Archived Posts May 2010 | Acton PowerBlog

When I lived in Hawaii my family visited Punchbowl National Cemetery to see where my grandfather’s high school buddy was buried. He was killed in the Pacific Theatre in World War II. As a child I had two thoughts that day. It was taking a long time to find his grave simply because it was a sea of stones and I remember thinking at the time, I wonder if his family wanted him buried here, so far from home. Did his loved ones ever see his grave?

We can comprehend the price of liberty in the thousands of American soldiers, sailors, Marines, and airmen buried far from home across seas and continents. One of these men, buried at Normandy, is medal of honor recipient Theodore Roosevelt, Jr. After receiving two denials to land with his men in the first assault waves at Normandy, he was finally granted permission to storm the beaches with his men on D-Day.

Courageous to an almost absurd degree, Roosevelt had a serious heart condition and walked with a cane. The only general to land in the first wave at Normandy, General Omar Bradley later said of Roosevelt’s actions on the beach that day, “It was the greatest single act of courage I witnessed in the war.”

His father, President Theodore Rosevelt, cited courage and honor as being among the chief virtues of the American way of life. Too often in the academy and the political sphere the opposite is true. The student senate at the University of Washington brought dishonor on itself when it blocked a memorial to medal of honor recipient, Marine fighter ace, and an alumnus of the school named Gregory “Pappy” Boyington in 2006. One of the reasons cited: “Many monuments at UW already commemorate rich white men,” driveled one student.

A true example of honor is the Tomb Guard, a special platoon within the 3rd U.S. Infantry Regiment. Honor and respect has everything to do with their ceremonial and almost mystic vigil over the Tomb of the Unknown Soldier in Arlington National Cemetery. The tomb represents not only all of those who died defending the republic, but also those who sacrificed their identity. The tomb has been guarded continuously and without interruption since the summer of 1937. Part of the creed of the sentinel guard reads:

Surrounded by well meaning crowds by day, alone in the thoughtful peace of night, this soldier will in honored glory rest under my eternal vigilance.

My favorite thing to do in Arlington is to walk the hallowed grounds in that garden of stones. It is in so many ways the greatest monument to America and her splendor and character. WWII veteran, and Mississippi civil rights hero Medgar Evers, who was assassinated in 1963, is buried there. Grand Rapids, Michigan native and astronaut Roger Chaffee, who died during an Apollo launch pad test, was also laid to rest in Arlington.

I actually left Arlington for a work related trip right before what has been dubbed “Snowpocalypse.” I remember watching the news about how the entire federal government had been shut down, and the area was in disarray. I remember thinking: while the weather was bringing the entire government to a halt, still somewhere things would be exactly the same. Across the Potomac in Arlington a solitary guard would be at his post, meticulously pacing 21 steps, with a rhythmic click of the heels, like an eternal heartbeat for America’s bravest.

When in Krakow, Poland, for Acton’s recent conference, I was interviewed by journalist Dominik Jaskulski for the news organization Fronda. Dominik has kindly allowed us to publish excerpts from his translation of the interview.

Father Sirico, tell us why your conference, organized with the Foundation PAFERE, is important for Poland.

Today, many people in the world are in a situation of transition. If you do not respond well in such conditions, you may see a repeat episode where – as you had here in Poland — people turned to socialist and communist ideas. I think it’s very important that people understand what culture is and how dynamic it is. With the foundation of a moral framework, it is much easier to choose the proper path of development. In that framework, we want above all to respect the dignity of the human person.

In Poland, we often see a discrepancy between the views of younger people and their elders about the nature of the transformation that occurred. Older people often talk about the loss of state benefits.

It’s quite funny, because less than 20 years ago, when I first came here, I gave an interview in which I was asked about how I thought things would go in the next few years. I said something like this: When the Israelites were leaving Egypt, it took them 40 years to arrive at the Promised Land. That’s mainly because Egypt was still in their hearts. In the Bible, the Israelites constantly asked, “Where is the land of milk and honey? When we were in Egypt, at least we had the dates and other food.” It took a whole generation to accept the changes that occurred.

What about unemployment? Under communism, we all had jobs. Currently, unemployment exceeds 10 percent. A few years ago it was even 20 percent.

Well, I think what the case was in the past in Poland is that everyone seemed to have a job. Authentic work, in which everyone is responsible for that work and understands its purpose, is productive. Many people were employed in Poland, which was not free, but many of these workers had no purpose and were unproductive. And, at the end, it led to massive poverty. Poverty, not wealth, was socialized. If we could measure the level of satisfaction and happiness then and now in Poland, I would be surprised if it isn’t now much higher. Yet it is true that some people find themselves in a difficult situation during the transition. We will discuss this during the conference.

Economics, as we know, has its cultural consequences, just as culture has economic implications. How you assess economic and cultural changes in Poland?

I must say that from all countries historically affected by communism, Poland and the Czech Republic were the most successful in their transformation. In Poland, largely thanks to the Church, the local culture remained intact. Of course, questions about the transformation continue to occur. This indeed was a dramatic shift because this country escaped one of the most horrific, depraved systems in human history. There is a cost, which we had to go through. We just have to understand that this transformation brings together a number of costs. (more…)

Time to set the record straight. Some of the comments on my original posting of Faith McDonnell’s article Embracing the Tormentors are representative of the sort of egregious moral relativism, spin doctoring, and outright falsification, that have for so long characterized the “social justice” programs of lefty ecumenical groups like the WCC and NCC. Then, for good measure, let’s have some of these commenters toss in a dollop of hate for Israel and claim that this nation, which faces an existential threat from autocratic Arab regimes frequently and publicly reminding us of their plans to annihilate the Jews or drive them into the sea, is not a democracy. Really? Compared to what? Iran or Syria?

Recall, if you didn’t take time to actually read the article (read the article!), the words of Christian poet and patriot Armando Valladares, who was imprisoned for 22 years in Fidel Castro’s island Gulag. In accepting IRD’s 1983 Religious Freedom Award, he said this:

The honor which you bestow upon me today will have special significance for Cuba’s political prisoners….During those years, with the purpose of forcing us to abandon our religious beliefs and demoralize us, the Cuban communist indoctrinators repeatedly used the statements of support for Castro’s revolution made by some representatives of American Christian churches. Every time that a pamphlet was published in the United States, every time a clergyman would write an article in support of Fidel Castro’s dictatorship, a translation would reach us and that was worse for the Christian political prisoners than the beatings or the hunger.

While we waited for the solidarity embrace from our brothers in Christ, incomprehensively to us, those who were embraced were our tormentors…. the Christians in Cuba’s prisons suffer not only the pain of torture and isolation but also the conviction that they have been deserted by their brothers in faith.

Thanks to commenter Neal Lang for reminding us of the Red Terror in Spain. The Spaniards were only following the program of extermination, the destruction of the faith, that was devised by the Bolsheviks and Stalinists. This article cites a Russian report placing the number of deaths of clergy, religious and lay leaders at 200,000 during the Soviet regime. It started early: (more…)

Blog author: jcouretas
Friday, May 28, 2010
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Sell! Sell! Sell!

This week’s commentary is from Victor V. Claar, an economist at Henderson State University and the author of a new Acton Institute monograph, Fair Trade? Its Prospects as a Poverty Solution. Follow his economics blog here.

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Poverty, Capital and Economic Freedom

By Victor V. Claar

When poor countries grow rich, it rarely has anything at all to do with how many mouths they have to feed or the abundance of natural resources. Instead, across the globe, poor countries of all sizes, climates, and endowments begin to grow rich as two key factors increase.

First, countries grow rich as their human capital improves. Human capital is the term economists use to describe the value that a country’s people possess through their accumulated experience and education. For example, there is little doubt that India’s recent growth explosion is due in large part to the education—including the knowledge of the English language—of its people.

Second, countries grow rich as they invest in and accumulate physical capital: the machines, tools, infrastructure, and other equipment that make the product of each hour of physical labor more valuable. That which both human capital and physical capital share is that they both transform the result of an hour of a person’s hard work into something of even greater value. As the value of an hour of labor rises, employers gladly pay higher hourly rates, knowing that their bottom lines will be the better for it.

If we want to be effective agents in aiding the poor, we should focus our efforts in directions leading to the enhanced value of an hour of labor. That is, we should help poor countries wisely grow their stocks of human and physical capital, all the while bearing in mind that markets and their prices send the best available signals regarding where our efforts can have the greatest impact. The newfound success of innovative micro lending efforts such as Kiva can help show us ways to effectively invest in the accumulation of physical capital by the global poor. Compassion International is a marvelous organization that works to further the education—the human capital—of poor children worldwide, with a financial accountability record above reproach. (more…)

On May 21, 2010, the United States Conference of Catholic Bishops released a media statement which sought to identify the way forward for Catholic engagement in the healthcare debate in light of the passage of healthcare legislation. The USCCB stresses that at the core of the bishops’ advocacy throughout the debate was a concern for three principles: (1) the protection of innocent life from the use of lethal force from conception to natural death; (2) the maintenance of conscience protections; and (3) the realization of universal access to healthcare for all, especially the poor and migrants. These, the USCCB stresses, will remain at the forefront of its contributions to the healthcare discussion. The USCCB consequently asks America’s “Catholic community to come together in defense of human life, rights of conscience and fairness to immigrants so we will have a health care system that truly respects the life, dignity, health and consciences of all.”

All this is well and good. Unfortunately, there is no mention in this text of a concern voiced by a good number of Catholic bishops throughout the debate: an assessment of whether the recent healthcare legislation can truly be said to reflect adherence to the principle of subsidiarity. For anyone who needs a reminder of what this principle means, here’s what the Catechism of the Catholic Church says (CCC 1883):

Excessive intervention by the state can threaten personal freedom and initiative. The teaching of the Church has elaborated the principle of subsidiarity, according to which ‘a community of a higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need and help to co- ordinate its activity with the activities of the rest of society, always with a view to the common good’.

It’s important to note that subsidiarity is not an “anti-government” or “anti-state” principle. Indeed it affirms that there is a role for government because (1) there are some things that only governments can and should do and (2) sometimes the state does need to intervene when other communities are unable to cope temporarily with their particular responsibilities. Nor, it should be added, does subsidiarity always translate into the very same policy-positions, precisely because some elements of the common good are in a constant state of flux.

That said, it’s puzzling to say the least that the USCCB, both during and after the healthcare debate, is not in the habit of referencing subsidiarity as a vital principle for Catholics to reflect upon as they consider the implications of what few now question amounts to the massive expansion of Federal government control over healthcare in the United States. Contrary to what some Catholics imagine (especially the professional social justice activists who dissent from fundamental church dogmas and doctrines while casting anathemas against anyone who disagrees with their own prudential judgments on any number of economic issues), striving to widen access to healthcare need not automatically translate into the state assuming a dominant role.

In their important joint pastoral letter of August 22, 2009, Archbishop Joseph F. Naumann of Kansas City, Kansas, and Bishop Robert W. Finn of Kansas City-St. Joseph listed subsidiarity as a vital principle upon which Catholics should reflect when thinking about health care reform. They even described subsidiarity as “the preamble to the Work of Reform”. Elsewhere in the document the bishops spelt out what this means for healthcare reform:

The right of every individual to access health care does not necessarily suppose an obligation on the part of the government to provide it. Yet in our American culture, Catholic teaching about the ‘right’ to healthcare is sometimes confused with the structures of ‘entitlement.’ The teaching of the Universal Church has never been to suggest a government socialization of medical services. Rather, the Church has asserted the rights of every individual to have access to those things most necessary for sustaining and caring for human life, while at the same time insisting on the personal responsibility of each individual to care properly for his or her own health.

During the healthcare debate, a considerable number of Catholic bishops expressed similar views. Bishops Walker Nickless of Sioux City, for example, was very specific:

… the Catholic Church does not teach that ‘health care’ as such, without distinction, is a natural right. The ‘natural right’ of health care is the divine bounty of food, water, and air without which all of us quickly die. This bounty comes from God directly. None of us own it, and none of us can morally withhold it from others. The remainder of health care is a political, not a natural, right, because it comes from our human efforts, creativity, and compassion. As a political right, health care should be apportioned according to need, not ability to pay or to benefit from the care. We reject the rationing of care. Those who are sickest should get the most care, regardless of age, status, or wealth. But how to do this is not self-evident. The decisions that we must collectively make about how to administer health care therefore fall under ‘prudential judgment.’ [I]n that category of prudential judgment, the Catholic Church does not teach that government should directly provide health care. Unlike a prudential concern like national defense, for which government monopolization is objectively good – it both limits violence overall and prevents the obvious abuses to which private armies are susceptible – health care should not be subject to federal monopolization.

Preserving patient choice (through a flourishing private sector) is the only way to prevent a health care monopoly from denying care arbitrarily, as we learned from HMOs in the recent past. While a government monopoly would not be motivated by profit, it would be motivated by such bureaucratic standards as quotas and defined ‘best procedures,’ which are equally beyond the influence of most citizens. The proper role of the government is to regulate the private sector, in order to foster healthy competition and to curtail abuses. Therefore any legislation that undermines the viability of the private sector is suspect. Private, religious hospitals and nursing homes, in particular, should be protected, because these are the ones most vigorously offering actual health care to the poorest of the poor.

These and similar views expressed by many bishops were dismissed as “libertarian” by whatever’s left these days of the Catholic left – as if only libertarians could possibly believe that limiting government power and encouraging private sector and civil society solutions to genuine social and economic problems are good things.

The truth, however, is that the USCCB’s professional social justice bureaucrats have a long history of playing down or even ignoring the implications of the principle of subsidiarity. Subsidiarity isn’t, for example, even listed as one of the “Themes of Catholic Teaching” on the Justice, Peace and Development section of the USCCB’s website. It is long past the time for that to change.

The Institute on Religion & Democracy’s Faith McDonnell:

Conducting “truth commissions” to denounce American armed forces and organizing divestment campaigns to cripple Israel are vital issues to some American church officials. Raising the banner of Intifada and expressing solidarity with Palestinians are also very important to this collection of liberal leaders. They “spiritualize” the Democratic immigration and health care reform agendas with pompous prayer, but their social justice-focused prophetic vision has strange blind spots. Leftist church leaders hardly ever see, let alone condemn, the imprisonment, enslavement, torture, and murder of Christians in the Islamic world, North Korea, and China.

Church officials and partner organizations such as the National Council of Churches (NCC) and the World Council of Churches (WCC) issue strident policy statements on such topics as “eco-justice,” broadband access for “economically depressed rural areas,” the Israeli “occupation,” and “unnecessary Department of Defense spending.” But one is hard-pressed to find these church leaders denouncing the recent appointment of the Islamic Republic of Iran to the United Nations Commission on the Status of Women. One searches in vain for an expression of solidarity with the Christian community in Jos, Plateau State, in central Nigeria, where hundreds of Christians were slaughtered by Fulani jihadists during March and April of 2010. If there are any such statements, they address vaguely “ethnic conflict” and are masterpieces of moral equivalency.

Such reticence to speak about persecution is not new for liberal church leaders. Downplaying or denying the egregious human rights violations of the Soviet system was symptomatic of Leftist hatred of America and Western values. It was also considered essential to the type of appeasement of tyrants necessary to achieve the liberal Utopian dream of a peaceful, nuclear weapon-free world.

Read “Embracing the Tormentors” on IRD’s Web site.

Some members of the Acton team were in Krakow, Poland, last week for the third conference in our series on Poverty, Entrepreneurship and Integral Development. This conference, which took place on May 19th, was on the topic of Building a Commercial Society: Culture & the Transition to Wealth, and was co-sponsored with the John Paul II Catholic University of Lublin, the Civil Development Forum, and the Polish American Foundation for Economic Research and Education.

With a massive debt crisis threatening Greece along with other euro-zone economies if not all of Europe, our conference speakers showed how the growth of the welfare state and the appetite for “free” (i.e. government-provided, taxpayer-funded) programs and entitlements have created all sorts of perverse economic, moral and cultural incentives and resulting maladies.

With a wide and impressive array of data, former Polish minister of finance Leszek Balcerowicz explained how the welfare state/entitlement mentality weakens incentives to work and save, and fundamentally alters relations within institutions such as the family, while also increasing and entrenching inequality and social transfer payments. A less dynamic, more resentful society with a few rich, politically-connected oligarchs and many frustrated entrepreneurs follows in much of the post-communist world.

Former Estonian prime minister Mart Laar related how Pope John Paul II’s moral culture of freedom did not and does not yet exist in post-communist countries, with negative consequences for the environment, the economy and the human soul. Estonia has succeeded in cutting government spending by 20 percent, has ignored the advice of the International Monetary Fund to raise taxes, and did not borrow money to finance the welfare state, which Laar called unsustainable and incapable of providing true welfare.

Dominican priest Fr. Maciej Zięba reminded us that the free economy includes more than private property and trade; it needs certain cultural and moral presuppositions about work, human dignity and equality, and decentralized social structures such as parishes, towns and businesses. Pope John Paul II’s encyclical Centesimus Annus was not “hyper-moralistic” but realistic in its reading of the free economy and urged us to do well and do good together.

In the afternoon session, Prof. Jan Kłos addressed the creative tensions of man’s relationship to nature and how it can be turned to our mutual benefit, while entrepreneur Andrzej Baranski spoke of the history of his family business in Krakow and the myth of the “human face” of socialism. Writer and journalist John O’Sullivan noted that Polish culture saved the nation during many trials and sufferings, and could save Europe again by recalling the modest, realistic yet vigorous Christian virtues Polish culture has long instilled in its people.

The conference concluded with the presentation of the 2010 Novak Award to the Lithuanian priest Fr. Kęstutis Kėvalas followed by his Calihan lecture on “The Market Economy in Benedict XVI’s Caritas in Veritate”. Fr. Kėvalas explained how the logic and spirit of giving need to penetrate the market economy, and indicated that Benedict may be developing a “theology of the market” akin to Pope John Paul II’s famed theology of the body. This theology would help shift the economic debate beyond aid and the culture of dependency on the welfare state towards one based on a fuller understanding of human nature.

Simon Johnson and Peter Boone wrote an interesting article the UK Telegraph Saturday called “The New Feudal Overlords of Europe will be the bankers of the ECB.”
Johnson is also the co-author along with James Kwak of a thoughtful and provocative book 13 Bankers as well as a blog on economics. Also on the ECB see my colleague Sam Gregg’s Piece at Public Discourse

Using Hayek’s famous phrase “The Road to Serfdom” Johnson and Boone argue the demise of Europe will not be the welfare state and the growth of government as Hayek predicted, but rather a “financial elite gone awry” They write:

Hayek had the sign and the destination right, but was wrong about the mechanism. Unregulated finance, the ideology of unfettered free markets, and state capture by corporate interests are what ended up undermining democracy both in North America and in Europe. All industrialised countries are at risk, but it’s the eurozone – with its vulnerable structures – that points most clearly to our potentially unpleasant collective futures.

As a result of the continuing euro crisis, the European Central Bank (ECB) now finds itself buying up the debt of all the weaker eurozone governments, making it the – perhaps unwittingly – feudal boss of Europe. In the coming years, the ECB and the European Union will dictate policy. The policy elite who run these structures – along with their allies in the private sector – are your new overlords

It is arguable who exactly are the peasants, the vassals and the lords under this model – and what services will end up being exchanged, but there is no question we are seeing a sea change in the post-war system of property, power and prosperity across Western Europe, just as Hayek feared. An overwhelming debt burden will bring down even the proudest people.

The ECB-EU approach will not return countries to reasonable levels of growth – the debt overhang is simply too large. The southern and western periphery of the eurozone cannot grow out of their debts under these arrangements and so will stumble from stabilisation programme to stabilisation programme – as did Latin America in the 1980s. This is bound to lead to hostile politics, social unrest and more economic crises.

The debt crisis must be addressed and I don’t disagree with their assertion that corporate-government collusion is a serious problem (See my article on Davos Capitalism) though I am unclear on how “Unregulated finance, the ideology of unfettered free markets, and state capture by corporate interests” exactly go together, or what they mean by “unfettered free markets.” Since Johnson and Kwak argue in 13 Bankers that we’ve had a type of oligarchic capitalism and Johnson and Boone matter of factly talk about “welfare socialism” I assume they aren’t arguing that the Europe or the US have had laissez faire free markets over the last decades, so I am not exactly sure what they mean. But on to their main points.

Johnson and Boone argue that current debt levels and the lack of political will to do anything about it will end up wreaking havoc on EU countries and ultimately on the US and the world.

The UK and US need to prepare themselves for more storms. The United States will be in the pleasant position as the world’s safe haven, but this will only encourage America’s profligate politicians to spend more and build more debt.

The UK will bear much more pain from euro devaluation and financial dislocation, all exacerbated by its own large deficit and debts. We might well see one more invasion across the channel, this time by bond vigilantes who question Britain’s ability to rein in inflation as it builds too large debts.

At the end of this great tumult, Europe and the UK will have sound fiscal regimes. Debt will be defaulted on or inflated away, and nations will have dramatically cut spending.

Hayek’s predicted demise of western society as he knew it will prove correct, but welfare socialism will prove the victim, erased by a political and financial elite gone awry.

Interesting and worrying stuff and the article is well worth reading as is 13 Bankers. But one thing the authors seem to ignore in this piece is that while welfare socialism may be the victim of the collapse (not a bad thing in my estimation), it is fully a culprit as well.

It is precisely a massive welfare state that is a part of the problem. It not only requires outlandish and unsustainable spending on the parts of governments who are afraid to address the challenge lest they lose popular support. But it also encourages a culture of irresponsibility, and inculcates a sentiment in the population that you can maintain an pleasant middle class life indefinitely without actually having to produce goods and services that people want and need. They suggest several austere measures as a solution but doubt the political will to achieve it. What may be really needed is a complete rethinking of the role of government and the whole idea of the current welfare state. That would not only require political courage, but cultural rejuvenation and this is something neither politicians nor bankers can provide.

Blog author: jcouretas
Tuesday, May 25, 2010
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Over at Public Discourse, a new article by Acton’s research director Samuel Gregg examines the deeper reasons behind the problems of the euro. In “Europe’s Monetary Sins,” Gregg points out that many of the euro’s present difficulties reflect a basic refusal of Europe’s political class to acknowledge some of the unpleasant economic realities associated with the EU’s social model, as well as a tendency to say one thing while really doing another. In short, Gregg argues that many of Europe’s economic predicaments flow from a crisis of truth, an unwillingness to recognize it, and the subsequent formulation of policy on the basis of untruths and half-truths. The most recent result of this process, Gregg says, is that the independence of the European Central Bank has been severely compromised:

Ever since its foundation in 1998, the ECB has been a whipping boy for European politicians from the left and right who argue that the ECB’s legally mandated priority of maintaining price stability has kept productivity and economic growth rates in the EU far below those of America. In reality, these problems have little to do with monetary policy and everything to do with low rates of entrepreneurship, unsustainable levels of welfare expenditure, an aversion to competition, high rates of public sector employment, and structural rigidities associated with some of the world’s most inflexible labor markets. Indeed, it is probable that the ECB’s avoidance of the low interest-rate policies adopted by the Federal Reserve in the 2000s may have made the 2008 recession in Europe more bearable than it might otherwise have been.

Against considerable political pressures, the ECB has hitherto doggedly defended its independence. All that, however, changed when the European Union decided to set up its 750-billion-euro bailout fund in early May 2010 to stabilize financial markets and rescue the holders of not only Greek government debt, but also, implicitly, the holders of any EU government debts that seemed shaky.