Posts tagged with: economic crisis

Former Acton research fellow Jay Richards has another bestseller, as of last night–Infiltrated: How to Stop the Insiders and Activists Who are Exploiting the Financial Crisis to Control Our Lives and Our Fortunes.

IF you follow free market writers closely, you known that government interventions in the financial markets, rather than too much economic freedom, fueled the housing bubble and paved the way to the subsequent housing collapse and financial crisis. Infiltrated deftly summarizes this, but it’s in two other areas where the author, former Acton research fellow Jay Richards, offers fresh insight.

The first is the way he explains how activists and politicians have used the financial crisis to double down on the same big-government hyper-regulatory strategies that got us into the financial crisis in the first place. As Jay explains, the misleadingly named “Dodd-Frank Wall Street Reform and Consumer Protection Act,” which neither reforms Wall Street nor protects consumers, is mostly just more of the misguided medicine that contributed to the crisis in the first place.

The second valuable feature of the book is its often novel-like descriptions of the characters and tactics that led from small beginnings to the Leviathan creature that is Dodd-Frank. Understanding the opposition–their strategies and appeal, their cynicisms and idealism–is crucial to mounting a successful counteroffensive.

The book explains all of this with the sort of accessible, engaging prose that characterized Richards’ previous bestseller, Indivisible, and lays out a practical blueprint for a counteroffensive.

“Richards brings a sharp analytical mind and a passion for justice to bear on the financial crisis and its aftermath.” –Arthur C. Brooks, President, American Enterprise Institute

“If you want to know why the popular wisdom about the causes and effects of the financial crisis is mosty wrong, and how such myths will help faciliatae similar crises in the future, Jay Richards’s Infiltrated is an eye=opener.” –Samuel Gregg, author of Becoming Europe and Tea Party Catholic.

Sojourners’ Jim Wallis has been at the Davos gathering in Switzerland and is urging us to be guided by a new Davos “covenant.” If you’ve never heard of Davos, Michael Miller’s RealClear Politics piece “Davos Capitalism” describes the gathering and its unassailable hubris this way:

Davos capitalism, a managerial capitalism run by an enlightened elite–politicians, business leaders, technology gurus, bureaucrats, academics, and celebrities–all gathered together trying to make the economic world smarter or more humane…. And we looked up to Davos Man. Who wouldn’t be impressed by the gatherings at the annual meeting of the World Economic Forum at Davos, a Swiss ski resort? Sharply dressed, eloquent, rich, famous, Republican, Democrat, Tory, Labour, Conservative, Socialist, highly connected, powerful and ever so bright.

Then, when the whole managerial economy collapsed, the managers and technocrats lost faith in markets. But they did not lose faith in themselves, and now they want us to entrust even more of the economy to them.

As if on cue, Jim Wallis writes in a recent public letter:

This week at the World Economic Forum in Davos, Switzerland, we are looking to the future and asking “what now?” At a Saturday session — “The Moral Economy: From Social Contract to Social Covenant” — a document will kick off a year-long global conversation about a new “social covenant” between citizens, governments, and businesses.

Why dispense with the yeomen-like “contract” language in favor of a new “social covenant”? Wallis explains that “in the past 20 years, the world has witnessed the death of social contracts. We have seen a massive breakdown in trust between citizens, their economies, and their governments…. Former assumptions and shared notions about fairness, agreements, reciprocity, mutual benefits, social values, and expected futures have all but disappeared. The collapse of financial systems and the resulting economic crisis not only have caused instability, insecurity, and human pain; they have also generated a growing disbelief and fundamental distrust in the way things operate and how decisions are made.” (more…)

Samuel Gregg, Acton’s Director of Research and author of the book “Becoming Europe“, says one of America’s real debt dangers is our increasing sense of entitlement from the government. In today’s Investor’s Business Daily editorial, Gregg states our “insatiable appetites” are getting us into the very deep economic trouble that no one, least of all politicians, seems to want to face:

…Luxembourg’s Prime Minister Jean-Claude Juncker famously lamented in 2007: “We all know what to do, but we don’t know how to get re-elected once we have done it.”

It’s tempting to see this as a peculiarly Western European problem. This is after all a continent in which even many nominally center-right governments’ default positions are essentially social democratic: i.e., extensive government intervention is simply considered normal.

But can anyone seriously deny that many American politicians — including some conservatives — play this game? Or that millions of Americans from all backgrounds have developed absurd expectations of what government “owes” them in economic terms?

And I’m not just talking about those who apparently regard any streamlining of social security as tantamount to homicide. I’m also referring to those businesses who think they’re entitled to receive corporate welfare instead of competing in the marketplace.

Gregg’s recommended remedy? “To put it bluntly, we need to accept that our participation in democracy cannot degenerate into voting for whoever promises us the most stuff.”

Rome contributor to ZENIT, Stefanie DeAngelo, recently interviewed the Acton Institute’s 2012 Novak Award winner, Professor Giovanni Patriarca. During the interview Prof. Patriarca speaks candidly about some of his academic influences, including Michael Novak and Benedict XVI. He also offers his reasons for hope in overcoming the prolonged global economic crisis.

Some Contemporary Reflections: An Itinerary from Novak to Benedict XVI

by Stefanie DeAngelo

2012 Novak Award Winner Prof. Giovanni Patriarca

ZENIT: You have recently received the Novak Award. What are some of the major contributions of the American philosopher and theologian to our thinking about the current state of the world?

Patriarca: The work of Dr. Michael Novak is so rich that it is not easy to summarize it in a few thoughts. In addition to his famous works on economics, a number of his articles published in the last few years, especially in the journal First Things, explores some of modernity’s contradictions regarding individual and social responsibility and the demise of traditional values that were held by previous generations. As Alexis de Tocqueville also warned, the loss of a metaphysical perspective, leads to materialism and the absurdity of nihilism. (more…)

Rev. Robert Sirico, author of “Defending the Free Market: The Moral Case for a Free Economy,” appears at a Rome press conference for his book.

The Catholic News Agency recently interviewed Acton’s president Rev. Robert Sirico during a press conference held last week in Rome for Vatican journalists. The local media were introduced to his new book, “Defending the Free Market: the Moral Case for a Free Economy.”

In the CNA article “Fixing economic crisis requires financial and moral truth, priest says,” Rev. Sirico states:

 

I wrote the book because I was concerned that there’s such a false set of assumptions of what a market economy is and that it’s completely disconnected from the moral life…We need to stop presuming that the government is the provider and find creative and innovative ways which can serve people and which will build a virtuous cycle instead of a vicious cycle.

Regarding the imminent challenges for economic growth and human flourishing in welfare-dependent European countries, like Italy, Rev. Sirico said: “It’s going to be difficult for young Italians to reach adulthood with their dignity intact for quite a while, because they presume that the State will provide for them, cradle to grave.”

To read the rest of the CNA article, go here.

Acton President Rev. Robert Sirico presents the 2012 Novak Award to Prof. Giovanni Patriarca

An overflow crowd, which included two current and one former rector of Rome’s pontifical universities, enthusiastically turned out on November 29 to support the winner of the Acton Institute’s Novak Award.  Students, professors, journalists, entrepreneurs and politicians alike packed the Aula delle Tesi auditorium at the Pontifical University of Thomas Aquinas to hear Prof. Giovanni Patriarca deliver his lecture  “Against Apathy: Reconstruction of a Cultural Identity”.

The Novak Award, a $10,000 prize named after the American theologian and social philosopher Michael Novak, is given annually to a young international professor whose distinguished research advances a deeper understanding of theology’s connection to human dignity, the importance of limited government, religious liberty, and economic freedom. The recipient delivers a formal presentation at the award ceremony known as the Calihan Lecture. (more…)

On his flight to World Youth Day in Madrid this morning, Pope Benedict XVI responded to a question about the current economic crisis. Not sure what the question was, but the well-respected Italian Vatican analyst Andrea Tornielli captured the reply. Here’s my quick translation of the Pope’s answer:

The current crisis confirms what happened in the previous grave crisis: the ethical dimension is not something external to economic problems but an internal and fundamental dimension. The economy does not function solely on mercantile regulations, but needs an ethical reason to work for man. This is what John Paul II affirmed in his first social encyclical: man must be at the center of the economy and the economy must not be measured by profit maximization but by the good of all, which includes responsibility towards the other. The economy works truly well only if it works in a human way, in respect for the other according to different dimensions. The first dimension is responsibility for one’s nation, and not only for oneself. The second is responsibility towards the world: nations are not isolated, as Europe is not closed in on itself, but responsible for all humanity, and must confront economic problems with this “key” of responsibility also for other parts of the world, for those countries that experience hunger and thirst. The third dimension concerns the future, we have to protect our planet, but we must also protect the working of the labor system for all, to think of tomorrow as well as today. If today’s youth do not find prospects for their lives, our today is mistaken and wrong.

It’s pretty clear that the Pope is referring to the economic problems particular to Spain, where youth unemployment is over 40 percent, and also where protesters known as los indignados are blocking the reform attempts of the Spanish government. The same indignados who’ve attempted to start riots in Madrid with World Youth Day pilgrims. The Holy Father is clearly a gentle and patient man.

The Pope also addresses ethics, the central role of the person, our responsibility to others and to the future of our planet. Nothing he said was at all different from what he or his predecessor, Blessed John Paul II, has indicated as a morally correct understanding of the market economy. And as he has previously said, dealing with our failings and weaknesses is the price of human freedom and responsibility. The more freedom we have, the greater the risk of our misusing it. But this is not a reason to restrict that freedom; doing so would actually replace the person from the center of the economy with cold, impersonal regulations.

Perhaps the Pope was referring to the record profits of some banks and other companies while unemployment remains high. Much of this is of course due to government policies to “stimulate” the economy in times of uncertainty, regardless of how that money is spent. Was the Pope questioning the results of Keynesian stimulus spending?

The real challenge for economists and policy makers is how do we move from the good intentions of providing ever-increasing, ethically-sound prosperity for all to actual results. Part of that challenge is the fact that our prosperity is the result of constant competition and rapid change, which can also endanger our current standard of living. It is unlikely we’ll ever be able to “guarantee” a stable, prosperous future for everyone because no one actually “controls” the global economy. The cost of putting someone in charge would effectively cut off the competition and innovation needed to create wealth, and would most likely be a force for evil rather than good. The most we can do is to expand opportunities for all, which is difficult enough for today’s local and national leaders, let alone for any global authority.

“The Deal Professor,” Steven M. Davidoff, has a good piece at The New York Times website about the indispensability of finance to our economy. It briefly rebuts the view popularized in the Oliver Stone movie Wall Street, in which financiers are portrayed as greedy parasites. I left a comment at the web page, noting that our documentary The Call of the Entrepreneur makes a similar case. I include the comment below, since it may not pass muster with the page’s comment moderator:

A documentary that explores the wealth-creating role both of the entrepreneur simpliciter and the finance entrepreneur in particular: The Call of the Entrepreneur. The film appeared on more than 80 PBS affiliates nationwide, including repeated airings in several major markets. And in what may be a first, it appeared both on PBS and Fox Business. I mention this by way of reassuring readers that the documentary isn’t screechy.

The one-hour film is a combination of narrative and expert commentary that many have found useful for explaining what entrepreneurs and merchant bankers bring to the economy, a particularly useful explanation for friends and family who wouldn’t read a lengthy article or book on the subject but will watch a documentary with high production values. It doesn’t pretend that there isn’t corruption or greed on Wall Street, but it does insist that these elements do not provide a full picture.

Full disclosure: I wrote the script for the documentary and am a fellow of the institute that created the film, The Acton Institute. The film is available at calloftheentrepreneur.com/. Also, the film doesn’t address the market distortions generated by Alan Greenspan and others, distortions that encouraged excesses in the financing world leading up to the economic crisis. Those issues are tackled at our web page on the economic crisis: acton.org/issues/economy.php/.

— Jonathan Witt

Memo to documentary filmmaker Michael Moore: Free markets didn’t cause the financial crisis. The biggest culprits were government planners meddling with the market. That’s the message of Acton’s newest video short.



So why on earth is Michael Moore (Capitalism: A Love Story, Sicko) so eager to route even more power and money through Washington? Centralized planning is economic poison. Doubling down isn’t the cure.

(Also, Acton’s resource page on the economic crisis is here.)

Joan Lewis, EWTN’s Rome bureau chief, covered Pope Benedict XVI’s general audience address on Wednesday, July 8 , during which the pontiff publicly commented on his landmark social encyclical “Caritas in Veritate” the day after it was officially released by the Vatican. Below is a summary of Benedict’s address to visitors in Rome, including Lewis’s own translation.

Yesterday, the Vatican released Pope Benedict’s third encyclical, “Caritas in veritate,” along with an official summary of the 144-page document that has six chapters and a conclusion. In addition, there was a very worthwhile two-hour press conference with summaries of the document’s salient points, as well as a Q&A session between reporters and Cardinals Martino and Cordes, Archbishop Crepaldi and Prof. Stefano Zampagni.

But surely the best summary of Pope Benedict’s just-released encyclical is the one he himself gave at today’s general audience, held in the Paul VI Hall and highlighting the moral criteria that must underpin economic choices.

In only 1,300 words (the encyclical has 30,466), the Pope explained the document’s contents and his intention in writing it. He began by explaining that Caritas in veritate was inspired by a passage from Paul’s Letter to the Ephesians where “the Apostle speaks of acting according to the truth in love: ‘Rather, living the truth in love, we should grow in every way into him who is the head, Christ’.” Thus, said Benedict, “charity in truth is the principal driving force behind the authentic development of every person and of all humanity. For this reason, the entire social doctrine of the Church revolves around the principle ‘Caritas in veritate’. Only with charity, illuminated by reason and by faith, is it possible to pursue development goals that possess more human and humanizing values.”

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