Archived Posts October 2008 | Acton PowerBlog

According to a report from the Zenit News Service, Cardinal Renato Martino, president of the Pontifical Council of Justice and Peace, recently insisted that the “logic” of the market be changed. He said that the logic “was till (sic) now that of maximum gain, and therefore the most investments possible directed toward obtaining maximum benefit. And this, according to the social doctrine of the Church, is immoral.” This is because, according to the Cardinal, the market “should be able to benefit not just those who invest capital, but those who participate in the step of making it grow, that is, those who work.”

Aside from the fact that some of the terms he used are too vague to make any judgment about, like “maximum benefit,” the economics in his statement would be more appropriate of a kid, rather than a Cardinal. So, let’s learn some economics.

Firstly, money has alternative uses. If I have some excess wealth, I am going to invest it in the things which give me the highest return. Why would I do this? Because, those projects which promise the highest return, taking risk into account, will produce the things that people want most, and hence will give me more “bang for the buck.” For example, would you invest your money in a carpentry business run by me? I wouldn’t—because I can’t hammer a nail. No wants a carpenter who does not know what he is doing. But would you invest in McDonald’s? Sure. Most everyone eats at McDonald’s, and kids especially love the place. And what do the people who patronize McDonald’s get out of it? They get a food for which they willingly and freely exchange money, and feel the better off for doing so, or they would not do it. And who supplies the food? The workers, in exchange for their discounted marginal revenue product. In other words, they exchange their time for the money equivalent of what they produce. Why are people paid different wages? They get different wages because their output is different. The work of the person who sweeps up, while necessary or he would not have been hired, is worth less than the work of the person who puts the burgers together. The burger guy’s work is not worth as much as the trained manager who is responsible for coordinating the whole operation. None of this would be possible without the people who ponied up the money in the first place expecting a high return for the money the usage of which they were willing to forgo. If this is immoral and against the social doctrine of the Church, then I am Santa Claus. If fact, to have an economy worthy of the name at all without this investment process would be worthy only of a figure like Santa Claus.

I have long argued in my writings that churchmen who have no real economic training or understanding prescind from making remarks like this which mislead the faithful, and portray the sui generis (self-generating) free market economy as an operation run from the top by a few greedy people constantly plotting to withhold wealth from the ordinary folks.

Lastly, the Cardinal remarks, “All of us should collaborate in the good of all.” This is exactly what the market does, except for those who are not able or refuse to participate in it, much of which is caused by political interference with the process, such as governments who punish provinces in Africa which are in rebellion and refuse to allow food supplies to reach the people in those provinces, or Western politicians who, in exchange for votes, have created generations of people addicted to government checks, rather than productive work and advancement.

I wonder what His Eminence thinks of government-imposed protective tariffs the purpose of which is to keep the goods of foreign workers from competing with domestic goods, in return for support from corporations and unions in the domestic industry. This prevents globalization—it prevents the wealth of the United States and other well-off countries from going to them for the products they work to produce.

Gee, Cardinal Martino, get a clue.

Read more from Dr. Luckey at “Catholic Truths on Economics.”

Blog author: dwbosch
posted by on Thursday, October 30, 2008

Via Drudge, Australia is joining none other than China in censoring the internet. Here’s a surprising endorsement/justification the writer uses to bottom line the article:

photo credit: fathersonline.orgThe Australian Christian Lobby, however, has welcomed the proposals. Managing director Jim Wallace said the measures were needed. "The need to prevent access to illegal hard-core material and child pornography must be placed above the industry’s desire for unfettered access," Mr Wallace said.

I’m not endorsing porn. But earth to Mr. Wallace: Scan up a few ‘graphs and note how Chinese Keepers of Internet Purity shield their masses against illegal "spiritual movements." Makes me wonder how long the internet will be available to Christian "industries" like outreach and evangelism. Not too long, considering some Christians are readily turning those reigns over to government.

Jesus didn’t condemn prostitutes or demand that His disciples lobby for nanny states. He offered them grace and holiness and a new life, and people took Him up on it.

Blog author: jballor
posted by on Thursday, October 30, 2008


The lyrics to “Busted,” written by Harlan Howard, and made famous as performed by Johnny Cash:

My bills are all due and the babies need shoes,
But I’m Busted
Cotton’s gone down to a quarter a pound
And I’m Busted

I got a cow that’s gone dry
And a hen that won’t lay
A big stack of bills
Getting bigger each day
The county’s gonna haul my belongings away,
But I’m Busted

So I called on my brother to ask for a loan
‘Cause I was Busted
I hate to beg like a dog for a bone,
But I’m Busted

My brother said, “there’s not a thing I can do,
My wife and my kids
Are all down with the flu
And I was just thinkin’ about callin’ on you,
‘Cause I’m Busted.”

Lord, I ain’t no thief, but a man can go wrong,
When he’s Busted
The food that we canned last summer is gone,
But I’m Busted

Now the fields are all bare
And the cotton won’t grow
Me and my family’s gotta pack up and go
But I’ll make a living, just where, I don’t know
‘Cause I’m Busted

There’s a lot to think about in this 2 minute song: family, poverty, foreclosure, charity, and economic displacement.

Update: A recommendation has come my way (HT) to check out Ray Charles’ version. Here is below:

Blog author: jballor
posted by on Wednesday, October 29, 2008

There’s a lingering issue that continues to bother me about the so-called “global warming” Supreme Court case from 2007, Massachusetts v. EPA (05-1120), and that is a nagging concern about federalism and environmental standards.

As it stands currently, individual states are often prevented from enacting tougher legislation or regulation regarding some forms of pollution than the federal EPA standards. In order for a state EPA to partner with the federal EPA, be “authorized,” and thus receive funds, “a state must have enforcement programs and statutes that are essentially as stringent as the federal programs.”

One basic argument that the court found cogent in the Mass. v. EPA case was that individual states were prevented from creating standards that were more stringent regarding CO2 emissions than the EPA, and that since the EPA had not enacted any serious level of restriction, the states were unable to protect their environment.

This bothers me in part because one of my basic political impulses is a federalist one, an emphasis on the rights and sovereignty of individual states. The relationship between the federal and state environmental agencies seems to me to be fundamentally tyrannical, in that it overrides the ability of states to regulate themselves on these matters.

If you coopt the sovereignty of someone and then let your responsibilities lapse, then you have committed a pretty serious injustice. In 2007, the state of California sued to get the EPA to allow it to enact cleaner air standards, a right supposedly granted under the Clean Air Act. The EPA needed to agree to the tougher standards by granting a waiver, which it declined to do.

So there’s that political concern. But there’s also an economic concern, and this cuts both ways. Most often the federal government invokes the commerce clause to argue that it is within its rights and responsibilities to promote economic trade and stability by enacting nationwide standards. But in the case of environmental standards, that economic argument might not always be salient.

In a recent New York Times column, Tom Friedman calls for “a national renewable energy standard that would require every utility in the country to produce 20 percent of its power from clean, non-CO2-emitting, energy sources — wind, solar, hydro, nuclear, biomass — by 2025.” Friedman repeats the typical argument justifying national standards: “About half the states already have these in place, but they are all different. It would create a huge domestic pull for renewable energy if we had a uniform national mandate.”

John Whitehead, blogging at Environmental Economics, gives expression to the basic economic and political concern I had about the Massachusetts v. EPA decision as well as proposals for national mandates on environmental standards:

Most every environmental economics textbooks explain why uniform national standards are inefficient. Since benefits and costs are regionally different, it makes sense to adopt non-uniform standards — if standard adopting is a must.

Why not give federalism free reign on environmental issues, let states compete against each other, and see how things play out? If California wants to experiment with enacting tougher restrictions while attempting to remain economically competitive, why not see if the state is able to pull it off?

A Boston-area Church of Christ is using environmental stewardship to boost membership.

The United Church of Christ, to which the Newbury congregation belongs, has called upon its members to become more deeply engaged in stewardship initiatives. Gary Gardner, a senior researcher at the Worldwatch Institute, an environmental research organization in Washington, wrote in 2002 that the union of environmentalists and religious institutions is "a powerful combination that until recently remained virtually unexplored. . . . Each looks at the world from a moral perspective; each views nature as having value that surpasses economics; and each opposes excessive consumption." Powerful it may prove to be for the church, which is just over the Newburyport line on Newbury High Road. Haverington said this year, on average, three families a week joined, and they are citing the environmental and experiential slants as the reason.

Or is it?

But some parishioners had no taste for Haverington’s course after she came on board in 2001, and left the congregation.The church is down to 65 active congregants, and like many other churches is in the midst of a financial crunch. It is now negotiating the sale of a historic rooster weathervane that once sat on top.

You’ll have to scan to Page 2 to get an idea of what sorts of things they were probably objecting to. Environmental stewardship can be an effective part of ministry and outreach for any congregation, but if that’s all you’ve got, is it really a Church anymore? [My New England church is growing, by the way - no financial crunching. Must be all that Bible preaching and praying and worshipping Jesus and stuff... ed]

UPDATE: Here’s a Tuesday two-fer: The Christian Science Monitor goes paperless. And Black Christians – the next target for climate change propaganda?

In this week’s Birth of Freedom short video Sam Gregg, author of On Ordered Liberty, discusses the views that two influential ancient philosophers held regarding human equality and the practice of slavery.


If you haven’t seen the other 7 video shorts, you can check out the rest of the series, learn about premieres in your area, and discover more background information at www.thebirthoffreedom.com.

Blog author: jcouretas
posted by on Monday, October 27, 2008

The famous Austrian economist, Joseph Schumpeter, despaired for the future of the free market system. The reason for this despair was that the excess wealth of the system would create educated folks who would turn on the very system that created them. Their education would make them into anti-capitalist ideologues, who would then kill the goose that laid the golden egg. He did not think that those who participated in the creation of such enormous wealth would be in any position to fight back, and this for two reasons: firstly, business people do not tend to be men of letters, so they are unable to mount arguments defending the system; secondly, the job of the business executive is the survival of the company, and thus, he will concentrate on those things required to weather the storm, not be controversial.

The man who is probably the most famous Austrian economist, Ludwig von Mises, despaired for the future of the free market system due to envy. Various sectors of society, academic, non-productive, uneducated, etc., would envy the wealth of the producers in society, and end up by finding means to take away that wealth and give it to the lesser productive people, despite the fact that they did not earn it, and therefore, are not entitled to it.

Our present political situation has a combination of both of these views. Both presidential candidates are in favor of redistribution of wealth, albeit one is more open about it. And very few business people are saying “no!” to any of it with a few exceptions, such as the president of BB&T Bank, who wrote an open letter to Congress asking why his totally solvent bank should be punished for the stupidity of the others.

But there is another culprit in this maelstrom. This culprit is the business person. Why? With tongue-in-cheek apologies to neo-classical (mathematical) economic theory, the purpose of a company is not to make a profit. As John Paul II said in Centesimus Annus, a profit is a sign of the health of a company, and therefore is good and necessary. But anyone who has taken a management course knows that the purpose of the company, aside from producing what the customers want, is to increase the wealth of the stockholders. This is different than making a profit, although profit is an integral part of it. Wealth is different than profit. Profit is a short run measurement of the short run health of the company. Wealth, by its very nature is long run. Profit appears on the financial statements of a company in mere money terms, and the accountants who produce those statements do not even take inflation into account. So a company could have an increase in profit, but not an increase in items sold, merely because they had to raise prices to accommodate the fall in the value of the dollar. But executives today are a slave to the profit line in the financial statements. They have a need to impress their boards and stockholders now by sacrificing the long term growth of the enterprise. (more…)

A 2001 radio interview of Barack Obama surfaced yesterday in which he said that “one of the tragedies of the Civil Rights movement,” and one of the limitations of the Warren Supreme Court, was that although they won such formal rights as the right to vote and “sit at the lunch counter and order,” they “never ventured into the issues of redistribution of wealth.”

A caller to the station, WBEZ Chicago 91.5 FM, then asks if the courts are “the appropriate place for reparative economic work to take place.” Obama responds that “you can craft theoretical justifications for it legally,” but a more effective approach is “the political and community organizing and activities on the ground that are able to put together the actual coalitions of power through which you bring about redistributed change.”

Does the radio interview demonstrate that Obama harbors radical views? Does it suggest that the black liberation theology of his former pastor, Jeremiah Wright, plays a bigger role in Obama’s thinking than he claims? Should black Americans get substantial monetary payments from other Americans as repayment for slavery and racism? If these are the primary questions swirling around this radio interview in the coming days, an important question may go begging: Would reparations specifically, and wealth redistribution generally, actually help poor black Americans?

In a new Acton video short, “How not to Help the Poor,” experts on poverty fighting argue that government wealth redistribution has devastated poor communities.

One of the experts interviewed is Robert Woodson, a former Civil Rights activist and president of the Center for Neighborhood Enterprise. “We in Washington today lead the nation in 21 separate categories of poverty expenditures,” he notes. “Explain to me why a child born in Washington D.C. has a life expectancy that’s lower than a child born anywhere in the western hemisphere second only to Haiti. We have the highest per capita expenditure on education and we’re 48th in outcomes for kids.”

Woodson does not find the answer in the history of blacks under slavery but in U.S. social policy after 1960. “The black marriage rate in 1930 to 1940 was higher than in the white community. Eighty-two percent of all black families had a man and a woman raising children. But what happened in 1960 when government intervened with the poverty programs, a major paradigm shift occurred and contributed to the decimation of the family.”

Why do such well-intended programs have such devastating consequences? And what has proven to help lift up the poor? The video short also explores these questions.

An early transcript of the Obama radio interview is available here.

Lawrence J. McQuillan offers a less than surprising economic assessment for the Golden State in the City Journal, causing people to flee for better opportunities elsewhere. McQuillan states:

California continues to be burdened with high taxes, punitive regulations, huge wealth-transfer programs, out-of-control spending, and lawsuit abuse. And there’s no end in sight to the state’s fiscal madness.

Some entrepreneurial minded residents are finding states like Nevada more hospitable for economic opportunity. Nevada ranks second when it comes to inbound migration. The Pacific Research Institute’s 2008 U.S. Economic Freedom Index ranked Nevada sixth in the country in “economic freedom.” South Dakota secured the top spot for 2008.

The rankings and report PRI has compiled is worth studying. It’s not a bland read either, for example thoughts and quotes concerning the relationship between political and property rights by leaders like James Madison are included.

Undoubtedly the report would be very beneficial for state legislators to use as a tool for serving their constituents. McQuillan also notes in his piece:

Economic freedom—or the lack thereof—affects states in multiple ways. Migration alters the political map through congressional apportionment. Current projections suggest that California’s mass exodus will deprive it of a seat in the U.S. House of Representatives after the 2010 census. Economic freedom also impacts pocketbooks. In 2005, per-capita income in the 15 most economically free states grew 31 percent faster than in the 15 states with the lowest levels of economic freedom. Policies friendly to economic freedom help states shore up their finances, too. The 15 freest states saw their general-fund tax revenues grow at a rate more than 6 percent higher than the 15 states with the least economic freedom.

Everyone seems to be going ga-ga over nationalization in the US these days, and why not? Heck, it seems to be working pretty well for Hugo Chavez in Venezuela.

Blast from the not-so-recent past: Maxine Waters on the domestic oil industry