliable and capable members of the association, whose duty would be, conformably with the rules of the association, to settle the dispute.” In other words, Leo called for employers to demonstrate a basic level of respect for the people who comprise their company. Dismissing Williams out-of-hand without following such simple advice has left NPR open for legitimate negative criticism.

It has also raised the issue of cutting government subsidies for the entire Corporation for Public Broadcasting enterprise. And it’s about time. Although relatively miniscule compared to other government-financed boondoggles, NPR should be allowed to sink or swim based on its own merits in the marketplace. Massive public fundraisers as well as corporate donations and sponsors foot the majority of NPR’s bills already. Liberal fat cat George Soros recently bequeathed $1.8 million of his personal fortune to NPR for the hiring of state-based reporters.

Indeed, NPR’s existence as a government-funded entity is an affront not only to secular free-market principles, but to Judeo-Christian views on subsidiarity as well. Succinctly stated, providing public monies to a direct competitor of private industry is morally wrong.

Williams, fortunately, was able to land on his feet. Fox News Network hired the revered analyst in the wake of his firing. NPR, however, may not be so lucky.

NPR’s hubris may yet be its undoing as a freeloader on the public dole. We can only hope.

This week’s Acton Commentary. Sign up for our free, weekly email newsletter here. While you’re at it, pick up a copy of Victor Claar’s new monograph, Fair Trade: It’s Prospects as a Poverty Solution, in the Acton Bookshoppe.

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Searching for Meaningful Work: Reflections on the 2010 Economics Nobel

By Victor V. Claar

This year’s Nobel economics prize was awarded to two Americans and a British-Cypriot for developing a theory that helps to explain why unemployment can persist even when job openings are available.

The economics prize is not one of the original awards established by Alfred Nobel’s 1895 will, but is instead a relatively new prize. Established in 1969, the Bank of Sweden Prize in Economic Sciences in Memory of Nobel — its official name — is funded through proceeds from a 1968 donation by Sweden’s central bank.

This year’s winners — Americans Peter Diamond and Dale Mortensen, and British-Cypriot Christopher Pissarides — were honored with the $1.5 million prize for their illumination of the obstacles that may keep buyers and sellers from finding each other in some markets as efficiently as economic theory traditionally predicts.

In some markets — where information is low-cost and individual buyers and sellers are not particularly unique — parties can quickly find each other and engage in mutually-beneficial exchanges. Any buyer is happy to trade with any seller as long as the price seems reasonable to each.

But in other markets the fit matters more. And, as Diamond’s early work in the 1970s suggested, sometimes fit matters a lot. An extreme example is the “market” for spouses. Because marriage is a lifelong joint endeavor, men and women search extensively for partners with whom their eventual marital union may fully flourish as God intends.

And because searching for just the right person takes time, effort, and perhaps many first dates, plenty of eligible men and women remain single at any given moment. Web sites like match.com and eHarmony are popular with singles because those sites help reduce search costs by improving the amount of information available to singles about potential mates.

Diamond, Mortensen, and Pissarides have studied extensively markets with such search costs. When both buyers and sellers are unique, it requires considerable searching for each to find just the right fit. Even in a well-functioning housing market with plenty of available homes, buyers may struggle to find homes they like. So the buyers keep looking.

All three recipients of this year’s prize have carefully extended Diamond’s work to better understand why we may observe persistent unemployment in the labor market even when there are plenty of job openings available, and with interesting policy implications — especially for unemployment insurance programs. Their work shows that more generous unemployment insurance programs will unambiguously lead to longer average unemployment spells: a result with very strong empirical support.

There are two ways to interpret this policy conclusion, and neither is incorrect. On one hand, quite generous welfare benefits may — at the margin — backfire in the sense that they make finding employment less urgent than it would be otherwise, resulting in less search effort by job seekers. This interpretation provided part of the motivation behind the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (the “welfare reform” bill), which shortened the amount of time individuals may receive welfare payments without working. The bill made unemployment look less attractive.

But on the other hand, meaningful work is a gift. God desires that men and women — the only creatures that He made in his image — imitate him through their creative work. Work is our collaboration with God’s creative purposes. Reformers such as John Calvin and Martin Luther stressed the idea, gleaned from Scripture, that every believer is called by God to certain work — a vocation — and has a duty to respond to that call. And John Paul II, in his letter on human labor, observed that work is “one of the fundamental dimensions of [a person’s] earthly existence and of his vocation.” Thus while low unemployment is an important goal, we should not be too quick to put policies in place that force unemployed persons to settle too quickly for jobs that are not a good match. Doing so would deny people the opportunity to pursue their unique callings — ones in which each person can exercise stewardship to the glory of the Creator.

The enduring contribution of this year’s economics Nobel winners will be their suggestion that unemployment insurance alone cannot guarantee meaningful work, and that future policy efforts to reduce unemployment would do better to focus on improving information and reducing search costs, leading to enhanced opportunities for meaning and human flourishing in labor markets. In a recent interview with the Associated Press, Pissarides pointed to the UK’s New Deal for Young People, which directly attaches government assistance to job seeking and training (rather than unemployment per se), as one example “very much based on our work,” he said.

Dr. Victor V. Claar is associate professor of economics at Henderson, the public liberal arts university of Arkansas. He is a coauthor of Economics in Christian Perspective: Theory, Policy, and Life Choices, and author of the Acton Institute’s Fair Trade? Its Prospects as a Poverty Solution.

Acton’s Research Director in the American Spectator:

Europe’s Broken Economies

By Samuel Gregg

During September this year, much of Europe descended into mild chaos. Millions of Spaniards and French went on strike (following, of course, their return from six weeks vacation) against austerity measures introduced by their governments. Across the continent, there are deepening concerns about possible sovereign-debt defaults, stubbornly-high unemployment, Ireland’s renewed banking woes, and the resurgence of right-wing populist parties (often peddling left-wing economic ideas). Indeed, the palpable sense of crisis left many wondering if some European economies have entered a period of chronic decline — one which might eventually reduce Europe to being a bit-player on the world stage.

Obviously we should avoid over-simplification. In Germany and Sweden, for instance, unemployment is declining while economic growth and exports are rising. Not coincidentally, both countries have implemented significant economic reforms over the past ten years. To the audible disappointment of the world’s left-wingers, Sweden is no longer Social Democracy’s poster-child.

Nor can Europe’s present woes be explained in mono-causal terms. Like America, property-bubbles and over-leveraged financial industries played a role in some countries’ meltdowns. But not every European nation presently enduring economic hardship experienced banking crises on the scale experienced by Ireland and Britain.

It will be decades before economists and historians completely diagnose what’s happened to Europe’s economies since 2008. Many, however, will likely conclude that many European countries’ economic culture helped them lurch into seemingly unending crisis.

“Culture” is one of those heavily over-used words. But in sociological and historical terms, “culture” is a way of describing, among other things, the approach to life, the values emphasized, attitudes toward work, the understanding of law, and ultimately the view of science, the arts and religion prevailing in a given society. Over time, these form a type of inheritance that can remain relatively stable in particular historical settings over several generations. (more…)

In this week’s Acton Commentary, I remember German reunification and reflect on its relevance for the present.

Twenty years ago this Sunday, East and West Germany reunited, capping one of the most extraordinary transformations in modern history. Communism in the Soviet Union and its eastern European satellites had collapsed; the oppressed nations of Europe rejoined the “free world.”

My generation was the last to straddle the two worlds, pre- and post-Soviet Union. When I was in elementary and high school, fear of atomic annihilation was real. The USSR was the great, looming adversary on the world stage. Debate over the strategy of “mutually assured destruction” was the ominous focus of international policy discussions.

Read the rest here.

This week’s Acton commentary from Research Director Samuel Gregg. Sign up for Acton News & Commentary here.

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Benedict’s Creative Minority

By Samuel Gregg

In the wake of Benedict XVI’s recent trip to Britain, we have witnessed—yet again—most journalists’ inability to read this pontificate accurately. Whether it was Queen Elizabeth’s gracious welcoming address, Prime Minister David Cameron’s sensible reflections, or the tens of thousands of happy faces of all ages and colors who came to see Benedict in Scotland and England (utterly dwarfing the rather strange collection of angry Kafkaesque protestors), all these facts quickly disproved the usual suspects’ predictions of low-turnouts and massive anti-pope demonstrations.

Indeed, off-stage voices from Britain’s increasingly not-so-cultured elites—such as the celebrity atheist Richard Dawkins and others whom the English historian Michael Burleigh recently described as “sundry chasers of limelight” and products of a “self-satisfied provincialism”—were relegated to the sidelines. As David Cameron said, Benedict “challenged the whole country to sit up and think.”

Of course the success of Benedict’s visit doesn’t mean Britain is about to return to its Christian roots. In fact, it’s tempting to say present-day Britain represents one possible—and rather depressing—European future.

Pope Benedict XVI celebrates mass at Westminster Cathedral


In an article welcoming Benedict’s visit to Britain, the UK’s Chief Rabbi Jonathan Sachs observed, “Whether or not you accept the phrase ‘broken society,’ not all is well in contemporary Britain.” The facts cited by Sach were sobering. In 2008, 45 percent of British children were born outside marriage; 3.9 million children are living in poverty; 20 percent of deaths among young people aged from 15 to 24 are suicides; in 2009, 29.4 million antidepressants were dispensed, up 334 percent from 1985.

Such is the fruit of a deeply-secularized, über-utilitarian culture that tolerates Christians until they start questioning the coherence of societies which can’t speak of truth and error, good and evil, save in the feeble jargon of whatever passes for political correctness at a given moment.

But what few commentators have grasped is that Benedict has long foreseen that, for at least another generation, this may well be the reality confronting those European Catholics and other Christians who won’t bend the knee to political correctness or militant secularism. Accordingly, he’s preparing Catholicism for its future in Europe as what Benedict calls a “creative minority.” (more…)

In this week’s Acton Commentary, I take a look at the prospects of “right-to-work” legislation in Michigan, “A Lesson from Michigan: Time to End Crony Unionism.”

One of the things that disturbs me the most about what I call “crony unionism” is the hand-in-glove relationship between the labor unions and big government. We have the same kind of special pleading and rent seeking in this system as we do in crony capitalism, but the labor unions enjoy such special protection that there isn’t even a hint of democratic competition.

The unions get windfalls from government subsidy and turn around and actively campaign for the expansion of government. The partisan character of some of the ad campaigns funded by labor unions are particularly egregious. I’ve recently seen a labor-funded ad running in Michigan that demonizes Republicans and lauds Democrats, and FactCheck.org ran a report earlier this month about attack ads from the American Federation of State, County, and Municipal Employees.

One of the noteworthy thing about unions in America is that the share of union members are increasingly coming from the public sector rather than the private sector. This adds an additional layer of concern to the larger problem of crony unionism. We in effect get government employees using government funds to campaign for the expansion of government.

Labor unions form a vital part of civil society, but when they are turned into arms of the government, their purpose is perverted and corrupted. Professor Charles W. Baird examines the merits of free labor in his Acton monograph, Liberating Labor: Liberating Labor: A Christian Economist’s Case for Voluntary Unionism.

Even the idea of debating whether unions should enjoy monopolistic privileges in a state like Michigan, dominated by organized labor interests for so long, is refreshing. And I think it might just be instructive about the kinds of alternative and innovative proposals that will have traction at the polls this November.

One of this week’s contributions to Acton Commentary, in honor of the upcoming American Labor Day holiday is titled, “Work and the Two Great Love Commandments.”

In this piece I focus on how we can view work as a means to express our love for our neighbor and for God. I say a bit about what work does for us as individuals as well.

There’s a great deal that could be said on this very important topic. Work is a huge area of our lives. Lester DeKoster, whom I refer to in the commentary, goes so far as to call work the “basic form of stewardship.” (You can find out more about DeKoster’s view of work in his little book of the same name, Work: The Meaning of Your Life—A Christian Perspective.)

He has another important perspective on work related to its formation of our souls and thereby the formation of civilization.

He writes, along with Gerard Berghoef,

While the object of work is destined to perish, the soul formed by daily decision to do work carries over into eternity…. This perspective on work, as a maturing of the soul, liberates the believer from undue concern over the monotony of the assembly line, the threat of technology, or the reduction of the worker to but an easily replaceable cog in the industrial machine. One’s job may be done by another. But each doer is himself unique, and what carries over beyond life and time is not the work but the worker. What doing the job does for each of us is not repeated in anyone else. What the exercise of will, of tenacity, of courage, of foresight, of triumph over temptations to get by, does for you is uniquely your own. One worker may replace another on the assembly line, but what each worker carries away from meeting the challenge of doing the day’s shift will ever be his own. The lasting and creative consequence of daily work happens to be the worker. God so arranges that civilization grows out of the same effort that develops the soul.

Tomorrow I’ll have more to say about work and civilization.