Category: Public Policy

In between dire warnings from the World Alliance of Reformed Churches (WARC) about the evil neo-liberal economic order and calls for more money from its member denominations, this gem arrived today via Ecumenical News International:

Church bank says its loans are at forefront of anti-poverty fight

Utrecht (ENI). Thirty years after its launch, a church-backed international development bank says it has become a world leader in providing resources for small loans for poor people to set up in business. The Netherlands-based Oikocredit agency announced it had approved record funding in the first nine months of the year for what is called the microfinance sector, which among other things offers small microcredit loans to cash-strapped borrowers.

According to its website, “Oikocredit believes that poor people can build themselves a better life, if only given the chance, if only given credit.” Beyond the cliches and PC buzzwords, there’s some clear economic thinking going on here.

“Throughout our years of operations, Oikocredit has proven that small poor entrepreneurs, cooperatives and others in developing countries are credit-worthy partners indeed. In fact, the demand for loans offered by Oikocredit steadily increases as the effectiveness of this credit for development is broadly recognised. Thus our loans are directed at groups: cooperatives of small-scale coffee farmers, for instance, who need their own coffee mill for increased income. Or microfinance institutions that split up our loans into thousands of small loans to very poor people.”

It’s not perfect, but its a far sight better than many other half-brained church schemes to “end poverty now.”

This interview with Charles Sandmel, a veteran of the municipal bond market, gives us some insights into current trends in the ethical investing movement. Some key points:

  • The leading market sectors over the last few years are in areas that “most of them [ethical investors] avoid, such as energy.”

  • Ethical investors don’t buy “Big Oil because of the pollution problems.”
  • Examples of ethical investments: wind turbine farms and facilities.
  • Examples of unethical investments: government bonds for nations with standing armies.
  • Sandmel likes bond funds for ethical investors because “going to the companies that are borrowing gives you a much greater chance to engage them on your social issues than simply buying their stock.”

Mark Cuban, billionaire owner of the Dallas Mavericks, opines on his blog about the difference between “investing” and “speculating.” He says, “The difference between the two is very simple. If you spend the money and the only way you can earn a return on that money is by selling whatever it is you have purchased. You are speculating.”

With respect to buying bonds, Cuban writes:

If you give your money to a mutual fund or hedge fund that puts money into public stocks and bonds, that’s super speculation.

Why Super Speculation? Because there is a 99 pct certainty that you are 3rd in line to get paid with whatever earnings the fund generates with your money.

First the fund itself has to get paid. They take money off the top.

Then the person who makes the investment decision has to be concerned about keeping their job. You see if the fund doesn’t outperform its peers or comp indexes, then the person who is responsible for the fund is out of a job.

Do you think that person cares more about putting a roof over his family’s head or you? Which means when push comes to shove, unless there are strict limitations, that fund manager is going to take the chances necessary to outperform his comps. And I can tell you that its par for the course to “go down swinging” than it is to take a called 3rd strike. Meaning, they risk your capital in hopes of keeping their jobs if that’s the only way to keep their jobs.

For Cuban, the “the problem is when the balance between the two shifts from heavy in investing to heavy in speculation.” This is because an emphasis on the former, “when money goes to create commerce, that’s capitalism at its best. Money going to smart people to do smart things. If it has good results, everyone makes money. The economy grows. Expectations are based on the prosperity of the company, typically over a longer term. New ideas create new wealth. It’s not a zero sum game. It can be an everyone wins game.”

But when there’s an emphasis on the latter, and while “speculation isn’t a bad thing. It can serve many purposes,” even so “it primarily just results in redistribution of wealth. If I speculate better than you, even if you are investing in apples and me in oranges, then its just a contest to see who does a better job. The winner gets the cash. Across all the different levels of speculation, the trillions of dollars, its a zero sum game.”

The Samaritan Guide is NOW Accepting Applications — for the 2005 online Guide.

The Samaritan Survey is the entry point for the October 1 — November 30 application to the 2005 Samaritan Guide.

Note: 2005 Samaritan Award applicants need NOT re-apply.

Application deadline is November 30, 2005 at 11:59pm

Eric Schansberg ponders the lessons that we can learn from the aftermatch of Hurricane Katrina. One of Schansberg’s biggest questions in light of the government’s failure to effectively manage the disaster is this: if the government, both local and federal, failed at all levels to deal with Katrina before, during, and after it made landfall, shouldn’t we be looking for other options rather than trying to depend more on a system that obviously failed? Schansberg suggests that while the government does play a role in the welfare of the nation, private organizations, charities, and local community groups are much more capable of dealing with the emotional and physical care of those displaced in the aftermath of the hurricane.

Private charitable activity is always better. Charity is always preferred ethically because people are engaged in voluntary, mutually beneficial exchange with others. Charity is always preferred biblically because it fills the biblical mandate to love others, especially those who are the most vulnerable. Charity, if done well, is preferred practically, because it is more effective, more efficient, and can focus on the spiritual as well as the material concerns of the needy. Again, if government is ineffective, shouldn’t our response be less dependence on government and more encouragement of private activity?

Read the full commentary here.

Blog author: jballor
Wednesday, October 5, 2005
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Also from last week’s McLaughlin Group, Mort Zuckerman from U.S. News & World Report makes the important point that rising costs of gasoline greatly impact the poorest and most vulnerable populations.

MR. ZUCKERMAN: …It is very difficult in America to really cut back on gasoline consumption, because people go to work and go shopping in their cars. We do not have public transportation in the way that Europe does.

MR. MCLAUGHLIN: Well, we need that for the macroeconomy and the microeconomy.

MR. ZUCKERMAN: Yes, we do need — absolutely, because it is the sole means of transportation both to jobs, to schools and to entertainment. So it is —

MR. MCLAUGHLIN: Forget the means. I’m talking about consumption, consumption, consumption.

MR. ZUCKERMAN: I’m talking consumption, yes. But the other part of it is when gasoline prices go up, if they go up by 50 cents a gallon, people use 20 gallons a week. Okay, that’s $10 a week or $500 a year. And for a couple, that’s $1,000 a year. For the poor people or the people earning relatively…It really hurts a lot. So it really disproportionately hits the poor.

So while prices go up and the market adjusts and people will make decisions based on that, some of us don’t have all options to choose from that a large amount of disposable income allows. If you struggled before when gas was $1.50 a gallon to afford what it takes to commute to your job, imagine when that cost is doubled. Certainly there are still general possibilities for off-setting some of this burden (such as carpooling or relying on what public transportation there is), but especially the short-term effects when the costs of a commodity like gasoline rise as they have, as Zuckerman says, it “disproportionately hits the poor.”

So while on the broader economic level it is best to let the market work, at the same time churches, charities, and community groups should be acutely aware of this, and attempt to address these individual situations as best they can.

Blog author: jballor
Wednesday, October 5, 2005
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Check out this exchange, involving Tony Blankley from The Washington Times, Pat Buchanan of MSNBC, and Eleanor Clift of Newseek, from last week’s McLaughlin Group about President Bush’s call for people to conserve gasoline in their daily activities:

MR. BLANKLEY: Let me make a quick point. Free-market prices maintain equilibrium of supply and demand. Let the price go up. People will make individual decisions.

MR. MCLAUGHLIN: Right.

MR. BLANKLEY: And they will cut back. They did when the prices went up. Some did; some didn’t. The idea of hortatory calls for conservation never work.

MR. BUCHANAN: John, they are all buying Eleanor Clift Priuses and they’re not buying my Navigators anymore.

MS. CLIFT: Right. (Laughs.)

MR. BUCHANAN: The market is working. People will not drive when the price goes up —

MR. MCLAUGHLIN: So you agree —

MR. BUCHANAN: — but they’ll put investment and money into oil.

The current situation in New Orleans can be seen in part as a result of the circumstances and context of the city’s founding in 1718. According to one report, the French settled on the site for New Orleans in response to “the need to control the Mississippi River and its tributaries.” But in order for this to happen, the French “would need to control the mouth of the river in the delta at the Gulf of Mexico. The problem with this site was the lack of high ground. The area of the delta was, and is, primarily swamps, marshes, and water. The site chosen for the city of New Orleans was far from ideal but was strategically necessary.”

The problem wasn’t so much with the city as it was originally settled, but rather with the expansion to its modern-day size: “New Orleans is situated on the northern bank of a great curve in the Mississippi River, with natural levees averaging ten to fifteen feet above sea level and only one to two miles in depth. The levees gradually drop off into the swamplands behind. While the oldest parts of the city rest on these levees, the greater part of the modern city rests at or below sea level and is subject to flooding. At this time, the city was the size of what is now known as the Vieux Carré, or French Quarter.”

So after the French colonization of New Orleans, the city grew and populated areas increasingly vulnerable to flooding. Today the Dutch, a former colonial power in their own right, have some ideas about amphibious houses that might serve those who resettle in New Orleans well. These amphibious houses have a “hollow foundation” that “works in the same way as the hull of a ship, buoying the structure up above water. To prevent the swimming houses from floating away, they slide up two broad steel posts – and as the water level sinks, so they sink back down again.”

The Dutch have primarily built these houses in response to fears about rising water levels due to global warming. Dick van Gooswilligen from the Dura Vermeer construction company said during a journalistic tour of the homes: “As global warming causes the sea level to rise, this is the solution. Housing of this type is the future for the delta regions of the world, the ones which face the greatest danger.”

Of course a city under sea level doesn’t need increased water levels to face great danger. That’s why “hordes of hydraulic engineers from Louisiana or Texas are making the pilgrimage to the North Sea coastline to look at the fortifications. The inland river dykes are also considered exemplary models.”

It seems to me that the founding of New Orleans and the contemporary effects of building on a site that is “far from ideal” would be an interesting topic for a paper at the “Colonialism, Postcolonialism, and the Environment” conference scheduled for next year at at the German Historical Institute in Washington, D.C. After all, “Today, no-one would dispute that colonialism has made a profound impact on the environment in former colonial areas, an impact which lives on in the post-colonial era, and affects the lives of millions of people.”

Blog author: jballor
Monday, October 3, 2005
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Two stats featured in this month’s Go Figure section of Christianity Today:

17: Percentage of the top 50 Fortune 500 corporations’ foundations whose policies prohibit their giving to faith-based groups.

57: Percentage of corporations that mention faith-based organizations and will not match employee contributions to them.

Blog author: jballor
Friday, September 30, 2005
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Why review a television show that never completed even its first season nearly three years ago? The confluence of events and circumstances that resulted in the cancellation of the Fox show Firefly in 2002 has done little to destroy the resiliency of the Firefly phenomenon. While only 14 episodes were ever made, and only 11 of those ever shown, once the complete series of Firefly came out on DVD, it topped sales at Amazon for months (it’s currently ranked #7). Fans of the show around the country host parties to watch the complete series with their friends. And today a full-length movie debuts in theaters, bringing the resurrection of the Firefly franchise full-circle.

Just what is it about this show that has made it such a phenomenon? It’s one part western, one part space opera, and one part action-adventure, a creation of Joss Whedon, of Buffy the Vampire Slayer fame. Others have commented on the show’s libertarian themes, but in the final analysis I think these claims are somewhat overblown. While libertarian emphases are clearly present, contract ultimately is not king.
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Federal involvement in education has grown steadily throughout the nation’s history, encroaching on what is still viewed by American’s as mostly a state and local responsibility. Kevin Schmiesing looks at a new book that examines U.S. education policy, the red tape and bureaucracy that has resulted, and the opposition to federal control that arose from parochial school administrators.

Read the full text here.