Archived Posts January 2011 - Page 2 of 5 | Acton PowerBlog

Blog author: jcouretas
Wednesday, January 26, 2011

When we think of rule of law failure, countries like Zimbabwe and Somalia come to mind. But as Acton Research Director Samuel Gregg points out in his latest piece over at Public Discourse, rule of law can also be subtly eroded in wealthy countries. The negative consequences for risk-taking, entrepreneurship, and long term investment, he says, can be far-reaching.

Risk is an inherent part of the workings of market economies. But Gregg notes that’s not the same thing as uncertainty:

Measurable risks are . . . no deterrent to the making of economic choices. If we take them seriously, they help us to calibrate our economic choices to be consistent with our responsibilities, resources, and opportunities. The same measurements also allow us to distinguish between prudent risk takers and the reckless, and reward them appropriately. Uncertainty, by contrast, involves those risks that cannot be quantified. It can occur either because of the sheer complexity of a given situation or because the subject matter cannot be reasonably measured. As long as a situation of uncertainty persists, it will deter many people from even considering whether to take economic risks.

Uncertainty in America, according to Gregg, is being magnified by the sheer complexity of laws such as the United States Internal Revenue Code:

A tax code of this size and complexity which is subject to so many sources of potentially conflicting official and semi-official explanations is bound to embody significant contradictions, and offers considerable scope for arbitrary decision-making. Uncertainty is the result. It’s also valid to claim that the same tax code may well be impossible for large numbers of honest law-abiding citizens to understand and comply with—not to mention difficult for conscientious civil servants to administer justly. As a result, many people may unintentionally violate the law or simply choose to forgo making any number of potentially wealth-creating opportunities for fear of violating the law.

Another example is the thousands upon thousands of pages of legislation being passed by Congress every year. As Gregg writes:

Then there are the rule-of-law problems associated with the sheer volume of law that directly shapes American economic life. The 2010 healthcare reform legislation, for instance, amounted to 2,700 pages. Not far behind it in length was the 2010 financial overhaul act: a mere 2,300 pages. More than a few legislators have confessed to never having read either piece of legislation in its entirety. Nor should we assume any great familiarity on their part with the thousands of pages of legislation which these acts superseded, integrated, or reinterpreted. The possibility that many laws governing healthcare and financial services have subsequently been rendered unclear, inconsistent, and impossible to comprehend is high.

These erosions of rule of law, Gregg says, result in large incentives not to take risks and not to make long-term investments. It also encourages entrepreneurs to look elsewhere for a more friendly, stable and comprehensible legal environment.

Read the piece in its entirety at Public Discourse.

There was a good deal of discussion in the media over “unfair” executive compensation, especially in light of the bonuses, golden parachutes, and other forms of remuneration received by CEOs during the bailout.

I have yet to hear much complaint about CEOs being underpaid, though.

But this might change as it becomes apparent that under-compensation of executives might well be a way to wriggle out of higher payroll tax liability. Consider the case of CPA David Watson, who “incurred the wrath of the IRS by only paying himself $24,000 a year and declaring the rest of his take profit.” The Slashdot piece makes the compelling conceptual connection between Watson’s case and that of “the much ballyhooed $1 Executive club like Steve Jobs, Larry Ellison, Sergey Brin, Larry Page, and Eric Schmidt.”

The outcome of this? According to a WSJ overview of the Watson case, “Pay can vary—but it can’t be too low.”

I think if we follow the golden rule we’ll get a golden mean for the golden parachute so that it won’t strangle the golden goose.

I’ve issued a call for publication for a special issue of the Journal of Markets & Morality to appear in the Fall of 2011 (14.2). The details are below, and you can download and circulate a PDF as well.

Call for Publication: Modern Christian Social Thought

In recognition of a number of significant anniversaries occurring this year, the Journal of Markets & Morality invites submissions for a special theme issue, “Modern Christian Social Thought” (vol. 14, no. 2). The year 2011 marks the 120th anniversary of Rerum Novarum, the encyclical from Leo XIII in 1891 that inaugurated the subsequent social encyclical tradition. 2011 also marks the 20th anniversary of John Paul II’s encyclical Centesimus Annus, which was promulgated at the centenary of Rerum Novarum.

This year is also the 120th anniversary of the First Social Congress in Amsterdam, which has become well-known as a representative of the trend of European social congresses in the last half of the nineteenth and early decades of the twentieth centuries. Abraham Kuyper, the noted Dutch theologian and statesmen, gave the opening address at this First Social Congress, a speech that set the tone for addressing the “social question” in light of Christian ethical reflection.

In recognition of these important events and their bearing for the course of Christian social thought over the last century and beyond, the journal welcomes submissions focusing on aspects of social thought in the various traditions, both within the Reformed or Roman Catholic tradition as well as in comparative and constructive dialogue between the two. This issue will include a new translation of a selection by Abraham Kuyper. The journal also welcomes proposals for translation other important sources related to the issue’s theme that have not been widely available previously in English. We also welcome submissions focusing on social thought in other Christian traditions, particularly Lutheran and Eastern Orthodox, in the modern era (from roughly 1850 to today).

The special theme issue, “Modern Christian Social Thought,” will appear in the Fall of 2011, and article submissions must be received by August 1, 2011, in order to proceed through the review process in a timely manner.

Queries are welcomed, as are submissions by international scholars and graduate students.

Please direct all correspondence and submissions to:

Jordan J. Ballor
Executive Editor
Journal of Markets & Morality

About the journal:

The Journal of Markets & Morality is a peer-reviewed academic journal published twice a year–in the Spring and Fall. The journal promotes intellectual exploration of the relationship between economics and morality from both social science and theological perspectives. It seeks to bring together theologians, philosophers, economists, and other scholars for dialogue concerning the morality of the marketplace.

Submission guidelines, subscription information, and digital archives are available at:

An interesting report in The Economist on the rise of flashy and free spending entrepreneur “gazillionaires” in India and China and how they are perceived:

In much of India, life is getting perceptibly better each year. Wealth per person has vaulted by 150% in the past decade, from $2,000 to $5,000. Many Indians think the nation’s entrepreneurs deserve some of the credit. In Dharavi, a slum outside Mumbai, an illiterate mother called Aruna sits in her tiny one-room flat, which is home to ten people. Asked how she feels about the rich, she says: “They have worked hard. And we must work hard, too.” Her eldest daughter has a job entering data at a bank. The next one is studying diligently. The family may be near the bottom of the ladder, but it sees a way up.

But this in China:

The perception that commercial success often depends on political ties makes inequality in China more galling. In the mid-1980s Chinese incomes were more evenly distributed than India’s—hardly surprising, since China was nominally communist and India is afflicted by a caste system. But now China is less equal than India, with a Gini coefficient of 0.4 to India’s 0.37. China has 800,000 dollar millionaires, but also 400m people who live on less than $2 a day.

Radio Free Acton hits the web once again today, this time featuring an exchange between Hunter Baker, author of The End of Secularism, and Jonathan Malesic, author of Secret Faith in the Public Square: An Argument for the Concealment of Christian Identity. Their conversation continues an exchange begun in the Controversy section of the latest issue of Acton’s Journal of Markets & Morality. Should Christians be overt about their faith when operating in the public square, or should Christian identity remain concealed in order to protect the faith from being drained of any real meaning? Baker and Malesic provide some thought-provoking perspectives on this vital question. [Ed. note: As an exclusive for PowerBlog readers, you can read the Malesic/Baker controversy in the Journal of Markets & Morality here.]

Additionally, we’re pleased to bring you an interview with Rev. John Armstrong recorded after his December 1st Acton On Tap event on Ecumenism and Ideology, in which we discuss what authentic ecumenism really is, as opposed to ideology.

To listen, use the audio player below:

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In this week’s Acton Commentary, “The Sheep and the Goats: Work and Service to Others,” I visit Lester DeKoster’s interpretation of the parable of the sheep and the goats from Matthew 25. Although not many have discussed this as an “economic” parable, DeKoster’s point is that anyone who truly serves another through legitimate work, whether paid or unpaid, can be understood to be a “sheep.”

Work, for DeKoster, is “the form in which we make ourselves useful to others, and thus to God.”

I don’t discuss another point DeKoster makes in his book, Work: The Meaning of Your Life–A Christian Perspective, that relates to what results from the aggregation of individuals’ work. The answer is civilization: “Work shares in weaving civilization, which is the form in which others make themselves useful to us, by providing us with the tools for doing our work well.”

DeKoster points to the chair in which you sit while you read, or any of the other myriad objects that surround you, that could only have been produced by the contributions of countless workers through the assembly line and supply chain. Joseph Sunde over at Remnant Culture has a post up today that echoes this, focusing on the example of the toaster. His poignantly asks whether this illustrates “that free trade is primarily about collaborating and sharing? Hasn’t free trade shown that it holds great power for expanding, connecting, and shaping a global community?”

Or as Kevin Schmiesing has put it, “No Man is an Economic Island.

With health care moving back to center stage in Washington, we’re publishing Dr. Donald Condit’s Acton monograph A Prescription for Health Care Reform as a free eBook readable in a variety of formats. This excellent work continues to be available for $6 (paperback) in the Acton Bookshoppe.

For your free eBook, visit Acton’s Smashwords page. The Condit book will soon be available in the Kindle store (no charge for that, either) and in other eBook retail sites. We’ll keep you updated when they become available.

Via Smashwords, you can download digital versions of the 81-page health care monograph for eBook readers, smart phones and computer screens.

The monograph was released before the passage of the Patient Protection Act in March. Dr. Condit has recently authored an update in the November 2010 issue of the Linacre Quarterly, published by the Catholic Medical Association. The medical association has graciously offered readers of the Acton PowerBlog an open link to Dr. Condit’s new article, “Health-Care Counter-Reform.”

The Jan. 5 Acton commentary was based on the Linacre article. Read “Obamacare and the Threat to Human Dignity” by Dr. Donald Condit.