Archived Posts May 2011 - Page 5 of 5 | Acton PowerBlog

Over the last several years I find myself more and more being drawn into conversation about religion—specifically, Orthodox Christianity—and economics. Originally, my interest in the economic side of the conversation was minimal. Embarrassing though it is to say now, I only took one economics class in college and while I got a “B” I was an indifferent student of the subject.

Thanks to personal friendships I’ve discovered the work of economists such as Ludwig von Mises and Fredrich A. Hayek—two dominant voices in the Austrian School of Economics. Even here though my interests were, initially at least, not so much in policy as methodology; unlike the quantitative and empirical approach I studied in college, the Austrian school conceives of economics more along the lines of the qualitative approach at the center of human science movement. This qualitative approach to economics has resulted in some interesting, and to my mind extraordinarily helpful and insightful, research into religion by scholars such as Laurence Iannaccone and Rodney Stark.

Among other things, the economic study of religion helps us understand why pluralism is good for religion in general but to the disadvantage of some religions in particular. Ironically, the free market in religion harms those liberal religious communities who value cultural pluralism and economic liberalism (in the contemporary American sense) but are suspicious, and even overtly hostile, to economic capitalism. On the other hand, those religious traditions that resist cultural pluralism and contemporary liberalism—but who often, though not universally—favor a free market approach to economics are the main benefactors of the free for all that characterizes the American religious landscape (see for example, Iannaccone, 1994).

Through this, circuitous route, I have lately come to an interest in economic public policy. Unfortunately such an interest is usually greeted with something less than enthusiasm—at least when (as in my case) you are an Orthodox priest. At the risk of making a gross generalization, clergy are typically as ignorant of economics and business as economists and business people are of moral theology and the ascetical tradition of the Church. Since I’m trading in stereotypes already, I would say that discussions between theologians and economists break down quickly since—intentionally or not—theologians assume economists are wicked even as economists assume that theologians are ignorant. Representatives of the two disciplines rarely understand each other because they rarely have even a basic grasp of the other academic discipline and the kinds of questions and concerns that its scholars seek to address.

This is why three small books published by the American Enterprise Institute are so welcome. The books (P. Wehner & A. C. Brooks, Wealth & Justice: The Morality of Democratic Capitalism; A. J. Pollock, Boom & Bust: Financial Cycles and Human Prosperity; S. F. Hayward, Mere Environmentalism: A Biblical Perspective on Humans and the Natural World) are part of AEI’s Common Sense Concepts series. They’re all short—each took just an afternoon to read—introductions to basic ideas in economics. What is especially important is that they do this in a way that takes seriously Christian moral concerns. Meant primarily for college students and written from a broadly Evangelical Christian perspective, singularly and together they offer a good ethical and practical defense of democratic capitalism.

That said though a defense of the American model of democracy and of the free market, these works do not allow either politics or economics to drive the conversation. Rather both are examined soberly in light of “merely Christianity.” I think the authors would all acknowledge, as Wehner and Brooks do explicitly in their book, that “capitalism, like American democracy itself, is hardly perfect or sufficient by itself” (p. 8). Both require “strong, vital, non-economic and non-political institutions—including the family, churches and other places of worship, civic associations, and schools—to complement,” sustain and (when needed) reform them.

But this symphonia is impossible without “an educated citizenry.” Such an education must be more than technical—essential though a sound technical foundation is. To fulfill the vision sketched out in these three books assumes that we possess personally what Peter Kreeft (1992) might call the “soft” virtues “such as sympathy, altruism, compassion” as well as the “hard” virtues of “self-discipline, perseverance, and honesty.” Like technological skill, personal virtue alone is insufficient. We need not only healthy, robust and vibrant families and churches, but also a political culture that supports and abides “by laws, contracts, and election results (regardless of their outcome). Without these virtues, capitalism [and democracy] can be eaten from within by venality and used for pernicious ends.”

Why are personal virtue and the rule of law essential? Because:

…capitalism, like democracy, is part of an intricate social web. Capitalism both depends on it and contributes mightily to it. Morality and capitalism, like morality and democracy, are intimately connected and mutually complimentary. They reinforce one another; they need one another; and they are terribly diminished without one another. They are links in a golden chain (p. 9).

As both an Orthodox Christian and a social scientist, seeing democratic capitalism in this way helps me understand how the ascetical and liturgical tradition of the Church can make a contribution to American civil society.

Especially for St Maximos the Confessor and St Gregory Palamas, the ascetical struggle does not extinguish desire (i.e., self-interest) as much as does purify it. As St Augustine argues, prayer, fasting and almsgiving teach me to order rightly the different elements of my life in light of the Gospel; asceticism points me beyond myself to Christ, helps me to love Christ, and in Christ to love my neighbor. Just as asceticism purifies my desires, the Church’s liturgical tradition provides me with a sense of the larger, eschatological context within which I live my life. Apart from such an eschatological experience, I will invariably and necessarily succumb to the temptation to take and make ultimate “the cares of this life” rather than to lay them aside as we hear in the Cherubic Hymn.

If Wehner and Brooks are correct, capitalism and democracy are “part of an intricate social web.” Understanding this social network requires not only personal virtue and just laws, but the eschatological vision that we receive in the sacraments and which we constantly accept and embody in the ascetical life.

In Christ,

+Fr Gregory

Work Cited:

Iannaccone, L. R. (1994). “Why Strict Churches Are Strong.” American Journal of Sociology, 99(5), pp. 1180-1211.

Kreeft, P (1992). Back to Virtue: Traditional Moral Wisdom for Modern Moral Confusion. San Francisco: Ignatius Press.

The blame game in Washington is heating up on skyrocketing gas prices. Republicans are criticized as being in the back pocket of the oil industry and partaking in crony capitalism. The Democrat Congressional Campaign Committee is even cashing in by hosting a fundraiser that is based on what has been the House Republicans “decade long relationship of protecting Big Oil taxpayer giveaways, speculations and price gouging…” However blame is also placed on Democrats, with accusations of placing barriers to prohibit domestic drilling. The debate has also centered around how we can be better environmental stewards. We may find ourselves asking questions such as whether green energy promotes environmental stewardship, and if oil drilling results in a dramatic harm to the environment?

An article published by the Washington Examiner contains disturbing numbers that will not be received very positively. Oil production in the Gulf was lower than predicated by the Energy Information Administration (EIA); however, imports were up:

While oil production in the Gulf is down more than 10% from April 2010 estimates, net crude oil imports are up 5%. At $83 dollars a barrel (the approximate average price of oil in the fourth quarter of 2010) that means Obama’s oil drilling permatorium increased American dependence on foreign oil by about $1.8 billion dollars in the fourth quarter of last year alone. The numbers only get worse as Obama’s permitorium further cuts into production. A Wood Mackenzie study predicts that for all of 2011 the permitorium will result in the loss this year of about 375,000 barrels of oil a day.

More imported oil also means higher prices at the pumps. The EIA explains: “Retail gasoline prices tend to be higher the farther it is sold from the source of supply.” It costs more money to transport oil to your gas station from the Persian Gulf than from the Gulf of Mexico.

On April 26th, President Obama wrote a letter to Congress calling for “immediate action to eliminate unwarranted tax breaks for the oil and gas industry, and to use those dollars to invest in clean energy to reduce our dependence on foreign oil.” The tax breaks President Obama is asking to be removed are worth $4 billion per year. This isn’t the president’s first call to action. His 2012 budget proposal also calls for the removal of the “subsidies.” But some have pointed out that the oil industry does not receive direct subsidy payments in the way that some farmers do. The president’s proposal specifically states:

Eliminates Inefficient Fossil Fuel Sub­sidies. Consistent with the Administration’s Government-wide effort to identify areas for sav­ings, the Budget eliminates inefficient fossil fuel subsidies that impede investment in clean energy sources and undermine efforts to address the threat of climate change. Approximately $4 bil­lion per year in tax subsidies to oil, gas, and other fossil fuel producers are proposed for repeal.

Here at the Acton Institute we have spoken in opposition to true subsidies, such as subsidized farming (articles can be found here, here, and here) and health care policy (a related article can be found here). In the past we have articulate the problems with subsidization. The language in President Obama’s budget proposal appears to be vague and does not specify where the oil industry will no longer be, in his words, subsidized. Is it in drilling? Does it affect gas prices? Ray Nothstine notes in his commentary, “High Gas Prices are Devastating to Poor” our moral obligation to the vulnerable and how the high gas prices are affecting them. With gas prices continuing to climb precautions should be taken to prevent even higher prices.

Brian Johnson, the American Petroleum Institute’s senior tax policy advisor, provides insight on the proposal in the president’s 2012 budget. Johnson explains that the president is proposing to remove the intangible drilling cost provision, which is the oil industry’s ability to deduct drilling “costs associated with labor, architecture, design and engineering; basically the building of an oil rig, a platform or any structure that allows the industry to get into the ground and find oil or natural gas.” Johnson claims this process helps in planning for the next stage of development and construction. Furthermore, Johnson claims the oil industry is already paying its fair share in taxes with an income tax rate at 48 percent. Whereas other S&P Industrials average a 24 percent effective tax rate. Stephen Comstock, also from API, responded to President Obama’s State of the Union Address in January, articulating problems with the president’s call to end subsidies for the oil industry.

While the call to end the oil subsidies is being criticized by some, others are supporting such an action. Bill Becker, a Senior Associate with Third Generation Environmentalism and an energy and climate specialist at Natural Capitalism Solutions, argues the subsidies place the United States at a competitive disadvantage to China and India in the competition to champion alternative energy:

If we are looking for ways to chip away at the budget deficit, to keep America competitive and to use market-based mechanisms to build a competitive clean energy economy, then subsidy reform should be near the top of the list.

Think of it this way: Imagine an Olympic marathon in which the U.S. team has to run on a steep and continuous uphill slope, while the teams from China and India run on a level track. That’s what “winning the future” will be like for the United States if we keep our perverse energy policies.  Direct and indirect taxpayer support for fossil energy, which far exceeds government support for emerging green energy technologies, almost certainly makes winning the future a futile race.

Becker also cites a report by the Government Accountability Office that claims “taxpayers are losing tens of billions of dollars in royalty payments in part because the Department of Interior doesn’t have sufficient capacity to monitor oil and gas production on public lands.”

In his letter address to Congress, the president calls to reinvest the $4 billion per year that the oil companies receive in subsidies into clean energy. The problem with current alternative energies is they are inefficient, not cost effective, and cause many unintended consequences (related articles on the inefficiency and unintended consequences of various alternative energies can be found here, here, here, and here).

Yes, we will need to develop good alternatives to oil over the long haul, but spending money on energy sources that are not effective is not a wise investment or a sign of being good financial stewards. If the tax provision and subsidies for the oil companies are to be cut, and taking into account the budget crisis the United States is currently facing, it may better serve the country to not reinvest the money and cut it out of the budget completely.