In a recent article in the Washington Post, Juan Forero and Michael Birnbaum recommend that in the face of the looming specter of Greek debt default, Europe may learn a few lessons from South America. In particular, they point to the good example of Uruguay and the bad example of Argentina.

According to the authors,

In a story that may provide a lesson for Europe, one country, Uruguay, that was on the edge of financial oblivion organized a fast, orderly and negotiated response that revived the economy and ended a run on banks. Another, Argentina, spiraled into a chaotic default and remains a pariah in world financial markets.

The article lists a variety of reasons, such as tax evasion, political stagnation, and civil unrest, with regards to why Greece is in danger of becoming the next Argentina. There is one aspect, in particular, though, that sheds some interesting light on current monetary practice. According to the article,

Greece is hamstrung by its ties to the euro, which it cannot devalue to make its exports cheaper, and leaving the currency zone might prove even more painful.

Though currency debasement has been possible since time immemorial, it has become easier ever since the “Nixon Shock” of 1971, when the United States ended its tie to the gold standard, affecting every other nation which had tied its own currency to the U.S. dollar for the sake of stability. However, from that point on, most countries have been operating with purely fiat-based currency; a government’s central bank can print as much or as little money as they desire, since its value has no stable grounding. (Grounding the dollar’s value to a specific amount of gold prevented the U.S. from printing more money than gold that it could be exchanged for.)

In a recent article in the Journal of Markets & Morality, James Alvey highlights the analysis of James Buchanan on the ethics of public debt and default. With regards to default, Buchanan identified two common means: open default or concealed default through inflation. By inflating its currency, a country can, in effect, cheat its bondholders out of the amount promised to them by repaying its debts with debased money. To do so is effectively concealed default. Notably, Alvey writes, “Buchanan says that the U.S. government did ‘default on a large scale through inflation’ during the 1970s,” the very decade in which we left the gold standard.

What is fascinating about the current crisis with Greece is that its central bank does not have sole control of the euro. Despite being a fiat currency, its decentralized nature gives it a certain stability.  Concealed default is not an option for Greece, forcing it to make the hard decisions necessary to avert defaulting on its debt or to do so openly.

For more on the history and moral implications of currency debasement, see Juan de Mariana, Treatise on the Alteration of Money, recently translated and published by Christian’s Library Press.

Blog author: jballor
Wednesday, November 9, 2011
By

In this week’s commentary, I draw on some of the insights contained in the forthcoming translation of a section of Abraham Kuyper’s work on common grace, Wisdom & Wonder: Common Grace in Science & Art, to discuss the relationship between work and the natural world after the fall. (You can pre-order Wisdom & Wonder today and be among the first to get the book when it is released next week.)

I found especially pertinent the insights offered by a Michigan fisherman Ed Patnode, who describes his entrepreneurial turn into the charter fishing business:

He decided to start running a charter boat about six years ago. Back then, he used to go fishing every weekend with a group of friends.

“It got to be expensive each weekend going. And so we were just trying to see ‘Hey, how can we cut our losses.’ It was really, really how do we get out there and get other people to help us pay?” (laughs)

And with a lifetime of experience, maybe even obsession, with catching fish, he certainly knew enough to do it.

The bit I used in this week’s commentary, “Work, the Curse, and Common Grace,” is what Ed says next:

But as much as he knows about fish, there’s still more he wishes he could know.

“You know we’d be rich if we could tap into the mind of a fish, just get that fish to talk and tell us why do you like pink, or can you tell us what days you’re going to bite pink on and what other factors are influencing your decision to bite this pink lure today.”

I bring in Kuyper’s musings about how this kind of insight into the nature of animals was something we lost in the fall. Common grace works to provide us with some way to learn about things in this world, so we are not completely blind or helpless. But even so, things are not the way they were or the way they will be after the Christ’s return and the consummation.

This is a perfect occasion to tell my own “big” fish story. As a boy I would visit my dad and step-mother during the summers here in Michigan, and my step-mom’s family had a cottage on a small lake. Early one morning my dad and I took the small rowboat out to the other side of the lake, where the mist was still coming off the water. As we neared the other shore, I readied my first cast of the day. As soon as it hit the water, BANG! I got a hit.

I was so excited, but I didn’t really know what to do, but I remember working that fish back and forth to the boat. It seemed like it took forever, and my arms sure were tired. But when we hauled that fish in I couldn’t believe it. It was a 4.5 pound largemouth bass, somewhere in the range of 20″, as I recall. I was so happy that I wanted to head right back in and show everyone. Wiser heads prevailed, as it was still very early in the morning and no one else was awake. Even so, as far as I was concerned my fishing day was done after that first cast, and I probably scared all the other fish away with the excited tapping of my legs, waiting for time to pass so we could go back with the fish. To this day that’s the best fish I ever caught.

The Center for American Progress (CAP) has boldly rebutted the arguments of our own Kishore Jayabalan, director of Istituto Acton, concerning the Vatican’s note on a “central world bank.” It has done so by showing him to be lacking in “respect for the inherent dignity of human life.” … Yes, we are talking about that Center for American Progress.

In a feature on their website that purports to tie last month’s Vatican note to the Occupy Wall Street movement, CAP offers this smarmy response to the analysis Jayabalan gave.

Some conservative Catholic commentators are not as supportive, however….

Kishore Jayabalan of the conservative Catholic Acton Institute said that the note’s appeal to an international authority contradicts the church’s teaching that problems are best solved starting at local levels of authority, also known as the doctrine of subsidiarity.

What these conservatives are missing is that the note draws heavily from the tradition of Catholic social teachings on justice and respect for the inherent dignity of human life. This is where the Occupy movement finds an ally.

CAP has one-upped us doctrinally: where Jayabalan is concerned with minor theological nuances like the doctrine of subsidiarity, their minds are fixed on higher principles like respect for human dignity, the most immediate threat to which is the great and terrible free market.

“At heart, it is a moral enterprise,” say CAP’s Jake Paysour about Occupy Wall Street. Yes, except at the hearts of its camps, where women dare not go because their human dignity is respected only as much as strong men find it convenient.

CAP’s record on human dignity speaks for itself. Its position on the lives of unborn children, for example, could not be any more out of line with Catholic teaching on “justice and respect for the inherent dignity of human life.” It is shocking that CAP even uses those words: the suggestion that they give one hoot about Church teaching on human dignity is nonsense.

I will resist the temptation of a GetReligion-style dismantling of the feature, since it would sail right over their heads at CAP, but I must point out that the Church’s principles of social justice were not “set forth 80 years ago” in Quadrogesimo Anno, as the author claims, but rather 40 years before in Rerum Novarum (hence the second encyclical’s name — not that we should expect anyone there to have any Latin). I don’t mean to make an ad hominem argument, but if you can’t get that right, what are you doing trying to explain the relative weights of principles first explicated in Rerum Novarum?

In the future: If you’re going to use the words of an Acton Institute expert, it is expected that you will avoid the shameless contortion of facts and logic that CAP indulged in today.

On Forbes, Doug Bandow surveys how both the religious left and religious right are using explicit faith teachings and moral arguments in the federal budget and spending battles:

Does God really insist that no program ever be eliminated and no expenditure ever be reduced if one poor person somewhere benefits? Perhaps that is the long lost 11th Commandment. Detailed in the long lost book of Hezekiah.

The budget does have moral as well as practical implications. However, as Ryan Messmore of the Heritage Foundation observed, “The budget is indeed a moral document, but it is also a morally complex document.” The fact that one is poor does not entitle one to any specific form or level of government benefits.

David Beckmann, president of Bread for the World—which actually lobbies government for more government spending rather than provides food for the world’s poor—stated that “there’s a lot in the Bible that says you have to help poor people.” That’s right. That “we” have to help the poor. Not that we have to force others to help.

Yet, as Mark Tooley of the Institute on Religion and Democracy noted, these groups “aren’t calling for individuals to shed their wealth for God’s Kingdom. Of course, they primarily want an all powerful state to seize and redistribute wealth according to some imagined just formula, after which the lion will lie peaceably with the lamb. It’s a utopian dream, not based on the Gospels, always monstrous when attempted, and premised more on resentment than godly generosity.”

Concern for the poor permeates Scripture, but nowhere does God set forth the means to achieve this end.

Read “God: The Shakedown Artist For The Welfare State?” on Forbes. (HT: RealClearReligion).

Also see the special Acton resource page: Principles for Budget Reform.

Over at National Review Online, Acton Research Director Samuel Gregg looks at a new study which shows a growing wealth gap between the senior set and those under the age of 35. The boomer generation also has the political clout to protect that security:

… another factor that makes older Americans’ economic position even more secure than that of younger generations is the disproportionate sway exerted by older folks on politics, much of which is directed to maintaining the entitlement status quo. From the narrow standpoint of their own economic self-interest, why should older people vote for the type of entitlement reform that is indispensible if America is to get its public-debt problem under control? Many of this quite numerous demographic will ask, why should they have to scrimp after having paid into Social Security all their working lives?

Members of the supercommittee charged with finding $1.2 trillion to cut from the deficit surely know that proposals such as raising the retirement age are bound to encounter enormous opposition from AARP-like groups — especially the ones dominated by those baby boomers who are now retiring and whose entire lives have reflected an après moi, le déluge mentality. Supercommittee members are also no doubt conscious that older people — many of whom are already very unhappy about Obamacare’s forthcoming changes to Medicare — have an alarming habit of turning out to vote in far greater numbers than their children and grandchildren.

Read Samuel Gregg’s “America’s Gerontocracy” on NRO.

Also see PowerBlog postings on “intergenerational justice” by Jordan Ballor, executive editor of the Journal of Markets & Morality.

If you’ve watched any football or baseball recently, you’ve probably seen this Audi commercial. It’s quite funny, and it’s right up Acton’s alley: it artfully distinguishes between proper and improper stewardship of one’s wealth. In this case, an awkward after dinner exchange shows what happens to the use of wealth when culture is diminished:

We have on the one hand a couple appreciative of the aesthetic triumphs of humanity (the Browns), and on the other, a couple of barbarians (the Joneses). In order to get to know each other, the Browns go over to the Joneses’ house for dinner, where they are struck by the Joneses’ art collection – the latter, with the Metropolitan Museum of Art, seem to be the world’s greatest collectors of the Dutch master Vermeer.

But it turns out that the Joneses are boors who have no idea of the value of their collection, and can appreciate only the Smiths’ expensive car. Their wealth may have been acquired by the virtues of industry and thrift, but it is wasted if it is not spent on things of value.

On MercatorNet, Sarah Phelps Smith writes what must have been intended as a companion piece to the Audi commercial: a review of the Florentine art exhibit Money and Beauty; Bankers, Botticelli and the Bonfire of the Vanities running right now in that city. The exhibit is a collection of banking artifacts, coins, and art from the Medicis and other Florentine banking families.

The exhibit is particularly relevant right now because, as Wall Street has done, the Medicis became wealthy by providing indispensible financial services, and along the way they made some rather imprudent decisions (Dr. Smith provides the example of business done with royalty, who could default at will). The Medicis also supported the work of Botticelli, Leonardo, and others Renaissance geniuses, and for that, Western Civilization will always be in their debt.

It’s easy to point out that a months-long drum circle in the middle of New York City isn’t a cultural achievement, no matter how many sleepless nights are inflicted on the neighbors. But what should have instead of those drum circles? Besides making you depressed about federal funding of the arts (with apologies to cowboy poets in all states), Dr. Smith reminds us that you can’t take it with you:

Do we, as a culture, use “disposable income” to foster artists who have put the time and effort into learning their craft so that they can make beautiful objects with a beauty that will last five hundred years? Perhaps the exhibition can leave us with a desire to encourage people with means to commission, support and propagate works of art that will be timelessly beautiful and universal in appeal, so that when history looks at the products of our culture we (or rather those who come after us) will find our legacy worth looking at.

The Audi marketing team breaks the cringe making silence in their commercial with the text “True greatness should never go unrecognized.” They playfully acknowledge that their big sedans are toward the bottom of the important-things-in-life scale, and that someone for whom a Vermeer might as well be a Thomas Kinkade is not living a fully human life. It’s funny — you can’t be in the business of selling high end cars without rejecting cultural relativism.

Writing on National Review Online’s Corner blog, Acton Research Director Samuel Gregg looks ahead to the Census Bureau’s release on Monday of poverty numbers based on a new measurement and analysis of those new numbers in a recent New York Times article:

Some of the reports using these fuller measures — more of them produced by organizations with no particular ideological ax to grind — claim that black Americans are less poor than previously supposed and that some of the officially poor are, well, not poor. This doesn’t mean that these groups are necessarily well-off. But what is revealing is that, as the Times’ piece states, “virtually every effort to take a fuller view — counting more income and more expenses — shows poverty rising more slowly in the recession than the official data suggests.” And if that is not enough, the article goes on to state that “while the official national measure shows a rise of 9.8 million people, the fuller census measures show a range from 4.5 million to 4.8 million.”

Read “Poverty: It’s More Complicated Than You Think” on The Corner.

…hilarity ensues.

A round up of news:

Statement of the North American Orthodox-Catholic Theological Consultation
October 29, 2011
Washington, DC

The Plight of Churches in the Middle East

The “Arab Spring” is unleashing forces that are having a devastating effect on the Christian communities of the Middle East. Our Churches in Egypt, Iraq, Syria, Lebanon, and Palestine report disturbing developments such as destruction of churches and massacres of innocent civilians that cause us grave concern. Many of our church leaders are calling Christians and all people of good will to stand in solidarity with the members of these ancient indigenous communities. In unity with them and each other, we the members of the North American Orthodox-Catholic Theological Consultation, gathered October 27-29, 2011, add our voice to their call.

We are concerned for our fellow Christians who, in the face of daunting challenges, struggle to maintain a necessary witness to Christ in their homelands. United with them in prayer and solidarity, we ask our fellow Christians living in the West to take time to develop a more realistic appreciation of their predicament. We ask our political leaders to exert more pressure where it can protect these Churches, many of which have survived centuries of hardship but now stand on the verge of disappearing completely.

When one part of the body suffers, all suffer (cf. 1 Cor. 12:26). As Christians in the West, we therefore have the vital responsibility to respond to the needs of our brothers and sisters who live in fear for their lives and communities at this moment. As Orthodox and Catholic Christians we share this responsibility and this concern together.

###

More here on the work of the Orthodox-Catholic Dialogue. (HT: CatholicCulture.org)

Many Copts have crosses tattooed on their wrists

Copts are protesting government foot-dragging in the investigation of the Oct. 9 Maspero massacre that killed more than two dozen protesters. Al Ahram reports that Copts are still grieving and many “cannot get past the nightmare of 9 October’s carnage, or the fear of further attacks on churches.” Nadia, a Copt woman who was interviewed by the newspaper as she entered Mar Girgis Church in Heliopolis, fears for her family:

For me, the question is not one of opening closed churches or giving us license to build more churches; the question is rather that when I go to pray on Sundays I cannot but think would there be an attack on the church when I am there with my kids.

On The Hill newspaper, Dina Guirguis points to “mounting pressure in the last four decades” directed at the Coptic community, which represents 10 percent of Egypt’s population. This year the attacks have taken a terrible toll:

… in 2011 alone, before the Maspero massacre, Copts had been the target of 33 sectarian attacks, 12 of which involved an attack on a church, leaving a total of 49 dead. Counting the bombing of an Alexandria church on New Year’s Eve, which added an additional 23 casualties, the death toll rose to 72, with dozens injured and a number of Christian homes and properties burned down. After Maspero, the death toll of Egypt’s sectarian violence rises to 97, with over 400 injured–and immeasurable psychological damage.

For years, rights groups have decried the Egyptian state’s complicity in the growing sectarianism targeting Egypt’s vulnerable religious minorities, but had held hopes high after Egypt’s peaceful revolution that had toppled a brutal dictator of 30 years. Now, the self-proclaimed “guardians of that revolution,” Egypt’s military rulers—SCAF—have extinguished hopes for genuine equality for all of Egypt’s “children” by itself undertaking this heinous massacre in cold blood, and scheming a cover up that would make Mubarak proud, indicating that the repressive ways of the past are alive and well in post-Mubarak Egypt.

Here’s an interview with a UK-based Coptic bishop, recorded last month:

Links on the plight of the Copts from this week’s Acton News & Commentary:

Coptic Christian Student Murdered By Classmates for Wearing a Cross

Mary Abdelmassih, Assyrian International News Agency

Copt’s Murder a Test of Egypt’s New Anti-Discrimination Law

Kurt J. Werthmuller, NRO

Metropolitan Hilarion accuses West of leaving Egypt Christians in the lurch

Interfax

Who’s Really Persecuting the Copts?

John Rogove, First Things

Acton’s Kishore Jayabalan on Vatican Radio today. Summary:

The spectre of a hard Greek default and euro exit hung over a meeting of G20 leaders beginning in Cannes on Thursday. U.S. President Barack Obama said after talks with his French counterpart Nicolas Sarkozy that Europe had made some important steps towards a comprehensive solution to its sovereign debt crisis but needed to put more flesh on the bones and implement the plan. The world is counting on the G20 to find a way out of the crisis, before it begins spreading to other parts of the globe.

“A lot of what is happening…at the G20 summit in France over the next couple days is really the inevitable consequences of a three or four year unwillingness of European politicians, and I would say American politicians as well, to deal with what’s obvious to most people is paying attention to this debt crisis,” said Kishore Jayabalan, the Director of the Rome office of the Acton Institute for the Study of Religion and Liberty.

“At some point government leaders are going to have to be frank and tell people they can’t rely on government benefits indefinitely,” he told Vatican Radio. “The entire scheme was based promises that can’t be kept.”

Jayabalan said in the future, people are going to be forced to be more self-reliant, and create their own opportunities.

Click on the player below to listen in:

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