Posts tagged with: economy

In continuing with the work of highlighting Calvin Coolidge at Acton, Marc Vander Maas and I recently spoke with Amity Shlaes. Shlaes’s biography of the 30th president will be out in early 2013. She is a big fan of the Acton Institute and praised our work saying, “Acton has been all over the Coolidge case.”

Shlaes is also interviewed in the Fall 2009 issue of Religion & Liberty. Listen to the podcast below:

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Marc and I also recorded an earlier podcast on Coolidge in June for Radio Free Acton.

Online today on the American Spectator is an article by Acton’s president, the Rev. Robert Sirico. In it, Rev. Sirico discusses the phenomenon of “creative destruction,” peculiar to free market systems, wherein newer and better industries and technology gradually replace older, less efficient ones. Rev. Sirico explains that while on the surface creative destruction appears to be harmful, in the long run it is crucial to a healthy, flourishing economy:

“Sometimes what appears to be beaten back and damaged is really healthy and preparing for new growth. This is the case with what economists call creative destruction — the phenomenon whereby old skills, companies, and sometimes entire industries are eclipsed as new methods and businesses take their place. Creative destruction is seen in layoffs, downsizing, the obsolescence of firms, and, sometimes, serious injury to the communities that depend on them. It looks horrible, and, especially when seen through the lives of the people who experience such economic upheaval, it can be heartrending.

But think of the alternative. What if the American Founders had constructed a society where no industry was ever allowed to go under because it would mean a lot of innocent people losing their jobs? I mean, have you ever met a livery yard owner or a stable boy? How about a blacksmith or a farrier? Do you have among your acquaintances any makers of bridles, saddles, chaises, coaches, or buggy whips?

Read the entire article here.

In my commentary this week, I reflect on the unemployment rate of many newly separated military veterans of our Armed Forces. The grim jobs outlook affects our reservists and National Guard forces too. As You Were, a book I reviewed on the PowerBlog in late 2009, touched on this topic quite a bit.

My first job out of college was working on veterans issues for former Congressman Gene Taylor (D-Miss.) I was able to meet and get to know combat veterans from battles like Okinawa, the Chosin Reservoir and Khe Sanh. It was a rewarding and educational experience.

I suspect we will hear more from Washington about how to solve this problem with additional centralized government action. But we already have real commitments and promises to veterans that must be honored and a debt of $15 trillion and growing that is staring down at us. My commentary is printed below in its entirety.

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Playing Politics with Unemployed Veterans

Getting the U.S. economy back on a path to solid growth and the job creation engine jumpstarted is dominating the headlines, talk shows and policy debates in Washington right now. Many of the legislative prescriptions focus on the dismal unemployment woes of newly separated military veterans, whose rates outpace the civilian population. The troubling figures reveal a persistently bleak and stagnant economy.

National unemployment currently hovers around 9 percent, while unemployment for veterans of the Afghanistan and Iraq wars is more than 13 percent. Veterans in the age group of 18-24 are worse off, with an unemployment rate of 30 percent. Dead last in the Union is Michigan, where 30 percent of all former service members are unemployed.

These numbers may only get more discouraging as defense budget cuts push more and more from the active duty ranks into a weak job market.

Federal legislation passed at the end of last year seeks to address the problem with tax credits for companies who hire veterans. The measure could help some, but tax incentives like these generally offer no substantial improvement for removing people from the unemployment rolls.

Better immediate solutions would be omitting special licenses and training required by states to work in certain fields. There is no reason a combat medic in Iraq should not be able to work as an emergency medical technician. Many already have more training than their civilian counterparts do.

In his election-year State of the Union address, President Barack Obama painted a vision of a post-WWII society where triumphant veterans came back and created the strongest economy in the world. In his words, they understood that they were “part of something larger.” Part of that “something larger” after the defeat of fascism was a growing free economy, but they also faced a long twilight struggle against the spread of communism.

To restore prosperity today, President Obama called for a “common purpose” to rally behind. But the obvious common purpose, the reduction of the staggering national debt, was largely ignored by the commander-in-chief during his address. For the unemployed, all Americans, and a free economy, the debt is the largest obstacle to restoring prosperity and reawakening the most expansive economy the world has ever seen. The failure of the American government to live within its means threatens to eviscerate the promises made to America’s veterans. It is a classic case of one moral failing leading to another.

The “something larger” greeting veterans when they come home today is a national debt of more than $15 trillion and an economy burdened by more and more regulations. The White House has already requested a debt ceiling increase to a whopping $16.4 trillion dollars. So great is the obstacle, and so serious is the threat, Indiana’s governor Mitch Daniels dubbed it “the new Red Menace.”

The threat to veterans is substantial. Although veterans’ benefits are justly generous, the government’s fiscal crisis has put those guarantees at risk. Last year, for the first time, some in Washington talked about the necessity of trimming promised pensions and health benefits for military retirees. Politicians are playing politics with veterans when they talk of reducing promised benefits with one side of their mouth and say they are creating jobs for veterans with the other.

Older military retirees can remember a time when they counted on the promise of free health care for life. Many sacrificed more lucrative private sector careers, nonpayment for overtime, and additional time with their family because of patriotism and promised security. Now they pay premiums for their care.

Thomas Jefferson warned of the moral pitfalls and decay of debt when he said, “The earth would belong to the dead and not to the living generation.” Profligate spending in the past undermines our capacity to honor present commitments.

With their skills, work ethic, and patriotism, veterans have the ability to overcome the challenges confronting them. Most businesses and companies want to hire veterans. All they need is some assurance that their prospects going forward will not be dimmed by burdensome regulation or economic instability stemming from federal fiscal irresponsibility.

Washington does not understand there is little to be done in terms of a prescriptive policy to cure veteran unemployment. The oft forgotten Calvin Coolidge once warned, “Unsound economic conditions are not conducive to sound legislation.”

The best cure is still a market unleashed from needless regulation and spending policies that reflect a moral and rational resolve. In the end, a federal government that is broke can do little for veterans who earned and are entitled to benefits already promised.

Paul Krugman made the mistake of over-sharing this past weekend when he told CNN’s Fareed Zakaria he thinks that the United States economy would benefit from a military build-up to fight made-up space aliens. He’s been defended as being fed up with Republican obstructionism, being desperate to make a point, or even being wholly and completely correct. He’s entirely wrong though, and his thinking (what there is of it) is an example of the kind of depersonalized economics that has cost this country so much.

You’ve probably seen the video by now. If not, your sides will ache through the rest of this post:

Economics is more than just the manipulation of balance sheets, which is how the hyperinflation trillions-in-stimulus crowd see it. Professor Krugman does not accept that essentially, economic activity is the production of something valuable, and he does not believe that human labor has intrinsic worth, besides its taxability. Therefore what people do does not matter; in fact, if lying to them makes the economy function more smoothly, that’s fine.

This is a vision in which Man has no dignity—in which Man is not made in the image of God or anything else. The study of human interaction, then, is nothing more than moving numbers around on a page, and people are no different than plastic cars to be shifted across a traffic jam board game. (It’s telling that Krugman turns to space aliens to save our economy.) Contrast this view with what the Pope said this morning at World Youth Day.

What does have value? The state, which for progressives like Krugman is the engine of historical progress. Enter Keynsian economics, and this weekend’s gibberish.

Blog author: jballor
Monday, February 1, 2010
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Business Weekly, a production of BBC World Service, had an informative feature on Toby Sheta, a Zimbabwean mobile phone trader, who provided insights into the courage and tenacity required of entrepreneurs under Mugabe’s brutal dictatorship (you can download the original Business Daily story in MP3 format here).

During the worst times of the Mugabe regime, Sheta would illegally buy and sell fuel coupons, a profitable enterprise because of the chaos of governmental interference in international trade and domestic fuel markets. Sheta says in the context of survival the “black market actually became the formal market,” the place where products were available. “For us the black market was the real market.”

Sheta says that what he gained as an entrepreneur in the emergency economy translate into more normalized economic conditions: “The skills that were learned and some of the principles that we’re using apply in any situation.” Sheta says, “Zimbabweans overall have gone through a school, a very informal school that was first upon us, in some ways in a positive way for us, to actually think and work for ourselves, work with our hands and see where we can see opportunity.”

Risk is a constant feature of enterprise, and Sheta testifies to the survival of the human spirit of innovation: “What I’ve learned is, even as I think of Haiti right now, as long as you’re human, and you’ve got your two feet, your two hands and your brain is still functioning, you’ll survive.”

“As you go into the problems you also go in terms of our creativity and learn how to survive,” he says.

As put by dairy farmer Brad Morgan, featured in Acton’s The Call of the Entrepreneur, “You put your butt in the corner, you’d be surprised what you can achieve.”

In terms of Zimbabwe’s future, Sheta points to stabilization in 2010 and beyond, in part because of the dollarization of the economy, and he concludes that Zimbabweans have “graduated to another level” from the emergency school of economics under Mugabe, looking forward to “see opportunities where in the past we wouldn’t have seen those opportunities.”

There has been much discussion, commentary, and debate on Pope Benedict’s much anticipated encyclical on the economy Caritas in Veritate (remarkable for a statement that has not yet been released).  At the PowerBlog, we will keep you informed on what is being said about the encyclical and, when it is released, we look forward to providing great coverage.

Two of the most recent commentaries came from John Allen Jr. in the National Catholic Reporter and Michael Novak in First Things.  In Allen’s preview of the new encyclical he states:

In effect, what Benedict laid out last night likely amounts to the theological and spiritual substructure of the encyclical, minus the specific economic prescriptions.

The core of what Benedict said, during an ecumenical vespers service at the grand basilica of St. Paul Outside the Walls, is that building a better world requires forming better people.  Structural reform thus presuppose personal moral and spiritual renewal, including a life devoted to prayer and the sacraments.

Allen further hints at the theme of the encyclical with his statement:

The idea that a better world must be built on better people is likely to be a core theme in Caritas in Veritale, and the pope dealt with it at length yesterday.

“Paul tells us [that] the world cannot be renewed without new human beings,” Benedict said. “Only if there are new human beings will there be a new world, a renewed and better world.”

There is much speculation that the new encyclical will be in favor of free markets and Novak responds to the criticism from those on the left:

For moralists, it is essential to see how often (not always) government itself sins grievously against the common good, out of a lust for power and domination over others.  Furthermore, government often (not always) generates foolish and destructive regulations, and often dispenses justice that winks rather than justice that is blind.  Government is more frequently the agent of injuring the common good than the ordinary lawful actions of free citizens.  During the twentieth century, governments too often destroyed the common good of their citizens for years to come.

Blog author: jballor
Friday, June 12, 2009
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A great deal of focus in the midst of the economic downturn has been on “green” jobs, that sector of industry that focuses on renewable sources of energy and that, according to some pundits and politicians, heralds the future of American economic resurgence. Here in Michigan, the long-suffering canary in the country’s economic mineshaft, the state government has particularly focused on these “green” jobs as an alternative both to fossil fuels and to fossil fuel industries, including most notably the Big Three automakers.

Apart from the dangers, moral and otherwise, endemic to government officials picking winners, there’s a need to rethink this entire framework. Even if such predictions about the future of alternative and renewable energy sources are realistic, it’s highly doubtful that the businesses that produce these kinds of technologies will ever employ enough people to begin to replace the losses to the labor force following the various bankruptcies, selloffs, buyouts, and layoffs.

The lesson state officials ought to learn is one about fostering an economic environment that promotes diversification and sustainability through creative liberty, rather than being tied to any one (however hopeful) sector of the economy.

This lesson also has something to teach us about how to truly promote sustainable business. The jobs that are most usually called “green,” like the places that manufacture wind turbines or solar cells, are a tiny part of the economic picture. Instead of “green” jobs, we ought to focus on “greening” jobs, changing the way we do jobs that already exist.

Anyone who works in business will tell you that at a certain point of production it is far more lucrative to eliminate $1 of waste than to gain $1 in sales. The eliminated waste goes straight to the bottom line, while the increased sales brings along all kinds of overhead that cuts into profits. As part of a recent feature titled “Work Reinvented,” Forbes reporter David Whelan described how many employees are taking the challenge of the economic downturn as an opportunity to “reinvent” their jobs. As Whelan writes,

Technology–computers and teleconferencing equipment, that is–makes fixed employment in a fixed place less necessary. Economics makes it less available. With chronic instability comes a shift in loyalty from the company to one’s own calling, skills and personal life.

Technological advancement, economic conditions, and environmental concerns might combine to create the perfect storm for the reformation of many kinds of jobs. For some, including a few profiled in Whelan’s report, this might mean an increase in telecommuting (although then again, perhaps not). For others it might mean job sharing, opening up their own business, or negotiating different compensation packages. An added benefit of this kind of innovative flexibility might be curbing of the transitory nature of today’s employment scene. There’s no way real way to enjoy human community when young and middle-aged professionals are moving every 2 to 3 years.

But in terms of political economy, our policies ought to be focused on the broader picture of “greening” a diverse landscape of jobs rather than subsidizing a narrow strip of “green” jobs.

Blog author: jwitt
Monday, February 16, 2009
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In response to the question, “What are the moral lessons of the American Recovery and Reinvestment Act (ARRA)?”

Perhaps the most effective historical trope in pushing through the massive stimulus package on Capitol Hill has been the notion that if only the New Deal of the 1930s hadn’t had to wait more than three years for the election of FDR, the Great Depression might have been avoided.

But have you ever wondered why the Great Depression persisted for so long? Why didn’t we bounce out of it after two, three, or four years as we did from previous economic downturns? Hillsdale’s Burt Folsom suggests an answer. Whether it was paying farmers not to farm until we had to import millions of bushels of grain, or throttling job-creating enterprise by raising the highest marginal tax rate to 90 percent, the many tentacles of the New Deal stimulus package choked rather than stimulated the American economy.

The common theme of all of the New Deal’s misguided policies was to remove decision-making power and cash from the free market and move it to Washington. As Folsom goes on to note, such policies not only extended the economic downturn, they set interest groups against each other, stimulating rather than alleviating human envy: “The New Deal divided and politicized the country in tragic ways. Those who lobbied most effectively won subsidies and bailouts even if their cause was weak. Others, who had greater needs, received nothing.”

There is a cure for human envy, of course, but it lies with a civil rather than a government institution, and with a power higher than Capitol Hill.

I’m ambivalent about the value of term limits, but one thing that can certainly be counted in their favor is that they (at some point at least), force lawmakers to go out and try to make a living in the economic environment which they helped to shape. In Michigan, nearly half of the 110-member House of Representatives will consist of new members. Of the 46 new members, 44 are coming from seats that were open because of term limits.

And now we have reports that ex-legislators are having a tough time finding private sector jobs in the state. As the AP reports, “The task of finding new gigs will be tougher than usual for this year’s crop of term-limited lawmakers because of Michigan’s highest-in-the-nation unemployment rate, which in November reached 9.6 percent — the highest monthly rate since March 1992.”

It’s been said that those who can’t do, teach. But sometimes those who can’t do, legislate. That’s in part an argument in favor term-limits, part-time legislatures, and something other than a system that encourages the formation of career politicians.

I recognize that serving in government is an important and even a divine calling. Still, I have a hard time finding a great deal of sympathy for those who after a break from the private sector have to face up to the real-world employment situation. You reap what you sow.

Blog author: jballor
Tuesday, July 15, 2008
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Last week presidential candidate John McCain distanced himself from economic adviser Phil Gramm, after Gramm’s comments that America had become a “nation of whiners” and that the current concerns over a lagging economy amounted to a “mental recession” rather than any real phenomena.

The press and political reaction was swift and quizzical. What could Phil Gramm possibly mean? Why would an adviser to a presidential candidate publicly broadside the American electorate? As one editorial page wondered, “we can’t fathom the target of his ‘nation of whiners’ zinger.”

Sen. Obama himself seemed a bit (mockingly) incredulous. “Then he deemed the United States, and I quote, ‘A nation of whiners.’ Whoa,” Mr. Obama said. “A nation of whiners?” After his remarks were published, Gramm would later clarify that he was talking about “American leaders who whine instead of lead.”

But Obama’s reading of Gramm’s original remarks seem to be the most natural. “It isn’t whining to ask government to step in and give families some relief,” said Obama.

Well, maybe it is whining, but that’s precisely the sort of family-friendly rhetoric that makes Gramm’s remarks seem unduly harsh by comparison. But does it matter if there is truth to the substance of Gramm’s assertions? A day after Gramm’s statements appeared in the Washington Times, the Washington Post published an article highlighting the findings of a study that characterized the baby boomers as a generation of…”whiners.”

The study by the Pew Research Center found that

More than older or younger generations, boomers — born from 1946 to 1964 — worry that their income won’t keep up with rising costs of living. They say it’s harder to get ahead today than it was 10 years ago. They are more likely to say that their standard of living is lower than their folks’ but that things don’t look too good for their kids either (67 percent of younger generations, meanwhile, feel they have it better than their parents).

This despite the fact that boomers, dubbed here the “gloomiest” generation, have had it objectively better for a longer period of time than any other generation before or since. Anecdotally I had a “boomer” relative tell me the other day that the movie Cinderella Man resonated with her because it happened during a time of economic duress, the Great Depression, that so closely resembles the problems of today. Talk about a lack of correspondence between perception and historical reality!

The real problem with Gramm’s remarks was that they displayed a lack of connection to the perceptions of many Americans, even if his comments corresponded better with reality than many popular perceptions. Part of what makes a successful politician is the ability to understand and sympathize with his or her constituency, beyond the clarity of vision simply to see what the objective truth is. Gramm’s comments were more than just “bootstraps” rhetoric. Perhaps they were meant to be prophetic, in a way that gives people a kick in the rear and forces them to readjust their frame of reference.

And, again, the substance of the remarks didn’t differ much from what the “straight talking” McCain campaign has been saying all along. Last April McCain marched into Ohio, a part of the country hardest hit by globalization of industry, and said, “a person learns along the way that if you hold on — if you don’t quit no matter what the odds — sometimes life will surprise you. Sometimes you get a second chance, and opportunity turns back your way. And when it does, we are stronger and readier because of all that we had to overcome.” This sort of approach takes seriously the realities of both global trade and the plight of displaced workers.

So McCain’s dismissal of Gramm should be understood as having as more to do with rejecting the tone and style of Gramm’s message than the substance. McCain may have learned something from the resonance of Mike Huckabee’s message to blue collar evangelicals that trade needs to be “free and fair.” But for many economic conservatives, reactions to that message were as negative as reactions were to Gramm’s message. Free and fair? Free is fair, right? Maybe it is, but it doesn’t always seem to be so. And simply repeating “free is fair” isn’t going to work rhetorically.

The ideological inability of many economic conservatives to frame their message in a way that resonates with mainstream Americans is what is reflected in Phil Gramm’s comments and the corresponding rejection and derision of Mike Huckabee by many in the GOP (the positive reception of Gramm’s remarks among many economic conservatives underscores this). In politics, communicating the truth effectively is just as important as perceiving it. McCain might be on a steeper learning curve on that score than many of his fellow Republicans.