Category: Public Policy

Blog author: kschmiesing
Tuesday, March 21, 2006
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Last spring I participated in a symposium at the University of St. Thomas School of Law on “pro-life progressivism.” The proceedings have now been published in the school’s law review, which is available here.

To simplify, the conference was designed to explore the possibility of extending the political and intellectual appeal of a position that is against abortion and the death penalty, and left-leaning on economic policy. To the organizers’ credit, they invited the airing of opinions critical of pro-life progressivism from various perspectives. My role was to question the “progressive” part of the equation, which I did, somewhat indirectly, with a brief history of “conservative” Catholic social thinkers.

Not part of the conference, but included in the published journal, is an extremely interesting piece by Patrick Shrake. Shrake argues that the privacy jurisprudence of the last 40 years should be overturned and that the kind of state anti-contraception laws that started the mess could be upheld. Catholics and others who both accept the moral case against artificial birth control and are wary of an activist state will view the article ambivalently, but it is at the least a serious and thought-provoking argument.

Blog author: jballor
Monday, March 20, 2006
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I was intereviewed for this article in yesterday’s New York Times, but I apparently didn’t make the cut. Nevertheless, in “Fair Prices for Farmers: Simple Idea, Complex Reality,” Jennifer Alsever does an excellent job bringing to light some of the dangers that are inherent with external and artificial adjustments to the price mechanism.

In the case of the fair trade food movement, the price floor is set artificially at a certain amount, determined to meet or surpass the subsistence needs of the local farmer. For coffee, this is currently set at $1.26 per pound by the fair trade community.

Alsever writes, “Despite good intentions, most consumers who shop according to their social convictions don’t know how much of their money makes it to the people they hope to help. Critics say too many fair trade dollars wind up in the pockets of retailers and middlemen, including nonprofit organizations.”

The problem is that the fair-trade certification organizations themselves, and also the retailers, can add several layers of increase into the price of a fair trade commodity. We might say that the fair trade consumer, who is presumably already willing to pay more than the market price, has a greater level of acceptable price elasticity.

TransFair USA, the certifying body in the US, “generated $1.89 million in licensing fees from companies that used the logo. It also spent $1.7 million on salaries, travel, conferences and publications for the 40-employee organization.”

“Farmers often receive very little,” said Lawrence Solomon, managing director of the Energy Probe Research Foundation, a Canadian firm that analyzes trade and consumer issues. “Often fair trade is sold at a premium, but the entire premium goes to the middlemen.”

Of course, these are the self-professed middlemen who cut out the layers of middlemen under a market based, free trade system. Those were the “bad” middlemen, while TransFair apparently represents the “good” sort of middleman.

One other aspect of this tinkering with the price mechanism is that the fair trade movement does nothing to recognize the reality reflected by purchasing power parity (PPP). So, writes Alsever, “a price that is fair in one country may not be in another. In Brazil, ‘$1.26 per pound for coffee is a fortune,’ said Kevin Knox, a coffee consultant in Boulder, Colo. ‘In the forest in the mountains of Mexico, the money barely is enough to justify doing it. Their yields are small, and the costs of production are higher.'”

These are just a few of the problems that arise when people try to artificially manage the price mechanism. When it is allowed to do its job, the market price of something provides a lot of good information. It can tell us, for example, that the supply of coffee far outstrips the demand, and so some coffee growers should think about getting into another product or industry. It would be in their best interests to do so, and the best interests of all of us, so that the world doesn’t end up with too much coffee and too little of something else.

The economic ignorance behind the fair trade movement leads me to believe that it really is just a sort of passing fad, especially popular among naïve church groups, which will at some point be replaced by far more effective methods of alleviating poverty around the world, such as micro-enterprise development (for more on this, see groups like Five Talents, Opportunity International, and Kiva). It’s hard to see real staying power behind a movement that thinks the answer to the reality of poor coffee farmers is simply to subsidize the production of commodities of which we already have an oversupply.

For more on some of the emotional and psychological reasons people are willing to pay more for fair trade items, see “Absolution in Your Cup: The real meaning of Fair Trade coffee,” by Kerry Howley. The fair trade movement currently lack the ability to enforce their pricing schemes through the coercive power of the state, so they must rely on other tactics.

Blog author: mvandermaas
Friday, March 17, 2006
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As mentioned in an earlier post, Acton was in Washington D.C. last week to honor the 2005 Samaritan Award-winning programs. But we managed to do a lot more than hold a reception for our honorees – almost all of them also met with members of Congress to impress upon them the value and importance of private charities in their communities.

We spoke with Karen Woods, Director of Acton’s Effective Compassion Initiatives, to get her perspective on a successful couple of days in our nation’s capitol. You can watch that interview by clicking the play button below.




Related items: Acton Senior Fellow Marvin Olasky was interviewed last week by NPR on the White House’s plans to increase faith-based grants. To read about Olasky’s Seven Principles for Effective Compassion, click here.

William Easterly, professor of Economics at NYU, has written a new book challenging the prevailing development orthodoxy of increased aid and the “big push” to combat poverty in the Third World. The White Man’s Burden: Why The West’s efforts to Aid the Rest Have Done So Much Ill and So Little Good, published by Penguin is to be released on March 20th.

I have only read a short bit of it so far, but what I have seen is refreshing. He questions the effectiveness of aid, pointing out that aid has been largely ineffective and more of the same is not the answer. In so doing he goes up against politicians such as Tony Blair and Gordon Brown, economists such as Jeffery Sachs, and rock stars such as Bono and Bob Geldof.

Sachs calls for increased aid and Blair speaks of a “big push” to bring about The End of Poverty. (Sach’s book is also v. interesting by the way) Easterly agrees with Sachs that extreme poverty is a tragedy, but while there is a lot of talk about poverty itself, he says there has been very little said

about the other tragedy of the world’s poor. This is the tragedy in which the West spent 2.3 trillion dollars in foreign aid over the last 5 decades and still has not managed to get twelve cent medicines to children to prevent half of all malaria deaths. The West has spent 2.3 trillion and still has not managed to get four-dollar bed nets to poor families

He contrasts the central planning inefficiency of the aid industry to the market’s ability to distribute 9 million copies of the sixth volume of Harry Potter books to the British and American economies in a single day.

There was no Marshall Plan for Harry Potter, no International Financing Facility for books about underage wizards.

Easterly makes the distinction between what he calls planners and searchers. Planners like Jeffery Sachs and Tony Blair advocate large scale attacks on poverty through aid and global initiatives. Planners operate from top-down schemes that are often well intentioned but have not worked. Searchers on the other hand avoid large scale plans and look for entrepreneurial solutions to solve problems that take into account incentives and accountability.

Despite the evidence, why do big plans remain so popular? Well, one reason of course is that planning schemes are inspiring. End poverty by 2025. Grandiose plans often have the support of big name politicians and celebrities and they promise a solution right away. Piecemeal solutions rarely inspire even when they work. Second, no one is accountable when the fail. And when they do fail the answer is do more of the same thing. The One Campaign is a perfect example. But popularity and good intentions are not a substitute for effectiveness.

A third reason is the prevailing allure of utopian schemes. Easterly writes that the planning approach to foreign aid is part of the what Karl Popper calls the “utopian social engineering” approach to problem. This approach has been tried and failed in diverse times and places such as the five year plans of the Soviet Union, the structural adjustment programs of the World Bank in Africa in the 1980s and 90s, and the “shock therapy” used on the transition economies after years of failed planned economies.

Utopianism is nothing new. Eric Voegelin saw Gnosticism and utopianism as the driving force of modern politics, and it appears to be the driving force of aid as well.

Maybe Easterly’s challenge will wake people up to the failures of planning and get them to respect the entrepreneurial capabilities of the people in the developing world. As Hernando de Soto has pointed out in The Mystery of Capital, there is no lack of entrepreneurial spirit in the Third World.

Instead of increasing aid and more top-down plans decrease regulation and barriers to starting businesses, and let local entrepreneurs and the markets find solutions that far away planners have been unable to accomplish.

Blog author: jballor
Friday, March 17, 2006
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A recent NBER working paper, “The Effects of Tort Reform on Medical Malpractice Insurers’ Ultimate Losses,” argues that “The long run effects of reforms are greater than insurers’ expected effects, as five year developed losses and ten year developed losses are below the initially reported incurred losses for those years following reform measures.”

A number of the specific changes in the history of tort law are discussed in Ronald Rychlak’s Trial by Fury: Restoring the Common Good in Tort Litigation, part of Acton’s Christian Social Thought Series.

Rychlak argues that in addition to the tangible and significant economic impact of current tort law, the system also “encourages litigation at the expense of forgiveness and understanding. It ignores the role that family members, friends, religious leaders, and others can play in bringing about reconciliation.”

Blog author: dphelps
Wednesday, March 15, 2006
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Go here for Acton’s new video, “Solutions,” which offers a real starting place for all of us who want to do something about poverty and hunger.

Touting the success of his faith-based initiative last week, President Bush noted that faith-based charities received more than $2 billion last year from the federal government. But even as Bush announced that the Department of Homeland Security would be the 11th agency to establish an office for the faith-based initiative, some groups are finding the money to be a mixed blessing.

An example is The Silver Ring Thing (SRT), which following a settlement between the ACLU and the Department of Health and Human Services, can no longer recieve federal funds under its current program. In this week’s Acton Commentary, “A Golden Opportunity for ‘The Silver Ring Thing’,” I note the temptation facing SRT “to acquiesce to the HHS regulations and attempt to rigorously separate the faith element out of the program.”

I conclude that “the temporary setback of the loss of government funding has the potential to be a long-term opportunity for The Silver Ring Thing,” in the sense that SRT can seek out private sources of funding and evade the strings that are inevitably attached to government funding.

“You can’t be a faith-based program if you don’t practice your faith,” said President Bush. He also said, according to the AP, “It used to be that groups were prohibited from receiving any federal funding whatsoever because they had a cross or a star or a crescent on the wall. And that’s changed, for the better.”

We can hope, however, that the faith element in religious charities is not merely restricted to mere display of a religious symbol, but pervades the charitable work of the organization. It’s this “damaging form of secularization: the kind that separates Christian faith from works,” that The Silver Ring Thing must resist.

David Kuo, a former deputy director of the White House faith-based office, criticized the administration for allowing the initiative to become “a whisper of what was promised.” Acton senior fellow Marvin Olasky, in an interview on NPR’s All Things Considered, expressed disappointment with the lower priority the faith-based initiative from the Bush White House.

But at least part of the difficulty the program faces comes from the problems posed by the enforcement of secularizing regulations by government bureaucracy. When asked about the impediments that governmental regulations put on their charitable work, one non-profit worker responded: “The complexities of the laws affecting part-time workers have made it impossible for us to hire candidates we could afford to pay. We have been amazed to learn that hiring even one part-time employee makes us a ‘pen-pal’ with a complicated array of government agencies.”

Read the whole commentary here.

Last Wednesday, I was privileged to attend the Samaritan Awards Gala in Washington, D.C. I have to say up front that Acton’s Effective Compassion events are probably the most enjoyable for me to attend because invariably one comes into contact with a group of very special, very dedicated people who are completely devoted to what our society would term “lost causes,” and having great success.

Ken Ortman

While there were a number of award-winning programs at the Gala this year, I’d like to take some time to focus on the 2005 Samaritan Award Grand Prize Winners, Ken and Sheila Ortman of Lives Under Construction Boys Ranch in Lampe, Missouri. Ken and Sheila were joined in D.C. by their daughter Melissa, who serves as the Development Director for the Ranch, and 7 young men who are currently residents in their program.

Sheila Ortman

Ken, Sheila and Melissa are wonderful people – remarkably kind, decent, and humble – who are doing amazing work with young men who come out of shockingly difficult circumstances. They are hard workers – Ken remarked during a conversation that he couldn’t imagine working at a job like mine, which involves a lot of sitting at a desk – who moved from their South Dakota farm to southwestern Missouri in order to start a new life working with troubled boys. And they are successful – the LUC program has a 92 percent success rate over the last 20 years, turning many young men away from lives of crime and substance abuse and toward a productive life in society. They do so by establishing a structured environment within which the boys can learn respect for God, authority figures, and gain a proper view of themselves as persons.

Melissa Ortman

We had the chance to meet 7 of the young men who live at the ranch, and the transformation in their lives is evident and remarkable. By all outward appearances, these boys were just like any other group of young people touring Washington, D.C. You’d never know that each of them had likely had severe drug or behavioral problems and numerous encounters with the law. They were a group of normal, if somewhat rambunctious teens.

The LUC Bunch on the Mall in Washington, D.C.

It is truly a blessing to meet people like the Ortmans, and it was great as well to watch the boys – many of whom were on their first trip to a large city. As I noted earlier, I always enjoy Acton’s Effective Compassion events, but having these young men along added a spirit and sense of adventure to this trip that will make it unforgettable for me.

If you haven’t done so in the past, I encourage you to check out the many fine charities like LUC Boys Ranch that are in our online Samaritan Guide, which is an excellent resource for anyone looking for effective private charities across the United States. Many of the programs in the guide are very small, but doing amazing work, and are well worth your attention and support.

I had an opportunity to talk with a few of the boys and with Ken, Sheila and Melissa. To hear my conversation with the Ortmans, click here (4 mb mp3 file). To hear from the boys, click here (1.9 mb mp3 file).

Blog author: jballor
Tuesday, March 14, 2006
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According to The Church Report, a new resource has been released which offers churches guidelines for keeping their activities and functions within the letter of the law. As non-profit organizations, churches are held to the same standard as registered charities and cannot engage in certain forms of public speech.

A report by The Rutherford Institute, “The Rights of Churches and Political Involvement” (PDF), examines in detail what the restrictions are for churches. There are two main areas: “first, no substantial part of the organization’s activities may consist of carrying on propaganda or otherwise attempting to influence legislation; and second, the organization may not participate in political campaigning in opposition to, or on behalf of, any candidate for public office.” For the purposes of this discussion, I’m going to focus on the former case rather than the latter, since I take it for granted that churches shouldn’t be institutionally involved in campaigning for a specific candidate. For more on this second aspect of the law, see this post on the use of church directories by political parties, passed on by Joe Carter.

In its summary of the first type of restriction, the report states:

In short, only one reported court decision has found a religious organization in violation of section 501(c)(3) by engaging in “substantial” legislative activities. The IRS, however, refuses to abide by any precise standards, such as a percentage rule, to measure when “substantial” legislative activities have occurred. Hence, a church or religious organization seeking to acquire or maintain a tax-exempt status must be aware that there is always some risk that its attempt to influence legislation will prompt the IRS to pursue an audit and perhaps even revoke its tax-exempt status.

It goes on to say that “one risk adverse approach might be for a church to report pending legislation to church members, without proposing, supporting or opposing any legislation.”

The bottom line seems to be this: “Tax exemptions for churches and religious organizations are a privilege and not a constitutional right. In fact, to acquire and maintain this privilege, churches and religious organizations may have to forsake heretofore protected constitutional rights under the First Amendment.”

This means that if it is something that is germane to the proclamation of the gospel, a church must be willing to lose its tax-exempt status. The government could potentially use tax-free status as leverage to keep churches quiet about political activity. If the pastor and consistory feel that the issue is one of religious imperative, something like a status confessionis, the church must resist the temptation to impose restrictions on its own speech in the interest of maintaining a privileged position.

This clearly calls for prudence and wisdom on the part of the church leadership. I’m not suggesting that churches simply cast off their tax-exempt status on a whim. But when the issue comes down to one of keeping silent over clear moral evils or losing their special status, churches must choose the latter. Their ultimate allegiance must be to Christ and not Caesar.

Dietrich Bonhoeffer, in the context of the enforcement of the Aryan clauses prohibiting pastors of Jewish heritage from ministry in the state churches, writes of the rare instance in which the church must “put a spoke in the wheel itself.” In his essay, “The Church and the Jewish Question,” he says, “Such action would be direct political action, and is only possible and desirable when the church sees the state fail in its function of creating law and order, i.e. when it sees the state unrestrainedly bring about too much or too little law and order. In both these cases it must see the existence of the state, and with it its own existence, threatened.”

He continues to argue that “there would be too little law if any group of subjects were deprived of their rights, too much where the state intervened in the character of the church and its proclamation, e.g. in the forced exclusion of baptised Jews from our Christian congregations or in the prohibition of our mission to the Jews. Here the Christian church would find itself in statu confessionis and here the state would be in the act of negating itself. A state which includes within itself a terrorised church has lost its most faithful servant.”

One such instance of the state making “too much law” and intervening “in the character of the church and its proclamation” would be the criminalization of certain types of speech as hateful or offensive.

Citing a recent OECD report, the EUObserver says that European schools are falling behind their counterparts in the US and Asia.

The main reason: a governmental obsession with equality that prevents investment and innovation in education, especially at the university level.

“The US outspends Europe on tertiary level education by more than 50% per student, and much of that difference is due to larger US contributions from tuition-paying students and the private sector,” noted the OECD paper.

Here’s how the news story concludes:

Despite European ideals like equality and equity, several OECD’s studies reveal that “social background plays a larger role in determining a student’s performance in countries such as Germany, France and Italy than in the US.”

“Europeans from difficult socio-economic backgrounds don’t receive the same educational opportunities as children from rich and middle-class families,” notes the paper.

This account accords pretty well with my own observations in Italy. The educational and economic mess created by governmental interference, protectionism and deference to trade unions results in a system where only the well-to-do and the well-connected end up with any sort of opportunity. If you happen to be born outside of Rome or Milan or to a poor family, tough luck.

From what I can tell, there’s not much of an educational choice movement in Europe but there ought to be.