It is a commonplace in discussions of environmental economics to consider so-called “negative externalities,” a technical term for the bad or damaging consequences of an activity that affects those outside the realm of economic decision-making.

For instance, I can make the choice to plant a tree in my yard on my own (presuming there are no regulatory hurdles to jump). A negative externality for my neighbor might be that my tree dumps a lot of leaves into his or her yard and they need to be cleaned up. Typically this level of external consequence is not given a concrete cost…we simply rake up whatever leaves happen to land in our yard, whether they are from trees we do or do not own (I got to thinking about this lately because I had to rake up a bunch of leaves this weekend. Thankfully I caught a relatively warm day after the rain had mostly dried up and the snow had not yet fallen). But if a branch or limb falls from my tree onto my neighbor’s property and causes damage, there may be a level of liability there that would allow for some sort of claim for economic compensation.

It is also a common part of this discussion for environmental economists to observe that we almost never place any concrete costs on positive externalities. I have no ability to charge my neighbor for the pleasure he or she receives from looking at my beautiful tree. I might be able to restrict this positive externality by building a fence and obstructing the view of my tree, but the beauty of the tree is a natural benefit that cannot be commodified in any usual sense.

Oftentimes these two observations, regarding the costs associated with negative externalities and the inability to commodify many positive externalities, are made with a somewhat grudging attitude. After all, thinks the economist, it seems unfair that a person be liable only for the bad things that happen because of their economic decisions but don’t stand to benefit because of the good things that happen. So from the economist’s perspective, there’s a bit of inconsistency there.

Common sense intuition runs the other way, however. We ought to pay for the harm that our actions cause, but it’s also appropriate that I can’t charge my neighbor for all the good my actions may do for him or her. In brief here’s a theological reason why the typical view is correct and is right to dominate both people’s thinking on these topics in general as well as the shape of public policy: Good is more fundamental and basic than evil.

This is a view typically associated with Augustine of Hippo, and in summary it simply means that evil is a departure from the good. The world order as created was “good,” for God made it and declared it such. Thus, the good of positive externalities is in some sense more basic than the evil of negative externalities. The harm caused by negative externalties is an evil resulting from the fact that things in a fallen world are simply not the way they are supposed to be.

Our conception that positive externalities are more basic than negative harms is an indirect witness to the priority of the good creation over the corruption of sin and evil. We can abuse the blessings of God’s goodness when we take these gifts for granted, too. But our sense that some norm of justice has been violated when there are negative externalities (and that the gracious order of natural blessings is more basic) is a moral intuition that the world was created good and in some radical way has departed from that original state.

Blog author: jcouretas
Friday, November 14, 2008
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Acton’s Sam Gregg on Public Discourse:

On November 15th, leaders of the world’s largest economies will gather in Washington, D.C., to discuss the ongoing international financial crisis. Figures such as Britain’s Prime Minister Gordon Brown view the summit as an opportunity to reform international financial structures and perhaps create new ones. He and others have spoken of a “new Bretton Woods”—the 1944 international meeting that sought to design an international financial structure for a post-war world.

Today, relatively little is left of the original Bretton Woods. Many of its provisions concerning exchange rates and currencies, for instance, were gradually abandoned. Bretton Woods’ most prominent institutional legacies are the IMF and the World Bank. For different reasons, neither is especially liked by developed or developing countries. In recent years, both have struggled to define their missions. The World Bank has additionally been dogged by allegations of ignoring or even facilitating corruption in developing nations, not to mention criticisms that, more than most bureaucracies, the primary objective of many of its staff seems to be institutional self-preservation.

The contemporary financial crisis has demonstrated, however, that the basic impulse for Bretton Woods-like solutions to international economic problems is alive and well. Some national leaders, for instance, have echoed (probably unconsciously) John Maynard Keynes’s call at Bretton Woods for a “world central bank”. More generally, there is a strong push, especially from Western European governments, for the creation of more intergovernmental planning and bargaining mechanisms as the means to impose a new international regulatory order upon national banking and financial systems.

But is this ‘top-down’ approach really the best way to address the financial crisis over the long term? One prominent twentieth-century figure who would have vehemently disagreed was the German economist Wilhelm Röpke (1899-1966).

Read the article at Public Discourse.

The National Catholic High School Honor Roll announced its fifth selection of the best 50 Catholic secondary schools in the United States. The purpose of the Honor Roll is to recognize and encourage excellence in Catholic secondary education. It is a critical resource for parents and educators that distinguishes those schools that excel in three categories: academic excellence, Catholic Identity, and civic education.

This year’s list includes 10 new honorees as well as eight schools that have earned recognition in each of the Honor Roll’s five years of existence. 2008 honorees range from newcomer schools such as Knoxville Catholic in Tennessee, to repeat honorees such as Bishop Machebeuf Catholic in Denver and Holy Spirit Preparatory in Atlanta. Texas and Michigan led with six schools selected, followed by California, with four schools. Nine different religious orders sponsor honorees, including the Jesuits, Legionaries of Christ, and Norbertines.

To see a list of the top 50 schools, as well as lists of the 10 honorable mention schools in each category, visit www.chshonor.org.

The Honor Roll is an independent project of the Acton Institute, an international research and educational organization. It is produced in consultation with an advisory board comprised of Catholic college presidents and scholars. Advisory board member Very Rev. David M. O’Connell, President of Catholic University of America, said the Honor Roll’s evaluation method is indispensable. “Catholic schools must examine themselves on a regular basis using a well-rounded approach that assesses adherence to the Church’s educational calling,” he said. “The Honor Roll strengthens schools by encouraging high standards and vibrant Catholicism.”

In its five years, the Honor Roll has seen more than 50 percent of America’s nearly 1,300 Catholic high schools participate at least once. This year nearly 300 schools completed the three detailed surveys that measure a school’s adherence to the Church’s educational mission. Each school also receives an evaluation to see how it compares to other schools nationwide.

The best schools demonstrate a balanced excellence, which includes an active Catholic culture, sound college preparation and integration of Church teaching in all departments. These schools also display sound moral, catechetical and civic formation that prepares students for vocations in the world as political, religious, scientific, and business leaders.

Questions about the Honor Roll may be directed to Anthony Pienta at (616) 454-3080, apienta@acton.org or info@chshonor.org.

The National WWII Memorial

When FDR ordered General Douglas MacArthur out of the Philippines in 1942, the dismal fate of the American and Filipino defenders at Bataan and Corregidor was sealed. Japanese forces had blockaded the island, achieved air superiority, and set their forces up to easily overpower the American defenses. The story of Bataan and Corregidor was a heroic tragedy. Heroic in that American and Filipino forces fought back bravely for months, and tragic in that any relief, retreat, or victory was impossible. The Japanese were on the offensive all over the Pacific, achieving a string of humiliating defeats to the American military.

With the exit of MacArthur, General Jonathon “Skinny” Wainwright was given command of the defense of the islands. The forces under him were slowly starving, unhealthy, and increasingly ineffective. Wainwright did his best to rally the men, visiting the front lines to encourage his forces. He even gained the highest respect of the Marines at Corregidor for his courage under fire and how he personally returned fire on the front.

Bataan was the first to surrender, setting up the atrocity of the Bataan Death March, where only 54,000 out of 70,000 arrived at POW camps. It was the largest surrender in American history, and even those who survived the death march awaited further atrocities at Camp O’Donnel. General MacArthur said of the Bataan defenders:

The Bataan force went out as it wished, fighting to the end its flickering forlorn hope. No army has ever done so much with so little and nothing became it more than its last hour of trial and agony. To the weeping Mothers of its dead, I can only say that the sacrifice and halo of Jesus of Nazareth has descended upon their sons, and God will take them unto Himself.

General Wainwright added, “Bataan has fallen, but the spirit that made it stand – a beacon to all the liberty – loving peoples of the world – cannot fall!” Wainwright carried a heavy burden for the surrender, and further despair settled in among the defenders at Corregidor for the fate that awaited them.

The American people followed the reports of the battle, clinging to any hope for a victory in the Pacific. It was never to be, despite further bitter and heroic fighting. Wainwright was forced to surrender the entire Philippines in May of 1942 for the purpose of saving civilians and his remaining men. Privately MacArthur was livid with the action, as some believed additional American and Filipino forces in other parts of the islands might have been able to hold out awhile longer or take up guerrilla action. Unfortunately for Wainwright, he was left with no other choice, yet he still declared, “I have taken a dreadful step.”

Wainwright was made a prisoner of war with his men. He was depressed that he was the commander who surrendered the largest contingent of American forces in its history.

General Jonathan M. Wainwright

He also believed he would receive a court martial and be made the scape goat for the Philippines if he ever returned home. His treatment like nearly every Allied prisoner in the Pacific was brutal. Like the men he led, he wasted away to a skeleton under Japanese care. Denied basic provisions, he was shuffled from camp to camp until the very end. Upon his liberation, he asked the first American he saw what the American Brass and people thought of him. The soldier replied, “You are a hero General Wainwright.” Still skeptical he kept asking additional men and officers the same questions.

The story of Bataan and Corregidor is a story of American defeat and temporary American abandonment of those who fought and bled there. Out of the ashes total victory and redemption would emerge for those fighting to free and liberate the people under Imperial Japanese aggression. The heroic defense of Bataan and Corregidor slowed the Japanese offensive in the Pacific, giving time for the Navy and MacArthur to organize their forces.

Wainwright did return to the United States a hero, and President Truman awarded him the Congressional Medal of Honor for his actions on the front lines of Corregidor. Wainwright was loved by the men he commanded because he suffered with them. He refused to leave their side or the rock he defended saying, “We have been through so much together that my conscience would not let me leave before the final curtain.” The Pacific Theater is sometimes overshadowed by the European Theater in WWII. The greatest thing about Veterans Day is we remember and honor all of those who served from the Chairman of the Joint Chiefs of Staff, to the lowliest infantry grunt.

Understanding in many ways he was a symbol of defeat, albeit heroically, Wainwright warned the nation against ever being ill prepared in its defense again. Wainwright declared:

I hope that the story of what Americans suffered will always be remembered in its practical significance – as a lesson which almost lost for us this land we love. Remember Bataan! Remember Corregidor!

Just in time for Christmas, Acton Media’s new documentary The Birth of Freedom is now available for purchase from the Acton Bookshoppe. Accompanied by a study guide which explores several core themes of the documentary, The Birth of Freedom tells the story of how modern understandings of individual liberty were developed and addresses the questions, “Why would anyone believe that all men are created equal? That all should be free? That all deserve a voice in choosing their leaders? Why would any nation consider this a self-evident truth?”

Order your copy, check out our popular Birth of Freedom short video series, learn how you can host a screening of your own, and discover more background information at www.thebirthoffreedom.com.

I made a mental note of it awhile back when I heard that there was a “Christian” version of the immensely popular Guitar Hero video game franchise in the works. Wired recently reviewed Guitar Praise – Solid Rock here.

Reviewer Eliot Van Buskirk notes that Guitar Praise “inhabits a gentler world where a bad performance gets you mild clapping and gentle suggestions instead of the raucous boos and catcalls that accompany failure in Guitar Hero.”

There are two conditions that would have to be met before I would consider purchase of this game.

First, this song from Sonseed would have to be included:


Zap! (For some reason hearing that song always reminds me of this SNL skit [video here]…and since we’re closing in on Christmas, even better.)

And second, I’d have to receive a standing offer to play Guitar Praise on stage as part of my church’s praise and worship team.

On a more serious note, this is a great example of how “evangelical” culture is so often derivative of popular culture (in a bad way) and dated (also in a bad way). Somehow I don’t think “Christian” Guitar Hero is what Andy Crouch has in mind for fulfillment of the call for Christians to be “culture makers.”

Posted at the Center for a Just Society (notice courtesy the National Humanities Institute), Dr. Mark T. Mitchell asks a series of questions focused on the intersection between morality and economics in light of the recent financial crisis. In “Ten Questions and a Modest Proposal,” Dr. Mitchell invokes the institute’s namesake and this blog’s tagline.

In question number 9, Dr. Mitchell says,

Lord Acton’s hoary saying is pertinent: “power tends to corrupt.” If so, then we should make efforts to decentralize power. Such a sensibility is behind the separation of powers written into the fabric of the U.S. Constitution. We should be concerned, then, when big corporations get into bed with big government. The off-spring will be ugly and, we can rest assured, it will be big. This bailout represents a stunning consolidation of corporate and government power. Of course, we are promised that the government will regulate the corporations, but the conflict of interest is glaring. Could it be that the problem is not de-regulation but regulations that favor big corporations over small businesses?

Recent reports have placed the economic impact of a shutdown of one of the Big 3 automakers could cost 3 million jobs and $60 billion in 2009. Now Detroit automakers are apparently “too big to fail.” (Update: Ford has announced significant 3Q losses this year, and plans to cut 10% of its salaried workforce in North America.)

The other questions are prescient, as well, and Dr. Mitchell’s “modest” proposal is well worth considering: “The American way of life is sustainable only if we acknowledge that publicly and privately we are called to lives of responsibility. Hubris is only countered when we recognize limits.”

Blog author: jcouretas
Thursday, November 6, 2008
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One does not broadcast his opinions in various forums over the years as I have done without receiving my fair share of disagreement from all sides, friends and foes alike. One participant who came to a recent conference remarked, “All my life I have been looking to build a fair and egalitarian society, but I have now learned why it is better to advance a free and virtuous society.”

Yet, something new came my way when I received an envelope with the return address of Commonweal, a publication known for – how shall we put this gently? – a progressive stance on matters of faith and public policy. Inside was the September 26 issue of the magazine, with a helpful note from the editors pointing me to page 8 where I came upon the “Libertarian Heresy — The Fundamentalism of Free Market Heresy” by Daniel Finn, who is a professor at St. John’s University in Collegeville, Minnesota. In his essay my colleague Sam Gregg and I are his primary targets. In a single, canard-laden article, we are attacked for heresy, fundamentalism, neo-conservatism and on questions of law and morality, for voicing “libertarian” and generally un-Catholic, not to mention anti-Thomistic views.

Professor Finn’s not-so-subtle polemical technique is to raise and make patently absurd questions and assertions and then leave it to the reader — and me — to conjecture an answer. Like so: “So has Fr. Sirico mixed libertarian heresy about human freedom into his Christian view of morality and law? I’ll leave that for him to reflect on.” As well as putting in my mouth the rather un-nuanced argument that “raising taxes to help others is unchristian.”

Facing an accusation of heresy from Commonweal was too delicious an irony to pass over without comment. So, on Oct. 13, I faxed the magazine this letter: (more…)

Blog author: jcouretas
Wednesday, November 5, 2008
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If a handful of friends and I were able to bang our heads against the wall for years by speaking the truth about Communist totalitarianism while surrounded by an ocean of apathy, there is no reason why I shouldn’t go on banging my head against the wall by speaking ad nauseam, despite the condescending smiles, about responsibility and morality in the face of our present social marasmus. There is no reason to think that this struggle is a lost cause. The only lost cause is one we give up on before we enter the struggle. — Václav Havel

The above quote is from “Politics, Morality & Civility,” an essay by Czech playwright and former President Václav Havel, published in his 1992 book Summer Meditations. The book was written soon after the former dissident took office following the fall of Communism in Czechoslovakia.

Doing some post-election reading, I came across the quote in an article by Al Sikes titled “Overwhelmed by Culture” on the Trinity Forum site. Sikes, whose career has spanned law, business, and government, currently divides his time between business consulting for the Hearst Corporation and board work. He also chairs the Board of Trustees of The Trinity Forum.

Although “Overwhelmed by Culture” is on the surface about the financial crisis, it really goes much deeper than that. Sikes observes that “the culture has overwhelmed its purported masters; the culmination of systemic wrong-headedness has miniaturized much of the leader class.” He reminds us that the Founders were most concerned about the “overwhelming importance” of the young nation’s moral condition, which is the basis for economic and political decision-making. Sikes:

Today’s crisis is said to be about money (too little liquidity); I believe it is about character. Putting people at profound risk as a tool of either public or private greed is morally wrong. Sure, each time a loan is made to an aspiring homeowner or entrepreneur, for example, there is risk, but the risk of highly leveraged purchases of exotic securities is of a different order. And the risk of under-funding pension and health-care promises (yes—promises, not mere programs) is of a different and, I would suggest, more profound order.

In a Darwinian world such conduct is simply in the order of things. After all, there are thousands who now live in lavish comfort as a result of their predation. They are survivors. But those who deal derisively or dismissively with faith and its foundations should pause; this crisis offers a learning moment.

We are on the eve of an election. It is often said that this election will be the most important one in at least a generation. Perhaps. I have no trouble finding admirable traits in both candidates for President, and I am hopeful because that is my temperament. But in parallel, I am convinced that the most important need is not on Pennsylvania Avenue but in the hearts and minds of the governed.

Read the rest of “Overwhelmed by Culture.”

Blog author: jcouretas
Wednesday, November 5, 2008
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We’ve posted Rev. Robert A. Sirico’s Oct. 30 speech delivered at the Acton Institute annual dinner in Grand Rapids, Mich. The dinner also featured a keynote address from Rev. John Nunes, president and chief executive officer of Lutheran World Relief, and remarks from Kate O’Beirne, National Review’s Washington Editor, who accepted the Acton Institute Faith & Freedom Award in honor of the late William F. Buckley, Jr.

Excerpt from Rev. Sirico’s speech:

Today we find institution after institution “in the tank” for unrestrained government intervention. One is reminded of Italian philosopher Antonio Gramsci’s call for the left to begin a long march through the institutions of Western Civilization. The left, it seems, got the memo. How will we respond to this disheartening situation? Now is no time to retreat in disarray. Now is no time to stumble. There remains a remnant … a potent remnant who has not bowed the knee to big government. My call to you tonight is a transparent one: strengthen the soldiers of that remnant. In particular—strengthen that band of brothers gathered with you tonight, the Acton Institute.

Never in Acton’s nearly 20 year history has our message been more essential than right now. As an institution that cherishes the free and virtuous society, we are living through this thing with all of you, and we need your help to continue. Our history of integrity; the quality of our products and programs; the responsible tone with which we approach the questions at hand, all speak to the fact that this work is worthy of your investment. I humbly ask for it with the promise that we will use it well and prudently.

The fact of the matter is that too many of us have become much too comfortable and yielded to a perennial temptation, the temptation to take our liberty for granted. Those of you who have invested in the work of the Acton Institute over the years know—and especially those of you who have had a chance to see our latest media effort “The Birth of Freedom” know—we believe the time has come for a renewal of those principles that form the very foundation of civilization, the same principles that make prosperity possible and accessible to those on the margins.

Liberty is indeed, as Lord Acton said, “the delicate fruit of a mature civilization.” As such it is in need of a nutritious soil in which to flourish. In this sense you and I are tillers of the soil, if you will.

Liberty is a delicate fruit. It is also an uncommon one. When one surveys human history it becomes evident how unusual, how precious is authentic liberty, as is the economic progress that is its result. These past few weeks are a vivid and sad testimony to this fact. As a delicate fruit, human liberty as well as economic stability must be tended to, lest it disintegrate. It requires constant attention, new appreciation and understanding, renewal, moral defense and integration into the whole fabric of society.

Read the entire speech here.