69 Responses to A Bit on the Debt Ceiling

  • So if I understand correctly, on August 2nd interest rates start going up as the Treasury needs to roll over debt. Don’t know how long the Treasury can keep that up. A few day? Weeks? Months?

    Reagan on the debt ceiling:

  • I agree with President Obama (version 2006.1 Beta). The debt ceiling should not be raised until tea party extremists allow him to continue to spend $1.4 trillion more than revenues each year, and also authorize him to raise taxes (just for the evil rich), and spend more and more money (purposeful repetitive silliness here). SARCASM: off.

    Lessee, they’ve raised the debt ceiling 62 times, or is it more?. And, the US financial condition (accelerating downward trajectory toward national bankruptcy) each time got worse. Then, they get in a black man and they want him to fail . . . [Sorry]

    “They” have kicked this can down the road too many times. Soon, if something real is not done to reduce deficits and lower the national debt trajectory, the US will default and [shriek] receive a credit rating agency downgrade.

    FYI: These rating agencies rated AAA about $3 trillion of mortgage-backed CDO’s rated then they defaulted en masse. That is the cause for the Dodd-Frank prohibition for banks from using them for credit decisions.

    The link says sane conservatives (ad hominem: you’re a nut if you disagree) want the debt ceiling raised. Is one definition of “insanity” doing the same thing over and over and expecting a different outcome?

    Oh, . . . Both sides are obdurate here. yet, two out of three Americans agree with the House that lowering the deficit/national debt is vital. Seems the elites and academics split the other way.

  • So we are in essentially a no win situation? we have to raise the debt ceiling in order not to default. But raising the debt ceiling only puts us in more debt, because, let’s face, we have no restraint, we max out our credit every time. Which will then cause us to raise the debt ceiling yet again. Which will then put us in more debt because we have no restraint, etc., etc. …. 👿

  • The link says sane conservatives (ad hominem: you’re a nut if you disagree)

    Yes.

    I heard Thomas Sowell interviewed the other day on one of the talk radio stations. His view was that the debt ceiling should be repealed entirely, so that people wouldn’t get the mistaken idea that you could limit spending by not raising it. When even Tom Sowell says not raising the debt ceiling is a bad idea….

  • T Shaw,

    I agree that getting spending more in line with tax revenues (primarily through spending cuts) is vital — but risking what amounts to a voluntary default on our current debt would be an absolutely boneheaded way to achieve that. I can understand if most people who answer polls don’t understand that, but the scary thing is when it’s unclear how many congressmen do.

  • BA: Then, whom is to blame for the impasse? Giuliani says 90% of the blame goes to Obama.

    They’re coming to put the “jacket” on m . . .

  • Well, there’s always the option of defaulting on federal payments other than debt service – not that it would be any wiser or more feasible to do so. You kinda want to avoid sudden disruptions like, say, not giving the military their paychecks. But hey, at least we’d keep interest rates low!

  • It seems to me that there was a bill that would have both raised the debt ceiling and cut spending passed in the House this week. Someone threatened to veto it and someone else insisted on having it tabled. So, the House at least did its job. If we default it’s on the President and the Senate for failing to be reasonable.

  • Mandy,

    You are correct.

    The Democrat Senate shot down the Repub House “Cut, Cap and Balance” in a straight party-line 51-46 vote. Senator DeMint will bring it forward again.

    From “Never Yet Melted”, “Richard Minter, Forbes, notes that we have no choice, we are going to have to stop increasing the beast’s rations. But that is a real problem for democrats, whose entire raison d’etre is the delivery of more federal money in return for support.”

  • Of course we wouldn’t have this debate right now if the Democrats had been able to pass a budget during the two years they completely controlled the federal government and if their solution to our fiscal problems didn’t consist of borrowing as if tomorrow will never come. The Republicans have brought forward proposals to curb our spending spree and Obama and the Democrats in Congress simply refuse to come up with any serious proposals of their own. Republicans shouldn’t budge an inch and force Obama to either give way or add “default” to his list of economic accomplishments. If we do default it will be by his choice since federal debt payments constitute a paltry 164 billion of federal revenue of 2.3 trillion. We do not need to borrow in order to meet our debt payments. Of course this is merely a scare tactic that the most worthless president in my lifetime has seized upon along with his threats to not pay the military or social security recipients.

  • I liked the Gang of 6 plan which was close to the Bowles-Simpson plan and supposedly the secret Obama plan. James Capretta at NR had some valid procedural criticism. If it were an ironclad bill, there would be no reason not to support it except for stupidity. Not raising the debt ceiling will result in a Democratic sweep in 2012. I know, I know “No, it won’t. It will result in 100 years of Republican dominance thanks to their steadfastness.” But I was just talking about reality.

  • “Not raising the debt ceiling will result in a Democratic sweep in 2012. I know, I know “No, it won’t. It will result in 100 years of Republican dominance thanks to their steadfastness.” But I was just talking about reality.”

    Reality comes in more than RINO lenses RR. Not raising the debt ceiling would lead not to a default but rather a cold dash of reality that business as usual is no longer possible. Adding a trillion dollars plus a year to the national debt is simply not feasible either long term or short term, and business as usual is Obama’s policy.

  • MAc is 100% right as always.

    Instapundit cites recent a Rasmussen poll result.

    Obama – 41%

    Ron Paul – 37%

    Another poll: two of three Americans agree with the House “Cap, Cut and Balance” plan.

    Maybe Obamba and Paul will exchange poll places when the O-ster reveals his secret plan.

  • Not raising the debt ceiling would lead not to a default but rather a cold dash of reality that business as usual is no longer possible.

    That cold dash of reality would be ruinous for the economy. If you think things are bad now, just try cutting a trillion or two dollars of government spending cold turkey like that and see what happens. That would be like an enemy destroying half our manufacturing capacity overnight. Remember that Y = C + I + G + X, and even though a lot of gov’t spending is transfer payments, that “G” is an awfully big number by itself. What would make up the difference if we suddenly stopped it? And it’s not just federal employees that wouldn’t get paid — payments on defense contracts would stop, for example, and employees all the way down the supply chain would lose their jobs. (Believe me, there are mom and pop machine shops that are nth-tier subcontractors on this stuff.) We don’t typically think of those kinds of businesses as people feeding at the gov’t trough, but that’s exactly the kind of ripple effect that not being able to borrow or otherwise raise revenues would have.

    Gov’t spending is certainly too high, but the answer isn’t to force the tough choices in such a reckless fashion. Instead of playing political games of chicken with the debt ceiling, what our elected officials should be doing is pursuing a steady, long-term strategy of aligning spending with revenues, with the goal of eliminating our borrowing addiction.

    One could argue that Sen. Bozo and Rep. Doofus have never shown such fiscal restraint, and one would be right. However, the alternative of slashing almost half of gov’t spending overnight is not the answer.

  • If we don’t start cutting spending now J. Christian, it will never get done. Our current path is one leading to debt repudiation in the not too distant future as we amass a debt that is simply unpayable. Unless a gun such as the debt ceiling is placed against their heads, there is no will to cut spending in Congress, at least among the Democrats. It is fanciful to expect anything else but kicking the can down the road by Congress unless a crisis arises that forces them to take action.

    If we simply rolled back federal expenditures to 2006 levels we would have a balanced budget. Such a demonstration of fiscal sanity would have an immensely positive impact on this nation’s economy and more than offset any negative impact from slapping hogs away from the federal trough. Such radical slashing of federal expenditures has been the norm in this country’s history. For example, in 1946 Federal expenditures were 55 billion with a substantial deficit. In 1947 expenditures were slashed to 38 billion with a surplus. The idea of a huge bloated federal budget is a novelty in this nation’s history and like so many of the ills that afflict us these days, a legacy of the sixties.

  • Never fear, the deep thinkers at Daily Kos have a solution not only to the debt ceiling but also the entire national debt:

    http://www.dailykos.com/story/2011/07/21/996876/-Beyond-the-Debt-Ceiling:-The-$30-Trillion-Plan-for-Ending-Borrowing-and-the-National-Debt?via=tag

    This idea is actually quite popular among the “reality based community”.

  • but risking what amounts to a voluntary default on our current debt would be an absolutely boneheaded way to achieve that.

    Regrettably, ‘absolutely boneheaded’ seems to describe a critical mass of the House Republican caucus. If the discussions I have had in fora such as this are any guide, these politicians move in a matrix of people for whom that is a descriptor.

    What is curious about this all is that (with the exception of Illinois and California) the state governments of all stripes seem to be able to cope passably with the fiscal difficulties they have faced. The central government, on the other hand, has conducted itself in such away as to discredit just about every component of the political class. They are all unfit to govern. We are about to learn that the hard way and are about to learn also that the institutional architecture of the central government is not so well engineered.

  • Most states require a balanced budget Art, they can’t print money and they don’t control the Fed to magically conjure it out of thin air. In short, they have to do it, and with the Republicans controlling most state legislatures and state houses there is the political will to do it. Where the Republicans control neither the legislature nor the state house, California and Illinois are prime examples, the flight from fiscal reality continues unabated.

    This crisis over increasing the debt ceiling is the most leverage proponents of fiscal sanity on the Federal level have to force the President and the Demcrats in Congress to do anything about the massive borrowing that is destroying the nation’s economic future.

    We are in this mess because for the past five decades we have been ignoring the first rule of a national debt set forth by Secretary of the Treasury Alexander Hamilton in his 1789 report to Congress on public credit:

    “Persuaded as the Secretary is, that the proper funding of the present debt, will render it a national blessing: Yet he is so far from acceding to the position, in the latitude in which it is sometimes laid down, that “public debts are public benefits,” a position inviting to prodigality, and liable to dangerous abuse,—that he ardently wishes to see it incorporated, as a fundamental maxim, in the system of public credit of the United States, that the creation of debt should always be accompanied with the means of extinguishment. This he regards as the true secret for rendering public credit immortal. And he presumes, that it is difficult to conceive a situation, in which there may not be an adherence to the maxim. At least he feels an unfeigned solicitude, that this may be attempted by the United States, and that they may commence their measures for the establishment of credit, with the observance of it.”

  • Will Rogers: “It ain’t what you don”t know that gets you in trouble. It’s what you know that ain’t so.”

  • You neglect a few things.

    1. A legislative body just might ignore the law, which Harry Reid and his confederates in the U.S. Senate have done with regard to the budget process. State legislatures have tended to be more circumspect about disregarding provisions of state constitutions and such.

    2. There are 11 state governments where the Democratic Party controls the executive and legislature, not two. California is in the crapper even though it has had a Republican governor for 23 of the last 28 years.

    3. The PBS talking heads last night were discussing some comments recently made by Christine Gregoire, the Governor of Washington. She apparently said she had to make what she termed ‘terrible’ decisions with regard to fiscal policy, but she made those decisions. Her federal counterparts are very resistant when they do not refuse outright. It is a different institutional culture.

    4. Modes of federal taxation are more procyclical than is the case on the state level. Federal tax collections as a ratio of domestic product are now at 0.149, about as low as they have been in the last 50 years or so. Some of the expenditure has been to service debt accumulated in attempting to resolve a banking crisis (always an expensive proposition) and some has been a result of demographic factors & price dynamics in medical care. A great deal of our trouble is the Democratic Party’s spending electives, but there is a great deal else as well.

    5. This is not going to be pretty, and advocates for the Republican congressional caucus have elected for the most part to behave as if the markets will not react. What is worse, it is coming to a head in conjunction with a sovereign debt crisis in Europe. The European institutions might have taken steps to immunize their banks, insurance companies, and defined-benefit pension plans by building a fund to buy preferred stock and issue indemnities. They apparently have not.

  • Mac,

    The Bernank and Tax Expert Geithner don’t need to raise taxes nor the elevate the debt ceiling nor mint trillion denominated platinum coins.

    They can simply make a book entry at each Federal Reserve Bank

    Aggregate national journal entry:

    Debit Credit
    Cash/effectively a Checking Account $30T
    Due to the American people $30T

    No. They will not draw checks on the accounts that cover “it all.” They will print $30T in crisp, new Federal Reserve Notes. And, that’s how it’s done now. Brilliant! Problem solved.

    Now, I’m having a stroke contemplating how much a bottle of hootch will cost.

  • “1. A legislative body just might ignore the law, which Harry Reid and his confederates in the U.S. Senate have done with regard to the budget process. State legislatures have tended to be more circumspect about disregarding provisions of state constitutions and such.”

    States can ignore laws all they want to Art, I could point out some doozies here in Illinois, but they can’t ignore they don’t have money which is why Illinois is staring at de facto bankruptcy.

    “There are 11 state governments where the Democratic Party controls the executive and legislature, not two.”

    Correct Art, and almost all are in worse fiscal shape than States controlled by the Gop.”

    “California is in the crapper even though it has had a Republican governor for 23 of the last 28 years.”

    I would hardly call the Guvernator a Republican Art. He got into the office due to Gray Davis and the Democrats leading the State down the path to bankruptcy, and, after an initial attempt to return to fiscal sanity, he went along with the Democrat controlled legislature.

    The change is noted here:

    http://usliberals.about.com/b/2006/01/14/arnold-schwarzenegger-californias-newest-democrat.htm

    “A great deal of our trouble is the Democratic Party’s spending electives, but there is a great deal else as well.”

    The current crisis is almost entirely due to the Democrat party, although I would concede that prior to Obama the fiscal abyss we face was a bipartisan disaster. The problem currently is that the Democrats refuse to do anything to meet the crisis and have done their best to make the fiscal crisis worse.

    “This is not going to be pretty, and advocates for the Republican congressional caucus have elected for the most part to behave as if the markets will not react.”

    Of course the markets will react. If the Republicans force through a deal that substantially cuts spending the markets will respond positively. If Obama refuses to agree to such a deal and takes the country into default as a part of political theatre against the Republicans, the markets will react negatively.

  • Don,

    Do you think Tom Sowell views the world through RINO lenses?

  • No he is simply wrong BA. It is possible to be wrong without being a RINO, but being a RINO certainly greatly increases the chances of being wrong on an issue of public policy. Sowell is simply misreading the politics of this based upon a fairly simplistic look at the government shut down of 1995:

    http://www.nationalreview.com/articles/256801/republican-showdown-thomas-sowell

    What Sowell fails to appreciate is that our fiscal plight is much more dire today than it was in 1995, that Obama has been on the spending spree to end all spending sprees and the public knows it, that the economy is in the tank today which was not the case in 1995 and that Obama lacks the preternatural political skills of Clinton. We also do not have Gingrich making an ass out of himself by complaining about being given a proper seat near the President on Air Force One. I think Sowell is a good economist and a poor historian.

  • Actually, the ratio of federal expenditure to domestic product is close to what it was ca. 1984. We are not in virgin territory as regards spending levels.

    There is considerable dreck in the federal budget, but the dreck is not anywhere near 40% of the total. And, of course, the tax take is lower than it has been in decades. The insistence on the part of Republican legislators that there be no tax increase, even one enacted by excising deductions, is foolish.

  • Economic growth is the solution.

    Achieve consistent 3% (private sector) economy growth and tax receipts will climb. If they could get 5% so much better. Conversely, rising tax rates (and more regulations) hamper GDP growth.

  • T. Shaw,

    The only period of time in American economic history where we experienced economic growth rates on the order of 5% per annum for any sustained run of years was in the process of climbing out of the Depression and ramping up war production. Even 3% per year is not to be expected given the rates of labor force growth we are likely to have.

  • “We are not in virgin territory as regards spending levels.”

    We certainly are in regard to amassing huge debt, without a global world war, and not a clue as to how pay for it, and an economy that has been in the tank for years.

    As to reducing federal expenditures, here are some ideas:

    End federal involvement in education. That would save 121 billion dollars.

    Reducing defense spending by 10% would save 72 billion dollars. (I would prefer not to do it, but these are desperate times.)

    Ending Federal welfare programs would save 108 billion dollars. Ending housing assistance would be good for another 60 billion dollars.

    Ending “Other Spending” would save 141 billion dollars. Let’s say 40 billion of that is worthwhile, we will call the savings 100 billion dollars.

    Ending Foreign Military and Economic aid would save 62 billion dollars.

    Abolishing Homeland Security would save 46 billion dollars. The whole thing should be scrapped with anything useful funded, including the INS, for not more than 10 billion dollars under the Department of Defense or the Department of Justice.

    Every Federal Agency, other than the Department of Defense, to be subject to an across the board 10% decrease in funding.

    Abolish retirement at 62 to receive social security.

    I think this would give us a pretty good start on amputating a substantial portion of the Federal budget.

    http://www.usgovernmentspending.com/budget_pie_gs.php?span=usgs302&year=2012&view=1&expand=30104041702080005051&expandC=&units=b&fy=fy12&local=s&state=US#usgs30250

  • As I said, there is a great deal of dreck in the federal budget, though I think the budget of the Department of Education is about half the figure you quote. The thing is, the Republicans only control 1/2 of the legislature. There is a limit to what they can accomplish in these circumstances and grave dangers accompanying their methods.

  • The figure I gave was total Federal spending on education Art. The Department of Education’s budget for 2011 is 77 billion. The Republicans are in opposition and there is a limit to what they can accomplish. However, this country is headed to a fiscal and economic iceberg, and the Republicans have to establish to the voters of this country that they are doing their very best to change the nations course. Then it will be up to the voters to decide in 2012.

  • Art Deco, federal spending as a percentage of GDP is at the highest since WW2. Granted, it isn’t that much higher than it was in the 80’s.

  • It is about 24%. In 1984, it was 23.5%. Federal spending during the Korean War was higher, I believe.

  • Compared to subsequent years, the Korean War looks normal but it marked a new normal of higher spending and revenue.

    Spending was 25% of GDP in 2009. 23.8% in 2010. The previous post-WW2 high was 23.5% in 1983. Post-WW2 average is 19.6%. Post-Korean War average is 20.1%. While social programs make up a large part of spending, as a percentage of GDP, Social Security is very stable and Medicare is growing rapidly but at a steady pace. The sudden run ups in spending correlate to military build ups and fiscal stimulus. The rest of government, i.e., non-military discretionary spending isn’t much of a problem. If you want to dramatically cut spending you have to look at Medicare and defense.

    Revenue was14.9% in 2009 and 2010, the lowest since 1950. On the other hand, it was 20.6% in 2000, the highest since WW2 when it peaked at 20.9%. Post-WW2 average is 17.7%. Post-KW average excluding the last 2 years is 18%. As a percentage of GDP, revenue is less volatile than spending. Absent tax cuts/hikes, revenue growth should closely match GDP growth. While income taxes and tariffs have been declining, the Social Security tax has been making up for it. It’s clear from the numbers that tax cuts don’t pay for themselves. If you want more revenue, it’s pretty straight forward.

    The hidden story is the growth of state and local government. State spending on health care and local spending on education have exploded. States have been increasing income taxes, both personal and corporate. Local governments have been raising fees and business taxes. Sales and property taxes have been steady. And most of this isn’t to make up for less federal spending (though there’s some of that particularly in education).

  • You can add Grover Norquist to the list of folks who think not raising the debt ceiling would be a disaster. Of course, Grover is noted for being a something of a milquetoast, so I’m sure he just doesn’t realize that Republicans are perfectly positioned to benefit from a default.

  • I think Mr. Boehner offered an extension of some months duration yesterday and was told no deal by Harry Reid. It seems the TEA Party caucus is holed up in Galveston saying ‘nothing’s going to happen’ as the storm surge barrels in and Harry Reid is ready to push down on that plunger betting the ensuing explosion will take out someone other than his crew. Most dismaying.

  • I thought Grover was keeping himself busy defending ethanol subsidies, the federal boondoggle to end all federal boondoggles.

    http://www.huffingtonpost.com/2011/06/14/grover-norquist-ethanol_n_876887.html

  • I believe Art (correct me if I’m wrong) is fond of noting something along the lines of America being saddled with the worst political class in our history. If the last few weeks haven’t proven it, nothing will.

  • Don,

    You raise a good point. There is a lot of government spending hidden in the tax code as tax credits and deductions. Ethanol would be one example, but there are plenty of others. A lot of conservatives have mistakenly treated getting rid of these tax expenditures as if they were the same as increasing tax rates (i.e. treating them as being of the devil). So, for example, some conservatives have rejected the Gang of Six proposal on the grounds that it raises taxes, even though the proposal reduces tax rates, because it also eliminates tax expenditures like the ethanol one you mentioned.

    What’s striking about Norquist is that he has been one of the staunchest opponents of eliminating tax expenditures (without corresponding tax cuts), and yet even he thinks that not raising the debt ceiling would be a bad idea.

  • It is hard to take issue with the proposition that eliminating tax ependitures is different from and superior to raising rates, as long as the term “tax expenditure” is properly defined. And therein lies the rub — it is not that easy to define. Theoretically it describes in disparity or departure from a hypothetically perfect tax base — whether based on income, consumption, wealth, or some more idiosyncratice option. For instance, sales tax exemptions for manufacturing machinery are often tagged as tax expenditures, but that is probably not correct. The term has utility, no doubt, but is often employed too readily without sufficient discernment. That said, ethanol subsidies would and should satisfy pretty much any knowledgable person’s definition.

  • Mike,

    I agree with you that it can get to be a tricky issue. This is why I think an absolute insistence on never raising taxes doesn’t work. Norquist has tried to maintain that position, and has ended up tying himself in knots, arguing against eliminating ethanol subsidies one day, then saying that he’s fine with letting the Bush tax cuts expire the next.

  • Agree, BA. I am no admirer of Norquist. There is no magical “right” maximum tax rate or maximun “right” size of government. These are prudential concerns, and reasonable men of good will can disagree in good faith. I favor smaller government with lower taxes, including lower tax rates, but not every tax increase is automatically unfair or unreasonable. As between removing ethanol subsidies versus increasing tax rates, it should be obvious that the former is the easier and more sensible policy decision — the fact that Norquist can’t see it that way demonstrates what happens when one contrives shakey principles to follow slavishly.

  • I rather suspect that the true reason that Grover is against deep sixing the ethanol subsidy has little to due with his alleged inability to distinguish between ending a subsidy and raising a tax.

    http://www.redstate.com/erick/2011/03/29/on-ethanol-conservatives-should-stand-with-tom-coburn/

    This stinks to high heaven and I am glad Coburn is hanging tough on this.

    http://www.bloomberg.com/news/2011-06-17/senate-ethanol-vote-signals-ill-wind-for-other-energy-subsidies.html

  • You may be right, Don, but I suspect that he knows the difference but his positions are informed by the rather crude “starve the beast” “the smallest government is best” prime directive. In other words, concerns about horizontal equity or fairness, or even economic efficiency, just take lower priorities than his prime directive. I have never been impressed with his thoughtfulness, but one cannot help but be impressed with his influence in GOP circles. He had a role in sabatoging much needed tax reform in GA.

  • Here’s my 4-STEP ACTION PLAN:

    (1) FIRE Rep. John Boehner and Sen. Mitch McConnell; replace them with Rep. Jim Jordan and Sen. Jim DeMint … .

    (2) CUT all Federal salaries by 15% beginning on October 1, 2011 … .

    (3) CUT the number of Federal employees by 15% beginning on October 1, 2011 … .

    (4) FREEZE the Federal Debt Ceiling at $14 Trillion … .

  • “There is no magical “right” maximum tax rate or maximun “right” size of government. These are prudential concerns, and reasonable men of good will can disagree in good faith. I favor smaller government with lower taxes, including lower tax rates, but not every tax increase is automatically unfair or unreasonable.”

    Couldn’t have said it better myself. Like I’ve said before, tax hikes should be treated like a declaration of war — a last resort to be used only when all else has failed or clearly will not work. If “all else” has not been tried, then don’t do it. However, to declare that one (as a head of state) will absolutely never raise taxes under any circumstances is as imprudent as saying that one will never, ever declare war under any circumstances.

  • Here’s my 4-STEP ACTION PLAN:

    ‘Cuz you got four years worth of beef jerky and canned goods stockpiled in a basement vault.

  • AD: “Four years worth . . . ” ❓

    In a collapse, America would have about a week away before mass violence, rapine and starvation. After a couple of months, there would be nothing left.

    Pray for the best. Prepare for an economic apocalypse.

    The debt ceiling will be raised and short term they will pay all amounts due. However, without a sharp reversal, insolvency and Greece-style default are inevitable. Greece has Germany and the ECU to save their bacon. The US does not have that.

  • Blackadder, ethanol is a subsidy, which is different than a tax credit. One allows you to keep more of the money you earn while the other takes money from one tax payer and gives to another.

    Don… nice arguments.

  • Tax credits are subsidies. Gasoline companies receive a tax credit for adding ethanol. Even if they were subsidies in the traditional sense, it makes no difference whether you keep money that other people cannot or whether you pay the taxes that everyone pays then get a refund that other people do not.

  • Subsidies can come in the form of a tax credit, but tax credits are not subsidies. There is a significant difference between the government allowing one person to keep more of their money and the government taking money from one person and giving to another. The former is tax abatement and the latter is called theft.

    True, the goals of both are the same, to encourage a behavior, but the means vary.

  • A refundable tax credit is the same as a subsidy. There’s really no difference between the two except in name.

  • A tax credit may not exceed total tax liability. A subsidy may, i.e. you can receive monies exceeding your tax liability. Some would call this profiting. I suggest you study the way these two examples work: agricultural and COBRA subsidies.

    Tax deduction tax credit subsidy.

  • Last line should have read …

    Tax deduction != tax credit != subsidy.

  • Kyle’s distinctions are legal but not substantive. Any departure from a Haig-Simons income tax base is a subsidy of some sort, if not legally, substantively. Limiting subsidies to the amount of one’s income tax liability does not make it less a subsidy,

  • A tax credit may not exceed total tax liability.

    If a tax credit is refundable then you get a “refund” of the full amount even if this is more than your total tax liability.

  • Sorry. Missed the “refundable” part. I am speaking of nonrefundable tax credits, which is usually the case.

    Mike, I assume you believe any tax cut is a subsidy. In fact, you could say anything less than 100% of your income to the government is a subsidy.

    Lowering the tax burden sometimes costs the government revenue, but is not the same as a subsidy. A subsidy is wealth redistribution whereas a nonrefundable tax credit and/or deduction is wealth retention. That is a substantive difference.

  • Mike, I assume you believe any tax cut is a subsidy

    Varying the tax rate according to economic sector constitutes a subsidy for the favored sector.

  • Varying the tax rate according to economic sector constitutes a subsidy for the favored sector.

    Only if you start with the assumption that all money is property of the state.

  • Kyle,

    I think you are missing the point. Suppose that Congress, in its infinite wisdom, decided to create a special tax deduction for people not named Kyle. To object to such a deduction doesn’t require you assume all money is property of the state.

  • Only if you start with the assumption that all money is property of the state.

    No, that is not the case. The only assumption is that some sort of tax is being assessed, either on enterprises or on households drawing income from enterprises or purchasing from them. Varying the rate of that tax confers a comparative advantage on the economic sector so favored.

  • I think you are missing the point. Suppose that Congress, in its infinite wisdom, decided to create a special tax deduction for people not named Kyle. To object to such a deduction doesn’t require you assume all money is property of the state.
    No, but calling the money the people get to keep a “subsidy” would be incorrect. It was their money in the first place. The government is not subsidizing their income by allowing them to keep more of it. If anyone is being subsidized in this scenario, it’s the government.

    No, that is not the case. The only assumption is that some sort of tax is being assessed, either on enterprises or on households drawing income from enterprises or purchasing from them. Varying the rate of that tax confers a comparative advantage on the economic sector so favored.
    I agree with everything you say here except the idea taxation is an assumption. It’s a certainty.

    I would add that not only does it give one party an advantage over the other by allowing them to keep more of their money, but taxation can be used to discourage behaviors by penalizing a party. Sadly, this taxing power has been abused in recent times.

  • but taxation can be used to discourage behaviors by penalizing a party. Sadly, this taxing power has been abused in recent times.

    There are externalities afoot in markets. Making use of excise taxes to render such costs internal to the producer (and consumer) is not an abuse of the power to tax.

    I agree with everything you say here except the idea taxation is an assumption. It’s a certainty.

    Unless you are running your government on some sort of royalty, there will be taxes. Particular instances of taxation are not certainties, however.

    If anyone is being subsidized in this scenario, it’s the government.

    You are confounding the manifestation of something in accounting with its economic effects.

  • Kyle,

    Let’s consider a couple of scenarios:

    1) Person A pays $10,000 in taxes. The government then turns around and cuts Person A a check for $2,000. This is a subsidy. Very bad.

    2) Person B pays $10,000 in taxes. The government then turns around and cuts Person B a check for $2,000. But it labels the check a “refund” for taxes paid. This, apparently, is not a subsidy, but is simply the government let people keep more of their money.

    It is senseless to treat the two scenarios differently. If you object to 1 but not 2, all that will happen is that the government will label more and more of their subsidy checks “refunds,” which is in fact what has happened. Ethanol subsidies, for example, take the form of a tax credit. The fact that it takes the form of a tax credit, however, does not mean it isn’t a subsidy.

  • There are externalities afoot in markets. Making use of excise taxes to render such costs internal to the producer (and consumer) is not an abuse of the power to tax.

    Any power can be abused, including the power to tax. Just because one has the authority to tax doesn’t mean there is no possibility of abuse.

    1) Person A pays $10,000 in taxes. The government then turns around and cuts Person A a check for $2,000. This is a subsidy. Very bad.

    2) Person B pays $10,000 in taxes. The government then turns around and cuts Person B a check for $2,000. But it labels the check a “refund” for taxes paid. This, apparently, is not a subsidy, but is simply the government let people keep more of their money.

    The $2k was never the government’s. The citizen’s invoice was for $10k. As a reward for behavior the government would like to promote, it tells the citizen to keep $2k of the money he sent the government. He is getting back $2k of the $10k he sent the government. That is the $10k from his pocket. It was his money, not the government’s. He gave it over willingly as his duty requires. He profited nothing; he simply received a portion of what he sent.

    Now, if he paid $10k in taxes and received $12k back, that is a serious problem which happens way too much.

    I am 50/50 on the idea if he paid $10k and received $10k back. It depends on why he is getting the $10k back.

    A dollar has a life. It’s either productive or not. The dollar takes residence in the private market or public sector. Every dollar returned to the private market has a much better chance of being productive and beneficial to the country than one going to the government. So, I am not offended at the sight of every tax break. Some are worthwhile and many are not, e.g. ethanol subsidies.

  • Some are worthwhile

    Which ones, and why?

  • Art, are you about to argue a flat tax is the only fair tax system?

  • The $2k was never the government’s.

    The money was deducted from your paycheck and sent to Washington as taxes, where it was deposited with the treasury (and then likely spent). In what sense is this money “never the government’s”? Only in the sense that the government says the money was never theirs. What your view boils down to is that the money is your property if and only if the government says it is. If the government calls something a subsidy, then it’s a subsidy. If it does exactly the same thing but calls it a tax cut, then it’s not a subsidy, but a tax cut (except perhaps in the special case where the “tax cut” is more than the total of what you paid in taxes).

    If this were just a manner of semantics then it wouldn’t really matter. But you seem to think that having the government send people checks based on engaging in some government approved activity is bad if it’s labeled a subsidy but okay if it’s labeled a tax credit. By that logic, two individuals could receive the same amount of money from the government via the ethanol tax credit, and in one case in would be a government subsidy while in another it’s just letting people keep more of their own money, just because the initial tax burden of the second guy was a little higher than that of the first.

    Every dollar returned to the private market has a much better chance of being productive and beneficial to the country than one going to the government.

    This is only true if people are free to spend that dollar as they see fit, rather than as the government directs. A person who gets a welfare check has a lot more freedom as to how to spend that money than does a person receiving an ethanol tax credit. The former can spend the money however he wants, whereas the latter has to spend the money on ethanol or it will get taken away from him in taxes.

  • Art, If not fixed, then taxes must vary. As learned here, that would require unfair subsidies. I think there is value to a varying tax system.

    The money was deducted from your paycheck and sent to Washington as taxes, where it was deposited with the treasury (and then likely spent). In what sense is this money “never the government’s”?

    This is why I abhor payroll deductions. People begin to believe payment arrangements define the way the tax system works. If I was president, I would eliminate W-2’s and make everyone work 1099.

    The way the income tax system works at its most basic is you earn an income, and the government bills you for a percentage annually. That invoice comes due Apr 15th. Everything else works within that basic framework.

    Payroll deductions are one avenue of paying your taxes. You could simply cut a single check between 1/1 and 4/15. Or, you could pay quarterly, which is the most the IRS will allow if you annual income reaches a certain level. You could also pay every month, every week, and even every day. These are avenues to settle your invoice. They are payment plans and are not the tax system.

    In regards to the $2k, where did the government get the $2k? Certainly not from its profits. The $2k, if paid out, has to be an account receivable before it’s an account payable. If not paid out, i.e. a tax credit, it never reaches AR and there is no AP. They simply record less in AR. They never possessed the $2k.

    Non-refundable tax credits are not the same as subsidies. People profit from subsidies without regard for taxes due, e.g. cash for clunkers, etc. Non-refundable tax credits are a reduced obligation which may not exceed you tax invoice amount. You cannot profit from them. You can only retain more of what was yours to begin with.

    The welfare check is wealth redistribution. It’s a redistribution most people are willing to accept to an extent, certainly not the proportions we see today.

    I am not for ethanol subsidies. They are an attempt to create an artificial market condition with unhealthy results.

A Religious Turning Test

Friday, July 15, AD 2011

This post requires a bit of background explanation, so bear with me.

A few weeks ago, Paul Krugman made the following comment about conservatives and liberals:

[I]f you ask a liberal or a saltwater economist, “What would somebody on the other side of this divide say here? What would their version of it be?” A liberal can do that. A liberal can talk coherently about what the conservative view is because people like me actually do listen. We don’t think it’s right, but we pay enough attention to see what the other person is trying to get at. The reverse is not true. You try to get someone who is fiercely anti-Keynesian to even explain what a Keynesian economic argument is, they can’t do it. They can’t get it remotely right.

Krugman, of course, famously refuses to read conservative bloggers, and his work at the New York Times doesn’t exactly display a deep understanding of conservative ideas (perhaps he is a good example of the Dunning-Kruger Effect in action). In any event, libertarian blogger and economist Bryan Caplan responded to Krugman by proposing the following test:

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7 Responses to A Religious Turning Test

  • Oh, hey, this looks fun. Working through the first response now, and already having some strong ideas as to what sort is really writing it.

  • Thanks for helping spread the word; I really want to make sure I recruit a sizeable pool of believers.

    Just one clarification: I’m scoring the guesses by atheists and those by Christians separately, to make sure that different opinions in the two groups don’t cancel each other out in the analysis. In this round, my main goal is to see if the atheists can fool Christians. The guesses of atheists are interesting, but can’t confer victory.

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  • Maybe it was just me, but I thought the atheists answering as Christians were not so bad either – that is, I did not find it all that easy to discern because I have heard various Christians give just about every answer presented.

  • Just yesterday I told something that I could fake being pro-choice but he couldn’t fake support for capital punishment which he readily admitted to. I think it’s a very revealing test and I look forward to the religious Turning test results.

  • I don’t know how a religious Turing test would turn out, or even an economics Turing test, but I’m pretty sure an abortion Turing test would show that pro-aborts don’t have a clue about the other side.

  • The results for the Atheist half of the Turing Test are up: It turns out that Christians make the most convincing atheists. Of the four people most strongly believed to be atheists by other atheists based on their responses, three of the four were Christian, and the atheist barely squeaked in.

    http://www.unequally-yoked.com/2011/07/who-won-atheist-round.html#comments

    Results for the Christian half will be up tomorrow.

Is it Anti-Catholic to Believe the Pope is the Anti-Christ?

Thursday, July 14, AD 2011

Writing in the Atlantic, Joshua Green notes that Michelle Bachmann’s (now former) church holds some, shall we say, unflattering views about the papacy:

Bachmann was a longtime member of the Salem Evangelical Lutheran Church in Stillwater, Minn., which belongs to the Wisconsin Evangelical Lutheran Synod (WELS), a council of churches founded in 1850 that today comprises about 400,000 people. WELS is the most conservative of the major Lutheran church organizations, known for its strict adherence to the writings of Martin Luther, the German theologian who broke with the Catholic Church and launched the Protestant Reformation in the 16th century. This includes endorsing Luther’s statements about the papacy. From the WELS “Doctrinal Statement on the Antichrist”: “Since Scripture teaches that the Antichrist would be revealed and gives the marks by which the Antichrist is to be recognized, and since this prophecy has been clearly fulfilled in the history and development of the Roman Papacy, it is Scripture which reveals that the Papacy is the Antichrist.”

Bachmann, it seems, never subscribed to the belief in question, and left the church sometime last year. Nevertheless, some are drawing comparisons between the views of Bachmann’s former church and those of President Obama’s former pastor, Jeramiah Wright.

I confess that I am of two minds about this story.

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38 Responses to Is it Anti-Catholic to Believe the Pope is the Anti-Christ?

  • I have long admired the uncompromising fight the the Wisconsin Synod has waged against abortion:

    http://www.wels.net/about-wels/doctrinal-statements/abortion?page=0,0

    As for their view of the Papacy, I am not shocked that Lutherans agree with Martin Luther.

    This whole nothing issue in regard to Bachmann does remind me that Mr. Joshua Green, the author of this piece, learned his trade at the Onion, and then polished his skills at the equally fictionalizing, if not quite so hilarious, American Prospect.

  • Having been born and raised in the Assemblies of God, that the Papacy is anti-Christ was part and parcel of many a sermon I heard as a youngster. Having converted to the Faith as an adult, I don’t hear that from my family any longer, and when I visit my Mom’s church, I don’t hear it there either. They all know I am now Catholic. I think some are afraid of my reaction where they to voice the sentiment. Others – my brothers and sister and my Mom – respect my choice and have heard me often enough talking about JP II and B XVI to know they aren’t anti-christ.

    I don’t think that most in the Wisconsin Synod are anti-Catholic. But Luther surely was, and the statement “the papacy is anti-christ” is anti-Catholic. But those kinds of extreme views are today held only by the more rigorous fundamentalists who often are mis-informed and ignorant, and (in my experience) afraid to learn the truth. They are afraid that if they listen to reason, they’ll be buying into some sort of satanic conspiracy. This is what they have been taught all their lives. So it was a great leap that my mother took to understand that when I visited on Christmas, while I would go with her to her church, Mass came first and I love the Catholic Church and I am not satanic (a little insane, and a work in progress, yes, but not satanic).

    The best thing to show people like this is your love of the Bible. That’s the only thing they respect. If you can explain the Faith from the Bible (not hard to do – after all, we gave the Protestants the Bible, though they took 7 books out), then you will win a lot of good will except among certain die-hard Baptist successionists and like-minded people.

  • Did her pastor (the one that baptized her) scream “God damn America!” for 20 years while she sat nodding in the pew?

    Shameless liars. Obama-worshiping imbeciles . . .

  • T. Shaw, you have such a way with words!

    😆

    “Obama-worshiping imbeciles . . .” is exactly right.

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  • I guess it depends on what you mean by “anti-Catholic.” Under a broad definition, you’re anti-Catholic if you believe Catholicism is harmful (e.g., the pope is leading people away from Christ). Using this definition, anti-Catholicism is fairly common in the US, particularly among atheists.

    Under a narrower definition, you’re anti-Catholic (or an anti-Catholic bigot, to differentiate), if you unjustly discriminate against Catholics. Using this definition, anti-Catholic bigotry is practically non-existent in the US.

    Under neither definition would merely disagreeing with papal infallibility make you anti-Catholic. It might make you anti-papal-infallibility though.

  • Mr. McClarey:

    With all respect should a faith’s anti-abortion teachings excuse all of its other tenets? Islam is very anti-abortion and the Holy Father has often had no bigger supporters in international forums on abortion and other family issues than fundamentalist Islamic nations. Does this then allow us us to ignore their other beliefs which we may view more negatively by dismissively saying “I am not shocked that Moslems agree with Mohammed.”

  • Eva, you would have a point if the Wisconsin Synod had radicals attacking the Church and Catholics with suicide bombers, were attempting to impose a Lutheran Theocracy behind the cheddar curtain and were driving out Catholics from the land of cheese. Instead, we have peace and harmony prevailing on the religious, if not the political, front in a state I know rather well and will be making my annual visit to in just two weeks. If the same were the case with Islam, what a sweeter world we would live in. Since we do not, you are comparing apples and rock salt.

  • This is not about the Pope. This is detraction; throwing steaming, stinking male bovine feces at Obama potential opponents.

    Re: “Obama-worshiping imbeciles” N.B. “Admiration is the daughter of ignorance.” Benjamin Franklin

    Case in point: Aim your dishonest long-range sniper scope on Obama not everyone that has the nerve to run against Obama.

  • “Under neither definition would merely disagreeing with papal infallibility make you anti-Catholic. It might make you anti-papal-infallibility though.”

    Whew! That means a lot of Catholics aren’t anti-Catholic. 🙂

  • Again, Mr. McClarey, I must respectfully disagree. You know as well as I that anti-Catholicism in this country hasn’t always been a case of respectful disagreement. Your Irish ancestors I’m certain could provide a very different opinion.

  • Baloney Eva. Your attempt to raise the specter of Know-Nothingism into this non-controversy is just as wrong-headed as your attempt to invoke Islam. Catholics in Wisconsin suffer no public discrimination as a result of the Wisconsin Synod.

    As for my Irish ancestors, they could have an interesting debate. On my Dad’s side they were Protestant, and on my Mom’s side they were Catholic. I have a little first hand experience of how confessional differences can play very little role today in how people treat each other.

    Catholics who become exorcised over the Wisconsin Synod’s views of the papacy are barking up the wrong tree when it comes to contemporary anti-Catholic bigotry in this country. A trip to virtually any leftist, atheist or homosexual website would, I trust, awaken even the least discerning Catholic as to where true bigotry against Catholics lives in this country. No doubt Joshua Green is readying an expose on this topic that will appear the second of Never.

  • A good overview of this exercise in partisan news hackery:

    http://www.getreligion.org/2011/07/are-you-now-or-have-you-ever-been-a-lutheran/?utm_source=rss&utm_medium=rss&utm_campaign=are-you-now-or-have-you-ever-been-a-lutheran

    What Joshua Green’s piece reminds me of is the type of tripe that was written in 1960 about whether Kennedy should be elected President due to his allegiance as a Catholic to the Pope. (The irony unknown at the time was that John Kennedy was unwilling to impose several Catholic teachings on himself let alone others.) Under the guise of discussing an issue it is an attempt to whip up religious animosity against a candidate.

  • Off-topic but another sign of the Apocalypse:
    http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2011/07/15/MNL61KAHVQ.DTL
    quoting Don:
    ‘A trip to virtually any leftist, atheist or homosexual website would, I trust, awaken even the least discerning Catholic as to where true bigotry against Catholics lives in this country.’
    Actually, Don, one needs to start with the anti-Catholic desk at the NY Times, ‘manned’ by one Maureen Dowd.

  • True Joe. The worst anti-Catholics are often lapsed Catholics, present company excepted. 🙂

  • Lapsed, but the Insurer may still allow me to renew my policy. 😕

  • “Lapsed, but the Insurer may still allow me to renew my policy.”

    I think He’s knocking at the door now. Let Him in.

  • Anti-Catholicism still exists in the US. I went to public high school and in an English class our teacher railed against Catholics. The one time I remember the most, she got the Baptists and Lutherans to start verbally attacking the Catholic Church also. I regret to this day that I did not walk out of the class and file a complaint.

    In the military, many of the units I was in had a significant amount of southerners. There would always be some “evangelical” that railed against the Catholic Church and the pope.

    I am of the opinion that if we just scratch the surface it will reveal anti-Catholic bigotry in the US. There are two Lutheran Churches in the town that I live in and one Catholic. Even though each church is on a hill, the Lutherans insist on derogatorily calling the hill the Catholic Church is on “Holy Hill”.

    We may not be killing each other but it does not mean we are not facing discrimination. Just listen to shows on evangelical radio stations.

  • I think reactions to this (as to Obama’s pastor) are going to have a lot to do with how people read them in a larger context.

    Of the various types of Protestant around these days, many of those who are most serious about actually accepting Christian doctrine and following Christ as those who take a fairly direct lead from original Christian sources — whatever they perceive those to be. As such, serious Catholics will often find themselves having more in common with strains of Protestantism which have traditionally been quite strongly against the Church, if only because they take their faith seriously enough to allow it to make them be against anything. Along these lines — of the converts from Protestantism that I know, most are actually from the more bible-thumping type of Protestantism who would traditionally be accepting of the idea that the papacy is the anti-Christ. Several describe themselves as growing up fairly “anti-Catholic”. By comparison, I don’t know many converts from the more mainstream liberal Protestantism which might be seen as more acceptable from this point of view. (And several old friends who are this more liberal type of Protestant have actually become increasingly anti-Catholic over the last ten years because of their strong gay rights and pro-choice advocacy has caused them to see the Church as evil.)

    By comparison, think people mostly saw Obama’s church affiliation as so troubling because they took it as being indicative of generally belonging to a worldview which despised the United States and indulged in weird racial conspiracy theories.

    So while, clearly, I strongly disagree with the WELS beliefs about the papacy, I don’t really find someone’s membership in the WELS all that troubling. My concerns about Bachmann as a candidate mostly center around her seeming like more of a firebrand than a leader, and not generally being electable.

  • That Evangelicals would have strong feelings regarding the Catholic Church should hardly be surprising. And, while it may, in a sense, make them “anti-Catholic”, it doesn’t necessarily make them bigots. Like Don, I too have a Catholic side of the family and an Evangelical side of the family. The Evangelicals in my family (including my own parents and siblings) tend to feel pretty strongly that being Catholic is an impediment to having a “real” relationship with Christ. They reject the authority of the Pope. They reject much of our theology. They will rail against indulgences and statuary and praying to saints and to “worshipping” the Blessed Virgin, and the like. There is a reason they are Evangelicals and not Catholics.

    Does that make them “anti-Catholic”? Probably. But that makes them opinionated and wrong, not bigots. There isn’t a bigoted bone in their bodies.

  • As a former member of the WELS, the synod that Bachman was a member of, I must agree with Eva. Any group that has anti-catholicism written into it’s confessions of faith can’t be trusted by Catholics. Also, The WELS suffers from extreme sectarianism. They honestly believe the Missouri Synod is apostate because they’re not as “pure” as the WELS! One can easily guess how they feel about non-Lutheran Protestants, let alone Catholics! Bachman may no longer be a member of the WELS, but nless she shows that she has shed the anti-catholicism and extreme sectarianism the WELS is famous for, she’s not fit to be a presidental candidate, let alone president.

  • First, I don’t disagree that there is anti-Catholic bigotry on the left. Secular leftist anti-Catholicism exists and is a problem. Believe me I know because of my own family dynamics. Orange and green parentage has nothing on Bridget and Bernie parentage.

    However, that does not mean we should minimize evangelical anti-Catholicism. As Catholic Lawyer points out their tolerance of Catholics in this country is skin deep. I have many evangelical friends and I find it humorous that when their kids go on mission trips to convert the heathens it is not to places where non-Christians are predominate but to traditionally Catholic countries in Central and South America. I know a few who have even gone on mission trips to Poland and Ireland.

  • Jay:

    How can one be “anti” something and not be intolerant our prejudiced against it? Does it mean that they wouldn’t burn a cross on my lawn but might stop and roast a marshmallow?

  • Interesting how Protestants and Catholics have more feuds with each other than they have with agnostics/atheists. Both religions profess to follow Christ but exhibit anti-Christian behavior by their disdain of each other. Yes, disdain. As a ‘neutral’ observer and agnostic who has sat in on many debates between the two, I must say the so-called Church has never been united.

  • “How can one be “anti” something and not be intolerant our prejudiced against it? Does it mean that they wouldn’t burn a cross on my lawn but might stop and roast a marshmallow?”

    That’s nonsense on stilts! I’m anti-leftist, but that doesn’t mean that I would discriminate or act violently toward someone for being leftist.

    What you just wrote is FAR more bigoted than anything I’ve ever heard from my evangelical relatives. Get the chip off your shoulder regarding protestants and evangelicals. Get over your counter-Reformation impulses. They are NOT the ones you have to worry about. The REAL threat to the Church is coming from the secular left, NOT our separated brethren.

  • Heck, we have more to fear from Catholic politicians on the left than we do from protestants and evangelicals, if what has happened in Illinois with regard to adoption and Catholic Charities is any indication.

    Joe, your observation is dead on – some people would rather fight the battles of 500 years ago than address the real existential threats facing us today, often from within our own ranks.

  • Part of this is: Within the ranks of Christians, I’m more comfortable with those who passionately disagree with me through their attempt to take Christ’s teachings seriously than those who accept everyone (except those whom they judge to be judgemental) because they don’t believe in much at all.

  • Jay, I agree that the chief threats to the Church today comes from secular liberalism. But, I would argue that the origins of secular liberalism are firmly rooted in protestantism. If that opinion makes me a reactionary Catholic then so be it. However,I might then argue that your opinions on the matter are colored by conflicting family allegiances.

  • I’d have no problem with a man of Bachmann’s background becoming a bishop, if he clearly stated (as she did) an opposition to the anti-papal teachings of a prior church.

    She’s not running for bishop, is she?

  • My opinions on evangelicals may be colored by actually knowing evangelicals and having spent time as one myself, but I’m not sure that’s necessarily a bad thing or disqualifies me from having an intelligent and well-informed view on the matter.

  • I mean, it’s not like I’m not aware of the shortcomings of evangelicalism vs. the Truth of the Catholic Faith. Otherwise, I would not have left behind the former to become Catholic. But I do believe my experiences with evangelicalism, rather than making me blind to the shortcomings, actually gives me a little more insight than someone who has known only the stereotypes of evangelicals.

  • This is the kind of thing that draws a smirk about Catholics
    http://www.twincities.com/ci_18480905?source=most_viewed

  • “Heck, we have more to fear from Catholic politicians on the left than we do from protestants and evangelicals, if what has happened in Illinois with regard to adoption and Catholic Charities is any indication.”

    Precisely Jay.

  • Is this all your “elites” have in the arsenal to move the 2012 election away from being an “Anybody but Obama” fiasco?

    One of my best and oldest friends is a Lutheran and a lawyer. He married a Catholic woman.

    He is not anti-Catholic. He still talks to me despite the fact that my wife and I introduced him to his wife.

    And, neither my Lutheran friend nor Ms. Bachmann shuts down convesrsations on Catholic Faith and Morals, e.g., Archbishops Dolan’s opposition to NY regularization of sodomy with, “Bishop Dolan ought to be more concerned about priests molesting children. And, keep his opinions to himself.” As I heard that on Imus this AM and almost drove the car into a ditch.

    I bet Ms. Bachmann also does not believe as anti-catholic bigot Bill Clinton’s press secretary Joe Lockhart publicly stated that Clito believes that Catholic beliefs amount to “ancient religious hatred.”

  • my immediate reaction–have not yet read comments–
    You’ve parsed it down into pinhead territory– as in how many angels dancing and how worthwhile is this consideration…
    don’t forget hierarchy in truth– their are levels of gravity (seriousness)
    … there are mortal and venial sins…EVEN THOUGH when you break one of the ten commandments it is as if you have broken them all… rended truth… It is still diddling to go off on whether not accepting some various levels of Catholic teaching equate with believing the pope to be the anti Christ.

  • I find much in common with Evangelicals and Pentecostals who dislike the Papacy, but love Jesus and actually believe in His holy word (though yes, they are wrong about the Papacy) than I do with any liberal progressive pseudo-Catholic Democrat who replaces the true Gospel of repentance and conversion with the false gospel of social justice, the common good and peace at any price, including the price of the lives of unborn babies. “Oh just be nice because you’re hurting my feelings.” What horse hockey!

    My family (as I said before) is Assemblies of God (AG) Pentecostal – just about as fundamentalist as one can get. Yet talks between the AG and the RCC have been going on for some time:

    http://www.zenit.org/article-32883?l=english

    Things are changing. And given a choice between someone like pseudo-Catholic Nancy Pelosi or John Kerry or Joe Biden, and Evangelical Michele Bachmann or AG Pentecostal Sarah Palin, I will vote for Bachmann or Palin any day of the week even if they do believe the Papacy is the seat of anti-christ (and they don’t, BTW).

    We have a far greater threat from liberals masquerading as Catholics in the Church than we do from Baptist Successionists or Pentecostal tongue speakers.

  • Islam is very anti-abortion….

    This is not true, and I have no idea why so many Catholics choose to believe it. Perhaps deep down, some of them actually do think that treating women like 2nd class citizens and restricting abortion do go together. Islamic scholars have traditionally followed the notion that the fetus becomes a living soul after four months of gestation”. Some scholars claim that abortion after conception is wrong, but the majority allow it in those first months. It depends on which scholar one chooses to follow. If there’s a more certain recipe for abortion on demand, I am unaware of it. Exceptions are also made in case of danger to the mother’s life, deformity or disease that would make a baby exceptionally difficult to care for, and in some cases, rape.

Whatever Happened to Usury?

Tuesday, July 12, AD 2011

While the subject of usury used to be a hot topic in moral theology, the Church has not had much to say on the subject over the last couple hundred years. The Catholic Encyclopedia article on Interest ably sums up the current situation:

In our day, she [that is, the Church] permits the general practice of lending at interest, that is to say, she authorizes the impost, without one’s having to enquire if, on lending his money, he has suffered a loss or deprived himself of a gain, provided he demand a moderate interest for the money he lends. This demand is never unjust. Charity alone, not justice, can oblige anyone to make a gratuitous loan (see the replies of the Penitentiary and of the Holy Office since 1830) . . . . In practice, however, as even the answer of the Sacred Penitentiary shows (18 April, 1889), the best course is to conform to the usages established amongst men, precisely as one does with regard to other prices.

Periodically, however, someone will suggest that the Church’s teaching on usury needs to be revitalized.

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59 Responses to Whatever Happened to Usury?

  • “The market will weed out excessively high interest charges…”

    Only, it doesn’t.

    Credit card companies are doing tremendous damage to individuals and families through their usurious practices. The interest rates, already high, go up as the ability to pay goes down. The instruments themselves are pushed on those least able to manage them and, should calamity befall the card-holder, they will mercilessly scalp him or her.

    I’m usually a big proponent of market-force control but I think you are WAY off base here. There simply is no justification for claiming moral freedom to extend credit to those who are not credit-worthy and then jack up the interest rates as they get farther and farther into debt.

  • Usury? Still alive and well at your local bank or anywhere on Wall Street. 30% on some credit cards. But hey you can get 2% interest on your CD. As Gordon Gekko said, “Greed is good.”

  • The problem with freedom in markets as in freedom in anything else is that some people use it badly. Credit card companies engage in predatory lending practices, using data analytics and fine print to devise profitable traps for the unwary. And there will always be a segment of the population who, whether through ignorance, irresponsibility, bad luck, or a combination of all three fall into these traps. I think legal restrictions are necessary because it simply isn’t true in practice that the market will weed out excessively high interest charges, if by ‘excessive’ we use a common-sense conception of fairness rather than insisting that ‘fairness’ and ‘what happens in markets’ are everywhere and always the same. I think it’s fine to debate the tradeoffs of freedom (access to credit) v. protection (banning certain fees, payment structures, etc.) in individual cases; but I don’t think it makes sense to say that all legal restrictions on credit arrangements are unnecessary for the common good (if that is what you are saying).

  • The price one pays for obtaining an unsecured loan Joe. I have seen “pay day” loan places that have annual interest rates that work out to 469%. I usually encounter them as I am preparing bankruptcy petitions for individuals. Once a bankruptcy petition is filed, my bankruptcy clients usually are deluged with credit card apps because they now have a good debt to income ratio and the companies know they can’t do a chapter 7 for eight years.

    One secret of credit card debt that most people are generally not aware of, is that outside of major urban areas, and often not there, credit card companies usually will not provide a witness to prove up their claim at the time of trial. This will lead to a motion to dismiss without prejudice. The debt is still there, but the credit card company has no judgment and therefore cannot garnish wages, place liens on real estate or bring the debtor before a court on a citation to discover assets to compel seizure of assets to pay the debt or the entry of a monthly payment order. Most credit card defendants could successfully fight a credit card lawsuit if they simply show up in court, and deny the claim, (they usually have no way of knowing if the credit card company has computed the amount they owe correctly) and request a bench trial. However, most of them do not show up and the credit card companies obtain judgments by default.

  • I think unsecured lending provides a valuable service for people who have a sudden emergency, a transmission goes for example, and lack the funds to meet the emergency. Additional regulation simply makes this type of lending unavailable to more people. To those completely over their head in unpayable debt, bankruptcy is an option that is far more painless than most people realize. To those who can manage a lump sum payment of 20-25 percent, most credit card companies will settle for that after a debt is not paid on for six to twelve months, although the debtor will pay income tax on the amount of the debt forgiven.

    Most people are able to handle the credit given to them, and to make broad policies based on the minority who cannot would be a mistake.

  • Most people are able to handle the credit given to them, and to make broad policies based on the minority who cannot would be a mistake.

    I suppose I’m conflicted on this. I’ve heard of credit card companies acting outrageously in certain cases, raising interest rates 10-20% on balances after one missed payment for borrowers who have outstanding credit. It seems to me that there is an information asymmetry between consumers and credit card companies regarding the structure of these debt payments. It would not upset me to see some of these practices proscribed in a world where we had intelligent legislatures, rather than people with no background in finance/economics responding to interest group pressures drafting the laws. I think that, in theory, it would be possible to craft credit restrictions that best served the common good; in practice, I think they are unlikely to be correctly identified by the political process, and that legislatures should be very cautious.

  • The type of debt that draws my ire John Henry is student loan debt. Here we have vast sums being lent to young, inexperienced people and every cent of it is non-dischargeable in bankruptcy. If a default occurs, the collection charges tacked on are obscene. There are programs that limit monthly payments for debtors in distress, but the loans loom over them for decades, effectively destroying their credit, with no way of getting out from under other than repayment. This is an area that needs drastic reform, as does the entire higher education “industry” in my opinion. If my wife and I were unable to pay for our son’s college, he would be incurring loans of around 15 k a year. His law school loans would probably tally at least 30 K a year. Sending young people out into the world with that type of debt on their back, from which there is little relief except payment over decades, is madness as a social policy.

  • Don, are you saying that a judgment is not enforceable on unsecured debt? That a credit cannot garnish, place a lien or otherwise collect in the event the court grants a judgment against the debtor? As for bankruptcy, having been there and done that (more than 20 years ago), i can state unequivocally that it is not the “easy way out.” First there were the lawyer fees, then the court approvals, then the worst: the stigma that follows. You can’t get credit for years. That black mark stays for a long time on your credit rating.

    Having fought it out with debt collectors and having agreed to a court-approved stipulated settlement, I now question the wisdom of paying anything back because of the outrageous interest rates and junk fees that have since accumulated, along with the fuzzy math that creditors use to figure what a debtor owes.

    So, my question is: What perils do I risk by simply suspending payments and letting them get a judgment, as they threatened to do in the first place? If the judgment cannot be enforcement, other than the “stain” on my already blotted credit history, what inducement exists for me to pay the debts off.

  • “Don, are you saying that a judgment is not enforceable on unsecured debt?”

    First they have to get the judgment Joe. Most credit card companies simply will not provide a witness to prove up their case at the time of trial.

    “First there were the lawyer fees, then the court approvals, then the worst: the stigma that follows.”

    Lawyer fees in my area Joe average about $1200.00 for a Chapter 7, which includes the filing fee of $299.00. Most of my clients have no difficulty obtaining credit as long as they are employed and most of their pre-bankruptcy debt is being wiped out in bankruptcy. Actually their problem not infrequently is too much credit being granted to them.

    “What perils do I risk by simply suspending payments and letting them get a judgment, as they threatened to do in the first place?”

    A debtor should always make a creditor prove up their case at trial. Often times they can’t. Social security is not subject to garnishment even if a judgment is obtained. A judgment would allow a lien to be placed against any real estate owned by a debtor.

  • I of course do not give legal advice over the internet Joe, since there are too many variables depending upon factual circumstances, and laws vary from state to state. My observations are general in nature and I am not telling anyone reading my comments to take any particular action based upon them. As always, the best course of action for anyone with a legal question is to consult an attorney in their area, preferably one who does not charge for an initial consulation.

  • Blackadder,

    I think Brandon’s focus was not so much regulatory (given that he admitted that most legal lending in this day and age was at least justifiable under tradition Catholic understandings of usery) but moral — along the line of, “If you are a lender, what considerations should you be taking into account in not over-charging interest.”

    Overall, I take your point that the market provides a reasonably good mechanism for determining interest rates that are fair, since given time and information there you should be able to get to an interest rate which is pretty close to the lenders cost of servicing the type of borrowing you are. That said, one could imagine situations where the market would allow a lender to charge more interest than is “fair”, perhaps based on some sort of market distortion or information asymmetry, and it seems to me that in that sort of situation the moral stricture would kick in. (Example: If I am a lender and for some reason know that a particular person is a good risk — as in, unlikely to default — yet also know that he is going to have a hard time proving that to the other lenders available to him, it would be wrong of me to take advantage of my information asymmetry to charge him an excessive rate of interest given what I know but other people don’t.)

    Of course, the ironic side not in this regard is that there will be the most opportunity for usury in the least free market situations — because that is where it is more likely that people won’t be able to find other alternatives to an unfair rate.

    I suppose there’s also the question, which market theory doesn’t deal with: Are there situations where from a moral point of view one should simply refuse to give a loan rather than offering one at an appropriate rate, because the borrower is such a high risk that and in so much trouble already that a fair rate would be ruinous.

    It seems to me that at the level of regulation, this is probably a bad idea because often people will try to secure loans even when this would be ruinous to them, and if you make it so they can’t do it legally they may turn to an illegal source which would be far worse. However, at a personal level I could see it as being a good idea in certain situations for a lender to encourage someone to look at options other than another loan rather than just making a loan at the appropriate rate.

  • I understand, Don, and thank you for your general advice. State laws governing lending practices vary for one thing. In Wisconsin, where I live, you MUST get individual creditor OK every time you change a payment under a Debt Management Plan. I had a DMP, under which I kept 4 creditors at bay at lower interest rates. Then I ran into further financial problems exacerbated by unexpected medical bills and was forced to seek lower monthly payments under the DMP. Long story short: Because the DMP was managed by a third party out of state and the necessary approvals from each creditor took more than 30 days to arrange, each one declared the DMP null and void and demanded that I adhere to the original terms. So instead of 9% interest, I was back to 29.9.

    For weeks I wrote letters, made phone calls to ask forebearance, etc., and never got anywhere so I said screw it, sue me. Which 2 of them did. So I go to court to answer and the lawyers in each instance separately get on on the horn from another location with a court-appointed mediator and we work out a stipulated settlement to avoid judgments. Me, being the honest chump that I am, I agree to pay most of the debt back and am warned that if I fail to keep up payments, then judgments will be entered. And since I don’t want to go back to court and face a judge who I am certain will side with the creditors, I figure I better pay. But if I don’t and they get judgments, what’s the worst that could happen? I’m on Social Security only, and my wife and I previously had separated our finances, community property laws notwithstanding (they can be overwritten by executing a separate legal agreement). So they can’t get a lien on her house since I don’t own it.

    It still galls me that the creditors “won” but I am having second thoughts about the stipulated settlementbecause I’ve gone many extra miles and they haven’t. I mean, if Chase is out $1,200 because of me, will they suffer? Other than my conscience, what obliges me to keep making payments?

  • John Henry,

    I suppose I’m conflicted on this. I’ve heard of credit card companies acting outrageously in certain cases, raising interest rates 10-20% on balances after one missed payment for borrowers who have outstanding credit. It seems to me that there is an information asymmetry between consumers and credit card companies regarding the structure of these debt payments.

    Though the flip side is that there’s an information asymmetry between the credit card companies and the consumers too, which the consumers don’t necessarily want to solve. For instance, how many people would want to call up their credit card companies and say, “Hey, just so you know, I’m thinking of getting divorced and so my wife and I are both running up consumer debt right now in hopes of pushing it off on the other in the settlement,” or “Just wanted to let you know there’s a lot of talk about layoffs right now at work.”

    A lot of the more frustrating things that credit card companies do are an attempt to get more money out of people who start showing danger signs before it hits the point where it’s too late and they take a loss. I agree with not wanting things to be too chaotic, so it seems like there’s a balance to be struck, but most of the time if their options are cut, they just charge everyone more to spread the risk and deny credit to the people who are most marginal — which sends them to much more unsavory places like payday loan sharks.

  • Joe,

    2% on a CD?!! 😯 Where? Sign me up!

  • Nick, I rounded. 😛

  • I think we are letting credit card companies off the hook too easily. Case in point:

    My wife pointed out that our Amex was at 27%. We hadn’t missed a payment and my wife pays the bills. She just hadn’t noticed it had gone up from 6% to 27 % on $3000 in debt with a limit of $8000.

    We are hardly a credit risk.

    I called when making a cup of tea. It was very hard to get hold of someone who could answer my questions. All I wanted to know is what had changed to warrant the interest rate increase. Each level kept saying ths same thing “we periodically reasses the interest charges…” and bucked the question as to who made that assessment to some other department.

    After 15 minutes of irritation, I got hold of a supervisor in the department supposedly in charge of such assessements and, when I got the same “periodically reassess” answer, I told him to close the account, cancel the card, and that I would send them a check for the full amount that day.

    He tried to talk me out of it but I insisted and hung up.

    I carried my tea to the living room and in the 20 feet of travel, the phone rang. A different Amex representative was on the phone, asking me “what can we do to get you back as a customer. You’ve been a good customer for so many years…” (Apparently not good enough to be treated fairly though.) I told her that I couldn’t think of anything that would change my mind and she offered to reopen the account with a 3% interest rate.

    15 feet. 24% interest rate change. That’s all that change.

    I’m sorry Don. I don’t think there is any way to dress up these usurious charlatans as other than a despicable, loathesome blight on the economic scene. They differ from their Pay-day Loan cousins only in the cost of their clothes. Underneath, they thrive on taking advantage of human misery and that, my friend, is the very definition of immoral.

  • “I’m sorry Don. I don’t think there is any way to dress up these usurious charlatans as other than a despicable, loathesome blight on the economic scene. They differ from their Pay-day Loan cousins only in the cost of their clothes. Underneath, they thrive on taking advantage of human misery and that, my friend, is the very definition of immoral.”

    No, they differ vastly in the amount of per annum interest they charge, and in the fact that their loans are completely unsecured. Often pay day loans get titles to vehicles to secure the debts and voluntary wage assignments to allow garnishment of wages without judgments. Credit is a product like anything else. If you don’t like the product on offer, you go somewhere else. Most local banks will give unsecured loans to people with good credit on better terms than most credit cards. However, they will also be more aggressive in their collection efforts if the loan goes South than most credit card companies. As for taking advantage of human misery, if unsecured loans were not available to most people, I do believe that the total amount of human misery would greatly increase as people would not have the funds to meet emergencies.

  • It’s not so much that I want to defend the behavior of credit card companies — which is often incredibly frustrating and at times somewhere between predatory and incompetent — but at the same time, once one gets a card, they basically agree to lend us large amounts of money, at our convenience, without asking us further questions. That’s a pretty amazing level of convenience by historical standards.

    And if we don’t want to deal with their games — a simple approach is simply not to take their money. (If we feel we can’t forgo this, then it would seem that at a minimum they’re better than the alternatives.)

  • I’m certainly out of my league on this topic (like so many others; but, that’s why I read this blog: to learn).

    I tend to come down on the “interest is usurious” side, but not too strongly. But, I think that this is a symptom of an economy that is controlled by corporations that are no longer tied to a location, those that are so big that they can afford to make a few customers mad.

    I understand economies of scale, and how larger corporations can result in greater efficiencies. But, they become impersonal. And, that’s not better.

  • Bank: An institution willing to lend money to people who don’t need it.

  • “I’ve heard of credit card companies acting outrageously in certain cases, raising interest rates 10-20% on balances after one missed payment for borrowers who have outstanding credit.”

    That happened when I moved. Excellent credit. In the move forgot to let the company know. When the bill came and when I finally got to it it was late. Got a notice that they were increasing my interest rate. Called and cancelled the card. Done.

  • But if you accept this, then one needn’t spend a lot of time worrying about whether or not particular particular interest charges are just. The market will weed out excessively high interest charges.

    I actually very much agree with this, on three conditions: that there is relatively little coercion, that there is relatively little fraud, and that we aren’t operating under emergency conditions. It won’t be true of a Mafia-dominated lending market, nor will it be true of a market in which external factors are causing borrowers to go into desperate panic, but it will be true if one has in place a high-trust lending system operating under standards that make for calm and open negotiations for loans. Whether a given case of lending is a matter of just exchange depends a great deal more on what happens during the negotiation than on the particular numbers decided; and, in fact, the interest rates in banks founded by St. Bernardino and his associates would have been well above anything a bank could charge today, because the risk was so much greater. The importance of negotiation doesn’t really come out in the extrinsic titles post, but that’s because it was primarily trying to show the kinds of interest that moral theologians had argued at length that a non-usurer could still charge; the post also uses relatively uncontroversial examples, which by definition are fairly conservative in character, whereas negotiation would at times get into much more complicated and controversial territory (hence the need for serious negotiation). The moral theologians who did the work on the theology of usury had as their main targets three groups of lenders: (1) people who acted as if lending itself, rather than the negotiation over the loan, gave them the right to interest; (2) people who failed to negotiate honestly, either coercing the borrower or hiding the interest that they were actually going to be charging under rhetorical tricks; and (3) people who in lending made little or no provision for honest borrowers who through no fault of their own might be completely bankrupted (or, in Renaissance times, worse than bankrupted) if the loan went south. If some prior thought is taken to preventing these three problems, negotiation takes care of almost everything else.

    It’s important to understand, however, (1) that interest rate is not the only form of interest in the sense used in moral theology (any fees charged are also considered, and notoriously this is a place where borrowers sometimes get tripped up); and (2) that markets work statistically, but ethics does not. To say that the market will weed out excessively high interest (whether rates or otherwise) is not the same as saying that there will be no excessively high interest, only that lenders will not be able , provided sufficient information is available, to get away with it consistently in the long run. But moral theology has to consider what standards should be upheld in each individual contract, regardless of what statistical fluctuations the market might be going through at the moment.

  • I don’t dispute that the expansion of credit has been generally good for commerce and that, by extension, that the physical human condition is generally improved thereby. I generally favor free market controls and tend to be skeptical of even well-intentioned government interference. However, it is too easy an answer to say that the consumer can take it or leave it. (Forgive me for paraphrasing. If this is not what is being said, please clarify.)

    There are two separate questions on the table: 1) what government controls, if any, should be applied to credit and 2) should the Church stake out a more restrictive ground for moral culpability.

    I believe that the knowing lending to those that one expects to have trouble repaying is fundamentally wrong unless doing so is providing for basic human needs and, then, it could only be moral if one was charging an interest rate that merely protects one’s interest in the transaction.

    Since credit card companies – and mortgage companies for that matter – have more access to information than anyone else, they cannot claim ignorance as to a particular borrower’s condition. It is, therefore, right and proper that they take a back seat in bankruptcy proceedings. Frankly, if they did better due-dilligence, they wouldn’t take such a beating in court.

    As a legal matter though, I don’t think it is right for credit card companies to engage in predatory lending, impoverishing millions with debt that can only be resolved through bankruptcy. Even if it is as easy on the pocket-book as you make it out to be, bankruptcy is perceived by many to be an admission of failure as a human being that many persons of character are unwilling to embrace.

    I have known many who have suffered for decades to satisfy their obligations rather than file for bankruptcy. I have known others who filed for bankruptcy but were shattered by the experience – suffering every bit as much within as those who struggled to pay.

    Which brings me to the moral.

    It simply is not right to financially torture those who have gotten themselves in a bind. It is kicking a man when he is down. it is letting a man drown while we watch from the bridge. It just isn’t right and, therefore, the Church should speak loudly.

  • Ms. Elizabeth Warren will save us when she takes over the Federal Consumer Finance Protection Bureau. Beginning this month, large ($10 billion-plus) mortgage originators, banks, etc. will be confronted with the Bureau, which will virtuously clear products for families and push markets in the right direction. Banks have been pounding on working class Americans. Thank you, Dodd/Frank.

    Finance 101: high yield, high risk. Many years ago, I analyzed regional “credit card” banks. They did not earn an appreciably higher return on assets or equity (ROA/ROE). Loan loss expenses and overhead dissipated nearly all the excess (over other consumer loan rates) interest revenues. I thought the business model was marginal, even at the high rates. And, many of the credit card banks were, relative to the high risk nature of the business, under-performers. In fact, one I followed failed at a time when no banks were failing. This go-around, I am mildly surprised credit card losses have not been more severe.

  • I’ll add my voice to the chorus of people pointing out that while high interest rates aren’t necessarily immoral, predatory lending (taking advantage of information asymmetry) is. Some of these mortgage contracts should be considered voidable for unconscionability.

  • G-Veg
    I suspect that the quietness of the Church is due to the myriad of modern factors about which even Rome is confused. The ordinary person can not only owe incredible interest after a engine repair credit card charge; but another ordinary person can take a cash advance from a similar card and buy Starbuck’s stock or Tiffany or Coach and come out way ahead in six months and after paying back the cash advance. I think Catholicism has to establish think tanks for complex subjects like modern finance…rather than waiting for a Catholic professor from Georgetown or from some other Catholic University to comment. I think Rome has to organize think tanks which she could easily fund by e.g. requiring a
    special donation from each Catholic during one year only. Imagine if worldwide the result was an average two dollars from each Catholic. That’s over 2 billion dollars which would fund Catholic think tanks in perpetuity. Presume the US would do it’s usual 33% to the fund, it’s per capita donation would make up for the severely poor.
    Much more organization and use of think tanks

  • “And there will always be a segment of the population who, whether through ignorance, irresponsibility, bad luck, or a combination of all three fall into these traps.”

    J.H. You forgot one – it is called “choice”. Most people make choices in their lives which have consequences i.e. go on vacation instead of saving, etc. If, as God intended, we are to have “free will” then there will be consequences to our choices.

  • The price of money will always be partly a function of the risk perceived by the lender. In other words credit card companies and so-called predatory lenders rely on highly profitable loans to offset a high rate of substantial losses. I seem to recall studies done a few years back that concluded that these types of lenders were no more profitable than more conventional lenders.
    That said, I do agree that taking undue advantage of information asymmetry can be immoral, and as Don points out this goes both ways.

  • CatholicLawyer,

    The reality is that the present system rewards those who make poor choices and are willing to steal and punishes those unfortunates who are too honest to do so.

    I see between three and five bankruptcy records a month. I obtain their records in relation to fraud investigations so it is an admittedly select group. My comments are NOT meant to suggest that those who have availed themselves of bankruptcy protection are doing anything wrong.

    In many of the filings I see, a pattern of fraud and theft is plainly evident. They come to the US, run up debts and purchases services that they have no intention of paying. Creditors win a few court cases against them and they go through bankruptcy. They discharge tens of thousands in debt and leave bankruptcy with their house and car and cash. They lie about their marital status, their residence, their assets, their work, and on and on and on…

    The point is that bankruptcy exists to give people a fresh start because there is a point of indebtedness where there is no way out. It was never meant to be used thus.

    If you are an honest man who makes a mistake or suffers a calamity, you shouldn’t be stripped of everything you have while trying to pay off your debts. It shouldn’t be true that bankruptcy is the preferable state to paying off one’s just debts and the predatory practices of lending institutions and credit companies shouldn’t be allowed to steal a man’s dignity through a thousand cuts to his wallet. God forbid you reach the point at which you can do nothing else but live week to week dealing with a pay-day loan scam that makes you poorer and poorer week by week.

    So… Yes. Of course there are consequences but I seriously doubt that Christ would have approved of the practice of impoverishing your neighbor because he was foolish enough to strike a poor bargain.

  • “They discharge tens of thousands in debt and leave bankruptcy with their house and car and cash. They lie about their marital status, their residence, their assets, their work, and on and on and on…”

    Exemptions vary from state to state. In Illinois debtors have a homestead exemption of $15,000.00 in their home and $2400.00 for a vehicle. The homestead exemption is $30,000.00 for a married couple where they both own a home and each spouse may claim a $2400.00 exemption in one vehicle.

    The vast majority of people going through bankruptcy lose none of their property due to the bankruptcy exemptions being adequate to cover the equity they have in property. I’d say that in the bankruptcies that I file, there might be one case out of eighty where there is any asset for the trustee to attempt to sell, and often that is a house where the debtor is eager for the trustee to sell the house so they can get paid the homestead exemption at the closing.

    Bankruptcy fraud is a criminal offense and occasionally the Department of Justice brings charges for it. However, the bankruptcy trustees do not have the manpower or the time to check on the validity of all the information on the bankruptcy petition, due to the vast number of them. At a typical meeting of creditors the trustee will often have 35-50 bankruptcy debtors to question and quite a few documents to review in regard to each case. Creditors of course can take part in the bankruptcy, engage in discovery and block bankruptcy discharges for fraud. I have represented creditors in such actions. However, in the vast majority of bankruptcy cases the creditors do not appear at the meetings of creditors, and no action is taken by a creditor in the bankruptcy, except to provide reaffirmation agreements where individuals reaffirm their mortgages, car debts and other debts secured by an interest in property. Part of the reason for this lackadaisical attitude on the part of creditors is economic, in that having an attorney review each bankruptcy filed and take appropriate action would be prohibitively expensive, and because creditors by and large do a very poor job of taking steps that can help protect their debts in bankruptcy due to poor internal procedures and acting fast enough after a debtor files bankruptcy.

  • G-Veg;

    I do not understand your point. Are credit card companies being taken advantaged of by borrowers or are they predatory? Both? Neither?

    I know that bankruptcies increase by 25% within a 30 mile radius of where a casino opens – choice pay rent or try to win big.

    Government interference in the market will not necessarily make it “more” fair. It will limit choice and options. To place the blame all on the credit card company is erroneous. In the end, having government intervene for the few limits the freedoms of the majority. Credit is only a tool if used properly.

    I advise clients not take out loans against possible settlements all the time because of the high interest rates. I have seen them ignore my advice and borrow for the poorest of reasons. Whose fault is it then that after competent advice (I am assuming I provide such advice) they refuse to listen and take out the loan anyway. Who am I to say “no”; because I think I am smarter/more educated/brighter so they must do it my way? It is their life.

    God forbid, you are making assumption about how I have had to live because where you think I am now.

    May God Bless Your Day

  • CL,
    I agree and would point out that even if we agree that it is morally wrong for a lender to extend credit at high interest rates “against possible settlements” when they know that the borrower has only the “poorest of reasons,” it is doubtful that lenders know the reasons, and criminalizing such conduct would only drive it underground resulting in even more onerous terms.

  • Why weep for creditors have many more options than debtors? Thanks to the IRS, write-offs are easy:

    http://www.irs.gov/taxtopics/tc453.html

  • Joe,
    I do not understand your point. A write-off is simply a deduction of a loss that is analogous to an inclusion of income.

  • My point, Mike, is that the ability to write off bad debt mitigates if not totally eliminates losses for creditors.

  • Joe,
    You do not seem to understand basic tax or accounting. That is like saying businesses don’t care about expenses because they can write them off, which is like saying businesses don’t care about profits. Bad debt losses are business expenses that reduce or eliminate profits, which are the point of the business. In no way do bad debt deductions come close to eliminating the losses for creditors — elimination would occur only in a world with 100% tax rates.

  • I understand that, Mike, which is why I used the word “mitigate.” And a good CPA can find a way to fudge it.

  • Joe, I’m a tax lawyer and, no, a good CPA will not find a way to fudge it. I don’t know where you get that idea. There is no way to fudge it. To say write-offs are easy is silly. Yes, it is easy to deduct valid business expenses, just as it is easy to include all income — so what? That is the point of a net income tax — to compute profit and tax it. Do you think that companies with reduced or no profits are happy just because their tax is correspondingly reduced or eliminated? Right. Trust me, a CEO who reports to his board that the bad news is we made no money but the good news we is we therefore paid no tax will not be well-received. He will be viewed as an idiot.

  • Mike, I got that idea after working many years on Wall Street and journalism. Do I need to dredge up Enron and Arthur Andersen, WorldCom and numerous other examples of “creative accounting.” Do we need to revisit how the books are cooked by unsuitable revenue recognizion, inappropriate accruals and estimates of liabilities, excessive provisions and generous reserve accounting and intentional breaches of financial reporting requirements?

    I didn’t just fall of a turnip truck, Mike. One has to be either naive or blind to the egregious accounting crimes that are rife in the history of corporate America. If you want to believe that everyone adheres to the general principles of standard accounting practices, far be it from me to disabuse you of that notion. But I live in Realville.

  • Catholic Lawyer,

    I apologize for being obtuse. Let me be clear: there are two questions on the table, 1) what government controls, if any, should be applied to credit and 2) should the Church stake out a more restrictive ground for moral culpability.

    As to the first question, conscionability must be in question at some point in contracting debt. Surely this is shy of the freedom to increase interest rates on closed accounts, 50%+ interest rates, hidden fees and intentional acts to push debtors over their limits. The State has a duty to step in to avoid injustice. Admittedly, this can be a difficult course for government to chart but there must be limits and I don’t believe that the present allowances are just.

    Running parallel to this justice point is that there is a basic duty to avoid contracting debt that one has no reasonable ability to pay. Bankruptcy fraud is a serious problem and creditors have a right to protection but their failure to mitigate the ill effects weighs against them. Don notes that Trustees don’t protect the interests of creditors very well and that many creditors don’t take even minimal efforts to protect their interest. Joe Green notes, quite correctly by the way, that part of the calculus is that a creditor’s ability to mitigate the ill effects of their poor “choices” through write-offs feeds the problem.

    In the final analysis, creditors are being shafted but they seem to have accepted that situation so long as they can pass off those losses on others. Many of those “others” are those who can ill afford the business-savvy machinations of an MBNA or AMEX. Short on cash and barely making their ends meet, it is unfair for the card companies to pass off the costs of their bad business choices by increasing interests and otherwise enslaving the debtor. To be perfectly frank, I don’t care that the debtor in that position got their through bad choices, it is no more fair to make slaves of men who reached that condition through bad choices then those who reached that condition through calamity.

    There is a role for the State in this situation and, due to the political consequences of placing a limit on usurious interest, the State has abdicated its role.

    As to the second and, for the record, the context of the post itself, the Church should loudly proclaim that it is morally reprehensible to use economic control over lending to make slaves of men. Usury is wrong. It is as simple as that but the Church has masked the message beneath an ornate and complicated argument. The Church’s position may be properly articulated in the hallowed halls of academia but the common man needs clear, understandable guidance.

    Christ drove the money changers from the Temple, He didn’t argue them into submission or write a treaties on the matter. The Church should unequivocally state Her preference for the poor and smack down the convoluted argument that the greater good of a world’s economy justifies the destruction of those in the poorest of economic circumstances.

  • Well framed, CL. It would seem to me that lenders carefully factor in that the small number of deadbeats who cause paper losses represent merely the “cost of doing business” and more than offset by the enormous profits made on the vast majority who do not default.

  • Proverbs 22:7
    The rich rule over the poor, and the borrower is slave to the lender.

  • Joe,
    What did you do on Wall Street?

  • Mike, worked five years at The Wall Street Journal as an editor and had a front row seat to all the shenanigans.

  • Jose Verde:

    Today’s problem (FDIC insurance losses since 2008 approaching $100 billion) is if/when more than 5% or 6% of a bank’s loans do not pay it’s pretty much “curtains.”

    Banking may be over-regulated, the margins low and there is too much competition not only from other banks but from unregulated finance companies and GSE’s.

    I pay 2.75% on my first mortgage, an adjustable rate loan I’ve been paying for 27 years, and 3.25%, prime, on my second. If the bank pays 0.1% on funds, the spread is just over 3% on the second. Then, there are servicing expenses, paying my taxes and insurance, and providing for the (hopefully) few deadbeats. There may just be enough to provide bank investors with about one-half the rate of return of non-bank equity investments.

    Actually, the IRS standard for taxable deduction of loan losses is stricter than the Federal bank regulators’ and GAAP. Plus, the lender, usually a bank, borrowed the money/deposits and paid interest, usually about 3%-age points below the interest rate charged on the loan, it loaned and did not collect. The bank (or FDIC in a failed situation) must repay the depositor and the bank “sucks wind” on the loan losses.

    I’ve been in this business for 34 years. I’ve been interviewed by j-men and women. They never got it right. Not even close.

    PS: I’m one of the suckers that paid their loans.

  • T. Shaw, everyone has a story, and it’s admirable to play by the rules. I have always tried to live up to my obligations, financial and otherwise, but sometimes things are beyond one’s control.

    Such as when I got a VA home loan back in the 70s after I got out of the Navy, sold the house five years later to a Realtor who rented it out and pocketed the money instead of paying the mortgage, which I foolishly thought he had assumed. Months went by, no notice from the bank about the arrearages; the bank wasn’t worried since the VA guaranteed the loan and the Realtor wasn’t worried because legally he was off the hook. The renters skipped, the house went into foreclosure and when the bank was made whole by the VA, guess who the VA came after. Me. Forced me into bankruptcy and ruined my life.

    So, in America, the big fish always eat the little fish. No one eats the big fish.

  • Ok, Joe, got it.
    But what do those shenanigans have to do with being able to deduct legitimate bad debt expenses?
    And what is so bad about factoring in expected expenses in one’s business model? Who would not do that?
    I continue to be genuinely mystified at your point.

  • Sorry, Joe. I neglected to read your last post. Big fish, little fish. Got it. You are a journalist.

  • And Joe, since VA loans were assumable in that era, why didn’t you make sure that your buyer assumed the loan? At the closing your loan should have been paid off or assumed. You sold the house subject to your mortgage which you kept? Did your buyer pay anything? Sounds like he didn’t even need a loan. Who closed your loan? Were you paying attention at all?

  • Holy kicking a man when he’s down, Batman!

    The man opens up about a mistake that he characterizes as having ruined his life and you heap scorn on him?

    I advise writing this one down so that you don’t forget it when the first opportunity for Confession comes around.

  • Well I guess my last sentence could be taken that way except for the heaping part. If so, then I apologize. But it looks to me like he got taken by one crooked realtor and paid a heavy price for not hiring a lawyer to represent him. That is genuinely unfortunate, but I still do not understand the relevance of a lender’s so-called “easy” ability to deduct losses related to bad loans.

  • Mike, the VA loan at that time and perhaps still is always kept in the veteran’s name even though it was “assumed” by the Realtor. I didn’t read the fine print, didn’t have a lawyer and trusted the guy would pay off the mortgage. As for your other points, I happily concede that there are legitimate deductions for bad expenses, key word being “legitimate.” It would be off-topic to elaborate on “shenanigans.”

    As a postscript, I did ask Sen. McCain at the time for help in interceding with the VA but nothing came of it. The VA insisted the note was in my name despite the “assumption” clause that was supposed to be in there.

    I’m neither a lawyer or an accountant, but I am a lifelong skeptic, an occupational hazard I’m afraid.

  • Joe,

    Sorry for your loss. Only thing I ever got from the VA was a couple months tuition benefits. That showed me. My Uncle Tom (RIP) WWII vet (tanks North Africa, Sicily, Italy up to the Po Valley) refused to have anything to do with them.

    Sounds like a typical, untoward government program. And, our children/grandchildren will be destitute over such like.

    I can’t figure who’s worse bankers, congressmen, realtors, used car salesmen, or . . . . Hey, these guys make lawyers look good.

    Don’t forget, #!@& the vet.

  • Despite that bad experience, I got some decent care at VA hospitals over the years for which I’m grateful.

  • Today’s problem (FDIC insurance losses since 2008 approaching $100 billion) is if/when more than 5% or 6% of a bank’s loans do not pay it’s pretty much “curtains.”

    See the Federal Reserve data. Loan delinquencies suffered by commercial banks ca. 1991 and today are in that range, only a small minority of banks have had to be put in receivership.

  • Understood, Joe. A quick Google confirms that historically VA loans normally kept the vet on the hook even if assumed by a new buyer. This is a crazy rule that really undercuts the entire benefit of assumability, but was probably grounded in the predicate that ever increasing home prices allowed for little risk of loss to the VA (and therefore the vet). The process did change in 1988 to require bank approval with the advantage being that the approved assumption removed any risk to the vet. In your case even if after 1988 the real estate agent buyer obviously did not go through the approval process and therefore did not really assume the loan at all thereby burning you. Your skepticism is well-earned as a consequence. I always advise people to hire their own attorney for residential real estate closings, but no one ever takes my advice. For the most part it works out because the closing attorney representing the lender is almost always honest and competent. In your case, I’ll bet the realtor closed the loan himself (permitted on some states) even though he was also the purchaser, which allowed him to basically defraud you, but probably non-provable legally. Quite an outrage really.

  • When I lived in NY, Mike, it was customary to hire a lawyer in a real estate transaction. This deal took place in AZ and the Realtor handled the sale and it all seemed kosher. An arcane business indeed. A lesson learned too late and subsequent investigation showed many other vets were in the same boat as me, which may be why the law was tightened in 1988. However, moot now, and one must move on.

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Father Coughlin and the Great Depression

Monday, July 11, AD 2011

I recently finished Alan Brinkley’s Voices of Protest, which is a dual biography of Louisana politician Huey Long and radio firebrand Father Coughlin. Father Coughlin is known for being virulently anti-semitic, yet Brinkley takes pains to note that a focus on Jews only occurred towards the end of Coughlin’s career, long after he had ceased to be a major political figure. According to Brinkley, Coughlin is best understood as an heir to the midwestern populist tradition of William Jennings Bryan. And indeed there was quite a bit of overlap between the views advocated by Father Coughlin during the early 1930s and those of Bryan forty years earlier. The Principles of the National Union for Social Justice (Coughlin’s organization) supported the living wage, support for unions, a “conscription of wealth” in the event of war, and the nationalization of “banking, credit and currency, power, light, oil and natural gas and our God-given natural resources,”

Like Bryan, though, Coughlin’s main focus was on monetary policy.

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13 Responses to Father Coughlin and the Great Depression

  • Fr Coughlin’s economic policies were leftist. Jeffery Goldburg’s ” Liberal Fascism” in pages 137-145 shows that Coughlin’s economics were leftist and socialist. He constantly denounced capitalism in his talks and literature. he is wrongly considered ‘right-wing’ because he turned against FDR. But as Goldburg shows, he actually turned against FDR because Roosevelt wasn’t as left-wing as he was!

  • Interesting post.

    More broadly, I would be really interested to read a history of popular attitudes towards inflation. At the moment, popular opinion on the right seems to be against inflation, while on the left the desire to fiscal stimulus is so strong that monetary policy seems more or less ignored.

    If anything, it seems like opinions on monetary policy were much more passionately held in the past than now, with Bryan as Exhibit A in that respect, but I’m not really clear on what the tides of opinion were and how they tied to other ideological trends.

  • Black Adder,

    What’s your recommendation concerning Voices of Protest? Is it worth the time? Are there some new insights into either one, but Long especially?

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  • Darwin,

    It is odd that monetary issues would get people riled up so much more in the past than today (the closest we have to a Bryan today would be Ron Paul, who of course comes down on the other side of the question). I wonder if this had to do with the fact that government was a lot smaller back then. Nowadays populist rage can be channeled into issues ranging from health care to union pensions, and so forth, whereas back then monetary policy was one of the few things the government had a major role in.

    Nicholas,

    I thought Voices of Protest was pretty good. It dragged on a bit at the end (after Long died and Coughlin marginalized himself) but was very informative.

  • Interesting fact in the history of gold: the UK went off the gold standard in 1931. Did It help? Not so much.

    “Many factors had conspired to create the Great Depression, . . . ”

    In A Monetary History of the United States, 1867-1960, Milton Friedman and Anna Jacobson Schwartz repeatedly named federal government policies as culprits in the Great Depression:

    · The Federal Reserve reduced the amount of credit outstanding, and therefore the stock of money, in 1931 and again in 1933; Monetary Policy.

    · Congress passed and President Hoover approved a major tax increase in June 1932; Fiscal Policy.

    · Rumors that President-elect Roosevelt would devalue the dollar (which he later did) caused the final banking panic; regulatory and Monetary Policy.

    · The national banking holiday declared by Roosevelt on March 6, 1933, undermined public confidence so greatly that 5,000 banks didn’t reopen after the holiday expired, and 2,000 closed permanently. Regulatory Policy

    In the 1930s, the Smoot-Hawley Tariff Act caused a collapse in global trade.

    Elsewhere (rightist claims) besides Friedman: A Perfect Storm of D.C. policy caused the Great Depression:

    In the 1930s, the Smoot-Hawley Tariff Act caused a collapse in global trade. Trade Policy.

    The Fed allowed the money supply to shrink by one-third. Monetary Policy – the gold standard was unchanged

    Herbert Hoover raised taxes. Fiscal Policy

    Government regulation in the 1920s prevented banks from branching, which caused more than 10,000 to fail in the 1930s. Regulatory Policy

    I believe the “cross of gold” was minor compared to the above causes. Gold did not shrink by one-third, but M1 did . . . On the contrary, bankers and business people thought gold dollars would be devalued and that was a cause of panic.

    Today we have uncertainty about: the next idiotic mass mistake will Bernanke and Geithner dream up; how high will be tax hikes; how much will national health care cost; how many thousands of new job killing regulations will be imposed; how high will fuel costs go because of the untoward control exercised over the Obama regime by the AGW cult; how high will food prices rise; etc.

    Seems to me Father Coughlin was slightly more astute at economics than Bernanke, Geithner or Obama. That’s not saying much. He should have stayed with saving souls.

  • the UK went off the gold standard in 1931. Did It help? Not so much.

    O yes it did. The British economic recovery began almost immediately upon devaluation of the currency in September 1931. The United States retained the gold standard. The succeeding 18 months were among the most economically harrowing in United States history. The year-over-year decline in domestic product (comparing 1932 to 1931) was 13%. Among the measures the Roosevelt Administration employed in 1933 was a large devaluation of the currency. The next three-and-a-half years were a period of rapid economic expansion.

  • Today we have uncertainty about: the next idiotic mass mistake will Bernanke and Geithner dream up; how high will be tax hikes; how much will national health care cost; how many thousands of new job killing regulations will be imposed; how high will fuel costs go because of the untoward control exercised over the Obama regime by the AGW cult; how high will food prices rise; etc.

    Neither Mr. Geithner nor Dr. Bernanke have any responsibility for policy in the realm of health and safety regulations, environmental regulations, labor law, or welfare spending. Dr. Bernanke’s agency has no responsibility for any dimension of fiscal policy. Mr. Geithner’s department collects taxes, maintains the intramural payments system, sells bonds, operates the mint and currency printing plant, and has a hand in regulation of the financial sector. It does not write the budget. Neither the Treasury nor the Federal Reserve can unilaterally raise taxes.

  • the UK went off the gold standard in 1931. Did It help?

    Yes. In fact, going off the gold standard turns out to be a strong predictor of when economic recovery started in a given nation. This was certainly Milton Friedman’s view (among many others).

  • This seems a good forum for asking a question I’ve wanted to ask for some time.

    It seemed to me that interest rates were kept artificially low for many years before the collapse in 2008. The low interest rates supported the housing market and fueled the bubble. They also left us nowhere to go in stoking the economy as it faltered: since we couldn’t spur investment with interest rate cuts, we were forced into an infusion trap, essentially de-valuing currency through stimulus measures.

    The first part of my question is whether I have it right and the second is, if I am right, what does this tell us about policy?

  • Father Coughlin should have stuck to saving souls. Camus: “All attempts to create Heaven on Earth result in Hell on Earth.”

    I dunno. In the UK, was it going off gold or was it Keynes? Plus, UK still had its Empire (Canada and India) and huge resources and trade advantages.

    AD: Obviously. The two blind mice merely fuel fear and uncertainty. The other phrases, behind each semi-colon, are independent of each other. Sadly, they all may combine to give the US a perfect economic storm.

    G-V: Low rates were one of a large number of factors leading up to the housing bubble, and too true made open market operations (easy money) unavailable to help the economy.

    No one in power understands the causes of all this “pomp and circumstances.” No one learned from the S&L crisis or the dot.com bubble burst, Fed acts around LTCM caused an attitude that they’d be bailed out, FDIC deposit insurance, FNMA/FHLMC corrupted Congress, HUD, CRA, etc. Got to run.

    Alan Greenspan is excoriated for his recent Fed performance. Few people remember that he was also on the wrong side of the run-up to the S&L crisis.

    I blame Bush.

  • It seemed to me that interest rates were kept artificially low for many years before the collapse in 2008.

    The Federal Reserve was raising the discount rate in increments throughout the period running from 2002 to 2006.

  • Black Adder,

    Thanks for the tip about the book.

Paul Ryan and Archbishop Dolan on Catholic Social Teaching and Budget

Thursday, May 19, AD 2011

Recently, Rep. Paul Ryan wrote to New York’s Archbishop Timothy Dolan to “to provide facts about [Ryan’s proposed] Budget to help advance an informed debate in light of social teachings about the well-being of the family, subsidiarity, the preferential option for the poor, and the dignity of the human person.” The letter outlined some of the main features of the Ryan plan, and suggested ways in which this plan was designed to meet the goals and principles of Catholic Social Thought. Here’s a snippit:

Nothing but hardship and pain can result from putting off the issue of the coming debt crisis, as many who unreasonably oppose this Budget seem willing to do. Those who represent the people, including myself, have a moral obligation, implicit in the Church’s social teaching, to address difficult basic problems before they explode into social crisis. This is what we have done, to the best of our ability, in our Fiscal Year 2012 Budget Resolution.

Yesterday Archbishop Dolan responded:

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42 Responses to Paul Ryan and Archbishop Dolan on Catholic Social Teaching and Budget

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  • Black Adder – Thank you for alerting me to this news. This is very encouraging to me that this dialog is even occurring. This is very positive news. Thank you.

  • Now THAT is the way it should be done! The government (any government) does no favors to either the poor or the middle class by continually making promises to them that cannot be kept.

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  • Now THAT is respectful and constructive dialogue. We need to stop with the partisan talking points and instead have meaningful conversations and/or debates like this one. God Bless them both. I hope the dialogue continues.

  • This is really fantastic. Good for Rep Ryan for reaching out to Archbishop Dolan, good for the Archbishop for responding in this way. I always guessed Ryan was more a “Mere Christian” with a Catholic background, but maybe he’s really engaged in the faith, or at least someone on his staff is.

  • This reasonableness on the part of both Rep. Ryan and Archbishop Dolan must have smarted a bit, because the mindless hacks over at The Catholic Democrats have sent me (and others — I’m not special, I’m just on their mailing list for some reason) a press release beginning:

    Boston, Mass. – Catholic Democrats is calling Archbishop Timothy Dolan of New York, the president of the U.S. Conference of Catholic Bishops (USCCB), to clarify comments he made in a letter (dated May 18, 2011) sent to U.S. Representative Paul Ryan (R-WI) that threatens to undermine the principles of Catholic Social Justice in his supportive words of the assertions made by Congressman Ryan regarding the priorities in Ryan’s budget. Catholic Democrats further calls on all U.S. bishops to publicly advocate for the poor, the elderly and working families in the midst of a divisive national debate that threatens to dismantle federal social safety programs for the most vulnerable members of our society.

    Nice to know that the Catholic Democrats are there to do the president of the USCCB’s job for him.

  • As a Catholic Democrat, I am at a loss as to WHY Ryan started the Dialogue and even a greaterloss as to WHY the Archbishop responded in such an elegant and timely manner.

    For longer than I remember I have been writing Church Clergy regarding my concerns with what I refer to as “Catholics of Conveneince” using our church to make their political statements. Told to contact Archbishop Dolan and other notable Church Leaders, I have yet to receive so much as a peep in return.

    Somehow politicians praising Ayn Rand Philosophies,,,,, and politically driven Catholic Republican guests and hosts on Conservative Media attacking the church on Immigration, the Priest abuse Scandals, and Social Justice to the Poor enjoy the silent cover of the same Bishops from whom Paul Ryan receives a glowing immediate response.

    I have often held that there isn’t a scandal in the church that will cause more harm than how our Church is used to carry Political Water every election issue.

    I’m guessing on the way to the Evangelical Political Victory Dinner held at the National Masonic Hall, Guest of Honor, Bill Donohue from the Politically driven Catholic League will give us an update on how he guards our Church against the actions of a wayward secular Liberal Media, and then call on Archbishop Dolan to do the Invocation.

  • The GOP spin on the letter has and should receive a negative response.

    However, the actual letter Dolan sent is perfectly fine. It in no way endorses the Ryan budget plan. It is a letter I could have co-signed myself if the Archbishop would want me to.

    I do find it interesting that Ryan is so concerned about the negative reaction to his budget by principled Christians that we now know he desparately sought a letter from the Bishops. His plan is not going over well. Too bad for him he didn’t get much from Dolan in response.

  • I agree the letter is fine,,,,, I guess my real displeasure is that even if Ryan did write a letter to Dolan,,,, the contents of both should not have been made public in any way. The Ryan plan is simply HORRIBLE, and I don’t think he should use it to tout his own political agenda…. but that i exactly what he and his Evangelical base is doing. .

    Rest assured Bill Donohue from the Catholic League would enter the frey and politically spin the Dolan letter if anyone representing the Catholic Church dare question the responses of both Boehner and Ryan. (Look what happened when Catholic U Professors dared question Boehner as Commencement Speaker — first Donohue trashed them,,,,,the Boehner read and praised a personal letter to Congress —- in “Mom likes me best” fashion.

    Those of us who respect our church and its teachings aren’t willing to drag it into every political battle,,,, I can’t say the same for politicians during a heated election cycle. It’s troubling and damages our message and its image. === In no time, we end up water carriers for the Fringers,,,,,,

  • It’s perfect that the “catholics for Obama” think Archbishop Dolan is a Cardinal. Apparently they’re not terribly engaged in the faith in a number of different ways.

  • Kurt, thank you – Francis,,, respectfully,,,, in a perfect world,,,,titles are very important…. In the less than perfect world in which we live,,,,, I prefer the importance of the title not be connected to the importance of the message. — For me,,, there is only one way to be engaged in the Faith,,,,, live it.

  • I think Archbishop Dolan did a particularly deft thing in pointing to the work of his colleagues who have made presentations to Congress (Blaire and Hubbard), and insisting that any meeting include them.

    It was an encouraging exchange all around, and I’m glad to see it published. The issues are too important not to get a full airing.

  • Dale, I think you have it right. He is not distancing himself from the position taken by the Bishops Conference (which he heads) but affirming it while reaching out to a powerful Republican. And he does it without the accusation that Mr. Ryan is unhonorable, unlike the sad attacks on President Obama by certain quarters.

  • I made a visit to Archbishop Dolan’s Cathedral this AM.

    K: You spelt “racist” wrong. It doesn’t start with a “u.”

    It is plain and simple. Something must be done. Or else, Medicare and Social Security will self-destruct. That is the situation. President Obama doesn’t have a plan. He generates demogoguery. You don’t like Ryan’s evil plan. What do you have?

    Those of us who respect our Church and its teachings don’t aid and abet abortion, class hatred or lies.

    As always, I left in the Poor Box one each Andrew Jackson that I had earned, not one penny Obam confiscated from someone else.

  • T. Shaw,,,,I don’t see where Kurt Spelled anything wrong,, I am not sure that would be a Kurt word. Why put words in people’s mouths????

    I don’t like Ryan’s Plan – that you called evil. It is Privatization of a plan to an Industry that has increased their premiums at a rate 5x higer than inflation for the last 20 years. NOTHING about his plan changes abortion coverage, you know that – but it’s a card people seem to pull when they are opposed to ANYTHING.

    You wanted an idea — here it is. I would do the same thing President Reagan did to save Social Security many years ago, like Reagan, continue to allow a raise in Maximum earnings taxed. ,,,I would call on the Medical Indstry to stop the fraud and waste, and would allow people forced to go to the Private market for INDIVIDUAL Health Insurance Plans, the option of a Medicare handled plan at the same rate as HMO’s in the Private Market. I would not have extended the tax breaks,,,,,and would have voted yes on elimination of Oil Subsidies. NONE OF THIS AIDS AND ABETS ABORTION, and as someone who respects our Church — I understand the harm accusatory statements like that do to Life Issues.

    I wouldn’t consider that demogoguary, but tire of the self-righteous assumption that those who aren’t marching to your tune are “aiding and abeting” abortion, class hatred and lies. I don’t parrot either side’s Talking Points, and tire of being accused of worn out accusations, while you claim “OBAM” confiscates from you because you EARN your money. Listen to yourself!!!

    Why in the world do you find it necessry to tell us of your Church habits,,,and the Jacksons you earn and donate, accuse the President of personally confiscating something from you and still not understand that rhetoric like that is actually what aids and abets??? It’s almost like you prefer to attack. It’s been 45 years,,,,,,,do you prefer LIFE – or STRIFE????

    Neither Medicare nor Social Security will self-destruct,,,,,it’s the PLANNED Destruction of Medicare and Social Security 80% of people polled simply don’t want that.

    Best to you.

  • Fr. Jonathon Morris was spot on in making essentially the same points as Rep. Ryan and Abp. Dolan while a guest during the “Great American Panel” debate on Sean Hannity’s show.

  • Next thing you know someone would accuse the Catholic Church (read Bill Donohue’s latest reason for all scandals, as it fulfills his fascination with homosexuality) of being Political Shills.

    And we wonder the reason for diminshing Donations to the catholic Church ????— the Big Money is going to political causes,,,,, and the rest of us don’t want our money used to carry their water. If I wanted to be part of an Evangelical Political Denomination – I would tithe them,,,,,,I want to be Cathoic,,,, so I guess will have to donate directly to Catholic Relief Services. I think that’s what both Jesus and Mary would do.

    Pax Christi thank you,,,,,Hannity not what Represents the Catholic Church I know. You confirmed my concerns and make me much more comfortable with my decision.

    Pax to you, too.

  • Jane,

    My point was K libelled Ryan as “unhonorable”, when the usual libel/ad hominem for any and all Ob (Party like it’s 2008!) critics is “RACIST.”

    Do you have a DSL line to Jesus and Mary, or do you dial up?

    Was it during the 6PM 5/21 transmission that Jesus assured you that anybody that disagrees with you is worse than Satan?

    PS: The word would be “dishonorable.” Ask your ESL teacher.

  • T, Shaw,,,,,, were you upset that I didn’t thank you also for confirmation on my decision. Well let me thank you for proving my point better than even Pax or I could ever to.

    Kurt Libeled No one – and called no one unhonorable,,,, the only libel I seem to read in your post is your attacks – In a short diatribe you confirmed exactly your thought process,,,,,Was it the word Racist,,,,, a concern with my menton of Mary,,,,, maybe favorite word “Satan”??? What could it be???? Oh, I forgot the old Aid and abet,,,coupled with the other favorite “Evil” — and how could any diatribe end without the standard “Class Hatred” — Spread that Love.

    Oh, wait, Sorry,,,,, You are good Christian because you drop your own “Jacksons” into the “Poor Box”.

    I am sorry your hopes for 5/21 weren’t met,,, You are a silly one,,,,,,but all that anger does nothing for the image of a church you think only you respects.

    I’ve made my point,,, you’ve made yours and as far as I am concerned “AMEN” on this.

    Have a lovely rest of the day….. and maybe a little bran is in order??

  • Yane,

    Do you, as does Obama, think it is 2008?

    How do you feel about harvey milk day in publik skools?

    How about Obama chug-a-lugging his hootch while the British National Anthem is playing?

    I do not believe in collective guilt or collective virtue. I do Corporal Works of Mercy with my Time and My Money not voting to take someone else’s money.

    You are good Christian because you vote for dems and liberals that are 100% for abortion, gay privileges, artificial contraception, embryonic stem cell murder; higher taxes for people you hate so as to buy more votes in the dem voter base, big government taking over people’s health care and rationing it, etc.

    The country is going to hell in a hand basket with you and K pushing double-time.

    What was your native language before you came here to straighten out America?

  • T. Shaw,,,,,, I underestimated you –You are an angy man – not only at your Church,,,but your Country too,,, – Send Rush Limbaugh a couple Jacksons,,,, and chug-a-lug “HIS” milk. Lovely Native Tongue you have –

    Sadly, humored by your diatribes,,,I found responding to you entertaining; however, an examination of conscience tells me it’s time to mature and no longer encourage the obvious.

    Read Donahoe’s diatribe to the John Jay Report,,,,it will both fascinate and embolden you. Send him a Jackson, and maybe he’ll send you an autographed copy.

    This is the last time I will thank you for confirming my observations.

  • Jou’re welcome!

  • Rep. Paul Ryan is opening a defense against the shameless lies about his Medicare reform plan. He’s promulgating a video explaining why Medicare is going bankrupt . . .

    He believes that voters will listen to reasoned arguments.

    Good luck with that . . .

  • Rep. Paul Ryan is opening a defense against the shameless lies about his Medicare reform plan. . . .

    He believes that voters will listen to reasoned arguments.

    Good luck with that . . .

    The voters in NY 26 certainly listened!!! 🙂

  • To those of you who promote and agree with the scare tactics perpetuated by the Left which is a major distortion of facts, shows clearly a lack of regard for financial sanity and responsibility I hope that both Medicare and Social Security goes bankrupt, becomes obsolete, because you’ll deserve the consequences of your inaction and blatant irresponsibility. Pax

  • Social Security and Medicare are the pension programs of the elderly. They are not ‘entitlements’, they are a debt we owe to some of the most vulnerable among us.
    I have no interest in the ‘social teachings’ of a church which would endorse such a thing.

  • Unfortunately the pension programs of the elderly are bankrupt. The question now is how to fiscally salvage them. This, done in a fiscally prudent way, is consistent with CST.

  • Unfortunately the pension programs of the elderly are bankrupt.

    Well, that is just a factually wrong statement. If you said “going bankrupt” it might be debatable, but “is bankrupt” is simply wrong.

    The OASI Trust Fund has assests of $2.4 trillion. It made a profit last year of $92 billion. Without any program changes, conservative projections show it flush for 25 years. After 25 years, it is capable of paying 75% of projected costs, with that figure gradually rising back to 100% as the baby boom generation dies off.

    NO PRIVATE SECTOR SPONSORED ANNUITY OR PENSION PLAN can project solevency 25 years in the future.

    The issue is, assuming conservative projections, that there is a gully that goes as low as 75% of benefits from 2036-2086.

    That gully should not be ignored, nor should it be used to destory a social insurance program in which the Catholic Church was instrumental in its design and adoption.

    I have my own plan for Social Security that requires nothing I consider radical.

  • Phillip, I expect better from conservatives that to engage in a form a relativism that adopts an “Alice in Wonderland” style asserting that words don’t have objective meaning, but mean what you want them to mean.

    Last December, I spendt more than I earned. I didn’t go bankrupt.

    Contrary to “Human Events”, CBO has not said that the Social Security Trust Funds are bankrupt and the fact they are currently paying benefits proves it is not.

    I will repeat: The OASI Trust Fund has assests of $2.4 trillion. It made a profit last year of $92 billion. Without any program changes, conservative projections show it flush for 25 years. After 25 years, it is capable of paying 75% of projected benefits, with that figure gradually rising back to 100% as the baby boom generation dies off.

    NO PRIVATE SECTOR SPONSORED ANNUITY OR PENSION PLAN can project solevency 25 years in the future.

  • Social Security is not insolvent, but it is in trouble. Its projected liabilities exceed its projected income, and that means it is under water from a present value actuarial perspective. But as Kurt suggests the deficiency is probably manageable with fairly modest adjustments on either the revenue or expenditure side. Medicare, however, is not so rosy. Most people do not distinguish between the two programs, but their financial circumstances are very different. There are no easy fixes for Medicare.

    In the end, by it nature a “pay as you go” defined benefit system is difficult to sustain since it cannot accommodate a simultaneous reduction of payers and increase in payees, if those changes are substantial. Actuarily sound defined benefit programs are far more achievable if future payouts are based on previous contributions than if based on future contributions. In other words, it is one thing project how much one must save now in order to satisfy a commitment for future payouts; it is quite another to project how much one might be able to raise 30 years from now in order to satisfy present commitments of payouts 30 years from now.

  • NO PRIVATE SECTOR SPONSORED ANNUITY OR PENSION PLAN can project solevency 25 years in the future.

    You would think that might suggest a basic problem with the idea of defined benefit pension plans.

    As someone in this 30s, I figure the safe thing to do is simply to assume that I’ll never get a dime back of the money I put into Social Security and prepare to finance my own retirement, however modest it must be as a result. If Social Security somehow manages to survive as anything other than a welfare program for the indigent elderly, that’ll be strictly gravy.

  • I agree Darwin. There is a reason corporations have generally converted to defined contribution plans, and it is not because it reduces current wage/comp expenses — total comp packages are a function of markets and reducing one element typically causes increases in others.

    You are wise to not count on SS. If it survives at all, it will survive as a true welfare program (it is currently a hybrid), which of course will reward those who do not save at the expense of those who do — which is increasingly the American way in all things.

  • Suppose Social Security was turned into individual defined-contribution accounts. Suppose the first $5K/year in contributions must be invested in treasuries. There’s a poor retiree’s fund that some of the contributions over $5K go into. This is still Social Security! It’s still pay-go since you’re investing in treasuries. The difference is that now, it’s accounted for individually. My point? When it’s the government, it doesn’t really matter whether it’s defined-benefit or defined-contribution. Defined-contribution may be preferable simply because it’s politically more difficult to take away contributions than it is to cut benefits.

  • That is a big “suppose.” I see no reason why the government must be required to borrow money without regard to its actual borrowing needs or why individuals must be required to lend money to the government.

    The other difference is that a defined benefit plan can hide transfer payments, which is precisely what SS does. $5000 paid into a defined contribution plan creates an account that cannot be invaded in order to pay more to someone who contributes less but earns less income.

  • “Social Security is not insolvent, but it is in trouble. Its projected liabilities exceed its projected income, and that means it is under water from a present value actuarial perspective.”

    So from one perspective it is bankrupt?

    “NO PRIVATE SECTOR SPONSORED ANNUITY OR PENSION PLAN can project solevency 25 years in the future.”

    Though it does seem rather contrary to the concept of Social Security that a public program cannot.

    “As someone in this 30s, I figure the safe thing to do is simply to assume that I’ll never get a dime back of the money I put into Social Security and prepare to finance my own retirement, however modest it must be as a result. If Social Security somehow manages to survive as anything other than a welfare program for the indigent elderly, that’ll be strictly gravy.”

    Yet another sense in which one can consider Social Security to be bankrupt.

  • I struggle to reconcile my conservative political beliefs with Catholic social teaching. The struggle for me is becoming increasingly and sadly irreconcilable. I sincerely hope my understanding of Catholic social teaching is flawed. What exactly is the morality in confiscating property from one segment of society, to redistribute to those who will not support themselves and who continue to vote for people who endorse confiscation of private property? What moral duty do I owe those corrupting this system? Who believes it is moral or just to take from me that for which you are unwilling to earn? Amongst all of the Catholic rhetoric on the budget I see no reminders that individuals have obligations to support themselves to the extent they are able and that we have a personal obligation to be charitable, not a collective one? I read exhortations to class warfare, villainizing the evil or greedy rich, and exalting government’s “obligations” to society, but where is the condemnation of the lazy poor? Oh, yes, I took it there and set up camp. What about the fraudulent poor? Or, forget about the poor, how about the entitled slackers? Wealth is in the eye of the beholder and not all the wealthy are evil just as not all the poor are good.

    As someone who has worked since the age of 15, and until the past two years worked multiple jobs rather than collect unemployment, because to me unemployment is an inducement to sloth – a deadly sin, I am offended by and angry at Catholic income redistributionists. This has no place in Catholic teaching because it isn’t charity – it’s tyranny.

  • Alecto, Thank heavens you aren’t playing that ungly “Class Warfare” Game???? Heaven forbid you villanize the greedy lazy fraudulant poor, or those entitled sloth-ridden slackers? It looks like someone is suffering from WEWS (Weekend Rush Withdrawal Syndrome).

    As politely as I can print it,,,,What part of what you have attained makes you so uncomfortable that spend all your free time worried anybody wants to take it from you???? If you want to know where condemnation of the Lazy poor is,,,,its the very people you are Quoting Fox News, Beck, Hannity, Limbaugh to name a few,,, it’s the fastest grossing Industry in America.

    Speaking of Deadly Sins, Pride is the original and most serious Deadly Sin. Do you want to play God and determine who is and is not in need, why they are in need and if they deserve a single thing from you??? I prefer to thank Him for what I have instead. I am more worried about “REvision of Catholic Doctrine than I am Redsitribution of Wealth,,,,, it hurts everyone. When did we choose to throw “O Master Grand that I may never seek,,,,so much to be consoled as to Console” under the bus??

    Thank you Tito,,,,Nothing has changed,,,, charity is not Tyranny, and Pride remains the Deadlilest of all sins.

  • Alecto,

    Catholic Social Teaching is indeed very broad. It does allow for redistribution within limits. It also talks about the limits of the welfare state, the need not to create dependency, the need to not discourage productivity and the rights of private property. It also argues against utopianism.

    Likely what you have heard is from your diocesan paper or very selective teaching by clergy or laity who have not read much of CST themselves. Many of those likely take CST as the only infallible thing they hold. This is problematic as components of CST are self-professedly prudential judgments based upon fallible human science. Particularly when they dissent from so much else.

Immigration vs. Euthanasia

Saturday, February 26, AD 2011

First up, Matt Yglesias on How to Run America Like a Business:

If you’re trying to look at America from a balance-sheet perspective the problem is very clear. It’s not “entitlements” and it’s not “Social Security” and it’s not “Medicare” and it’s not “health care costs” it’s the existence of old people. Old people, generally speaking, don’t produce anything of economic value. They sit around, retired, consuming goods and services and produce nothing but the occasional turn at babysitting. The optimal economic growth policy isn’t to slash Social Security or Medicare benefits, it’s to euthanize 70 year-olds and harvest their organs for auction. With that in place, you could cut taxes and massively ramp-up investments in physical infrastructure, early childhood education, and be on easy street.

There’s an element of satire involved here, of course. But in my view the growing entitlement crisis is one of the reasons I worry about the eventual acceptance of euthenasia throughout the United States (the other being the temptation the children of baby boomers will have to euthanize their parents as a kind of revenge for killing off their brothers and sisters via abortion).

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3 Responses to Immigration vs. Euthanasia

  • I have long suspected that one of the reasons the federal government doesn’t try too hard to crack down on illegal immigration is because illegal immigrants are helping to prop up the Social Security system — most do NOT get paid under the table in cash, they get regular paychecks with taxes withheld like the rest of us. (However, they use fake or stolen Social Security numbers to do it.)

    Also, if it were not for immigration (legal and illegal) the U.S. birth rate would probably already be well below replacement level and our population would be stagnant if not falling.

    I would also suspect that the baby bust which followed the baby boom also has played a big part in the public pension crises being faced by many states, as well as the public union controversy in Wisconsin and elsewhere. There just aren’t enough younger workers in the system to pay for the benefits the older, retired workers have accrued. The bottom line is that the Baby Boom generation, for various reasons, failed to replace themselves and now they are paying the price — literally.

  • Is that a (putrid) poor attempt at plagiarizing Jonathan Swift’s “Modest Proposal”?

    Or, is it a back-handed endorsement for Obamacare?

    Of course, his “solution” is not to invest the $$$$ in the productive private sector. No! He proposes to leave grandma out on an ice (Eskimo-style) floe and give the “saved” money to public employees unions (to fund abortion, liberal candidates’ campaigns).

  • BTW: FDR’s Ponzi Scheme is coming to its natural conclusion.

    He didn’t care. FDR and the “reformers” knew it would be about 80 years before the time bomb blew up.

A Few Thoughts on Wisconsin and Unions

Thursday, February 24, AD 2011

At the risk of losing some of my libertarian street cred, I have to say that I feel a lot of sympathy for the public employee members in Wisconsin. Even if you think that their salaries and benefits are excessive, those benefits and wages were contractually agreed to by their employers, and I’m sure that in many cases people have planned their retirements on the assumption that these contracts would be honored.

On the other hand, if having public employee unions leads to workers receiving promises of future pensions and benefits that can’t or won’t be met, then that could be a reason to reconsider whether public employee unions are such a great idea going forward. The Church recognizes the right of workers to unionize, but this right is fundamentally based not on any the supposedly good consequences that unions have for workers, but rather as an application of the right of private association. As John Paul II noted in Centesimus Annus, (“the Church’s defence and approval of the establishment of what are commonly called trade unions [is] certainly not because of ideological prejudices or in order to surrender to a class mentality, but because the right of association is a natural right of the human being, which therefore precedes his or her incorporation into political society.”

I’m willing to accept correction on this, but it seems to me that if the right to unionization is based in the right to association, then it would seem that the union relationship ought to be voluntary for all the parties involved. Forcing workers to join a union or forcing an employer to deal with a union on certain terms strikes me as being contrary to people’s association rights, not a fulfillment of them. In the case of public employee unions, the government is the employer, and so should have a wide latitude to decide to what extent it is willing to bargain with unions and to what extent it isn’t.

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80 Responses to A Few Thoughts on Wisconsin and Unions

  • Yeah, obviously, I can’t blame the Wisconsin unions for not wanting to see their benefits reduced. Given the choice, I’d rather not see my benefits reduced.

    My only beef with unions is when they secure legislation which requires all workers in a given company or line of work (like being a public school teacher) to join whether they like it or not. This seems like a pretty clear violating of one’s human right to association, in that it forces association against one’s will. And, of course, with the idea that an employer has to reach an agreement with a given union, rather than simply forgoing to employ their members.

  • Which is why laws which mandate union membership may be contrary to Catholic Social teaching.

  • With the collapse of our economy I lost my job after working for 28 years. I was close to retirement and had to take that proverbial haircut in what my retirement was suppose to be. I was also married to an unionized auto worker and saw in my own employment a union shop dismantle itself because of unrealistic demands, which in my mind was the union committed suicide. This proved to me that unions are needed at certain times and then they need a new model such as what auto workers contracts are moving into a profit share approach. In the public sector some unions go into arbitration where they have to prove the government entity can afford to pay what they demand.
    State governments have to balance their budgets by law and we operate under the rule of law. When the government goes into debt which they knowingly cannot pay back borders or moral and ethical issues.
    In Michigan a JUDGE ruled that the state had to lay off teachers because of this issue and it will raise the class size to 60 pupils. I think it is a moral issue to put in place policies to make sure this does not happen.

  • This is “one big love triangle.” The gov employee unions are in bed with the politicians. The taxpayer is (can I say this?) cuckolded.

    A significant amount of public employee union dues (100%, indirectly paid by TAXPAYERS) is used to help elect mostly democrat (nearly 100% pro-abortion) candidates who repay the selfsame campaign contributions (from taxes) with more taxpayer money in better benefits and higher wages.

    They seem to be completely oblivious to the fact that they have run out of other people’s money. That is an economical issue, not a moral issue.

    Also, consider the 9.4% unemployment and 17% underemployment rates among private sector employees compared to the near 0% rates among gov employees.

  • One has to distinguish unions in private enterprise from unions in public service. If public servants do not like their wages and such they can vote for different elected officials; they already have a say. There is something, well unsettling, in the idea of public servants organizing against the public in a democracy.

    In private enterprise a union that becomes a parasite (e.g., instead of fighting for the 40 hour work week and a living wage, it fights for fork lift drivers to make six-figure salaries and life-time health insurance) competition will kill the host, and there will be other companies (that never drove their employees to unionize, or that have reasonable unions) that will step in the void to provide goods, services, and jobs. There is no such arrangement in government for parts of government that can not be privatized. In fact, as others have pointed out, it becomes a situation where the elected officials get votes and money from the union and then rewards the union with more pay–they are both parasites on the common citizen and the only limit is the ability to borrow money to be paid by, or to bankrupt, our children and grand children.

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  • My late father worked in a plant almost all of his working life where membership in the Allied Industrial Workers was mandatory. Other than taking dues money and giving sweet heart jobs for union bosses he could never see what earthly good the union did for him and his fellow workers. If membership in the union had been optional he would have left it in a heartbeat.

  • Just another reason why our treasures ought to be stored up in heaven, where they won’t rot.

  • You shouldn’t have to join a union but I think it’s perfectly permissible to insist that non-members pay for free riding.

    Also, I bought the whole idea that public sector unions are bad but I’m not sure why that must be. There is an effective check on public sector unions. If Gov. Walker can do what he’s doing now, he can certainly stand up to unreasonable union demands.

    On a related note, how do those who support Lila Rose’s deceptions feel now that Gov. Walker has been the victim? It’s still fair game? Is this the world we wanna live in? Where nothing is confidential?

  • Well stated.

    Right of free association prohibits the government from prohibiting unions or union membership, provided the unions are freely joined by each member as an option which he may voluntarily leave or take without fear of consequences being imposed on him as a result of the decision.

    Right of free association likewise prohibits the government from requiring that employers, including the government itself, deal solely with the unions, or with a particular union, for obtaining a worker to fill a particular job.

    I suppose the only real question for libertarians, then, is this: Does a private (not government) employer have the right to not hire, or even to fire, persons purely for being/becoming members of a union?

    In short, the right of free association exists, and the government has no just authority to penalize you (that is, to initiate force against you) for your association with a union. But if I don’t hire you or if I fire you, that isn’t an instance of me exercising force against you. It’s merely me refusing to associate with you. (I am, for the purposes of this example, assuming that I am not a company owner in a company town where the company, for all intents and purposes, is the government.)

    So, do I have a right as an employer to not associate with you, or to cease associating with you, because of who I just found out you’ve been associating with?

    My inclination is to say, “Yes, I have that right, provided I’m not the government, or in a position of such monopolistic power that my refusing to associate with you constitutes a de-facto exercise of force against you.”

  • RR:

    Why should it be considered “free riding” if non-union members are hired by the same employer, for the same jobs, under different terms (since their terms were not negotiated by the union)?

  • In the late 40’s lots of plants were moving south to right to work states.
    I watched a union member family of five move from Ohio to Tenn. to work in a plant which went non-union. He was told to strike and walk the picket line for less than half pay. After nearly two years with his family living on beans and biscuits he finally gave up. Sticking with the union rather than going non-union and providing for his family taught ME a lesson I’ve never forgotten.

  • Is it injust that we have “better benefits and higher wages” at this particular moment?

    I would suggest that a down economy naturally lends itself to stronger wages and more certain benefits in precisely those sectors that enjoy weaker wages and declining benefits during periods of significant economic growth. There seems to be an inverse relationship to the attractriveness of government jobs and the attractiveness of private – sector employment.

  • By “injust,” I meant “unjust.”

  • RC, because the terms won’t be different. If employers don’t extend the same benefits they negotiated with unions to non-members, non-members can just walk in to the boss’s office and demand identical terms and they’ll very likely get them. They reap the benefits of unionization with minimal effort.

  • “If employers don’t extend the same benefits they negotiated with unions to non-members, non-members can just walk in to the boss’s office and demand identical terms and they’ll very likely get them.”

    Why? If I were an employer I’d give better terms to my non-union employees in hopes their ranks would swell.

    The free rider argument in regard to unions has always struck me as weak. The truth is that there has always been a substantial segment of workers who do not wish to belong to unions, and the closed shop and mandatory deduction of dues is the union response to their unpopularity among more than a few of the workers they purport to represent. If unions were as popular as their mythology represents, neither the closed shop nor mandatory union dues deductions would ever have been necessary.

  • RR:

    So you’re saying that the non-members can only achieve the better benefits by doing a little research into the salaries and benefits of other folk in their industry, and engaging in their own negotiations.

    But isn’t that what everyone does to obtain a raise? Anyone with a little initiative and gumption, that is. Again, not something it’s just to call “free-riding.”

    But whether it is or isn’t, it seems to me that the principle of free-association prohibits government from requiring by law that people pay a fee for not being in a union.

    To say that the government may do that, is to say that I and a cavalcade of my fellow citizens may, with just moral authority, pull out a weapon and, while threatening you with violence if you don’t accede to my demands, take your property from you to punish you for not associating with the folk with whom we wish you to associate. Not very free, that.

  • Aw, folks beat me to the “being forced to PAY union dues when you don’t want to be a member, especially when you’re not a member, is also a violation of the right to associate.”

  • RC, non-members have a much easier time negotiating a raise when the union has already done the heavy lifting for its members. That’s just common sense.

    As for whether it violates free association, I see it like the debate over the constitutionality of the health care mandate. An individual mandate may be unconstitutional but taxing and spending to the same ends is not. Likewise, forcing everyone to pay union dues may violate free association but employers can pass union costs on to their employees regardless of membership.

  • “Likewise, forcing everyone to pay union dues may violate free association but employers can pass union costs on to their employees regardless of membership.”

    Why in the world would they do that?

  • I’m not sure how serious the free rider issue really is. Other countries (e.g. Germany) mandate open shops and it doesn’t seem to be a problem. If it came down to it, a union could always write it into their contracts that they get x percent more than nonunionized workers, adjusting for various factors (this sort of thing is typical in Hollywood, where star A wants to make sure that he is always paid more than star B, and so forth).

    The biggest violation of the right to associate in American labor law, it seems to me, is that it prohibits so-called company unions (in which workers and employees are part of the same organization). When Church documents speak of the right to unionize, most of the time they are explicit in including associations of employers and workers as part of this right. Yet in America this is illegal.

  • I don’t know much about Germany but from what I read it seems like their high rate of union membership is primarily a cultural phenomena.

    If unions members contract to get x percent more than non-members, you’d get a de facto closed shop.

  • Don, I don’t know if employers would voluntarily pass unions costs on to employers regardless of membership but they can be made to. Or the government can bank roll unions. Point is there are ways to make non-members pay without violating the right to free association so I don’t find the “I have a right not to pay union dues” all that convincing an argument against closed shops.

  • “Point is there are ways to make non-members pay without violating the right to free association so I don’t find the “I have a right not to pay union dues” all that convincing an argument against closed shops.”

    RR if I am forced to pay for a private organization I do not wish to support that certainly does violate my right to free association. The closed shop is a classic example of forced association. The decline of unionism in the private sector has been caused by many factors, but I think the coercive aspects of unionism left a bad taste in the mouth of many workers towards unions.

  • If unions members contract to get x percent more than non-members, you’d get a de facto closed shop.

    I actually don’t have a problem with a closed shop with its what the employer and union agree to. On the other hand, if a business wants to have an open shop that also should be allowed.

  • If it came down to it, a union could always write it into their contracts that they get x percent more than nonunionized workers, adjusting for various factors

    My first reaction is to wonder why anyone would agree to this, but then it strikes me that “adjusting for various factors” might cover a lot. For instance, unions often seem to want to have compensation determined primarily by seniority and very expensive benefits (very low deductible insurance, guaranteed pension benefit, etc.) To someone with a non-union frame of mine, like me, who might also be planning to move on out or up into non-unionized roles fairly quickly, it would actually be more attractive to work non-union with a slightly lower total comp + benefits package if my package leaned more toward salary and less towards benefits, and if I could get pay and bonuses based on performance rather than seniority. For someone intent on plodding along and watching the clock for thirty years at the same company, working union might be more attractive.

  • Folks who disagree with the political leaning of the union– or who have a moral objection to the union at all– might take lower pay; those who have insurance from another source might jump at the chance to get more pay over redundant benefits, or to choose their own benefits elsewhere.

    The obvious response to a union contract that says that the union workers will always get a set amount more than the non-union workers would be for those who don’t want to join Union 1 to form Union 2.

  • I said I’d stay away, but this one begs a response. Greedy labor unions killed most of the good daily newspapers in NYC, where I grew up and suffered with millions of other citizen-taxpayers forced to suffer through countless teacher, transit, garbage, and other government worker strikes and impossible wage and other demands that sent a once-great city in a steep decline from which it never recovered.

    I’ll never forget the Daily News headline back in the 1970’s when New York sought help from the federal government: “Ford to City: Drop Dead!”

    The headline today should be: “Wisconsin to Unions: Shut Up!”

  • Stick around Joe. You are a worthy sparring partner!

  • Thanks, Don. All forgiven?

  • In that case, allow me to observe:

    It’s hard to have much respect for the collective intelligence of the American people when the majority do not seem to know the difference between “STOP” and “YIELD.”

    : )

  • Darwin,

    You ask why an employer would ever agree to pay his unionized workers more than his one union ones. Of course, if an employee did not wish to do so he would not have to. A rational employer, though, might be willing to pay union members more if and to the extent that union membership was able to make unionized workers more productive. For example, unions might provide a vehicle for more efficient dispute resolution, might increase worker morale and decrease shirking, and could provide a mechanism for increasing the skills of union members. Stephen Bainbridge has some thought on this here.

    In the current institutional environment, the incentives are for unions and management to each try and grab as much benefit as they can and to provide as little as possible in return. In fact, this form of unionism is so ingrained that it can be hard to imagine unions behaving in any other way. But if union relationships had to be voluntary I think a lot of these incentives would be reversed.

  • A significant amount of public employee union dues (100%, indirectly paid by TAXPAYERS) is used to help elect mostly democrat

    Neither in federal elections nor Wisconsin elections may union dues be used to make contributions to candidates. Contributions come from a separate political action committee of which no union member is required to give an dmost do not. (Even though all union members, PAC givers and non-PAC givers get to vote on endorsements).

    i don’t know much about Germany but from what I read it seems like their high rate of union membership is primarily a cultural phenomena.

    It is largely due to the strong role the Catholic Church played in promoting trade unionism and union membership, along maybe with the intercession of German labor union leader Blessed Nikolas Gross.

    I actually don’t have a problem with a closed shop with its what the employer and union agree to. On the other hand, if a business wants to have an open shop that also should be allowed.

    The closed shop is illegal and has been since the Taft-Hartley Act.

    A Union Shop is only permissible with the agreement of both management and labor. Union shops are not permitted among federal goverment employees or in “Right-to-Work” states.

    The Open Shop is perfectly legal and exists except where a union shop has been agreed to per above.

    if I am forced to pay for a private organization I do not wish to support that certainly does violate my right to free association. The closed shop is a classic example of forced association.

    The Union Shop under the NLRA is balanced with the Union’s duty of fair representation. Full disclosure: I am a union representative in an open shop. If I fail to give those employees who are not union members the same level of service I give those who pay dues, I can be fined, fired or go to jail. I have never heard one conservative or libertarian make a single comment of the unfairness of this.

    Labor has long said they are happy to give up the opportunity to negotiate for an Union Shop if it is then free to only represent those who join the union. In fact, during the Bush Administration, a union tried to get the NLRB to sauy it could do that. Both the Chamber of Commerce and the Bush Administration successfully filed objections.

  • Kurt-
    are they non-members, or ‘core members’?

    It’s a little disingenuous to go from someone saying that union dues are used to elect democrats to talking about direct PAC contributions. The purple shirted thugs of late are a big example of this “help.”

  • Kurt,

    If I fail to give those employees who are not union members the same level of service I give those who pay dues, I can be fined, fired or go to jail. I have never heard one conservative or libertarian make a single comment of the unfairness of this.

    FWIW, I believe I commented to you within the last couple weeks that this strikes me as unfair. As someone against unions as they currently exist in the US, if there were a union operating at the company I worked for I would not only not want to have to be a member of pay “fair share”, but I would also not want to have the union deal with any grievance I might have, not want to have my employment constricted by the union contract, etc. (I also don’t won’t an employer to be able to hand off it’s HR duties to a union, as it gives them too much plausible deniability.)

    So at least, now you can say that at least one conservative or libertarian has agreed with you this is unfair. 🙂

  • Neither in federal elections nor Wisconsin elections may union dues be used to make contributions to candidates. Contributions come from a separate political action committee of which no union member is required to give an dmost do not. (Even though all union members, PAC givers and non-PAC givers get to vote on endorsements).

    Also, I believe this is a tad disingenuous in that unions can easily advocate in an election without giving money directly to a candidate. That’s like suggesting the NRA is a non-partisan organization.

  • are they non-members, or ‘core members’?

    Non-members. Where management and labor have agreed to a union shop, employees still have the option to quit the union and only pay an agency fee. The agency fee payers still have all the rights to equal service from the union and can sue if they feel they have not been served.

    In an open shop, those who pay no dues or agency fees still have all of the rights to equal service. Now, you may ask “yes, Kurt, but who would be enough of an a**h@@@ to willfully not join the union, pay a cent of dues, and still demand union representation and take action if they did not get it?” You would be amazed. My union lawyers make me take hours of training every year to make sure I don’t get a DFR complaint lodged against me.

    I believe this is a tad disingenuous in that unions can easily advocate in an election without giving money directly to a candidate.

    Indpendent expenditures on behalf of a candidate using union dues money is also illegal in federal and Wisconsin elections. Not only can a union not use dues money to buy a TV ad saying “vote for X” but it would be illegal for a union to spend dues money to give members a t-shirt with the union name on it to go to a campaign rally.

    So at least, now you can say that at least one conservative or libertarian has agreed with you this is unfair

    Should I hold my breath for the second?

    And rather than constantly reading from conservatives attacks on unions for the union shop, should I have any hope that these attacks would be retired and instead conservatives would focus on attacking the Chamber of Commerce for their position and demand that unions be allowed to be organized that simply represent their voluntary dues paying members? The AFL-CIO has been for this since Blessed Lane Kirkland. Its nothing new on the labor side.

    And once we resolve that, maybe you can give me a defense of the conservative position on the prohibition of secondary boycotts?

  • Indpendent expenditures on behalf of a candidate using union dues money is also illegal in federal and Wisconsin elections. Not only can a union not use dues money to buy a TV ad saying “vote for X” but it would be illegal for a union to spend dues money to give members a t-shirt with the union name on it to go to a campaign rally.

    Well, given your expertise on the topic, maybe you can explain a bit for those of us who only read the news stories. It’s common knowledge that unions are some of the biggest spenders in elections dealing with issues they’re concerned about. Are you saying this is entirely PAC money and dues are never used for it?

    Also, if this is the case, why to unions often include positions on topics having nothing to do with their areas of work in their union resolutions? For instance, a public school teacher friend of mine was complaining to me recently that the NEA and OEA both specifically endorse abortion and birth control in their resolutions. If unions are not going around advocating in favor of various political issues, why are they spending resources adopting resolutions on these topics?

  • Non-members. Where management and labor have agreed to a union shop, employees still have the option to quit the union and only pay an agency fee. The agency fee payers still have all the rights to equal service from the union and can sue if they feel they have not been served.

    According to the NLRB link that I provided:
    The NLRA allows employers and unions to enter into union-security agreements, which require all employees in a bargaining unit to become union members and begin paying union dues and fees within 30 days of being hired.

    Even under a security agreement, employees who object to full union membership may continue as ‘core’ members and pay only that share of dues used directly for representation, such as collective bargaining and contract administration. Known as objectors, they are no longer full members but are still protected by the union contract. Unions are obligated to tell all covered employees about this option, which was created by a Supreme Court ruling and is known as the Beck right.

    An employee may object to union membership on religious grounds, but in that case, must pay an amount equal to dues to a nonreligious charitable organization.

    More than 20 states have banned union-security agreements by passing so-called “right to work” laws. In these states, it is up to each employee at a workplace to decide whether or not to join the union and pay dues, even though all workers are protected by the collective bargaining agreement negotiated by the union. These states include Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Iowa, Kansas, Louisiana, Mississippi, Nebraska, Nevada, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia and Wyoming.

    Can you provide the text showing where you’re required to give union representation to these folks on the same level as full union members? The site search is borderline useless.

    Indpendent expenditures on behalf of a candidate using union dues money is also illegal in federal and Wisconsin elections. Not only can a union not use dues money to buy a TV ad saying “vote for X” but it would be illegal for a union to spend dues money to give members a t-shirt with the union name on it to go to a campaign rally.

    Again, you’re either missing the point or dodging.

  • Stop holding your breath Kurt. I think that’s unfair. I also think it’s unfair to require non-union employees to fork over even a minimal of funds to the union.

    In these states, it is up to each employee at a workplace to decide whether or not to join the union and pay dues, even though all workers are protected by the collective bargaining agreement negotiated by the union.

    And there’s the rub. It may be in some (or possibly many) instances that a non-union worker is “protected” by the union’s agreement. However, that means the non-union employee and the company are also restricted by the union agreement. This strikes me as unfair too.

  • Humphrey v. Moore, 375 U.S. 335, 55 LRRM 2031 (1964).

    MacKnight v. Leonard Morse Hospital, 828 F.2d 48,126 LRRM 2259, 2261 (1st Cir. 1987).

    http://www.teamster.org/content/duty-fair-representation (last item)

    From the Federal Labor Relations Authority (bolding is mine):

    THE DUTY OF FAIR REPRESENTATION UNDER THE STATUTE

    A. The Section 7114(a)(1) Duty of Fair Representation
    Section 7114(a)(1) of the Statute provides:
    § 7114. Representation rights and duties.

    (a)(1) A labor organization which has been accorded exclusive recognition is the exclusive representative of the employees in the unit it represents and is entitled to act for, and negotiate collective bargaining agreements covering, all employees in the unit. An exclusive representative is responsible for representing the interests of all employees in the unit it represents without discrimination and without regard to labor organization membership.

    The obligation set forth in the second sentence of section 7114(a)(1) of the Statute is commonly referred to as an exclusive representative’s duty of fair representation. The Authority has interpreted this section to require an exclusive representative to represent the interests of all bargaining unit employees: 1) without discrimination; and 2) without regard to whether the employee is a dues paying member of the exclusive representative. The duty of fair representation is grounded in the principle that when a union attains the status of exclusive representative, it must use that power to fairly and equally represent all members of the unit.
    I will first discuss that aspect of the duty of fair representation which involves disparate treatment by a union of a unit employee based on union membership.
    B. Authority Test When Employees are Treated Differently Based on Union Membership
    1. Legal Test
    This aspect of the duty of fair representation usually concerns situations where a non-dues paying bargaining unit employee claims disparate treatment from that received by dues paying union members. In other words, an employee alleges he/she was treated differently just because they were not union members.

  • Stop holding your breath Kurt. I think that’s unfair. I also think it’s unfair to require non-union employees to fork over even a minimal of funds to the union.

    OK. And the labor movement is happy to concurrently do away with both. The Chamber of Commerce and the GOP is not. I appreciate your kindness. Can you advise me about how we can get the great majority of conservatives who have taken up your viewpoint to move on this?

    Again, you’re either missing the point or dodging.

    The law is clear that Wisconsin unions can’t use dues money for political activities. If you are aware of a violation of the law, I think you should report it to the Wisconsin AG.

  • Within the past twenty years there were tens of thousands of private sector employees just like myself who, after many years on the job and been given our “outstanding service” plaques, were regrettably “downsized” out of a job because our companies or subsidiaries could no longer “afford” us. It was simply and necessarily the right fiscal move to keep the company profitable for the stockholders.
    Why in heavens name can’t the state of Wisconsin or any other enterprise with responsibility to those who fund their operations use the same logic to maintain its solvency without being looked upon as villains?
    Also, I feel certain that not any one of the people I have referred to was promised a job for life and were free to terminate their employment when ever we wished.

  • Humphrey V. Moore looks to be about the union being required to represent everyone when they’re the only ones allowed to represent anyone, and MacKnight v. Leonard Morse Hospital has no mention of union membership in it.
    (The case seems to be about a really bad nurse throwing a fit about the person who represented her deciding, after the case was done, that she really shouldn’t be a nurse.)

    The only link between MacKnight and membership in a union I could find was a statement in this document, as some sort of afterthought to mentioning that grievance representations have to be materially deficient to be actionable.

    The text you quoted boils down to: “When the union is the only one allowed to represent anyone, they have to represent non-union members, too.”

    Or:
    FLRA.gov
    Basically, an exclusive representative may not treat non-union members differently than dues paying union members in matters over which the union has exclusive control. Thus, the duty not to discriminate based on union membership attaches only when an employee has no right to choose a representative other than the union to represent the employee in the underlying dispute. In situations where an employee may choose a representative other than the exclusive representative, such as in a proceeding before the Merit Systems Protection Board or in litigation in a U.S. District Court, the exclusive representative may discriminate between dues paying members and non-members and thus may lawfully treat employees differently on the basis of whether or not they pay dues and belong to the union. Since the union in such situations does not have exclusive representation authority, the employees who are not union members may protect their interests by selecting representation from other sources. Thus, the Authority has held that an exclusive representative’s responsibilities will be analyzed “in the context of whether or not the union’s representational activities on behalf of employees are grounded in the union’s authority to act as exclusive representative.”

    So you’re not required to give non-members service equal to what you’d give union members, unless they’re barred from getting that service themselves.

    I can see why folks would object if the unions didn’t give up all exclusive representation rights– that is, if it wasn’t made so that non-union members aren’t bound by union deals. Without having the data about the lawsuit on hand, and not being able to find it without better details, I’m not prone to think well of the unions.

    Can you advise me about how we can get the great majority of conservatives who have taken up your viewpoint to move on this?

    Why try to get ‘conservatives’ to do it, when you could try to get the unions to work for it? Be a good thing– get them off of abortion, birth control, etc.
    Could even make a nice big national campaign out of it- “True Freedom! Freeing those who want no union from being bound by union deals, freeing unions from responsibility to those who don’t want to join!”

    The law is clear that Wisconsin unions can’t use dues money for political activities.

    I believe you mean partisan political activities. Same way that ACORN isn’t allowed to be partisan– and we all believe that, right?

  • OK. And the labor movement is happy to concurrently do away with both. The Chamber of Commerce and the GOP is not. I appreciate your kindness. Can you advise me about how we can get the great majority of conservatives who have taken up your viewpoint to move on this?

    My guess is, you’d find that the vast majority of conservatives have no interest in continuing this — after all many conservatives don’t want there to be unions at all, so they could hardly want unions to be representing non-union members. The reason folks like the Chamber of Commerce would oppose changing this is, I would imagine, that one of the benefits a company would be considering in forming an agreement with a union would be that they can now push off a lot of their HR work on the union. If the union is relieved of this responsibility, this effectively increase’s the company’s costs. So they aren’t going to want to let unions off the hook without renegotiating on terms more favorable to them. However, if unions never wanted to have to represent these folks anyway, I’m sure they should be happy to agree.

    If conservatives aren’t leading the charge on this, it’s probably because they either don’t know about it or are busy trying to relieve unions of other responsibilities.

    The law is clear that Wisconsin unions can’t use dues money for political activities. If you are aware of a violation of the law, I think you should report it to the Wisconsin AG.

    Forgive me, but I get the sense that we’re getting answers here which are true but not actually answering the question asked. Anyone who reads the paper knows that union money is a big factor (almost always on the progressive side of the aisle) in elections. Now, it’s possible that all of this is voluntarily given PAC money from happy union members — after all the NRA is an election heavyweight and all its money is collected from voluntarily paying members — but I must admit that given that virtually all the actual union members I know are unwilling members who have been forced to join by union shop agreements, I find it a little hard to believe that PAC donations are the sole source of all the union money at play in elections.

    Now it’s possible that:

    a) This is somehow different in Wisconsin than in much of the rest of the country or
    b) You’re telling us things that are true but not actually answering the questions we’re asking.

    How do I get this idea about union money in elections? Well, a quick google search returned this as the number one result:

    Two top newspapers are examining two of the top spenders in this year’s campaigns. The Wall Street Journal says the American Federation of State, County and Municipal Employees is the no. 1 independent spender. The New York Times delves into public records to identify corporations that are helping to fund policy battles and record campaign spending by the U.S. Chamber of Commerce.

    According to the Journal, AFSCME is spending $87.5 million — more than anyone else, but the title could be temporary depending on what happens in the next 10 days. The union’s money comes from dues paid by its 1.6 million members.

    So, is Politics Daily lying or mistaken, or is it in fact common practice for dues money to go to political purposes? In this case, Labor apparently out-spent the Chamber of Commerce, which suggests some pretty solidly deep pockets.

    And here’s the Daily Beast saying the same thing even more explicitly:

    Team Obama’s message in the closing weeks of the campaign was completely eclipsed Friday by a union official who openly boasted in a story reported by The Wall Street Journal: “We don’t like to brag,” but “we’re the big dog” when it comes to campaign funding.

    Big as in $87.5 million. Big as in the biggest spender of any outside group—all meant to protect the interests of unions, the new “privileged class.” But wait a minute: Team O led us to believe that honor went to the vilified U.S. Chamber of Commerce and all of its alleged contributions from “foreign money” sponsors.

    A record $87.5 million has been spent by one union, the American Federation of State, County and Municipal Employees, to elect Democrats. Paid not by voluntary contribution from its members, but by forced union dues from workers—who are paid by taxpayers.

  • My guess is, you’d find that the vast majority of conservatives have no interest in continuing this

    Well, we have a situation in which labor has an offer on the table to abolish. And we have your assertion (which I will accept) that most rank and file conservatives would accept labor’s offer. And we have the reality that the Chamber of Commerce and the GOP are blocking abolishing this situation.

    Where this leads me is that once again rank and file conservatives are dupes for Big Business and the Republican establishment. We have conservative politicans blocking the way for what labor and informed rank and file conservatives see as the right path. And we have scads of conservatives (as any google search will show) who rail against the unuon shop while are blind to DFR obligations of unions.

  • I don’t think that conservatives are particularly “dupes” in this regard, they just don’t translate their thinking into the particular actions which would be most helpful to labor. They’re a lot more interested in getting unions out entirely than in relieving them of their obligations to non-union workers in an open shop.

    Of course, what I’d be much more interested in is your response to the question about election spending and union dues.

  • I don’t think that conservatives are particularly “dupes” in this regard, they just don’t translate their thinking into the particular actions which would be most helpful to labor. They’re a lot more interested in getting unions out entirely

    I appreciate that. It’s not hard to say: “I’m against labor unions I want to get rid of them entirely.”

    I obviously disagree with that view, but I appreciate it much better than those who pretend they are not against organized labor, just raise a myriad of particular objections.

  • It’s a matter of simplicity. If you don’t want to have to join a union or have a union dictating the terms of your employment, it takes very little knowledge of labor law to simply oppose having a union around your workplace at all. It takes rather more to get into the fine points of advocating a labor law change that would allow a union to represent some of your coworkers but not you.

    This doesn’t necessarily indicate an opposition to organized labor in principle, though it might, just a dislike for what it is in the US at this time.

    And speaking of fine points — I notice that all of a sudden you’re willing to respond to any topic other than union dues being used for political advocacy. Should we take that as an admission that although what you said earlier may have been technically true in some sense, that it is in fact standard practice for dues to be used for political purposes?

  • I understand the hostility of the idea of non-supervisory workers of a common trade or profession making collective, democratic decisions about desired terms and conditions of employment and then negotiating with the employer over those terms and condition rather than the belief that bosses and the Blessed Mother are preserved from Original Sin and therefore incapable of doing wrong, and therefore the bosses dictating the terms of employment is perfectly fine.

    On political action, your issue is that you think the legal definition of political campaign activity is lax. I am happy to support a more strigent definition in law. I’m not willing to support an initative that applies different standards to groups I dislike and groups I like. I’m even less willing to agree at a different standard for groups YOU like and dislike.

  • On political action, your issue is that you think the legal definition of political campaign activity is lax.

    No, we just notice that 1) there is a lot of money, and 2) it’s going in a pretty uniform direction.

    I know I’d much rather trust in myself and a “boss” than a democratic group I was forced to join. “Democracy” becomes “mob rule” rather easily. (Ask a sheep having a nice, democratic vote with two wolves on what to have for dinner.)

  • “And rather than constantly reading from conservatives attacks on unions for the union shop, should I have any hope that these attacks would be retired…”

    Actually, we should look at rather unions, as they are currently constructed (particularly in Wisconsin,) are in accord with Catholic Social teaching. As the bishop of Madison noted in his letter, and contra the distorted post on Vox Nova, Catholics may licitly disagree. Actually a very good position for Catholics to support the Gov. of Wisconsin and reform disordered unions.

  • “I understand the hostility of the idea of non-supervisory workers of a common trade or profession making collective, democratic decisions about desired terms and conditions of employment and then negotiating with the employer over those terms and condition rather than the belief that bosses and the Blessed Mother are preserved from Original Sin and therefore incapable of doing wrong..,”

    The problem comes in when union bosses, who are also possessed of Original Sin, distort the purpose of a union and become an arm of a political party. Particularly when it acts contra the common good.

  • Kurt,

    I understand the hostility of the idea of non-supervisory workers of a common trade or profession making collective, democratic decisions about desired terms and conditions of employment and then negotiating with the employer over those terms and condition rather than the belief that bosses and the Blessed Mother are preserved from Original Sin and therefore incapable of doing wrong, and therefore the bosses dictating the terms of employment is perfectly fine.

    Oh come now, there’s no need to get all melodramatic about it.

    I don’t dislike unions because I think bosses are somehow preserved from original sin — like everyone else I’ve had good bosses and bad bosses. (Recently I had one so stupid I up and left the company — for which I should probably thank him since the new job he encouraged me to find pays a lot more.)

    I the reason I dislike unions is because:

    a) They seem permanently wedded to a set of ideas in the political arena (e.g. the Democratic Party) which I think is destructive at best and at times evil, and

    b) All of the interactions I and my personal friends and families have had with unions have been negative, and left me to feel that their primary purpose is to cause people to obsess over trying to do as little real work as possible.

    If my experiences had been different, I might feel very differently about unions. (Given that you work for unions, I would assume your experiences, or at least interests, have been the opposite.) But my experiences have in fact been quite negative, and thus so are my opinions.

    On political action, your issue is that you think the legal definition of political campaign activity is lax. I am happy to support a more strigent definition in law. I’m not willing to support an initative that applies different standards to groups I dislike and groups I like. I’m even less willing to agree at a different standard for groups YOU like and dislike.

    No, I don’t think that the legal definition of campaign activity is too lax. I have no problem with the unions, the chamber of commerce, the NRA, and indeed large corporations themselves spending large amounts of money in elections. (In this sense, it strikes me that Citizens United was simply leveling the playing field a bit.)

    However, given that I see no problem with unions spending their dues money on political activism, and given that I think they almost universally support bad policies when they spend their campaign funds, you can hardly be surprised if I am against expanding union membership, especially through the coercion of union shops. Less union dues means less money spend on policies I think are bad, so given that unions advocate policies I think are bad, it naturally follows that I want to see them both small and weak.

  • (Ask a sheep having a nice, democratic vote with two wolves on what to have for dinner.)

    And there you have it. Most workers are wolves. And therefore allowing worker organization and allowing them to make democratic decisions is to empower wolves.

    The problem comes in when union [elected leaders], who are also possessed of Original Sin, distort the purpose of a union and become an arm of a political party.

    Except it is not a distortion of a labor unions to give workers and worker issues a voice in politics. Your problem is that you simply don’t like the political choices non-supervisiory workers make.

  • *snort* Thanks for the jumping to conclusions. Are most people going to beat you up and take your wallet? Do you thus assume that any large group of people have your best interests at heart?

    Do you make the flatly insane assumption that they have the same goals as you?

    Does the concept of people disagreeing with you and not being either stupid or evil even come to mind, Kurt?

  • Except it is not a distortion of a labor unions to give workers and worker issues a voice in politics. Your problem is that you simply don’t like the political choices non-supervisiory workers make.

    A false dichotomy and part of the union mentality and short sightedness many of us reject. There’s an assumption that all non-supervisory citizens are in one camp, but that clearly isn’t so. I am from blue collar stock, having worked so for 25 years and have never agreed with the political choices of the unions. Nor have I found uniform approval of the same from union employees. Most seem apathetic to the union’s political work and some even despise it. I also do not find anything monolithic about the politics of people who are supervisors.

    To make matters worse, it’s not really non-supervisor workers making those political decisions, it’s essentially supervisors and administrators of large national corporations making them. Kind of ironic when you think about it.

  • It occurs to me that unions have the power to remove their responsibilities to non-members already in their hands– they only have responsibility where they have exclusivity.

    If they gave up exclusivity, they’d no longer have a responsibility to non-union members. No need to worry about the Chamber of Commerce or the current administration, and frankly I think that would satisfy most of the folks here, as well– a fully voluntary group that only has effect on its members? Sounds good to me.

    Perhaps they’d have to make sure their members were able to go via other routes as well to be fully “non-exclusive”.

  • “Except it is not a distortion of a labor unions to give workers and worker issues a voice in politics. Your problem is that you simply don’t like the political choices non-supervisiory workers make.”

    As many have noted, many workers do not agree with the political decisions of some other union workers and their union bosses. But again, its that many unions have become a political arm of the Democratic Party that is of concern. As noted, this is contrary to Catholic Social teaching.

  • Your problem is that you simply don’t like the political choices non-supervisiory workers make.

    I take it you have never worked in higher education, Kurt.

  • There’s an assumption that all non-supervisory citizens are in one camp, but that clearly isn’t so. I am from blue collar stock, having worked so for 25 years and have never agreed with the political choices of the unions. Nor have I found uniform approval of the same from union employees. Most seem apathetic to the union’s political work and some even despise it.

    In my work with unions, I have found 95% of our members support the political choices the membership makes. And the remaining 5% dissents to the Left.

    American unions are in full accord with Catholic Social Teaching on their political independence. We pursue the agenda our members direct us on workplace issues and support the candidates who support us.

    It occurs to me that unions have the power to remove their responsibilities to non-members already in their hands– they only have responsibility where they have exclusivity

    The issue of exclusivity is a demand of management, not labor. Management does not want to deal with multiple unions among the same unit of workers, therefore has seen that the law is written to have a single (or exclusive) representative rather than the possibility of multiple representatives.

  • The issue of exclusivity is a demand of management, not labor. Management does not want to deal with multiple unions among the same unit of workers, therefore has seen that the law is written to have a single (or exclusive) representative rather than the possibility of multiple representatives.

    Doesn’t change that it’s a matter the unions can deal with, rather than trying to get others to do it for them.

  • “American unions are in full accord with Catholic Social Teaching on their political independence. We pursue the agenda our members direct us on workplace issues and support the candidates who support us. ”

    That’s already debatable as Unions are not to be a “partisan arm”

    I think others have also shown that it is less than 95% who support the politics of the Unions. If I recall, when NY State stopped collecting dues for the public employees, 90% of members stopped paying. Now perhaps they were that 5% who were to the left of the union and were voicing protest. But I doubt it.

  • Here where a union, acting contrary to CST and the majority of its union members. Of course acting as an arm of the Democratic Party:

    http://www.npr.org/templates/story/story.php?storyId=100339693

  • Doesn’t change that it’s a matter the unions can deal with, rather than trying to get others to do it for them.

    Its written into the law. Therefore a change of law would be needed.

    That’s already debatable as Unions are not to be a “partisan arm”>

    And they are not a partisan arm. The Democratic Party has no control over unions.

    I think others have also shown that it is less than 95% who support the politics of the Unions.

    Absolutely no evidence to that. Now, when it comes to shareholder in a corporation, there you have a case.

  • “Absolutely no evidence to that. Now, when it comes to shareholder in a corporation, there you have a case.”

    Didn’t read the link, did ya?

  • Unlike shareholders, who are denied any right to have a say about political use of their money, union members have the right to go to a local union meeting, speak their mind, make motions and vote on them, and elect their leaders. In all the union elections I’ve observed, I can’t recall a single winning candidate who promised to do less on political action. Sorry, you are out of touch on that one.

  • Kurt,

    Well, that’s kind of a no brainer due to selection bias. Given that unions are invariably run by Democratic Party activists, people who don’t like the party are generally going to grudgingly surrender their mandatory dues and ignore all the political junk mail they get from their unions, not show up to meetings where they’ll only be ignored and disliked.

  • “Sorry, you are out of touch on that one.”

    Still didn’t read the link. Not an anectdote like you present, but a survey. More powerful statistically than an anecdote.

  • DC,

    I gotta say you are clueless about unions, and I’m increasingly convinced clueless about blue collar Americans. I would say about 1/3rd of union officers are Republicans, and know it for fact regarding some particular unions that have done surveys.

  • (an aside: First time to this site and based on the caliber of this discussion I can promise you I’ll be coming back to read more. Mature, informed, engaged dialogue… that’s rare.)

    There are a number of issues covered above but I’ll try to comment on just a few. Full disclosure, I work for a non-union professional employee association.

    –Regarding the political agenda of the union:

    Although I’m in agreement with everyone’s (sans Kurt) general impression of the union being effectively an arm of the Democratic Party, it is not enough to just have an impression. But the facts are that public employee unions (I’ll use the NEA as an example) fund left-leaning political causes, ballot initiatives, and indirectly support the efforts of left-leaning campaigns. [http://teachersunionexposed.com/dues.cfm]
    (I apologize for not having a more neutral source, but the assertions and data listed on this page are valid.)

    The union can and does spend dues on politics (I believe the NEA will spend $20 per member from dues on political activism). They cannot fund elections or campaigns unless they’re operating through a PAC (for which dues are “voluntary”, more on that later), but they can and do fund ballot initiatives (the teachers union is the largest supporter of tax increasing ballot initiatives), non-profit liberal organizations, advertisements that technically obey campaign finance laws, etc. And those are just the legal means. They also, via other channels, such as their PAC, are heavily involved in elections, GOTV efforts, and campaign ads. Few will argue that the unions are a major political force and that their agenda leans overwhelmingly to the left, but it is true that deducing whether or not dues ends up supporting the agenda is hard to determine (for us and for the dues-paying members). Many Catholic public school teachers become religious objectors regarding compulsory union dues to prevent any money from ending up supporting abortion or other fundamental issues (religious objectors see 100% of their dues go to a mutually agreed-upon charity).

    –As to Kurt’s claim of 95% support, the facts tell a different story (Kurt is actually better informed than most union supporters with whom I debate, although we disagree on this assertion):

    Non-union association supporters push “paycheck protection” laws, which takes the government out of the role of collecting monies via payroll deduction for political activity. In other words, the government isn’t spending taxpayer dollars to process heretofore opt-out political contributions. When states pass these laws, the teachers unions saw their ‘voluntary contributions’ plummet by 85%-90%. Suddenly when teachers were required to opt-in, very few were interested. Paycheck protection laws are moving forward in Alabama and Florida now.

    Not to mention, when 90% plus of the PAC money goes to one party, but more than half of your membership belongs to another party or is independent (not to mention those who are apathetic to politics), it can’t be true that the membership supports the political agenda of their association, especially those who are forced to pay dues (non-right to work states) or those whose states do not yet have paycheck protection laws. Perhaps Kurt is referring to the NEA’s representative assembly. 95% is still high, but we can certainly agree that a majority of those who attend the RA vote to create the political agenda of the NEA. That doesn’t mean that union members necessarily supported those conclusions. The equivalent would be to say that most Americans support pay increases for their legislators because the legislators voted for pay increases and Americans voted for the legislators. The transitive properties don’t quite work in a representative government.

    –Forced unionism:

    The right to association means that government should not prevent me from freely associating–and I also shouldn’t be forced to associate. Union shop supporters can parse words about who is a “member” (those who become “agency fee” payers are beholden to their contract whether they like it or not, but the lose the right to vote on the contract, union elections, attend meetings, liability insurance, discounts, etc.–even though they often pay 85% or more of the dues of a full member) but the truth is the employees are forced to pay dues to a union as a condition of employment. That is un-American. And I will equally defend the right of an individual to join a union as the right of an individual to work a job without joining the union.

    Kurt’s note about the unions wanting to end the union shop in exchange for not protecting non-members intrigues me. Right to work states do end the union shop, although collective bargaining agreements do represent all employees of a certain class (so a teacher in Kansas is beholden to the contract even if they never pay a penny of union dues or ever joined). Although non-members’ rights are limited, the union is technically required to serve those employees per the contract. If they end that obligation, are they expecting to get more dues from the right to work states “free riders” (their word) than they’ll lose from the folks in previously non-right to work states leaving the contract? I don’t think they’re that foolish but I would like to hear more, Kurt, if you can point me to some links.

  • Few will argue that the unions are a major political force and that their agenda leans overwhelmingly to the left,

    I won’t argue it. I would agrue that support for workers defines the left. Everything else sometimes associated with the left — environmentalism, abortion rights, gun control — is secondary and non-essential.

    When states pass these laws, the teachers unions saw their ‘voluntary contributions’ plummet by 85%-90%. Suddenly when teachers were required to opt-in, very few were interested. Paycheck protection laws are moving forward in Alabama

    It passed in Alabama and already 87% of teachers have signed up for electronic payment from their bank accounts, by passing payroll deduction. Despite the logistical challenges of switching the entire union membership in one swoop, the union now thinks they may eventually reach 99%.

    Kinda shoots that theory all to heck.

    Many Catholic public school teachers become religious objectors regarding compulsory union dues …

    No Court has ever allowed Catholics to have a legally recognized religious objection to union dues because the Church’s Magisterium has refused all requests to testify on behalf of objecting individual Catholics.

    Beck objectors need not state a reason for their dues rebate, but Catholics are among the least likely to be among the 5% of workers who are Beck objectors.

    –As to Kurt’s claim of 95% support, the facts tell a different story

    What facts? Have you talked to 6% of the membership?

    Not to mention, when 90% plus of the PAC money goes to one party, but more than half of your membership belongs to another party or is independent (not to mention those who are apathetic to politics), it can’t be true that the membership supports the political agenda of their association

    The members of my union are 30% Republican, 45% Democratic, 25% Independent. In our most recent membership survey, 95% said the union should advocate for our members in political action based on union issues.

    Kurt’s note about the unions wanting to end the union shop in exchange for not protecting non-members intrigues me.

    Under current law, a union must give fair representation to everyone in a unit, be they union members or not. That means that a non-member can file a grivance and the union must represent him, fairly and equally as a dues paying union member even if it costs the union thousands and thousands of dollars to do so. If the union wins a case for back pay, the settlement agreement the union negotiates must apply equally to union and non-union members (I have been successfull in insisting as part of the settlement that rather than mail the back pay checks to the harmed workers, they are to be picked up in the union office. Sadly, even though the checks would have paid three years of dues, the free-riding skunks didn’t have a bit of shame walking in the union office to get their check).

    It has been management, not labor who has insisted that a union cannot just represent part of what management decides is a bargaining unit.

  • “No Court has ever allowed Catholics to have a legally recognized religious objection to union dues because the Church’s Magisterium has refused all requests to testify on behalf of objecting individual Catholics.

    Beck objectors need not state a reason for their dues rebate, but Catholics are among the least likely to be among the 5% of workers who are Beck objectors.”

    I direct you to Roesser v. University of Detroit & University of Detroit Professors Association/MEA/NEA. This article lists another case in NY:
    http://www.mackinac.org/2912. And there are more. In fact, many of the religious objectors I encounter are Catholic. Perhaps I just have an easier time spotting or connecting with Catholics, but that’s been my experience.

    Regardless, my point wasn’t that Catholics specifically object (just using an example since we’re on a Catholic website), but that the political positions of the union are radical enough for individuals of many faiths to forfeit benefits in order to see their money go to a charity rather than the union’s agenda (despite the union’s cooperation, per the examples above).

    In fact, my organization and many like it grow because of individuals fed up with the political positions of the union–especially those unrelated to the profession. They are absolutely not “secondary or non-essential”–but quite the contrary. They are at the core of what the union, at least the NEA, stands for in this country: more taxes and a liberal social agenda. I’m not saying they’re not allowed to do this, I believe strongly in the right to associate freely, but let’s all be adults and acknowledge that the unions are a major political force for the Left in this country. If I understand you correctly you are not disagreeing on this point.

    “The members of my union are 30% Republican, 45% Democratic, 25% Independent. In our most recent membership survey, 95% said the union should advocate for our members in political action based on union issues.”

    To be fair, you did qualify your claim of 95% support by noting that you are speaking exclusively to your work with unions (are you in a right-to-work state??). I can say that my experience with unions hasn’t been quite the opposite, but there are many who either don’t know what their union is doing politically, think (incorrectly) that their dues money is only for bargaining and benefits because they aren’t giving to the PAC, are afraid to speak up about their disagreements with the political positions of the union, are apathetic to politics, or are resolved to their fate because they think there are no options available to them. For those who are happy with the activity of their union, they should certainly remain members. For those who aren’t, they should be free to either pay for the legally exclusive benefits the union can provide, direct all of their dues to charity, or withdraw from the union and find another option for benefits and protection. Seems like the American thing to do, to let people choose. Others on this forum have provided examples of how the revelation that the union is working against the wishes of its own members has caused an uproar (e.g. Prop 8 in California) that don’t validate your claim (then again, California is not a right-to-work state…).

    Also, define “union issues”–does that mean 95% of your membership wants your union to support gun control? amnesty for illegal immigrants? off-shore drilling bans? gay marriage? abortion? stem cell research? or that 95% of your union wants the union to be an effective advocate for the profession…

    “It passed in Alabama and already 87% of teachers have signed up for electronic payment from their bank accounts, by passing payroll deduction. Despite the logistical challenges of switching the entire union membership in one swoop, the union now thinks they may eventually reach 99%.”

    I too was surprised at the 87% figure, seemed mighty fast to me. Either the union has learned how to react swiftly to such legislation, they were planning ahead for some time, or something isn’t adding up. They’re trying to block the legislation in court, so they must not be very close to 99% just yet. Regardless, those individuals are absolutely welcome to arrange for bank draft and continue to pay dues voluntarily. The state shouldn’t be in the role of collecting dues for political organizations. I consider it a success for America, whether union membership goes up, down, or stays the same as a result.

    More importantly, union members can more easily end their membership when they so choose. Too many union contracts prevent the school district from ending payroll deduction union dues except during predefined periods (as determined by the union). You can sign your name to a napkin to get in, but if you want to get out you need to turn in certified letter during 2 weeks of the year–the two weeks around July 4th! That’s criminal (the example is an NEA affiliate in a Right-to-Work state). My organization allows members to come and go as they please. We don’t need to lock the doors to keep people from leaving. The union will be even more accountable and responsive to their members if the members don’t have to wait another 11 months before they can save their money.

    “It has been management, not labor who has insisted that a union cannot just represent part of what management decides is a bargaining unit.”

    I understand your argument in favor of this agreement, although I would support the compromise for completely different reasons (because I predict a different outcome), but I asked for some links or evidence to management preventing this grand bargain (or of the unions supporting it). Two rational people such as you and I could come to an understanding on it, but that doesn’t mean our respective sides of the debate have any intention of doing so.

    It is right to conclude that you would support all states being right-to-work so long as those who are still in the union aren’t obligated to support those who choose not to be? Because on that, sir, we are in agreement.

    In closing, I stand behind my points. The unions support a radical political agenda, 95% of union members (particularly the involuntary members) are not in agreement with the agenda, and forced unionism (and forced dues) are wrong and should be ended. Seems you agree on the first and third points (granted not with my exact language) and on the second point I await your response.

  • Many Catholic public school teachers become religious objectors regarding compulsory union dues …I direct you to Roesser v. University of Detroit & University of Detroit Professors Association/MEA/NEA.

    University of Detroit is not a public school, it is a Catholic university. The Roesser case allowed him to only pay an agency fee, it did not give him a religious basis for exemption from all dues. I would note this solitary objector at a Catholic institution adds to my previous observation that the Church’s Magisterium has refused all pleas from anti-union litigants to testify on their behalf. I think the highest ranking cleric to testify in such as case was a Monsignor and USCCB department head in the 1980s who testified in favor of the union.

    Regardless, my point wasn’t that Catholics specifically object

    Okay, I think we are clear here. One need not state a reason for invoking Beck rights, as about 5% of b.u. workers do. A Baptist might be able to make a good case his personal understanding of the Bible requires him to quit the union. A Catholic (because our theology is different from the Baptists) has never successfully made the case his Church requires it, because his Church refuses to say so. Someday, you might find a judge who has a “Baptist” view of Catholicism who sides with such a litigant. But this is a side point.

    They are at the core of what the union, at least the NEA,

    Again, I notice conservative critics almost exclusively limit their discussion to the teacher unions. Citing as an example once or twice is understandable. But you do understand the inability to ever reference any other trade simply confirms with me and many others the opinion that even among “populist” conservatives, they are totally disconnected to Americans who work in a factory, mine, mill or machine shop. Personally, I think this is the basis of so much conservative hostility to labor. All rhetoric aside, they know they cannot even carry on a learned conversation about blue collar life and they are terrified that their political opponents have connections to large numbers of Americans with whom they are totally disconnected from.

    but that the political positions of the union are radical enough for individuals of many faiths to forfeit benefits

    5% for all reasons totaled — religious objectors, ideological objectors, cheap-os and social misfits.

    There is an argument for accommodating a dissenting majority, but conservatives have utterly failed at any evidence that the democratic processes used by unions (again, conservatives being incapable of speaking about any trade other than the teachers) to set their public policy agendas are not reflective of the membership.

    To be fair, you did qualify your claim of 95% support by noting that you are speaking exclusively to your work with unions (are you in a right-to-work state??).

    I cite my union as an example. I know of two other large unions that survey their members. Appropriately, they carefully phrased two questions to address the real issue (this was during the 2004 presidential race)– “If the election was held today would you vote for Bush or Kerry” (2:1 in favor of Kerry), and “Regardless of who you are voting for, which candidate has the better position on [steelworker] issues” (95% Kerry).

    I can say that my experience with unions hasn’t been quite the opposite,… An experience that I have not seen extends to factory workers, mineworkers, mill workers, truck drivers or machine shop workers

    Also, define “union issues”–does that mean 95% of your membership wants your union to support gun control? amnesty for illegal immigrants? off-shore drilling bans? gay marriage? abortion? stem cell research? or that 95% of your union wants the union to be an effective advocate for the profession

    Union issues are those the membership votes to be union issues at our National Convention, where any delegate can propose a resolution. However, my union has not taken a stand on any of those issues you mention nor have the great majority of labor unions (immigration reform might be the exception). On the other hand, I make no apologies for labor support for the Voting Rights Act and the Civil Rights Act. Martin Luther King said these laws would have never been enacted over the conservative opposition without labor and I agree here with Dr. King.

    On the other matter, I may not have been clear. To me, as a man of the Left, I hold what defines the Left is support for workers and economic justice. Other issues are not essential to the Left. If you think standing for workers is radical, well, that’s you.

    I too was surprised at the 87% figure

    Yeah. Kinda blows to heck one the conservative talking points. I’m sure Glenn Beck has some crazy response! 🙂

    They’re trying to block the legislation in court,

    They have been successful. The Republicans could have written a constitutional law that blocked any payroll deductions. Instead they singled out labor but left alone the United Way, softball league and anything else employees authorized. Banning union dues but leaving any other payroll deduction in place is a discriminatory law that has no place in a free society.

    My organization allows members to come and go as they please

    Really? What’s your membership and what’s the date of your annual meeting? I might know some guys (just enough to be a majority) who want to join for the one day the voting take place.

    It is right to conclude that you would support all states being right-to-work so long as those who are still in the union aren’t obligated to support those who choose not to be? Because on that, sir, we are in agreement.

    Yes, let a union organize and represent that part of a bargaining unit who wishes to be in the union. If you are in the union, you get the negotiated pay and benefits, any settlements, grievance representation, etc. In essence, the bargaining unit is redefined to include simply those workers who choose to be union members (this actually would not require any change in law if management would cooperate. While the NLRB settles labor – management disputes as to the boundaries of the bargaining unit, it is very rare they meddle if there is agreement between the two parties. )

    Professor Morris is the leading advocate of this, but since his book, there have been adverse rulings by the Labor Board in response to management objections.

    http://www.cornellpress.cornell.edu/cup_detail.taf?ti_id=4218

    I also would ask your support that the restriction on labor’s first amendment rights in the prohibition of secondary actions/boycotts be repealed. It would seem to me this should offend libertarian conservatives.

  • On religious objectors:

    It seems we are in agreement that some individuals are so opposed to the political positions of the union that because no other choice is available to them, they become agency fee payers or religious objectors. We disagree on the number that this figure represents (in particular because I don’t think we’re comparing apples to apples, but rather your experience with private sector unions, possibly in right to work states, with my experience with public sector unions, specifically the NEA, in non-right-to-work states), but the point is that (some of) the unions take strong positions on social issues, almost exclusively on the Left, that is not the desire of their members.

    On a side note, you (accidentally, I assume) combined two of my statements. I mentioned as an aside to my point (repeated above) that Catholic school teachers become religious objectors to avoid funding the radical agenda of the unions. You said no court recognizes the religious objector rights of Catholics (not just teachers). I quickly searched for linkable examples and found two, one of which happens to be in education (also one was private sector, one public), but certainly wasn’t limiting myself to teachers in response to your broad comment. In fairness, it was my error for not making time to read the decisions themselves, I trusted lines in articles referring to the cases that they “upheld the Title VII rights” of the employee. The latter example (the link) was a public sector Catholic employee allowed to send his money to charity. It does happen, although it shouldn’t even be necessary to become an objector but rather just leave the union if they take a position that is against any of your beliefs, religious or otherwise.

    But we’re starting to go in circles when in the end we do agree that individuals who want to be in a union and be represented by that union should have the right to do so, while others should be able to negotiate their own terms of employment and join any other association. I can understand, after having done some reading, why employers don’t want to have to negotiate with numerous unions, since each negotiation would work off of the last agreement, etc. I can explain what I’m saying but I have other points to get to.

    On your union:

    You’ve yet to answer me, are you in a right-to-work state? Ideological cohesion is much easier when you run a voluntary group, I’ll concede. I deal with many, however, who do not have a choice.

    On public versus private unions:

    First, this blog article is about public employee unions, so although I concede that I can always be more clear, I was assuming we’re talking about public employee unions all along.

    I see a fundamental difference between public employee unions and private employee unions. In fact, many in my family are voluntary members of private employee unions. Private employees negotiate with private employers over the share of profits they create together. I have no problem with that. If the owners don’t make reasonable offers, they have no workers to run the mines, factories, shipping, etc. If the workers don’t accept reasonable offers, they’ll put the company out of business (unless of course the US government steps in and hands you shares of the company while trampling the rights of shareholders). That equilibrium is fair (minus the bailout). I may have concerns about specifics (not a fan of “card check”; no tolerance for owners mistreating workers; workplace safety is paramount) but the system will balance itself with those two forces naturally in check.

    On the other hand, public employee unions negotiate with elected officials that they helped elect! And the “profits” they decide on is our tax dollars. Public employee unions pass laws that favor the growth and power of the public employee unions, which they use to pass more laws. They also fight laws that would increase accountability for the jobs that they do. This is a vicious cycle. There is no balance or equilibrium. The elected local and state officials, without tax dollars, are extorted by the public employee unions for more and more in benefits. It is both criminal to demand more than the municipality can pay, and criminal for the municipality to promise what they can’t provide. It is unfair to the workers (public and private) and to the taxpayer.

    On the NEA:

    The National Education Association is the largest labor union in the country. It is also tremendously important in lobbying, elections and campaigns, and forwarding the agenda of the Democratic Party (almost exclusively). It is also the union on which I know the most. So aside from the key difference between public and private, made above (in sum, I have few complaints about private employee unions, particularly those with dangerous working conditions), the NEA is a prime example of how unions behave in this country. It is not the only example, and I’m sorry if their actions reflect poorly on you or overshadow what your union does, but take that up with the NEA. The SEIU doesn’t exactly sit out political battles either, nor does AFSCME. FYI, those are the three largest labor unions in the country.

    In fact, I would love to see some private employee unions insist that the public employee unions not conflate these two very different groups. School teachers demanding not to pay any of their health insurance premiums is not the same as coal miners demanding some reasonable safety measures be put in place to save lives. Unions thrive on solidarity but at some point there are some in the labor movement in cushy offices standing on the backs of truck drivers and factory workers–raising taxes on those same labor brethren to boost their own pensions and retire at 60.

    On VRA and CRA of the ’60s:

    Not sure which “conservatives” MLK is referring to, but the votes were much more accurately a battle between North and South. For example, the Republican Party voted in greater percentages for both laws than the Democrats. I would agree that without labor, those acts might not have been able to overcome “traditionalists” opposition (as they referred to themselves), but labor wasn’t alone in that fight and didn’t include many of the public employee unions.

    Also, I do not think “standing with workers” is radical, in fact, that is the job of the union. What is radical is the agenda unrelated to labor or the profession that the union represents. Why would the NEA even have an opinion on Native Hawaiian lands, nursing homes, veterans’ benefits? The answer is that the NEA is an incredibly powerful political force and the liberal agenda will try to use whichever tools are at its disposal (no different than any other agenda). The NEA Legislative Agenda is to the Left of the Democratic Party.

    On Alabama:

    Time will tell what the effects of the law is. But like I said, regarding those laws, if they are fair (exceptions to these laws always concern me, as they do you), then it doesn’t matter how many people leave or join the union afterward, just that they have the choice.

    Glenn Beck always has something crazy to say. I choose not to listen.

    Speaking of crazy, very funny on the “annual meeting.” Tell your friends we hold our annual meeting 90 miles south of Key West, Florida.

    Can you elaborate on the amendment rights to which you are referring? Is your union prohibited from organizing a boycott?

  • It seems we are in agreement that some individuals are so opposed to the political positions of the union that because no other choice is available to them, they become agency fee payers or religious objectors.

    Okay, some individuals. And the choice of going to the union meeting and making a motion to reverse the union’s position on the objectional issue is not a choice they have because the hold a minority viewpoint in the union. Being in the minority doesn’t mean one is wrong, it just means they are at a disadvantage in a democratic organization.

    On a side note, you (accidentally, I assume) combined two of my statements. I mentioned as an aside to my point (repeated above) that Catholic school teachers become religious objectors to avoid funding the radical agenda of the unions. You said no court recognizes the religious objector rights of Catholics (not just teachers). I quickly searched for linkable examples and found two, one of which happens to be in education

    Sorry if I mis-edited your comments. I was just trying to condense the discussion. I’m using the term “religious objector” strictly. Just like a Quaker or member of another Peace Church is legally recognized as a religious objector to war, while a Catholic might as an individual object to all war, but the state does not recognize Catholicism as a peace church.

    My reading of the links was that the individuals were not granted a religious exemption from payment of all dues, but allowed a Beck rebate. The person received no support from the Catholic Church as to his opinion.

    while others should be able to negotiate their own terms of employment

    You are going even farther than I am. I have not spoken on what rights non-union members should have. I will note the great majority of blue collar/non-supervisory workers in non-union workplaces are never allowed to even speak with someone who has work terms negotiating authority.

    Are you suggesting that in non-union settings, a job applicant/new hire be given the (currently non-existant) right to actually meet with someone who has the authority to negotiate wages, benefits and other terms of employment? While maybe not unusual for highly skilled professionals, this would be a very radical change for most blue collar workers.

    You’ve yet to answer me, are you in a right-to-work state?

    Nope.

    Not sure which “conservatives” MLK is referring to

    Probably William F. Buckley (Sharon, CT) and Barry Goldwater (Phoenix, AZ).

    Labor was not alone on the liberal side of the great civil rights debates, but I do agree with Dr. King that it was essential to victory and the most effective grassroots organization. A side note, bowling was an entirely segregated sport until the UAW organized the first mixed race bowling leagues. They gave courage for the next group to follow, the CYO.

    Dr. King was killed in Memphis while he was there in support of the AFSCME strike.

    On Alabama:

    Time will tell what the effects of the law is. But like I said, regarding those laws, if they are fair (exceptions to these laws always concern me, as they do you), then it doesn’t matter how many people leave or join the union afterward, just that they have the choice.

    I don’t see how you can be on the fence that Alabama is fair. It is an open shop state. Teachers are allowed to authorize all sorts of deductions from their paychecks like United Way, etc. The Republicans singled out labor unions. The Courts have wisely ruled this is discrimination, as it is.

    Glenn Beck always has something crazy to say. I choose not to listen.

    You are a wise person.

    Can you elaborate on the amendment rights to which you are referring? Is your union prohibited from organizing a boycott?

    Yes. Under federal law it is illegal for a labor union to support in any way a secondary boycott and the Republicans are trying to toughen this law so that any secondary action is covered. Isn’t freedom of speech a First Amendment right?

  • Kurt, I hope you are not still holding your breath. Get the government out of labor. The First Amendment, if taken seriously, demands it. If the free association clause of The First Amendment is to have any meaning at all it should mean that the government is to pass no laws that limit the right of the individual to associate himself with any group, that would have him as a member, and to peaceably advocate for any position he chooses. Regulating a thousand and one exceptions to the First Amendment by implementing laws that tell unions, employees and owners what they can and cannot peaceably do is an anathema to freedom. Republicans and Democrats may seem disagree over what is right or wrong, but they both agree strongly that the government should pick the winners and losers in most any contest. Each faction claims the mantle of freedom but they both want to use the power of the state to control the agenda and each invariably demands that the power of the state be applied to secure the victory of their own side.

  • Martin,

    You have a very good point. This is exactly what Lane Kirkland suggested back when he was President of the AFL-CIO and as far as I know, the offer is still on the table. I can understand, particularly in the past, how the view was taken that labor strife and work stoppages and strikes and secondary boycotts/hot cargo issues drew labor, management and the public to the conclusion that some rules of the game were needed to lessen economic disruption. But the rules have been totally tilted towards the bosses.

    We need to take up the Kirkland offer and just make it an open field. Let labor play hardball as much as it can and see what it gets. No business has to by law recognize a union or allow a NLRB certified election. Labor in turn can use whatever tactic it wills to advance its interests — closed shop, secondary boycott, strikes, hot cargo, political action, shareholder activism, etc.

    I will admit this will probably advantage the skilled trades more than unskilled labor, so its not perfect.

Pro-Life Incrementalism is Working

Wednesday, February 23, AD 2011

Over at the Corner, Michael New draws attention to a recent op-ed by Frances Kissling of the oxymoronic group Catholics for a Free Choice:

In a column that appeared in last Friday’s Washington Post, Frances Kissling, who served as president of Catholics for a Free Choice, offers some advice for supporters of legal abortion. Kissling acknowledges that recent pro-life efforts — specifically our focus on fetal development and our efforts to pass incremental laws — have been effective in shifting public opinion in a pro-life direction. She acknowledges that supporters of legal abortion are now losing, and that the pro-choice arguments that were persuasive in the 1970s are no longer working today.

As a result, Kissling suggests a shift in strategy. Specifically, she urges her pro-choice allies to support some restrictions on late-term abortions. She states that supporters of abortion rights need to “firmly and clearly reject post-viability abortions, except in extreme cases.” She even says that abortions in the second trimester “need to be considered differently.” Kissling encourages an approach that would mandate counseling for women seeking abortion in these circumstances.

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12 Responses to Pro-Life Incrementalism is Working

  • BA,

    Well, obviously I disagree about the AZ bill.

    I think we are winning the battle for hearts and minds precisely because, at least until recently, we focused solely on abortion as murder. We did not focus excessively on demographics, nor did we adopt the dishonest strategies of the left. We instead crushed all of the self-serving and manifestly absurd arguments of the pro-abortion movement.

    That is why the debate shifted from “when does life begin” to “is it a person”, this is why the slogans shifted from “my body, my choice” to “abortion is a tragedy, a necessary evil.” We did this with the truth, not with sideshows and distractions.

    The rhetoric surrounding the AZ bill is ridiculous and absurd. Hardened Republicans making speeches about racism and sexism? It’s completely cynically and duplicitous. All anyone has to do is say, “fine, its not because I wanted a boy instead, its because I’m just not ready right now.” Who ever admits, openly, anyway, to getting an abortion for gender reasons in this country? How about race? No one admits this, and if they were asked, even if it were the true reason it would be denied.

    This is just idiocy.

    As I said elsewhere, though, I don’t reject incrementalism in total. Parental notification laws, informed consent laws, these are good things, because they don’t take the focus off the truth; they make the best of a bad situation, and they are actually enforceable, not empty gestures.

  • I am in favor of incrementalism since there is no other way forward at present. I think it diminishes the moral force of our argument not one whit. Lincoln could call for restricting slavery in the Territories while continuing to attack it as a complete evil.

    On the other hand, once pro-aborts admit that some abortions should be restricted or banned that weakens their argument immeasurably. The current abortion regime can only survive long term if it has a dedicated cohort willing to fight all out for it. Once they begin saying late term abortions are evil because they take human life, it starts a domino effect in our favor.

    The pro-life cause has many avenues of service of course. If some prefer a more head on approach that is fine. For myself I will support the baby steps now towards our ultimate goal of banning abortion and protecting all the unborn, and pray that the day will come in my lifetime when we can take great leaps.

  • I don’t think there is much convincing evidence to link incrementalism to the perception that the abortion industry is “losing.” Correlation, as we all know, does not equal causation. Here are some explanations that I find far more likely:

    a. As the article admits, the perceived shift is largely generational. Those of us under 40 are survivors. The knowledge that we had a 1 in 4 chance of getting wiped out by abortion is being reflected in public opinion.
    b. We young pro-lifers are less willing to compromise babies conceived in rape or incest and are more likely to reject the culture of contraception.
    c. The rise of 40 Days for Life, the recent explosive growth of the March for Life and other grassroots apostolates provide a way to create effective communication opportunities.

    I’m getting tired and my thoughts are getting a bit less cogent, but I also think it’s worth considering that Planned Parenthood has a very clear strategy to get around the problems posed by incrementalism: shift abortions to earlier in pregnancy. I’m all for promoting the use of ultrasound and fetal development to reach particular women in crisis. But if we rely too much on these measures, we risk losing the very early abortions–those that take place before the baby has clearly identifiable features. That’s why Planned Parenthood is working to get RU-486 in EVERY affiliate. It’s why we’ve seen no real decrease in the use of abortifacient birth control. And it’s why the abortion industry developed the new “week after” pill.

    I think it’s important for us to recognize that incrementalism and the “home run” approach (for lack of a better term) are not mutually exclusive. I work full-time in the pro-life movement, and we push for incremental victories. But we also push for personhood. You can do both. And we have to do both. Regardless of its political success, personhood provides a great opportunity for education that we simply must take advantage of. Instead of debating on PP’s terms (choice, access, etc.), we get to address why we’re really opposed to abortion: because it kills a child. Such strategies have worked in the past.

  • Abortion kills a human being. Killing is not health care. Murder is not a human or reproductive right. Assassination is not a choice: no compormise, no debate.

    Sadly, the problem is that abortion ranks about number ten (e.g., the 2008 election) on many catholics’ lists of moral imperatives: behind raising taxes of the hated rich and dismantling the evil, unjust American way of life.

    Speaking of oxymorons, try: “military intelligence” and “happily married.”

  • I think that incrementalism has worked in shifting the zone of possible agreement towards the pro-life position. Kissling’s piece (and other similar ones in the past from high profile feminists and abortion advocates) indicates that the absolutist pro-abortion position simply isn’t working anymore, and that the “clump of cells” claim is mostly only holding among those who are hard boiled pro-aborts anyway.

    Part of what needs to be kept in mind with this and other similar issues, I think, is that it’s not just increasing the number of advocates on one side of an issue that makes a difference in how an issue stands in the political balance. Equally important, at times, is taking the middling people without strong convictions and shifting them from mildly the other side to mildly your side. I think where the pro-life movement has been fairly successful in recent decades has been in making those who are not strong advocates either for or against abortion to lean slightly against it and feel that it might be taking a life. These folks won’t tell you that “abortion is murder”, but they lean anti-abortion and that gives the pro-life movement room.

    However, that kind of shifting of slightly held opinion only gets one so far. At a certain point, in order to make further progress, we’ll need real converts. And though those are coming, they are not yet enough.

  • Roe v. Wade stands in the way of doing anything BUT the incremental approach right now. And the incremental approach is the best way to chip away at Roe.

    Once Roe is overturned and the issue is back with the voters where it belongs, THEN we can talk about all or nothing approaches to ending abortion.

  • The voters should decide whether murder is legal???

  • “The voters should decide whether murder is legal???”

    As opposed to the courts having decided for us all that not only IS murder legal, but that we can’t do anything to restrict it at all? Absolutely.

    How else do you suggest we get from where we are to where we should be? Magic?

  • And I’d be more likely to believe in magic than to believe that either of the following scenarios could occur:

    (1) that the Pro-Life Amendment will pass 2/3 of both Houses of Congress and 3/4 of the state legislatures; or

    (2) that there will ever be 5 Supreme Court Justices sitting at one time who would find abortion to be unconstitutional. Right now, there is MAYBE one Justice who leans in that direction, and that is Clarence Thomas.

    We’ve had trouble enough getting Justices who will find Roe to be the piece of legal garbage that it is and thereby overturn it, thus sending the matter back to the states and/or the voters; it is wholly unrealistic to believe that we will have any chance of getting Justices on the Court who will not only overturn Roe, but then go in the complete opposite direction and hold that abortion violates the constitutional right to life.

  • Jay, I don’t necessarily disagree with you. I, too, don’t think that political strategies will end abortion. In fact, I’m pretty sure as long as 98% of the country is contracepting, and the average age for first exposure to pornography is 11, that abortion-on-demand will remain the law of the land. Looking back, it’s very easy to cite the passage of some law, or a war, or a court decision as the moment that a great injustice was ended. But that’s just lazy history. Typically, politicians are dragged kicking and screaming across the finish line.

    What we need is a cultural transformation. When the United States is a pro-life country, our judges and our lawmakers will fall in line. Let’s face it, for better and (usually) for worse, our judicial system reflects the trends of the age.

    So how do we do this? By making somebody wait 24 hours for an abortion? Don’t get me wrong, I am ALL for incremental improvements (assuming they don’t concede the lives of the politically inconvenient babies conceived in difficult circumstances). They might save lives. They might help us become more like Europe where abortion after 12 weeks is incredibly rare (and often illegal). But these measures don’t get us closer to seeing abortion end.

    Why are we pro-life? Because we value every life, beginning at the moment of conception. We believe that the single cell zygote is a person. I merely propose we endeavor to change our laws to reflect that belief. I don’t begrudge somebody for preferring a different strategy. I do begrudge everybody who actively opposes the strategy. And I get a little defensive when the nascent personhood movement is derided as having failed everywhere as though 38 years of incrementalism with no results is successful…

    Again, cultural transformation is needed. And how can we expect the culture to take us seriously if we don’t posit legislatively that the pre-born child is a person? If we restrict our efforts to parental notification and waiting periods, we allow the pro-aborts to define the debate in terms of access and choice. When we expand the debate to include personhood, we debate on our own terms: which human lives do we defend, and which do we kill?

    So in summary, yes, personhood is likely to be a political loser for the forseeable future. But personhood as a political strategy cannot be divorced from the great educational opportunity to tell America “Yes, the embryo is a person deserving of full protection under the law.”

  • “I merely propose we endeavor to change our laws to reflect that belief.”

    I don’t disagree, but isn’t that the same thing as allowing voters to decide this issue? It seems we’re both in agreement that voters and their representatives do a far better job of representing where our culture is on life than the courts do.

  • I suppose so, but I tend to think the prohibition on murder is already settled, right? When the embryo is declared a person on the law, that won’t so much kick it back to the states as it will aborb the pre-born into protection granted by existing homicide statutes. Maybe we are using different terms to say the same thing?

Against Small Pox

Sunday, February 13, AD 2011

There is a saying among logicians: one man’s modus ponens is another man’s modus tollens. In english, the idea is that different people often respond to the same argument by reaching opposite conclusions. If you see that an argument is valid, a logical response is to accept its conclusion. But another, equally logical response is to reject the argument’s premise.

That seems to be the situation with a recent post by David Curz-Uribe of the blog Vox Nova. David begins by contrasting two different views of the relationship between human beings and the rest of creation:

In the first account God tells Adam and Eve: “Be fertile and multiply; fill the earth and subdue it. Have dominion over the fish of the sea, the birds of the air, and all the living things that move on the earth.” The sense here is of total control, ownership, “dominion.” On the other hand, in the second account it says that “The LORD God then took the man and settled him in the garden of Eden, to cultivate and care for it.” Here the sense is of stewardship: caring for something that they do not own.

I do not want to read too much into these short passages, but I think that this tension still affects our current understanding of the world around us. If the world is “ours” in the sense we have complete control over it, then we can do what we want, subject only to our prudential judgment of how to treat our property. On the other hand, if the world is God’s, then our decisions must show deference to God’s own plan. We are stewards, and presumably (like all stewards) have a great deal of autonomy and authority, but in the end we are constrained by the plan of the actual Master of creation.

In the abstract I am more inclined towards the stewardship interpretation than the dominion interpretation given above (if for no other reason than that “stewardship” sounds nice while “dominion” sounds bad). Yet as David notes, the stewardship interpretation has some unusual implications:

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5 Responses to Against Small Pox

  • Why does ‘dominion’ “sound bad”? While I more or less agree with your observations re DCU’s VN post, I don’t understand why ‘dominion’ on its face is less good than ‘stewardship’; aren’t they just aspects of the same reality?

  • This brings to mind a comment made at the recent CPAC meeting. Ann Coulter was asked who was her favorite democrat. Her answer, “That’s like asking what’s my favorite disease.”

    Plus: Since Rachel Carson’s, et al, hysteria about an unproved “silent spring” and concomitamt bans on DDT, etc. tens of millions of Africans (possibly needlessly) suffered from malaria, sleeping sickness, etc. all of which may have been averted . . .

    Here are the Commandments: Love God with your whole strength, whole heart and whole mind: in truth and in spirit ; and love your neighbor as yourself.

    In that light, keeping smallpox alive sounds sinful. Unless, of course you define small pox as your brother or neighbor.

    Your faith must be as the little child’s.

    Let’s see: some cogitate on a small pox (you need an eletrcom microscope to see one) virus’ right to life, but an eight-month old unborn human doesn’t . . . Oh, maybe that explains voting for Obama.

  • Yeah, I’m with you that this seems a very odd way of framing the question in regards to small pox.

    I would, likewise, tend to think that keeping a few secure lab samples around would be the wiser choice, since they’d be needed to create vaccines at some future point. But seeing it as a violation of creation to destroy the last samples of small pox does seem odd.

    I think it might be a spill over of the somewhat magical power that some people assign to the idea of a species, and thus the utter horror that people have with the idea of species going extinct. Whereas in the point of fact, while from a conservationist point one certainly doesn’t want to see people needlessly wiping species out, it is quite normal for species to go extinct as environments change and new competitors appear.

  • The VN article implicitly assumes that there are two contradictory creation stories. Its analysis further implies that we are to choose which creation story we are to follow on the basis of its advice. The article doesn’t say that; it definitely doesn’t say that. I doubt the author thinks in those terms. But it does soften the reader to that sort of analysis.

    The choice between dominion and stewardship is false. To make an inadequate analogy, it would be like a reader of the OT and NT trying to decide if God is one or three. The truth is not a choice between A and B; it’s a blending of them.

    A better analogy would be – actually, it’s a great analogy – should the husband be the leader of the family (dominion) or should he love his wife and children (stewardship). The truth is that the husband is called to be both, each aspect reinforcing the other. It’s worth noting that the dual understanding, that we are to be lords and stewards of creation, would yield the sane framework for this topic, which is a bias toward humanity over smallpox. The fact that the VN author’s underlying approach would yield a framework that can’t choose between a virus and humanity is a powerful indication that the underlying thought is flawed.

  • I think there may be a world view difference that you sort of touch on….

    I think the best way to lay it out is this:
    Imagine that two murderers separately kill two groups of people, in situations utterly identical except for two points:
    the first kills 50 but does not wipe out the group (mass murder);
    the second kills 40 and wipes out the group he killed. (genocide)

    Which is worse?

    (I wish this were purely fancy, but I’ve had folks inform me that genocide is always worse than murder– even if the “genocide” consists of killing the last member of a group for a totally unrelated reason, such as “he was trying to kill me.” See, sci fi is good for something….)

Obama Administration to Stop Reporting Abortion Statistics?

Friday, February 4, AD 2011

Beginning in 1969 the Centers for Disease Control and Prevention collected data on legal abortions carried out in the United States through its Abortion Surveillance System. The report based on this data ordinarily appeared as an article in CDC’s professional journal, The Mortality and Morbidity Weekly Report (MMWR) the week after Thanksgiving. The report lagged the data by three years, i.e., the 2006 data were printed in 2009.

While not comprehensive, the CDC report provided the best single estimate of abortions in the US, as well as providing detailed breakdowns: the age of the baby at the time of abortion, age of the mother, number of abortions the mother had previous to the current one, etc. People on both sides of the abortion debate have cited these statistics to make their points.

Last year, contrary to the long-established practice, November came and went with no report posted on the CDC’s website. Over the following weeks, multiple visits to the site proved fruitless. The possibility the report was not merely delayed, but had in fact been axed from higher up, had to be considered.

Last week, RedState began investigating by calling those in DC who might have some answers. After several attempts, we finally received confirmation from Rhonda Smith at the CDC’s press office in Atlanta that the report has been buried indefinitely; the CDC “will not have stats available at any time in the near future” and there “are no plans for them to come out any time soon.”

More. This is outrageous, and raises the question of why the Obama Administration wouldn’t want the report published.

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16 Responses to Obama Administration to Stop Reporting Abortion Statistics?

  • This is indeed pretty appalling.

    And here some people have promised they were going to prove to me that Obama was better at reducing abortions than Bush. So much for that, I guess…

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  • Now the CDC and the Obama administration are attempting to cover their posteriors by stating that the report has merely been “delayed” and has been in editing since November. Mediamatters claim that they obtained, read “obtained” as spoonfed to them by the Obama administration, a CDC e-mail from November discussing a publication date. The whole thing stinks to high heaven and if Redstate had not raised a furor the publication date would likely have been the 28th of Never.

  • Hmm…. I wonder why the report is not being published. Could it be due to Obama’s record of being one of a few senators to vote against outlawing partial birth abortions? Consistently pro-choice Obama’s motives seem quite clear to me.

  • Maybe this is what our president meant when he said he wanted abortions RARE….. he wanted the numbers to be unfindable

  • Eric Blair, aka George Orwell, described in “1984” a memory hole into which the bureacrat was supposed to put items to be remembered. The memory hole fed into an incinerator.
    Welcome to their world.
    TeaPot562

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  • You clearly don’t understand. Obama is the most pro-life president ever. He has passed pro-life health care reform and pro-life education subsidies. He has passed pro-life bank reform and pro-life infrastructure repairs.

    The only reason that there is no report is that pro-life Obama has clearly eliminated abortion through all this pro-life investment.

  • This is yet another example of the transparency we were promised by Mr. Obama. For those who still expect anything other than lies from this guy, you will continue to be amazed at the audacity he displays in view of the truth. The only truth is what Obama wants the people to see, and as he wants them to see it.

  • were talking about an administration here that doesn’t believe BORN babies that survive abortion should be cared for…the first lady even believes that PBA is a legitimate medical procedure…

    Rome is burning.

    http://www.jillstanek.com/2008/02/links-to-barack-obamas-votes-on-ils-born-alive-infant-protection-act/

    http://www.jillstanek.com/2009/09/will-michelle-promote-partial-birth-abortion-in-healthcare-pitches/

  • I think one of my comments is stuck in purgatory….

  • I retrieved your comment from spam purgatory Jasper! Links in a comment often causes our spam protection program to toss it into the spam file.

  • Ah, this would explain why my comment containing a link debunking this was discarded. Not that it would convince anyone anyway.

    Have a wonderful week.

  • Hello!?!? Where were you guys 10 years ago? After the drastic declines under Clinton the abortion rates stagnated under Bush’s social policies and started to rise well before he left office.

    Did no one pay attention to the fact that the 2004 Pro-Life ads were using Clinton ear data? Why? because Mr Pro-Life Bush’s policies were killing the same or more babies. In the article above it states that 2006 didn’t come out until 2009… which was definitely planned so that the Republican’s wouldn’t have to answer the questions as to why the rates were doing up the younger groups and why they could say they were Pro-Life all they want but if their policies of greed kill more innocent lives… well they just won’t report that.

    While I’m 100% Pro-Life it definitely seems worse to me to lie to people that you are trying to do something when you really just want votes as opposed to being delusional that life doesn’t being at Conception.

    Until the greater Pro-Life movement realizes that we don’t really have any friends in Washington and start demanding both Social policies that are in line with the Church to go along with our Life Issues… nothing is going to change.

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  • Hello!?!? Where were you guys 10 years ago? After the drastic declines under Clinton the abortion rates stagnated under Bush’s social policies and started to rise well before he left office.

    Ummm. Huh? The abortion rate and ratio continued to decline under Bush, and indeed to my knowledge were lower every single year under Bush than they ever were under Clinton.

    http://darwincatholic.blogspot.com/2008/03/poverty-and-abortion-new-analysis.html

    You may be 100% pro-life, but you need to work on being 100% clear on the facts.

Egypt Thought of the Day

Tuesday, February 1, AD 2011

Bryan Caplan asks, a propos of events in Egypt, why some revolutions end up making things better while others make things worse. His answer (which he admits is unconvincing) is that revolutions make things better when they are against totalitarian regimes and worse when they are against authoritarian regimes, because “the point of totalitarian regimes is to give people less freedom than the median voter wants, but the point of authoritarian regimes is often to give people more freedom than the median voter – or at least the median man of violence – wants.”

I don’t think that works. Marcos wasn’t a totalitarian, for example, and neither was Milosevic. When I consider which revolutions turned out badly and which turned out well, the thing that really jumps out at me is the degree to which the revolution in question was achieved by peaceful as opposed to violent means. There are exceptions, of course, but for the most part violent revolutions have tended to end badly (very often making things even worse than before), whereas largely non-violent revolutions have tended to make things better. Violent revolutions end up being led by violent men, and once in charge they have a tendency to turn their talents on others. Whereas the leaders of non-violent revolutions tend to be better at democratic politics (and if they aren’t they don’t try to hold onto power by killing their opponents).

Something to think about.

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5 Responses to Egypt Thought of the Day

  • It might even be specified to violence inside of the new country– the US’s revolution wasn’t bloodless, but the target was outside, not part of the new country. France, on the other hand, killed… like, everybody?

    I generally figure that revolutions make things bad if the guys doing the revolution enjoy the power they got more than they care about the original reason for the revolution. (assuming the reason wasn’t “get in power”)

  • Our revolution was not especially peaceful, and not just against the British. There was also a fair amount of fighting between Patriots and Tories, both before and during the Revolutionary War. What we did have, which other revolutions lacked, was a long tradition of elections, and leaders who were used to helping run their colonies. I think that type of experienced leadership can make a vast difference in how a revolution turns out.

  • The same people who believe that miraculously in 48 hours Egypt will be blessed with a classical liberal, Jeffersonian democracy also believe that 310,000,000 Americans can generate all their energy needs with sunbeams and wind mills. Go ask the Spanish how that worked.

  • Off the top of my head, I’d say that national unity is an important factor. Really, a non-violent revolution can’t succeed unless there’s massive support for it. In that situation, it’s going to be a lot easier to govern the resulting state. A revolution that involves one sizable population overthrowing another is going to be violent, and is not likely to lead anywhere nice. The first scenario is Poland; the second is South Africa. Even the rare peaceful revolution with a divided population has the potential of leading to catastrophe – I’m thinking of the Indian subcontinent.

    If national unity is an important factor, that would bode well for possible uprisings in Egypt and Lebanon, but not for those in Sudan or Yemen. Of course, this being a Catholic blog, we have to recognize the risk that too much unity in Egypt or Lebanon could raise for the Christian minorities.

  • 1. What are the boundary conditions which define ‘revolution’ as opposed to some other sort of regime change?

    2. To what importance do you assign the different components of the common life in assessing whether conditions are better or worse?

    3. When you say conditions are better or worse, events over what interval of time would count as frictional costs which could be excluded from the assessment?

The Ultimate Left-Wing Tax System

Monday, January 31, AD 2011

Recently Matt Talbot of Vox Nova offered up the following plan for tax reform:

I propose that there is a one-time, 20% federal tax on all financial assets over $2 million – assets in IRA’s and 401(k) plans would be exempt, provided the particular accounts were held on, say, September 15, 2008 (this would prevent using retirement accounts as an anticipatory shelter.) Yes, the stock and bond markets would take a hit; can’t be helped, and the stock market is way over-valued anyway, by historical standards. The stock market should be there to finance capital investment, not to enrich Wall Street greedheads.

In the comments my co-blogger Darwin had some negative things to say about this plan. Truthfully, though, I think that properly implemented a one-time wealth tax could work pretty well. In fact, I would say that the main problem with Matt’s proposal is that it is much too modest.

For one thing, as was noted in the comments to his post, restricting the tax to financial assets over $2 million excluding IRAs and 401(k)s is not going to raise much revenue. And the more exemptions you have in the system, the more likely it is that the rich will just hire tax attorneys to hide their assets and avoid the tax. To deal with these problems, I would make the wealth tax all-inclusive.

Since wealth inequality is much much greater than income inequality, this would be a highly progressive measure. However, without a lower limit, you might worry about the impact of this proposal on the poor. To offset this, I would institute a guaranteed minimum income. The minimum income level would have to be pretty low to avoid work disincentives and keep the plan fiscally responsible, but it would be high enough that even in the first year it would be enough for the poor to pay the tax. Unlike the wealth tax, the guaranteed minimum income program would be ongoing, and would be in addition to rather than instead of all existing federal assistance programs.

Going forward, I would replace corporate taxes at the federal level by raising the capital gains tax rate to 23%. Finally, I would simplify the tax code, eliminating all deductions and replacing the current bracket system with two brackets: 10% for income under $100k, 23% for above that.

Finally, to ensure that the rich don’t hide their assets to avoid the tax, I would deputize every store clerk in America as an IRS enforcement agent. Try as they might, wall street greedheads would not be able to avoid the tax. They could bury their gold in the backyard if they wanted, but as soon as they dug it up to buy a new yacht we’d get ’em.

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25 Responses to The Ultimate Left-Wing Tax System

  • How many families have over $2 million in financial assets? One, maybe two million? That would be about 2% of the population.

    Democracy!!!

    Why don’t ‘we’ just take it all?!

    We see here (VN) on display infallible ignorance of the functionings of the real world. But hey, that also is true for the White House and Senate.

    I no longer read (torture myself) VN – near occasion of sin. I do not need to. A few years ago I completed my post-doctoral field work in the fever swamps of erudite, left-wing ignorance.

  • I drive a 14 year old car, and my wife drives a 13 year old car. The value of my house was just a little more than my salary when I bought it, and its value today is a fraction of my earnings. My wife and I have never vacationed in Europe, though we have been to Toronto to see her brother’s family once and flew to Cancun for our 10th anniversary. Most of my suits are purchased used from eBay. Our splurges are for Catholic schools and various Catholic and other charities — we give away between 10 and 20 percent of our gross income every year. Through 30 years of 50-60 hour work weeks and diligent saving and investing, we have now apparently accumulated too much money. Boy, have we been stupid. I don’t often get intemperate, but my response to those who make this rather unbelievably stupid proposal is go pound sand and keep punding until your brain cells work again.

  • What is your take on Fairtax?

    If you think it’s anything other than absurd deceptive nonsense, which sounds wonderful, allow me to set you straight.

    I was a big fan of Fairtax — until I saw the fine print, and asked Fairtax leaders some questions.

    Fairtax claimed for 13 years and in 8 books, and in over 4,000 speeches that “Only people pay taxes”. IN fact, Fairtax leader Boortz claimed that “only people pay taxes” was the #1 principle for Fairtax.

    But then we see this odd sentence in Boortz’s Book, ironically named “Fairtax The Truth”

    “Under our plan, all city and state governments will pay to the federal government a tax on all their spending — on all their purchases, on services and goods, including labor (wages).” Fairtax The Truth Book, page 138, by Neil Boortz.

    We called a Fairtax spokesman and asked about this — will California state government have to pay 15-18 billion dollars to the federal government? Will every city government have to pay it too?

    Is this is ADDITION to the “tax on personal consumption”?

    Yes — Fairtax leaders told us emphatically. California government will have to pay 15-18 billion dollars to the federal government. Every city, and every state government, will have to pay.

    This is central to Fairtax. Not only is it in their fine print, this is basic to their math. This trillion dollar tax on city and state government is how their math “works”.

    We have Fairtax’s goofy explanation for this hidden tax, see these two blogs.

    http://fairtaxunmasked.blogspot.com/

    http://fairtaxfineprint.blogspot.com/

    If you still think Fairtax is on the level — or even sane — I have a bridge to sell you.

    Yes, we need a new tax code — and we need honesty and openness.

  • Just to be clear, I am not suggesting that Schell is stupid — just his proposal.

  • I think the key difference is in more than the framing. It appears to morally offend Matt that people who own wealth in the form of financial investments exist in the first place. His tax seems based on the idea that if someone owns a bunch of stocks and bond, that money is somehow being kept away from society, and so society should go take 20% of it away and use it for more useful purposes. What he doesn’t seem to be able to understand is that, however offensive it may seem to him that large investors own more than most other people, that invested money is busy keeping the economy going, capitalizing businesses, providing people with jobs, etc.

    A fair tax goes after money as it is being spent, but ignores money which is invested. If you make a large income but save most of it, then you would pay comparatively low taxes and increase in wealth. Which is pretty much the opposite of what Matt’s proposal seems motivated by: a desire that there not be wealthy people owning investments.

    Now, of course, this is why the fair tax is actually a very good idea, and Matt’s is a destructive one.

  • Darwin,

    I agree with you about the motivation point. No one ever fed the hungry by hating the rich.

    However, I disagree when you that that with a consumption tax “[i]f you make a large income but save most of it, then you would pay comparatively low taxes.” If you do this you will end up paying more in taxes, its just that you will do so later on when you spend the extra money you earned by saving.

  • Mr. Black Adder, You clearly do NOT understand the FairTax.

    You do not correctly describe how it works. The FairTax is NOT a one time tax on wealth. It ONLY taxes consumption as it occurs. That IS what people benefit from. People do NOT benefit directly from work, the work gives them the ability to earn, then consume if they choose! Someone does not benefit from accumulation of wealth until they spend it! The FairTax encourages accumulation of wealth, which is good for the economy, and good for people of ALL walks of life. When someone decides to benefit from that accumulation they will pay taxes without exception or loophole at same rate as any other family consuming ABOVE their poverty level. That’s because NO ONE effectively pays tax until they consume above their poverty level.

  • Mark,

    I think the specific FairTax proposal has some big flaws, but I think the general idea of replacing existing taxes with a consumption tax makes sense.

    Ron,

    A consumption tax is equivalent to a one time tax on wealth (plus a tax on income going forward).

    Suppose I have a million dollars in assets. With a one time 23% wealth tax, I pay $230,000 in taxes, and am left with $870,00 to spend on whatever I want. With a 23% consumption tax, I can buy $870,000 worth of goods and services, on which I will pay $230,000 in taxes.

  • Exactly right, DC, subject to the proviso that I’d substitute consumption tax for Fair Tax. Whether the Fair Tax is the best consumption tax alternative is still an open question to me. I am more of a fan of the broad-based expenditure tax advanced by William Andrews of Harvard and more recently by Sam Nunn when he was a Senator of Georgia. Basically, that tax would work much like our present income tax, but allow a deduction for all contributions to savings. All withdrawals from savings at any time would simply be added to the base. In theory all income would be taxed over one’s life time as one spent it. Ideally, the need for the estate and gift tax would be obviated as the decedent’s savings would be entirely withdrawn in order be distributed to heirs.

    This tax is a consumption tax that treats gifts as a form of consumption. It has the advantages of (i) easy development from our current tax (which due to IRAs, 401(k)s, etc is already a hybrid), (ii) ability to accomodate desirable policy objectives such as a deduction for charitable contributions, and (iii) ability to accomodate vertical equity adjustment — i.e., rates can be progressive. Some would criticize thiss flexiblilty as allowing for the very type of complexity that is the subject of current widespread derision. But as a tax lawyer whose practice includes a lot of sales tax disputes, I find it naive for people to think that (i) the sales tax is simple (tax lawyers find this notiion humerous) and (ii) the Fair Tax will somehow forever avoid the array of popular exemptions common in state sales taxes everywhere.

  • If you do this you will end up paying more in taxes, its just that you will do so later on when you spend the extra money you earned by saving.

    Hmmm. Would you tax charitable giving and inheritance, or would they be exempt?

  • Would you tax charitable giving and inheritance, or would they be exempt?

    I believe that the tax applies to charitable contributions but not to inheritance.

  • Ideally, the need for the estate and gift tax would be obviated as the decedent’s savings would be entirely withdrawn in order be distributed to heirs.

    But wouldn’t that be double dipping to the extreme? If a man gifts his grandson fresh out of college $25K from his savings, would the young man have to pay tax on it or would the grandfather have to pay the tax above the amount? Either way, tax was paid on the 25K and then would be taxed again as the kid spends it. That doesn’t seem just to me (neither does sales tax on used cars either!), plus it’s one of those hidden-but-in-plain-sight type taxes which irk me so.

    I used to rail against the income tax years ago, but I have come to think it an equitable method – even if it is far from that right now. I wouldn’t like anybody to have to pay a dime of income tax until they reach a certain threshold before any taxes kick in at all and that threshold would be much higher than it is now. I would also like the structure to be more family friendly and to be an incentive for having/keeping a family, etc. I still think there would be need for the EITC, but it might be constituted a little different.

    While I think certain consumption and excise taxes are legitimate, many strike me as nothing more than a means for the “representatives of the poor” to institute a heavily regressive tax on those they champion. It’s like a cynical shell game where they pay lip service and buy votes with largess from treasury. I’ve never heard of a diligent advocate of the poor protesting cigarette, alcohol, used car, and fuel taxes – nor the lottery. All of which are either targeted toward the poor or simply too regressive.

  • Mike, I don’t believe the Nunn USA tax would require estates to withdraw all savings.

    DC, the FairTax is a sales tax. You can make all the gifts you want but the recipient would pay taxes on whatever they buy with the gift. Essentially, it would hurt charities and eliminate the estate tax.

    My biggest problem with the FairTax is the rate. 30%. That’s asking for a rampant black market. Another problem is that even with the rebate, it’s far too regressive. Then there’s the problem that it’s also a one-off wealth tax that hits everyone’s retirement which wouldn’t be as big a problem if it wasn’t so regressive.

  • My biggest problem with the FairTax is the rate. 30%. That’s asking for a rampant black market.

    This is a serious concern, but I think it could be addressed by having a VAT instead of a straight sales tax.

    Another problem is that even with the rebate, it’s far too regressive.

    It’s only regressive if you look at annual income instead of lifetime income. Under the current system once a person retires they are basically done paying taxes (they might still pay some capital gains tax, but they don’t pay any more income tax). Since the rich spend a larger proportion of their income after they retire, looking at annual income creates the illusion that the rich are paying a lower percentage than they actually do.

    Then there’s the problem that it’s also a one-off wealth tax that hits everyone’s retirement which wouldn’t be as big a problem if it wasn’t so regressive.

    Right, a switch to a consumption tax is equivalent to a one time wealth tax, plus you are effectively increasing the long term capital gains rate and taking away the investment incentives created by IRAs. Whether the incentives in favor of work and savings going forward is something I don’t think you can tell without actually running the numbers. My understanding is that economists who have looked at this have generally concluded that the positive incentives outweigh the negative ones.

  • Actually a FairTax (or any similar consumption tax) would eliminate the capital gains tax. Or alternatively, it makes all investments tax deferred which is the same thing (in the same way that traditional and Roth IRAs are identical if your tax rates are the same at contribution and withdrawal). In fact, the Nunn USA tax is just that; our current income tax with investments tax deferred. This is identical to our current income tax minus investment taxes like capital gains and dividends. There are behavioral differences between these plans but they’re mathematically identical (assuming identical tax rates). They all make savings more attractive by treating all savings as if they were placed in IRA’s.

  • RR,
    Yes, you are right that the Nunn USA Tax would not tax distributions upon death, but I view that as its largest defect. I see no good reason to encourage perpetual intergenerational wealth accumulation. It seems more sensible to me for all income to be taxed during the earner’s lifetime as he spends it. Conceptually I see no reason to distinguish between inter vivos gifts and testamentary ones, and no reason not to consider gifts as just one expenditure choice.

    RL,
    In your example, grandpa would receive no deduction for his gift, which would be treated just as any other expenditure. Under my theory the gift should also be regarded as income and taxed to the grandson, but only when he spends it. I don’t see the injustice of taxing all consumption, and I think it is sensible to view all one’s income as consumed as one spends it, and see no reason to not treat gifts as just a spending option. Basically, my system would treat all uses of income equally. No preference or discrimination as between spending, saving or giving. Economists have long criticized the income tax as penalizing savings; a Nunn Bush type tax (I think mine is a slighly improved version of it) would not encourage savings — it would just not discourage savings.

  • Actually a FairTax (or any similar consumption tax) would eliminate the capital gains tax.

    The FairTax would eliminate the capital gains tax, but it wouldn’t eliminate taxes on capital gains (in the same way that it would eliminate the income tax but not taxes on income).

    Suppose I make $1 million in long term capital gains. Under the current system I pay $150,000 in taxes. Under the FairTax, I would end up paying about $230,000 in tax out of the same money.

  • Mike, I don’t know if the Nunn tax would tax inter vivos gifts but I don’t think any gifts should be taxed. I see no reason to distinguish between transferring money from my right pocket to my left and transferring money from my pocket to your pocket. I want to tax wealth, not the transfer of it. An ideal consumption tax taxes only the wealth created and only once. If you want to attack wealth, have a larger initial tax or a continuous tax (e.g., a property tax). Taxing transfers discourages them and encourages immediate consumption.

    BA, yes, but under the current system, your capital gains are made on post-income-tax principle. Under the FairTax, they’re made on untaxed principle. In the end, a 23% income tax and no capital gains tax leaves you with the same tax burden as the FairTax.

  • BA, yes, but under the current system, your capital gains are made on post-income-tax principle. Under the FairTax, they’re made on untaxed principle. In the end, a 23% income tax and no capital gains tax leaves you with the same tax burden as the FairTax.

    Fair enough, but as you pointed out a while back, a 33% flat tax with a $30,000 exemption looks a lot like the current system in terms of progressivity. So any regressive effects of the FairTax could be eliminated by making the rate 33% instead of 23% and raising the amount of the prebate.

  • BA, that’s exactly what I’d like to see. That and a VAT instead of a sales tax. Better still a digital VAT card that applies the rebate instantly at the point of sale. It would prevent people from living off their rebates like welfare since you have to actually spend money to receive it.

  • I’m trying to think if I like or dislike this feature, but it strikes me that a consumption-based tax system would encourage people to put more value on intangible assets and status rather than strict consumption, depending on what things the tax applied to.

    Say I make a lot of money and I consume relatively little but instead put away huge amounts in savings. I also contribute large amounts to certain charities. If the companies and charities I give money to respond by providing me with status, influence, and access to opportunities and facilities, these things would effectively be discounted because they wouldn’t actually be bought items.

    Now we’re talking about pretty non-tangible assets here. Though they might be highly useful in getting political and commercial opportunities. So maybe the attraction of gaining these “untaxed” advantages (which you’d be purchasing pretty inefficiently anyway) would not be that high. But it would be sort of interesting if such a system resulted either in people investing more in social institutions or developing something a bit more like an aristocracy.

  • DC, that’s interesting. Of course, since those intangible goods are costless, you’ll get plenty of supply. So while we may get more of them, they won’t be any more valuable than they are now.

  • Well, as I think about it, probably the amount of the consumption tax isn’t enough to actually effect much cultural change. 30% is a lot, but if those who are raking in truly staggering amounts of money get to keep all their earnings until they spend it, the extra 30% probably isn’t even that bad a deal.

    However, I would note that goods such as status or influence are not necessarily costless or of infinite supply, though maybe “intangible” is the wrong word for what I mean.

    The kind of thing I was thinking of was: Say someone has a truly massive amount of wealth, such as he might spend on a private jet and a really out-of-this-world vacation home or island. But somehow, consumption is just out now. So instead, he endows a new wing to the hospital which is named after him. Not, however, totally out of the goodness of his heart. Because it’s with the implicit understanding that it’s “usual” as a business expense for the hospital to court donors with flights to conferences on private Caribbean islands, and having their names and the names of their company splashed on lots of hospital materials, and being invited to swank board dinners and made the guest of honor at banquets and such.

    Basically, if certain kinds of consumption are basically a way of signalling “I’m a really important guy” and consumption somehow becomes unfashionable, does this drive people into other ways of signaling the same thing?

    If so, pushing people to signal importance by endowing charities and owning private companies and sitting on boards and such might actually be more beneficial for society in many ways. It might be a good thing. Though it might also, in some ways, lead to a more static society in that it would tend to reinforce ties between members of an existing elite. (So, for example, the hospital and the other members of the hospital board might be more likely to go to their donor’s company for various goods and services rather than really searching for who has the best product at the best cost. This closing of opportunity might make it harder for a new company which isn’t connected to a known grandee to make it.)

    As I say, now I think about it coolly, I don’t really think a 23% or 30% consumption tax would cause this, but this idea that people might trade consumption for status and influence did strike me as interesting.

  • DC, business expenses wouldn’t be any cheaper for businesses under a consumption tax. And now that I think about it, it wouldn’t even affect the costless intangibles. Under the current income tax system, companies can provide you with pre-tax benefits like dinner. Or it can give you the money, and you have to pay income tax then buy dinner with post-tax money. Nothing changes under a consumption tax except you pay the tax when you buy the dinner instead of when you receive the money. It’s the same tax. This stuff gets confusing because we often forget that when we buy something we’re buying it with money we already paid income tax on.

  • The thing is, people are not necessarily profit maximizing rational actors. Often they get hit up about things because they are loss averse but only recognize certain losses as “real”.

    Two classic examples are the way that people talk about mortgage and charitable donations. If you think about it, it makes no sense to take on more mortgage debt in order to maximize your deductions or to make charitable donations strictly to maximize your deductions. A deduction, after all, simply reduces your taxable income. And yet, you’re always better off with more income and paying the tax on it than giving up the income entirely.

    People do not always think this way, however, probably because they don’t have any choice about witholding and so they see the only thing they affect as being what they file and how much they get back.

    No, we could also theorize that people are mistaken about their motivations when they claim that they maximize their mortgage debt or make large donations at the end of the year in order to minimize their taxes, but I’ve had enough people claim to me that they refinanced and took money out of their house or made a large donation right at the end of the year in order to minimize their taxes I’m moderately convinced that some people act that way even though it’s not rational.

    I think the question would be: would suddenly imposing a very large consumption tax cause people to look for other ways of getting benefits they might previously have purchased. Would people become more averse to purchasing luxuries and instead try to secure “free” stuff via social status and power.

    Now note, this would only apply if certain types of very expensive purchases are basically just signalling behavior and not something people actually place that much value on in and of itself. And like I said, as I think about it, I think the increase in take-home income for the very rich would cancel out the effect in this case and so a 30% fair tax would not have this effect.

Vatican Bank Chief Condemns Keynesianism

Monday, January 24, AD 2011

Current fiscal and monetary policies in the United States and Europe risk increasing government control over national economies, resulting in weakened political strength throughout “the whole of the western world,” the Vatican’s top banking expert said.

Writing in the Jan. 14 edition of the Vatican newspaper, L’Osservatore Romano, Tedeschi warned of the growing influence of “Keynesian” economic theory on both sides of the Atlantic.

Governments on both sides of the Atlantic, he said, are committed to Keynes’ policy of increasing public debt to sustain levels of economic production, consumption, and employment.

He said artificially low interest rates are another key to the strategy of increasing spending and discouraging saving. With no incentive to keep money in the bank, those who would have otherwise been savers are pushed to spend.

“Zero interest rates factually equal a de facto transfer of wealth from he who was a virtuous saver (although not for Keynes) to he who has become virtuously (for Keynes) indebted,” he said. “Practically, it’s about a hidden tax on poor savers, a tax transferred to the wealthy, (that is), over-indebted states, business people and bankers.

More. That sound you hear is Morning’s Minion’s head exploding.

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5 Responses to Vatican Bank Chief Condemns Keynesianism

  • That sound you hear is Morning’s Minion’s head exploding.

    LOL. Maybe unsurprisingly that’s the first thought I had when I read the title of this post.

  • “If QEII is successful increases in the money supply will be matched by increases in output (as millions of currently unemployed workers find jobs), so the purchasing power of savings need not be degraded. And if you are one of the millions of unemployed, you will in fact be much much better off.”

    This seems quite problematic to me. Isn’t it somewhat “perfect world” analysis? “If all the money trickles down to the right people, who spend it on the right things, productivity will up, people will be employed” and so on. However, looking at it simplistically, it seems to me that employment is created by others’ need (or, more darkly, desire). If I want a wagon wheel, and I do not have one, I can either make it, or buy it. Therefore, we need wheelwrights (or car makers). If the needs do not exist, trickling down funds will create jobs temporarily, but demand may not necessarily rise.

    Daniel Goldman noted in First Things, here: http://www.firstthings.com/article/2009/05/demographics–depression-1243457089, that the recession we are experiencing is directly related to downfall in demand, especially for housing:

    “Housing prices are collapsing in part because single-person households are replacing families with children. The Virginia Tech economist Arthur C. Nelson has noted that households with children would fall from half to a quarter of all households by 2025. The demand of Americans will then be urban apartments for empty nesters. Demand for large-lot single family homes, Nelson calculated, will slump from 56 million today to 34 million in 2025–a reduction of 40 percent. There never will be a housing price recovery in many parts of the country. Huge tracts will become uninhabited except by vandals and rodents.”

    I would argue that as demand for housing falls and has fallen, so will demand for other material assets. Current fiscal stimulus (soon to be paying for growth in China’s military), combined with our individualistic and obsessive focus on no children / 1 child families, will sink us.

  • Jonathan,

    1. That is David Goldman, not Daniel Goldman. He is untrustworthy.

    2. Housing prices per the Case-Shiller index are almost precisely what they were in February 2009.

    3. That index has been criticised as exaggerating volatility in housing markets due to its national indices being derived from some of the most overheated markets.

    4. The 30% drop in the Case-Shiller 20-city index during the period running from August 2006 to February 2009 had nothing to do with demographic factors. Family structure was not revolutionized in that 30 month period.

Is A Preferential Option for the Poor Bad for the Poor?

Thursday, January 20, AD 2011

Admittedly this sounds like a silly question, but it is effectively one that Kyle Cupp is asking over at Vox Nova:

Putting aside whether or not the theory actually works in practice, a question I don’t here wish to debate, does trickle-down economics embody what has been called in Catholic circles the preferential option for the poor?

I’m inclined to answer that it does not, that while helping to generate pools of capital at the top may benefit the poor through a process of “trickling down,” the theory itself embodies a preferential option for the rich.

Kyle wants us to put aside the question of whether “trickle-down” economics actually works, so for purposes of considering the question we can assume that trickle-down does make the poor a lot better off than any alternative. So what Kyle is really asking here is whether a preferential option for the poor might require us to make the poor worse off (e.g. by rejecting trickle-down economics).

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50 Responses to Is A Preferential Option for the Poor Bad for the Poor?

  • It’s really depressing that you even have to make this argument.

  • It’s really depressing that you even have to make this argument.

    Indeed, but I always appreciate Blackadder’s posts on these type of things. He does common sense and objectivity justice and I think his style may lead some people think things through a little more. Well done, BA.

  • I am afraid that many people on the Left, I trust that Kyle is not in this category, hate the rich much more than they love the poor.

    The attitude is described well in an old Russian tale. A poor peasant lived next to a rich peasant who had a cow. The poor peasant found a lamp that had a genie in it. The genie granted him one wish. The poor peasant didn’t hesitate: “I wish the cow of my neighbor would die.”

  • And speaking of cows:

    “Feudalism: You have two cows. The lord of the manor takes some of the milk. And all the cream.

    Pure Socialism: You have two cows. The government takes them and puts them in a barn with everyone else’s cows. You have to take care of all the cows. The government gives you as much milk as you need.

    Socialism: You have two cows. The government takes one of your cows and gives it to your neighbor. You’re both forced to join a cooperative where you have to teach your neighbor how to take care of his cow.

    Bureaucratic Socialism: You have two cows. The government takes them and puts them in a barn with everyone else’s cows. They are cared for by ex-chicken farmers. You have to take care of the chickens the government took from the chicken farmers. The government gives you as much milk and as many eggs as its regulations say you should need.

    Fascism: You have two cows. The government takes both, hires you to take care of them, and sells you the milk.

    Pure Communism: You have two cows. Your neighbors help you take care of them, and you all share the milk.

    Russian Communism: You have two cows. You have to take care of them, but the government takes all the milk.

    Communism: You have two cows. The government seizes both and provides you with milk. You wait in line for you share of the milk, but it’s so long that the milk is sour by the time you get it.

    Dictatorship: You have two cows. The government takes both and shoots you.

    Militarism: You have two cows. The government takes both and drafts you.

    Pure Democracy: You have two cows. Your neighbors decide who gets the milk.

    Representative Democracy: You have two cows. Your neighbors pick someone to tell you who gets the milk.

    American Democracy: The government promises to give you two cows if you vote for it. After the election, the president is impeached for speculating in cow futures. The press dubs the affair “Cowgate.” The cows are set free.

    Democracy, Democrat-style: You have two cows. Your neighbor has none. You feel guilty for being so successful. You vote politicians into office who tax your cows, which forces you to sell one to pay the tax. The politicians use the tax money to buy a cow for your neighbor. You feel good. Barbra Streisand sings for you.

    Democracy, Republican-style: You have two cows. Your neighbor has none. You move to a better neighborhood.

    Indian Democracy: You have two cows. You worship them.

    British Democracy: You have two cows. You feed them sheep brains and they go mad. The government gives you compensation for your diseased cows, compensation for your lost income, and a grant not to use your fields for anything else. And tells the public not to worry.

    Bureaucracy: You have two cows. At first the government regulates what you can feed them and when you can milk them. Then it pays you not to milk them. After that it takes both, shoots one, milks the other, and pours the milk down the drain. Then it requires you to fill out forms accounting for the missing cows.

    Anarchy: You have two cows. Either you sell the milk at a fair price or your neighbors try to kill you and take the cows.

    Capitalism: You have two cows. You lay one off, and force the other to produce the milk of four cows. You are surprised when she drops dead.

    Singaporean Democracy: You have two cows. The government fines you for keeping two unlicensed farm animals in an apartment.

    Hong Kong Capitalism (alias Enron Capitalism):
    You have two cows.
    You sell three of them to your publicly-listed company, using letters of credit opened by your brother-in-law at the bank, then execute an debt/equity swap with associated general offer so that you get all four cows back, with a tax deduction for keeping five cows.
    The milk rights of six cows are transferred via a Panamanian intermediary to a Cayman Isands company secretly owned by the majority shareholder, who sells the rights to all seven cows’ milk back to the listed company.
    The annual report says that the company owns eight cows, with an option on one more.
    Meanwhile, you kill the two cows because the Feng Shui is bad.

    Environmentalism: You have two cows. The government bans you from milking or killing them.

    Totalitarianism: You have two cows. The government takes them and denies they ever existed. Milk is banned.

    Foreign Policy, American-Style: You have two cows. The government taxes them and uses the money to buy a cow for a poor farmer a country ruled by a dictator. The farmer has no hay to feed the cow and his religion forbids him from eating it. The cow dies. The man dies. The dictator confiscates the dead man’s farm and sells it, using the money to purchase US military equipment. The President declares the program a success and announces closer ties with our new ally.

    Bureaucracy, American-Style: You have two cows but you have to kill one of them because the government will only give you a license for one of them. The license requires you to sell all your milk to the government, which uses it to make cheese. The government pays lots of money to store the cheese in refrigerated warehouses. When the cheese spoils, the government distributes it to the poor. The poor get sick from the cheese, go to the emergency room, and are turned away because they have no health insurance. The President declares the program a success and reminds us that we have the finest health care system in the world.

    American Corporation: You have two cows. You sell one to a subsidiary company and lease it back to yourself so you can declare it as a tax loss. Your bosses give you a huge bonus. You inject the cows with drugs and they produce four times the normal amount of milk. Your bosses give you a huge bonus. When the drugs cause one of the cows to drop dead you announce to the press that you have down-sized, reducing expenses by 50 percent. The company stock goes up and your bosses give you a huge bonus. You lay off all your workers and move your production facilities to Mexico. You get a huge bonus. You contribute some of your profit to the President’s re-election campaign. The President announces tax cuts for corporations in order to stimulate the economy.

    Japanese Corporation: You have two cows. You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk. You teach the cows to travel on unbelievably crowded trains. Your cows always get higher test scores than cows in the U.S. or Europe, but they drink a lot of sake.

    German Corporation: You have two cows. You engineer them so they are all blond, drink lots of beer, give excellent milk, and run a hundred miles an hour. Unfortunately they also demand 13 weeks of vacation per year and are very expensive to repair.

    Russian Corporation: You have two cows. You have some vodka. You count your cows and discover you really have five cows! You have more vodka. You count them again and discover you have 42 cows! You stop counting cows and have some more vodka. The Russian Mafia arrives and takes over all your cows. You have more vodka.

    Italian Corporation: You have two cows but you can’t find them. While searching for them you meet a beautiful woman, take her out to lunch and then make love to her. Life is good.

    French Corporation: You have two cows. You go on strike because you want another cow, more vacation and shorter work weeks. The French government announces that it will never agree to your demands. You go to lunch and eat fabulous food and drink wonderful wine. While you are at lunch, the airline pilots and flight controllers join your strike, shutting down all air traffic. The truckers block all the roads and the dock workers block all the ports. By dinner time the French government announces it agrees with all your demands. Life is good.

    Political Correctness: You are associated with (the concept of “ownership” is an outdated symbol of your decadent, warmongering, intolerant past) two differently-aged (but no less valuable to society) bovines of non-specified gender. They get married and adopt a calf.

    Counterculturalism: Wow, dude, there’s like . . . these two cows, man. You have got to have some of this milk.

    Surrealism: You have two giraffes. The government requires you to take harmonica lessons.”

    Distributism: You name one of your cows Chesterton and one of them Belloc, and argue with them about what distributism means. Nothing much else ever gets done.

  • “Distributism: You name one of your cows Chesterton and one of them Belloc, and argue with them about what distributism means. Nothing much else ever gets done.”

    Hilarious and so true!

  • Now Don, that was as egregiously off topic as I’ve ever seen anything.

    But I laughed. Frequently. 🙂

  • On topic:

    A lot of what I came away from that post with is the conviction that I’m not sure much of anyone is all that sure what exactly “preferential option for the poor means”. It seemed like, to the extent we got closer to such an idea, people agreed that it meant both intending to benefit the poor with one’s actions (perhaps specifically one’s actions in designing “the system”) and also that one’s actions really did succeed in benefitting the poor.

    In this sense, it seems to me that if “trickle down” works all one has to do is summon up the will do keep doing what one is doing for the benefit of the poor and one is all set.

    But if so, that seems to give the phrase a rather trivial meaning. I’m not sure if that’s a bug or a feature.

  • You can’t ask whether trickle-down economics is consistent with a preferential option for the poor without asking whether or not it works.

    The first commenter on my post, John C. Médaille, raised the same problem, and I concede that answering the first question may not be possible without answering the second. Perhaps I was too hasty in laying out my initial question. My aim was to focus the discussion, but my means seems to have wounded my argument. No pain, no gain though, as they say.

    The example you give of paying doctors to provide free health care to the poor clearly embodies (at least in intent) a preferential option for the poor because the policy is designed to help the poor. Helping the poor is the end, the goal, whereas paying the doctors is the means. Does trickle-down* economics do this as well? That’s my question. I think.

    *I didn’t mean to use trickle-down economics as a negative description, and I will happily use a more favorable term in the future. What do you suggest?

  • I’m rarely sure of the meaning of any word, Darwin, and I want to take that uncertainty as a feature rather that a bug, but I’m not sure even of that.

  • The example you give of paying doctors to provide free health care to the poor clearly embodies (at least in intent) a preferential option for the poor because the policy is designed to help the poor. Helping the poor is the end, the goal, whereas paying the doctors is the means.

    But if a doctors’ lobbying group was a big supporter of the plan, because they believed it would result in more money for doctors, surely the plan itself would (all other things being equal) remain a good idea even if the motives of the biggest supporters were in fact nothing to do with the poor, wouldn’t they?

    Perhaps, the doctors would derive no moral benefit if they were self interested about it — but wouldn’t the objective worth of the policy be the same either way?

  • I didn’t mean to use trickle-down economics as a negative description, and I will happily use a more favorable term in the future. What do you suggest?

    Voodoo economics.

  • The example you give of paying doctors to provide free health care to the poor clearly embodies (at least in intent) a preferential option for the poor because the policy is designed to help the poor. Helping the poor is the end, the goal, whereas paying the doctors is the means. Does trickle-down* economics do this as well?

    I think that the intent that matters here is one’s own intent. If I think that a given policy helps the poor but is being supported by others for bad reasons the thing to do is not to oppose the policy but to try and get people to support it for the right reasons.

  • Before we talk about preferential options for the poor, how about we define poverty? How about we discuss ways to measure it?

    I read in one of Thomas Sowell’s books the other day that only 3% of people considered “poor” in the United States remain so for longer than 8 years. In this country, people go in and out of poverty all the time by their own efforts.

    I don’t think poverty is really the problem in this country. It is the supposed injustice of vast disparities in wealth. I have a problem with that when it is the result of government intervention, but I have no problem with it when it is based on honest work and voluntary exchange.

  • As I understand it, “preferential option for the poor” means that as Christians, we should prefer actions and public policies which ACTUALLY benefit the poor and vulnerable over those which merely benefit ourselves or benefit people who already have wealth or power.

    However, what appears to benefit the poor in the short term may not be what benefits them in the long term. For example, if anti-poverty programs result in the government going broke trying to fund them, then one can plausibly argue that the “preferential option” requires an honest assessment of the state/nation’s ability to continue funding these programs.

    Here’s another example of how the preferential option might work. In many states, agencies are required to consider “regulatory flexibility” affecting certain classes of individuals or entities when rules and regulations are proposed. These may include small businesses, small municipalities, non-profit or charitable organizations, families, schools, etc. The idea is to insure that the effect of such rules upon these entities — which may not have the same ability or “clout” to lobby for or against a rule as others — is considered and not ignored. In that sense, you could say there is a preferential option for small business, etc. in these rulemaking processes.

  • ‘Trickle-down economics’ is a rhetorical thrust and only vaguely defined. When you assert it ‘works’, the appropriate response is, ‘toward what end?’.

  • Darwin writes:

    But if a doctors’ lobbying group was a big supporter of the plan, because they believed it would result in more money for doctors, surely the plan itself would (all other things being equal) remain a good idea even if the motives of the biggest supporters were in fact nothing to do with the poor, wouldn’t they?

    Perhaps, the doctors would derive no moral benefit if they were self interested about it — but wouldn’t the objective worth of the policy be the same either way?

    Yes and yes. The ulterior motives of big supporters may be cause for some suspicion, but ultimately the policy does or does not embody an option for the poor, and I think one can come to some conclusion about that without considering the motives of every supporter–even the big ones. In fact, I’d say the policy writers would be prudent to appeal to the self-interest of those affected and involved. There’s nothing wrong with that, necessarily, and it would most likely be vital to the success of getting the policy implemented.

  • Black Adder writes:

    I think that the intent that matters here is one’s own intent. If I think that a given policy helps the poor but is being supported by others for bad reasons the thing to do is not to oppose the policy but to try and get people to support it for the right reasons.

    Well said.

  • “…If we paid doctors to given free health care to the poor, this would benefit the doctors..”

    You joke, right? 🙂

  • The term “supply-side economics” is as good as any. It describes the same thing: that lower taxes on the rich will encourage the development of productive capital, which will increase the supply of goods and trickle down to the lower-income people.

    I think Kyle’s question is valid, and it’s one I’ve wrestled with. I think that supply-side economics can be morally acceptable, but it’s tricky. For example, if you say that present injustice is to be encouraged if it leads to better conditions in the future, how is that not consequentialism? That has some ugly implications in terms of means and ends, as well as a tradeoff between morality and comfort. It’s a delicate question.

  • Cutting taxes on the wealthy to zero would help the poor. The preferential option requires that policies actually prefer the poor relative to the rich. That doesn’t mean any one proposal must prefer the poor but overall the system must help the poor more than the rich.

  • Strictly speaking supply side economics has to do with marginal income tax rates (not just taxes as such) on high income earners (not the rich as such). The real idea is that a reduction in marginal rates yields more productive behavior, resulting in a vibrant economy including job creation. Indeed one tenet of supply side theory is that a reduction of marginal tax rates can in some circumstances result in greater tax revenue without any reliance on the Keynesian multipier effect. To understand this one need only imagine a world with a tax rate of 100%. Such a world would yield exactly the same tax revenue as a world with a 0% tax rate — i.e. 0, at least in a free society. It is axiomatic to most free market theorists that no one would work or invest if 100% of one’s compensation for such work or investment was paid to the government. Plainly, a curve exists (albeit one that is much easier to understand in principle than identify or apply in practice) which describes the relation between tax rates and government revenue, and only one place on that curve is optimal for maximizing government tax revenue. Of course, maximizing government tax revenue is not necessarily a dispositive objective of tax policy, but reasonable people should agree that it is not sensible to set rates beyond that optimal point (although Obama suggested otherwise in the presidential campaign in regards to capital gains rates).
    Also, while there is a relationship between the “rich” and high income earners, in this country that relationship is pretty weak. Most high income earners are not rich by any reasonable standard.

  • Mike, nearly every economist agrees that we’re no where near the Laffer peak.

  • Mike – All good points.

  • I also think the fuzziness and newness of the term “preferential option for the poor” makes it insufficient grounds for altering an economic system.

  • I think you need to be careful how you justify purchases or other actions with the trickle-down effect. For example, is it preferable for the poor for you to justify buying a yacht assuming the yacht makers employ poor people or is it preferable to give that money to a charity who feeds and educates the poor so that they can find a better job than yacht making?

    I think it’s dangerous to assume that selfish purchases are also benefiting the poor. Preferential option for the poor is preferring the needs of the poor before all other needs and wants including your own.

    From the compendium of the Social Doctrine of the Church:

    The principle of the universal destination of goods requires that the poor, the marginalized and in all cases those whose living conditions interfere with their proper growth should be the focus of particular concern. To this end, the preferential option for the poor should be reaffirmed in all its force. “This is an option, or a special form of primacy in the exercise of Christian charity, to which the whole tradition of the Church bears witness. It affects the life of each Christian inasmuch as he or she seeks to imitate the life of Christ, but it applies equally to our social responsibilities and hence to our manner of living, and to the logical decisions to be made concerning the ownership and use of goods. Today, furthermore, given the worldwide dimension which the social question has assumed, this love of preference for the poor, and the decisions which it inspires in us, cannot but embrace the immense multitudes of the hungry, the needy, the homeless, those without health care and, above all, those without hope of a better future”

    As Jesus tells us, “whatever you did for the least of these you did for me.”

    Do you want to tell him that you cared for the poor by buying a yacht (or some other selfish purchase)? or would you rather say that you fed the hungry, clothed the naked, and educated the uneducated?

    If you say both, then how do you know? How do you know it actually trickles down? The current income inequality in America with the lowest progressive taxation we’ve had in decades shows that it does not.

  • RR, I never suggested otherwise. But even if true (I honestly don’t know) it does not follow that it is good economic policy to raise taxes. Only a true statist would say that it is axiomatic that tax rates should always be set to maximize government revenue. All the Laffer Curve really suggests is that rates should never be set higher than the point at which revenue maximizes. It does not suggest that that point is “optimal.” That question is as much normative and prudential as it is positive and computational.

    Unlike libertarians and some conservatives, I have no problem in theory with government acting as a charitable social agent. But in evaluating what would be effective (leaving aside fair), one must have a pretty sober understanding of human nature and how real people will respond to various conditions. My experience suggests that government programs are viewed as entitlements, and entitlements have a very perverse effect on the behavior of their intended beneficiaries. Private charity does much better.

    Also, there will always be a tension between those who view poverty through a fairly absolutist lens and those who see it through a relativist one. Some of us believe that access to very basic housing, food, and health care is sufficient; others will always be uncomfortable with disparity. I’m kind of in the middle but do acknoledge that much of the sentiment of the latter group is grounded in plain old envy.

  • “Do you want to tell him that you cared for the poor by buying a yacht (or some other selfish purchase)? or would you rather say that you fed the hungry, clothed the naked, and educated the uneducated?”

    What if you tell Him that by establishing a yacht selling business you provided employment for 50 men and women so that they could feed, clothe and educate their families? These questions are a good deal more complicated than many people make them out to be. The best anti-poverty program for most folks is a good education, a stable family and a good job. Government programs tend to be rather poor at supplying any of these.

  • Can anyone give me a chapter and verse citation where Jesus uses the term “preferential option for the poor?”

    I’m working from Mark 14:7.

  • Jesus never uttered that phrase.

    I think this whole idea has been understood too materialistically.

    There is also spiritual poverty. But we think that if people are materially well-off their chances of becoming spiritually wealthy increase. I don’t think that is that case.

  • RR,

    Cutting taxes on the wealthy to zero would help the poor. The preferential option requires that policies actually prefer the poor relative to the rich. That doesn’t mean any one proposal must prefer the poor but overall the system must help the poor more than the rich.

    I’m a little confused here. Are you saying that if a policy helps both the poor and the rich, it is only acceptable under the “preferential option for the poor” if it helps the poor more than the rich?

    What if some policy helps the rich more than the poor, but still helps the poor more than the alternatives? Should one avoid it on the principle that it would help the rich more than the poor, and that this would add to inequality and thus be unjust?

    Also, if “the system” as a whole benefited the poor more than the rich, should that simply mean that the former poor should be poor anymore and that someone else (the old rich?) were now poor?

    More generally,

    – Maybe it’s just a vague feeling from the terms used, but I have the general feeling that “preferential option for the poor” is used to mean some sense in which someone has their thumb on the scale to tilt some system more in the direction of the poor than would otherwise be the case. That we’re not just talking about some policy which in some sense benefits them, but that in some way you take “a system”, then sque it towards the poor and go with that. Is there any basis for this or am I being led down a wrong path?

    – It also seems to me that the entire idea of the “preferential option for the poor” as usually expressed assumes that there are multiple economic “systems” and that one can pick or modify “the system” in such a way as to assure that “the poor” as a class are the prime beneficiaries of ” the system”. However, I’m really not clear that this is in fact true about economies — that is, I’m not clear that there is multiple “systems” one may pick from, some of which will necessarily and always benefit the poor more than others. I think maybe this becomes easier if we assume that the “preferential option” is something to be implemented civicly rather than economically, but I’m still a bit skeptical of the idea that one can design a “system” as a whole, civicly or economically, which primarily benefits “the poor” over others.

  • Mac,

    ” . . . many people on the Left, . . . hate the rich much more than they love the poor.”

    It’s not hate. And, they do not love the rich less. They love the poor more. Jesus did not teach one should love certain of one’s brothers more than evil, rich brothers. That’s in the Gospel of Marx.

    Another name for it is class war.

  • If a given program helps both rich and poor, then it’s probably going to help the poor more than the richer (in real, as opposed to nominal, terms).

  • A question?

    Why do we keep saying a preferential option for the poor when the Catechism of the Catholic Church, and to my knowledge all Church teaching, to my knowledge, makes a point of saying not “preferential option” but “Love For the Poor”? [Note: I have never been able to find a online version of the original Spanish to see what the Latin American Bishops actually taught.]

    I suspect one reason relevant to this discussion is that “option” could be understood as a program, those unenlightened heathen who do not support it are doomed to hell. Where as “love” would imply the Cardinal Virtue of Justice Justice is the moral virtue that consists in the constant and firm will to give their due to God and neighbor. Certainly two people could have an equally “constant and firm will” and have mutually exclusive ideas on how that applies in a given situation.

  • and to my knowledge all Church teaching

    should read

    and to my knowledge all Church teaching at that level

    The definiton of Justice above is from the Catechism

  • DarwinCatholic, I’m confused too. For example, what if a free trade agreement with Japan meant that cheap Japanese robots would replace American nannies? I would argue that this shouldn’t be done unless there is a safety net for the newly unemployed. The preferential option isn’t limited by immigration status so I’d argue that we should oppose policies that impoverish even illegal immigrants.

    I think if we had a system that provided a sufficient financial safety net and opportunities for improvement, we would have fully exercised our preferential option since there would be no more poverty except for poverty by choice. This is why I no longer view the earned income tax credit as the ideal anti-poverty program. It still keeps people in poverty since it can’t provide a 100% credit. I think the ideal safety net must bring people completely out of poverty. We can still have work requirements but then jobs must be guaranteed. Sweden has such a program. They place people in private jobs which ends up creating more unemployment. I would place people only in public sector jobs, however menial. What if instead of giving unemployed bankers unemployment benefits, we offer them a job at the SEC for minimum wage?

  • “The principle of the universal destination of goods requires that the poor, the marginalized and in all cases those whose living conditions interfere with their proper growth should be the focus of particular concern.”

    I may be splitting hairs here but “particular concern” is not necessarily the same thing as “preferential option.” Particular concern, as I interpret it, means simply that the good of the poor and marginalized have to be seriously considered in economic decision making — which is entirely reasonable and possible. The effect of any economic policy upon the poor should never be dismissed or ignored. Even less should the poor be unfairly stigmatized or treated as unworthy of concern.

    “Preferential option,” on the other hand, seems to imply (or at least seems to be commonly interpreted to mean) that the poor are always in direct competition with the middle class and wealthy and that all economic decisions must benefit the poor to a greater degree than everyone else — which is highly impractical if not impossible.

  • If a given program helps both rich and poor, then it’s probably going to help the poor more than the richer (in real, as opposed to nominal, terms).

    Agreed. Though people who talk about the preferential option for the poor most seem to completely fail to understand the distinction between real and nominal terms and get mad at such a situation instead.

  • For example, what if a free trade agreement with Japan meant that cheap Japanese robots would replace American nannies? I would argue that this shouldn’t be done unless there is a safety net for the newly unemployed.

    By that argument, wouldn’t one ban most economic growth? The invention of the car pretty much wiped out the poor buggy whip makers.

    I think the ideal safety net must bring people completely out of poverty. We can still have work requirements but then jobs must be guaranteed. Sweden has such a program. They place people in private jobs which ends up creating more unemployment. I would place people only in public sector jobs, however menial. What if instead of giving unemployed bankers unemployment benefits, we offer them a job at the SEC for minimum wage?

    On the general point — perhaps I don’t know enough about Sweden but I’m not clear that any country has completely eliminated poverty.

    On the idea of putting unemployed bankers to doing minimum wage work at the SEC — that probably depends a lot on whether you want anything done well at the SEC. Also, many people tend to claim that the minimum wage is in fact a poverty wage. Honestly, I can’t see what exactly the attraction is of making people who are receiving a cash benefit because they ware out of work do some sort of make-work. It gets very little productive done, probably costs more to run than just giving the money, and keeps the unemployed person from being able to spend all their time looking for work or getting new training.

    General point again:

    At the risk of getting the “bad catholic” pile on from the left: It really sounds to me like “preferential option for the poor” has no clearly agreed upon meaning which wasn’t well and clearly understood in Catholic moral teaching for a couple thousand years before the phrase was dreamed up. Given this, I’m not sure how much people are adding to discussion by throwing it around as if it meant something.

  • By that argument, wouldn’t one ban most economic growth? The invention of the car pretty much wiped out the poor buggy whip makers.

    The invention of the car brought more people out of poverty than put into it. That’s why I used the Japanese robots replacing nannies hypo. In either case, the goal isn’t to ban creative destruction but to protect the poor. That can be done with things like welfare, education, and job placement. If a safety net isn’t an option, I guess you’d have to weigh the effects of the creative destruction on the poor and decide whether to ban it.

    Sweden might have poverty. There may be people unwilling to work. As for the guaranteed job placement, it isn’t intended to provide value. It’s intended as make-work but if we’re going to give out money anyway, it makes getting on welfare less attractive. Also, from a CST POV, it provides the dignity of a job. Like the Swedish program, you’d be required to submit proof that you’re actively applying to jobs.

  • “The invention of the car brought more people out of poverty than put into it.”

    No one knew that at the time. For the first few decades of the “horseless carriage”, they were out of reach of most of the middle class and all of the poor, and precisely the type of expenditure that some people in this thread would have blasted as a luxury for the rich that could have been better spent on the poor. Precisely the same thing could have been said about the early stages of personal computers and virtually of any new technology entering the economy. This is why running an economy based on fairly vague “feel good” admonitions from ecclesiastical officials is almost always going to end in economic disaster. The Church tells us to remember the poor and we have a duty to care for them, and I view that as entirely true. When Church leaders go from there to trying to tell us how to run an economy they are treading into an area where they have no expertise and their recommendations have to be examined with the same care we give to economic recommendations from any source.

  • Economic policy affects the poor. The preferential option doesn’t dispute any economic theories. It only insists that the moral problems be addressed. It doesn’t prohibit creative destruction but it requires that we try to mitigate the destruction part. Too often an economic policy that creates a net reduction in poverty ignores the fact that it can throw real people into poverty.

  • For example, what if a free trade agreement with Japan meant that cheap Japanese robots would replace American nannies? I would argue that this shouldn’t be done unless there is a safety net for the newly unemployed.

    I think you are confusing the issue of free trade with the issue of automation. Take a more realistic example: automated checkout lanes at supermarkets. Instead of having someone working at every checkout lane, you have lanes where people scan their own items and pay with a credit card. Do you think that should be banned? Or take self-serve gas stations. My understanding is that there are some parts of the country that ban self-service gas pumping on the grounds that it destroys low skill jobs. If you want to buy gas you have to wait in your car and a nice attendant will come out and pump your gas for you. Should that be required throughout the country? For that matter, lots and lots of jobs in manufacturing and agriculture that used to be done by low skill workers but are now done by machines (if you visit a car plant it’s amazing how much of it is automated). Should all of that be restricted?

  • The preferential option doesn’t dispute any economic theories. It only insists that the moral problems be addressed. It doesn’t prohibit creative destruction but it requires that we try to mitigate the destruction part.

    Okay, I don’t disagree with that. I wonder, though, why you don’t think the EITC is an ideal solution?

  • I used the free trade in robot nannies example because it would disproportionately help the rich but it doesn’t really matter. Is there a moral difference between repealing existing protectionist measures and refusing to enact new protectionist measures? The poor may rely on existing protectionism (e.g., trade barriers on Japanese robot nannies) like they rely on Medicare and Social Security. Liberalization can be just as harmful to them and helpful to the economy as taking away their entitlements. Even most hardcore libertarians don’t want to immediately cut off entitlements. On the other hand, new protectionist proposals (e.g., requiring that all gas stations be full-service) create reliances that don’t yet exist.

    I’m not for any protectionism if there is a sufficient safety net for the losers but it seems to me that if that’s not an option, the preferential option demands that we protect existing reliances.

  • As for the guaranteed job placement, it isn’t intended to provide value. It’s intended as make-work but if we’re going to give out money anyway, it makes getting on welfare less attractive. Also, from a CST POV, it provides the dignity of a job.

    I guess I wouldn’t tend to see useless make-work as providing the dignity of a job — if anything, it would seem like just as counterfeit money degrades the value of real money, so putting a significant percentage of people in make-work jobs would degrade the perceived value of real work.

  • The EITC would be my second choice. The problem is that it keeps people in poverty because you can’t provide a 100% credit of the amount they fall short of the poverty line. If you increase the income threshold under which people are eligible, people who aren’t in poverty would receive the credit too. Also, I’d like to see a work requirement which is harder to justify it if you don’t guarantee work. Finally, I think working, even if it’s a menial government job for minimum wage, is more dignified than collecting welfare.

    DarwinCatholic:
    if anything, it would seem like just as counterfeit money degrades the value of real money, so putting a significant percentage of people in make-work jobs would degrade the perceived value of real work.

    Counterfeit money degrades the value of money by increasing supply. I don’t think we should restrict jobs just because scarcity makes jobs more valuable. And unlike counterfeit money, a min wage job can’t be passed off as something more valuable. It may discourage demand for comparable min wage jobs in the private sector but there would also be job seeking requirements that require participants to take private sector jobs if offered.

  • I realized as I was typing it that it would be easy to mistake me for talking about the economic value of work, but I’m in fact talking about the societal value of work.

    It seems to me that we already have a problem of sorts in that many people do not see their jobs are particularly productive, and thus there is a societal perception of a job as being “some stupid, useless thing I go do so that corporate overlords will give me my paycheck”. If at this point in time we had 10% of the population doing work that was intended to be useless make-work, we would completely undermine any cultural appreciation for the dignity of work in our society.

    Perverse as it may sound, it seems to me that if simply paying people cash unemployment benefits lacks the dignity of work, this actually is a feature, because it underscores the social importance of getting a job in order to get off the dole.

  • Is there a moral difference between repealing existing protectionist measures and refusing to enact new protectionist measures? The poor may rely on existing protectionism (e.g., trade barriers on Japanese robot nannies) like they rely on Medicare and Social Security.

    Are there existing trade barriers to importing robot nannies from Japan?

    It seems like the main effect of banning robot nanny imports from Japan would be to move production of the robot nannies to the U.S. That would mean we’d have to give up making something else here. And presumably what we would have to give up making is something we were better at doing (otherwise there’d be no point in importing the robots from Japan instead of making them ourselves) Which means that our productivity would be lower. That the poor would be helped by this is far from clear.

    The EITC would be my second choice. The problem is that it keeps people in poverty because you can’t provide a 100% credit of the amount they fall short of the poverty line. If you increase the income threshold under which people are eligible, people who aren’t in poverty would receive the credit too.

    That’s true, but so what? Lots of existing entitlements go to some people above the poverty line, why not the EITC?

  • Protectionist policies designed to protect existing jobs as opposed to attempting to create new jobs doesn’t move jobs anywhere. Productively would remain constant though it would eventually lag other countries. Since all I’m worried about is the poor who already rely on protectionism, it can be phased out over time. I don’t care if we don’t have any more corn growers in 50 years but those who rely on it to make a living now need protection. Again, my preferred method is direct cash payments instead of protectionism but I’m assuming, for sake of argument, that that isn’t an option.

    I don’t think an EITC that fully subsidizes the poor and the near-poor is horrible but I think make-work could be better. You don’t have to subsidize anybody but the poor. There’d be additional administrative costs but they’d be small compared to more tax credits. Anyway, it’s a theoretical preference that could change if I’m shown contradictory real-world data.

  • Joe Hargrave:

    “I think this whole idea has been understood too materialistically.

    There is also spiritual poverty. But we think that if people are materially well-off their chances of becoming spiritually wealthy increase. I don’t think that is that case.”

    Very good point! The use of all earthly goods should be ordered toward obtaining heavenly goods. Charity is as much for the rich as it is the poor!

Federal Judge Rules Individual Mandate Unconstitutional.

Monday, December 13, AD 2010

A copy of the decision is here. Two other federal district courts have previously upheld the individual mandate against constitutional challenge, and at least one suit remains pending.

It’s often claimed that the individual mandate is a necessary compliment to the provisions of ObamaCare banning denial of coverage based on pre-existing conditions and so forth. The idea is that if an insurance company can’t deny you coverage once you are already sick there is a strong incentive not to get coverage until you are already sick, which leads to a death spiral (that’s a technical term) of increased insurance prices and lower levels of coverage.

However, as Paul Starr noted back when the bill was being debated, there are ways of dealing with this problem that don’t involve a mandate:

The law could give people a right to opt out of the mandate if they signed a form agreeing that they could not opt in for the following five years. In other words, instead of paying a fine, they would forgo a potential benefit. For five years they would become ineligible for federal subsidies for health insurance and, if they did buy coverage, no insurer would have to cover a pre-existing condition of theirs.

The idea for this opt-out comes from an analogous provision in Germany, which has a small sector of private insurance in addition to a much larger state insurance system. Only some Germans are eligible to opt for private insurance, but if they make that choice, the law prevents them from getting back at will into the public system. That deters opportunistic switches in and out of the public funds, and it helps to prevent the private insurers from cherry-picking healthy people and driving up insurance costs in the public sector.

For whatever reason, the Democrats choose not to head this advice, and didn’t include any alternative to the mandate in the bill, even as a fall back measure. This means that, if the mandate is ultimately found unconstitutional, there will be nothing in the law to prevent the “death spiral” scenario. Granted, this can always be passed in the future, but this may not be as easy to do depending on the political environment at that time. Why the Democrats didn’t do this is a mystery to me.

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12 Responses to Federal Judge Rules Individual Mandate Unconstitutional.

  • Why the Democrats didn’t do this is a mystery to me.

    With that statement you seem to assume that the objective of the Democrats was to draft sound legislation to produce a beneficial and sustainable system. I didn’t get that sense about it at any point in the process. Perhaps your remark was rhetorical and excessively charitable. 🙂

  • ObamaCare has not only been a disaster politically, but also is a perfect example of an ill-thought out and extremely poorly crafted piece of legislation. It is hilarious to recall that one of the themes of the Obama campaign in 2008 was competence.

    http://voices.washingtonpost.com/thefix/white-house/polling-the-transition-obama-s.html

  • I don’t see that solving the death spiral problem. It’ll help but the healthy will still tend to opt-out.

  • RR,

    If five years isn’t a sufficient amount of time to stop the death spiral then it can be increased until it is.

  • Perhaps the provision was left out of the bill because our Congresspersons did not [could not – were not permitted to] read it.

  • The obvious problem is: what happens when someone signs the 5-year opt-out, and then gets cancer a year later? Then we’re back to the same old problem: someone needs health care and is being denied can’t afford it. Europeans may be okay with that, because they’ve learned that there are trade-offs in universal care, like having to sit on waiting lists. If Americans were hard-hearted enough to leave that guy’s care up to his family and private charity, we would never have gotten anywhere near passing ObamaCare in the first place.

    Most Americans today believe every person should be able to get whatever health care he needs, on demand, regardless of his ability to pay — and we’ve convinced ourselves this is actually possible, and not at all a square circle. Any sort of opt-out that has actual consequences would be like admitting otherwise.

  • Who would have thought . . .

    That’s what happens when you elect nitwits who can neither read nor understand the bills they enact.

    Worse yet, we have given them unlimited power to botch the whole enchillada.

    NO WAIT! they are sufficiently SMART to exempt themselves from socialist hell care.

  • Most people think they’ll be healthier than others so I don’t see any time-out period working. There is still a backstop in the form of Medicare when people hit 65. Also, the longer the penalty period, the earlier you’d have to sign up to avoid the penalty. The earlier you make people sign up, the less educated and less financially able they’d be and therefore less likely to sign up. The longer penalty would be at least partially, if not wholly, counteracted by these effects. Finally, there’s the politically unpalatable effects that Aaron mentioned.

  • The obvious problem is: what happens when someone signs the 5-year opt-out, and then gets cancer a year later?

    Same thing that happens now.

  • “Same thing that happens now.”

    Yes, including sob stories about people being “denied” health care, and grandiose schemes to “fix” the problem.

  • That’s what happens when you elect nitwits who can neither read nor understand the bills they enact.

    1. Glass-Steagall Act of 1933 (definitively concluding post-crash banking crises and erecting a legal architecture which stood for 47 years):
    53 pages long.

    2. Social Security Act of 1965 (erecting Medicare and Medicaid):
    137 pages long.

    3. Dodd Frank financial ‘reform’:
    848 pages long.

    4. Affordable blah blah act of 2009 (Obamacare):
    1,990 pages long.

  • Our government has just gotten too large.

    Did you know that the Virginia Attorney General is Catholic? I read it here http://catholicamericanpatriot.blogspot.com/

Tight Money is a Tax on the Unemployed

Thursday, December 9, AD 2010

One argument commonly made by inflation hawks is that inflation is bad because it is a tax on savers. The idea being that since inflation erodes the purchasing power of a dollar, those who keep their money in a savings account will end up being able to buy less with that money down the road if there is inflation than if there is not. There is an element of truth to this idea, though if inflation is expected there are ways to deal with the problem, such as offering higher interest rates for savings accounts.

A propos of David’s post earlier to day, however, it occurs to me that there is a flip side to the inflation taxes savings argument, namely that disinflation (i.e. lower than expected inflation) functions as a tax on the unemployed. When a certain amount of inflation is expected over the coming years, this ends up getting built into people’s wage demands, contracts, loans, etc. If inflation is approximately 2-3% a year for several decades, then people will come to expect a raise of at least 2-3% a year to cover the increase in the cost of living, and they will get upset if this doesn’t happen, even if inflation is significantly below 2-3% (on election day I met a man who was angry he had been denied a cost of living raise in his Social Security for 2009, even though there was deflation that year).

If expected inflation doesn’t appear, there won’t be enough money for businesses to pay their workers and will have to cut either wages or employment. But since workers hate nominal wage cuts (even where these don’t translate into real wage cuts), employers tend to respond to this situation by laying people off rather than spreading the pain around. The result is that during inflationary or disinflationary periods real wages tend to increase (since prices are falling while wages remain constant in nominal terms) and so does unemployment. Functionally this acts as a kind of wealth transfer from the unemployed to those who still have jobs. Thus, tight money is a tax on the unemployed.

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6 Responses to Tight Money is a Tax on the Unemployed

  • No, no, no.

    Tight money is not a tax on the unemployed in the same sense that inflation can act as a tax. Inflation is a tactic to the extent that it takes what a person currently has or currently earns. This is particularly the case when inflation and debt monitization go together, since then you are losing value while the government gains it.

    Now it is true that tight money can at times have a negative impact on employement. However, that is not a tax on the unemployed.

    Further, the conditions under which the money supply will be the restrictor on employement are I think very often over stated.

    Finally, the unemployed are almost universally living on either fixed incomes or savings, and thus price increases for essential goods and services will be particularly difficult to handle.

    p.s.
    Official inflation is not up, but most of the social security recipients I know are seeing considerable increases in many of the things they buy. The method used for calculating general inflation is not a good indicator of the cost of living for a retired person, particularly one living a modest lifestyle.

  • Disinflation is not necessarily lower than expected inflation. Disinflation is a falling inflation rate. It is possible people would expect inflation to fall, but it still would be disinflation.

  • BA: An economist you are not. That would be inflation tax, not tight money tax.

    And, how is money tight? Near zero % short term interest rates; reserve requirments were not raised; $3 trillion in cash is in banks and corporations; M1 and M2 not declining; etc.

    One problem is low loan demand, another is dire uncertainty caused by the anti-private-sector regime’s hideous anti-jobs/anti-growth legislations, policies, burgeoning regulations, and daily threats against productive people, er, right-wing extremists.

  • Maybe I’m missing something here – if we have deflation then the cost of basic necessities goes down; that works out as a tax break for the poor.

    Inflation is good for two sorts of people:

    1. Big government spenders who want to get out of paying their debts.

    2. Financial sharks who make money by manipulating markets rather than engaging in long term investing.

    We’ve had inflation since we create the Federal Reserve in 1913 and between that day and this, what sorts of institutions have flourished? Big government and “investment” banks which manipulate markets.

  • Mark,

    If you have deflation prices will fall, so that the same nominal wage translates into a higher real wage. On the other hand, it means that employers won’t have enough money to pay these higher real wages. If wages also fell this wouldn’t be a problem. However, it is difficult for nominal wages to fall, both because of long term contracts, and because people have a particular aversion to nominal wage cuts (even when they don’t translate into real wage cuts, as prices have also fallen). The result is that instead of cutting wages employers tend to cut employment. So the people who still have jobs benefit (they get the advantage of lower prices with the same nominal wage), but those who are unemployed do not (they get the benefit of lower prices too, but the fact they have lost their job mor