For PowerBlog readers around New York City, Rev. Robert A. Sirico will be speaking tonight, Wednesday March 2nd. The event, Business and Compassion: Rehumanizing Our Economy, is hosted by Heart’s Home, International Center for a Culture of Compassion, and the American Bible Society. Rev. Sirico is one of four members speaking on a panel. The event will be from 7:00pm-9:00pm (EST) at the American Bible Society National Headquarters (1865 Broadway, New York, NY 10023). The cost of admission is $15 for students and $30 for general admission. Any questions regarding tickets and admission can be directed to Heart’s Home.
If you’ve been following the news recently, no doubt you’re aware of the controversy in Wisconsin surrounding Governor Scott Walker’s budget proposals – which include curtailing collective bargaining for state employees – which have led to massive union protests in Madison and the state Senate Democrats fleeing to Illinois to try to delay the vote and force changes in the bill.
Last week, a couple of radio shows turned to Acton for insight on the Wisconsin situation. On Monday, Rev. Robert A. Sirico joined guest host Sheila Liaugminas on The Drew Mariani Show on Relevant Radio to discuss how to properly value the work of public employees, Catholic teaching on unions, and some of the problems posed by public sector unions:
On Tuesday, Acton’s Director of Research, Dr. Samuel Gregg, joined host Al Kresta on Kresta in the Afternoon on Ave Maria Radio to discuss both the Catholic Church’s historic teaching on unions and its response to the present situation:
My latest for Acton Commentary. I’m also adding a couple of videos from Hotep and the Institute for Justice.
Let the Hustlers Hustle
By Anthony Bradley
If necessity is the mother of invention, then there is nothing worse than quenching the entrepreneurial spirit of people seeking to improve their situation by imposing arbitrary third-party constraints. America’s unemployment problems linger because hustlers cannot hustle.
For many, “hustling” connotes business activity that is shady, or even illegal. But in the black community it is common to use the term to describe the entrepreneurial spirit that drives people to take risks to meet one’s needs and to provide legitimate services through creative enterprise in the marketplace. The latter view is the one taken by indie Hip-Hop mogul Hotep, who has created Hustler University as an effort to redeem hustling as a way to create space for economic empowerment. Clients include the NAACP, the Urban League, Clemson University, the National Education Association, Illinois Public Schools, and Morehouse College.
Hotep defines a “hustler” as “an enterprising person determined to succeed, [a] go-getter.” Participants in Hustler University are exposed to the idea that human beings were made to be innovative and creative and “to manifest our dreams into creation,” says Hotep. Among the Hustler’s 10 Commandments that Hotep aims to teach today’s entrepreneur are the aphorisms “your network is your networth,” “the early bird gets the worm,” and success is “where opportunity meets preparation.”
Hotep offers helpful direction, but for independent-minded hustlers to succeed and thereby benefit both themselves and their communities, they need an environment that provides them opportunities to work freely. While there are many factors that keep entrepreneurial spirit dormant such as laziness, the absence of mentors, and skill deficiencies, one of the greatest obstacles is the mass of regulations generated by federal, state, and local governments.
The Institute for Justice recently released a report describing how government regulations prevent entrepreneurs from taking off. In Houston, for example, hustling a mobile food truck business is nearly impossible. For starters, a would-be mobile food entrepreneur must obtain a license from the City of Houston Department of Health and Human Services. Potential hustlers must submit, in-person, two sets of plans that satisfy a 28-point checklist. During the government truck inspection, the vendor must provide extensive documentation including an itinerary and route list. He is required to pay $560 in fees, which includes $200 for the installation of an electronic tracking device. Operators must also disclose their menu, including every ingredient used as well as its origin, and how each dish is prepared. Even worse, a form must be filled out for each ingredient. This is just a sampling of the regulations in one city. Similarly daunting tangles of red tape exist in every jurisdiction in America, preventing entrepreneurs from starting and maintaining small businesses.
It’s clear that this regulatory regime especially hurts small businesses, the primary source of new jobs. Mark Crain, William E. Simon Professor of Political Economy at Lafayette College, conducted a study several years ago describing the disproportional burden imposed by federal regulations on small business. Crain found that firms with fewer than 20 employees spend 45 percent more per employee complying with federal regulations than do larger firms. Small firms spend 67 percent more per employee on tax compliance than larger firms do, and, compared to the largest companies, more than 4 times as much ($3200 vs. $700) per employee to comply with environmental regulations.
The black unemployment rate currently (January 2011) stands at 15.7 percent. Hispanics are a little better at 11.9, but both lag whites at 8 percent. The last thing we need are burdensome government regulations preventing hustlers from hustling. Whether intentionally job-killing or not, these types of government regulations dampen the entrepreneurial spirit of people who are trying to improve their situation and make contributions to the civic good by providing services that people need. Based on employment figures, these regulations arguably affect blacks and Hispanics disproportionately.
If America is really serious about addressing abysmal unemployment rates, federal, state, and local governments would do well to take the handcuffs off of hustlers and free them from the regulations that keep them from creating wealth. In other words, get government out of the way and let the hustlers hustle!
There was a good deal of discussion in the media over “unfair” executive compensation, especially in light of the bonuses, golden parachutes, and other forms of remuneration received by CEOs during the bailout.
I have yet to hear much complaint about CEOs being underpaid, though.
But this might change as it becomes apparent that under-compensation of executives might well be a way to wriggle out of higher payroll tax liability. Consider the case of CPA David Watson, who “incurred the wrath of the IRS by only paying himself $24,000 a year and declaring the rest of his take profit.” The Slashdot piece makes the compelling conceptual connection between Watson’s case and that of “the much ballyhooed $1 Executive club like Steve Jobs, Larry Ellison, Sergey Brin, Larry Page, and Eric Schmidt.”
The outcome of this? According to a WSJ overview of the Watson case, “Pay can vary—but it can’t be too low.”
On October 21st at Acton’s 20th Anniversary Dinner, Richard M. DeVos – Co-Founder of Amway Corporation with his friend Jay Van Andel – was presented with the 2010 Faith and Freedom Award. Rev. Robert A. Sirico, president and co-founder of the Acton Institute, cited DeVos for his “decades-long exemplary leadership in business, his dedication to the promotion of liberty, his courage in maintaining and defending the free and virtuous society, and his conviction that the roots of liberty and the morally-charged life are to be found in the eternal truths of the Judeo-Christian tradition.”
In his remarks upon accepting the award, DeVos commented on his years in business, the impact that his Christian faith has had on his life, and on the crises faced by the United States in World War II and in the present day. Portions of his comments are presented below:
An example of the impact that Rich DeVos spoke of at the end of his remarks came earlier in the evening from Nicole Boone, an alumna of Acton’s Toward a Free and Virtuous City conference and Executive Director of Goshen International, an educational ministry in South Africa:
In this week’s Acton Commentary, I take a look at the prospects of “right-to-work” legislation in Michigan, “A Lesson from Michigan: Time to End Crony Unionism.”
One of the things that disturbs me the most about what I call “crony unionism” is the hand-in-glove relationship between the labor unions and big government. We have the same kind of special pleading and rent seeking in this system as we do in crony capitalism, but the labor unions enjoy such special protection that there isn’t even a hint of democratic competition.
The unions get windfalls from government subsidy and turn around and actively campaign for the expansion of government. The partisan character of some of the ad campaigns funded by labor unions are particularly egregious. I’ve recently seen a labor-funded ad running in Michigan that demonizes Republicans and lauds Democrats, and FactCheck.org ran a report earlier this month about attack ads from the American Federation of State, County, and Municipal Employees.
One of the noteworthy thing about unions in America is that the share of union members are increasingly coming from the public sector rather than the private sector. This adds an additional layer of concern to the larger problem of crony unionism. We in effect get government employees using government funds to campaign for the expansion of government.
Labor unions form a vital part of civil society, but when they are turned into arms of the government, their purpose is perverted and corrupted. Professor Charles W. Baird examines the merits of free labor in his Acton monograph, Liberating Labor: Liberating Labor: A Christian Economist’s Case for Voluntary Unionism.
Even the idea of debating whether unions should enjoy monopolistic privileges in a state like Michigan, dominated by organized labor interests for so long, is refreshing. And I think it might just be instructive about the kinds of alternative and innovative proposals that will have traction at the polls this November.
Throughout the piece, Mr. Tucker employs a distinction between scarce, economic goods, and non-scarce, infinitely distributable, spiritual goods:
I have what I think is a new theory about why this situation persists. People who live and work primarily within the Catholic milieu are dealing mainly with goods of an infinite nature. These are goods like salvation, the intercession of saints, prayers of an infinitely replicable nature, texts, images, and songs that constitute non-scarce goods, the nature of which requires no rationing, allocation, and choices regarding their distribution.
None of these goods take up physical space. One can make infinite numbers of copies of them. They can be used without displacing other instances of the good. They do not depreciate with time. Their integrity remains intact no matter how many times they are used. Thus they require no economization. For that reason, there need to be no property norms concerning their use. They need not be priced. There is no problem associated with their rational allocation. They are what economists call “free goods.”
[…] This is completely different from the way things work in the realm of scarce goods. Let’s say that you like my shoes and want them. If you take them from me, I do not have them anymore. If I want them again, I have to take them back from you. There is a zero-sum rivalry between the goods. That means there must be some kind of system for deciding who can own them. It means absolutely nothing to declare that there should be something called socialism for my shoes so that the whole of society can somehow own them. It is factually impossible for this to happen, because shoes are a scarce good. This is why socialism is sheer fantasy, a meaningless dreamland as regards scarce goods
This week I’m attending Mises University, one of the largest and most rigorous summer courses in the Austrian School of economics (or “reality economics,” as my friend Michael McKay likes to call it).
Among the various lectures, there was one in particular that struck me as particularly relevant to the work of the Acton Institute. Peter Klein, professor of economics at the University of Missouri, delivered a presentation on entrepreneurship, a large part of the focus of his academic work.
Dr. Klein approaches the subject of entrepreneurship from the more realistic Austrian perspective. Rather than viewing people as examples of the homo economicus, as almost robotic, quantitatively-driven machines, Dr. Klein views human beings as unique and free actors. When we act, we do so under conditions of time and uncertainty. Though every human action presupposes cause and effect, there is no guarantee that our instincts are correct or that our efforts will pay off. In this way, every one of us, whenever we choose some action, is a kind of entrepreneur. In the face of uncertainty, we have an intended – but not guaranteed – result of action.
Combine that with the Austrians’ very realist take on production: production is not some kind of abstract graphical function, but the concrete act of taking a natural resource (e.g. some wood, a stone, some metal ore), and using one’s labor – almost investing a part of oneself – to physically transform it.
In a very broad sense, we all participate in this two-sided entrepreneurial action: actively and consciously transforming the world around us, and doing so in the face of uncertainty and imperfect knowledge.
In a much more specific sense, this activity applies to the people we would usually call entrepreneurs (Ludwig von Mises called them, “entrepreneur-promoters”). These are the businessmen we all know: the small-business owner, the investment banker, the risk-taker. These are individuals whose entrepreneurial spirit in a special way exceeds those of everyone around them. They are the ones willing to take on greater risk, confront greater uncertainty, and make more difficult decisions.
In any case, I find that this realistic description of the role of entrepreneurship fits extremely well with the theology in The Call of the Entrepreneur. In the film, we learn that the entrepreneur is a “co-creator”: He participates in the act of transforming raw materials and natural resources into products for consumers; but the entrepreneur does so by investing time and energy into the production process. And creativity and imagination play an indispensable role in this process of co-creation.
I remember a kind of feeling of awe when this thought dawned on me during Dr. Klein’s lecture. Here we find yet another example of how the market process, when understood and employed correctly, is not simply a morally indifferent result of choice, but a morally positive thing. Society and its consumers are made better off, and both the laborer and the entrepreneur are reminded of their human dignity as they participate in God’s work of fashioning the world.
NPR’s Morning Edition had a touching piece the other day that illustrated how great a blessing business can be, and just how terrible things can be when there’s no freedom to innovate, produce, and create wealth. Chana Joffe-Walt and Adam Davidson of Planet Money put together the narrative of George Sassine of Haiti and Fernando Capellan of the Dominican Republic, “Island Of Hispaniola Has Two Varied Economies.”
Both men shared the same dream: to open up a T-shirt factory. Sassine has had to struggle through all kinds of adversity in the attempt to realize his dream. And just as it was about to take off for good, to really get going, the earthquake hit. Says Sassine, “I’ve had a coup d’etats. I’ve had hurricanes. Now, I have an earthquake.” The “simple cut-and-sew factory” that Sassine had managed to put together lies in ruins.
Cappellan, on the contrary, started with a simple cut-and-sew operation, but in the interim has enjoyed great success; “His business now is, as they say, several steps up the value chain from the dream he started with.”
Sassine puts his finger on what differentiates him from Cappellan. It’s not ability, or ingenuity, or diligence. What has really prevented Sassine from doing for Haiti what Cappellan has done for the Dominican Republic?
Sassine asserts assuredly of Cappellan, “fortunately, for him, his country, his government was behind him. Me, I’ve been having governments against me all my life.” Political instability, corruption, and tyranny are what kill dreams like Sassine’s and Cappellan’s.
The current issue of Touchstone magazine features an impressive cover essay by Douglas Farrow, Professor of Christian Thought at McGill University in Montreal, Quebec. In “The Audacity of the State,” Farrow uses the biblical Ichabod motif to examine the crumbling pillars of the family and church, which when properly respected form critical foundations for a flourishing society.
In their place, writes Farrow, is the “savior state,” which “presents itself as the people’s guardian, as the guarantor of the citizen’s well-being. The savior state is the paternal state, which not only sees to the security of its territory and the enforcement of its laws but also promises to feed, clothe, house, educate, monitor, medicate, and in general to care for its people.” As Lord Acton said, “There are many things the government can’t do – many good purposes it must renounce. It must leave them to the enterprise of others. It cannot feed the people. It cannot enrich the people. It cannot teach the people. It cannot convert the people.”
In a piece as far-ranging and challenging as this, there are bound to be some minor points with which to quibble. For instance, Farrow’s characterization of the role of Erastianism in the overarching narrative seems to be a bit of a caricature, or at least not contextually sensitive. But in any case, there is one larger lacuna in Farrow’s otherwise admirable, impressive, and worthwhile essay, a piece which has far too many worthwhile sections and quotes from which to pull an adequate nosegay. Farrow’s piece must be read in its entirety. (And while you are there, sign up to receive Touchstone.)
But in discussing the elements of civil society, those institutions other than the state which provide it with limits and humble its would-be soteriological ambitions, Farrow considers only the church and the family, “the two most prominent pillars of political freedom, the pillars that have always provided for a roof or shield over the individual and his conscience.”
To be sure, there is some historical basis for considering only these three (church, state, family). These are, after all, the so-called “three estates,” orders, or institutions of classical Christian social thought. These estates have in some form or another functioned vibrantly in the discussion of Christian social thought from Luther’s own time to the present. Richard Baxter (Weber’s proclaimed paragon of the Protestant ethic), for instance, had a threefold distinction beyond personal ethics: economics (referring in the older sense to family), ecclesiastics, and politics.
But in speaking of the tyrannical habitus of the state, at least passing reference must be made to what Dietrich Bonhoeffer identified as the fourth institution: the realm of work, business, culture. It is understandable why Farrow might not pay much attention to this multifaceted pillar of civil society, especially since that pillar has largely been ground to a nub in the course of the twentieth century. But state control and invasion of this sector of social life is as far-reaching, perhaps more so, as it has been with the state’s involvement in the church and family.
The church and the family certainly have their defenders in the public square, although they are too few and fragmentary, as Farrow rightly laments. But who will speak against the audacity of the state for the realm of labor, work, and cultivation? These need their defenders, too, and that in one sense is precisely what we aim do here at the Acton Institute.