Posts tagged with: Samuel Gregg

Would dissolving the European common currency, as proposed by the French free-market economist and entrepreneur Charles Gave in his book Libéral mais non coupable (“Liberal But Not Guilty”) free the Old Continent to stand upright on its financial feet again? Or would dissolving the currency drastically end the European project altogether, as some pro-Euro technocrats in Brussels fear?

Charles Gave, the chairman of the investment firm GaveKal, (and whose lecture I listened to at a 2011 Acton Conference Family Enterprise, Market Economies, and Poverty in Rome), offers an excellent economic policy analysis in answering these urgent questions.  However, as you will read below, the European side of the financial crisis cannot be fixed in purely economic terms.

In his chapter “Europe: A Turtle on its Back”, Gave says that the EU’s already slow-moving economic tortoise is now in a worse position while laying flat on its back – its shell “heavily weighed down by a systemic debt trap” whose origins are found in keeping the common currency afloat at all costs.

Gave believes that the only way to get the turtle walking upright again would be lighten its load by effectively dissolving the heavily debt-tied euro and restoring national currencies to pre-1999 monetary standards. In Gave’s opinion, a restoration of national currencies across the Eurozone would force member states to return to a culture of self-reliance, that is to say, to count more on their own national fiscal and monetary means and standards.

The positive effect would also mean abandoning the quasi-idolatrous ways in which Europeans go to save their common currency while closing a blind eye to less responsible member states’ reckless spending.

Gave’s criticism of local/national responsibilities and the very origins of debt raise deeper questions about the cause of the  European debt and monetary crises, but it is far from offering a  more complete picture of the problem.

Acton’s research director, Dr. Samuel Gregg, helps us fill in the gaps.  As he said in a recent editorial for the American Spectator:

Europe does indeed face huge monetary challenges. Having a common currency while permitting euro-members to violate mutually-agreed debt limits was always a recipe for disaster. Greece could happily splurge on adding tens of thousands of public sector workers to the government’s payroll and financing Chicago-esque patronage politics, while Portugal built dozens of now-idle, often half-finished soccer stadiums.  Why? Because everyone knew if things went bad, then preserving the euro (a ‘sacred cow’ for Europe’s political class) from the impact of nations’ defaulting meant that heavyweights like Germany would go to considerable lengths to try and prevent a currency-meltdown.

Yet this amounts to only a partial — and therefore inadequate — explanation of Europe’s present disarray…[It] can’t disguise the truth that there’s something even more fundamental driving Europe’s economic crisis.

From the beginning, post-war Social Democracy’s goal … was to use the state to realize as much economic security and equality as possible, without resorting to the outright collectivization pursued by the comrades in the East.  In policy-terms, that meant extensive regulation, legal privileges for trade unions, “free” healthcare, subsidies and special breaks for politically-connected businesses, ever-growing social security programs, and legions of national and EU public sector workers to “manage” the regulatory-welfare state…with little-to-no experience of the private sector.

None of this was cost-free. It was financed by punishing taxation and, particularly in recent years, public and private debt. In terms of outcomes, it has produced some of the developed world’s worst long-term unemployment rates, steadily-declining productivity, and risk-averse private sectors.

In sum, the idolatrous preservation of a European common currency and the ensuing “debt trap”  and “domino default” which Gave articulates in his book  is more fully understood when we link the European financial crisis to a crisis of Christianity — a  faith which makes challenging demands on practicing members’  moral interrelationships, levels of risk aversion, and practical ways in which they care for fellow citizens and see their moral duties relation to their neighbor and society.

Christianity, as defined so well by the Catholic Church’s teachings on subsidiarity, demands that social problems must be first solved at the individual, local level. Only if the local and personal proves insufficient should the problem to be taken to higher levels, with the state as the means of last resort.

Subsidiarity – a guiding principle to all responsible Christians – helps limit public debt by relegating moral duties first and foremost to the private sphere.  Subsidiarity is a check against  forms of collectivization and the expensive public costs involved. When too much of the moral duty is placed on the state, public costs grow and debt is possible.  When it is not, the state’s welfare machine is tends to shut down.

In conclusion, if it is true that the vast majority of Europeans no longer practice their Christian faith or take their charitable duties very seriously, one can rightly doubt how easily it will be them to free themselves from the weight of unsustainable debt  (see also Sam Gregg’s ALS lecture below on this topic). If non-practicing Europeans tend to pass on more of their individual moral responsibilities to the state  for the welfare of the elderly, sick and need people of society, it ends up being a costly delegation of Christian freedom and responsibility.  In economic consequences, this makes the EU a fertile ground for a systemic debt traps and precarious monetary crises.

[youtube http://www.youtube.com/watch?v=h1HZud5lHGc&w=350&h=208]

In a new analysis in Crisis Magazine, Acton Research Director Samuel Gregg examines “the shifting critiques” of the pontificate of Benedict XVI including the latest appraisal that the world is losing interest in the Catholic Church particularly because of its declining geopolitical “relevance.” But how do some of these critiques understand relevance?

On one reading, it involves comparisons with Benedict’s heroic predecessor, who played an indispensible role in demolishing the Communist thug-ocracies that once brutalized much of Europe. But it’s also a fair bet that “relevance” is understood here in terms of the Church’s capacity to shape immediate policy-debates or exert political influence in various spheres.

Such things have their own importance. Indeed, many of Benedict’s writings are charged with content which shatters the post-Enlightenment half-truths about the nature of freedom, equality, and progress that sharply constrict modern Western political thinking. But Benedict’s entire life as a priest, theologian, bishop, senior curial official and pope also reflects his core conviction that the Church’s primary focus is not first-and-foremost “the world,” let alone politics.

Read “Benedict XVI and the Irrelevance of ‘Relevance’” on the website of Crisis Magazine.

Acton On The AirDr. Samuel Gregg, Acton’s Director of Research, has become something of a regular guest on Kresta in the Afternoon of late; below you’ll find audio of his two most recent appearances.

Leading off, Sam appeared with host Al Kresta on February 15th to discuss Pope Benedict’s concept of the dictatorship of relativism in the context of the HHS mandate debate, and the potential consequences of the death of absolute truth. Listen via the audio player below:

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Then, on the 22nd, Dr. Gregg made another appearance with Kresta to discuss the concept of ordered liberty, contrasting the concepts of freedom for excellence vs. freedom of indifference. You can listen to the interview below, and if you’re interested, head over to the Acton bookshoppe to pick up a copy of On Ordered Liberty, his book on the same topic.

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On The American Spectator, Acton Research Director Samuel Gregg observes that, “as evidence for the European social model’s severe dysfunctionality continues to mount before our eyes, the American left is acutely aware how much it discredits its decades-old effort to take America down the same economic path.” Against this evidence, some liberals are pinning the blame on passing fiscal and currency imbalances. No, Gregg says, there’s “something even more fundamental” behind the meltdown of the post-war West European social model. (Thanks to RealClearWorld for linking).

… this reality is that the Social Democratic project is coming apart at the seams under the weight of the economic policies and priorities pursued by most Social Democrats (whatever their party-designation) — including the American variety.

From the beginning, post-war Social Democracy’s goal (to which much of Europe’s right also subscribes) was to use the state to realize as much economic security and equality as possible, without resorting to the outright collectivization pursued by the comrades in the East. In policy-terms, that meant extensive regulation, legal privileges for trade unions, “free” healthcare, subsidies and special breaks for politically-connected businesses, ever-growing social security programs, and legions of national and EU public sector workers to “manage” the regulatory-welfare state — all of which was presided over by an increasingly-inbred European political class (Europe’s real “1 percent”) with little-to-no experience of the private sector.

None of this was cost-free. It was financed by punishing taxation and, particularly in recent years, public and private debt. In terms of outcomes, it has produced some of the developed world’s worst long-term unemployment rates, steadily-declining productivity, and risk-averse private sectors.

Above all, it slowly strangled the living daylights out of economic freedom in much of Europe. Without Germany (which, incidentally, also engaged in welfare reform and considerable economic liberalization in the 2000s), it’s hard to avoid concluding that Social Democratic Europe would have imploded long ago.

Read “The American Left’s European Nightmare” by Samuel Gregg on The American Spectator.

A week ago, Dr. Samuel Gregg addressed an audience here at Acton’s Grand Rapids, Michigan office on the topic of “Europe: A Continent in Economic and Cultural Crisis.” If you weren’t able to attend, we’re pleased to present the video of Dr. Gregg’s presentation below.

Blog author: jcouretas
Wednesday, February 22, 2012
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Over at National Review Online, Acton Research Director Samuel Gregg takes a look at a recent Charles Blow op-ed in the New York Times in which the writer hyperventilates about statements made by Rick Santorum on the subject of income inequality.

Economically speaking, income inequality reflects the workings of several factors, many of which are essential if we want a dynamic, growing economy. Even your average neo-Keynesian economist will acknowledge that, without incentives (such as the prospect of a higher income), many entrepreneurial projects that create wealth — not to mention jobs and often greater incomes for others — may lie dormant forever. Either that or the entrepreneur will simply leave for a more friendly economic environment in which his ideas, willingness to assume risk, and potential job-creation capacities are taken more seriously.

Part of Mr. Blow’s unhappiness with Santorum was that he made his inequality remarks in Detroit, despite Blow correctly noting that “income inequality in the Detroit area isn’t particularly high.”

But Detroit’s well-documented economic problems have little to do with income inequality per se. They have far more to do with decades of corporatist collusion between bailed-out car companies and the UAW, rampant political corruption, and assorted crony-capitalist arrangements — the same arrangements that recently helped, as a recent University of Illinois study illustrated, the Chicago metropolitan region merit (yes, merit) the unenviable title of “the most corrupt area in the country since 1976.”

Read “Inequality Anyone?” by Samuel Gregg on National Review Online.

Acton On The AirA couple of Acton radio appearances to let you know about: First of all, Acton’s Director of Research Dr. Samuel Gregg joined host Al Kresta yesterday to discuss the modern papacy on Kresta in the Afternoon. He focused on the social and political thought of Popes John Paul II and Benedict XVI. You can listen to the interview by using the audio player below:

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Additionally, Acton’s Director of Media Michael Matheson Miller provided some additional commentary on the controversy surrounding the Obama Administration’s contraception mandate decision on America’s Radio News, which you can listen to below:

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“If there was ever any doubt about one of the Obama Administration’s key philosophical commitments,” writes Acton Research Director Samuel Gregg in a new article in the American Spectator, “it was dispelled on Jan. 20 when the Department of Health and Human Services informed the Catholic Church that most of its agencies will be required to provide employees with insurance-coverage for contraceptives, sterilization, and abortifacient drugs: i.e., products, procedures, and chemicals used to facilitate acts which the Church and plenty of others consider intrinsically evil.”

Gregg writes that “modern liberalism has a long history of trying to exclude consideration of the proper ends of human action from public discourse in the name of tolerance. But neither liberalism nor secularism are as neutral about such matters as they pretend.” In fact, that neutrality looks more and more like coercion. Gregg:

And here we come face-to-face with the essence of what a certain Joseph Ratzinger famously described in an April 2005 homily as “the dictatorship of relativism.” Most people think of tyrannies as involving the imposition of a defined set of ideas upon free citizens. Benedict XVI’s point was that the coercion at the heart of the dictatorship of relativism derives precisely from the fact that it “does not recognize anything as definitive.”

In this world, tolerance no longer creates the safety for us to express our views about the nature of good and evil and its implications for law and public morality. Instead, it serves to banish the truth as the reference point against which all of us must test our ideas and beliefs. The objective is to reduce everyone to modern Pontius Pilates who, whatever their private beliefs, wash their hands in the face of obvious injustices, such as what the Obama administration has just inflicted upon not only Catholics, but anyone whose convictions about the truth requires them to abstain from cooperating in acts they regard as evil per se.

Of course, modern liberals do have their preferred ends, which (despite all their endless chatter about reason) reflect their profoundly cramped vision of man’s intellect. Here they follow the eighteenth-century Scottish philosopher David Hume. He argued that “reason ought to be the slave of the passions.” Reason’s role, in other words, is not to identify what is rational for people to choose. Instead, reason is reduced to merely devising the means for realizing whatever goals that people, following the profound moral reasoning of a five year-old, “just feel like” choosing.

Read Samuel Gregg’s “Obama and the Dictatorship of Relativism” on the website of the American Spectator.

In the journal Foreign Affairs, Acton Research Director Samuel Gregg offers an analysis of the Vatican’s recent pronouncements on economic policy, most notably the document issued in October titled “Towards Reforming the International Financial and Monetary Systems in the Context of Global Public Authority” (also called “The Note”). The Church, Gregg said, “wanted to attract the attention of world leaders as they assembled to discuss ongoing turmoil in financial markets at the G-20 Summit in Cannes and to add its voice to those arguing for capital controls (such as the “Tobin tax”) to discourage international financial speculation.” But, he argues, advocating a world economic authority could work against the interests of developing nations, including those heavily Catholic:

… a world authority could pit the economic interests of Catholics in developed countries against those in developing nations, creating challenges for how the Church presents its teachings about economic issues to Catholics throughout the world. Many countries throughout Latin America, Africa, and Asia are in a fundamentally different economic and geopolitical place from those of the ailing EU. The Church must thus deepen its appreciation of how the global operation of economic factors such as comparative advantage, incentives, and tradeoffs has different impacts upon Catholics living in very dissimilar economic circumstances. But this also has implications for the Church’s position concerning the economic functions to be assumed by a world authority. Such responsibilities, for example, could primarily concern promoting greater economic integration through removing obstacles to trade. This, however, would be incompatible with the Note’s theme that a world authority’s economic functions should be focused upon securing greater control over the pace of change through international regulations that, if implemented, would significantly impede the free movement of people, goods, and capital.

Read “The Vatican’s Calls for Global Financial Reform” by Samuel Gregg on the website of Foreign Affairs.

Over at National Review Online, Acton Research Director Samuel Gregg recaps President Obama’s State of the Union address:

There is always something surreal about a Chicago politician talking about “fairness” and “playing by the rules.” There is something even more bizarre about a president talking about the need to expand energy production after his administration has generally undermined significant progress in facilitating energy development for three years in the middle of a recession. And who would describe Detroit as “on the way back”? A stroll down the ghost town otherwise known as downtown Detroit — which is teetering on the edge of being put into administration — would suggest the opposite. It’s not often that I agree with very much said by the New York Times’s Maureen Dowd, but this State of the Union speech illustrated that the lady was dead right in describing the Obama presidency as a bubble within a bubble.

Read it all on NRO.