Archived Posts April 2009 - Page 5 of 6 | Acton PowerBlog

Blog author: jballor
Thursday, April 9, 2009

AS NYT columnist Frank Rich observed earlier this week, it’s hard to find much sympathy for Rick Wagoner. “Sure, Rick Wagoner deserved his fate,” writes Rich. “He did too little too late to save an iconic American institution from devolving into a government charity case.”

The delusions of the CEOs who lined up on Capitol Hill last year to lobby for bailouts extended beyond the arrogance of flying to congressional meetings in private jets. Duly chastened, the CEOs next made the pilgrimage in a caravan of hybrids, but still didn’t realize that some of them might be lobbying to lose their jobs.

If they had realized that in getting a government bailout they would be getting far more than they expected, they might have thought longer and harder about taking public money. I’m sure that Ford CEO Alan Mulally is happy that his company is the only one of the Big 3 that isn’t currently beholden to the whims of the federal government.

Companies who take government money are going to learn what charities who have gone on the government dole learned long ago: he who writes the checks ultimately calls the shots. In biblical parlance, “the borrower is servant to the lender.”

The fate of Rick Wagoner should be a cautionary tale to all those companies who are considering government bailouts, just as the fate of so many faith-based nonprofits serve as warnings to those who want government subsidies.

In a wide-ranging interview with Christianity Today, Rick Warren discussed his view of the new vision for the faith-based initiative. Here’s that Q&A:

Have you paid attention to the new faith-based initiatives released by President Obama and Joshua DuBois focusing on the four issues of responsible fatherhood, reducing unintended pregnancies, increasing interfaith dialogue, and reducing poverty?

Those are great goals. My fear is that if all of a sudden you have to compromise your convictions to be part of the faith base, that will kill it. People will simply ignore it. Saddleback has never accepted government money for any peace Plan project because we don’t want the strings attached to it. While the faith-based initiatives have great promise, if it becomes an issue where you can’t just hire Christians in a Christian school, that will effectively kill them.

Blog author: jballor
Wednesday, April 8, 2009

President Obama took time out over the weekend to respond to this week’s PBR question: “Let me assure you in the days ahead my administration intends to do to every industry in this country exactly what we are doing to the automakers.”

Father John Zuhlsdorf, who runs the popular Catholic blog “What Does the Prayer Really Say?” has opened a new discussion thread on the work of the Acton Institute. He explains:

In light of what is going on in the world’s economies, and in light of what will be increasing tension between secular governments and the Church, which has her body of teaching on social issues, it is a good idea to have a strong discussion about Acton and the Church’s social teachings.

Fr. Z, who joined us at Acton University as a blogger last year, started the Acton discussion to address comments that were being raised on another entry regarding Fr. Robert Sirico’s letter to Notre Dame President Rev. John Jenkins. Here’s Fr. Z’s summary:

Under that other entry, commenter Sarsfield opines:

Sirico is a dissenter from the social magisterium of the Church in favor of the decidedly un-Catholic philosophy of economic liberalism. The very purpose of his organization is to “correct” the “mistakes” of all the Popes who have spoken on the social question since Leo XIII. His choice of the organization’s name is telling if anyone bothers to read a little history. It was Acton, after all, who not only opposed Vatican I’s proposed definition of papal infallibility but tried to use his considerable influence with the British government to induce the anti-Catholic European powers to intervene militarily to prevent the Council from meeting.

Some responses were given to this:

* You may or may not agree with Fr. Sirico’s affinity for economic liberalism, but it is a gross overstatement to accuse him of dissenting from the Magisterium of the Church.
* You are incorrect to categorize Fr. Sirico as a dissenter from the Magisterium for his economics. Though, without more information, I’m not sure if it’s because you are wrong about the Acton Institute, or if it’s because you misunderstand Leo XIII.
* I think a better description of Fr. Sirico’s politics/economic theories rather than “economic liberalism,’ which is the term you use, would be “economic libertarianism.” Or “free market capitalism.” Excuse me for coining the first phrase, but certainly, as I read through the Acton maxim’s on their web site, they have much more to do philosophically with the right wing, or modern conservativism’s “less is more” view of the government’s involvement with all things that affect capitalistic economies. So it just as well could read, “economic conservatism,” for those listening with ears primed with the current left vs. right paradigm labeling conventions. So, while you may mean to convey exactly the same idea, the labeling must certainly give the opposite appearance to eyes and ears more conventionally tuned.

Join the discussion on WDTPRS. Come back here to link your remarks.

This past week, President Obama forced the CEO of General Motors to resign. The real significance of this may be lost on most people. Some might say, “Well, if General Motors is not doing well, the CEO should be replaced.” The major difficulty with this is that this is a special power of the GM Board of Directors, not the President of the United States. Effectively, this makes President Obama the Board of Directors of General Motors, and any other company he wants to control, and makes the Board a mere figurehead. Slowly but surely, this is moving us to a fascist form of government. In fascism, the companies still exist, but the government tells them what to do. This was similar to Mercantilism, which was the predominant economic system in Europe from about the 1600s until 1800, more or less. Mercantilism was the system of economics that Adam Smith wrote against in his famous An Inquiry into the Nature and Causes of the Wealth of Nations, which most people shorten to the cryptic Wealth of Nations. Smith was trying to show that government control of business impoverishes nations. Instead, he posited “a system of natural liberty,” which allowed people to follow their natural pursuits, take on the risk of doing so, and allow the market, that is, the countless decisions of people, to decide the outcome. It was the realization of the truth that Smith expressed in his work that subsequently brought prosperity to countless nations.

Now we are returning to the old system, under a new guise. Secretary of the Treasury Timothy Geithner recently asked Congress to grant him unprecedented power to shut down any company that, in his opinion, is dangerous to the overall economy. Note that there are no specifics to this power—it would be at his discretion. For those who have read my blog entries “The Economics of Politics,” you can see that all of this is a grab for what politicians live for—power, and power alone. Politics attracts those kinds of people. When asked by a Congresswoman where in the Constitution he went to get justification for this type of power, Geithner expressed incoherent babbling. It did not seem ever to cross his mind that he needed Constitutional justification for such an assumption of power. Again, this is typical of fascism. A crisis is, if not created, then hyped, panic flamed up, and people in this panic are willing to trade their freedom for security. Only too late will they realize that the situation was not as bad as the self-interested government officials portrayed it. The power will have been granted, and only a miracle will pry it away from the hands of the government. Once taken, government almost always keeps a power.

Getting back to General Motors, its problems go all the way back to government-imposed protective tariffs, which are a remnant of Mercantilism. Corporations seek to be protected from foreign competition so they do not have to work to keep up. The government, bowing to pressure and false economic theories, puts tariffs and quotas on imports to raise their prices higher than those of the domestic product; in this case, cars. The car makers then can do whatever they want because consumers face a choice of either us or nothing. In the 1970s, when we began allowing imports, the American car companies were caught, and almost went out of business. They finally got their act together when a new wave of government regulation on cars was imposed, thus raising the cost of domestic cars. To boot, the latest situation is that the Federal government is dictating to the car companies what types of cars to make, all in an effort to be “green.” The problem is that the market does not want these cars, so the company is forced to spend millions on cars they cannot sell. Then the government says, “Oh, it would be terrible if the companies failed; so many would be put out of work. So we have to bail them out again, and since we are ponying up the money, we now have a controlling interest in them, we can call the shots, we can tell the company what to produce, we can fire the executives, and when the company comes in with a loss, we blame the company again, bail them out again . . . .” And the circle continues. Remember, this government is the same one that has brought us the Post Office, the Department of Motor Vehicles and the public school system. All those who believe that the government can bring us out of a recession should remember that it was the government that caused it in the first place. Remember the housing bubble?

What a racket!

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

It made headlines last week when General Motors CEO Rick Wagoner was asked to resign by representatives of President Obama. Fritz Henderson, G.M. President, was announced as Wagoner’s successor to the top spot in the troubled car-manufacturer.

Henderson faces a series of directives from the Obama administration intended to retool G.M. As New York Times reporter Bill Vlasic notes, “The government has mandated that at least two-thirds of the debt of bondholders be swapped for G.M. stock, and that half of the retiree trust obligation also be financed with company stock.” If Henderson is unable to meet these demands, then the Obama administration has made it clear that bankruptcy is the alternative.

“We will either do it out of court or we will do it in court,” Mr. Henderson said. “But we will get the job done in terms of recreating and reinventing General Motors as a competitive enterprise.” In the sacking of Wagoner and the hands-on approach to forming G.M.’s future the federal government has flexed its muscles, refusing to be a passive partner following the extension of bailout funds to a host of corporations.

Given the precedent this might set, this week’s PBR question is: “Should the government control bailed-out companies?”

rebellion In the new book The Rebellion of Ronald Reagan, James Mann wants you to meet Reagan as the rebel who parted ways from cold war hawks in his own administration and foreign policy “realists” who were loyal to containment. It could be argued that Reagan was the atypical conservative dove in Mann’s view.The author does provide a relatively fresh thesis on Reagan’s role in ending the Cold War, which reinforces his rejection of what he calls “both left wing and right wing extremes.” Mann believes conservatives who champion Reagan as the president who had a well formulated economic and military plan to execute the end of the Soviet Union, and left wing critics who saw Reagan as lucky, overly simplistic and vapid, were both wrong.

When it comes to Soviet diplomacy, Mann’s account is highly praiseworthy of Reagan and his Secretary of State George Schultz. He sees the end of the Cold War as a result of both of men’s instincts and creativity in dealing with Mikhail Gorbachev, rather than the heavy arms build up, resistance to détente, and “saber-rattling” of Reagan’s first term. Critics of Reagan from the right, “failed to see the dynamics that were propelling change [in the Soviet Union]. Reagan would come to grasp the situation better and more quickly than they did,” says Mann. (more…)