Posts tagged with: intergenerational justice

schoolchoicesignWhy do liberal and conservative evangelicals tend to disagree so often about economic issues? This is the third in a series of posts that addresses that question by examining 12 principles that generally drive the thinking of conservative evangelicals when it comes to economics. The first in the series can be found here. Part 2 can be found hereA PDF/text version of the entire series can be found here.

7. The best way to compensate for structural injustice is to increase order and individual freedom.

As it relates to economics, structural injustice could be defined as occurring when outside forces unjustly limit some person’s opportunities to enact their morally legitimate plans. Almost all evangelicals – whether liberal or conservative — agree that structural injustices still exist and that they must be opposed. Where we disagree is about what forms of structural injustice are most pervasive in 2014 and how they should be corrected.

We tend to think of structural injustices as macro-level phenomena (such as racism) that affect the actions, practices, beliefs, and laws of a large region (such as the Jim Crow laws that that codified racial segregation and discrimination). That has historically been the case in America. But today, structural injustices are usually created on the micro-level and affect a smaller area. Take, for example, the issue of poverty. In 2014, the two factors that are most likely to create structural boundaries that keep a child in poverty are their parents and their local community.
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In a recent interview in the Wall Street Journal, billionaire Stan Druckenmiller discusses his recent university tour sounding the alarm on intergenerational theft. The article paraphrases his case:

[W]hile today’s 65-year-olds will receive on average net lifetime benefits of $327,400, children born now will suffer net lifetime losses of $420,600 as they struggle to pay the bills of aging Americans.

It goes on:

When the former money manager visited Stanford University, the audience included older folks as well as students. Some of the oldsters questioned why many of his dire forecasts assume that federal tax collections will stay at their traditional 18.5% of GDP. They asked why taxes should not rise to fulfill the promises already made.

Mr. Druckenmiller’s response: “Oh, so you’ve paid 18.5% for your 40 years and now you want the next generation of workers to pay 30% to finance your largess?” He added that if 18.5% was “so immoral, why don’t you give back some of your ill-gotten gains of the last 40 years?”

He has a similar argument for those on the left who say entitlements can be fixed with an eventual increase in payroll taxes. “Oh, I see,” he says. “So I get to pay a 12% payroll tax now until I’m 65 and then I don’t pay. But the next generation—instead of me paying 15% or having my benefits slightly reduced—they’re going to pay 17% in 2033. That’s why we’re waiting—so we can shift even more to the future than to now?”

In my recent commentary, I examined the recent projections of the Congressional Budget Office: (more…)

388px-The_Last_of_the_Spirits-John_Leech,_1843Matt Mitchell at Neighborhood Effects offers an interesting perspective regarding the fiscal cliff. As we hurriedly approach the edge, Mitchell’s insights ought not to be ignored, whatever the outcome of today’s last minute meeting at the White House. Evoking the Ghost of Christmas Yet to Come from Charles Dickens’s A Christmas Carol, he writes,

At the risk of mixing metaphors, we should think of the fiscal cliff as the Ghost of the Fiscal Future. It is a bleak lesson in what awaits us if we don’t get serious about changing course.

Mitchell goes on to hint at the serious issue of intergenerational justice that our government’s current fiscal behavior will affect if it continues unchanged:

The non-partisan Congressional Budget Office [CBO] now projects that, absent policy change, when my two-year-old daughter reaches my age (32), revenue will be just a bit above its historical average at 19 percent of GDP while spending will be nearly twice its historical average at 39 percent of GDP. This is what economists mean when they say we have a spending problem and not a revenue problem: spending increases, not revenue decreases, account for the entirety of the projected growth in deficits and debt over the coming years. (more…)

Blog author: jballor
Tuesday, November 22, 2011
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It seems that the supercommittee (the US Congress Joint Select Committee on Defict Reduction) has failed to agree on $1.5 trillion in cuts over the next decade. In lieu of this “failure,” automatic cuts of $1.2 trillion will kick in. These cuts will be across the board, and will not result from the committee’s picking of winners and losers in the federal budget.

In the context about discussions of intergenerational justice earlier this year, Michael Gerson said that such across-the-board cuts are “really the lazy abdication of governing.” And with respect to the outcome of the supercommittee process, Gerson is laying the lion’s share of blame for this failure to govern with President Obama: “It is the executive, not the legislature, that gives the budget process energy and direction. The supercommittee failed primarily because President Obama gave a shrug.”

But I want to speak out in favor of across-the-board cuts, at least provisionally. I do not think they necessarily represent a failure to govern, or the “lazy abdication of governing.” It’s true as Gerson says that “To govern is to choose. And some choices are more justified than others.” In the case where there is no clear agreement about spending priorities, or even the basic views of the purpose of government, choosing to keep spending priorities as they currently exist might just be the most feasible political move. If everyone agrees that there needs to be cuts, but no one wants their pet programs cut, then it seems reasonable to, as Gerson puts it, “let everyone bear an equal burden.”

If we were to try to weigh the cuts and divide them proportionally between various areas of government spending, it seems to me that we’d need to come to grips with the various responsibilities of government: primary, secondary, tertiary, and so on. Things that are more central to the federal government’s purpose should be cut relatively less than those things that are more peripheral. That’s the view that appears in the Acton Institute’s “Principles for Budget Reform,” for instance.

But one thing that’s clear about today’s political climate is that there is very little consensus on what the central functions of government are. And in the absence of consensus, maintaining current spending priorities might be the best we can hope for.

I had the pleasure of appearing on Relevant Radio last Friday to talk to Sheila Liaugminas on her show, “A Closer Look.” I discussed the idea of “intergenerational justice,” a term favored by evangelicals (Roman Catholics tend to talk about “intergenerational solidarity”), and how that concept relates to much of today’s discussion about the federal budget.

One thing you hear from many is that we need a “both/and” solution: we need to both cut spending and raise revenue in order to close the annual deficits. I’m not really convinced of this, in part because the federal government has historically shown that increased revenue always results in increased spending. The government spends what it takes in, with a little bit more to boot. There has to be something structural and meaningful to stop this from continuing to happen, especially since we can’t count on the political culture to do so itself. Whether that structural obstacle is a balanced budget amendment or some other kind of binding agreement, something like that has to be put in place.

I don’t think it’s fair on the other side, though, to say that closing some tax loopholes, making tax avoidance more difficult, and simplifying the tax code is tantamount to “raising taxes” either. So in that sense there might be a case for raising revenues in this limited sense if it gets the tax system focused on what it is supposed to do (raise revenues) rather than using it as a tool for rent-seeking, social engineering, and pandering to special interests.

What’s more important than the question of revenues vs. cuts, however, is recognizing that the size of the federal government has stayed about roughly constant when you look at it in terms of tax receipts relative to GDP. Anthony Davies does a nice job illustrating this. He points out that the government basically takes in amounts roughly equal to 18% of GDP (+/- 2%). So that’s essentially what the government needs to learn to live on. By contrast, we’re spending about 24% of GDP this year, and that number only goes higher as entitlement promises come due.

So how about this for a both/and solution: we cut spending to get within a couple of percentage points of 18% of GDP and we focus on tax policies that will grow GDP in a sustainable way in the longer term.

Urban prairie Detroit 2I wrote a bit about my short essay describing some of the principles and concepts at play concerning intergenerational ethics and economics. There are also important intergenerational cultural consequences following the Great Recession. A decade ago there was much concern about the rootlessness of current generations and the transience of the workforce. But that ability for workers to move quickly to new jobs in other cities and states has been undermined by the housing crash. Most anyone who bought a home in the last decade will not be moving anywhere anytime soon.

As Robert Bridges contends in a WSJ op-ed, “Coming generations need to realize that while houses are possessions and part of a good life, they are not always good investments on the road to financial independence.” The “ownership society” means something far different today than it did even a decade ago.

In her book How the West was Lost, Dambisa Moyo describes well some of the background leading up to the housing crash. One of the contributing factors was this cultural ideal of a “homeownership” society and resulting government policy to promote homeownership. She contends,

The direct consequence of the subsidized homeownership culture was the emergence of a society of leverage, one where citizen and country were mortgaged up to the hilt; promoting a way of life where people grew comfortable with the idea of living beyond one’s means.

She also judges that there are significant intergenerational implications:

Under the government guarantee system which propels the rapid appreciation of house prices, the only winners are those who can downsize (downgrade) their housing, or move to a different area, and buy a smaller (cheaper) place. Everyone else loses…. This ‘escalator’ effect continues until the time that the kids go to college. It’s a wealth transfer from the younger generation to the older generation as house prices become more expensive.

One of the effects of what Moyo calls “government guarantee system” is that resources (capital) was increasingly invested in homes that might have been invested in other, more productive, sectors.

An incisive piece by Roben Farzad explores why the aftereffects of the housing bubble are not likely to go away anytime soon. He quotes Doug Ramsey of Minneapolis investment firm Leuthold Group, “a student of asset bubbles,” who says, “The housing decline will be a long, multiyear process, and the multiplier effect across the economy will be enormous.”

Jonathan Smoke, head of research for Hanley Wood, a housing data company, argues, “We’ve gone through a period when we should have been tearing down houses. The supply of total housing stock is beyond what is necessary.”

Why then are we still celebrating “new housing starts” as signs of a rebounding economy rather than a continuation of misplaced investment and cultural priorities?

In today’s Acton Commentary, “Debt and the Birth Dearth,” I examine the interrelationship between demographics, economics, and morality, especially within the context of America’s current public debt crisis.

I conclude by pointing to the spiritual nature of our “debts”:

Jesus taught Christians to pray, “Forgive us our debts.” If we do not renew and reform our culture along the lines suggested here, a renewal that must be led by Christians acting as agents of transformative grace, the debts for which we must pray forgiveness will be far weightier than those incurred by the federal government.

In a primary sense, of course, all of our debts, sins, and transgressions are more than we can afford to make recompense for. This is why the atoning work of Jesus Christ, in his life, death, and resurrection, is of fundamental importance.

But this reality doesn’t remove our responsibility to respond to God’s saving grace in thankfulness and in “fear and trembling.” Instead Christ’s work makes our even meager attempts at faithfulness possible and meaningful.

The Heidelberg Catechism describes this daily conversion of the Christian, the turning away from sin and toward Christ, in terms of death and life, mortification and vivification. This “mortification of the old man” is a dying-to-self, “a sincere sorrow of heart, that we have provoked God by our sins; and more and more to hate and flee from them.” Vivification, by contrast, is “a sincere joy of heart in God, through Christ, and with love and delight to live according to the will of God in all good works.”

A critical part of this “joy of heart in God, through Christ,” must manifest itself in the celebration of God’s gift of life itself. This includes promoting faithful procreation and parenting, and as Russell Moore has argued so well, promoting a culture of adoption.

Luther famously described parenthood as a sacred calling.

Preaching on “The Estate of Marriage” in 1522, Luther said:

Now observe that when that clever harlot, our natural reason (which the pagans followed in trying to be most clever), takes a look at married life, she turns up her nose and says, “Alas, must I rock the baby, wash its diapers, make its bed, smell its stench, stay up nights with it, take care of it when it cries, heal its rashes and sores, and on top of that care for my wife, provide for her, labor at my trade, take care of this and take care of that, do this and do that, endure this and endure that, and whatever else of bitterness and drudgery married life involves? What, should I make such a prisoner of myself? O you poor, wretched fellow, have you taken a wife? Fie, fie upon such wretchedness and bitterness! It is better to remain free and lead a peaceful, carefree life; I will become a priest or a nun and compel my children to do likewise.”

What then does Christian faith say to this? It opens its eyes, looks upon all these insignificant, distasteful, and despised duties in the Spirit, and is aware that they are all adorned with divine approval as with the costliest gold and jewels. It says, “O God, because I am certain that thou hast created me as a man and hast from my body begotten this child, I also know for a certainty that it meets with thy perfect pleasure. I confess to thee that I am not worthy to rock the little babe or wash its diapers, or to be entrusted with the care of the child and its mother. How is it that I, without any merit, have come to this distinction of being certain that I am serving thy creature and thy most precious will? O how gladly will I do so, though the duties should be even more insignificant and despised. Neither frost nor heat, neither drudgery nor labor, will distress or dissuade me, for I am certain that it is thus pleasing in thy sight.”

A wife too should regard her duties in the same light, as she suckles the child, rocks and bathes it, and cares for it in other ways; and as she busies herself with other duties and renders help and obedience to her husband. These are truly golden and noble works. This is also how to comfort and encourage a woman in the pangs of childbirth, not by repeating St. Margaret legends and other silly old wives’ tales but by speaking thus, “Dear Grete, remember that you are a woman, and that this work of God in you is pleasing to him. Trust joyfully in his will, and let him have his way with you. Work with all your might to bring forth the child. Should it mean your death, then depart happily, for you will die in a noble deed and in subservience to God. If you were not a woman you should now wish to be one for the sake of this very work alone, that you might thus gloriously suffer and even die in the performance of God’s work and will. For here you have the word of God, who so created you and implanted within you this extremity.” Tell me, is not this indeed (as Solomon says [Prov. 18:22]) “to obtain favor from the Lord,” even in the midst of such extremity?

Now you tell me, when a father goes ahead and washes diapers or performs some other mean task for his child, and someone ridicules him as an effeminate fool—though that father is acting in the spirit just described and in Christian faith—my dear fellow you tell me, which of the two is most keenly ridiculing the other? God, with all his angels and creatures, is smiling—not because that father is washing diapers, but because he is doing so in Christian faith. Those who sneer at him and see only the task but not the faith are ridiculing God with all his creatures, as the biggest fool on earth. Indeed, they are only ridiculing themselves; with all their cleverness they are nothing but devil’s fools.

[Martin Luther, vol. 45, Luther's Works, Vol. 45: The Christian in Society II, ed. Jaroslav Jan Pelikan, Hilton C. Oswald and Helmut T. Lehmann, Luther's Works, 39-41 (Philadelphia: Fortress Press, 1999).]

Thus Christians, in celebrating life, marriage, family, and children, must risk being worldly derision and ridicule, relying on heavenly wisdom rather than the devil’s foolishness.