Archived Posts September 2011 - Page 2 of 7 | Acton PowerBlog

Blog author: rnothstine
Tuesday, September 27, 2011

For some, in our still largely affluent society, there is a deep seated need to be a member of the victim class. The background of your socioeconomic privilege is no obstacle, as they must create a narrative that points to being a victim. While some might aspire to sainthood, others aspire to victimhood. This video and report courtesy of The Blaze sums it up well. It would be unfortunate if charades like this drown out the real instances of injustice and those that are truly marginalized.

The Manhattan Institute’s Proxy Monitor project is aimed at “shedding light on the influence of shareholder proposals on corporations.” It provides a thorough analysis of proposals made from 2008 – 2011 by activist investors — and believe it or not, only 35 percent of those proposals were related to corporate governance. Most of the shareholder proposals that these companies deal with are attempts to direct the company in a more green or pacific or fair direction, and they come from small shareholders who do this to dozens of companies.

A new report from Manhattan summarizes the trends — the growing social proposals, and how Dodd-Frank has playing into activists’ activities — and the proxy monitor website allows you to look at any shareholder proposal from the last few years. The proposals are enlightening. The Sisters of Mercy of the Americas have submitted proposals to the stockholders of Lockheed Martin and General Dynamics stating,

WHEREAS: Space has served as a sanctuary where, over the years, nations cooperate rather than confront one another. Satellites save lives…

RESOLVED: Shareholders request that, within six months of the annual meeting, the Board of Directors provide a comprehensive report on Lockheed Martin’s involvement in the space-based weapons program, at reasonable cost and omitting proprietary and classified information.

The well-meaning Sisters of St. Francis of Philadelphia, in a proposal to McDonald’s shareholders that made the news earlier this year, requested that,


The Affordable Care Act, signed into law on March 23, 2010, included federal menu-labeling legislation requiring the posting of calories on fast food menu boards….

RESOLVED: Shareholders ask the Board of Directors to issue a report, at reasonable expense and excluding proprietary information, within six months of the 2011 annual meeting, assessing the company’s policy responses to public concerns regarding linkages of fast food to childhood obesity, diet-related diseases and other impacts on children’s health.

Many other equally well-intentioned proposals have been filed, including repeated requests by the Sisters of Charity of St. Elizabeth that various pharmaceutical companies restrain their prices to “reasonable levels.” The Unitarian Universalists have requested that Pepsi Co. “create a comprehensive policy articulating our company’s respect for and commitment to the Human Right to Water.”

This is not to mention the numerous environmental proposals made by religious groups, requesting that the Rights of Humanity and of Mother Earth not be violated by carbon emissions and by the use of genetically engineered plants. Take, for instance, this statement from a proposal to Du Pont’s shareholders, concerning genetically engineered crops:

The right to food requires that we place the needs of the most marginalized groups, including in particular smallholders in developing countries, at the centre of our efforts

One might think the Sisters of Charity of St. Elizabeth were unaware that it has been the genetic improvement of crops that has saved millions of the world’s poor from starvation.

We’ll keep you posted on further developments, and the effects these proposals may have on companies’ performance.

Acton’s director of research, Samuel Gregg, has contributed his thoughts on last night’s debate to National Review’s roundup. He was disappointed by the candidates’ performances: “with the exception of Newt Gingrich, substance did not feature highly in this debate.” These debates tend to be about talking points and about subtle digs at your opponent, not the kind of serious debate we had at the Palmetto Freedom Forum, but Gregg says,

It’s too easy to say that such formats as Thursday night’s don’t lend themselves to that type of presentation. Whoever runs against President Obama is going to have to articulate, in very similar settings, a vivid, powerful, and content-rich contrast to the present administration’s economic policies.

Though none of the candidates was able to offer the “serious, public, and substantial reflection” on our economic problems that Gregg was looking for, he’s not expecting to hear it from the incumbent in debates with the GOP choice:

Angry voters (especially independents), disillusioned with politics and politicians in general, aren’t going to buy in to messianic 2008 hope-’n’-change rhetoric in 2012. Yet while anti-Obama sentiment will take the Republican candidate a long way towards victory, it won’t be enough in the current economic climate. Substance — and the ability to communicate it — will matter.

Read his full commentary here.

Uwe Siemon-Netto commemorates the 150th anniversary of the birth of Robert Bosch:

One hundred and fifty years ago, on Sept. 23, 1861, the visionary industrialist Robert Bosch was born in a village near Ulm in Germany. He became a global entrepreneur whose name is ubiquitous in the auto industry to this very day. And 125 years ago, he founded Robert Bosch GmbH, the largest privately owned corporation in the world today. In 1907, Bosch opened its first U.S. subsidiary. By the time World War I broke out, Bosch presided over a worldwide empire. Its business collapsed after the war, soon recovered, and then was annihilated during Hitler’s Third Reich. Bosch and his collaborators financed the German resistance against the Nazis, rescued Jews and tried in vain to persuade the Western powers not to appease Hitler. Today, Robert Bosch GmbH is the world’s largest supplier of automotive parts.

Read the whole thing.

Faith leaders protest budget cuts (at U.S. Capitol, not NCC meeting)

A “budget is a moral document,” right?

The Institute on Religion & Democracy reports that following the loss of a major donor, the National Council of Churches (NCC) finds itself “closer than ever before to the precipice” of financial collapse. The progressive/liberal church coalition, comprised largely of mainline Protestant and Orthodox churches, is running out of dough. IRD’s Barton Gingerich:

Evangelical Lutheran Church in America Presiding Bishop told the NCC’s September board meeting: “We have 18 months sustainability.” All voting NCC board members were scrambling for “immediate sustainability,” mostly behind closed doors as they discussed the NCC’s audit and budget. Further highlighting the crisis was an interruption of the meeting by placard waving union employees distressed over benefit cuts to NCC staffers.

Meeting in secrecy? Workers protesting draconian budget cuts? In response, some NCC leaders suggested that the organization do nothing for a year but seek out prospective donors. Of course, they used the appropriate biblical vocabulary for “shutting this place down”:

At one point, the board broke up into small table groups to propose solutions to these besetting toils. One table, headed up by Bishop Mark Hanson and United Methodism’s Betty Gamble, even recommended the NCC take a “jubilee.” Under this plan, the NCC would withdraw from public activities and focus on fundraising. Many delegates pointed out that such a recess would negate any reasons for donors to contribute.

But how strange that the same NCC leaders who signed onto the Circle of Protection’s faux-prophetic admonition to “resist budget cuts that undermine the lives, dignity, and rights of poor and vulnerable people” are now looking at slashing pension and health care benefits for their own employees. Didn’t the NCC hear that our nation is facing a health care crisis? Wasn’t it General Secretary Dr. Michael Kinnamon who not so long ago reminded us all that with the troubled economic times, “millions more are finding increases in medical co-payments and participation requirements unmanageable or are losing health benefits with the loss of employment”?

Didn’t NCC’s president, the Rev. Peg Chemberlin, point out when she endorsed the Circle of Protection that Christians have sometimes failed to heed “the call to economic justice in our national life. Sometimes we have gotten so concerned about our personal lives we have neglected this very point”?

The employees of the NCC, and presumably their union steward, don’t care for the budget cutting idea at all:

Accentuating the tension was an interruption by the NCC staffers’ union, the Association of Ecumenical Employees, which marched into the board meeting waving placards. Ironically, the pro-union NCC has been trying to reduce retirement and health benefits with its own union. It seems that contract negotiations have lasted nearly eight months, prompting distressed unionists to conduct their silent interruption, after which they quietly marched out.

Maybe the memory is too fresh in their minds of NCC executives getting themselves arrested in the U.S Capitol Building last summer while they were offering “public prayers asking the Administration and Congress not to balance the budget on the backs of the poor.”

Is it finally sinking in among some on the religious left that you can’t just wish away a looming budget meltdown? Perhaps the NCC leadership would profit from a review of the Acton Institute’s Principles for Budget Reform or the website of Christians for a Sustainable Economy. They won’t find any fundraising tips on these pages but they might just start to better appreciate the virtue of fiscal prudence.

Blog author: eschansberg
Thursday, September 22, 2011

At the most recent GOP presidential debate, there was a famous exchange between CNN’s Wolf Blitzer, Rep. Ron Paul, and the partisan crowd. Blitzer asked Paul about a hypothetical 30-year-old man who refused to purchase health insurance, got sick, and needed extensive medical treatment. Blitzer asked “Who pays?”

Paul replied, “That’s what freedom is all about, taking your own risks…”

Blitzer interrupted him by asking “Are you saying the society should just let him die?”

A few people in the crowd shouted “Yeah”. But Paul said no—and then explained that society should and would take care of him.

Paul continued: “We’ve given up on this whole concept that we might take care of ourselves, assume responsibility for ourselves. Our neighbors, our friends, our churches would do it. This whole idea—that’s the reason the cost is so high!…We dump it on the government; it becomes a bureaucracy; it becomes special interests; it kowtows to the insurance companies and the drug companies…”

Paul made a number of interesting and important points. But aside from his astute analysis, it’s clear that his reply runs counter to conventional ethics. In contrast, many (most?) people believe that we should not rely on freedom and markets. Instead, they want the government to take a lot of money from a lot of people—to support others who make bad decisions and/or face circumstances beyond their control.

When I heard the debate over “let ‘em die”, I immediately thought of students in a classroom. If a student decides not to study appropriately, should I “let ‘em fail”? I’ve always thought so, but maybe I should reconsider. Should I lower the grades of the successful and increase the grades of those who don’t study or just aren’t very smart. (I could transfer grade points explicitly—for example, from “wealthy” A-students. Or I could arbitrarily increase the grades of D&F students, devaluing the grades of A-C students.)

It turns out that the analogy is limited in two important ways. First, health care can be much more important than grades. Of course, grades are important too. If you don’t graduate from high school or college—or you graduate with a weaker major or a lower GPA—then this will have a dramatic impact on your standard of living. And much health care is not vitally important. So, the analogy only falls short when referring to catastrophic or highly-significant health considerations.

Second, I don’t do anything to get in the way of my students earning a good grade. In fact, I do a lot to help them learn and succeed. In contrast, the government is quite busy making it much more expensive to obtain health insurance and more difficult to obtain care. The federal government subsidizes the purchase of health insurance through businesses, causing it to move away from the normal role of insurance in covering rare, catastrophic events. Vastly broadening the scope of health “insurance” causes a dramatic increase in the cost of health care and especially, health insurance. (Imagine the cost and accessibility of auto “insurance” if it covered door dings, oil changes, etc.) This makes Wolf Blitzer’s scenario far more likely. As the government vastly inflates the cost of health insurance, it tempts people to take their chances.

In addition, state and federal governments have all sorts of mandates and regulations on health insurance—that increase costs and decrease competition in the market for insurance. In fact, government has all sorts of other regulations—on everything from prescription drugs to labor markets—that cause all sorts of trouble, but this would require a far longer essay! (If you’re interested, check out my paper in the Winter 2011 edition of Cato Journal.)

Rep. Paul’s answer was to rely on markets and freedom to take care of people. The flip side of that coin is to reduce government intervention—not only taking money from A to care for B, but also government policies that dramatically and artificially increase the cost of health insurance. Blitzer’s question will always be with us. But why do we ignore the many government policies that make his question so much more relevant?

In this Great Recession, it is sad to travel through this great country and see the ranks of the unemployed crowded with so many youth. I think we can all agree that this is deplorable—and that we should endeavor to find an equitable and efficient method for improving the lives of our young people.

So, I have a proposal: Tuition and books at a public university should be free to all students. Students would attend the public university closest to their home. This would be financed by some combination of local, state and federal taxpayer dollars. And it would be regulated by a similar combination of local, state, and federal oversight– university boards, parent-professor associations, state legislators, and a new federal program, “No College-Student Left Behind” (NCLB).

Those who want to attend a private university would still have that option. They would pay taxes to support the public universities and then pay private school expenses on top of that. A wide variety of private schools—some religious, but mostly secular—would be available to satisfy the demand for various niches in the market for higher education services.

All government loans and grants would be eliminated, since there would no longer be a financial barrier to obtaining a college education. Students could still borrow money from family, friends, or banks to pay for education at a private university.

Think about the benefits: First, in the short-term, it would reduce unemployment among the young people (and others) by engaging them in another productive endeavor.

Second, education—a wonderful thing—would be freely accessible to all. In the long-term, at the micro level, we would expect an increase in worker skills, leading to higher pay. At the macro level, we would expect an increase in human capital and technological advance, leading to more economic growth.

Third, jobs would be created throughout higher education—from administrators to professors to staff. Construction at universities would boom, creating an untold number of jobs in the building trades. Publishers would sell more books; office furniture makers would sell more desks; computer makers would sell more laptops; and so on.

Of course, one can imagine some of the complaints that would arise.
Private schools would vociferously oppose what they would describe as “unfair” competition, having to operate alongside highly-subsidized public schools. But the market they serve is fundamentally different and one might argue that their preferences should not be allowed to supersede the greater, public good.

Some taxpayers might complain about higher taxes. But how many would notice the difference? With the costs spread over multiple levels of government and across many taxpayers, the per-tax, per-person costs would be modest. In any case, what’s the big deal about those in the middle and upper classes paying additional taxes?

Bureaucrats connected to government grants and loans might lose their jobs. But more bureaucrats would be needed to regulate the growing public sector efforts in higher education. And those displaced from loans and grants could probably be shuffled to other areas of the education bureaucracy without much impact.

The biggest ruckus would probably be raised by economists. As George Stigler once pointed out, economists are “the premier ‘pourers of cold water’ on proposals for social improvement”, particularly through government activism. Although political supporters and utopian dreamers focus on the benefits of such proposals, an economist would inevitably ask about its (opportunity) costs as well.

The costs? Resources taken from taxpayers would be diverted from efficient uses to the subsidized area. Some people would have money taken from them through taxation—to support an activity that other people would not value enough to devote their own resources.

Proponents of free higher education would point to its positive ripple effects. But the diverted resources would also have negative ripple effects. On net, we would be merely moving resources from one sector of the economy to another. In a grand shell game, jobs would be gained, but more jobs would be lost.

Economists would also wonder about the impact of reduced property rights and ownership. If one doesn’t pay for something, they are less likely to take it seriously. This is already a concern since higher education is subsidized significantly by the federal and especially state governments. With even less skin in the game, students would be more likely to treat the education casually, reducing its value for all students.

Of course, if you don’t like my proposal, then you should also be opposed to our current provision of K-12 education. Elementary and secondary public schools are free and students must attend the government-run school in their neighborhood—unless their parents are wealthy enough to attend private schools or resourceful enough to homeschool.

If my proposal is not all that swift for young adults, how can it be the policy of choice for children?