Archived Posts July 2011 » Page 2 of 6 | Acton PowerBlog

In the discussion of whether the problem with our national public debt is a question of receipts, outlays, or both, I linked to a helpful set of graphs from Anthony Davies, an economics professor at Duquesne University. This data shows that even though a variety of tax rates have changed a great deal over the years, the federal government has basically taken in receipts within the range of 16-20% of GDP over the post-WWII era. If you haven’t looked at this presentation before, you should do so now.

And today, Grove City economics professor and AU faculty lecturer Shawn Ritenour links to another chart, which compares these receipts against historic federal outlays (or spending). He notes (and refutes) Joe Weisenthal’s contention that “any politician who says Washington has a spending problem, rather than a revenue problem, is speaking from a position of anti-tax ideology, rather than empirical data.”

But I think if you look at the history of receipts and outlays a bit closer, you’ll see that the variance in receipts over the last decade are well within the historical norms. But the variance in outlays over that period isn’t outside the norms, either, in the sense that it continues a disturbing trend after 1970. (The data for current and future years is estimated and gleaned from sources here.)
There used to be some correlation between the red and blue lines. But not in today’s Washington.
Again, given this historic perspective, I think it’s hard to blame the blue line for the current debt levels. Keep in mind too that since these figures are a function of GDP, as the economy grows, other things being equal so too does the spending and receipts of the federal government.

In addition to the larger versions of the graphs clickable above, you can download this set of graphs in PDF form here, and visit our “Principles for Budget Reform” page to read more related commentary.

The question of “What Would Jesus Cut” raised in new ads for John Boehner’s, Harry Reid’s, and Mitch McConnell’s home states is fundamentally wrongheaded. It reverses the proper approach of religious leaders to politics and threatens to mislead their flocks.

The PowerBlog has already addressed the Left’s inclination toward class warfare rhetoric during the debt ceiling debate. Much to our surprise, President Obama didn’t seem to have read that post in time to include its insights in Monday night’s speech. Instead, we heard the same disheartening lines about corporate jets and big oil: the president doubled-down on his jealousy-inducement strategy and continued to ignore economic reality.

The country’s religious leaders who have begun to parrot this class warfare language are failing an even greater responsibility than the President’s. It is good that they enter into the debate, but as we explained last week with reference to Archbishop Charles Chaput, religion must always guide political engagement, not the other way around. Evangelization is the necessary and proper motivation of political speech by a religious leader. To reverse this engagement—to turn to religion secondarily, as a means to solving political ends—is to court error.

Aristotle writes his Nicomachean Ethics first, and then his Politics, for precisely this reason. Ethical inquiry (and metaphysical before it) must precede and direct political inquiry. To reverse that order is essentially to justify means by ends.

Father Sirico addressed the WWJC question in April, during Wisconsin’s showdown with its public sector unions. On the Paul Edwards Program he explained the invalidity of Sojourner’s WWJC approach:

I have a very difficult time taking a question like that seriously. It politicizes the gospel: it reduces the gospel—the mission of Jesus Christ—to a question of budget priorities…. It really attenuates the whole thrust of what the gospel is.

The very name the group behind the ads has chosen for itself, the Circle of Protection, is reflective of their misunderstanding. Rather than venturing into the political realm driven by an evangelical spirit, they circle the wagons around a particular policy and use Christianity as a shield.

None of this is to say that the practical solutions advanced by the Circle of Protection are necessarily wrong—only that if the group is right, it has stumbled upon the best policies without the enlightenment of Christianity that it claims.

Yesterday Senator Harry Reid finally proposed a budget plan – one week before the United States is set to default. It is about time that Senate Democrats joined President Obama and House Republicans in offering a concrete budget proposal; however, their budget plan passes the buck onto future generations.

The government cannot continue to leave budget woes to future generations, and this is exactly what Senator Reid is trying to do. In fact, after viewing a video found on his website, he seems rather proud of the fact that his budget proposal doesn’t touch the three largest entitlements—Social Security, Medicare, and Medicaid—which alone consist of 40 percent of federal spending in 2010 (entitlement spending makes up 57 percent of federal spending). Instead of making the tough call, proposing reforms and cuts to spare future generations from the large financial burden these programs bring, the Senate Democrats are deciding to continue with things as they are. Judging by the current financial state of the U.S. this is rather problematic.

The Senate Democrats’ budget proposal disregards the principles of stewardship. By not cutting or reforming entitlements they are not looking long term to ensure the creation of a strong and stable economy for our children and grandchildren.  Jordan Ballor in his commentary “Do Less with Less: What the History of Federal Debt and Tax Leverages Teaches” offers a pretty common sense solution for Senator Reid:

Raising taxes without such assurances, even for such a critical cause as the public debt crisis, is pure folly. To really address the structural deficits at the heart of the federal budget, particularly with respect to entitlement programs like Social Security, Medicare, and Medicaid (which together accounted for 40 percent of federal spending in 2010), the government simply needs to find ways to do less with less.

Entitlements have greatly contributed to our deficit problem, and a sound budget solution will recognize their contribution to the deficit and look to rectify the situation.

As Samuel Gregg articulates in “Deficit Denial, American-Style” the U.S. must pay off its debt if it hopes to economically grow and flourish:

After examining data on 44 countries over approximately 200 years, two economists recently found evidence suggesting that developed nations with gross public debt levels exceeding 90 percent of GDP (i.e., America) find that their medium-growth rates fall by one percent, while average growth declines by an even greater proportion.

The United States can begin down the path of prosperity by shrinking government and doing less with less and fostering an economic climate that is strong and vibrant for future generations.

Also see the Acton Institute’s  Principles for Budget Reform which can be viewed by clicking here.

 

 

 

The film Lt. Dan Band for the Common Good kicks off with the Abraham Lincoln quote, “Honor to him, who braves for the common good.” The words are appropriate. In 2003, wanting to do even more for America’s service men and women, Gary Sinise formed the Lt. Dan Jam Band. The band name was easily decided because many soldiers, sailors, Marines, and airmen did not know Sinise by name and just called him “Lt. Dan.” The moniker is based on his well known portrayal of an Army lieutenant who lost his legs in Vietnam in the Hollywood film Forrest Gump.

Sinise likes to joke that expectations are low because the band leader is an actor, but in truth the band is made up of professional musicians. Director Jonathan Flora followed the band all over the world for two years as it performed for America’s military and charitable organizations that support the military.

The filmmakers focused a lot of the attention on all the band members and their commitment to those sacrificing for the nation. One touching scene comes on a bus when somebody off camera mentions that Sinise is a hero to the military and the moment leaves him visibly emotional. The film also includes interviews from Sinise’s wife and children and they share how much they miss having Sinise at home but are fully supportive and proud of his service.

Sinise, who was awarded a Presidential Citizen Medal by President George W. Bush in 2008, said in the film that after he started hearing casualty reports in the War on Terror, now almost ten years old, he had to do something. A 2008 Washington Times piece traces much of Sinise’s work with the military and the love and affection they have for him. Also quoted in the article is Deb Rickert of Operation Support our Troops. Rickert declared of Sinise:

In an age when the public often lavishes epitaphs of greatness on celebrities merely because they are famous, the military community bestows the simple title of friend on Gary Sinise truly because that is what he is to us.

While Sinise and the band members are visibly central in the film, many of the stories, tributes, and attention are reserved for the men and women in uniform and the first responders at Ground Zero on 9/11. Gripping testimonials are woven throughout the documentary, especially from family members of those who are deployed overseas in a war zone. An example of notable figures who offer words during the film include film actor Robert Duvall and American hero Colonel Bud Day, a recipient of the Congressional Medal of Honor.

Most importantly, Lt. Dan Ban for the Common Good is simply a powerful reminder of what one can do when gifts and talents are put in service of others. Sinise is a natural because his heart and his authenticity shines. The director does a fine job of pointing out what is already widely known among the military and their families, that Sinise is known as somebody who genuinely cares about their service and circumstances and is not hanging around for a photo-op.

St. Ephraem declared, “Blessed is the soul that is adorned with charity.” For those who wear the military uniform Gary Sinise is affectionately known simply as “Lt. Dan.” But many others have rightly noted that he is the Bob Hope of this generation. Hope was the face of USO tours and he entertained service members for half a century. It is a serious comparison and if America’s military has anything to say about it, a deserving one.

I had the pleasure of appearing on Relevant Radio last Friday to talk to Sheila Liaugminas on her show, “A Closer Look.” I discussed the idea of “intergenerational justice,” a term favored by evangelicals (Roman Catholics tend to talk about “intergenerational solidarity”), and how that concept relates to much of today’s discussion about the federal budget.

One thing you hear from many is that we need a “both/and” solution: we need to both cut spending and raise revenue in order to close the annual deficits. I’m not really convinced of this, in part because the federal government has historically shown that increased revenue always results in increased spending. The government spends what it takes in, with a little bit more to boot. There has to be something structural and meaningful to stop this from continuing to happen, especially since we can’t count on the political culture to do so itself. Whether that structural obstacle is a balanced budget amendment or some other kind of binding agreement, something like that has to be put in place.

I don’t think it’s fair on the other side, though, to say that closing some tax loopholes, making tax avoidance more difficult, and simplifying the tax code is tantamount to “raising taxes” either. So in that sense there might be a case for raising revenues in this limited sense if it gets the tax system focused on what it is supposed to do (raise revenues) rather than using it as a tool for rent-seeking, social engineering, and pandering to special interests.

What’s more important than the question of revenues vs. cuts, however, is recognizing that the size of the federal government has stayed about roughly constant when you look at it in terms of tax receipts relative to GDP. Anthony Davies does a nice job illustrating this. He points out that the government basically takes in amounts roughly equal to 18% of GDP (+/- 2%). So that’s essentially what the government needs to learn to live on. By contrast, we’re spending about 24% of GDP this year, and that number only goes higher as entitlement promises come due.

So how about this for a both/and solution: we cut spending to get within a couple of percentage points of 18% of GDP and we focus on tax policies that will grow GDP in a sustainable way in the longer term.

Acton is delighted to announce that BIZ TV will be presenting The Call of the Entrepreneur, Today, July 22 at 5:00 pm EST and Sunday, July 24 at 7:00 pm EST in the following cities:

Los Angeles (KAZA, digital channel 47.3)
Dallas (KAZD, 55.3)
Houston (KYAZ, 51.3)
Atlanta (WANN, 32.1)
Wichita (51.3)
Salt Lake City (20.2)
Denver (28.5)

The Call of the Entrepreneur (2007) tells the story of three entrepreneurs: a failing dairy farmer in rural Evart, Michigan; a merchant banker in New York City; and a refugee from Communist China. One risked his savings, one risked his farm, and one risked his life.

For more information on The Call of the Entrepreneur, please visit the official website.
For information on BIZ TV, click here.

News broke yesterday of an audacious violation of Apple Computer’s intellectual property rights (IPR) in China. This expat blogger posted photos of three sham Apple Stores she discovered in the city of Kunming—the stores have been set up by some entrepreneurial chap hoping to capitalize on the company’s Chinese popularity.

The story was slightly amusing, especially in light of Apple’s recent earnings announcement. (“They totally did it again,” said one analyst. It was also revealed that Apple now sits on enough cash in hand to buy 100% of Goldman Sachs at its current market value.) It seems that the Apple brand is now so valuable that the Chinese are counterfeiting the company’s retail outlets to sell Apple’s own products at full price. As one employee of the fake store said when reached by the Wall Street Journal,

It doesn’t make much of a difference for us whether we’re authorized or not. I just care that what I sell every day are authentic Apple products, and that our customers don’t come back to me to complain about the quality of the products.

But that’s precisely why Apple’s IPR must be protected. The company is one of the most innovative ever—their graphical user interface, popularization of the computer mouse, iPod music player, and touch-screen devices have dragged the technology sector forward, to say nothing of their design contributions—and that innovation would not have been supported without protections for the company’s intellectual property.

The U.S. Constitution justifies the establishment of IPR in giving Congress the power

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

As David H. Carey explains in his Acton monograph The Social Mortgage of Intellectual Property,

If allowing some techonology to be patented benefits society in the long run more than it costs society temporarily to forego unrestricted use of that technology, then such patents are morally defensible.

The Apple Store “experience” is tightly bound up with the company’s products (remember how miserably Dell stores failed?), and part of allowing Apple temporary exclusive use of its inventions is allowing it to sell them as it sees fit.

There is also the question of trademark, which exists primarily for the protection of consumers, so that when I buy a tube of Crest toothpaste from a CVS I know that I’m not getting a Chinese imitation accidentally laced with cyanide, stocked by a shyster posing as a reputable franchisee.

Whatever employees of these fake Apple Stores may say—and according to the blogger who broke the story, none of the stores’ sales force realized at the time that they weren’t working for Apple—it’s China! Would you buy an iPhone from one of the fake stores? The Chinese government has a responsibility to its citizens to enforce Apple’s trademarks and protect its citizens from fraud.

By pure coincidence, I can illustrate the importance of protecting IPR in China: Yesterday, about the time this story was hitting the internet, my father went to the Apple Store in Dallas (an authentic one) and purchased an iPad. While he is away for a week on a theology course, Apple’s device will give him access to email and other business tools, so that he can grow in virtue and keep his business running at the same time (and once they debut the iSpankings app, he’ll be able to keep his kids in line, too). He chose an iPad over any number of other devices because his IT guy—who doesn’t like Macs, as IT guys never do—told him it would do the job best.

Except for the U.S.’s protection of IPR, that market solution wouldn’t have been possible.

Blog author: nrolf
posted by on Friday, July 22, 2011

In Allan Bloom’s translation of The Republic of Plato, Socrates sets out to define the meaning of justice, and if the just life can be seen as being more profitable than the unjust life.  Thrasymachus, an acquaintance of Socrates, in book I of the Republic of Plato, offers his reckless opinion on justice saying, “Justice is the advantage of the stronger” (338c), and that “injustice, when it comes into being on a sufficient scale, is mightier, freer, and more masterly than justice” (444c). Thrasymachus’ definition of justice should be an alarming one because it can be used to explain the economic crisis and situation today: The unjust man benefits in good and bad times, by the laws and contracts made by those in power, while the just man is punished in both good and bad times.

It is interesting to see that this example of injustice, that was discussed more than two thousand years ago, is still in effect today when considering the bailout of banks, government spending, and the national debt in the United States. Time and time again the government is sending us the same message Thrasymachus gave us: it pays to be unjust in today’s unjust society. Banks and government spending are being rewarded for reckless exhaustion of money through raising taxes across America to cover-up their own debt. The government is benefiting in both good and bad times by rewarding themselves for making their own mistakes, while citizens are being punished in good and bad times because of the advantage of those in power.

So, in a society that rewards injustice, why is the just life one that should be considered more profitable and desired? Why should will still push to create a more free and virtuous society? If we look at the interpretive essay of Allan Bloom we may begin to understand why the just life is worthwhile. According to Allan Bloom:

“Justice is human virtue, each gains his fulfillment in the prosperity of the whole”… and that “injustice is not a virtue, but a vice because it is contrary to wisdom, which is a virtue.”

It isn’t hard to believe that the practice of virtue in society can lead us to a more free and virtuous society; and, that the practice of virtue in economics and politics will permit justice in these areas. Explained again in his interpretive essay of The Republic, Allan Bloom states:

“Justice is to be desired (rewarded) because it is the health and perfection of the soul. It therefore follows that justice, as the virtue of the soul, is desirable in itself. Everyone wishes to have a healthy soul.”

If justice, not injustice, was rewarded in our society, with the practice of virtue, then economies, politics, and lives in general would reflect that of a healthy soul; and would, in turn, help society flourish.

We can find this same message in what is said through the prophet Isaiah, “Thus says the Lord: Observe what is right, do what is just; for my salvation is about to come, my justice, about to be revealed” (Isaiah 56:1). By doing what is right and practicing what is just, we are living-out virtue; but more importantly, we are seeking first the kingdom of God.

Blog author: kspence
posted by on Thursday, July 21, 2011

Archbishop Charles J. Chaput was named the next archbishop of Philadelphia on Tuesday, and mainstream coverage of the story immediately turned to sex abuse scandals. Which makes a lot of sense because, you know, that has dominated his tenure in Denver. As John Allen pointed out, that’s not the case at all, but George Weigel reminds us not to expect anything else.

What Archbishop Chaput is justly notable for is his Christian contribution to public debate. In his books, including the influential best-seller Render Unto Caesar, his writings in periodicals, and even his testimony before Congress, the Archbishop has been a model of evangelization of the secular world. He sees the Christian vocation to preach the Gospel as inseparable from an engagement in the public square. As he told John Allen, evangelization “is about trying to see the best of the world around us and to show how the Gospel makes it better and richer, and how the Gospel at the same time corrects it and purifies it. There’s no way the Gospel can embrace and purify the world unless it knows the world.”

Now Archbishop Chaput has been considerably more engaged in public life than many bishops, but he insists that an engagement driven by the Gospel cannot be a passive one, that a cleric is “unavoidably a leader, not a facilitator or coordinator of dialogue. A priest can’t just be a man of dialogue and consensus, because at some point he also has to lead.”

The Archbishop is a model for other Christian leaders whose congregations look to them for guidance when religion and public policy intersect. He combines Christian charity with absolute fidelity to Christian moral precepts and proper circumspection. His position on Health Care exemplifies this attitude:

Health care, of course, is one of the things the church has done in imitation of Jesus Christ, who came to heal the sick and to drive out evil in the world. It’s very important for us to be involved, but in a way that Jesus is involved, and not to do anything at all that would contravene the teachings of the Gospel.

As St.Paul said, “We may never do evil that good may come about” (Romans 3:8). Chaput is one of those bishops who understands that while Christians may have prudential disagreements about how to realize a good end, there are certain accommodations that a Christian may never make. The distinction is missed by many Christians and non-Christians.

Archbishop Chaput’s approach to public discourse may best be summed up by his answer to Allen’s Benedict-or-John Paul question at the end of their interview: “I hope that I have the evangelical energy of John Paul II, and the clarity of preaching of Benedict XVI.” That is quite an aspiration, but it is one which all Christians, and especially clergy, ought to share.

Urban prairie Detroit 2I wrote a bit about my short essay describing some of the principles and concepts at play concerning intergenerational ethics and economics. There are also important intergenerational cultural consequences following the Great Recession. A decade ago there was much concern about the rootlessness of current generations and the transience of the workforce. But that ability for workers to move quickly to new jobs in other cities and states has been undermined by the housing crash. Most anyone who bought a home in the last decade will not be moving anywhere anytime soon.

As Robert Bridges contends in a WSJ op-ed, “Coming generations need to realize that while houses are possessions and part of a good life, they are not always good investments on the road to financial independence.” The “ownership society” means something far different today than it did even a decade ago.

In her book How the West was Lost, Dambisa Moyo describes well some of the background leading up to the housing crash. One of the contributing factors was this cultural ideal of a “homeownership” society and resulting government policy to promote homeownership. She contends,

The direct consequence of the subsidized homeownership culture was the emergence of a society of leverage, one where citizen and country were mortgaged up to the hilt; promoting a way of life where people grew comfortable with the idea of living beyond one’s means.

She also judges that there are significant intergenerational implications:

Under the government guarantee system which propels the rapid appreciation of house prices, the only winners are those who can downsize (downgrade) their housing, or move to a different area, and buy a smaller (cheaper) place. Everyone else loses…. This ‘escalator’ effect continues until the time that the kids go to college. It’s a wealth transfer from the younger generation to the older generation as house prices become more expensive.

One of the effects of what Moyo calls “government guarantee system” is that resources (capital) was increasingly invested in homes that might have been invested in other, more productive, sectors.

An incisive piece by Roben Farzad explores why the aftereffects of the housing bubble are not likely to go away anytime soon. He quotes Doug Ramsey of Minneapolis investment firm Leuthold Group, “a student of asset bubbles,” who says, “The housing decline will be a long, multiyear process, and the multiplier effect across the economy will be enormous.”

Jonathan Smoke, head of research for Hanley Wood, a housing data company, argues, “We’ve gone through a period when we should have been tearing down houses. The supply of total housing stock is beyond what is necessary.”

Why then are we still celebrating “new housing starts” as signs of a rebounding economy rather than a continuation of misplaced investment and cultural priorities?