Category: Public Policy

Blog author: jballor
Tuesday, March 28, 2006
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“Immigration creates wealth,” says Larry Kudlow:

Part of the immigration problem is simply Mexico’s inadequate growth and lack of economic opportunity. The country is growing at about 3 percent a year, but it ought to be growing at six to ten percent. Our southern neighbor ought to be the “Mexican Tiger,” but continues to be the “Mexican Chihuahua.”

He also cites and explicates a column by Linda Chavez in The Washington Times, “illustrating what great entrepreneurs and small-business owners Hispanics are.”

Blog author: kschmiesing
Monday, March 27, 2006
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It was a major topic of discussion during the era of corporate scandals a couple years ago, but the issue of executive compensation still pops up in the news from time to time, and it remains a problem with which serious thinkers continue to grapple.

Harvard’s Lucian Bebchuk and Berkeley’s Jesse Fried started one important strand of the discussion when they published Pay Without Performance in 2004. (Robert Kennedy reviewed it for Markets & Morality [available to subscribers]). In brief, Bebchuk and Fried proposed measures to enable and encourage more active shareholders as a check on exorbitant executive pay.

The discussion continues at Harvard’s Program on Corporate Governance, which features further commentary from Bebchuk as well as papers that criticize his proposals for reform. One paper not linked at that page is Stephen Bainbridge’s, which argues that boards of directors are better suited to make corporate governance decisions than are shareholders.

Blog author: jballor
Monday, March 27, 2006
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Kofi Akosah in Accra, Ghana, writes in the latest Campaign for Fighting Diseases newsletter about the prospects for the use of DDT in fighting malaria in his home country. He first describes the devastation that the disease wreaks: “More than 17 million of Ghana’s 20 million people are infected by malaria every year, costing the nation a colossal 850 million cedis (US$94 million) for treatment alone.”

He continues, “Those infected by malaria are in and out of hospital and unable to work. Malaria takes an especially heavy toll on farmers. Swarms of mosquitoes make it impossible for farmers and their families to sleep indoors especially, during the rainy seasons when they are forced to sleep outdoors around bonfires.”

Akosah blames in large part the regulations and methods used by the World Health Organization, which he says have “advocated the use of insecticide-treated bednets in vector control, almost to the exclusion of other proven measures.” One such measure that the WHO has decided to reintroduce in limited use, is “Indoor Residual Spraying, which involves spraying the interior walls of dwellings with a small amount of DDT. This acts as an irritant to the mosquitoes, which prevents them from coming in the house in the first place. Those that do make it inside are quickly repelled outside.”

One of the reasons that DDT had been excluded from WHO treatments against malaria was the havoc that the use of the chemical caused nearly fifty years ago. As Chuck Colson writes, the WHO “sprayed the people’s thatch-roofed huts with DDT—and set in motion a life-and-death illustration of the importance of respecting the natural order.”

He says that the unintended consequences of the application of DDT to the huts followed after the mosquitos had been killed: “The pesticide killed the mosquitoes, but it also killed a parasitic wasp that kept thatch-eating caterpillars under control. The result? People’s roofs began caving in.”

“And then things really got bad,” Colson continues. “The local geckos feasted on the toxic mosquitoes—and got sick. Cats gorged on sick geckos—and dropped dead. And then, with no cats, the rats began running wild, threatening the people with deadly bubonic plague.” All this points to the dangers of the unintended consequences of any policy initiative, but especially one that involves the alteration of the natural environment.

The way to deal with the reality Colson describes, however, is not necessarily to abandon the use of DDT altogether, but to learn from the mistakes of the past. This is why current advocates of the use of DDT emphasize that it is indoor spraying that is the legitimate use of the chemical.

The statement of the Kill Malarial Mosquitos NOW! coalition (PDF) states vehemently that it is in favor “only for indoor residual spraying (which results in zero-to-negligible external environmental residue) – and not for aerial or any other form of outdoor application.”

For more on the coalition, see this entry from the PowerBlog, “Add DDT to the Malaria-Fighting Arsenal.”

An snippet from Ecumenical News International:

Presbyterians invest $1 million in church ‘bank’ that helps poor

New York (ENI). The Presbyterian Church (USA) has invested US$1 million in Oikocredit, an organization established by the World Council of Churches that assists people in poor countries start small businesses. The investment is the largest in Oikocredit over more than a decade, the church announced earlier this week, making the 2.4-million-member US denomination the second-largest investor in the institution set up in 1975. The largest is the Church of Sweden.

I’ve looked a bit at the Oikocredit organization, and in generally this does not fit my normal expectations for an initiative by the left-leaning WCC. To be sure, Oikocredit does employ the rather vague criteria of “socially responsible investing” when deciding which groups to fund.

But in general, the microlending approach is much more economically viable and informed than many ecumenical attitudes towards global poverty. Started over thirty years ago, Oikocredit has a track record, and “was created for groups that need credit to develop their productive enterprises, but have difficulties receiving credit through conventional financial institutions, because they simply lack collateral.” For a personal story of how microloans can be a part of the solution (along with property rights, the rule of law, and so on), see this commentary by Rev. Jerry Zandstra.

Despite its shortcomings, Oikocredit on the whole is probably a good thing. And again, when compared to what you typically see from ecumenical groups, it’s positively refreshing.

Joe Knippenberg raises three issues with respect to my critique of the faith-based initiative (here and here). He writes first, “any activity that depends upon money is potentially corrupting, whether the source is governmental or private…. Why governmental money is different from private in this regard isn’t clear to me.”

I agree that the potential for corruption is present in both cases, but the immediate constituency differs from private to public funds. For the former, the donors are the immediate stake-holders and the charity is accountable to them. For the latter, politicians and bureaucrats are those who hold the charity immediately accountable.

Despite the best intentions of many people who work in government, special interests and ideologies can skew their proper stewardship of taxpayer money, and does not always represent the interests of the citizenry. Since taxpayer money is mediated through the government, there is another layer of institutionalization that serves to increase the distance and thus the accountability between the charity and the donor constituency.

This raises another important issue, which is that strictly speaking taxpayers shouldn’t be considered “donors” in the traditional sense at all. Paying taxes is enforced by the power of the state in a way that voluntary donation to private charities is not. One aspect of this is the distancing effect I just pointed out, but another effect is that the moral virtue of the act of giving is displaced by the coercive nature of the taxpayer/government relationship. Surely those who voluntarily give even more to charities than they are required by taxation are worthy of even greater praise because of this, but nevertheless the nature of the money flowing in to charities from these two sources is quite different. One is coerced the other is voluntary. (more…)

My commentary last week on the situation of the Silver Ring Thing has occasioned some conversation on the LewRockwell.com Blog (here, here, here, and here). The consensus on the faith-based initiative seems to be that, in the words of William L. Anderson, they “were pointing out at the beginning that this was a bad idea, and that taking the state’s money ultimately would mean that the state would be interfering with the larger mission of these religious groups.”

Contrariwise, Joseph Knippenberg, who blogs at No Left Turns and is a professor at Oglethorp University, writes in this week’s The American Enterprise online column that the faith-based initiative is being undermined by partisan Democrats and that it will have to continue under the diligent faithfulness of Republicans.

Citing the differences between the Republican and Democratic approaches, he writes of the former, “because the shekels come without unnecessary shackles, the effect of government funding isn’t necessarily homogenizing or secularizing. In a nutshell, this co-religionist hiring exemption enables government to cooperate with, but not dominate, a vigorous and diverse private philanthropic sector.”

The danger is, in Knippenberg’s view, that the faith-based initiative will become dominated by Democratic partisans, who “would force every government contractor into essentially the same bureaucratic mold. Every recipient of government funding would ultimately be simply an extension of the government, offering more or less the same services in more or less the same setting.”

But even if Knippenberg is right, and there is this vast difference between the approaches of the two parties, it merely serves to underscore my point about the unreliability of government funding. He is responding in part to this Washington Post story which notes the boon that Bush’s faith-based initiative has been to certain conservative-minded charities. (more…)

In this week’s Acton Commentary, “The North American Church and Global Stewardship,” I note that blessed with extraordinary material riches, Christians in North America are increasingly viewing their stewardship responsibilities in a global context. I look at one school in British Columbia and how their local building project also raised funds for a school in Sierra Leone.

Dennis DeGroot, principal of Fraser Valley Christian High School, writes and informs me, “The money keeps coming in for the school project. The students have far exceeded their goal. The total now at $36,000 and money still coming in.” He also says, “My long term vision for this is that all Christian schools would find partnerships like ours in the developing world; true partnerships where we learn from each other where real wealth lies.”

For some background, you can read my brief column in The Banner, “Building on the Tithe.”

While there is a general acceptance of the role of private property for social order and economic prosperity, the challenges to private property have not ended. The eminent domain issue is one threat; another comes from environmentalist groups such as the Foundation for Deep Ecology and others who see humans as a drain on the earth and nature. Some environmentalists advocate the consolidation of land to be put under federal control and promote stringent land usage restrictions that would prevent a landowner using his property fruitfully.

Their argument is nothing new: individuals left to themselves will not be as effective as central planners in decided the best way to allocate and protect resources, etc. etc—they are merely variants of the Marxian arguments used by economic central planners.

Despite the rhetoric, common ownership of land and resources has not been an effective means of addressing problems. It failed under applied socialism, and has not led to environmental protection and stewardship as environmentalists hope. Private property ownership creates incentives for people to use land wisely and in a sustainable manner. John Stossel gives an excellent illustrations of the importance of incentives and the private ownwership including privatizing elephant ownership in Africa.

St. Thomas Aquinas addressed the question of property and human incentives in the 13th century. He argued it is lawful to own property for three reasons:

First, because every man is more careful to procure what is for himself alone than that which is common to many or to all: since each one would shirk the labor and leave to another that which concerns the community, as happens where there is a great number of servants.

Secondly, because human affairs are conducted in more orderly fashion if each man is charged with taking care of some particular thing himself, whereas there would be confusion if everyone has to look after one thing indeterminately.

Thirdly, because a more peaceful state is ensured to man if each one is contented with his own. Hence it is to observed that quarrels arise more frequently where ther is no division of the things possessed.

Notice the humanist vision—the appreciation for the individual, an understanding of human nature, a respect for the capabilities of individuals to make decisions and control their own sphere. Also notice point number three. Compare this to the unspeakable violence perpetrated by socialist government leaders on their own citizens because they were not “content” with operating in their own sphere.

It is unfortunate Marx and the socialists were not steeped in the thought of St. Thomas early on. Who knows, it could have avoided some of the pain and suffering imposed by socialist governments on their own people. But the reality of Marxism has become clear. As Pope Benedict put it in his new encyclical Deus Caritas Est

Marxism had seen world revolution and its preliminaries as the panacea for the social problem: revolution and the subsequent collectivization of the means of production, so it was claimed, would immediately change things for the better. This illusion has vanished.

The leftwing environmentalists are part of a long line of central planners. They want to the control of property in the hand of government bureaucrats and planners, i.e., themselves. But planners are always less effective than those closer to the problem, because no matter how much they know, or think they know, they’ll never has as much knowledge as those individuals on the ground close to the situation. This is the principle of subsidiarity—rooted in Aquinas’ defense of private property. Wisdom of the past as applicable today as it was then.

Hunter Baker at The Reform Club passes along a column by Maggie Gallagher that has him “rethinking” his position concerning illegal immigration. Gallagher notes, “Economic studies suggest that overall, immigration is a net wash, or a slight plus, for the American economy. But the pluses and minuses are not evenly distributed over the whole population: Lesser-skilled Americans who compete for jobs that don’t require Ivy League credentials take the hit, while people like me enjoy a lot of the benefits.”

Andrew Yuengert, a professor of economics at Pepperdine University, in his Acton monograph on immigration, makes the same observation. In his shorter white paper based on the monograph, Yuengert writes regarding the impact of immigrants on the cost of social programs, “the real problem is not the fiscal burden of immigrants but the concentration of the fiscal burden in a few localities.”

Baker identifies with the problems posed for low-wage natives in the US who are faced with increasing competition from immigrant workers (both legal and illegal). It is true that certain areas of the country are going to be negatively impacted in terms of the costs of government programs, as well as that certain sectors of the population in these areas will face increased competition for low-wage jobs.

Neither of these two facts can obscure the reality that liberal and legal immigration results in a net economic gain for the US. What these realities can do, however, is temper and specialize government policy.

Perhaps even more importantly, they can give incentive and direction for private social endeavors to help alleviate the job displacement and negative economic effects. Charities could target immigrant communities and take the burden off the state to provide education and health care. Other programs could focus on training and education for immigrants and natives to move on from low-wage jobs.

Immigration should be seen as an opportunity and incentive for natives in low-wage earning jobs to get better training, experience, and education and improve to higher paying positions. A benefit of increased competition for jobs is that workers are given the incentive not to remain indefinitely in positions that don’t give them the standard of living they desire.

For Yuengert’s views especially as regards illegal immigration, listen to this radio interview (mp3) from The Jerry Bowyer Show.

Actonites know about all the benefits of globalization.

Most of these benefits are economic but also have much greater and often unseen social impact as well. Increased international trade in goods and services promotes division of labor and an efficient use of scarce resources, resulting in lower-priced, higher-quality products. The poor are often the greatest beneficiaries as both producers and consumers. People all over the world come to recognize their increased interdependence, not only with their local grocer or tailor, but with others in faraway lands.

Only the most xenophobic and nationalistic foes of economic and social progress would be against globalization, right?

Wrong.

In nearly every country of the world, including those who have thrived in the last 10-20 years of increased trade, globalization is under attack and in danger of being reversed.

See here for the troubles being reported in Europe, here in the United States, and here in India. And there’s plenty more out there.

This most recent backlash against globalization shows how fears of insecurity prey on mass perceptions and how arguments in favor of economic efficiency are rarely strong enough to resist these fears.

Readers of the Acton PowerBlog know how important religious leaders can be in shaping moral arguments and more of these leaders need to understand just what is at stake here. A collapse of the global economic system resulting from increased protectionism would be an unmitigated disaster for everyone.

There are reports that Pope Benedict is planning a social encyclical on work. It would be a perfect opportunity to re-examine John Paul II’s groundbreaking “Centesimus Annus” and the more recent trends the world has seen.