Category: Public Policy

Blog author: jballor
Wednesday, April 2, 2008

In recent years the UK has emerged as a key player in both genetic experimentation and in corresponding legal battles over the extent to which the government ought to regulate such research. The latest news coming from across the pond involves passage of a bill legalizing the creation of human-animal hybrids with certain restrictions (regarding type and length of survival).

Three members of the governing cabinet were “reportedly considering resignation if forced to back the Bill.” Controversy arose over the call from Roman Catholic bishops in the UK to allow MPs and cabinet members a “free vote” on the bill, allowing them to enjoy freedom of conscience as informed by their faith.

Since the creation of the first hybrid embryo was announced yesterday, religious leaders are calling for the creation of a national bioethics commission.

This has brought some strong reactions from critics of the Catholic and generally “pro-life” position.

My own views were lately characterized as representative of the “Roman Catholic and generally free market think tank, the Acton Institute,” and were then conflated with the reasoning of evangelical scientist Cal DeWitt (with whom I do share denominational affiliation).

According to the Reason piece, the distinction I make between the treatment of plants and animals is “based upon the idea that while God commanded Noah to save animal lineages, the Almighty said nothing about preserving plants on the Ark.” (Update: Joe Carter does a thorough and articulate job of dissecting Bailey’s article here).

In fact, in the piece in which I outline a theological framework for evaluating GM foods, I don’t mention Noah at all. And in proposing a similar framework for evaluating the treatment of animals, my only reference to Noah has to do with the inauguration and the terms of the covenant, not with the fact that the animals were preserved on the Ark.

Christian reasoning about the general treatment of animals and concerns with the role of human stewardship are not based on some obscure biblical text, as Bailey’s dismissive allusion would lead us to believe. There is an overarching biblical theme that has to do with human responsibility over the natural world, plants and animals included.

Rev. Leonard Vander Zee, for instance, uses a reference coming at the very end of the book of Jonah as a point of departure, linking it definitively to the foundational “dominion” mandate in the first chapter of Genesis. He summarizes developments in human stewardship and science this way:

State universities used to be known for their programs of “animal husbandry.” What a wonderful term. To husband the animals is to care for them, to provide for their welfare, as well as to use them for human benefit. In the past few decades, most such programs have become departments of animal science, which makes it possible to look on animals as laboratory specimens we can manipulate.

We needn’t agree with the particular conclusions that Vander Zee draws in order to agree that responsible stewardship is a biblical mandate. Clearly the idea of “animal husbandry” is closer to the biblical picture than “animal science.”

The core problem that Bailey and others have with this theological and moral insight is not that it draws too fine a distinction, but that it proposes to set any limits to research at all. That’s why religious opposition to certain kinds of research (or farming practices, for that matter) have to be construed as wholesale opposition to learning, science, and advancement.

But instead, we might also note with Aquinas that the abuse of something does not destroy it’s legitimate use. Christians do believe that scientific knowledge is a legitimate pursuit and indeed a divine calling. But that doesn’t mean that there aren’t limits to legitimate practice. And identifying and defining those limits is precisely what these disagreements are all about.

With great ability comes great responsibility. With apologies to Browning, we might say that man’s scientific reach has exceeded his moral grasp.

Blog author: eschansberg
Tuesday, April 1, 2008

Last month marked the 75th anniversary of the beginning of FDR’s “New Deal”.

The Great Depression is the most famous event in U.S. macro-economic history. Most or all of my students know that it happened in the first half of the 20th century. They have no sense of what caused it– except perhaps to lay blame on the 1929 stock market crash. And they have a vague sense that the New Deal policies of FDR were helpful in ending it.

Because their impressions of the New Deal are limited, it is relatively easy to communicate what economists know about the Great Depression and the New Deal.

The Great Depression was noteworthy for its length and depth. A typical recession– probably what we’re dealing with now– is relatively short (e.g., 6-9 months in length) and features a slowdown in economic activity (negative output growth with reduced income and production). The most notable feature, politically, is a modest increase in unemployment. Even unemployment of 6-7% is enough to induce howls of pain from the unemployed and unlikely promises to make things better by a range of politicians (e.g., the recent macro “stimulus package”).

That said, some recessions are (much) more severe than others. For example, in fighting the inflation of the mid-late 1970s, we ended up with double-digit unemployment in the early 1980s. In further contrast, the Great Depression lasted for more than a decade and featured unemployment as high as 25%.

One quick way to note the limits of the New Deal: unemployment was 19% in its 6th year.

Markets may have trouble “adjusting”, but they don’t have that much trouble. So, it is wise to look at government policy during the 1930s to fill out one’s hypothesis of cause/effect about the Great Depression. Economists point to four major policy blunders:

1.) four tax increases, including the initiation of Social Security’s payroll tax on income– a tax on labor, thus making it more painful to hire workers

2.) a shrinking money supply– not from the Fed actively reducing it, but from passively sitting by while confidence decreased, lending activity dropped, and the amount of money in the system fell (in contrast, note the Fed’s activity– or even hyper-activity in recent days)

3.) the Smoot-Hawley Tariff Protection Act of 1930 is generally considered the primary catalyst for the stock market crash of 1929– as investors looked forward to the devastating impact this would have on international trade and the significant impact it would have on our economy

4.) the imposition of laws that would prevent wages and prices from adjusting downward (as they need to do in a recession): most notably, price floors (e.g., in farming), wage floors (the minimum wage), and a spate of pro-union legislation.

Bad policy was responsible for the bulk of the Great Depression– and perhaps is entirely responsible for its length and continued depth.

Finally, the most famous part of the New Deal could not have been all that effective. The government worked hard to create jobs– most famously, through the Works Progress Administration (WPA). And it was successful in part. But in doing so, it must have destroyed at least as many jobs. To note, where did the money come from to create the jobs? From the private sector– where economic activity was squashed and jobs were destroyed as a result. Government spending is typically a shell game– moving resources from one area to another, creating some and destroying other. Moreover, government rarely does things in an efficient manner, so one would expect the net effect to be negative. And again, if one looks at the results, it is clear that government policy was not a cure for a struggling economy.

With Amity Shlaes’ recent book, The Forgotten Man: A New History of the Great Depression, I’ve seen two interviews (with her) and an op-ed (by her) on the topic.

As Christians, we believe that history matters. As an economist, I know that economic history matters. May we study both– to learn both the good and the bad from our past.

In yesterday’s Wall Street Journal Europe, Alberto Mingardi of Istituto Bruno Leoni (and long-time Acton friend) lists some of the reforms Italy needs to boost economic growth, which is forecast at a measly 0.6 – 0.8 percent for 2008.

Mingardi advocates a number of tax cuts and a more determined privatization of state assets. Some of these issues are being discussed – timidly – in the current election campaign; Mingardi also focuses on de-regulation and de-bureaucratization, issues heretofore neglected by Italian politicians.

Current labor regulations are “so numerous that no one can even give their precise number. No one can comply with rules they don’t even know about.” Mingardi adds that “it’s safe to say at least half the statutes currently in force should be repealed, as their only effect is to create confusion.”

A recent study shows that it takes on average 696 days to dismiss a worker in Italy compared to only 19 in the Netherlands. Critics of de-regulation would argue that Italian workers are therefore better protected. Wrong. Unemployment is 5 per cent in Holland compared to 6 per cent in Italy.

This may seem counter-intuitive but makes economic sense. If I know it will be impossible to fire an unproductive worker, I will be much less likely to take a chance on hiring any worker I don’t personally know. Hence, the Italian model of “family capitalism” and higher levels of unemployment.

Italian bureaucracy also exacts high costs on business creation. According to the World Bank, the cost of opening a business is 18.7 per cent of per capita income compared to only 0.8 per cent in the United Kingdom and 0.3 per cent in the Republic of Ireland. Moreover, an Italian business spends an average of 360 hours per year filing taxes whereas in neighboring Switzerland 63 hours suffice. (Not surprisingly, Switzerland is the economic envy of Europe.)

Workers also pay for onerous regulations. Everyone in Italy nowadays complains about stagnant wages, these are clearly the result of decreasing productivity caused by bureaucratic disincentives for businesses to invest and grow.

An overwhelming bureaucracy undermines both individual liberty and the public interest. It punishes the creative spirit of the entrepreneur by obstructing investment and innovation, and harms society by killing the potential for growth and employment. The irony is that regulation and bureaucracy are often enacted in the name of social values.

Blog author: jballor
Tuesday, April 1, 2008

Last week the Providence Journal ran a piece by me on the forthcoming “rebate” checks from the government intended to be an economic stimulus, “The mandate is to ‘spend all you can’.” I take issue with the idea that the government gives us money that is our own in the first place, and then tells us how we ought to spend it: on consumables and retail goods to spur growth in the economy.

Instead, I propose that people “should use this rebate money as they see fit, since they are the ones most familiar with their own situations and their own needs. Consider giving part of the money to charity or saving, paying off debt or investing. And if it makes sense for you and your situation, you should feel free to buy that hi-def TV if you so desire.”

“But you certainly should not feel obligated to do so as if mere consumption is a civic responsibility,” I add.

The real problem with the package is that it perpetuates a view of the government’s role in the economy as the final arbiter of how markets ought to work and what people should be doing with their money. No doubt this is in part a response to the idea that the federal government in general, and the president in particular, has a primary formative influence on the shape and health of the nation’s economy.

Alasdair MacIntyre puts it this way,

Government insists more and more that its civil servants themselves have the kind of education that will qualify them as experts. It more and more recruits those who claim to be experts into its civil service…. Government itself becomes a hierarchy of bureaucratic managers, and the major justification advanced for the intervention of government in society is the contention that government has resources of competence which most citizens do not possess.

Thus comes the idea that the president is a kind of “economist in chief,” who directs the nation’s and the world’s markets by executive decree (compare that idea with the presidential job description given by the Concerned Women for America here).

Update: It’s 3 am…and this time the crisis is economic…

Of course, if we’re really concerned about someone answering a phone in a crisis, maybe we should elect a Wonder Pet:

It’s been a while since we’ve seen a completely meaningless gesture on behalf of the unsinkable global warming consensus. As such, it’s my pleasure to announce that the next meaningless gesture will occur… last Saturday?


Yes, Saturday evening saw the arrival of Earth Hour, an 8-9 pm extravaganza of switching off lights that apparently not many people knew about. For example, here’s the local reaction from the Grand Rapids Press:

…some of Grand Rapids’ most prominent environmentalists, including Mayor George Heartwell, had not heard of Earth Hour.

“Earth Hour?” Heartwell responded when asked how he planned to observe it.

West Michigan Environmental Action Council Executive Director Rachel Hood said she “probably” had heard about it, but had no plans.

“We try to save the Earth 24 hours a day, seven days a week, 365 days a year,” said Hood, who has lots of plans for Earth Day on April 22.

Judging from the article, it appears that Earth Hour went head-to-head with the NCAA men’s basketball tournament and lost in a blowout. The real winners? People who enjoy comparing Al Gore’s home energy usage to that of major engineering landmarks in the US.

While we’re on the subject of Gore, it should be noted that he is now launching a $300 million ad blitz as a part of his “effort to redefine climate change as a moral and spiritual issue.”

(Allow me to pause a moment and note that the left likes to assert that the source of funding can automatically corrupt any scholarship or commentary that fails to support the consensus – see here. Under the principle of “what’s good for the goose is good for the gander,” I’d be very interested in knowing exactly who is putting up $300 million to fund Gore’s campaign. I look forward to some hard-hitting investigative journalism from, say, Media Mouse.)

Now, I’d certainly agree that environmental stewardship is a moral and spiritual issue, and that I, as a Christian, have a stewardship responsibility toward our natural environment. But there’s that word – “responsibility.” We are called to be responsible stewards, to use our minds, to balance sometimes competing goods in order to come to the best possible solution. For example – on the one hand, reducing emissions and pollution is undeniably a good thing, and we should work toward doing so as much as reasonably possible. On the other hand, economic growth is also a good thing, allowing wealth to be created and the poor to be lifted out of poverty – but economic growth often creates pollution. This is where the call to be a responsible steward comes into play – we must balance these competing interests with an eye towards the good of our fellow man.

Global warming is already a moral and spiritual issue, inasmuch as it is an issue of environmental stewardship. But we all know what Gore is getting at when he refers to the issue in this way – he’s trying to frame his view as the only moral and spiritual way to approach the issue, and to baptize his proposed “solutions” with an aura of spiritual approval. Gore has never been shy about denigrating anyone with the temerity to disagree with him in rather harsh terms, and it’s not unusual for Gore and his cadre of alarmist allies to engage in some wildly overheated rhetoric in the service of their cause, so it’s not surprising on the other hand to see him attempt to wrap himself in a mantle of spirituality to enhance his image. But just as with any politician or political campaign, Christians should be wary of simply taking Gore at his word, especially considering what appears to be his rather flexible definition of telling the truth.

A call to end poverty through more spending by the federal government is forever professed by some candidates and politicians. Maybe, they say, if just more money was appropriated and distributed this time, the results and relief for those in financial need would be conclusively different? Former President Clinton at least ran for office as a “new Democrat,” went on to declare the end of the era of big government, and signed welfare reform. Clinton was the first Democrat to win consecutive elections to the presidency since Franklin D. Roosevelt, cracking the Republican Party’s hold on the White House.

Some young voters are attracted to Democratic Presidential Candidate Barack Obama because of his call to reshape society by empowering the federal government to spend even more on poverty programs. Young voters who are inspired by religious left icons are especially enamored with this not so new idea. Some older voters and still others who know their history are understandably hesitant to continue down that well traveled road.

Stephen Malanga reminds us once again in a recent piece in the City Journal that two parent married households are well equipped to overcome this trap. Malanga goes on to remind us that until the political sphere discusses the social and cultural plagues that promote poverty, “we can’t begin to take the necessary steps to reduce long term poverty.” Beginning in the 1960’s, another Democrat, the late former Senator Daniel Patrick Moynihan raised the issue of the emerging crisis of out of wedlock births and broken families and its relation to systemic poverty.

Blog author: berndbergmann
Thursday, March 27, 2008

In a front-page article of the March 20-21 edition of the Vatican’s newspaper, L’Osservatore Romano, entitled “L’aqua bene comune per tutti” (“Water: Common Good for All”), an Italian political scientist laments that a basic necessity of life is bought and sold.

Riccardo Petrella of the Catholic University of Louvain in Belgium is rightly concerned that a billion people do not have access to clean drinking water. While he criticizes world leaders for not making this problem a top priority, his main target is actually the economics of treating water as a commodity.

He blames economics for creating a shortage of water: “This approach does not recognize any human and social rights, there are no public goods or services just private economic goods and services based on economic interest. The commodification of water is accompanied by a privatization of the water supply. In this context, shortages are accepted as ‘natural’, inevitable….”

This is a prime example of combining good intentions with bad economics. Petrella mistakenly assumes that economic goods and common goods are mutually exclusive, when in fact prices help regulate the production and distribution of a natural resource.

Only a small part of the global water supply has actually been privatized. Over the last twenty years or so, the process of privatization has been accelerated, and the availability and the quality of water has generally improved. This is not only true for Western countries but also in less developed countries.

Take Chile as an example. It aggressively privatized its water industry and has vastly enhanced access to water for the poor. Usage of potable water went up from 63 percent to 99 percent for the urban and from 27 percent to 94 percent for the rural population after the introduction of markets for trading water rights.

In contrast to what Petrella asserts, privatization, rather than being a cause of water shortage, is increasingly seen as a remedy to this problem. In Saudi Arabia, for example, privatization was introduced after a shortage of water caused riots in November 2006. The government had exacerbated the problem by subsidizing water to keep prices low. This led to an inefficient and careless usage of water. Riyadh had to change course and is now planning for half the population to be covered by private water companies by 2010.

It is misleading to suggest a contrast between private enterprise and the common good since the market tends to channel resources to where human demand is strongest and can fill gaps in investment and expertise where the public sector fails. It’s certainly no violation of human rights to promote a competitive market for something as essential as water.