Posts tagged with: debt

The first presidential election I remember was the Ronald Reagan – Walter Mondale race in 1984. My kindergarten class in the Philadelphia suburbs held a mock vote that Reagan overwhelmingly won. It of course reflected the way our parents were voting. I can remember at the age of five, John Glenn was one of the Democrat candidates seeking the nomination and I knew he was a famous astronaut. The truth is, I’ve always been fascinated by presidential elections and Bare Knuckles and Back Rooms by Ed Rollins and Bad Boy: The Life and Politics of Lee Atwater by John Brady are two political books that deeply influenced my thought. Both books remain relevant and offer valuable lessons today.

Frank Hill, who directs The Institute for the Public Trust, has a solid post discussing Robert Kennedy, self-government, and tomorrow’s election. Hill quotes Lord Acton in his essay as well. He cites Kennedy’s “Day of Affirmation Address” in South Africa in 1966. It was a striking address, touching on the universal truths recognized by the West. Below is a great line from Kennedy’s speech that day:

At the heart of that Western freedom and democracy is the belief that the individual man, the child of God, is the touchstone of value, and all society, groups, the state, exist for his benefit. Therefore the enlargement of liberty for individual human beings must be the supreme goal and the abiding practice of any Western society.

Kennedy’s 1968 presidential campaign and Ronald Reagan’s 1976 campaign are probably the two campaigns that offer the most mystique and magic for liberals and conservatives. One campaign ended with a tragic assassination and the other left conservative activists heartbroken by a narrow defeat. Both candidates were treated to adoring fans and followers and shook up the political landscape. While they represented different ends of the political spectrum, they were both visionary presidential campaigns. Those two campaigns caused a lot of young people to get excited not just about politics or power but deeper ideas about government and the human person.

Tomorrow is a big election. We’ve rightfully placed a heavy emphasis on the limits of politics here at the Acton Institute. Politics will not solve the deeper issues and problems facing this nation. The topic was the overarching theme of Rev. Robert Sirico’s 2012 Annual Dinner address. Jordan Ballor and I hosted an Acton on Tap addressing that very question in 2010. But elections and politics are important and serve a purpose. There are clear philosophical differences between the candidates and the peaceful transition of power reflects well on the foundations of our country.

At Acton we’ve always tried to raise the discourse and talk about higher truths. In a country that now faces crippling debt, moral chaos, and threats to religious freedom, we would be wise to draw upon some words James Madison used to close a letter he penned to a friend in 1774. Madison, concerned about persecuted Baptists in Virginia wrote, “So I leave you to pity me and pray for Liberty and Conscience to revive among us.” I would think most of our readers would agree and wish that much would be so.

From a purely political standpoint last night’s Vice Presidential Debate was probably a victory for both candidates. Vice President Joe Biden fired up his base with his aggressive and somewhat dismissive behavior towards Congressman Paul Ryan. Ryan of course did nothing to hurt Romney and showed he is prepared to be president in an emergency.

Ultimately, the Vice Presidential Debate matters little to nothing in terms of outcome, and that’s why these two were probably in a better position to sit down together and have a candid and civil conversation about the economic and spending crisis this nation faces. It was not to be of course. And it’s probably too much to expect given the nature of the budgetary wars between the Republican Congress and the White House over the last two years. So much of the spending fight had already exhausted itself between these two behind the scenes in Washington.

Save for Ryan’s defense of a plan for cautious entitlement reform, much of the domestic argument came down to which team is better equipped to manage the bureaucracy. The federal government has now doubled in size from just over a decade ago. And it has funded that expansion all through borrowed money. We’ve spent $2 trillion on education at the federal level alone with no marked improvement, only educational decline. Greater urgency and details are needed from our leaders on how they are going to cut and limit federal spending. Everybody knows gutting subsidies to PBS won’t cut it.

Catholics can address the abortion question as it relates to Catholic Social Teaching and who is the serious thinker about their faith, but I also feel there was a real opportunity by both candidates last night to speak less politically about the debt and take moral leadership on an issue. Our spending problem is a visible sign of America’s holistic decline when it comes to our historic strong moral values, strong work ethic, and moral courage. Rev. Robert Sirico has said, “When one generation borrows what cannot be expected to be paid in the next generation, such a civilization is at a crossroads.” We need our leaders to embody those words or we need to replace them.

Blog author: jwitt
Monday, August 20, 2012
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Some proponents of limited government understandably yearn to see Mitt Romney’s recently announced running mate, Paul Ryan, as something like the pure intellectual descendent of Friedrich Hayek and Milton Friedman. Some on the left, meanwhile, will be tempted to portray him as a heartless monster who only wants to enrich the 1 percent. Paul Ryan the politician is more complex than either portrait. Far from throwing granny under the bus, his efforts at budget reform are an essential step in saving Social Security and Medicare, along with improving the long-term fiscal health of the nation. On the other hand, and although his American Conservative Union score is a solid 91.69, he did vote for TARP, the bank bailout, and the auto bailout–government intrusions he has said he now partially regrets.

The personal side of Paul Ryan also doesn’t fit neatly into many preconceived categories. His extended family is financially successful, but he lost his father when he was 16, attended a public university, and worked a variety of summer and side jobs during and after college to make ends meet. As a teenager he helped take care of his grandmother who had Alzheimer’s.

He’s a socially conservative Catholic, and a fan of grunge rock, Beethoven, Led Zeppelin, and Hank Williams, Jr. He’s an outdoorsman who bow hunts, does his own skinning and butchering, and kills catfish with his bare hands. And he’s married with three children, with a wife, Janna, who is a stay-at-home mom with degrees from Wellesley and George Washington University.

For more, here is a piece in which Ryan discusses his votes for TARP and the bailouts; here is a breakout of the American Conservative Union’s 91.69 conservative score for Ryan; and here is a short biography.

UPDATE: The Janesville Gazette has just published an Extra that pulls together their local pieces on Ryan and Janesville along with some national stories and policy resources–a nice one stop resource.

In addition to my post yesterday and other education related posts on the Powerblog (here, here, here, here, and here), I highly recommend this analysis of the higher ed bubble from educationviews.org if anyone is interested in learning more.

I would emphasize that this is not simply an economic problem but a moral one. We cannot in good conscience continue to promote higher education to our youth while its quality continues to diminish and its price continues to rise. To do so is to fail to fulfill our moral duty to leave an inheritance to the next generation from the good that previous generations have passed on to us. The bar needs to be raised as a matter of human dignity. On the whole, people will rise (or fall) to the level of the expectations that we have for them. The level of expectations placed upon a person sends a message about their perceived ability and value. In addition, needless spending needs to be cut, and our government and banks need to stop handing out loans like candy to pursue degrees that will not realistically secure the income needed to pay them back. This is a present moral failing that is leading us to a future economic collapse.

From the article:

As George Will describes it, the bubble is what happens “when parents and the children they send to college are paying rapidly rising prices for something of declining quality.” The point at which parents cease to be willing to pay those rising prices is when the bubble bursts. When that happens, the financial assumptions on which American higher education has been based for many decades will come crashing down.

There are, however, two highly unpredictable elements in the current situation. One is the willingness of the Obama administration to sustain the bubble by encouraging more and more students to attend college and by using student loans to support this expansion. The other is the bubble-deflating power of online education.

Read more . . .

On June 29, both Houses of Congress passed, and President Obama signed, a law maintaining Stafford student loan interest rates at 3.4 percent for one more year – two days before they were scheduled to double. A number of human rights groups and religious communities have praised this development. The Jubilee USA Network, a coalition of over seventy-five churches, has been pushing for passage of this bill, and now celebrates it as a living-out of the Biblical practice of periodic forgiveness of debts. Even the organization’s use of the word “Jubilee” in its name is a reference to a practice God commanded for the Israelites in the Old Testament: “Thou shalt sanctify the fiftieth year, and shalt proclaim remission to all the inhabitants of thy land: for it is the year of jubilee,” (Leviticus 25:10). Similarly, the Catholic Church has a long tradition of periodically holding a Jubilee Year celebrating forgiveness. There’s no question that the concept of pardoning debts out of pure mercy is certainly a Judeo-Christian one. But intellectual honesty requires us to ask whether any particular event is an example of a given principle. Is maintaining the current Stafford student loan interest rate actually a Christian “jubilee” event?

The first Church-wide jubilee was proclaimed by Pope Boniface VIII on February 22, 1300, granting indulgences and remission of the penalty for sins to all the faithful who would make a pilgrimage to Rome and Saint Peter’s Basilica. As the concept of the Jubilee was gradually being developed, the details continued to change over the next hundred and fifty years (various lengths, such as 25, 33 and 100 years were proposed as the time span between Jubilees) but beginning in 1450, the Church has held Jubilees once every 50 years up to the present day, with only three omissions. (more…)

Blog author: dpahman
Thursday, June 21, 2012
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ABC’s Chancellors for Equity and Inclusion, 1985-1988
Source: http://www.imdb.com/title/tt0088885/

I have recently written on the moral implications of growing tuition costs and the resulting student loan debt (here). One factor I did not explore in depth was the reason for rising tuition costs, which, adjusted for inflation, have more than doubled since the 1980s. No doubt, there are many factors that have contributed to this, but George F. Will of the Boston Herald points to one possible cause: bureaucratic sprawl under the auspices of promoting diversity. Despite rising costs for students, Will writes,

UCSD found money to create a Vice Chancellorship for Equity, Diversity and Inclusion. UC Davis has a Diversity Trainers Institute under an Administrator of Diversity Education, who presumably coordinates with the Cross-Cultural Center. It also has: a Lesbian, Gay, Bisexual, Transgender Resource Center; a Sexual Harassment Education Program; a Diversity Program Coordinator; an Early Resolution Discrimination Coordinator; and Cross-Cultural Competency Certificates in “Understanding Diversity and Social Justice.” California’s budget crisis has not prevented UC San Francisco from creating a new Vice Chancellor for Diversity and Outreach to supplement UCSF’s Office of Affirmative Action, Equal Opportunity and Diversity, and the Diversity Learning Center (which teaches how to become “a Diversity Change Agent”), and the Center for LGBT Health and Equity, and the Office of Sexual Harassment Prevention & Resolution, and the Chancellor’s Advisory Committees on Diversity, and on Gay, Lesbian, Bisexual and Transgender Issues, and on the Status of Women.

Personally, I think that fair treatment of all and appreciation of cultural heritage is a good thing, but do we really need more and more administrators to ensure it? Indeed, Will notes, “In 2009 the base salary of UC Berkeley’s Vice Chancellor for Equity and Inclusion was $194,000, almost four times that of starting assistant professors. And by 2006, academic administrators outnumbered faculty.” Surely there must be a more efficient (not to mention ethical) way. (more…)

I just read the introduction to Amity Shlaes’s forthcoming biography, Coolidge: Debt, Perseverance and the American Ideal. She has been very gracious in taking an interest in the work I have been doing on Coolidge and my recent Acton commentary on the 30th president.

Shlaes was interviewed in the Fall 2007 issue of Religion & Liberty about her book The Forgotten Man. I quickly realized in my own research there is no biography that captures Coolidge’s deep relevancy for today given the mammoth federal debt and the centralization of federal power. Coolidge took limiting federal power and its reach seriously.

Without naming names or titles, many of the Coolidge biographies in print are simply sub par. That will change with the release of her biography and this is a book that needs to be out now. There is no release date set in stone to my knowledge or I would offer it up to readers of the PowerBlog.

In the introduction, it is clear just how well Shlaes understands Coolidge’s leadership on economic issues and his emphasis on thrift. I love that she played off her title The Forgotten Man by calling Coolidge “The Forgotten President.” I’ve certainly noticed in my own talks when I go out and discuss Coolidge that so little is known about him.

In her introduction, Shlaes brilliantly draws out comparisons of Coolidge with George Washington, John Adams, Abraham Lincoln, Grover Cleveland, Theodore Roosevelt, Woodrow Wilson, Warren G. Harding, John F. kennedy, Lyndon Johnson, and Ronald Reagan. Some of her insightful comparisons I would never have highlighted on my own. Shlaes is a gifted writer and I foresee this book being very influential with the ability to transform contemporary thinking about our national government.

One of the things that draws me to Coolidge is his appreciation for the past. He was a very modern president who oversaw great technological advances and an America that was modernizing at a rapid pace but he always reminded the people of who they were and the great heritage that gave birth to the American ideal. “If we are to maintain the great heritage which has been bequeathed to us, we must be like-minded as the fathers who created it,” declared Coolidge.

One of my favorite books is The Word of Life by Thomas C. Oden. In the introduction to that book Oden quotes Henry Vaughan’s “Retreat:”

O How I long to travel back,
and tread against that ancient track! . . .
Some men a forward motion love,
But I by backward steps would move.

If Coolidge had heard those words, which is quite possible, I feel he would have loved them.

Virgil's Aeneas fleeing the sack of Troy with his father on his shoulders and leading his son by the hand.

“Even the conventional everyday morality,” writes Vladimir Solovyov,

demands that a man should hand down to his children not only the goods he has acquired, but also the capacity to work for the further maintenance of their lives. The supreme and unconditional morality also requires that the present generation should leave a two-fold legacy to the next,—in the first place, all the positive acquisitions of the past, all the savings of history; and, secondly, the capacity and the readiness to use this capital for the common good, for a nearer approach to the supreme goal. This is the essential purpose of true education….

According to Solovyov, there is a basic, commonsense morality by which most parents feel an obligation to leave an inheritance to their children and give them the opportunity and know-how to use it. He goes on to argue that this principle ought to be expanded generationally: “the present generation should leave a two-fold legacy to the next,” passing on what it has received and instilling in the next generation the ability and desire to use the heritage of human history for the common good. This, he believes, is the “essential purpose of true education.” As commencement ceremonies are celebrated throughout the country this month, how well, I wonder, do we match up to this standard in the United States today? (more…)

Why do democracies struggle with debt? One reason, as John Coleman notes, is that one of the problems is that debt is essentially an intergenerational wealth transfer:
(more…)

Blog author: flair
Friday, March 23, 2012
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Would dissolving the European common currency, as proposed by the French free-market economist and entrepreneur Charles Gave in his book Libéral mais non coupable (“Liberal But Not Guilty”) free the Old Continent to stand upright on its financial feet again? Or would dissolving the currency drastically end the European project altogether, as some pro-Euro technocrats in Brussels fear?

Charles Gave, the chairman of the investment firm GaveKal, (and whose lecture I listened to at a 2011 Acton Conference Family Enterprise, Market Economies, and Poverty in Rome), offers an excellent economic policy analysis in answering these urgent questions.  However, as you will read below, the European side of the financial crisis cannot be fixed in purely economic terms.

In his chapter “Europe: A Turtle on its Back”, Gave says that the EU’s already slow-moving economic tortoise is now in a worse position while laying flat on its back – its shell “heavily weighed down by a systemic debt trap” whose origins are found in keeping the common currency afloat at all costs.

Gave believes that the only way to get the turtle walking upright again would be lighten its load by effectively dissolving the heavily debt-tied euro and restoring national currencies to pre-1999 monetary standards. In Gave’s opinion, a restoration of national currencies across the Eurozone would force member states to return to a culture of self-reliance, that is to say, to count more on their own national fiscal and monetary means and standards.

The positive effect would also mean abandoning the quasi-idolatrous ways in which Europeans go to save their common currency while closing a blind eye to less responsible member states’ reckless spending.

Gave’s criticism of local/national responsibilities and the very origins of debt raise deeper questions about the cause of the  European debt and monetary crises, but it is far from offering a  more complete picture of the problem.

Acton’s research director, Dr. Samuel Gregg, helps us fill in the gaps.  As he said in a recent editorial for the American Spectator:

Europe does indeed face huge monetary challenges. Having a common currency while permitting euro-members to violate mutually-agreed debt limits was always a recipe for disaster. Greece could happily splurge on adding tens of thousands of public sector workers to the government’s payroll and financing Chicago-esque patronage politics, while Portugal built dozens of now-idle, often half-finished soccer stadiums.  Why? Because everyone knew if things went bad, then preserving the euro (a ‘sacred cow’ for Europe’s political class) from the impact of nations’ defaulting meant that heavyweights like Germany would go to considerable lengths to try and prevent a currency-meltdown.

Yet this amounts to only a partial — and therefore inadequate — explanation of Europe’s present disarray…[It] can’t disguise the truth that there’s something even more fundamental driving Europe’s economic crisis.

From the beginning, post-war Social Democracy’s goal … was to use the state to realize as much economic security and equality as possible, without resorting to the outright collectivization pursued by the comrades in the East.  In policy-terms, that meant extensive regulation, legal privileges for trade unions, “free” healthcare, subsidies and special breaks for politically-connected businesses, ever-growing social security programs, and legions of national and EU public sector workers to “manage” the regulatory-welfare state…with little-to-no experience of the private sector.

None of this was cost-free. It was financed by punishing taxation and, particularly in recent years, public and private debt. In terms of outcomes, it has produced some of the developed world’s worst long-term unemployment rates, steadily-declining productivity, and risk-averse private sectors.

In sum, the idolatrous preservation of a European common currency and the ensuing “debt trap”  and “domino default” which Gave articulates in his book  is more fully understood when we link the European financial crisis to a crisis of Christianity — a  faith which makes challenging demands on practicing members’  moral interrelationships, levels of risk aversion, and practical ways in which they care for fellow citizens and see their moral duties relation to their neighbor and society.

Christianity, as defined so well by the Catholic Church’s teachings on subsidiarity, demands that social problems must be first solved at the individual, local level. Only if the local and personal proves insufficient should the problem to be taken to higher levels, with the state as the means of last resort.

Subsidiarity – a guiding principle to all responsible Christians – helps limit public debt by relegating moral duties first and foremost to the private sphere.  Subsidiarity is a check against  forms of collectivization and the expensive public costs involved. When too much of the moral duty is placed on the state, public costs grow and debt is possible.  When it is not, the state’s welfare machine is tends to shut down.

In conclusion, if it is true that the vast majority of Europeans no longer practice their Christian faith or take their charitable duties very seriously, one can rightly doubt how easily it will be them to free themselves from the weight of unsustainable debt  (see also Sam Gregg’s ALS lecture below on this topic). If non-practicing Europeans tend to pass on more of their individual moral responsibilities to the state  for the welfare of the elderly, sick and need people of society, it ends up being a costly delegation of Christian freedom and responsibility.  In economic consequences, this makes the EU a fertile ground for a systemic debt traps and precarious monetary crises.

[youtube http://www.youtube.com/watch?v=h1HZud5lHGc&w=350&h=208]