Archived Posts August 2010 » Page 2 of 6 | Acton PowerBlog

From Marketwatch today, “Morgan Stanley warns on sovereign defaults”:

“Outright sovereign default in large advanced economies remains an extremely unlikely outcome,” they said. But bondholders could suffer losses from forms of “financial oppression,” such as repaying debt with devalued currency, the analysts warned.

From last week’s Acton Commentary by Sam Gregg, “Deficits, Debt, and Self-Deception”:

Then there is the increased possibility that governments will resort to other, less-conventional means of deficit-reduction. As Adam Smith observed long ago in The Wealth of Nations, “when national debts have once been accumulated to a certain degree, there is scarce, I believe, a single instance of their having been fairly and completely paid.” Smith went on to explain that “the liberation of the public revenue, if it has ever been brought about all, has always been brought about by a bankruptcy; sometimes by an avowed one, but always by a real one, though frequently by a pretended payment.”

By “pretended payment,” Smith meant governments would seek to escape their debts by inflating the currency. In this way, governments could legally deny creditors what they are due in real terms, while simultaneously avoiding formal bankruptcy.

Of course, whenever a government resorts to inflation to diminish its debts, it has, for all intents and purposes, effectively acknowledged its insolvency. But such actions, as Smith noted, also constitute gross injustices against numerous innocents. Those who have been frugal and industrious suddenly find the value of their savings and capital arbitrarily reduced because of others’ financial irresponsibility. This also reduces the incentives for people to save and invest. For why should anyone bother to do so if they cannot be reasonably sure that the worth of their savings will not be suddenly diluted by government fiat?

Today’s Acton Commentary:

Teachers Unions and Civil Rights Groups Block School Choice for Black Students

Teachers unions, like the National Education Association (NEA), and many civil-rights organizations inadvertently sabotage the potential of black males by perpetuating failed educational visions. Black males will never achieve academic success until black parents are financially empowered to opt out of failed public school systems.

The American public education system is failing many groups, but none more miserably than black males. The numbers are shocking. The Schott Foundation recently reported that only 47 percent of black males graduate from high school on time, compared to 78 percent of white male students. This revelation is beyond disturbing because it exposes the fact that many public schools serve as major catalysts for the desolation of unemployment and incarceration that lies in many black boys’ future.

In many places the disparity between whites and blacks is nearly unbelievable. In Nebraska, for example, the white/black graduation gap is 83 percent compared with 40 percent and in New York 68 percent compared with 25 percent. The way urban city school districts fail black males is more disconcerting considering that black professionals are in charge. Urban districts are among the worst at graduating black males: Atlanta, 34 percent; Baltimore, 35 percent; Philadelphia, 28 percent; New York, 28 percent; Detroit, 27 percent; and St. Louis, 38 percent.

There are surely many reasons for such failure, and family breakdown must rank high among them. Schools may be powerless to transform black family life, but they should not be left off the hook for turning in a dismal performance. In a recent interview, Dr. Steve Perry, principal and founder of Capital Preparatory Magnet School in Hartford, Conn., repeatedly places the blame for the black achievement gap at the feet of the partnerships between the teachers unions and the NAACP, “a civil-rights relic.” The places where black students excel, says Perry, are those where students have access to choice. Sadly the NAACP and the NEA have long undermined the push for low-income black parents to exercise freedom to choose the best schools as a national norm. (more…)

Blog author: jballor
posted by on Tuesday, August 24, 2010

David Murray is Professor of Old Testament and Practical Theology at Puritan Reformed Theological Seminary, and chairman of HeadHeartHand Media, announces the release of a new video product, God’s Technology, a product about “training our children to use technology to God’s glory.”

I had the pleasure of meeting Dr. Murray over lunch one day, and I look forward to seeing his presentation of “a Christian response to the digital revolution.” Dr. Murray blogs here.

You can see the trailer for God’s Technology below.

God’s Technology Trailer from Puritan Reformed on Vimeo.

One of the inspirations for my little book, Ecumenical Babel: Confusing Economic Ideology and the Church’s Social Witness, was the incisive and insightful critique of the ecumenical movement from the Princeton theological ethicist Paul Ramsey.

Ramsey’s book, Who Speaks for the Church? A Critique of the 1966 Geneva Conference on Church and Society, has a wealth of both theoretical and concrete reflections on the nature of ecumenical social witness and the relationship between church and society.

He concludes the book with a section titled, “The Church and the Magistrate,” in which he provides some direct comments on the way in which the church can actively be of service to the political authorities. This task is of great importance for the institutional church, but it must be done in such a way that the unique responsibilities of the church and the state are not conflated, and in a way that respects the conscience and individual responsibility of the Christian in civil service.

Thus, writes Ramsey, “If the churches have any special wisdom to offer here, it is in cultivating the political ethos of a nation and informing the conscience of the statesman. The church’s business is not policy formation. That is the awesome responsibility of magistrates (and of churchmen along with other citizens in their nonecclesiastical capacities).”

The role of the church, therefore, is to inform rather than to prescribe in specific detail. “It is not the church’s business to recommend but only to clarify the grounds upon which the statesman must put forth his own particular decree,” argues Ramsey. “Christian political ethics cannot say what should or must be done but only what may be done. It can only try to make sure that false doctrine does not unnecessarily trammel policy choices or preclude decisions that might better shape and govern events.”

And in a prophetic statement that indicts the contemporary fascination with “social justice” (which so often conflates the concept with love), Ramsey writes, “Christians should be speaking more about order as a terminal political value along with justice, without the naïve assumption that these are bound to go together without weight given to both.” Just how much do you hear about “social order” from those campaigning so vociferously for a particular form of “social justice”?

Ramsey’s book is well worth reading. If you can pick up a used copy somewhere, do so and count yourself as having found a bargain.

The front page of a recent issue of the Vatican daily L’Osservatore Romano read like an Italian “Help Wanted” listing: “Lavori per Giovani Cercasi” (cf. Aug. 13 2010).

Unfortunately, this eye-catching headline was not a classified ad targeting young professionals for job openings at the Holy See’s many curial and administrative offices – the prized “stable” positions that would have Roman youth queuing in lines much longer those to enter Sunday Mass at St. Peter’s Basilica!

Rather, the Vatican newspaper summarized alarming statistics on worldwide youth unemployment released by the United Nations International Labor Office (ILO) in its detailed 87-page Global Employment Trends for Youth. In its special report the ILO confirmed global unemployment rates for young men and women (ages 15-24) are caught in a dangerous tailspin.

In only a two-year span between 2007 and 2009, an estimated 81 million out of 620 million youth have lost jobs –the unfortunate fall out from the massive lay-offs, non-renewed contracts, and start up bankruptcies during the Great Recession. That’s an average 13% unemployment rate for a young generation whose lives are on pause at critical stages of their vocational and financial development.

Some naysayers claim we are witnessing a veritable free fall into what may be a very long and bitter winter for job seekers, further extended by inevitable “double dip” periods of recession. So pessimistic are they, that we hear them quip: the currently frozen jobs market has activated a financial Ice Age. They argue that world’s unemployed youth are stuck in a very long-term socio-economic downturn in which many of them may never fulfill their basic dreams without stable jobs. Hence they can forget about plans for marriage, having children, purchasing homes, and saving for proper retirement.

Well short of claiming that the sky is falling, in the very least we can agree wit the ILO report: rising unemployment among youth will surely “lead to socio-economic instability and political unrest.”

NEETs and Nullafacenti

A 13% youth unemployment rate would be a “dream figure” for some industrialized countries, like Italy where I live and work. Here average unemployment for the same age bracket hovers regularly above 20% and drastically worsens when counting those young adults older than 25 who are not counted in most official unemployment figures.

Those young Italians who procrastinate entry into the workforce by not graduating university on time or who are still stuck in the starting blocks of their career by taking on un-paid company apprenticeships are typically not counted as unemployed. When we include them in the unemployment statistics, some estimates rise to well over 30%.

Finally, there is the most worrying segment of the young jobless population: the so-called NEETs (Not in Employment or Education or Training). In Italy, NEETs have now reached two million and account for over 21% of the country’s unemployed youth. NEETs are often tarred and feathered as the nation’s nullafacenti (“do nothings”), who help Italy maintain the number one EU position for this ever-growing detriment to society. They invest absolutely nothing in themselves to find traditional jobs or create entrepreneurial business opportunities – a financial and social welfare time bomb just waiting to explode.

To prove my point, just watch this TV5 clip (see minutes 12.20-13:50). Last week on Italian national television, reporters covered the shocking story of a 25 year-old NEET male (living at home in a city near Rome) who violently threatened his parents, extorted them, and even locked them out of their own house as he demanded more “allowance” money to satisfy his various material caprices. Eventually local police had to intervene to subdue the nullafacente and “restore” the official property rights of his parents own home.

Adverse vs. Difficult Conditions

All this is going on while the 2010-11 forecast for economic growth in Europe appears dim, as the Old Continent sputters along a very trepid economic recovery.

In Euro-zone countries official reports for the first quarter of 2010 were modest at best and downright dismal in economies of its weakest Mediterranean partners, like Italy, Spain and Greece. Second quarter reports released on August 13 by Euro Stat were not inspiring either, with average Euro-zone GDP growth rates up by a mere 1%.

When studying conditions in impoverished and developing countries, our heartstrings are tugged by the increasing impossibility for young people to succeed while paralyzed by a most vicious circle of economic, political and social turmoil (no fault of their own!). These include massive obstacles such as absolute tyranny, decades of civil war and genocide, widespread corruption, little or now rule of law, no direct foreign investment, no regular lines of credit, devastating droughts and famines, deathly outbreaks of easily treatable diseases, faulty telecommunications, et al.

Now these are what I call adverse conditions. These are conditions which all but crush any chances youth have to find and create new work, despite their high ambitions, inventive strategies, and sincere vocations in their line of business. Their odds will improve only if radical changes and revolutions occur in their societies.

Yet, we cannot say the same about the chances of youth finding and creating work while living in the world’s largest but struggling industrialized economies, like Italy. Comparatively speaking, this is still a land in which youth can make it in life. Here some of the world’s most creative and unrelenting businessmen achieve success, even despite suffocating regional and national tax structures, turf wars with mafioso thugs, and a near bankrupt social welfare state in times of austerity. Believe it or not, it is still possible for enterprising youth to make it in Italy. It may be very difficult to succeed here, but not impossible as in, say, Cuba or North Korea. Far from it.

Too Much Dolce Vita?

Some stats claim an amazing 70 percent of Italian single men and women (both employed and unemployed) live at home until their mid-to-late 30s. Some critics from hardworking cultures typically say this population group lives the “sweet life”, a.k.a. the dolce vita. Others defend the socio-economic phenomenon, claiming this is the only way youth can save for a future home and a car down payment or to help keep their parents’ household afloat. In either case, they enjoy the benefits of a secure and relatively struggle-free home environment. In Italy no 15-24 year-olds starve or sleep on the street.

However they view themselves, Italian youth usually fail to appreciate that living at home provides a tremendous financial opportunity for them. Unlike others living own their own and barely making ends meet, they can save up small amounts capital over time to try their luck in entrepreneurial ventures on their own or in partnership with others who share their same business concept. This is what I think the Vatican newspaper meant to inspire, when it said youth should live up to their potential as the “forza motrice” (driving force) of the world’s teetering economy.

After all, in addition to being able to save a little venture capital, they have assets and resources that impoverished and developing nations would fight tooth over nail for. They are private owners of smart phones and wireless lap taps, have 24/7 internet access, enjoy affordable higher education (and cheap advanced education), have efficient and very inexpensive transport around the European Union (God Bless Ryan Air!), and can easily request small start up business loans – typically up to €5000 (with their parents as guarantors) to secure a little more investment capital.

And yet so many bitter young Italians sit idle in their beautiful piazzas with nothing better to do.

Ironically these historic squares were not built for modern day-dreamers, but to host and encourage vibrant hubs of entrepreneurial trading during Renaissance times –the very period that gave inspiration to the free market as we know it.

Notwithstanding, Italian youth know not their past nor perceive well their futures. They blame everyone from Berlusconi to the Madonna (not the pop-star!) for having no opportunities.

Parents Should Be Furious

The Vatican news piece of two weeks ago (written on Friday the 13th, another reason to blame the bad stats!) should have been dedicated to a story on inspiring young business leadership in the recession market. They should have interviewed a young Italian entrepreneur, a friend of mine, whose marketing agency was built on less than €1000 start up capital. It now approaches six figures in annual revenue and the business owner is now attempting to purchase his own home, get married and is considering hiring other young collaborators to help take his venture to the next level (yes he is about to create new jobs!).

Italian parents should furious, just like the master in Christ’s Parable of the Talents, whose timid servant had simply buried the meager capital he had received. The risk aversion is the same for Italian upper and middle class youth who do nothing worthwhile, even with a generous €200 paghetto (monthly allowance) that some of them receive. Worse still, they blow it at bars, movie theaters and cell phone shops. Did they know that some successful internet businesses humbly start with that very same amount?

Perhaps it boils down to a question of values – values instilled in youth by an overly cautious post-war generation of parents who insist their offspring find the golden fleece of work (i.e. un posto fisso or permanent union-protected job). Their encouragement has done little but create false hopes in youth.

Sadly, this values system is broken. In Italy, we can no longer use the same macroeconomic and political “excuses” to define the youth’s scapegoats, like we still can in developing and impoverished countries or in 1940s post-World War II Europe. In modern industrialized, but often struggling countries like Italy, the forza motrice must be the the current generation of enterprising youth, whether they like it or not. To do so, they need to finally switch gears and overcome their aversion to risk, discover their special callings in life, invest their talents in worthwhile projects, and once again prove they are one of the most creative and resilient cultures on earth.

Blog author: jcouretas
posted by on Friday, August 20, 2010

Two more thoughtful reviews of Jordan Ballor’s Ecumenical Babel: Confusing Economic Ideology and the Church’s Social Witness, now available on Kindle. First, from John Armstrong on his ACT 3 blog:

In reducing its witness to advocacy for a particular set of policies, the ecumenical movement has abandoned the attempt to proclaim the Gospel, the true foundation of its spiritual authority. “This is surely a form of culture-Christianity,” writes Ramsey, “even if it is not that of the great cultural churches of the past. This is, indeed, the most barefaced sectarianism and but a new form of culture-Christianity. It would identify Christianity with the cultural vitalities, with the movement of history, with where the action is, with the next and even now the real establishment, but not with the present hollow forms.” In this way, the question of how the church’s prophetic responsibility ought to be expressed in a post-Christendom era has not received adequate attention from the ecumenical movement. Instead, it has simply assumed that the same form of prophetic pronouncement is as appropriate today as it was in the era of the Reformation, the medieval church, or the Old Testament monarchy.

The modern ecumenical movement began in the early twentieth century with great promise. By the middle of the 20th century that promise had been greatly misplaced because of the relationship of the movement, through many of its principal leaders, to ideology. The same happened on the right, from 1976 on, as conservative evangelicals increasingly embraced political and economic ideology in place of the gospel. If we are to get Christ and the gospel back into the center of our shared life and witness then we must take seriously what writers such as Jordan Ballor are saying to us. I heartily commend Ecumenical Babel, a truly readable and wonderful book. All who love Christian unity centered in the witness of the church and the gospel of Christ will benefit from this fine new book.

And these concluding paragraphs from a long review on Viola Larson’s Naming His Grace blog:

Ballor’s last chapter offers ways the ecumenical movement could be reformed. He focuses on a biblical and personal reform that centers in the life of the Church. He also focuses on the wealth that God gives to be used by his people. He asks that peripheral issues be left open for debate. Ballor writes:

“Economic and political opinions should not be turned into articles of faith. Indeed there must be room for bad economic and political opinions in our confession. There are limits, of course, and these primarily arise when some alien influence or idea, a worldly ideology, takes the place of biblical confession and becomes an all compassing world-and -life view, a would be competitor of Christianity.” (119)

While Ecumenical Babel: Confusing Economic Ideology and the Church’s Social Witness, is a small book, it is dense, filled with clear thinking, biblical and confessional concern and a multitude of resources. Ballor has provided members of the mainline Churches with valuable material. Members of the PCUSA, who long for an ecumenical movement that speaks as a Church to and with its members, rather then in an authoritative manner for its members, will find a possible way forward in this book. The orthodox members of mainline churches who long for an ecumenical movement that confesses for Christ and against his enemies will also find relief in this book.

President Calvin Coolidge called Francis Asbury a “prophet in the wilderness.” He has also been called “the bishop on horseback” and “the prophet of the long road” for his prolific treks across the American frontier.

Francis Asbury statue in Wilmore, Kentucky

The Methodist bishop who was born on August 20, 1745, was the architect of the American Methodist movement. The denomination grew from a few hundred upon his arrival to over 200,000 members at the time of his death. At his death in 1816, the Methodist Episcopal Church was the largest U.S. denomination. To here about his unique work ethic and more biographic information check out this Acton PowerBlog post in our archives.

When Asbury left England for the colonies he never saw his parents again. Asbury would witness the American Revolution and played a pivotal role in the Second Great Awakening. He joined America’s Westward Expansion by horseback so that none would go without hearing the Good News of Christ. While sailing to the American colonies in 1771 Asbury wrote in his journal:

I will set down a few things that lie on my mind. Whither am I going? To the New World. What to do? To gain honour? No, if I know my own heart. To get money? No: I am going to live to God, and to bring others so to do.

We at Acton have been among the loudest critics of clergy and other religious leaders who undermine economic freedom (and therefore prosperity, including for the poor) by advocating more extensive government intervention in economic affairs.

So we should be the first to applaud when clerics strike a blow for freedom. Kudos to the monks of St. Joseph Abbey in Covington, Louisiana.

Monasteries may seem an unlikely venue for capitalist ferment, but in fact they hold an important place in the history of economic development in the West. In the medieval period, for example, they were centers of industrial activity, such as milling and tanning.

The monastic tradition’s insistence on self-sufficiency continues, spurring contemporary marketing of monkish products from coffee to chocolate to … caskets.

It’s the coffin business that got St. Joseph’s in trouble. By selling its pine boxes without a funeral director’s license, the monastery violates state law. So the abbey is suing the State of Louisiana in federal court.

It’s a classic case of what economists call “barriers to entry”: regulations put in place by existing businesses or professionals to limit competition and thereby drive up prices and compensation. Usually the vested interest posits some rationale concerning the public good (e.g., not just anybody should be allowed to practice medicine…), but frequently enough the reasoning is pretty thin (e.g., should you really need a license to cut hair or drive a taxi?).

The negative consequences of such barriers are the same as those attending any artificial limiting of competition: inflated prices, deflated supply, decreased employment opportunities for those who need them most (those who cannot afford the fees or tuition associated with credentialing and licensing).

Thus, Abbot Justin Brown, in words that might warm the heart of Frederic Bastiat, Adam Smith, or Milton Friedman:

We have not taken this step lightly, but it is one of our Constitution’s many great virtues that it protects economic liberty so that everyone — even monks — can earn an honest living through the labor of their own hands.

Two of the things I’ve paid some attention to, one more recently and the other as an ongoing area of interest, came together in an Instapundit update yesterday.

Glenn Reynolds linked to a video of a NYC cop who “threatens a man taking cell phone video with arrest.” This picks up the attention given here and here to the question of law enforcement and ‘citizen photojournalism.’

But what really struck me about this story was the threat attributed to the (apparent) cop, who said, “Guys in jail are going to rape you.”

This is beyond the pale in myriad ways. Reynolds points out in an update that “when you have a badge and a gun you should behave better than the average schmuck, rather than having a license to be a jerk.” Public persons, like law enforcement officials, have a higher standard of conduct than private individuals.

But this story also gets at the necessity of prison reform, and the importance of Christian engagement of the criminal justice system.

The term dehumanization gets used often to describe what happens to a victim, particularly of a violent crime. But it’s all often what happens in the realities of the American system of criminal justice.

Simply because people commit crimes, heinous, violent, or otherwise, it does not mean that they cease to be human persons.

No matter what someone has done there are simply things that are not to be done to them, and certainly not within the context of a legally-sanctioned system of justice. This moral reality is what stands behind a good deal of the principled Christian opposition to torture, for instance. And it’s also what lies behind the proscription of “cruel and unusual punishments.” There are just some things that you don’t do to human beings in any situation or context, merely by virtue of their status as human beings.

The prevalence of prison rape in particular is something that criminals should not be subjected to. Evangelicals have been particularly active on this issue, including groups like the NAE and Justice Fellowship.

Holding criminals accountable is part of what it means to treat them as human beings, as moral agents. But the dignity of human persons, in their victimhood as well as their victimization, also means that there are limits to forms of punishment or to acceptable contexts for incarceration. It also means that imprisonment is not the final word, even in cases of life sentences. Inmates are still people, and therefore need to be treated as such, with all the challenges and potential that face all human persons.

This has important implications for what prison and imprisonment look like. For instance, in the latest issue of Corrections Today, one of the “top nine” reasons to increase correctional education programs is that “From a humanistic viewpoint, education is the right thing to do.” The brief article (PDF) cites a UN statement:

Education should be aimed at the full development of the whole person requiring prisoner access to formal and informal education, literacy programs, basic education, vocational training, creative, religious and cultural activities, physical
education and sport, social education, higher education and library facilities.

(Thanks to Dr. John Teevan, director of Grace College’s Prison Extension Program for pointing out that article).

My own view is that the broad realm of criminal justice, including various accounts of restorative justice and the relationship of Christians, both organically and institutionally, to the government system of punishment is especially ripe for fruitful engagement. And the issue of prison rape is a concrete instance of where Christian activism is of utmost importance.

This week’s Acton Commentary:

Deficits, Debt, and Self-Deception

By Samuel Gregg

It passed almost unnoticed, but in late July the Obama Administration raised the Federal Government’s budget deficit forecast for fiscal year 2011 to $1.4 trillion. That’s up from February’s forecast of $1.267 trillion. In July alone, the Federal Government’s deficit was $165 billion, of which $20 billion was for interest-payments on debt.

The long-term outlook is even worse. The U.S. Government is now borrowing approximately 41 cents of every dollar it spends. It’s also predicting additional borrowing of $8.5 trillion until 2020. If that eventuates, America’s national debt would exceed 77 percent of its annual economic output.

At some point, most of us become dazed by all these numbers that track America’s upward spiral of debt. This numbness is only exacerbated by the fact that government debt-excesses in most developed countries have been matched and even surpassed by household and financial-sector debt.

In Spain, for instance, household debt rose from 69 percent of disposable income in 2000 to 130 percent in 2008. Britain was worse, with the ratio rising from 105 percent to 160 percent over the same period. Average American household debt increased from $27,000 in 2001 to $44,000 today.

The economic effects of servicing all this debt (let alone paying down the principle) are not hard to grasp. For many households, it means either bankruptcy or severe curtailing of lifestyles so that expectations match people’s actual incomes. For others, it translates into less access to credit, even for those with good credit records or well-conceived business plans that need only sufficient capitalization to succeed. The cost of servicing government debt also reduces the amount of private sector capital available for investment. This means slower growth which further impedes our ability to shrink government deficits. (more…)