Archived Posts June 2012 - Page 6 of 14 | Acton PowerBlog

How about a tax on fires?

On National Review Online, Acton Research Director Samuel Gregg examines the push for a “transaction tax” to solve some of the fiscal problems in the European Union. The move would, Gregg explains, “levy a tax on any transaction on financial instruments (securities, loans, deposits, derivatives, and various asset classes) between banks, hedge funds, insurance businesses, investment companies, and other financial organizations whenever one contracting party is located in the EU.” That may not sound like much, but would apply to literally millions of financial transactions daily. The scheme has drawn the support of “EU apparatchiks” but the opposition of the British who see the tax proposal as a threat to London’s financial competitiveness. Gregg sees what’s behind it:

In short, the EU’s transactions-tax scheme reflects a long-standing desire to “throw sand” in the wheels of financial globalization. Its origins lie in what’s called the “Tobin tax,” named after the American economist James Tobin, who argued in 1972 for the levying of a 0.5 percent tax on all spot-currency conversions. The point, for Tobin, was to discourage “speculators” who “invest their money in foreign exchange on a very short-term basis.”

Unfortunately for its advocates, there’s considerable evidence that Tobin-like taxes on financial transactions don’t reduce volatility. In the midst of financial crises, long-term and short-term investors behave in very much the same way — they get out, and transaction taxes don’t prevent them from abandoning ship. Greece, for example, currently applies a transaction tax to the sale of Greek-listed shares. That, however, isn’t doing much to prevent the present exodus of capital from Greece.

Taking the broader view, it’s hard to avoid concluding this latest EU harmonization boondoggle is about two things. First, it’s a way for EU officials and governments to appear to be punishing European financial institutions for their contributions to Europe’s economic crisis. Second, it reflects the general European failure to come to grips with some of the deeper problems contributing to Europe’s debt crisis.

Read “Financial Fiddling while the Euro Burns” by Samuel Gregg on NRO.

One of the real challenges in arguing for various social policies is getting reliable data about the effectiveness of government programs. This is particularly the case with regard to welfare spending. It’s often very difficult to measure a particular program’s effectiveness, however. But this is an essential task, as Jennifer Marshall writes:

The measure of our compassion for the poor should not be how much we spend on federal antipoverty programs. Compassion must be effective.

We ought to define success by how many escape dependence on welfare to pursue their full potential as human beings. To measure our commitment to the poor by the number of dollars spent on antipoverty programs is to diminish human dignity.

Researchers in the UK have written a report arguing for an approach to public policy that integrates “randomized controlled trials” (RCTs) into attempts to measure the impacts, intended and otherwise, of government programs. In “Test, Learn, Adapt: Developing Public Policy with Randomised Controlled Trials,” (HT: Hacker News) the authors argue that RCTs are used widely in the private sector, but at least in the UK they “are not routinely used to test the effectiveness of public policy interventions.”

They go on to explain why RCTs are particularly helpful in determining the effectiveness of a particular program:

What makes RCTs different from other types of evaluation is the introduction of a randomly assigned control group, which enables you to compare the effectiveness of a new intervention against what would have happened if you had changed nothing.

The introduction of a control group eliminates a whole host of biases that normally complicate the evaluation process – for example, if you introduce a new “back to work” scheme, how will you know whether those receiving the extra support might not have found a job anyway?

Check out the whole report which provides details on the nine suggested steps for implementation (PDF).

The Office of Management and Budget’s (OMB) 2012 draft report to Congress on costs and benefits of federal regulations states that “agencies should carefully consider how best to obtain good data about the likely effects of regulation; experimentation, including randomized controlled trials, can complement and inform prospective analysis, and perhaps reduce the need for retrospective analysis.”

This last point is somewhat dubious, for as the title of the UK report indicates, the process of evaluating the effectiveness of public policy interventions is ongoing: Test, learn, adapt, repeat! The ninth step is actually to “return to Step 1 to continually improve your understanding of what works.” But in any case it might well be that RCBs are going to be one tool increasingly relied upon to provide some helpful insight into what works and what doesn’t.

Blog author: jcarter
Thursday, June 21, 2012

On AEI’s Values & Capitalism blog, RJ Moeller kicks off a new series that will “highlight the work and ideas of people advocating for free enterprise in especially compelling and interesting ways” with a review of Rev. Sirico’s Defending the Free Market:

As you continue through the richly insightful pages of “Defending The Free Market,” Rev. Sirico goes to great lengths to drive home an incredibly important point: Freedom is not normal. The United States is not just an aberration. It is the aberration of human history. No civilization has flourished like we have in our 235 short years, and Rev. Sirico implores the reader not to miss the very important fact that we did this because of (not in spite of) our radically different views on concepts like liberty, equality, and charity.

We have prized certain values over others. We have valued things that other countries and cultures have scoffed at since Jamestown and Plymouth Rock. And attached to all of the other freedoms we hold so dear—the one that binds and undergirds all others—is economic freedom. The right to freely seek one’s own vocation. The right to both bear risk and reap reward. The right (and responsibility) to provide for one’s own family. The Judeo-Christian duty to use one’s own property and possessions to personally help the least among us.

Read more . . .

Blog author: jcarter
Wednesday, June 20, 2012

Perhaps no other adjective better captures the American political climate than fearful, says Andrew Knot in this week’s Acton Commentary (published May 25). “The past decade has witnessed a spike in fear-driven politics, at least accusations of such. The coming election appears no different,” he adds. The full text of his essay follows. Subscribe to the free, weekly Acton News & Commentary and other publications here.

David Paul Deavel has a fine review of Rev. Robert Sirico’s Defending the Free Market over at National Review Online.

Deavel notes:

What makes Sirico’s defense of a free economy all the stronger is his consistent acknowledgment that a functioning free market neither immanentizes the eschaton, making heaven on earth, nor makes a society virtuous or whole. Freedom of economic (and other) action is not the goal of society — acting virtuously in freedom is. And the intellectual and spiritual resources for virtuous action do not inhere in markets themselves. In his chapter on why state-sponsored health care is not really a compassionate answer, he writes against “the seduction that the power of economic freedom can in itself generate a system of health care marked by honesty and love.” Economic freedom must be accompanied by other kinds of freedom, particularly religious, and by people thinking about their duties toward the sick, the dying, and the poor. Homo economicus may be a useful abstraction for certain economics problems, but the human capital of love, loyalty, and sacrifice is the kind of capital required for a successful capitalism.

Read the entire review at National Review Online.

Blog author: jballor
Wednesday, June 20, 2012

In my Acton Commentary this week, “Good Work Never Ends,” I look at the example of two local personalities, John Izenbaard of Kalamazoo, Michigan, and Fred Carl Hamilton of Wyoming, Michigan, to argue that “the good work of service to others ought never end as long as we live.”

Izenbaard in particular is a striking example of perseverance in serving others. The 90 year-old Izenbaard has been working at Hoekstra’s True Value Hardware for 74 years, and has no plans to retire.

During his conversation with Rev. Sirico at Acton University last week, Michael Novak observed that at the heart of every business is an idea, some new good or service that is produced. In my talk on “The Church and God’s Economy,” I outlined what I call the 4 P’s of God’s economy. The P for the realm of work is that of “production,” precisely in the same sense used by Novak. Work is the realm of productive service of others. When work is defined in this way it causes us to rethink from the ground up the worldly notion of retirement.

In this week’s piece I also refer to the formula “from success to significance.” As I point out, a good way of understanding this formula is not necessarily as a temporal transition from career into retirement, but rather as a shift in perspective. On that score, we might also talk about moving “from success to service,” or even defining success in terms of productive service.

Dietrich Bonhoeffer has a helpful insight into what this might look like in relation to the challenge of being faithful in the midst of the daily grind:

The unity of prayer and work, the unity of the day, is found because finding the You of God behind the It of the day’s work is what Paul means by his admonition to “pray without ceasing” (1 Thess. 5:17). The prayer of the Christian reaches, therefore, beyond the time allocated to it and extends into the midst of the work. It surrounds the whole day, and in so doing, it does not hinder the work; it promotes work, affirms work, gives work great significance and joyfulness. Thus every word, every deed, every piece of work of the Christian becomes a prayer, not in the unreal sense of being constantly distracted from the task that must be done, but in a real breakthrough from the hard It to the gracious You.

I also note Lester DeKoster’s fine book on work in the context of this week’s piece, and his argument helps us realize that the dynamic of serving others and serving God is not an either/or proposition. As he writes, work “gives meaning to life because it is the form in which we make ourselves useful to others, and thus to God.”

From’s blog comes this story about the company Capital Bikeshare, a business which rents bikes to people throughout the D.C. metropolitan area. Sounds like a cool idea, but why is it getting taxpayer support?

Capital Bikeshare, which rents bikes at more than 165 outdoor stations in the Washington D.C. area, serves highly educated and affluent whites.There’s nothing wrong with that, of course, except that the program has received $16 million in government subsidies, including over $1 million specifically earmarked to “address the unique transportation challenges faced by welfare recipients and low-income persons seeking to obtain and maintain employment.”

Well, helping the poor sounds nice. I bet it’s really helped them out, let’s see if that’s the case.

Capital Bikeshare’s latest user survey finds that 95 percent of its regular patrons have college degrees, 53 percent have a Masters or Ph.D., and 80 percent are white. Fully 0 percent have only a high school diploma and just 7 percent make less than $25,000 a year. More than 90 percent were employed and 14 percent reported they were college students, suggesting that very few welfare recipients are using the service.

Well, at least legislators can feel good I guess, even if they haven’t really done any good. This episode points out that government efforts are often poorly targeted in their attempts to help the poor. There’s nothing wrong with running a bike service, but the rationale that such enterprises should receive tax payer support because they help the poor is wrong. This applies to many topics in attempted government aid, many government policies that are ostensibly meant to help the poor are actually very poorly targeted. As Ismael Hernandez said last week during a lecture given at Acton University, we must use not just our hearts and our muscles, but also our minds.

A lecture from Ismael Hernandez on “Subsidiarity and Helping the Poor” and other lectures from Acton University can be found here.