The AP reports that of the roughly $379 million spent by the US government on relief efforts in Haiti, less than 1% has been in the form of direct government to government aid.

This has raised complaints from the Haitian president, Rene Preval, who says his government isn’t getting its fair share. According to the report, Preval spoke at a news conference and complained, “There’s a perception of corruption, but I would like to tell the Haitian people that the Haitian government has not seen one penny of all the money that has been raised — millions are being made on the right, millions on the left, it’s all going to the NGOs (nongovernmental organizations).”

But is that really so bad? If it is the citizens of Haiti who need direct assistance, why should more of the money be routed through the Haitian governmental bureaucracy?

Undoubtedly the government is struggling to provide any modicum of law and order in the chaos of the last two weeks. And whatever money the Haitian government receives should go firstly toward providing that kind of stability within which aid workers, food suppliers, and virtuoso entrepreneurs don’t have to be so concerned with theft and violence.

And in any case, the amount spent by the US government thus far is a small percentage of the nearly $2 billion in aid that has been sent in to the disaster zone. Indeed, according to the Chronicle of Philanthropy, private aid from America is running at about $470 million, topping the government’s contributions by nearly $100 million. Preval’s claims to a greater share of that aid money seem to not have much merit.

It isn’t the Haitian government that is the object of charitable aid; it’s the Haitian people, and that’s where the vast bulk of the money ought to be (and seemingly is) going. That’s also why calls for forgiveness of the Haitian government’s debts are so misguided, at least in the short term as the dead are still being pulled from the rubble.

In last night’s State of the Union address, President Obama commented that “even though banks on Wall Street are lending again, they’re mostly lending to bigger companies. Financing remains difficult for small-business owners across the country, even though they’re making a profit.”

He then offered some of our tax dollars to help: “So tonight, I’m proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat.”

The irony is that our government helped create this problem in the first place, both Republicans and Democrats. By repeatedly bailing out big corporations, Washington signaled the markets that it will protect “too-big-to-fail” companies if they should falter. So is it any surprise that big companies are attracting the lion’s share of the available credit?

What else has the government done to help? Well, it’s gobbling up an obscene portion of the world’s available credit by borrowing unheard of amounts of money. And by holding interest rates artificially low, it’s preventing the price function from coordinating the supply and demand of credit.

With help like this from the federal government, it’s a wonder there’s any credit left over for small businesses.

Occasional Acton Institute collaborator and theologian Eduardo Echeverria has a new book out: “Dialogue of Love”: Confessions of an Evangelical Catholic Ecumenist.

I haven’t gotten my hands on a copy yet, but the buzz—from some pretty respectable folks—is good. To wit, Francis Beckwith of Baylor University:

This is an amazing book. Professor Echeverria, artfully and persuasively, shows how the Catholic and Reformed traditions can better understand, as well as learn from, each other. This book is a model on how Christians ought to think about the relationship between faith and reason and how that understanding informs ecumenical dialogue.

Blog author: mvandermaas
Thursday, January 28, 2010
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Children are not the property of the state:

A Christian family from Germany have been granted political asylum in the US after facing the threat of prison for home schooling their children.

Uwe and Hannelore Romeike, who are evangelical Christians, were forced to flee Germany as they wished to educate their five children at home.

Home schooling is still illegal in Germany under laws introduced during the Nazi era.

The German law means that parents who choose to home school their children can face fines or even imprisonment.

Mr Romeike said: “I think it’s important for parents to have the freedom to choose the way their children can be taught”.

Mr Romeike and his wife withdrew their three oldest children from school in 2006 after they encountered problems with violence, bullying and peer pressure.

However, the decision to educate their children at home brought the family into conflict with the German authorities.

Blog author: sgregg
Wednesday, January 27, 2010
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This week’s Acton commentary:

The left is in trouble in Latin America. Sebastián Piñera’s recent election as Chile’s first elected center-right president in decades owes much to the inability of the center-left coalition that governed Chile after 1990 to rejuvenate itself. Yet across Latin America there is, as the Washington Post’s Jackson Diel perceptively observes, a sense that the left’s decade of dominance is unraveling.

Future historians may trace the beginning of this decline to the refusal of Honduras’s Congress, Supreme Court, Administrative Law Tribunal, independent Human Rights Ombudsman, Supreme Electoral Tribunal, two main political parties, and Catholic bishops to allow ex-President Manuel Zelaya to subvert Honduras’s constitutional order “from within” Chávista-style in 2009.

In truth, however, the populist-left is wilting because their economic policies are collapsing. The most prominent example is Venezuela. Hugo Chávez’s regime was recently forced to devalue the currency, thereby undermining the purchasing power of ordinary Venezuelans’ bolivars in an already recessionary inflation-riddled economy. He is also rationing basic commodities such as electricity. (more…)

Jean-Bertrand Aristide, the ex-president of Haiti who has lived lavishly in exile as a guest of the South African government for the past six years, recently announced he was ready to go back and help Haiti rebuild from its catastrophic earthquake. Allowing the former despot Aristide — a long time proponent of liberation theology — back into the country would be the worst thing we could do to Haiti right now. The American government must resist any move by Aristide to return.

In 2004, I wrote a piece for the Wall Street Journal in which I reminded readers of Aristide’s violent past:

In sermons later published in his book “In the Parish of the Poor,” [Aristide] called for forming “battalions” to perform “acts of deliverance” and for overthrowing the regime by “any means necessary” and pined for a Haitian version of the Sandinista Revolution. He did not hide his sincere devotion to Christian communism, which preferred its humanitarianism soaked in blood.

Ultimately, this former priest’s flawed understanding of the human person and economic realities added great suffering and injustice to a Haitian people who have endured so much: (more…)

The current issue of Touchstone magazine features an impressive cover essay by Douglas Farrow, Professor of Christian Thought at McGill University in Montreal, Quebec. In “The Audacity of the State,” Farrow uses the biblical Ichabod motif to examine the crumbling pillars of the family and church, which when properly respected form critical foundations for a flourishing society.

In their place, writes Farrow, is the “savior state,” which “presents itself as the people’s guardian, as the guarantor of the citizen’s well-being. The savior state is the paternal state, which not only sees to the security of its territory and the enforcement of its laws but also promises to feed, clothe, house, educate, monitor, medicate, and in general to care for its people.” As Lord Acton said, “There are many things the government can’t do – many good purposes it must renounce. It must leave them to the enterprise of others. It cannot feed the people. It cannot enrich the people. It cannot teach the people. It cannot convert the people.”

In a piece as far-ranging and challenging as this, there are bound to be some minor points with which to quibble. For instance, Farrow’s characterization of the role of Erastianism in the overarching narrative seems to be a bit of a caricature, or at least not contextually sensitive. But in any case, there is one larger lacuna in Farrow’s otherwise admirable, impressive, and worthwhile essay, a piece which has far too many worthwhile sections and quotes from which to pull an adequate nosegay. Farrow’s piece must be read in its entirety. (And while you are there, sign up to receive Touchstone.)

But in discussing the elements of civil society, those institutions other than the state which provide it with limits and humble its would-be soteriological ambitions, Farrow considers only the church and the family, “the two most prominent pillars of political freedom, the pillars that have always provided for a roof or shield over the individual and his conscience.”

To be sure, there is some historical basis for considering only these three (church, state, family). These are, after all, the so-called “three estates,” orders, or institutions of classical Christian social thought. These estates have in some form or another functioned vibrantly in the discussion of Christian social thought from Luther’s own time to the present. Richard Baxter (Weber’s proclaimed paragon of the Protestant ethic), for instance, had a threefold distinction beyond personal ethics: economics (referring in the older sense to family), ecclesiastics, and politics.

But in speaking of the tyrannical habitus of the state, at least passing reference must be made to what Dietrich Bonhoeffer identified as the fourth institution: the realm of work, business, culture. It is understandable why Farrow might not pay much attention to this multifaceted pillar of civil society, especially since that pillar has largely been ground to a nub in the course of the twentieth century. But state control and invasion of this sector of social life is as far-reaching, perhaps more so, as it has been with the state’s involvement in the church and family.

The church and the family certainly have their defenders in the public square, although they are too few and fragmentary, as Farrow rightly laments. But who will speak against the audacity of the state for the realm of labor, work, and cultivation? These need their defenders, too, and that in one sense is precisely what we aim do here at the Acton Institute.

This week’s reappointment vote for Fed Chairman Ben Bernanke has created some strange bedfellows in Washington. A muddled middle of Republicans and Democrats supports the Keynesian’s reappointment, but the real odd couples are among the opposition. For different if overlapping reasons, free market proponents and far-left figures such as democratic-socialist Bernie Sanders of Vermont are both convinced that Bernanke has done much to hurt our economy, particularly those in the bottom half of our economy.

Desmond Lachman of The Enterprise Blog observes:

Throughout 2006, when the worst of the sub-prime lending was taking place, Bernanke was conspicuously silent in sounding the alarm about the dangers of the U.S. housing bubble. Similarly, he was painfully slow in recognizing how severe the fallout from the bursting of the housing bubble would be….

If there is one more item that should sink Bernanke’s bid for a second term it has to be his recent statement that the Federal Reserve’s extraordinarily low interest rate policy between 2001 and 2004 contributed little to the creation of the largest U.S. housing market bubble on record. The Senate would do well to ask itself whether the economy’s interests would be best served by again choosing a Fed chairman who seems to have learned so very little from the Federal Reserve’s past monumental mistakes.

A sign that Bernanke’s reappointment really may be doomed: John McCain, whom many would characterize as a member of the muddled middle, also has come out against Bernanke. Political calculations may lead others to follow. For instance, if the new senator from Massachusetts, Scott Brown, wants to reinforce his strong crossover appeal, opposition to Bernanke offers an uncommon opportunity: Both working class Democrats and limited government conservatives reject Bernanke’s vision of Uncle Sam playing wet nurse to Wall Street.

As I wrote recently, our economy would be best served by a Fed Chairman who will let the market of lenders and borrowers guide interest rates, and who understands that unproductive companies should be allowed to go bankrupt. What’s useful in those companies doesn’t disappear in a bankruptcy. The valuable assets are purchased and put to better use by more productive companies. And when interest rates are allowed to float upward to reflect the scarcity of current savings, people will be more careful what they borrow for, while others will be enticed to save more, attracted by the higher interest rates paid for bonds. This, in turn, will boost available capital for longer-term business ventures aimed at enhancing our productivity.

Consider the short depression of 1920. A decade before the Great Depression, World War I had just ended and a flood of American soldiers returned home in search of work. Meanwhile, the Federal Reserve, having roughly doubled the money supply during the war, now put the brakes on the easy money by moving interest rates closer to where they might sit if simply left to market forces. The government also largely refrained from bailing out failed businesses or trying to juice the economy with big stimulus packages.

All of this is the opposite of what the Keynesians recommend in an economic slowdown. It’s the opposite of the Keynesian strategy pursued by both FDR and Hoover during the Great Depression. And it’s the opposite of what Chairman Bernanke has sought to do.

So how did the depression of 1920 play out? The readjustment to a peacetime economy was severe. Production fell by some 20%. Unemployment shot past 11%. But then the depression quickly reversed itself.

Many companies had gone broke, but their useful assets were sold to well-run companies. During the early phase of the contraction, goods and savings were tight, but the higher interest rates signaled to people, “Hey, if you want to borrow money, you’d better have a good, productive use for the money because you’re going to have pay a premium for it” — not because of a bunch of mean old capitalists but because there wasn’t a lot of savings to loan out right then. People got the message. Money got loaned to the most productive enterprises, and before long, the economy was humming again. The unemployment rate dropped below 7% in 1922, and below 3% in 1923. The government allowed the free market to readjust itself, and it quickly did.

This is the strategy recommended by the Austrian school of economics (which incidentally has more adherents in the United States than in Austria). The Austrian school is the polar opposite of the Keynesian school. The Austrian school predicted the Great Depression when others were preaching permanent prosperity. And it predicted our current recession when Bernanke the Keynesian was saying everything was right as rain.

All of this should give the Senate pause.

From Econstories.tv: In Fear the Boom and Bust, John Maynard Keynes and F. A. Hayek, two of the great economists of the 20th century, come back to life to attend an economics conference on the economic crisis. Before the conference begins, and at the insistence of Lord Keynes, they go out for a night on the town and sing about why there’s a “boom and bust” cycle in modern economies and good reason to fear it.

Lyrics sample (written by John Papola and Russ Roberts):

We’ve been going back and forth for a century
[Keynes] I want to steer markets,
[Hayek] I want them set free
There’s a boom and bust cycle and good reason to fear it
[Hayek] Blame low interest rates.
[Keynes] No… it’s the animal spirits

[Keynes Sings:]

John Maynard Keynes, wrote the book on modern macro
The man you need when the economy’s off track, [whoa]
Depression, recession now your question’s in session
Have a seat and I’ll school you in one simple lesson

BOOM, 1929 the big crash
We didn’t bounce back—economy’s in the trash
Persistent unemployment, the result of sticky wages
Waiting for recovery? Seriously? That’s outrageous!

more here.

Blog author: rnothstine
Monday, January 25, 2010
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Writers on this blog have pointed to a lot of examples of effective compassion when it comes to charity and public policy. But what can ineffective compassion, or maybe just a lack compassion, look like? The Lieutenant Governor of South Carolina Andre Bauer made a comment saying government assistance programs for the poor was akin to “feeding stray animals.” I’m not highlighting the comment just to bash Bauer and you can watch the clip where he clarifies his comments. He continues in a follow up interview by offering up a much more articulate and measured response to the problems of government dependency.

I think the comments show, besides being woefully short on compassion, the value of the work we do at the Acton Institute. This is especially true when it comes to talking authentically on issues of poverty and the unintended consequences that result from government solutions. Bauer went on to say that “My grandmother was not a highly educated woman, but she told me as a small child to quit feeding stray animals. You know why? Because they breed.” The problem with the illustration or metaphor he used was that it completely misses the mark about the dignity of the human person. Furthermore, most Americans want to help people, even when their intentions are misguided.

Let’s be frank, it is hard to adequately help those caught in a cycle of dependency by government programs with animal comparisons. It is not a coincidence that many programs and charities that are run for the poor are managed best by those who have a deep love for those in need. It is one of many reasons why they are more effective and loving than bureaucratic treatment. 1 Samuel 2:8 declares: “He raises the poor from the dust and lifts the needy from the ash heap; he seats them with princes and has them inherit a throne of honor. For the foundations of the earth are the Lord’s; upon them he has set the world.”

In a story in the Boston Herald Bauer adds, “I also believe government, too often in its effort to help people, ends up creating a bigger problem.” The story also highlights some of the circumstances of Bauer’s upbringing, which suggests to me it is hard to believe he is at his core a man of little compassion. In any event, it sounds like Bauer could really benefit from Acton University.