Posts tagged with: europe

Distributism is not a new idea—it wasn’t conceived by G.K. Chesterton and Hilaire Belloc. As Belloc explains in The Servile State, their idea was a return to certain economic principles of medieval Europe—a guild system, wider ownership of the means of production, etc.—in order to right the injustices of capitalism. But distributism goes back further than that, to Tiberius and Gaius Gracchus in the second century B.C., and the theory’s proponents would do well to learn from the tragic failures of the Gracchi.

Plutarch tells us that the two brothers were among the most virtuous men of their day. Tiberius, ten years older than Gaius, served with great distinction in the army and showed himself not only an excellent tactician but, in his famous dealings with the Numantines, a peacemaker also. He then returned to civilian life and was elected a tribune—a representative of the interests of the common man and one of the highest offices in the Roman Republic.

As Rome grew the army was no longer made up of farmers who tilled their fields six or nine months out of the year, so that by the time of the Gracchi, the citizen farmer class upon which the Republic had been built was basically extinct. The rich could buy out the farms of whomever they wished, and more and more common families left their lands and moved to the capital, where they lived as dependents on the public.

In an attempt to save the Republic, Tiberius moved to redistribute the land and prevent the rich from buying it up in large tracts. Whatever Tiberius’s intentions—and they were certainly noble—this was revolution, and the Senate reacted. Tiberius, who had with such skill arranged peace between his army and a barbarian tribe, became swept up in the political repercussions of his attempt to return Rome to her former glory, and was assassinated.

Gaius tried to accomplish the leveling that his brother had not, but he too made an enemy of the Senate and died violently. Plutarch says of them in his account:

What could be more just and honorable than their first design, had not the power and the faction of the rich, by endeavoring to abrogate that law, engaged them both in those fatal quarrels?

In his defense of distributism for the journal Dappled Things, John C. Medaille argues that it is the only political-economic system capable of rendering distributive justice which is not a “cure worse than the disease.” Substantial government intervention or workforce unionization present dangers too “massive,” he says, to consider. But if there is anything to be learned from the failure of the Gracchi, it is that a distributist system is, if not totally impossible to implement, certainly a cure worse than the disease.

Noted NYU law professor and free-market advocate Richard Epstein has written a provocative piece titled “How is Warren Buffett like the Pope? They are both dead wrong on economics.” Here’s the money quote:

The great advantage of competition in markets is that it exhausts all gains from trade, which thus allows individuals to attain higher levels of welfare. These win/win propositions may not reach the perfect endpoint, but they will avoid the woes that are now consuming once prosperous economies. Understanding the win/win concept would have taken the Pope away from his false condemnation of markets. It might have led him to examine more closely Spain’s profligate policies, where high guaranteed public benefits and extensive workplace regulation have led to an unholy mix of soaring public debt and an unemployment rate of 20 percent. It is a tragic irony that papal economics mimic those of the Church’s socialist opponents. The Pope’s powerful but misdirected words will only complicate the task of meaningful fiscal and regulatory reform in Spain and the rest of Europe. False claims for social justice come at a very high price.

I blogged about Pope Benedict’s comments last week, and while I don’t disagree with Epstein’s main point, I wonder if he actually means to deny the importance of ethics in economics. The Pope wasn’t saying that there should be no fiscal or regulatory reform, but that such reform must consider future, and not merely present, well-being, which is actually the impetus for policies such as liberalizing labor markets. And unlike Warren Buffett, the Pope wasn’t calling for higher taxes on the rich.

In short, the Pope was making a larger ethical argument that can certainly include the much-needed reforms Epstein cites. Since the Pope isn’t an economist and doesn’t pretend to be one, we should listen to his moral teachings and try to incorporate them with sound economics, rather than disparage them as economically damaging. It is true that while Catholic social teaching stresses the importance and necessity of profits, far too many Catholic and other religious leaders neglect how profits are actually made and distributed – which Epstein briefly and usefully describes – and in this sense, it is far too easy for moralists to pit profits versus people. It would make more sense to try to relate how profit maximization can and often does contribute to the common good, but it can’t do so without ethical men and women who won’t lie, cheat and steal.

I’d like to think that both the Pope and Richard Epstein are right.

The European Union’s finances are in a dismal state, and are requiring governments to revaluate the “welfare state.”  Samuel Gregg articulates in his article appearing in The American Spectator, “Europe’s Not-So-Revolutionary Youth,” that a youth movement called les indignés or los indignados, depending on where you are, is resisting the reforms being proposed:

This time, however, things are different. With barely-disguised reluctance, governments across Western Europe are proceeding with relatively minor reforms aimed at reducing the European welfare state’s costs. But les indignés are protesting not only the pain of change — they also clearly resent the changes themselves.

Of course there’s an anarchist fringe to these youth protests — the ski-masked individuals who routinely join any demonstration to exult in the joy of physical violence against police and random destruction of private property. But by and large, the indignant ones want exactly what their parents and grandparents regard as their birthright: not-too-exacting jobs-for-life, free health-care, state-guaranteed minimal-incomes, six weeks paid annual vacation, early-retirement, and generous state-provided pensions.

In other words, they want Social Europe. Los indignados don’t, however, apparently comprehend just how much this economic system has contributed to their present plight.

Gregg further explains that while the youth are fighting for a return to the status-quo in Europe, demographic trends undermine their case:

Many young Europeans are also remarkably unaware that Europe’s demographic trends are further tilting the scales against them. The below-replacement birth-rates prevailing in almost every European nation will result in the proportion of active workers to retirees across the EU shifting over the next twenty-five years from a 2:1 ratio to a 1:1 ratio.

This makes it unlikely that even present reforms, such as raising retirement ages, can forestall an eventual implosion of Europe’s welfare states — a process that, at present rates, will be underway long before les indignés come even close to receiving their first state-pension check.

Nor do los indignados appear to realize that any chance they might have to force through liberalizing economic reforms via democratic means is weakening by the day.

The same demographic developments that will severely compromise their financial prospects are also reducing young Europeans to the status of a minority in the world’s most rapidly aging continent. This progressively diminishes their ability to out-vote Europe’s millions-strong (and growing) gerontocracy who, AARP-like, appear quietly content to live off their children’s future.

Los Indignados should be angry about the present situation they are faced with. However, a return to the status-quo fails to acknowledge that it is the status-quo that put Europe in its current financial hardship. Instead, los indignados should be fighting for more dramatic change moving Europe away from the welfare state.

Click here to read the full article.

It is very easy to forget what is happening in other parts of the world especially when we are in the midst of our own financial crisis in the United States. Considering the economic challenges we are faced with, this may be a mistake as we can learn from other’s problems. Europe is experiencing economic woes that continue to worsen. In the American Spectator, Samuel Gregg explains:

As Europe’s financial crisis worsens, it’s increasingly apparent that the economic woes of countries like Portugal, Spain, and Greece have resulted from more than just bad policy. With each passing day, evidence mounts that one dynamic driving the crisis is that of untruth: a disturbing European pattern of fabrication about levels of public spending and debt.

The latest proof for this thesis is the discovery by newly-elected Spanish regional and local governments of concealed debts run up by their predecessors. This contradicts claims by Spain’s Socialist Finance Minister, Elena Salgado, that Spain’s regions had no “hidden deficits” on their accounts. Spain’s business community, however, has long complained about local governments pressuring private companies to do business with them “off the books.”

One reason for such behavior is that Spain’s government knows that the greater Spain’s real overall-public debt, the higher will be the interest-rates demanded by financial markets and the more stringent will be the conditions attached to any “financial assistance package” (i.e., bailout) that Spain might, like Portugal and Greece, eventually need.

As Gregg says, the financial problems in Europe are not just current but have been festering since the beginning of the Eurozone when strict standards were to be implemented:

In the 1990s, European governments agreed the single currency’s success would depend upon countries entering the eurozone on a solid financial basis and then remaining on a firm footing. To that end, both the 1992 Maastricht Treaty and the 1997 Stability and Growth Pact (SGP) established strict criteria concerning public spending for countries admitted to the single currency.

One such standard concerned the ratio of an applicant country’ gross government debt to GDP. It was not to exceed 60 percent at the end of the preceding fiscal year. Maastricht’s convergence criteria also specified that the ratio of the annual government deficit to GDP should not exceed 3 percent of the same fiscal period.

Such standards were supposed to prevent a “free rider” program from occurring so countries with an irresponsible fiscal reputation, such as Greece, didn’t use their membership to over-indulge and rely on the rest of the members to bail them out. However, this policy wasn’t strictly adhered too. Gregg states that “…many euro applicants were allowed to get away with ‘creative accounting’ to meet the conditions of Maastricht.”

Europe continued to financially falter and wasn’t showing signs of recovery. This could be seen from many actions such as the encouragement of “fudging” numbers through new rules that “added many exceptions for types of spending that would not be included when determining debt and deficit figures.”

Is there a solution to Europe’s financial crisis? Gregg responds with a resounding yes:

Few “core values” would have a more bracing effect upon Europe’s current economic problems than their governments embracing honesty, transparency, and accountability. No doubt many a European political-career would be terminated as a result. The alternative, however, is for Europe’s governments to continue the charade about the real state of their finances.

Morally and financially, that’s not an option at all.

Click here to read the full article in the American Spectator.

Doubtful, at least on these terms. Does the institutional church have to officially advise the government in order to have influence?


European institutions “more open than ever” to church co-operation
By Jonathan Luxmoore

Warsaw, Poland (ENInews)–A senior ecumenist has welcomed growing co-operation between leaders of European institutions and churches, and predicted a growing advisory role for religious communities.

“I think we’re seeing a greater openness today than ever before,” said Rudiger Noll, director of the Church and Society Commission of the Conference of European Churches (CEC). “Our latest meeting was triggered by the Arab uprisings and European response, and by Europe’s financial and economic crisis, and in both areas the institution presidents were very clear. What’s needed is a new value-based, community approach in Europe, rather than just an economic system. They’re turning to the churches for this.”

The United Church of Westphalia pastor was speaking after a Brussels meeting on 30 May between 20 religious leaders and the Portuguese president of the European Union’s governing commission, Jose Manuel Barroso, as well as the European Council’s Belgian president, Herman van Rompuy, and the Polish president of the European Parliament, Jerzy Buzek.

In an ENInews interview on 30 May, he said religious leaders now had regular “institutionalized meetings” with senior European officials, including the EU’s rotating presidency, and “dialogue seminars” on issues of common concern, in line with Article 17 of the EU’s 2008 Lisbon Treaty, which guarantees churches an “open, transparent and regular dialogue” with EU institutions. However, he added that church leaders also hoped to strengthen the structural contacts with a “deeper culture of dialogue.”

“EU leaders have said they didn’t need the Lisbon Treaty to have a relationship with us,” said Noll, whose organization, founded in 1959, groups 125 Orthodox, Protestant, Anglican and Old Catholic churches, and 40 associated organizations.

“Although it would be naive to believe all our member-churches speak the same language, we should at least singing, at the end of the day, from the same hymn sheet – playing different instruments, but making up a single orchestra.”

In his address to the annual meeting, the religious leaders’ seventh with European institution presidents, CEC’s Orthodox president, Metropolitan Emmanuel of France, said the world of faith could “prove a powerful ally in efforts to address issues of democratic rights and liberties.”

A 30 May CEC press release said the mostly Orthodox and Protestant representatives had reiterated their commitment to promote “the rights of minorities and migrants, economic justice, participation, solidarity, freedom of speech and expression as well as religious freedom.”

The meeting followed a 25-28 May annual plenary of CEC’s Church and Society Commission in Brussels, which was attended by religious affairs specialists from the EU’s European External Action Service, Bureau of European Policy Advisors and European Parliament presidency.

A 27 May CEC statement said the commission had agreed to finalize a human rights training manual for European churches and join the Sunday Alliance network, adding that member-churches were committed to operating as “responsible and competent partners for the European institutions,” while seeking to “speak with a common voice and make sure this voice is heard.”

The inclusion of the Church and Society Commission on a new EU Transparency Register, requiring companies and organizations lobbying the EU to have their activities publicly recorded, would “allow for regular and non-bureaucratic exchanges to complement the formal dialogue process,” the statement said.

In his ENI interview, Rudiger Noll said the current openness to churches and faiths was a “common sentiment among EU officials,” but added that CEC also counted on the appointment of a “permanent facilitator” in the 736-seat European Parliament, to ensure dialogue was maintained during an upcoming change of leadership from the center-right European People’s Party to the Progressive Alliance of Socialists and Democrats.

“When it comes to relations with the institutions, the churches are always surprised to see how much they have in common–the context in which we live is much more important than any theological or confessional divergences,” the CEC Commission director told ENInews.

Acton On The AirLast week, the Acton Institute held a conference in Rome examining the rise of Asian Economies. One of the keynote speakers was Thomas Hong-Soon Han, the Ambassador of the Republic of Korea to the Holy See. Vatican Radio spoke with him about the topic of the conference; you can listen to the interview using the audio player below:

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The American Spectator published a new commentary by Acton Research Director Samuel Gregg. The commentary was also picked up by RealClearReligion.

Christians in a Post-Welfare State World

By Samuel Gregg

As the debt-crisis continues to shake America’s and Europe’s
economies, Christians of all confessions find themselves in the
unaccustomed position of debating the morality and economics of
deficits and how to overcome them.

At present, these are important discussions. But frankly
they’re nothing compared to the debate that has yet to come. And
the question is this: How should Christians realize their
obligations to the poor in a post-welfare state
world?

However the debt-crisis unfolds, the Social
Democratic/progressive dream of a welfare state that would
substantially resolve questions of poverty has clearly run its
course. It will end in a fiscal Armageddon when the bills can’t be
paid, or (and miracles have been known to happen) when political
leaders begin dismantling the Leviathans of state-welfare to avert
financial disaster.

Either way, the welfare state’s impending demise is going
to force Christians to seriously rethink how they help the least
among us.

Why? Because for the past 80 years, many Christians have
simply assumed they should support large welfare states. In Europe,
Christian Democrats played a significant role in designing the
social security systems that have helped bankrupt countries like
Portugal and Greece. Some Christians have also proved remarkably
unwilling to acknowledge welfarism’s well-documented social and
economic dysfunctionalities.

As America’s welfare programs are slowly wound back, those
Christian charities who have been heavily reliant upon government
contracts will need to look more to the generosity of churchgoers
— many of whom are disturbed by the very secular character assumed
by many religious charities so as to enhance their chances of
landing government contracts.
(more…)

Kenneth P. Green, of the American Enterprise Institute (AEI), recently examined green energy in Europe in an essay titled, “The Myth of Green Energy Jobs: The European Experience.” Green thoroughly analyzes the green industry in Europe while seeking to discover the reasons behind its current downward spiral. As readers discover, this is largely due to the green industry being unsustainable while heavily relying on government intervention and subsidies.

Green uses the failing green industry in Europe to forewarn the United States that its policies, if continued, will bring the same unfruitful results. If the green industry is going to succeed it should not be a government supported industry, as Green states:

…governments do not “create” jobs; the willingness of entrepreneurs to invest their capital, paired with consumer demand for goods and services, does that.

All the government can do is subsidize some industries while jacking up costs for others. In the green case, it is destroying jobs in the conventional energy sector—and most likely other industrial sectors—through taxes and subsidies to new green companies that will use taxpayer dollars to undercut the competition. The subsidized jobs “created” are, by definition, less efficient uses of capital than market-created jobs. That means they are less economically productive than the jobs they displace and contribute less to economic growth. Finally, the good produced by government-favored jobs is inherently a non-economic good that has to be maintained indefinitely, often without an economic revenue model, as in the case of roads, rail systems, mass transit, and probably windmills, solar-power installations, and other green technologies.

Spain, according to Green, destroys an average of 2.2 jobs for every green job created, and since 2000, it has spent 571,138 Euros on each green job which includes subsidies of more than 1 million Euros per job in the wind industry. Italy also is experiencing problems. If Italy spent the same amount of capital in the general economy as it does in the green sector, then that same amount of capital that creates one job in the green industry would create 4.8 to 6.9 jobs for the general economy.

Green further explains a feed-in law instituted in Germany which requires utilities to purchase different kinds of renewable energy at different rates. The feed-in law requires utilities to buy solar power at a rate of 59 cents per kilowatt-hour when normal conventional electricity costs between 3 and 10 cents, and feed-in subsidies for wind power were 300 percent higher than conventional electricity costs. The implementation of wind and solar power did not even save German citizens money in energy rates because the household energy rates actually rose by 7.5 percent.

Denmark is also experiencing its fair share of problems. According the CEPOS, a Danish think tank that issued a report in 2009:

[the] CEPOS study found that rather than generating 20 percent of its energy from wind, “Denmark generates the equivalent of 19 percent of its electricity demand with wind turbines, but wind power contributes far less than 19 percent of the nation’s electricity demand. The claim that Denmark derives 20 percent of its electricity from wind overstates matters. Being highly intermittent, wind power has recently (2006) met as little as 5 percent of Denmark’s annual electricity consumption with an average over the last five years of 9.7 percent.”

Denmark currently has the highest electricity prices in the European Union, but while Danes are paying such high prices, one would imagine that there is a cost benefit factor occurring, such as great environmental benefits and a lower carbon footprint.  However, Green explains that the greenhouse gas reduction benefits are actually slim to none: “The wind power consumed in Denmark does displace some fossil-fuel emissions, but at some cost: $124 per ton, nearly six times, the price on the European Trading System.”

With large inefficiencies and high costs in subsidies being paid in Europe, Green warns American policy makers not to follow in Europe’s footsteps. So the question is what should the U.S. Government do? The answer, according to the Las Vegas Review-Journal, is nothing.

In an editorial recently published the Las Vegas Review-Journal examines the costs of subsidies and support dollars per megawatt hour the U.S. spent in 2008. According to the Energy Information Administration, oil and natural gas received 25 cents per megawatt-hour, coal received 44 cents, Hydroelectric received 67 cents, nuclear power received $1.59, wind power received $23.37, solar power received $24.34 and refined coal received $29.81. The editorial also published comments from John Rowe, CEO of Chicago based Exelon which is the nation’s biggest nuclear power producer. In the editorial Rowe articulates a resonating message to President Obama and Congress concerning green energy policy:

…in trying to boost “clean” energy — wind, solar, nuclear and natural gas — Congress and the states have enacted or proposed bills that would burden consumers, cripple markets and increase federal debt but do little to clean up the air.

In a speech to the conservative-leaning American Enterprise Institute, Mr. Rowe said his message to lawmakers is simple: “I’m asking that Congress do nothing.”

Mr. Rowe said utilities across the country are turning to “cheap” natural gas to generate electricity and do not need a clean energy standard proposed by President Obama.

With the country insolvent, and streets filled with violent protests, the Church of Greece is now pointing fingers at the country’s political leadership and international “creditors” (who have just ponied up another 2.5 billion euros for the bailout). Yet Greece, the Holy Synod says, is “under occupation” by lenders, who have moved in because the politicians “undermined the real interests of the country and its people.”

Here’s a report from the Athens Now site, which attributed the statement to the Holy Synod of the Church of Greece. (more…)

Blog author: jcouretas
Wednesday, December 15, 2010
By

Video: Hundreds of protesters clashed with riot police across central Athens on Wednesday, smashing cars and hurling gasoline bombs during a nationwide labour protest against the government’s latest austerity measures. The former Development Minister Costis Hatzidakis was attacked by protesters outside a luxury hotel. He was escorted, bleeding from the scene as his attackers yelled “thieves” at him. Source: Russia Today

In the Greek daily Kathimerini, Alexis Papachelas writes:

There are no easy answers and, to make matters worse, we still have no idea about how the global crisis will affect Europe in early 2011.

The Greek government chose a course of treatment for the economy that is much like shock therapy, meaning that it tried to squeeze as many changes as possible into a short period of time.

If this strategy is successful, the government will have a strong card to play when it has to deal with its European peers and market forces in the case that debt restructuring is offered as a solution. If, however, the strategy fails, the shock therapy may turn into that extra bit of force that breaks the valve on the pressure cooker that is Greek society.

Read Acton Research Director Samuel Gregg’s new essay on Public Discourse titled, “Socialism and Solidarity.”