Posts tagged with: american enterprise institute

The Hastert Center at Wheaton College will host a debate tomorrow night between Jim Wallis, president of Sojourners, and Arthur Brooks, president of the American Enterprise Institute, on the question, “Does Capitalism Have a Soul?” Washington Post columnist Michael Gerson will moderate.

In framing the debate, Dr. Seth Norton, Hastert Center director, notes in the press release:

“It’s a good chance to compare different visions of capitalism and market economies, and to discuss the role of government in those economies. There is a lot of debate on these issues in secular venues, but this is a chance to hear two people who have a spiritual common denominator address complicated issues related to economic systems, and that’s a rare event.”

The event begins at 7 p.m. and is open to the public.

Blog author: jballor
posted by on Monday, September 20, 2010

Victor Claar, Acton University lecturer and professor of economics at Henderson State University, will give a talk tonight in Washington, D.C., hosted by AEI, “Grieving the Good of Others: Envy and Economics.”

If you are in the area, you are encouraged to attend and hear Dr. Claar as well as two respondents discuss the topic of envy and its moral and economic consequences.

Here’s a description of the event:

Critics of capitalism often argue that this economic system is irretrievably tainted by the sin of greed. They claim that by empowering government to “spread the wealth around” we can free ourselves from the tyranny of greed, purging the influence of sin. But are they right? At this event, Victor Claar, associate professor of economics at Henderson State University, will discuss the role of envy in collectivist and redistributive economic systems. Beginning with an explanation of the classic theological understanding of envy, Claar will argue that “grieving the good of others” is an unavoidable aspect of social democracy.

Update: The audio and video of the AEI event is now available. (There’s a nice plug for Acton University at the beginning.)

Tomorrow Dr. Claar will also be appearing as part of The King’s College Distinguished Visitor Series in NYC.

Dr. Claar is co-author of Economics in Christian Perspective: Theory, Policy and Life Choices as well as author of the Acton Institute monograph, Fair Trade? Its Prospects as a Poverty Solution.

As Dr. Claar will elaborate, the question that epitomizes envy, which is defined as “sorrow at another’s good,” is the self-centered concern, “What about me?” For fans of the hit TV series Lost, I can think of no better illustration of this than the turn from envy to malevolence in this climactic confrontation between Ben Linus and Jacob from the conclusion of season 5:

A very good piece on taxation, income inequality and fairness in today’s Wall Street Journal by Arthur C. Brooks, president of the American Enterprise Institute. Brooks, a frequent guest speaker at Acton events, is also author of “The Battle: How the Fight Between Free Enterprise and Big Government Will Shape America’s Future”, forthcoming from Basic Books in June. Watch for the review on the PowerBlog soon.

Simple facts about our tax system do not support the contention that it is “unfair” in favor of the rich. According to the most recent IRS data, the top 5% of earners bring in 37% of the income but pay 60% of the federal individual income taxes. The bottom half of earners bring home 12% of the income but pay 3% of the taxes. Today, according to the Tax Foundation, 60% of Americans consume more in government services than they pay in taxes.

In sum: A large majority disagrees with the current administration’s redistributionist philosophy; believes the rich already face a tax rate that is too high; and disapproves of the fact that more and more Americans pay nothing in federal income taxes. So why do arguments like the president’s persist?

The answer is that nobody wants to sound anti-poor, so we too easily concede the notion of fairness to those who define it as redistribution and criticize redistribution only because it leads to economic inefficiency.

This is an error. There is nothing inherently fair about equalizing incomes. If the government penalizes you for working harder than somebody else, that is unfair. If you save your money but retire with the same pension as a free-spending neighbor, that is also unfair.

Read “‘Spreading the Wealth’ Isn’t Fair” on the Wall Street Journal Web site.

Blog author: jwitt
posted by on Friday, September 18, 2009

If it doesn’t faze you that

  1. Uncle Sam badly mishandled the stimulus porkanaza
  2. Congress would have directed bazillions to a surreally corrupt Acorn but for these two young heroes
  3. Michael Moore’s Sicko is Wacko
  4. Canadians will no longer have a free market healthcare system to flee to
  5. Government-run health care will look and smell and feel like the Department of Motor Vehicles … with sharp needles and bedpans
  6. If none of this has convinced you that a government-run healthcare system is a bad idea, then spend some time perusing Jay Richards’ thoughtful blogging work on health care here at The Enterprise Blog.

And have a blessed weekend.

Published today on the Web site of the American Enterprise Institute:

Some numbers are highly significant in the Bible. The Israelites, for example, wandered in the desert for 40 years. Moses spent 40 days on Mount Sinai when he received the Law. Jesus went into the wilderness for 40 days and nights. These are periods often associated with probation, trial, or even chastisement before the Lord.

Now we have “40 Days for Health Reform,” a massive effort by the Religious Left to muster support during the congressional summer recess for the Obama administration’s nationalization of America’s healthcare system. Liberal Christians and Jews even recruited the president on August 19 for a nationwide call-in, which was said to draw 140,000 listeners. If the ministers, rabbis, and lay “community organizers” in the churches and synagogues succeed, we’ll all be wandering in the parched wilderness of socialized medicine—and for a lot longer than 40 days.

What’s remarkable about this effort is that, as Americans have started to see the details of ObamaCare, they have revolted against the plan in ever-growing numbers. They’ve shown up at town halls and given their nonplussed members of Congress a healthy dressing down. A Rasmussen Reports survey finds that most voters (54 percent) now say they would prefer that Congress simply not pass a healthcare reform package.

Yet the tone-deaf Religious Left has mobilized for the rescue of socialized medicine, one of its most dearly sought objectives. In doing so, its leaders have labeled the honest dissent of ordinary Americans as the fruit of “mob rule,” the result of manipulation by “right wing” talk radio hosts, and evidence of outright misinformation and falsehoods. Not a very Christian thing to do, if you ask me.

Jim Wallis of Sojourners, who worked so feverishly for Obama’s election, has been leading the charge. He recently wrote that the “storm troopers of political demagoguery, such as Rush Limbaugh, Sean Hannity, and Glenn Beck, have mobilized their followers to disrupt town meetings and defeat comprehensive reform by yelling louder than anybody else.” Like others, Wallis has cast the healthcare debate as a Manichaean battle between the forces of Light and Darkness, prooftexting the president’s and the Democratic congressional reform plan with handy bits of Holy Writ.

In the Washington Post, he cited Leviticus to show that the Bible lays out a “detailed public health policy in regards to contagious rashes and leprosy.” This, Wallis claimed, proves that “the laws governing the Hebrews ensured that participation in their healthcare system was not based upon economic status in the community.” I must have missed that lesson in seminary.

Amazingly, Wallis told Congressional Quarterly that opponents of socialized medicine “really want to shut down democracy and we can’t let that happen. The faith community is literally going to stand in the way of those who want to stop a conversation.” CQ also quoted John Hay Jr., an evangelical leader from Indianapolis, Indiana, who said that “40 Days for Health Reform” is “really an effort to refocus where the central moral issue is—it seems to have been derailed or taken off track by a lot of voices over the past couple of weeks.”

Along with Sojourners, some of the key collaborators on the Religious Left’s rally to the White House and congressional plan include PICO National Network, Faith in Public Life, Faithful America, and Catholics in Alliance for the Common Good.

The U.S. Conference of Catholic Bishops has argued that healthcare is a human right that should be available to all. “The Bishops’ Conference believes healthcare reform should be truly universal and it should be genuinely affordable,” wrote Bishop William F. Murphy, the chairman of the USCCB’s Committee on Domestic Justice and Human Development, in a July 17 letter to Congress. Now, Catholics can agree or disagree with the bishops’ advocacy for universal healthcare—that’s a question of prudence not dogma. Tellingly, Bishop Murphy’s letter did not cite Scripture, the catechism, or any papal encyclical. It was argued from a basis in policy and motivated by the bishop’s honest desire for improvement in a system where one in six patients in the United States is cared for in Catholic hospitals.

But note also what the Catholic bishops did. They issued a clear and forceful call for a reformed health policy that “protects and respects the life and dignity of all people from conception until natural death.” That non-negotiable insistence on the respect for life is, by and large, missing from the Religious Left’s campaign. What we get instead are bland assurances, parroted from White House and congressional talking point memos, that “life and dignity” would be forever safe under ObamaCare. I am not persuaded.

What else is missing from the Religious Left’s campaign? Plenty.

There is no acknowledgement that expanding federal spending by $1 trillion or more to reengineer the American healthcare system, and further burdening future generations with groaning debt loads, might be a bad thing. Or would the Religious Left simply have the government declare a Jubilee and disavow these debts when they become totally unmanageable? Is this too somewhere in Leviticus or perhaps Deuteronomy?

There is little or no recognition that other key institutions—the family, the Church, local civic associations—might also have a role to play in shaping reform. Certainly, no recognition for those civic and social groups that have a healthy distrust of an invasive state. Instead, we get the constant demand from the Religious Left that Washington must act. It is a sort of idolatry—the worship of Big Government as the solution to all of our problems.

There is a near total blindness to the fact that nationalized health systems in other countries are deeply troubled, even deadly. Horror stories about these systems are plentiful in the mainstream media. What about the common good? A 2002 report by the Adam Smith Institute noted the following about Britain’s state-run healthcare monopoly:

The NHS has a severe shortage of capacity, directly costing the lives of tens of thousands of patients a year. We have fewer doctors per head of population than any European country apart from Albania. We import nurses and doctors from the world’s poorest countries, and export sick people to some of the richest. More than one million people—one in sixty of the population—are waiting for treatment.

Faith communities should recognize the Religious Left’s “40 Days” campaign for what it is: a politically driven “community organizing” effort that aims to expand a bloated state and make Americans evermore dependent on politicians and bureaucrats, not doctors, for healthcare. As people of faith, we need to speak up against this dishonest affair. After all, it’s our “prophetic” duty.

Update (5/21): The New York Daily News reports that “state lawmakers are trying to give the fat tax new life.”

Senate Democrats want to impose a penny excise tax on non-diet sodas to help fund a plan to provide property tax relief to homeowners. “It’s a small amount of money, as far as increasing the price of soda, and it would allow the governor and the state to have a new slogan for soda: ‘Have a coke, a rebate check and a smile,’” said state Sen. Jeff Klein (D-Bronx) who unveiled the plan yesterday.

On the Atlantic Magazine blog, Derek Thompson links Rev. Sirico’s article and offers praise for sin taxes:

The idea that taxes have no right to reflect government values is crazy (why else would we give legal and financial bonuses to marriage?). Cigarettes already face steep state taxes precisely because those states value a smoke-free environment. Carbon taxes are advocated on the principle that companies aren’t properly valuing the negative externality of pollution.

sin taxOriginal Post: Writing on The American, published by the American Enterprise Institute, Rev. Robert A. Sirico looks at how the “sin tax” has been creatively revived by those currently “remaking America” in Washington. The sin tax is an excise tax on those goods that elected officials deem morally suspect: tobacco, liquor, junk food, among other things. But Rev. Sirico says that the temptation to impose sin taxes is one that should be resisted for economic and moral reasons. From the article:

The elite media, liberal think tanks, and academic researchers are already building a case against Big Food for its scarlet sins: sweetened drinks, fatty snacks, alcoholic beverages. You know what’s coming next: a wave of punitive government regulation and scores of lawsuits aiming to shake down the nation’s vast food and beverage industry. It’s the same strategy developed for the assault on the tobacco industry—tax the bad stuff out of existence. Today, in New York City, the price of a pack of cigarettes now tops $9 (each pack now carries $5.26 in taxes), which makes the city one of the most expensive places in the country to smoke.

Never mind if you have freely chosen to smoke a cigarette or drink a cold Coke on a hot summer’s day and, mirabile dictu, you take responsibility for your actions. The New Puritans who are ready to dramatically expand the welfare state and limit personal freedoms claim to know what’s best for you.

The sin tax seems like a convenient ploy when the state is searching for new sources of revenue in fiscally tight times. A sin tax also appeals to some voters who view it as a way of discouraging consumption of certain objectionable products. Yet the temptation to impose sin taxes is one that should be resisted for economic and moral reasons. The consequences of the sin tax are often the very opposite of those intended by its designers. Rather than increasing revenue, the sin tax can reduce it. Rather than discouraging what are regarded as morally questionable behaviors, the sin tax can make them more appealing. Rather than reducing what are perceived to be internal costs of the sin, the sin tax can increase them and expand them to society as a whole.

Read “Hate the Sin, Tax the Sinner?” on The American.

In “The Real Culture War Is Over Capitalism,” Arthur C. Brooks argues in the Wall Street Journal that the “major cultural schism” in America today divides those who support capitalism and, on the other side, those who favor socialism. He makes a strong case for the moral foundations of free enterprise and entrepreneurship and points to the recent “tea parties” as evidence that Americans still favor the market economy. Brooks, the president of the American Enterprise Institute, says Americans are revolting against “absurdities” like the bailout of General Motors that will be financed with ballooning budget deficits and trillions in new federal debt. He writes:

… the tea parties are not based on the cold wonkery of budget data. They are based on an “ethical populism.” The protesters are homeowners who didn’t walk away from their mortgages, small business owners who don’t want corporate welfare and bankers who kept their heads during the frenzy and don’t need bailouts. They were the people who were doing the important things right — and who are now watching elected politicians reward those who did the important things wrong.

Voices in the media, academia, and the government will dismiss this ethical populism as a fringe movement — maybe even dangerous extremism. In truth, free markets, limited government, and entrepreneurship are still a majoritarian taste. In March 2009, the Pew Research Center asked people if we are better off “in a free market economy even though there may be severe ups and downs from time to time.” Fully 70% agreed, versus 20% who disagreed.

He also points out that the government has been increasingly “exempting” Americans from paying taxes, an intentional strategy to create a larger class of government-dependent citizens.

My colleague Adam Lerrick showed in [the Wall Street Journal] last year that the percentage of American adults who have no federal income-tax liability will rise to 49% from 40% under Mr. Obama’s tax plan. Another 11% will pay less than 5% of their income in federal income taxes and less than $1,000 in total.

To put a modern twist on the old axiom, a man who is not a socialist at 20 has no heart; a man who is still a socialist at 40 either has no head, or pays no taxes. Social Democrats are working to create a society where the majority are net recipients of the “sharing economy.” They are fighting a culture war of attrition with economic tools. Defenders of capitalism risk getting caught flat-footed with increasingly antiquated arguments that free enterprise is a Main Street pocketbook issue. Progressives are working relentlessly to see that it is not.

Read the “The Culture of Charity,” the Spring 2007 interview with Brooks in Acton’s Religion & Liberty. Watch a 16-minute video interview with Brooks recorded at the Acton Grand Rapids office in May 2008

Congress is debating a number of measures designed to “rescue” homeowners facing foreclosure as the housing and credit crisis grinds more and more financial and real estate assets to dust. Much of the reporting on the credit crisis, in the tradition of objective journalism, strains to explain the problem objectively, as if what was happening in the markets was somehow an act of nature, something unguided by human action. Thus, people “fell” into the problem as if pulled by a gravitational force:

Congress has been struggling for months to respond to a mortgage crisis that has left more than 1.2 million homes in foreclosure, with an additional 3 million forecast to join them over the next two years. Most involve subprime loans that established terms the borrowers could not afford. As homeowners defaulted and fell into foreclosure, home prices fell more than 10 percent. Many borrowers who are having trouble making payments find that they cannot sell or refinance their homes because they owe their banks more than their homes are worth.

But markets and industries and trade are guided by human beings, who have fairly well known tendencies. In “The Human Foundation of Financial Risk,” Alex J. Pollack of the American Enterprise Institute looks at that depressingly predictable mass hysteria that has propelled one financial bubble after another from the South Sea Bubble of 1720 and beyond. The “great twenty-first century housing and mortage bubble,” he argues, is just the most recent example.

Pollack notes how the mortgage securities market, looking out on a housing expansion that seemed unending, became “enamored” of statistical models of risk crafted by some of the best and brightest on Wall Street. How well did these arcane formulas come to grips with the human factor?, Pollack asks.

Did they pick up the effects of short memories–of the inclination to convince ourselves that we are experiencing “innovation” and “creativity” when all that is happening is a lowering of credit standards by new names–or of what are rightly considered unearned risk premiums being counted as profits and paid out as bonuses? Did the models adequately take into account the cumulative human forces of optimism, gullibility, short-term focus, genuine belief in momentum, extrapolation of so-far-profitable speculations, group psychology, and increasing fraud? Did the models keep up with the fact that as they were running, the behavior was changing? Obviously, they did not.

He reminds us that the reason financial bubbles are so seductive is that, for awhile at least, everyone associated does pretty well. Homeowners were getting more and more house with easier borrowing terms, lenders were generating profits from ever more creative strategies, and Wall Street was packaging and reselling this stuff to investors all over the world. All the while, Congress and the White House were crowing about ever higher levels of home ownership and participation in the American Dream.

Pollack points to the “widespread realization” in early 2007 that a large proportion of subprime mortages and subprime mortgage securities were going to default as the beginning of the end. It was the disillusion that crashed the party. “The end of belief ends the bubble and begins the bust,” Pollack writes. Let the panic begin.

We’re now in the early phase in what is likely to be a massive push in Washington to bring new regulation to the financial services industry and “rescue” more homeowners in an election year (but probably not the homeowners who have been paying their bills). Pollack again sees how this typically plays out:

In the wake of a bust, there is always a predictable series of political activities: first, the search for the guilty; second, the fall of previously esteemed heroes; and third, legislation and increased regulation to ensure that “this will never happen again.” But, with time, it always does happen again. Consider in this context the statement of the comptroller of the currency in 1914 that with the creation of the Federal Reserve, “financial and commercial crises, or panics . . . seem to be mathematically impossible.”

Pollack talks about the “cumulative human forces” behind the bust. From a Christian perspective, these “cumulative” factors would also include a healthy awareness of the reality of sin. There will always be the risk of cheating and greed and theft in financial affairs, personal and corporate. When that risk is inflated with the bubble, then its effects, as we have seen, may be impossible to contain. And no group caught up in the enthusiasm of the housing and mortgage bubble was immune from it — not the homeowner, not the lender, not the securities market.

The new risk we face is that the regulatory cure proposed by Washington will have it’s own illusions of “innovation” and “creativity” — with a naive belief in the power of government to make any more financial crises “impossible.” Federal bailouts for both bankers and borrowers are on the table. Over-reaction and over-regulation is likely to follow. There will be no discussions about the nature of sin in Congressional hearings, but there will be plenty of demons. Mostly, mortgage lenders. As Pollack observes, it’s all too predictable.