Category: Public Policy

Four hundred MILLION dollars!

Whoops. This week, GM retracts its earnings report from four years ago, saying it overstated its profits by somewhere between $300-400 million dollars. The tendency with a story like this is to cry “fraud!” and then denounce corporate America for its inherently corrupt nature. Now, who can say what the cause is of this slip-up (blunder, goof, unbelievably huge mathematical oh-oh?)? But in the absence of the whole story, how proper is pessimism? Is it possible to be ambivalent toward GM and give them the benefit of the doubt?

Detroit auto is in a bad way (for other ways Detroit is in a bad way, see here). With Delphi in big trouble, SUV sales plummeting, and a $1.6 billion dollar third-quarter loss (that’s billion with a ‘b’), why would GM come out and report a mistake this embarrassing at the most inopportune time? If there is scandal and GM was involved in shady, Enron-like accouting, why would they fess up now? One could easily say they would get caught anyway (the SEC has an investigation going), but even so, why pile sorrow upon sorrow if you are trying to deceive people?

Speculation can be healthy only to a certain point. So let’s at least give them the benefit of the doubt. For once, let’s make a point of recognizing what seems to be–at least at this point–corporate honesty. (You won’t hear that in the news.) See, not all guys in suits are trying to take over the world.

Blog author: jspalink
posted by on Wednesday, November 9, 2005

Black Americans have enjoyed only a mixed record of progress in the fifty years since Rosa Parks took her seat on that Montgomery bus. Anthony Bradley examines her legacy and the nature of liberty in today’s America. “Truly free blacks are those who are free to make their own morally formed choices without government involvement,” Bradley writes.

Read the full commentary here.

Blog author: jballor
posted by on Wednesday, November 9, 2005

A long oral and written tradition about the mixing of species has been noted on this blog before, specifically with regard to Josephus. I just ran across this tidbit in Luther that I though I would share, which points to a continuation of a tradition of this sort running down through the Reformation.

Luther is commenting on the Old Testament character of Anah, and debating whether we might consdier Anah to have committed incest. He writes:

We could say that Anah also slept with his mother and that from this incest Oholibamah was born and many similar things. But nothing is to be imagined in Holy Scripture without clear testimonies of the Word. Below (v. 24) we shall hear that Anah was a notorious rascal and the author of an abominable act of copulation, namely, of asses with horses. But if he had no respect for the order and sight of God and nature but dared to mingle animals of a different genus, which is contrary to nature and the ordinance of God in the creation and concerning which Holy Scripture says in Gen. 1:25: “God made the beasts of the earth according to their kinds and the cattle according to their kinds, and everything that creeps upon the ground according to its kind,” it could also come to pass that he slept with his mother.

Here we can see Luther’s logic: if Anah were the type of person to so flagrantly violate the creation order and engage in that “which is contrary to nature” and “an abominable act,” the mixing of animals across genus, he is clearly the type of person who would commit incest iwth his own mother. I would say that’s a rather striking indictment of such primitive genetic engineering.

Luther actually thinks that we should not attribute the crime of incest to Anah, but engages in this thought experiment to show us one way of arguing that Anah could have. The basis for this commentary is a genealogical passage, specifically Genesis 36:18, which could lead one to believe that Anah’s daughter was conceived by his own mother. Luther rejects this interpretation, attributing it to Jewish rabbinical tradition, but interestingly enough at the same time affirms an interpretive tradition regarding Genesis 1:25 and the ordering of the animal species.

Via Best of the Web Today, an interesting comment from Senator John Kerry:

Democratic Sen. John Kerry called the Republican budget approved by the U.S. Senate “immoral” and said it will hurt cities like Manchester.

“As a Christian, as a Catholic, I think hard about those responsibilities that are moral and how you translate them into public life,” the Massachusetts senator said at a rally Saturday in support of Democratic Mayor Bob Baines, who is running for re-election.

“There is not anywhere in the three-year ministry of Jesus Christ, anything that remotely suggests – not one miracle, not one parable, not one utterance – that says you ought to cut children’s health care or take money from the poorest people in our nation to give it to the wealthiest people in our nation,” he said.

Kerry criticized the Senate spending plan, which would cut an estimated $36 billion over five years, saying it would reduce funds for police, after-school programs and children’s health care.

In one sense, Kerry is correct: one would search in vain to find any point in the Gospels where the Lord does any direct issue advocacy on the modern welfare state (“verily I say unto you, blessed is the Congress that slashes federal low-income health care funding, for they shall have much loot to pass on to their fat-cat special interest contributors…”). But the implied assertion that those who support such cuts in federal spending are anti-poor, or even anti-Christian, deserves more careful scrutiny.

What comments such as these reveal is a philosophy that, as Rev. Gerald Zandstra has noted, lacks “any real discernment about the proper role of government with respect to the issues of poverty and charity.” When the government assumes the primary responsibility for the care of the poor, it does not enhance a society’s morality (as Kerry and others like him would argue); rather, it erodes the moral foundations of the society:

To assign the problem of poverty solely to the government radically short changes the person in need. The poor, in surrendering them to the care of the government, are increasingly estranged from the family, church, charity, or local community who would benefit greatly by becoming involved in the life of someone who requires real help. There is a mutual benefit in all of these relationships that form the firmest foundations of civil society. In these relationships, we can care for the poor and, more important, see the whole person and experience the dignity that is inherent in the human soul.

Such a placement of responsibility is not only corrosive to society, but also harmful to the church, as Rev. Robert A. Sirico notes:

The specific problem this confusion presents to the church is that it disintegrates charity into an entitlement and collapses love into justice. If all relations are based merely on state-enforced justice, what becomes of the virtue of love? Especially when viewed from a religious perspective, the disadvantages of an expansive welfare state are sadly apparent. Promoting the government as the resource of first resort lessens the incentive of people in the pews to become personally involved in needed projects and relegates the church to the role of lobbyist. To the extent that the church functions as a lobbyist, rather than itself clothing the naked, feeding the hungry and performing the other traditional acts of charity, the church loses a rich source of its own spiritual nourishment.

This has, in turn, led to a secularizing of the social assistance systems (schools, hospitals, orphanages, health clinics). This development minimizes the moral influence of religious mediating institutions which are so critical in helping to stabilize troubled families.

The moral of the story? People of faith should think twice before using religious language to defend the maintanance and expansion of the welfare state. What seems at first glance to be a sound moral choice may be self-defeating in the long run.

Blog author: kschmiesing
posted by on Monday, November 7, 2005

For those of us who harbor some nostalgic sentiment for this country’s agrarian past…

I’ve written previously about the corrosive effect of subsidies on American agriculture. Now, Denis Boyles, in a thoughtful piece on NRO, notes from a similar perspective the importance of entrepreneurial thinking in preserving the agricultural towns of rural America.

Here’s one piece:

When I asked Genna M. Hurd, the co-director of the Kansas Center for Community Economic Development at the University of Kansas and an expert in rural communities, what made the difference between a town that lived and a town that died, I expected her to give me the old saw about how it takes a school to save a town. Instead, she answered simply, “Local leadership and vision.”

Aaah, the magical soothing balm that is government regulation!

The delightfully titled Now Batting for Pedro Borbon blog (“Manny Mota…Mota…Mota”) reveals the (predictable) results of governmental efforts to “increase transparency” in the business world:

So, let’s review. The law that was supposed to ensure greater transparency and make the stock market safe for all of us, especially the little guy, is driving companies to purge the little guy, become less transparent, and shun our world-class public capital markets.

Score another beaut for the Great Sausage Factory!

“We’re from the government, and we’re here to help you,” indeed…

Regardless, it seems to me that this is yet another opportunity to reflect on the importance of maintaining ethical business practices in both large and small corporations. As you recall, Sarbanes-Oxley was the congressional response to the various Enron-Worldcom type business accounting scandals in the late 90′s. Those scandals – a result of a distinct lack of ethical practices – resulted in a lot of people losing a lot of money, public distrust of corporations, and a resulting governmental response to the public outcry. The final links in this chain of events include massive new costs for businesses in order to comply with the new regulations, and now the phenomenon noted above. In other words, everyone loses. Returning to and reinforcing core ethical principles, however, creates a situation in which everyone can win.

A story on today’s Morning Edition by Claudio Sanchez examines the future of the school system in New Orleans following the hurricane Katrina disaster. New Orleans school superintendent Ora Watson complains that charter schools are stepping in to fill the void left when public schools were cancelled for the remainder of this school year.

She says, “There are so many different agendas. The mayor has decided that the city can run 20 schools under a charter. We have individual schools going to individual groups saying, ‘Would you charter me?’ They’re picking the school district apart. This is a real, real frustration.” Of course it’s easy to see why this would be a “real frustrating” for someone with a vested bureaucratic interest in maintaining the pre-Katrina state of publicly administered education in New Orleans.

According to the report, Watson worries that New Orleans could be the “first urban school system in America to be taken over by special interest groups.” I assume she means special interest groups other than the National Education Association.

Listen to the rest of the report for other viewpoints on reconstructing education in New Orleans. In many ways, the disaster can be viewed as an opportunity to improve a broken and failing system.

It’s clear that superintendent Watson is ardently opposed to introducing a principle of freedom of choice and competition into the system. For more on how competition, rightly practiced, can work in the educational arena, see this interview with J. C. Huizenga, chairman of the National Heritage Academies.

evilmonkeyJordan Ballor, associate editor at the Acton Institute, responds to a study published by Joan Silk, a researcher at the University of California, which finds that monkeys do not exercise compassion.

Silk’s team placed a chimp in a situation where it had the option of pulling one of two ropes. Pull the first rope, and the chimp received a bit of food. Pull the second rope, and the chimp received the same bit of food, but a monkey in a neighboring cage also received a similarly-sized morsel.

What Silk found was that “the chimps were entirely indifferent” to the situation of their neighbor. They pulled the first rope about half the time, and the rest of the time they pulled the other. And this indifference was manifested even though the neighboring chimp would often plead or implore its potential benefactor to pull the second rope. “They had their face right up there sometimes. But the begging gestures don’t seem to have had a big impact on the chimp’s behavior,” Silk said.

Ballor reflects on Silk’s research, commenting that “even though not all humans act compassionately, and perhaps not all animals act selfishly, the important reality to recognize is that we necessarily make moral conclusions about such behavior.” Selfless compassion, says Ballor, is a manifestation of the imago dei: “We were built for a purpose, to love God by loving our neighbor.”

Read the full commentary here.

In the wake of Hurricane Katrina, Americans living in Europe were often scolded about the need for big, centralized government to look after the poor, and we heard yet again about the moral superiority of Europe’s social model over America’s market-driven one.

People who follow the Acton Institute and read the Wall Street Journal’s editorial page are too smart and well-informed to fall for such bromides. The American Entreprise magazine also devoted a whole issue debunking Europe’s claims.

But when mainstream publications such as Newsweek International can see the hypocrisy and obvious failings of European protectionism, we may be reaching a tipping point.

This week’s edition has an article on Europe’s increasing reluctance to expand global trade. The biggest culprits are France, Germany and Italy, the continent’s three largest economies but whose political classes, whether they be of the left or of the right, are beholden to trade unions and other opponents of increased competition. (The U.S. Congress is not spared deserved criticism, either.)

Part of the socialist mystique is that the poor are too vulnerable to survive market changes – but the Newsweek article shows how the poor also have the most to gain from increased trade. Europeans must start to understand that this affects not only the poor in Africa and Asia but in their own countries as well.

As Tony Blair recently told the European Parliament, “What type of social model is it that has 20 million unemployed?”

Blog author: jballor
posted by on Wednesday, November 2, 2005

There’s a new venture, Kiva, that according to the founder Matthew Flannery is “a startup focused on connecting lenders with micro-businesses online. We provide the world’s first and only online micro-lending opportunity and just opened to the public 3 weeks ago. We have now started over 30 businesses in Uganda and are scaling at a rapid pace.”

The effort still looks to be in its infancy, but as of October 11 Kiva was officially out of “beta” testing. This means “we spent 6 months testing our software and our processes and we no longer consider this whole thing to be a ‘test’.”

Simply put, this is a great concept that can have real, concrete, positive effects in the lives of those living in the world’s poorest nations. Access to capital is a huge problem in many of these areas. Banks often cannot take on the risk of providing low-interest loans with terms long enough to spark development because of governmental, monetary, and economic instability in these countries. Now those of us who are concerned and live in the most prosperous nation in the history of the world can charitably take on that risk.

One of the great things about the microloan solution is that it attempts to find solutions that really work and address problems that arise in the real-world economic systems. These kinds of answers are an excellent alternative to economically misinformed campaigns like the “fair trade” movement.

Of course, not only for this particular venture but for all such efforts, effectiveness, transparency, and stewardship are key elements. Read more about Kiva’s due diligence process here.

The good news? “Due to the recent overwhelming interest in Kiva,” there are currently no businesses listed still looking for loans. The bad news? The need is great in the developing world, but it is difficult to bring these entrepreneurs to light. There is a lot of infrastructure work that needs to be done. Kiva is pursuing this in partnership with the Village Enterprise Fund.

HT: Seth Godin’s Blog