Posts tagged with: Wall Street

At least Obamacare comes at us head on. The greater legislative threat may be the one that most Americans have never heard of. Economist Scott Powell and Acton friend Jay Richards explain in a new piece in Barron’s:

While Obamacare received more attention, the Wall Street Reform and Consumer Protection Act, also known as Dodd-Frank after its Senate and House sponsors, … unleashed a new regulatory body, the Consumer Financial Protection Bureau, to operate with unprecedented power.

Dodd-Frank became law in 2010 and is supposed to avert the next financial crisis. Yet banks are still too big to fail and Fannie Mae and Freddie Mac remain wards of the state, while the CFPB has been given sweeping authority over consumer credit and other financial products and services that played no significant role in the crisis of 2008.

Powell and Richards then offer some specifics:
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Acton Institute is once again offering a free ebook; this time, Banking, Justice and the Common Good. From now until May 5, 2012 at 3 a.m. EST, you can click on this link and download the monograph for free.

We’d appreciate your comments and thoughts on the book. When you’ve finished, please go to the Amazon page for the book and leave a review.

Blog author: kspence
Thursday, October 6, 2011
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My sister has a small pillow in her bedroom that’s embroidered with the words “She who dies with the most shoes wins.” I’m sure Lloyd Blankfein’s daughter has one just like it. And you’d think that the patchouli-scented Occupy Wall Street crowd might not like such a pillow, but you’d be wrong, as Ray Nothstine pointed out in this week’s Acton Commentary. The anger at Zuccotti Park isn’t sparked by greed on Wall Street, it’s sparked by greed in Zuccotti Park.

Unions that have joined the Occupy Wall Street protests are signing on to these demands for government-facilitated greed. The local Transport Workers Union spokesman told CNN,

Their goals are our goals. They brought a spotlight on issues that we’ve believed in for quite some time now. … Wall Street caused the implosion in the first place and is getting away scot-free while workers, transit workers, everybody, is forced to pay for their excesses.

So in return, the Transport Workers Union demands free art school for everyone. How that is in the best interest of the members of Local 100 is beyond me, because in the end, their union is parroting Gordon Gecko’s “Greed is good” speech from Wall Street.

The Transport Workers, the SEIU, and other labor groups pretend to align themselves with a groundswell of moral outrage directed at thieving, manipulative fat cats, but the outrage isn’t moral at all. It’s appetitive, and that’s not the political urge of a free society.

Author’s Note: My sister, an extremely smart and capable young lady, complains that I make her sound “like a complete airhead.” That is not at all the case, so if this post gave you that impression, know that she is very poor-in-spirit.

My commentary this week addresses the demonstrations in New York and in other cities against free enterprise and business. One of the main points I make in this piece is that “lost in the debate is the fundamental purpose of American government and the importance of virtue and a benevolent society.” Here is the list of demands by the “Occupy Wall Street” movement. It is in essence a laundry list of devastating economic schemes and handouts. Additionally, the demands are counter to America’s founding principles. The commentary is printed below:

Class Warriors for Big Government

By Ray Nothstine

Acting as unofficial scorekeeper, Sojourners Founder and CEO Jim Wallis recently declared, “There really is a class war going on, and the upper class is winning.” However, many of the class warfare protesters who are taking to the streets to “occupy” Wall Street and American cities are the disgruntled children of well-to-do parents. A quick sampling of video clips from the protests shows students from elite universities like Harvard, George Washington, and Columbia. Such protestors are driven less by genuine economic hardship than by misguided animus toward the market system that has enabled the wealth from which they have benefited.

One such protestor, Robert Stephens, launched into a tantrum about a bank seizing his well-educated parents’ $500,000 home. The claim turned out to be bogus, but he managed to convince sympathetic media outlets that he was the victim of abuse and scorn at the hand of free enterprise. Stephens, a student at the prestigious George Washington School of Law in Washington, is just one of many out-of-touch protestors pointing simplistically to the market as the culprit in the current economic downturn while ignoring other sources of financial dysfunction, such as the crony capitalism of government subsidies to business or government fiscal irresponsibility.

Struggling to make ends meet, most Americans lack the time to tune into protestors who are just as distant from their problems as Washington bureaucratic elites. Ronald Reagan offered these poignant words as he called on his own political party in the 1970s to shed its big-business country club image and to embrace the factory worker, the farmer, and the cop on the beat:

Extreme taxation, excessive controls, oppressive government competition with business, frustrated minorities and forgotten Americans are not the products of free enterprise. They are the residue of centralized bureaucracy, of government by the self-anointed elite.

Excessive taxation, regulation, and centralization of power always save their most vicious bite for the middle class. They are the hardest hit, not the super wealthy, some of whom call for higher taxes and are fawned over by a bloated government with an insatiable appetite for revenue. If there is any class conflict, it will come from the taxpaying class as it tries to tame the avarice of the political class. Most Americans are not very sympathetic to radical protestors because they still believe in an American Dream of limitless potential and opportunity.

While some protestors call for more government—or even the use of force—to restore their version of social justice and utopian economic schemes, lost in the debate is the fundamental purpose of American government and the importance of virtue and a benevolent society.

This nation’s founders adopted a system of government emphasizing a separation of powers and federalism to protect private property and the harmony of the Republic. Protestors calling for a dismantling of these ideas, whether it is through the confiscation of another’s property or through massive, centralized power seem alien to most Americans. During his inauguration another American President, Bill Clinton, aptly declared, “There is nothing wrong with America that cannot be cured by what is right with America.”

The virtues and values that have shaped our Republic offer the best for America. One of the wealthiest men of America’s founding era was John Hancock. Yet the man who once quipped, “They [the Crown] have no right to put their hands in my pocket,” was no miser. Often a political foe of the founder known for his oversized signature on the Declaration of Independence, American President John Adams nonetheless wrote, “If benevolence, charity, generosity were ever personified in North America, they were in John Hancock.” Hancock supported churches, city improvements, the arts, assisted widows, and paid for the education of orphans. However, a much greater compliment was bestowed upon him. He was widely known for treating those of modest means with the same respect as those with wealth and power.

History too shows the consequences of regimes that wished to redistribute the wealth of others and make denunciations about greed, especially wrapped within a materialistic, secular worldview. That was class warfare, too, and it ended in blood and wretched poverty.

Blog author: jcouretas
Tuesday, October 4, 2011
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Occupy Wall Street?

On the Sojourners blog, Shane Claiborne marks the feast day of St. Francis of Assisi by absurdly wondering if “he’d be on Wall Street protesting today.” This follows the practice of shrinking Jesus Christ and various saints of the church down to pocket size (What Would Jesus Cut?) in order to fit them into whatever pet political project is at hand, in this case the Occupy Wall Street antics. Not the whole saint in the context of history, mind you, which could be inconvenient, but a happy little Smurf-Saint you can use to practice ventriloquism.

This causes all sorts of problems (most of them apparently unrecognized) for Claiborne as he attempts to cast St Francis as a fellow activist standing against Christian “extremists” who, among other sins, “bless bombs” and “baptize Wall Street.” This is anachronistic in the extreme but nevertheless it needs to be pointed out that the saint’s embrace of poverty and his care for the poor was not based on, as Claiborne claims, his status as “one of the first critics of capitalism.” St Francis lived and worked and prayed as he did out of a total commitment to the greatest commandment — to love God and love the neighbor.

Claiborne gets me to wondering: What would the Wall Street rabble demanding an end to the market economy make of St Francis and his deep devotion to orthodox Christian belief (he was one of those dogmatic Roman Catholics, don’t you know?), and all that involves? How many of the anarchists stretched out on the sidewalks of lower Manhattan with their smart phones and iPods could tell you what a feast day is and how it’s celebrated? An entry in the 1909 Catholic Encyclopedia notes that St Francis drew his strength from “his intimate union with Jesus in the Holy Communion” not mobilizing Ivy League undergrads protesting their mounting student loan debts. Later in life, the saint was known for “an ungrudging submission to what constituted ecclesiastical authority.” Quite the revolutionary.

Claiborne recounts the journey St Francis made in 1219 to Egypt where crusaders were battling “Saracens.” Yes, he was sickened by the carnage and brutality he witnessed there and worked as a peacemaker to both sides. But the saint made his journey to convert Muslims to Christianity. Is that Claiborne’s model of ecumenical outreach?

Read the absurdly fantastic demands of the Occupy Wall Street crowd including free college education, multi-trillion dollar government spending programs, living wages for all, and the like. You wonder: Who is really worshiping Mammon here? Their program is devoid of any spiritual value. It is a political manifesto, imbued with grievance and aimed at plunder.

Love for the neighbor? Not if you’re one of those neighbors working on Wall Street — or Main Street for that matter. The protesters should listen to the saint’s words:

And all the brothers should beware that they do not slander or engage in disputes; rather, they should strive to keep silence whenever God gives them [such] grace. Nor should they quarrel among themselves or with others, but they should strive to respond humbly, saying: I am a useless servant. And they should not become angry, since everyone who grows angry with his brother shall be liable to judgment; and he who has said to his brother ‘Raqa’ shall be liable to the Council; whoever has said ‘fool’ shall be liable to the fires of hell (Mt. 5:22). And they should love one another, as the Lord says: This is my commandment: that you love one another as I have loved you (Jn. 15:12). And let them express the love which they have for one another by their deeds, as the Apostle says: Let us not love in word or speech, but in deed and in truth (1 Jn. 3:18). And they should slander no one. Let them not murmur nor detract from others, for it is written: Gossips and detractors are detestable to God (Rom. 1:29-30). And let them be modest, by showing meekness toward everyone (cf. Tit. 3:2). Let them not judge or condemn. And as the Lord says, they should not take notice of the little defects of others. Rather they should reflect much more on their own in the bitterness of their soul. And let them strive to enter through the narrow gate, for the Lord says: Narrow is the gate and hard the road that leads to life; and there are few who find it (Mt. 7:14).”

Blog author: rnothstine
Tuesday, September 27, 2011
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For some, in our still largely affluent society, there is a deep seated need to be a member of the victim class. The background of your socioeconomic privilege is no obstacle, as they must create a narrative that points to being a victim. While some might aspire to sainthood, others aspire to victimhood. This video and report courtesy of The Blaze sums it up well. It would be unfortunate if charades like this drown out the real instances of injustice and those that are truly marginalized.

When we think of rule of law failure, countries like Zimbabwe and Somalia come to mind. But as Acton Research Director Samuel Gregg points out in his latest piece over at Public Discourse, rule of law can also be subtly eroded in wealthy countries. The negative consequences for risk-taking, entrepreneurship, and long term investment, he says, can be far-reaching.

Risk is an inherent part of the workings of market economies. But Gregg notes that’s not the same thing as uncertainty:

Measurable risks are . . . no deterrent to the making of economic choices. If we take them seriously, they help us to calibrate our economic choices to be consistent with our responsibilities, resources, and opportunities. The same measurements also allow us to distinguish between prudent risk takers and the reckless, and reward them appropriately. Uncertainty, by contrast, involves those risks that cannot be quantified. It can occur either because of the sheer complexity of a given situation or because the subject matter cannot be reasonably measured. As long as a situation of uncertainty persists, it will deter many people from even considering whether to take economic risks.

Uncertainty in America, according to Gregg, is being magnified by the sheer complexity of laws such as the United States Internal Revenue Code:

A tax code of this size and complexity which is subject to so many sources of potentially conflicting official and semi-official explanations is bound to embody significant contradictions, and offers considerable scope for arbitrary decision-making. Uncertainty is the result. It’s also valid to claim that the same tax code may well be impossible for large numbers of honest law-abiding citizens to understand and comply with—not to mention difficult for conscientious civil servants to administer justly. As a result, many people may unintentionally violate the law or simply choose to forgo making any number of potentially wealth-creating opportunities for fear of violating the law.

Another example is the thousands upon thousands of pages of legislation being passed by Congress every year. As Gregg writes:

Then there are the rule-of-law problems associated with the sheer volume of law that directly shapes American economic life. The 2010 healthcare reform legislation, for instance, amounted to 2,700 pages. Not far behind it in length was the 2010 financial overhaul act: a mere 2,300 pages. More than a few legislators have confessed to never having read either piece of legislation in its entirety. Nor should we assume any great familiarity on their part with the thousands of pages of legislation which these acts superseded, integrated, or reinterpreted. The possibility that many laws governing healthcare and financial services have subsequently been rendered unclear, inconsistent, and impossible to comprehend is high.

These erosions of rule of law, Gregg says, result in large incentives not to take risks and not to make long-term investments. It also encourages entrepreneurs to look elsewhere for a more friendly, stable and comprehensible legal environment.

Read the piece in its entirety at Public Discourse.

Blog author: jcouretas
Thursday, February 4, 2010
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The Archbishop of Canterbury, Rowan Williams, delivered a talk on theology and economics at New York’s Trinity Church last week. The historic Wall Street church was the site of the Building an Ethical Economy: Theology and the Marketplace conference which promised to “bring together leading theologians and economists to talk about the relationship between economics and Christian belief and action.”

Williams had this to say:

“Inevitably at some point, you have to talk about what level of wealth generation is compatible with the finite setting in which we live.” The global economic crisis, he said, brought to light “unreal forms of wealth generation which simply produce naughts on the end of a balance sheet that correspond to nothing.”

“Theology,” he said, “while it can’t solve specific economic problems, will be at the very least nagging at the vocabulary, nudging at the assumptions.”

And that’s how his talk went — long on literary and theological metaphor (“money is a metaphor like other things”) but precious little on economics. What’s more, there seemed to be no words in his vocabulary that would help him distinguish between competing economic systems or, in fact, help him describe how the economic systems in the United Kingdom or the United States actually work. At some point, economics transcends mere metaphor and goes to work in a concrete way in the world in which people live.

Is the archbishop aware that there has been a jaw-dropping, incredible reduction in global poverty?

World poverty is falling. … new estimates of the world’s income distribution and suggests that world poverty is disappearing faster than previously thought. From 1970 to 2006, poverty fell by 86% in South Asia, 73% in Latin America, 39% in the Middle East, and 20% in Africa. Barring a catastrophe, there will never be more than a billion people in poverty in the future history of the world.

How did this happen? What type of economic system brought this about? Doesn’t it seem as though more than “naughts” are being produced in some of the poorest regions of the world? Is this poverty reduction not an occasion for rejoicing, or at the least singing a few hymns right there on Wall Street?

You can read the 3,600 word transcript of Williams’ talk here, but you won’t learn much about poverty reduction. Or economics.

And how many times do we have to be informed, by people who apparently believe they have discovered the connection for the first time, that the root meaning of economics is from the Greek word οικονομία for household management? Can you see the metaphor coming?

Williams announces that the “isolated homo economicus of the old textbooks, making rational calculations of self-interest, has been exposed as a straw man: the search for profit at all costs in terms of risk and unrealism has shown that there can be a form of economic ‘rationality’ that is in fact wildly irrational.”

Rowan Williams’ visit to Wall Street would have been more educational for him, and more edifying for those who heard his talk, if he had actually spent some time with the people who work in that district. He would have found out that, by and large, they’re not so “irrational” after all. They might help him understand how the world works, and that not everyone who labors on Wall Street, or on Main Street, believes that all human relations “are actually to do with exchange and the search for profit,” as he describes it. He might even find the imago Dei in one or two people who work on Wall Street. But he will only find that Image in real human persons, not metaphors.

In a new essay at The American, Jay Richards explains why capitalism isn’t based on greed.

In Acton’s first documentary, The Call of the Entrepreneur, Richards along Rev. Robert Sirico, Sam Gregg, Michael Novak and others touch on this matter in making the moral case for the free economy.

“The Deal Professor,” Steven M. Davidoff, has a good piece at The New York Times website about the indispensability of finance to our economy. It briefly rebuts the view popularized in the Oliver Stone movie Wall Street, in which financiers are portrayed as greedy parasites. I left a comment at the web page, noting that our documentary The Call of the Entrepreneur makes a similar case. I include the comment below, since it may not pass muster with the page’s comment moderator:

A documentary that explores the wealth-creating role both of the entrepreneur simpliciter and the finance entrepreneur in particular: The Call of the Entrepreneur. The film appeared on more than 80 PBS affiliates nationwide, including repeated airings in several major markets. And in what may be a first, it appeared both on PBS and Fox Business. I mention this by way of reassuring readers that the documentary isn’t screechy.

The one-hour film is a combination of narrative and expert commentary that many have found useful for explaining what entrepreneurs and merchant bankers bring to the economy, a particularly useful explanation for friends and family who wouldn’t read a lengthy article or book on the subject but will watch a documentary with high production values. It doesn’t pretend that there isn’t corruption or greed on Wall Street, but it does insist that these elements do not provide a full picture.

Full disclosure: I wrote the script for the documentary and am a fellow of the institute that created the film, The Acton Institute. The film is available at calloftheentrepreneur.com/. Also, the film doesn’t address the market distortions generated by Alan Greenspan and others, distortions that encouraged excesses in the financing world leading up to the economic crisis. Those issues are tackled at our web page on the economic crisis: acton.org/issues/economy.php/.

— Jonathan Witt