Posts tagged with: free-market

Update: The Michael Medved Show streams here.

Former Acton research fellow Jay W. Richards will be on the Michael Medved Show today talking about his new book, Money, Greed, and God: Why Capitalism Is the Solution and Not the Problem. He will be on during the show’s third hour. If your station carries it live, that’s 2-3 p.m. Pacific, 4-5 p.m. Central, and 5-6 p.m. Eastern.

Go here to see if a station in your area carries the show.

Jay is also scheduled to appear on The Dennis Prager Show Wednesday morning.

I had the chance to read an early copy of the book. Richards distills the core arguments for a free and virtuous society superbly. Money, Greed, and God is highly readable and yet more incisive than many academic books on the subject. Disciples of the nanny state and a naked public square beware.

Blog author: jwitt
posted by on Monday, February 16, 2009

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.

Blog author: jcouretas
posted by on Thursday, February 12, 2009

In my Winter 2007 article on economic globalization for AGAIN Magazine, I quoted economist Wilhelm Roepke. (AGAIN is published by Conciliar Media Ministries, a department of the Antiochian Orthodox Christian Church of North America). Roepke:

Economically ignorant moralism is as objectionable as morally callous economism. Ethics and economics are two equally difficult subjects, and while the former needs discerning and expert reason, the latter cannot do without humane values.

In light of all that has happened with the U.S. economic meltdown in the last few months, I continue to subscribe to the following statement from the same article:

… there is no real understanding of “social justice” without an understanding of basic economic principles. These principles explain how Orthodox Christians work, earn, invest, and give to philanthropic causes in a market-oriented economy. Economic questions are at the root of many of the problems that on their face seem to be more about something else — poverty, immigration, the environment, technology, politics, humanitarian assistance.

I remain a convinced believer in the market economy, which is a different thing than saying that I believe in the “free market” (a misnomer for industrialized economies that have always been subject to heavy regulation) or laissez faire economics (not a good idea and, again, a term that refers to something that doesn’t exist).

The climate of fear and panic that has been raised first by the Bush administration and now President Obama (we’re in a “crisis that could become a catastrophe” he claims) should have us all screaming not “help!” but “stop!” The alarm we raise should be about the fantastic expansion of government control — in some cases outright nationalization — over what was one of the freer markets in the world. And let’s recall that most Orthodox Christian immigrants came to this country for economic opportunity — in many cases a chance to put their entrepreneurial gifts to work in a growing and prosperous country. How much opportunity will be left once Washington gets finished with its top down central planning project? If this current crisis has taught us anything, it is the importance of economic growth and sustaining that growth in a humane way over the long haul.

So, I go back to Roepke for guidance on what’s being proposed in Washington. In particular, I turn to his 1957 book, “A Humane Economy: The Social Framework of a Free Market” (ISI, 1998). Page numbers in brackets:

On the necessity for economic liberty [104]: “Since liberty was indivisible, we could not have political and spiritual liberty without also choosing liberty in the economic field and rejecting the necessarily unfree collectivist economic order; conversely, we had to be clear in our minds that a collectivist economic order meant the destruction of political and spiritual liberty. Therefore, the economy was the front line of the defense of liberty and of all its consequences for the moral and humane pattern of our civilization.” (more…)

Blog author: jcouretas
posted by on Wednesday, November 26, 2008

Following up on our coverage of Pope Benedict’s economic “prophecy,” here’s a snip from yesterday’s “Papal Bullishness” editorial in Investor’s Business Daily. Read then-Cardinal Ratzinger’s 1985 article “Market Economy and Ethics” here.

The Pope gave a “prediction that an undisciplined economy would collapse by its own rules,” the ex-socialist lawyer and economics professor nonsensically claimed at Milan’s Cattolica University last week.

Tremonti conveniently omitted that elsewhere in the Pontiff’s 2,300-word analysis he grumbled that Theodore Roosevelt and Nelson Rockefeller spread “the notion that only Protestantism can bring forth a free economy — whereas Catholicism includes no corresponding education to freedom and to the self-discipline necessary to it, favoring authoritarian systems instead . . .”

Furthermore, the only apparent English translation of the paper is on the Web site of Fr. Robert Sirico’s Michigan-based Acton Institute. Why would a think tank devoted to emphasizing the free market’s spiritual underpinnings tout an anti-capitalist tract?

Blog author: jcouretas
posted by on Thursday, November 6, 2008

One does not broadcast his opinions in various forums over the years as I have done without receiving my fair share of disagreement from all sides, friends and foes alike. One participant who came to a recent conference remarked, “All my life I have been looking to build a fair and egalitarian society, but I have now learned why it is better to advance a free and virtuous society.”

Yet, something new came my way when I received an envelope with the return address of Commonweal, a publication known for – how shall we put this gently? – a progressive stance on matters of faith and public policy. Inside was the September 26 issue of the magazine, with a helpful note from the editors pointing me to page 8 where I came upon the “Libertarian Heresy — The Fundamentalism of Free Market Heresy” by Daniel Finn, who is a professor at St. John’s University in Collegeville, Minnesota. In his essay my colleague Sam Gregg and I are his primary targets. In a single, canard-laden article, we are attacked for heresy, fundamentalism, neo-conservatism and on questions of law and morality, for voicing “libertarian” and generally un-Catholic, not to mention anti-Thomistic views.

Professor Finn’s not-so-subtle polemical technique is to raise and make patently absurd questions and assertions and then leave it to the reader — and me — to conjecture an answer. Like so: “So has Fr. Sirico mixed libertarian heresy about human freedom into his Christian view of morality and law? I’ll leave that for him to reflect on.” As well as putting in my mouth the rather un-nuanced argument that “raising taxes to help others is unchristian.”

Facing an accusation of heresy from Commonweal was too delicious an irony to pass over without comment. So, on Oct. 13, I faxed the magazine this letter: (more…)

Blog author: jcouretas
posted by on Wednesday, November 5, 2008

We’ve posted Rev. Robert A. Sirico’s Oct. 30 speech delivered at the Acton Institute annual dinner in Grand Rapids, Mich. The dinner also featured a keynote address from Rev. John Nunes, president and chief executive officer of Lutheran World Relief, and remarks from Kate O’Beirne, National Review’s Washington Editor, who accepted the Acton Institute Faith & Freedom Award in honor of the late William F. Buckley, Jr.

Excerpt from Rev. Sirico’s speech:

Today we find institution after institution “in the tank” for unrestrained government intervention. One is reminded of Italian philosopher Antonio Gramsci’s call for the left to begin a long march through the institutions of Western Civilization. The left, it seems, got the memo. How will we respond to this disheartening situation? Now is no time to retreat in disarray. Now is no time to stumble. There remains a remnant … a potent remnant who has not bowed the knee to big government. My call to you tonight is a transparent one: strengthen the soldiers of that remnant. In particular—strengthen that band of brothers gathered with you tonight, the Acton Institute.

Never in Acton’s nearly 20 year history has our message been more essential than right now. As an institution that cherishes the free and virtuous society, we are living through this thing with all of you, and we need your help to continue. Our history of integrity; the quality of our products and programs; the responsible tone with which we approach the questions at hand, all speak to the fact that this work is worthy of your investment. I humbly ask for it with the promise that we will use it well and prudently.

The fact of the matter is that too many of us have become much too comfortable and yielded to a perennial temptation, the temptation to take our liberty for granted. Those of you who have invested in the work of the Acton Institute over the years know—and especially those of you who have had a chance to see our latest media effort “The Birth of Freedom” know—we believe the time has come for a renewal of those principles that form the very foundation of civilization, the same principles that make prosperity possible and accessible to those on the margins.

Liberty is indeed, as Lord Acton said, “the delicate fruit of a mature civilization.” As such it is in need of a nutritious soil in which to flourish. In this sense you and I are tillers of the soil, if you will.

Liberty is a delicate fruit. It is also an uncommon one. When one surveys human history it becomes evident how unusual, how precious is authentic liberty, as is the economic progress that is its result. These past few weeks are a vivid and sad testimony to this fact. As a delicate fruit, human liberty as well as economic stability must be tended to, lest it disintegrate. It requires constant attention, new appreciation and understanding, renewal, moral defense and integration into the whole fabric of society.

Read the entire speech here.

Blog author: jcouretas
posted by on Monday, October 27, 2008

The famous Austrian economist, Joseph Schumpeter, despaired for the future of the free market system. The reason for this despair was that the excess wealth of the system would create educated folks who would turn on the very system that created them. Their education would make them into anti-capitalist ideologues, who would then kill the goose that laid the golden egg. He did not think that those who participated in the creation of such enormous wealth would be in any position to fight back, and this for two reasons: firstly, business people do not tend to be men of letters, so they are unable to mount arguments defending the system; secondly, the job of the business executive is the survival of the company, and thus, he will concentrate on those things required to weather the storm, not be controversial.

The man who is probably the most famous Austrian economist, Ludwig von Mises, despaired for the future of the free market system due to envy. Various sectors of society, academic, non-productive, uneducated, etc., would envy the wealth of the producers in society, and end up by finding means to take away that wealth and give it to the lesser productive people, despite the fact that they did not earn it, and therefore, are not entitled to it.

Our present political situation has a combination of both of these views. Both presidential candidates are in favor of redistribution of wealth, albeit one is more open about it. And very few business people are saying “no!” to any of it with a few exceptions, such as the president of BB&T Bank, who wrote an open letter to Congress asking why his totally solvent bank should be punished for the stupidity of the others.

But there is another culprit in this maelstrom. This culprit is the business person. Why? With tongue-in-cheek apologies to neo-classical (mathematical) economic theory, the purpose of a company is not to make a profit. As John Paul II said in Centesimus Annus, a profit is a sign of the health of a company, and therefore is good and necessary. But anyone who has taken a management course knows that the purpose of the company, aside from producing what the customers want, is to increase the wealth of the stockholders. This is different than making a profit, although profit is an integral part of it. Wealth is different than profit. Profit is a short run measurement of the short run health of the company. Wealth, by its very nature is long run. Profit appears on the financial statements of a company in mere money terms, and the accountants who produce those statements do not even take inflation into account. So a company could have an increase in profit, but not an increase in items sold, merely because they had to raise prices to accommodate the fall in the value of the dollar. But executives today are a slave to the profit line in the financial statements. They have a need to impress their boards and stockholders now by sacrificing the long term growth of the enterprise. (more…)

What is the root cause of the sub-prime crisis shaking the global economy? We need to know so we don’t allow it to screw up our economy even worse.

Many point to dishonesty and poor judgment on Wall Street. There was plenty of that leading up to the near-trillion dollar bailout, and even now the stock market is busily disciplining stupid, dishonest companies.

Others point to the many people who falsified loan applications to get mortgages beyond their means. That too played a role.

But dishonesty and poor judgment are as old as Adam and Eve. Something more was at work in the present crisis, a crisis of unprecedented scope. Why didn’t profit-minded loan companies run thorough credit checks? Why did they keep pumping out low interest loans to high risk borrowers, ignoring the risks?

It’s as if somebody spiked the financial system’s punch bowl with stupid juice, driving normally prudent financiers to dash, en masse, over the cliff.

It seems that way because it is that way. The brewers of the stupid juice were largely (if not exclusively) politicians in Washington who sought to redistribute wealth from the rich and middle class to poor people with bad credit. These politicians fostered various laws and institutions that directed, cajoled and legally bullied mortgage companies to extend big loans to people with little credit.

A case in point is a group called ACORN—Association of Community Organizations for Reform Now. Stanley Kurtz explains in an Oct. 7 essay at National Review Online:

“You’ve got only a couple thousand bucks in the bank. Your job pays you dog-food wages. Your credit history has been bent, stapled, and mutilated. You declared bankruptcy in 1989. Don’t despair: You can still buy a house.” So began an April 1995 article in the Chicago Sun-Times that went on to direct prospective home-buyers fitting this profile to a group of far-left “community organizers” called ACORN, for assistance. In retrospect, of course, encouraging customers like this to buy homes seems little short of madness.

… At the time, however, that 1995 Chicago newspaper article represented something of a triumph for Barack Obama. That same year, as a director at Chicago’s Woods Fund, Obama was successfully pushing for a major expansion of assistance to ACORN, and sending still more money ACORN’s way from his post as board chair of the Chicago Annenberg Challenge. Through both funding and personal-leadership training, Obama supported ACORN. And ACORN, far more than we’ve recognized up to now, had a major role in precipitating the subprime crisis.

(more…)

The Business and Media Institute highlights House Speaker Nancy Pelosi’s response to a question about why conservatives and advocates for the free market degrade San Francisco as a city out of step with mainstream America. Pelosi believes it’s all about economics, and she points to the fact that government regulation and government programs in San Francisco are the model for America, and advocates for free markets are afraid of other citizens recognizing that. Pelosi says:

In San Francisco, every child has health care until 25 years old. In San Francisco, we don’t have a minimum wage, we have a living wage. In San Francisco, the environment is not an issue for us, it is a value. It is an ethic – it is protecting God’s creation. And so the exploiters of nature, of workers and the rest – like to use other aspects of our lives, which we take great pride in.

Pelosi goes on to note that conservatives try to use social and traditional values as a wedge issue to stop the spread of San Francisco’s economic values across America. She seems to be expressing the view that San Francisco is the new “city upon a hill.”

But are loss of economic freedoms and increased regulations in San Francisco a beneficial economic policy for all of America’s businesses and citizens? San Francisco’s mayor has also gone after bottled water. What about the city’s recent treatment of the U.S. Marines? Thomas Sowell does a good job explaining the reason for amazingly high housing prices in San Francisco because of increased government environmental regulations.

San Francisco is a beautiful city with many great citizens, but their economic policies are certainly not a shining example for all of America to follow. The Speaker’s comments however are a reminder of the need for free market advocates to do a better job in articulating the moral value and benefits behind their own ideas. If the arguments against San Francisco are led by people who may primarily be interested in social issues, there is merit of course, but the argument against exporting San Francisco values are incomplete.

Blog author: jcouretas
posted by on Friday, March 28, 2008

Russian emigre philosopher Georgy Fedotov (1888-1951) proposed two basic principles for all of the freedoms by which modern democracy lives. First, and most valuable, there are the freedoms of “conviction” — in speech, in print, and in organized social activity. These freedoms, Fedotov asserted, developed out of the freedom of faith. The other principle of freedom “defends the individual from the arbitrary will of the state (which is independent of questions of conscience and thought) — freedom from arbitrary arrest and punishment, from insult, plundering and coercion on the part of the organs of power … ”

In an ideal world, all of these freedoms would be present. But Fedotov also cautioned that “freedom is the late, refined flower of culture.”

For the flower to bloom, the roots need to be watered. A free society, from the ground up, requires a respect for the rule of law, a judiciary and police force that aren’t easily bought, a political culture that knows how to rid itself of corruption, and a vigorous free press to keep the pols and bureaucrats honest. I would also add a liberal measure of economic freedom and property rights that secure wealth from the “arbitrary” plunder of the government.

All of which gets us back to Russia. In an interview this week in the Financial Times, President-elect Dmitry Medvedev pledged to root out the “legal nihilism” that plagues his country. Excerpt:

[Medvedev's] starting point is his legal background – he is, he says, “perhaps too much of a lawyer”. Meticulous and precise, he sees almost every issue through the prism of legal thinking. But behind the occasionally laboured language lies a deeper goal. Mr Medvedev says he wants to do what no Russian leader has done before: embed the rule of law in Russian society.

“It is a monumental task,” he agrees, switching momentarily to English. “Russia is a country where people don’t like to observe the law. It is, as they say, a country of legal nihilism.”

The pledge to overcome “legal nihilism” became a central part of Mr Medvedev’s low-key election campaign. It seems a restatement of Mr Putin’s own promise eight years ago to establish a “dictatorship of laws”, although critics say Mr Putin delivered too much of the former and not enough of the latter. Even today, Russians quote the 19th-century satirist Mikhail Saltykov-Shchedrin’s aphorism that “the severity of Russian laws is alleviated by the lack of obligation to fulfill them”. The result is a society plagued by endemic corruption, arbitrary use of the law by the state against individuals or companies – and by companies against each other – and a judiciary that has never known genuine independence.

To paraphrase, all democracy is local. One of the strengths of the American democratic tradition is its intensely local nature. Most Americans’ experience with democracy happens when they vote for a judge, attend a school board meeting, or run afoul of the local traffic cop. If democracy doesn’t work at this level, it doesn’t work at all. As Medvedev pointed out to his interviewers: “When a citizen gives a bribe to the traffic police, it probably does not enter his head that he is committing a crime … People should think about this.”

But bribing a cop is a moral issue, just as much as it is, if not exactly a political crime, then a seemingly simple act of convenience. Morality cannot be legislated, but it can be taught and for this we need the Church and the family and those other neighborhood groups, charities, and small businesses, that act as civic training grounds and make up a healthy community. Edmund Burke called these “the little platoons” of society. (more…)