14 Responses to Charity, Act Not Emotion

  • Did anyone ever say anything about an emotion when talking about love? No. More importantly, my post had nothing to do with being “progressive.” Anyone who has any understanding of the traditional role of government, instead of the free-market liberalsm, will know it is a traditional understanding to see the government enforces justice (which included regulating financial abuses to help society as a whole).

    More importantly, it is rather ironic to try to claim I am one who forgets the incarnation and we are to be incarnational. You entirely ignore the whole point of the post which is to look beyond economic charity — to be truly giving of oneself to another in love (not an emotion; in caritas) — to someone real, in front of you. To point out that real incarnational love is capable no matter what social position or status one is at. One should point out that Bill Gates himself needs charity — in the true sense, not the superficial “I give money to a cause” sense. Love indeed is to be given — and once we move beyond toe false “give money” sense of love (which is truly gnostic), we really can move on to true up-lifting modes of love. Where is the lack of incarnational theology in this? Nowhere. The fact of the matter is it is given to real persons before you — that no matter who they are, there is still room for LOVE for CHARITY– points to this.

  • I do not have any social statistics on the matter, but I think you need to consider certain qualifications with regard to your portrait of family care for the aged:

    1. It is atypical for the aged to live with their children, but it is not unusual at all for retired parents to move to be near one or more of their children. In my limited circle of acquaintances, I have seen the opposite as well multiple times: middle-aged people taking jobs near their elderly parents as a precautionary measure. The difference between residence with and residence near might perhaps be attributable to the general increase in affluence since my grandfather and his brother took charge of their mother and father between 1945 and 1949.

    2. I think if you investigated matters, you might discover that three-generation households of the sort you describe were typically not long in duration. (In the case above, four years).

    3. Sorry to be a repetitive bore, but custodial care supplementing and supplanting family care is not a novelty. The population of state asylums fifty years ago was 9x what it is today. Among their charges was not only people insane from schizophrenia and tertiary syphilis, but also the senile and the retarded as well.

    4. With regard to the homeless: the Urban Institute offered many years ago that there were 600,000 homeless. Given the increase in the general population since then, perhaps the number is now 700,000. Providing basic subsistence for a client population that size (with much volunteer labor) likely would not set you back more than about $10 bn. I think philanthropic donations in this country are typically around 2% of domestic product, or around $280 bn. Organizations like Covenant House can handle the homeless and might be more likely than public bureaucracies to supply the ministry necessary to move some of these folk back into workaday life.

  • Darwin,

    Thanks for the good post. Referring to Mr. Karlson’s Vox Nova post, I think it is a mistaken to think that the “what about charity?” argument seeks to keep people in poverty so that charity can occur. I really think it operates on the other side of the equation – how does charity occur when the resources that would be devoted to it are confiscated (taxed away)? In a perfect socialist world, the government would provide all basic necessities to those in need; however, I never see us reaching that perfection. The poor will always be among us, and will always require some form of charitable assistance. I hope the charitable among us will still have the means of picking up that slack.

  • “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”

    Winston Churchill

    The problem with socialism is that sooner rather than later the socialists always run out of other peoples’ money, as the welfare states in Europe are demonstrating and Obama and the Democrats in Congress will soon learn.

  • The problem with so many responses here: nothing I said was about socialism — bringing out that social justice is the role of the state follows Catholic Social Teaching. To point out that the common good is to be met by the state is not socialism. To say this is not to say that everyone has to be at the same level — it is that there is a minimum level everyone has to be at. Once there, you can and should have a diverse society, but again, those who have more are expected to use it more as stewards, knowing that everything is given to their custody by God.

  • Henry,

    You may not have intended your post to be progressive, but I think it certainly displayed a strongly progressive sensibility in two senses:

    1) While it is true that traditional Catholic teaching holds earthly justice to be the responsibility of the state, it is indeed a new and novel understanding of “justice” to take it to mean assuring through statist social welfare programs that “there is a minimum level everyone has to be at”. In traditional Catholic countries, throughout the centuries, the material help of the poor was addressed primarily by Church institutions, not state institutions. Indeed, statist social welfare programs were initially pioneered in Europe by anti-clerical regimes in the 19th and early 20th centuries, having already done much to dismantle the Catholic institutions which had served a similar function. So at a minimum, I think it’s reasonable to take your reading of this as progressive both on the modern political spectrum and also as an interpretation of Catholic teaching.

    2) The idea, which you hint at (at least in apposition to the current state, whether or not you mean it to be seriously achievable), that it is reasonably achievable to reach a society in which all people truly receive an equal minimum standard of living via the beneficence of state programs, is certainly a politically progressive vision and quite arguably a humanisticly progressive vision as well, in the sense that we have never seen such a society in actual existence in history and positing that one is achievable seems to mean positing a change in basic human behavior.

    —-

    I certainly did not mean to suggest (nor have I ever heard anyone suggest) that charity has its only form in providing money directly to people or to some sort of fund. Indeed, I would think the examples I provided (parenthood, providing for aging parents, etc.) made it clear that charity is often expressed through and formed by some other more direct and personal act. However, I think it is very important to be clear that charity is nurtured through acts, not merely through some sort of general good disposition. In that sense, arguing that charity will take place regardless of whether the practical need for it is replaced by statist programs seems to deny the important of actual acts in developing, nurturing and expressing charity.

    For instance, to take your example, it is certainly true that Bill Gates is in need of charity, in the sense that he is, like any person, in need of having love expressed to him in relationship — primarily through acts. Obviously, in his case, the acts through which he needs charity to be expressed to him do not include providing food, shelter, money, etc. But that doesn’t mean that charity towards Bill Gates involves the amorphous good will of those disputing on the internet either. Bill Gates needs charity in that he needs those with whom he interacts to treat him in a loving fashion, though acts. The only way in which I can think of that any of us could provide charity to him would be to pray for him — which people are certainly welcome to do, I’m sure he needs the prayers.

    —-

    You say your primary point was indeed this, that charity is expressed primarily through loving acts towards real people whom we encounter, rather than simply proving them with money (often indirectly). I’m sorry that I missed this in the piece, as it’s a point I basically agree with. However, even so, I think it’s important not to draw an artificial barrier between charitable acts which provide a material help to people (food, clothing, shelter, money, etc.) and loving acts of some other sort.

    As I pointed out with the example about rearing children: it is often the providing of necessities which teaches us to love in the first place, and it is only as the love grows that we learn to provide love in other ways as well. When we purposefully sever all of the bonds of dependence within society so that we can live the individualist dream with the help of the state — our livings assured regardless of our interactions with other persons, begin to choke out the very personal interactions which teach us love.

  • Art,

    Certainly, as you point out, the fact that aging parents seldom now actually live with their children doesn’t mean that children don’t have any interactions with the aging parents. And for those with the means or opportunity, people often did seek others ways out in times past rather than providing care themselves. (My wife and I actually lived in a three generation situation for a while with my grandmother in her last months, and I can certainly agree it’s often not fun or easy.)

    Though also to shade the details a bit here: the situations I’m talking about with my Indian coworkers don’t necessarily involve frail parents needing care. It just seems to be standard practice that when a father retires, he and his wife start moving in their their children rather than paying rent. This usually ends up with them providing primary care for their grandchildren, while often both child and in-law work.

    Also agreed that some of the items I mentioned can be tackled quite handily (and perhaps better) by private organizations than by the government. I was just trying to think of a couple of highly visible forms that government “charity” programs often take which one wouldn’t necessarily see vanishing. Unemployment benefits and the FDIC were probably much better examples than food banks or homeless shelters.

  • The FDIC is an actuarial pool. It does not qualify as charity (unless you regard insurance companies as charities).

    It seems my point went by you, so I will re-iterate. I offer that elderly parents live in separate digs from their children because they have the disposable income to do so as part of the general improvement in levels of affluence over the years. The elderly often prefer not to live with their children, even when they are welcome to do so. In 1947, a bourgeois like my grandfather got to work with a mix of public transportation and long walks, owned one car which only his wife knew how to drive, suffered the summer months as he had all his life as a born-and-bred Southerner, heated his house in the winter with coal in a furnace he got up in the middle of the night to stoke, and had seen a good many of his teeth leave him behind. He also had his mother and father stashed in his little suburban house nine months of the year. His counterpart today has everything but those wretched wisdom teeth the oral surgeon took out, drives to work, wimps out with air conditioning, has a gas furnace he thinks about only when the bill arrives – and lives about a ten minute drive from his mother’s ducky garden apartment.

    What cannot be readily replaced by purchases is the labor and individual attention one’s children can offer, which is why you see both parent and child moving to be near each other even when such is not, strictly speaking, a necessity. Both are calculating that there may be (or will be) a time when such is necessary. Also, when your mother is in a hospital or nursing home, she needs an advocate. Which is to say she needs you, even though an institution is caring for her in most respects. It’s easier if you live right there.

  • Art,

    Agreed that the FDIC is not a charity — though I certainly wouldn’t consider other safety net programs to be charities either. For instance, the health care bill, which many liberal Catholics have insisted is a necessity for justice in our country, basically just forces people to belong to actuarial pools.

    I don’t think that any of the government programs which fill the place which closer social solidarity might otherwise cover count as charitable in the least. They’re programs which in some sense or another grant us more security to allow us to lead life individually. The FDIC is perhaps a reach, but I think that at least in how people experience its effects, it’s arguable. Since it guarantees deposits, it makes people far more inclined to save in banks rather than in hard assets such as family held valuables. By getting savings into banks, it helps overall circulation, and allows greater lending. If instead we lived in a world in which only those who thought they knew enough to be sure which banks were “sound” actually put their money into banks, while others hoarded cash or valuables, we’d probably have an economy in which people had to rely much more on extended family for large purchases rather than relying on credit. Etc.

    I don’t disagree with your point about living with parents. It’s something a lot of people don’t prefer to do if given the choice, so the simple increase in wealth would probably make it less common even without social security and medicare. That said, given that many people are not actually all that great at planning for the future, I would imagine that without those programs a lot more people would end up falling back on three generation familial arrangements, or a lot more money transfers within extended families.

    Though, of course, if those programs had never existed in the first place we might have a much heavier cultural emphasis on saving which would result in most people being in the same or better shape by retirement either way. Maybe the programs breed improvidence more than isolation.

    I wonder how one could try to examine the question…

  • Henry Karlson, above, seems to have said a lot of true things, while failing in the end to come to the correct conclusions because he neglects that force and charity are antitheses; that love which is forced is not love. Since government does absolutely nothing without exercising force (sometimes directly and strongly, sometimes indirectly and softly), much of what he’d advocate under the banner of incarnational and communal exercise of love turns out, in practice, to look a lot like a crowd of nine wolves and one sheep voting on how best to feed the hungry.

  • R.C. I have not argued that the government is acting in charity, only in justice. Justice IS the domain of government.

    DC actually, the state throughout history was also gave all kinds of help and aid to the poor, and enforced a level of justice which got undermined with the change into a capitalistic system. For example, they had rules such as one could “eat off the land” as long as one only took what one could eat and needed to eat from the land. That wasn’t a Catholic institution giving to the poor, it was the government forcing landowners to give. This is just one example among many. Again, Catholic Institutions, as always, and in any situation, would and should give in charity according to the time and place, so that it gives over and above what was being done by the government. This would always be the case, even in a more just society.

  • The FDIC is not an income transfer program either. It is a receiver of insolvent institutions. Its funds, as a rule, come from assessments on member banks, and it usually expends little from its funds. It typically administers haircuts to the creditors of the bank not subject to its guarantees and marries the bank off to a healthier institution.

    Social Security and unemployment compensation are income transfer programs and Medicare and Medicaid are collective consumption schemes. They are not actuarially sound pension and insurance programs. So they count as ‘welfare’ (though not, strictly speaking, charity). Military and civil service pensions may aspire to be actuarially sound programs predominantly financed by the contributions of their beneficiaries. They are, however, typically subsidized defined-benefit programs. You would not call that ‘welfare’, however. ‘Rent extraction’ would be a better term.

    Programs such as Social Security and Medicare induce people to save less than they otherwise would. I have never attempted to make a bibliography of the literature on this topic. IIRC, Martin Feldstein made his bones as an economist studying just this question.

    You do raise the point that time horizons vary according to social stratum. Edward Banfield built much of his interpretation of contemporary urban life on this observation and Gloria Steinem has also written on the question, but I do not think much discussion of this makes it to general audiences and no politician is likely to acknowledge it. It is the variation in time horizons over the community that (I think) makes a measure public provision of certain services (medical and custodial care) advisable. With regard to just about anything else, the circumstances of the impecunious can be improved by rectifying perverse features of the tax code. (Tax relief is not charity either).

    One thing you make a glancing reference to is the decay in relations between shirt-tail and collateral relatives. I think this is a much more severe change than that between elderly parent and adult child.

  • I was reading Aristotle’s Politics, and came across this passage which seems remarkably relevant (not just to this post, but in response to the ill-educated folks who claim that private property is a creation of the Enlightenment):

    http://classics.mit.edu/Aristotle/politics.2.two.html

    Property should be in a certain sense common, but, as a general rule, private; for, when everyone has a distinct interest, men will not complain of one another, and they will make more progress, because every one will be attending to his own business.
    * * *

    And further, there is the greatest pleasure in doing a kindness or service to friends or guests or companions, which can only be rendered when a man has private property. These advantages are lost by excessive unification of the state.

    The exhibition of two virtues, besides, is visibly annihilated in such a state: . . . liberality in the matter of property. No one, when men have all things in common, will any longer set an example of liberality or do any liberal action; for liberality consists in the use which is made of property.

    Such legislation may have a specious appearance of benevolence; men readily listen to it, and are easily induced to believe that in some wonderful manner everybody will become everybody’s friend, especially when some one is heard denouncing the evils now existing in states, suits about contracts, convictions for perjury, flatteries of rich men and the like, which are said to arise out of the possession of private property. These evils, however, are due to a very different cause- the wickedness of human nature. Indeed, we see that there is much more quarrelling among those who have all things in common . . . .

Difference and Equality

Thursday, December 3, AD 2009

Individualism is one of those terms which a great many people use in a great many different ways, so it has been with interest that I’ve been reading Individualism and Economic Order by F. A. Hayek. The book is a collection of essays dealing the individualism, its definition and its place in the economic order.

From the first essay, “Individualism: True and False” comes an interesting thought:

Here I may perhaps mention that only because men are in fact unequal can we treat them equally. If all men were completely equal in their gifts and inclinations, we should have to treat them differently in order to achieve any sort of social organization. Fortunately, they are not equal; and it is only owing to this that the differentiation of functions needs not be determined by the arbitrary decision of some organizing will but that, after creating formal equality of the rules applying in the same manner to all, we can leave each individual to find his own level.

There is all the difference in the world between treating people equally and attempting to make them equal. While the first is the condition of a free society, the second means, as De Tocqueville described it, “a new form of servitude.”
(Individualism and the Economic Order p. 14-15)

This strikes me as touching on the sense in which classical liberals in the tradition of Burke and Smith can still be considered “conservative” in the old sense of the term. Although Burke is commonly accepted by those who argue that classical liberalism is not “truly conservative” as being conservative in his outlook because of his reaction to the French Revolution, he was (like Smith) Whig, though they were Old Whigs, not True Whigs or Country Whigs. Prior to the French Revolution, Burke had been generally supportive of the cause of the colonists in the American Revolution.

Taking Hayek’s point, classical liberals in the tradition of Burke and Smith do not reject the necessary hierarchy of society. Nor do they embrace sudden, transformative social change. As such, they can certainly be seen as conservative. However, they do seek sufficient freedom within society to allow people to “find their own level”, believing that there is a natural hierarchy of ability which will thus result in an ordered society, and a more desirable one than one in which hierarchy comes strictly from birth and rank.

In this sense, the freedom of a classical liberal society creates social order, and a more stable one than the sort that an ancien regime conservatism maintains. Indeed, arguably, at this point in history, it is only this Whig-ish conservatism which is commonly found within society. Ancien regime conservatism has virtually died out.

Entirely different are notions of politics or the human person in which it is held which all people are truly and fully equal — in ability and inclination as well as in human dignity. Such systems would indeed seem to lead quickly to a most undesirable oppression.

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18 Responses to Difference and Equality

  • The trouble with “individualism” in rightist (traditionalist or right-liberal) argumentation today is the lack of realization of what Robert Nisbet pointed out in the 50s and Patrick Deenan has been hammering home in recent years: it is an invitation to statism, and an opening for a grave lonliness.
    ( http://www.frontporchrepublic.com/?p=4115 )

    Individualism and personal freedom, which should always be second to virtue as a value, tends to deny a very basic truth that all conservatives must embrace: the absolute and inherent incompatibility between liberty and equality. Left-liberals value the latter, and right-liberals the former. Each is a false human anthropology when out of context. We are products of a particular time and social environment, and that cannot be escaped – which makes family the most foundational unit of the good society.

    The purpose of freedom and liberty is to protect family, material and immaterial.

  • Jonathan,

    Actually the Hayek essay (“Individualism: True and False”) this quotes would be worth your time (it’s fairly short) in that one of the things it seeks to do is arrive at a proper understanding of what individualism means in relation to the classical liberal tradition.

    What, then, are the essential characteristics of true individualism? The first thing that should be said is that it is primarily a theory of society, an attempt to understand the forces which determine the social life of man, and only in the second instance a set of political maxims derived fromt his view of society. This fact should by itself be sufficient to refute the silliest of the common misunderstandings: the belief that individualism postulates (or bases its arguments on the assumption of) the existence of isolated or self-contained individuals, instead of starting from men whose nature and character is determined by their existence in society. If that were true, it would indeed have nothing to contribute to our understanding of society. But it’s basic contention is quite a different one; it is that there is no other way toward and understanding of social phenomena but through our understanding of individual actions directed toward other people and guided by their expected behavior. This argument is directed primarily against the properly collectivist theories of society which pretend to be able directly to comprehend social wholes like society, etc., as entities sui generis which exist independently of the individuals which compose them. The next step in the individualistic analysis of society, however, is directed against the reationalistic pseudo-individualism which also leads to practical collectivism.

    I’d be curious at your reaction to it.

  • Is it perhaps too much of an oversimplification to describe the different views of individualism as a means/end dichotomy. Randian and leftists see individualism as an end in and of itself, whereas conservatives/classical liberals merely see it as a means by which to achieve a more just social order.

  • Darwin,

    As I recently pointed out on a different thread, the classical liberalism of the American founders was also balanced by their classical republicanism, which includes an emphasis on virtue and does not shy away from regulating wealth to preserve society.

    I would argue that classical liberalism never created a stable society – other political forces such as aforesaid classical republicanism, or later on labor movements and the Church tempered and balanced it.

    Finally, I would argue that all most all of the classical liberals are gone – that even the vast majority of libertarians are not truly classical liberals. Why? Because I believe anyone defending the right of total, untaxed inheritance today cannot possibly believe in a “natural aristocracy”, a “meritocracy”, or anything other than the perpetuation of oligarchy and plutocracy.

    Except the one libertarian I met as a socialist who said we could strike a bargain – we could tax the hell out of inheritance as long as he could become rich in his lifetime without paying a dime on it. I always thought it was a good idea.

  • Darwin,

    Hayek and Röpke, in their analysis of the “humane economy,” both identify the elevation of individualism as something like “reationalistic pseudo-individualism which also leads to practical collectivism.”

    One problem though, especially for the traditionalist conservative critic (my own politics), is that Hayek’s case for the “free market” (i.e. The Constitution of Liberty) draws very heavily from Hume, A. Ferguson, and Adam Smith. That is not necessarily a red flag (Mill and Bentham would be for sure) but it remains the British, skeptic, empirical tradition. That tradition has both much to admire and quite a lot to deride from the traditionalist perspective.

    Their case rests on the necessary ignorance of human judgement, which is correct (in a civilized society, there is no centrality capable of managing a complex social outgrowth, so a minimal state is best) but also incomplete.

    Hayek, IMO, is relevant at the theoretical level yet less so at the practical level, and this is due to some uncomfortable topics like demographics and population composition. Here my critique would turn Buchananite: specific government policies matter less than the quantities and qualities of populations. Racism and sexism become cheap and lazy charges at that point, yet this is the obvious problem with all shades of individualism at the intersection of public policy – Finland, for instance, is “Finlandly” because of the Finns themselves, not because of philosophy and governmental mechanics.

  • there is no other way toward and understanding of social phenomena but through our understanding of individual actions directed toward other people and guided by their expected behavior

    This is a very good refutation of Randian libertarianism and its incorrect anthropology. Individualism should not mean that subjective action is sacrosanct; it is, instead, a better way to analyze the social outcomes that are obviously the product of so many individual decisions. The temptation is to play identity politics and assume that these social constructs have some nature or form that can be counted on to behave in certain ways… Just to name one example, it would be foolish to assume that all Catholics will act similarly, ceteris paribus.

  • The trouble with “individualism” in rightist (traditionalist or right-liberal) argumentation today is the lack of realization of what Robert Nisbet pointed out in the 50s and Patrick Deenan has been hammering home in recent years: it is an invitation to statism

    Okay, let’s test this. Which part of the globe is more individualistic: the United States, or Europe? Which part is more statist?

  • Blackadder: on a blog discussing the anti-gay marriage vote in NY, a European leftist jumped in and said basically, see, this is why in Europe a supra-national body decides these issues, because we don’t want a situation where people vote to deny other people their rights. He obviously thought that was highly superior to the way we rednecks do things.

    Ironically enough, it is the Left which now embodies the mentality of the ancien regime. In Europe, the dukes and earls have been replaced by the EU elites, because the judgment of the peasants is not to be trusted. And many liberals in this country also put their faith in the elites and the courts and would like us to become more like the Europeans in that respect. The funny thing to me is that it’s basically feudalism presented as cutting edge progressivism.

  • “The funny thing to me is that it’s basically feudalism presented as cutting edge progressivism.”

    On target analysis Donna. Leftist comments about the tea bag party protests reminded me of a British aristocrat looking down his nose and cursing at the American rabble of 1776. The Left has a childlike faith in government by experts with the “proper opinions” amd judges with the “proper opinions”. Voters simply cannot be trusted to elect representatives with the “proper opinions”. That is also why Leftists love treaties to bind what elected representatives can do.

  • European leftist jumped in and said basically, see, this is why in Europe a supra-national body decides these issues, because we don’t want a situation where people vote to deny other people their rights. He obviously thought that was highly superior to the way we rednecks do things.

    Maybe it’s all Providence. Clearly someone like this isn’t a clear enough thinker to understand the virtues inherent in a properly constructed constitutionally limited republic. Its a pity when someone forfeits his ability to shape society for the better and contribute to his own governance, but maybe it’s best that those who would, should.

  • on a blog discussing the anti-gay marriage vote in NY, a European leftist jumped in and said basically, see, this is why in Europe a supra-national body decides these issues

    That’s an interesting argument, or at least it would be if it was remotely true. There’s no supra-national body in Europe telling nations that they have to recognize gay marriage. The issue is decided country by country, and in fact most European countries do not recognize gay marriage.

  • Because I believe anyone defending the right of total, untaxed inheritance today cannot possibly believe in a “natural aristocracy”, a “meritocracy”, or anything other than the perpetuation of oligarchy and plutocracy.

    Clayton Cramer has visited this issue on occasion and (I believe) has some citations to literature. His point: that with some exceptions (the duPonts, for example), families tend to lose their mojo after a few generations and their wealth is dissipated (by alcoholism, failure to earn well, and bad investments, among other things). A sad contemporary example would be Robert Kennedy’s in laws.

    You also would not want to work it so that an able businessman could not provide for his wife or his disabled children.

  • Okay, let’s test this. Which part of the globe is more individualistic: the United States, or Europe? Which part is more statist?

    Europe is more statist. This doesn’t negate though, the point of the first post, and I think ties into the second. A welfare state/statist/collectivist/ect. governmnetal organization “works” much better in a homogeneous society, for reasons explained by Putnam among many others.

    And so one big reason “individualism” as a public ethos is an open pathway to statism is that the “autonomous rights-based individuals” many open border/libertarian types tend to be happy to receive will over time make the country significantly more statist: one glaring example is California in the last three decades.

  • A welfare state/statist/collectivist/ect. governmnetal organization “works” much better in a homogeneous society, for reasons explained by Putnam among many others.

    The evidence isn’t that it works any better, only that it is more popular. I don’t see that as being necessarily a positive.

  • I think we find the first link between individualism and statism in Hobbes. First he shatters organic society and breaks us up into individual atoms, then he reconstitutes us in the body of the Leviathan, the absolute monarchy.

    This is why I object when people compare modern statism to feudalism, calling it “neo-feudalism.” At least in places such as England, the average peasant probably had more freedom certainly than a “worker” under communism. It was the medieval village (and the Church as the provider of social services) that had to be broken up and destroyed so that absolutism and statism could consolidate themselves.

  • The evidence isn’t that it works any better, only that it is more popular. I don’t see that as being necessarily a positive.

    I disagree with you on the evidence, but that’s another argument. Let’s accept this premise: in a homogeneous society (race, ethnicity/culture, religion, language being the most important) a statist system of governance is more popular and nothing else. This is not nothing if that state retains republican or democratic processes….in fact, popularity of large-scale policy is essential to societal harmony and decent, honest governance. Diversity and proximity equals conflict – all across the world, all across time and environment. Does this mean any one person is “lesser” than another? No. It means human populations are different, and (for powerful evolutionary reasons) prefer their “own.”

    Now let us consider a societal opposite. With different (and, by the way, strongly self-segregating populations), and with our incredibly advancing understanding of genetics, the future of social policy could very well be very contentious and ugly, with resentments galore.

    Geoffrey Miller in the current Economist:

    Human geneticists have reached a private crisis of conscience, and it will become public knowledge in 2010. The crisis has depressing health implications and alarming political ones. In a nutshell: the new genetics will reveal much less than hoped about how to cure disease, and much more than feared about human evolution and inequality, including genetic differences between classes, ethnicities and races.

    Uh oh. I just don’t see how it is not obvious that such revelations, in a republican society with democratic processes, an egalitarian ethos, and different populations, is not a toxic mix.

    (And again, let me be clear: I am not saying, nor do I believe, that any one person has less moral worth or inherent human dignity than another.)

  • Joe,

    I guess I see two issues with your characterization of the approach that classical liberals would/should take to inheritance:

    1) I’m not aware the Burke, Smith, etc. in any way endorsed a confiscatory approach to inheritance.

    2) The desire to be able to pass on an inheritance does not necessarily stem from an opposition to meritocracy (some idea that because your parents were rich you deserve to be rich regardless of your own abilities) but rather from self interest in the sense the classical liberals talked about it. When Smith talks about “self-interest” he means no so much “selfishness” or “what I want for me, myself” but rather “what I, myself, want to do with my goods”. One of the very natural things that people desire (and work to achieve) is the ability to take good care of their loved ones and of other causes or institutions they care about. In this sense, wanting have the fruits of one’s labor result in financial support for one’s children, one’s church, etc. would all be examples of “selt interest” in the classical liberal sense.

An Interesting Thought on State Universities

Tuesday, November 24, AD 2009

Some interestingly counter-intuitive thoughts on the UC student protests against rising tuition from David Henderson of EconLog:

Taxpayer funding of higher education is a forced transfer to the relatively wealthy

Socialist author Robert Kuttner once called Proposition 13, California’s 1978 property-tax-cut initiative, the revolt of the haves. The latest opposition by UC students to a 32% increase in tuition is a revolt of the “will-haves.”

Milton Friedman used to remark that the California government, with its state funding of higher education, taxed the residents of Watts to pay for the residents of Beverly Hills. I think Friedman exaggerated substantially. Even though the California’s tax system relies heavily on sales taxes, which probably makes the state tax system on net somewhat regressive, it’s still the case that a given Beverly Hills family pays much more in taxes than a given family in Watts. But Friedman also focused on family income of the student, and that’s misleading.

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5 Responses to An Interesting Thought on State Universities

  • Henderson’s point isn’t limited to state funding of higher education (although this is a clear example). Lots of programs that are ostensibly about helping the less well off are in fact regressive. Social Security, for example, is funded through non-progressive payroll taxes. Since the rich tends to live longer and start work later, the net result of this is that the rich receive a proportionately greater benefit from Social Security, and pay a proportionately lower cost. I believe the same is true for Medicare, although the case is somewhat murkier.

  • Hilaire Belloc writes something to this extent in “The Servile State.” Capitalism, he believes, is not good. Socialism, he believes, is no better. Capitalism “mitigated” by socialism will be a nightmare. He reasons that the clever will be able to wile through the system and take advantage of it, whereas the dense or otherwise disadvantaged will be unable to keep up with its complexities. Moreover, as they get ensnared and ground up by the capitalist system, the safety nets that “save them” will only entangle them further, and lead ultimately to a situation where many of them will be permanently or indefinitely on the bottom, working for the benefit of those on top.

  • The problem is dismounting from the tiger:

    1. Secondary education, which was once fairly rigorous in metropolitan areas, has been allowed to rot (read Thomas Sowell on the quality of instruction he received at a certain high school in Harlem ca. 1946 and the quality his niece received there just 12 years later);

    2. The labor market relies on gradations of extent and selectivity of higher education as indicators of generally desirable qualities for employment;

    3. Vested interests prevent improvement of primary or secondary education;

    4. Vested interests prevent alternatives to higher education as indicators of desirability (case law on ‘equal employment opportunity’ effectively prohibits written examinations for employment;

    5. Absent ready alternatives to higher education as an indicators, later cohorts will be at a disadvantage to earlier cohorts in the labor market as higher education contracts;

    Optimally, nearly all educational institutions would be incorporated philanthropies whose trustees were elected by locally resident alumni; public higher education would be limited to training academies for the military, police, and civil service; public primary education would be limited to schools for incorrigibles run by sheriffs’ departments; and public secondary education would not exist. Primary and secondary education would be financed by state-issued vouchers and private donations (not tuition) and higher education would be by tuition and private donations, and nothing else. Enough of the edifice of ‘civil rights law’ would be demolished to permit employment examinations. Most people would begin their adult work life at 19.

    And we will never get to there from here. Too many people’s careers are bound up with the craptastic system we have now. Our president wants to make it possible for ‘everyone’ to go to college (so we can push the onset of adult life from 23 to 26? Argh).

  • Art,

    I agree that there’s really no changing the percentage of people who go (or try to go) to college at this point, even though that would arguably be a good thing all around.

    It does, however, stike me that it might be appropriate to expect public universities to get the vast majority (if not all) their funding from tuition, donations, and their endowment rather than from the state budget. If that meant raising tuition enough that graduates ended up with more student debt, that would seem like a relatively fair loan against one’s future.

  • …it might be appropriate to expect public universities to get the vast majority (if not all) their funding from tuition, donations, and their endowment rather than from the state budget.–Darwin Catholic

    And after a reform like that, what would make what you’re calling “public universities” different from other universities open to the public – other than meddling by politicians?

    Privatize the lot of ’em. Silicon Valley owes more to private Stanford University than to the five political appointee-operated universities elsewhere in the Bay Area – 2 UC and 3 CSU campuses – combined. The private, operated “in the Jesuit tradition” University of Santa Clara has also punched above its weight in supplying top Silicon Valley talent.

The Road to Serfdom

Tuesday, November 17, AD 2009

I do not endorse some of the overheated added commentary, but I believe Friedrich von Hayek’s warnings of the long terms dangers of a planned economy are just as prescient today as when the book The Road to Serfdom was published in 1944.  It is a short book and well worth the time it takes to read it. Some memorable quotes of von Hayek:

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5 Responses to The Road to Serfdom

  • Hilaire Belloc in THE SERVILE STATE anticipated Hayek by several decades.

  • Interesting that GM’s several billion loss this quarter indicates that it is on the road to recovery. It will be able to repay part of the government loans from government money.
    Creative Accounting it is called.

  • Or you could call it a lie. Maybe theft. Perhaps B.S.

    I wonder if I can convince my mortgage company to confiscate money from other debtors and give me a non-recallable, non-recourse loan so I can use that to pay my mortgage. My balance sheet would look great and then they can make brochures with my face on them showing a success story for financial prudence. How do I sell this? . . .

  • Do we need government? Of course, we have disorderd appetites and we must use force to restrain some of them. Murder, rape, kidnapping, plunder by another government, etc. However, we need to limit the scope of that government becuase it will be run by the same people it seeks to govern: sinners. The temptation to power is too great for any man so the power must be tempered and temporary.

    Economic rights, such as private property and a stable reserve currency that is pegged to a commodity to keep its inflation in check are very important. Hayek was right about all that and he also knew that if wealth is controlled by the collective then the individual is a slave and a slave that will not be free to excercise the worship of religion. Not good, unless you like that sort of thing.

    You know that old chestnut: Freedom is Slavery. It is a brave new world. We used to be apes and now we can be gods.

  • Gabriel,

    I’m going to buy that book by Hilaire. I’m a big fan of Von Hayek and if Belloc is anything close to it, I’d like it to be Catholic.

I Want One Of Them Stimulous Jobs

Friday, November 6, AD 2009

There is something in me which, when it sees to related numbers, wants to immediately do a calculation, so when I saw a news story stating that the $215 billion in stimulous money given out thus far had resulted in 640,329 jobs, my first question was, “How much is that per job?”

Answer? $312,339.44

Not too shabby, eh? I’d like one of them jobs just fine.

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One Response to I Want One Of Them Stimulous Jobs

12 Responses to John Mackey on Capitalism and Running a Business

  • I think the problem here is in the word “value” which is inherently subjective. Notice that MacKay never uses it. The noble purpose he aspires to is much more objective: healthy food, socially responsible trade, biodiversity, etc.

    I am sure walmart sells many good that people “value” but do they aspire to a noble purpose in the selling of those goods? They might say so because they are offering rock bottom prices which do help the family budget. But is there a trade-off?

  • Other than the fact that they have become China-Mart, Wal-Mart is a very helpful company. They are very, very beneficial to the poor. They hire people with low skills and also sell necessary goods at prices the poor can afford. Is that their mission? I don’t know. Does it really matter? In the temporal sense, no – they provide the benefit anyway, wether for virtue or greed.

    The problem with modern American quasi-corpratist capitalism is that it is not truly free-market capitalism, which is the only naturally occuring economic system. Management is usually made up of bean-counters who have no closeness to the business’ purpose just the bottom-line and shareholders are more often investment companies that have the same bottom-line orientation. If individuals own shares they are often treating the market of stocks as a gambler’s paradise rather than a place where one can easily transfer titles of ownership in a business they care about.

    Along with the easy money and manipulation of the Fed with its control of the banks and the money supply we do not have a free economic system that truly rewards entrepreneurs with a vision. We need to get back to that. Will the market always reward people with vision? No and it shouldn’t.

    The market, free from government intervention, is ultimately responsible to the end consumer. Consumer’s appetites dictate who succeeds and who fails. If people are thrifty, financially literate and moral the market will reward business that meets those standards. Unfortunately, those examples are dwindling in the modern controlled American and global economy.

    I never really liked Mackey’s stores becuase they are full of crunchy, granola eating people and tend to epitomize the neo-hippie trends; however, in light of his philosophy I think I may frequent the stores more, although they are quite expensive.

    Odd how the same people shop at Whole Foods and Starbucks, yet one company is pro-free market and truly responsible, the other is anti-capitalist, hypocritical and full of self-absorbed and condesending green (watermellon) ‘charity’.

  • AK,

    “The problem with modern American quasi-corpratist capitalism is that it is not truly free-market capitalism, which is the only naturally occuring economic system.”

    Markets evolved over time. The first societies were in fact communal. I’m not saying that this means we must be communal, but that different stages of technological development give rise to different economic systems. For most of human history the vast majority of the people did not participate in markets at all. They produced what they needed to live. For most of civilized history participation in markets was secondary to production for immediate consumption. Only in the last 400 years or so has production specifically for exchange become the predominant economic system.

    “If people are thrifty, financially literate and moral the market will reward business that meets those standards.”

    The problem with this is that it is almost as utopian as socialism. Any system can work if people are moral; the problem is that many people choose not to be, and ruin any system that they participate in.

    The Church has always recognized the right and duty of the state and the people to regulate the economy to serve the common good. The state is not perfectible, and markets are not perfectible, because man as such is not perfectible; as the teaching of the Church makes clear, however, ALL of these institutions are required to serve the common good.

    That means that leftists are wrong to categorically dismiss the market and rail against it as inherently immoral; and it also means that rightists are wrong when they categorically reject a meaningful role for the state and the public sector in meeting people’s needs. History has indeed shown that both are necessary, and that one without the other has the potential to lead to great injustice and civil disorder.

  • JH,

    “Markets evolved over time. The first societies were in fact communal. I’m not saying that this means we must be communal, but that different stages of technological development give rise to different economic systems.”

    Joe, I agree with your assessment, we were originally communal because we were in survival mode. I was referring to civilization. Men living in civilized society and not in communal tribes. In stating that free-market capitalism is the only NATURAL economic system I am making a statement of what freely acting men will do: engage in mutually beneficial voluntary exchange. The only technology needed for that is money, a medium of exchange. Even if production is nothing more than growing crops or raising cattle and even if the medium of exchange is trading crops for cattle. That is the essence of free market capitalism. Without interference of any sort, that is what rational humans will do.

    “For most of human history the vast majority of the people did not participate in markets at all. They produced what they needed to live. For most of civilized history participation in markets was secondary to production for immediate consumption. Only in the last 400 years or so has production specifically for exchange become the predominant economic system.”

    People did exchange in markets. The market has been the center of the city and the principle reason for travel for all of human history. In the last several hundred years we have simply applied better transportation, advanced productive capacity and more fluid money. The basic exchanges are still the same. Crops for cattle or gold for ploughs or dollars for computers – it is all basically the same.

    “The problem with this is that it is almost as utopian as socialism. Any system can work if people are moral; the problem is that many people choose not to be, and ruin any system that they participate in.”

    Not really, by moral I was referring to the aggregate and not necessarily the individual actors. If the principles, traditions and customs of a society are basically moral then the institutions will be basically moral despite the large quantity of sinners and the smaller quantity of deliberate sinners. In any event, a free market liberates human creativity and innovation and allows methods and means for checking and punishing the immoral actors. All government methods for checking bad behavior developed in a free market first, meaning the creativity of some individual devised the method which is used by government. Governments are inherently administrative and not creative.

    “The Church has always recognized the right and duty of the state and the people to regulate the economy to serve the common good. The state is not perfectible, and markets are not perfectible, because man as such is not perfectible; as the teaching of the Church makes clear, however, ALL of these institutions are required to serve the common good.”

    I hope I did not give the impression that I am against this sentiment. When individuals actors who assign certain duties to government and leave most to the natural market the most social benefit is realized. None are perfectible, only utopians believe that, yet we are to seek something MORE PERFECT. We are to journey as individuals and in the aggregate toward perfection knowing it is like the horizon. We can see it, we can move toward it, but we will never reach it.

    “That means that leftists are wrong to categorically dismiss the market and rail against it as inherently immoral; and it also means that rightists are wrong when they categorically reject a meaningful role for the state and the public sector in meeting people’s needs.

    Those are difficult words. What is a leftist? What is a rightist? As I understand it we have assigned the LEFT to those who advocate for absolutism and the RIGHT to those who advocate anarchy. If that is correct, then you are correct, neither option works with fallen man. I don’t subscribe to either idea, no rational person can. As with everything save for Love of Christ, balance is what is required.

    “History has indeed shown that both are necessary, and that one without the other has the potential to lead to great injustice and civil disorder.”

    I don’t think we are disputing if both are necessary, I think we are disputing the point of balance. In fact it isn’t a duality, it is inherently trinitarian.

    We need to devise an order that assigns proper roles and the balanced amount of power to three spheres:

    Church
    State
    Free Man (the market)

    Church first because the moral order belongs to the moral authority. For us that would be The Church, for others, well, they’re confused. Nevertheless, there are some basic commonalities that are true no matter what ‘denomination’ one may belong too, even pagans, atheists and followers of false religions. The historic commonality is Christian morality. Heretical Christians, non-Christians and Catholic Christians all benefit from Christian morality as taught by Mother Church. This country was founded on these principles, despite the fact that the Protestants refused to attribute the teachings to the Catholic Church.

    I think it was Patrick Henry who stated, “It cannot be emphasized too clearly and too often that this nation was founded, not by religionists, but by Christians; not on religion but on the Gospel of Jesus Christ.”

    State is second in the sense that men in the aggregate have given consent and certain duties from their own sovereignty to government. Limited duties, with a specific and narrow scope. Primarily to protect LIFE, LIBERTY, PROPERTY and FREEDOM OF WORSHIP. If government is limited to the protection of the aforementioned, not the regulation, not the promotion, not the management but simply PROTECTING, then that government is legitimate, licit and as moral as humanly possible. Prosecuting murder, especially of the pre-born and waging just war are designed to protect life. Liberty and property are protected by ensuring that the market is not coerced by anyone. Freedom of religion is obvious.

    If government is limited to those activities and respects subsidiarity (federalism) then men are free to act within the confines of good, informed conscience. Those who do not, face punishment by both the market and the government.

    All three orders are necessary, integrated and need to be balanced and coordinated appropriately. That will never happen, but it is not for us to make it happen. Our duty is to seek the more perfect integration, coordination and balance of Church, State and Free Man. The efficacy is the work of God.

  • AK,

    I agree with a lot of what you say, but I reject the strict limitations you think ought to be imposed on government.

    When I talk about not rejecting the state or markets, I am talking about the economy as well as everything else. Let me be more clear: the Church has not only supported, but insisted on, state intervention in the market when it becomes apparent that the latter cannot meet the needs of people, provide them with that which is their right as human beings with with dignity, to preserve social order, etc.

    In a modern technologically advanced society, what we cannot have is unaccountable, concentrated economic power, whether it is an outcome of markets or government decrees.

  • Joe,

    I think we agree on most things and I know we agree in the macro-cosmic sense. I think we are finding babelized disagreement in the micro-comsic sense.

    The reason for strict limitiations on the government is NOT becuase government is BAD. Authority is a good. Governmnet must be restricted because it is SANCTIONED FORCE. That is a devasting power. Used morally it is a benefit; however, if that power is used immorally, even for ‘good’ intentions, it is calamity. Governments, all kinds, are run by sinful, fallen humans. Without restraint the monopoly of power will typically attract the greedy, ambitious and worse. That means the sanctioned force of government can be in the hands of humans cooperating, willfully or negligently, with Satan. Checking government is not an indictment on government, it is an indictment on man.

    Furthermore, the Church is NOT infallible in economic matters. I respect and agree with Church teaching on the moral intent of man’s economic activity. The problem is that what the Church has insisted needs regulation is NOT the market of freely acting humans it is the very intervention of humans acting with force of government. We have to keep in mind that our sins are ever present wheter we are a businessman or a government regulator, neither is infallible and neither is exepmpt from corruption. The difference is the businessman has to operate with numerous other actors some as corrupt as he and others far less so. The government regulator has COERCIVE POWER and there is no check on his corruption becuase the government is a monopoly.

    The only market of government exists internationally and one can argue that in the last hundred years or so, we have established a global government monopoly apparatus so government monopoly has no competition. That is the problem.

    All that power concentrated in a few hands WILL invariably lead to that power being in the hands of corrput and evil men. Even a good king cannot be sure that his offspring will have a good rule. Usually for monarchs and inheritors of wealth, by the third generation it is all squandered.

    Limiting and checking the power of government is what keeps evil men in check and allows the vurtuous to benefit the most in need.

    Markets cannot create conentrated power. Only FORCE can do that. Governments role is to keep force OUT of the market so that the power is always with the lowest commong denomentator: The end user, the consumer.

  • I believe we could have a clearer discussion of the problems were we to give up believing that the U.S. of A. is basically a moral country. I have, for example, just finished reading George Archibald’s JOURNALISM IS WAR. He recounts his various investigations into the vile shenanigans in the cesspool of Washington in the past two decades.

    It is distressing to realize that all our suspicions of politicians and union leaders and CEOs and the Catholic clergy are not without foundation. We are forever hoping that somehow our politicians will not infected by the poisonous miasma that is Washington [sad that George’s glorious name should stand for base corruption].

    Two classic examples were the town hall meetings in which one Representative said that he would listen only to people from his district and was told that the participants were people from his district.
    In another the Representative proclaimed that it was his town hall meeting and he would set the rules.

    The sadness arises from the fact that these people have been blinded by the Washington miasma. They come from relatively simple backgrounds. They have not discovered the vaccine against the halls of power.

  • Gabriel,

    “I believe we could have a clearer discussion of the problems were we to give up believing that the U.S. of A. is basically a moral country.”

    Words are tricky things. They are inadequate for communicating, but the best we have available.

    The US of A IS a moral country in the sense that the principles she was founded upon are moral. She is also moral in the sense that within the context of her history, with all her blemishes and horrors, she is the most consistently moral country.

    The bulk of her people seek virtue, imperfectly, and in comparison to the peoples of Christendom, with less efficacy. Perhaps we are struggling for virtue in a world with Satan on the loose.

    Our culture is certainly NOT moral and we do have to take responsibility for that but loss of our culture does not make all of us immoral. Was anyone moral in Sodom and Gomorrah? Moral people, or at least people seeking to be moral, may be immersed in a culture that is immoral. Jesus dined with sinners and publicans. Perhaps we are here to reclaim the USA for her King.

    Our political class is overwhelmingly immoral. Thieves, usurers, liars, perverts openly displaying their homosexual proclivities, adulterers, megalomaniacs, etc. are in more abundance than moral men. This is the reason government is supposed to be BOUND with the chains of the Constitution.

    Our biggest problem is our institutional desire to evict God from public intercourse and governance. We CANNOT remain moral if we demand that he leave us alone. Without Him we are certainly immoral. The work of the enemy seems to be succeeding becuase we keep diminishing God’s role in our public lives, but this need not be so. The first amendment secures our given right to worship the God of Christ freely. We need to make a courageous, respectful and civil PROTEST against the removal of God from our public lives and our governments.

    For the LORD did not give us a Spirit of timidity.

    We need to stop being timid, cowed by political correctness and deference for the sensibilities of men. We need to walk boldly into the fire proclaiming our King. Otherwise we are just spectators to the demise of a once great nation. Silence is consent.

    Pray the Rosary with your brothers and sisters on the corner of your street, in front of the city hall, in the centers of commerce. Proclaim the King and see how many moral people will join you. Then tell us if this is still a moral country. I think she is. I beleive she is. I hope she is. The USA is consecrated to our Blessed Mother. Respect your mother and ask her for the graces to set this moral country back on the path to Heaven and away from the abyss.

    I’ll join you.

  • American Knight:
    What you write seems to me to be wish-filled thinking. Our culture, thus our country, is not moral. It has no defenses against immoral positions. For example, it may well be that a majority of Americans do not hold with abortion “except except except…”.
    Abortion is not illegal in this country.
    It appears that many [most?] couplings are not done with the marriage lines. [What society has ever survived without a clear understanding of marriage and the family?].
    What of the next stage the education of children? The school system is hostage to unions which protect mediocrity in its members and in students.
    Consider the history of the country. It took a while to slaughter enough Indians that they became no longer a problem, except that they are forced to live in reservations where education is abominable and drunkenness rife.
    Need I dwell on slavery which continued to the 1960s?
    The War on Poverty seems to have impoverished many more. Roe v. Wade was quite clearly an effort to decrease unwanted populations.
    And so on and so on and so on.

    The much praised liberty has become a liberty to do whatever you could get away with. And to avoid as much responsibility as possible – personal and public. And to call in the lawyers to protect yourself, teste the ACORN business.

    We are not on this earth to build America as the City on the Hill.

  • Gabriel,

    What you may perceive as wish-filled thinking is Hope.

    I know our culture is immoral, but as I stated in my previous post that doesn’t make the country immoral. In principle the United States of America is founded on Christian morality by sinners.

    To assume that it is an immoral country is to concede the fight. We live in an immoral country we have institutionalized evil so we are all going to Hell. I reject that.

    We live in a moral country and most of us do it immorally and we have insitutionalized evil so those of us with eyes to see and ears to hear MUST be good Christian witnesses, fight for the re-establishment of our moral principles and re-consecrate our country and our selves to the Blessed Virgin and through her immaculate hands and heart to her Son, our Lord.

    I think we are here precisely to build America as the City on a Hill and our own state, town, home and body too!

    The efficacy of that work is not for us to decide, but it is our duty to do the work with that end in mind.

    “Thy Kingdom come” That means into our hearts, but it also means into our familiies, our towns, our country and the world.

  • American Knight writes Friday, October 9, 2009 A.D.
    “I think we are here precisely to build America as the City on a Hill and our own state, town, home and body too!
    “The efficacy of that work is not for us to decide, but it is our duty to do the work with that end in mind.

    “Thy Kingdom come” That means into our hearts, but it also means into our families, our towns, our country and the world”.

    My attempt is to point out that being American is no guarantee of goodness. We have relaxed too much into the comfort of the wealth of natural resources and take it as a right.

    The Founders were political creatures [and mostly ignorantly anti-Catholic]. They had fallen for the “Enlightened” nonsense of automatic progress, a word interpreted as improvement. Yet they were not shocked by being slavers.

    You must put together for me a list of accomplishments of the U.S.A. to balance the various horrors committed in the name of Liberty and Manifest Destiny.

  • Gabriel,

    I totally agree: Being American is no guarantee of goodness. Neither is being ‘Catholic’. Far too often we Catholics are tempted (God knows I fall for it often) to lean toward conceit when it comes to our faith. I am not condemning you, I am just using a handy exapmple. You stated, “The Founders were political creatures [and mostly ignorantly anti-Catholic]. They had fallen for the “Enlightened” nonsense of automatic progress, a word interpreted as improvement. Yet they were not shocked by being slavers.”

    Your statement is correct; however, Catholics have also owned slaves and advocated for slavery. Many Catholics were involved in racist and biggotted practices as recent as the last century. So we cannot cast stones at our poor misguided Protestant brethren simply because our Church, is The one established by Christ and only we have Apostolic succession. This is true for the Church, it is not necessarily true for each Catholic.

    I suspect this is the same for Protestants, in fact it may be more excuseable for them becuase they do NOT have infallible teaching, just the pale shadows left over from when their heretical founders were Catholic.

    Since the Church is perfect and we know that Catholics are not can you draw the conclusion that the Church is imperfect or that Catholics are perfect? Of course not, The Church is the Church and we are sinners. The same analogy can be applied to our country, although less ‘perfectly’. America is good and moral, Americans may or may not be. Until all of our mores, institutions, conventions, customs, etc. are corrupted (sadly that may not be far off) then we have something good to hold on to and revert to, while correcting the mistakes of the past, which include slavery and something much worse – abortion.

    The accomplishments of the USA that balance horrors do not exist. America is not a church and she has no spiritual soul, just a spirit of principle. Theie is no balance. The slaughter of Christians at Nagasaki with atomic weapons is unexcuseable we need to transcend it, not excuse it. Nevertheless, America has done more good for the world than harm, in her time but that doesn’t mean a balance has been achieved. Keep in mind she’s a country not a person. Most of our errors are propogated by evil forces and evil men working with them. We have a struggle ahead and the outcome will determine the fate of billions. In any event, this is not the thread to truly debate this issue.

    Suffice it to say that Mackey highlights his ‘conversion’ from nice sounding anti-capitalist platitudes to the honesty of the fact that free-markets allow the morally inclined to thrive and provide for their customers, their employees and themselves for the benefit of all. In fact a free-market even allows one to glorify God in their free market activity if they so choose. Thank God for that becuase without these wealthy Catholics who thrive in the free market, we’d have even less parishes than we do. I heard that one good man underwrote the public prayer of the Holy Rosary in Kansas City for almost 200,000 of the faithful. It required a $200,000+ check – thank God for free-markets!

Beatrix Potter, Capitalist Swine

Friday, September 25, AD 2009

[This is neither American nor Catholic, but it is, I like to imagine, mildly amusing in a bored-parent-on-a-Friday kind of way.]

As you can perhaps imagine, there is much reading in the Darwin family, as we consider it necessary to corrupt the dear little tabula rasas of our children with a mixture of facts and fairy stories from the very youngest possible age. And how better may one corrupt the youth then by wrapping up the harsh teachings of the dismal science in the charming trappings of a bevy of dear little fuzzy animals? Do not allow these subtle deceptions, gentle reader! As I shall demonstrate, under the cover of a whimsical, Edwardian children’s authoress, lurks a deadly capitalist in sheep’s clothing.

Attend, to The Tale of Ginger and Pickles (ebook available here)

THE TALE OF
GINGER & PICKLES

BY
BEATRIX POTTER


Once upon a time there was a village shop. The name over the window was “Ginger and Pickles.”

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They Only Donate Money

Thursday, September 24, AD 2009

Every so often, when dealing with Church projects and non-profit work in general, one hears someone who does a lot of volunteer work toss off a disparaging remark alone the lines of, “Oh, those people. They only give money. You’d never see them down here working.”

Sometimes this is used to support a claim as to “who really cares” about an issue, along the lines of:

“Sure, you’ll find lots of [members of group X] a pro-life fundraising banquets, but you’ll never see them working at a crisis pregnancy center.”

or

“[Members of group X] may give money to ‘charity’, but you’ll never find them filling boxes down at the foodbank or working with at-risk kids.”

This has always struck me as a somewhat unfair criticism, for reasons I will get into in a minute, but I was particularly reminded of this last week when I had to go down to the diocesan offices to be trained to count and report the collections for the diocesan Catholic Services Appeal. The annual appeal provides a about the third of the operating expenses for the diocese — and since I deal with financial-ish stuff at work and I’m going to be rotating off the pastoral council in a couple months, I half volunteered, half was dragooned, into helping out with the processing of the collection this year at the parish. At the training session, I was particularly struck by the numbers of where the money in the appeal comes from:

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39 Responses to They Only Donate Money

  • Folks who put down charitable people who simply donate money are just jealous snobs who could care less.

    I have often observed this kind of snobbery amongst those people who are more so jealous of the fact that such affluent patrons of a particular parish is capable of donating so much to such charitable causes for the Church, wherein the mere mention of their names seems to inflame a kind of covetousness on their part than anything else.

    All I know is that if it weren’t for their generous donations, so many poor centers within that very diocese and the homeless that depend on these would be found utterly wanting — even worse, their very shelters closed down.

  • DC,

    CSA is only a portion of the giving options that this Catholic has. Myself, I give quite a bit to the Church, and to charitable organizations, but not a thin dime to the diocese or anything it sponsors. I won’t until the chancery and it’s affiliates are cleaned of pro-aborts and cafeteria Catholics and the bishop stands firm for Catholic teaching and liturgical rubrics. Many Catholics are of the same mind as me on this.

    Another note on this question of volunteering vs. financial donation. I don’t think we are called to “volunteer” but we are called to care for the less fortunate. This can be financial in part, but MUST involve direct charitable work, face to face with those we are aiding. Writing a check, or stuffing boxes, or working on a committee do not replace direct acts of Charity.

  • Excellent point.

  • Matt,

    Leaving aside the merits of donating to one’s diocese, the CSA donation rate ties pretty well with what I’ve seen of how things work at the parish level too. At our parish, there are 3500 registered families, but only about 10% of those turn in any collection envelopes during a given month. Clearly, some people give without using envelopes, but give that the total weekly collections divided by the number of envelope users works out to <$50, it's pretty clear that again there's a minority of people providing the vast majority of the money — and not necessarily because they're writing vast checks.

  • So in a sense, donating time and donating money are actually exchangeable. This is further complicated by the fact that although all people have roughly the same amount of total time, their amounts of free time and the amount they’re paid for their working time vary. A professional who makes $90k/yr and spends 10-12 hours a day on work and work related activities has fairly little time for volunteering, and if he donates the money he makes for a few hours a week worth of his work to a charity, that money goes a long way. Someone who works part time for $8 a hour, on the other hand, has a lot of free time, but very little money. The amount of money that person could donate based on the same number of hours of working time would do a charitable organization comparatively little good (while taking away a lot of that person’s money.) Given these variances, it may well be that the professional giving a charity the pay he received for five hours worth of his work does the charity much more good (in regards to actually getting their charitable work done) than if he showed up and spent five yours helping out physically.

    Given how fungible time and money can be, you might also think of it this way:

    The generous money donated by a wealthy patron (e.g., $20,000) to Church can represent time devoted at work that was actually dedicated (i.e., volunteered) for that charitable cause (i.e., all those billable hours that comes to $20,000).

  • If I were to speculate, which I never fear doing, I imagine a lot of big hitters are contacted personally by the diocese and send the checks directly. It’s kind of annoying, but $100,000 is a lot of money, and there are people that can write those kinds of checks, and yet you have folks who want the bishops to play St. Athanasius on them. Obviously the rich can’t just get what they want, but a lot of budgets can be busted by angering the wrong people.

  • This is a great discussion. As a self-employed individual time away from my business costs me more than writing a check and if there is no margin, there is no mission.

    As e., pointed out, the money that I donate from my efforts in my for-profit business takes time to earn, that time is essentially being donated. Yet, the money costs me less than the time. Meaning if I were to devote time instead of money, I would earn considerably less and therefore my next donation would also be smaller. Most of my business activities (time) are not direct revenue generators (money) but they do build up to the generation of revenue and it is the increase in that revenue that allows me to donate more.

    Another point is that charity comes from Charity, Caritas, Love. It doesn’t mean feeding the hungry in a soup kitchen with my own hands or paying for the soup that another feeds them with only. Primarily it means loving others as Christ loves them out of love for Him. It is incumbent on us to love our employees, bosses, co-workers, clients and others and not necessarily because they are less fortunte but becuase they are human.

    Being remunerated for your efforts is good, maximizing your profit and ability to donate is good, loving eveyone, especially Christ while doing it is great!

  • As e., pointed out, the money that I donate from my efforts in my for-profit business takes time to earn, that time is essentially being donated.

    That’s something these folks seem incapable of deciphering.

    I myself might not be such a patron; however, it doesn’t take a genius to grasp the fact that the total dollar figure donated basically amounts to all those hours spent at work by the individual to make that money; hence, consider all those hours as virtually being volunteered to that charitable cause.

  • MZ,

    If I were to speculate, which I never fear doing, I imagine a lot of big hitters are contacted personally by the diocese and send the checks directly.

    In this case, the people who are writing $100,000 checks are included in that 2,500 people who are responsible for 50% of the collections. They are contacted directly by the diocese before the standard collection and invited to one of the regional receptions with the bishop (or at the moment, with the interim), but they’re given pledge cards to fill out as part of the main campaign so that their donations can be tracked back to the parish and the parish gets “credit”.

    That’s actually how I got into asking about the details of this 2500 households, because I was shocked to discover that I was part of the “big givers” group despite having given less than $1000 in the last annual appeal.

    Diocesan funding in the Austin diocese apparently comes in roughly equal thirds from 1) the annual CSA appeal, 2) the “tax” which all parishes send to the diocese — a portion of all their own collections, and 3) other. I would imagine there _is_ some big giver stuff going on separately in that “other” category, as well as fees for various diocesan programs, etc., but that’s separate from the whole CSA set of numbers I was discussing above.

  • This is good stuff, DarwinCatholic.
    A couple of thoughts: first, I volunteer with a number of organizations. In many cases, I am working on a board or similar administrative type responsibilities. Does that make my work less valuable, less worthy than if I was doing something face to face with an individual being served? I don’t think so.

    We each have different gifts. My gifts may allow me to serve 1,000 people, but, perhaps, not as intensely, not having as much recognizable effect, as someone whose gifts can serve 5 people but much more directly. On the other hand, my gifts may serve fewer people than someone else’s can serve, but, again, their service may not provide as much effect on a per person basis, even if their contribution (hours or dollars) is much more than mine.

    Second, there is a real trade off for the organization between hours of personal service and money. What I have seen over and over among volunteer organizations is that they start out with enthusiastic volunteers trying to make a difference in some area of interest to them. As they become more successful, the hours that the need demands tend to increase exponentially. The volunteers get burned out and the organization shrinks, or more volunteers are brought in. But that is self limiting, because there are only so many people out there with time available (and an interest in this organization’s goals, as opposed to something else’s). The only realistic alternative for the group to continue and to improve their service, to serve more people, is to professionalize. Paid staff.
    Frequently, these organizations have a difficult time adjusting to paid staff doing things that the volunteers used to do. Maybe there is now one paid staff person, an “executive director.” Lots of whining by the volunteers about how they wouldn’t have done things the way that new person is doing them. “All they’re looking for is the paycheck.” And so forth, while the executive director may sniff about how ineffective things are with the grunts doing so much of the work, “they aren’t here when we need them,” etc. But big needs require big organizations, if you truly want to have an effect, rather than just feel good about your personal heroic efforts. And the big organizations need full time people and that means that they need to raise money, not get five people to come down and mop out the warehouse, or whatever.

    Third, I give to a number of causes, Catholic and otherwise, but I also choose not to give to an even larger number of other organizations, Catholic and otherwise. So the people at the latter groups, volunteers or paid staff, can look down their noses at me for not supporting their worthy group. Sorry, there’s only so much time in my day and so many dollars in my pocket, even if I have more dollars than most people. I would submit that “you’re not doing enough” is an unchariable statement, whether made directly, made indirectly or only thought. How much I do and for whom is between me and God.

  • As e., pointed out, the money that I donate from my efforts in my for-profit business takes time to earn, that time is essentially being donated.

    Exactly.

    The only difference I would see, is that (at least for me) it can be hard to keep in mind “and this is the percentage of each day when I’m working for my parish instead of my own bank account; and this is the time when I’m working for the crisis pregnancy center; and this is the time when I’m working for the monestary; etc”. Work pretty much feels like work to me, even if I’m aware at a certain level that I’m supporting not only my family but a raft of other things too.

    But overall, as I wrote, I think getting all worked up about the difference between giving time and giving money is out of place.

  • Do not let your right hand know what your left hand is doing.

    It is good that you cannot count how much time you spent ‘donating’ — just do it. It isn’t our time and it isn’t our money. It all belongs to God, we simply get to use it for good or ill while we are in the Valley of Tears.

    I think the key point here is that we are all called to be Charitable and what that means for each of us is something different. Our part is in being receptive to the wisdom of the Holy Spirit to know what we should, and should not do. So long as we don’t bury, waste, our talents.

  • Isn’t almsgiving a work of mercy?

  • Phillip,

    In the lean months it sure feels like it. 🙂

  • Not all volunteering is of the same net value, either, if we’re looking at dollars– I notice the folks who like to sniff about people “only” give money tend to have a lot of time on their hands, yes, but they’re also unskilled volunteers. (and stay that way)

    A trained carpenter’s five hours working on some old widows’ houses during a slow season is more “value” than Random Burger Flipper High School Kid #4 doing yard work for the same folks for ten hours, and the lawyer who has no time to offer but rented the van and bought the materials that they’re using for repairs and clean-up probably has a higher cash input.
    If they’re all doing it because they want to help older folks– that is, out of love– it’s rather unseemly for any of ’em to sneer at the others.

  • It seems to me that the point is being missed here. True Charity involves a giving of oneself, giving love. It is not just one’s “hours” or “cash”, and there aren’t any equations for it. If none of your charitable work involves direct contact with those you are trying to help, how could it be love?

    Charity is not just about seeing to material needs anyway, we must provide comfort, the kind of comfort that only comes from a friendly, face to face meeting. We can’t just hire people to do this for us.

  • If none of your charitable work involves direct contact with those you are trying to help, how could it be love?

    I’ll be sure to tell this to one particular person at a charity who practically volunteers all her time (at even the expense of time with her family) seeking out patrons to support it, so that all the homeless and battered women the charity supports could be accomodated as opposed to ever having direct contact with those folks directly.

    Or perhaps I’ll tell the same to an elderly person who happens to volunteer her time as secretary at the charity, who herself never actually has any actual contact with such homeless people. She probably just does so not in order to help these people (how can that be? she doesn’t even have contact with these people!), but to mock their existence!

    What cruel, selfish people! These are obviously devoid of love!

    In other words, for somebody who claims that there aren’t any actual equations for ‘True Charity’, you sure got some nerve to pronounce judgment on those folks who charitably donate their time/money to causes that actually help people.

  • Perhaps the example of the widow giving a penny to the temple? Christ saw love there.

  • e.,

    this is really not a personal issue, so don’t go getting all defensive and irrational.

    I didn’t pronounce judgment (an odd accusation coming from the likes of you).

    Ask those people you’re talking about if they never meet the people they help face to face, or do other acts of charity directly, I’m sure you’ll find that they are not so sheltered as your feigning on their behalf here.

  • You didn’t pronounce judgment?

    You essentially declared that it couldn’t possibly be love unless there was direct, face-to-face contact!

    You basically condemned these folks, judging these people who, although having charitably volunteered all their time at the charity, weren’t actually doing so out of love!

    How dare you!

    That elderly woman who basically volunteers most her time at the charity as a secretary isn’t much less a contribution, or even worse, should be judged as utterly devoid of “love”, simply for the fact that she’s never even had direct, face-to-face contact with those homeless people that the charity actually helps!

    Next time I see her, I’ll make sure to relay the truths of your Gospel:

    “What are you doing? None of your supposedly ‘charitable’ work involves direct contact with those people and, therefore, your contributions aren’t based on love!”

    And then show her the door!

  • e.,

    get lost.

  • The Gospel According to Matt declares:

    “If none of your charitable work involves direct contact with those you are trying to help, how could it be love?”

    You were the one who made “direct contact” a prerequisite to ‘True Charity’ and that anything that doesn’t (including the elderly woman who simply volunteers her time at the charity as a mere secretary) couldn’t possibly be considered as such and, worse, not even based on ‘Love’.

  • Matt,

    I hope you can understand why I find what you said not only disturbingly wrong but also quite twisted.

    That elderly person has never laid eyes on those folks face-to-face, but I can tell you she loves them regardless, or else why would she volunteer most of her time at the charity’s headquarters?

    I can assure you: it is out of profound love that she actually does so!

  • e. & Matt,

    I think you’ve both made your points clear — and both have some validity — but please avoid rancor of I’ll have to shut things down.

  • Whenever I hear the “you only give money,” argument I think,”Okay, let’s see how you get without my check or Bob’s or Mary’s or Todd’s?” It’s nice to hand out sandwiches to the street people but somebody had to buy that bread and peanut butter.

  • Matt,
    Your requirement for personal contact is grounded in the notion that love is an emotion. It is not. It is a decision. We are all called to love those we have not met.

  • The rather virulent over-reactions to the suggestion that if you love someone you might want to ACTUALLY SEE THEM IN PERSON suggests to me a twinge of guilt perhaps of being isolated from the destitute.

    I will post the works of mercy here which may be instructive in the way that they are worded:

    The corporal woks of mercy are
    * To feed the hungry;
    * To give drink to the thirsty;
    * To clothe the naked;
    * To harbour the harbourless;
    * To visit the sick;
    * To ransom the captive;
    * To bury the dead.

    The spiritual works of mercy are:

    * To instruct the ignorant;
    * To counsel the doubtful;
    * To admonish sinners;
    * To bear wrongs patiently;
    * To forgive offences willingly;
    * To comfort the afflicted;
    * To pray for the living and the dead.

    A number of these works explicitly demand being the face of Christ for those in need, but the others imply such a personal connection that it seems to me an error to suggest that all human contact in Charity could be dispensed by temporal work on behalf of Charitable cause or financial donation thereto.

    It seems to me that working in isolation from those in need, leaving the face to face to those paid professionals best able to deal with such “horrors” yields an almost bureaucratic result, as is clearly the case with Catholic Charities in many places. The resulting corruption is devastating.

    Now, let’s be calm, I am in no way condemning to Hell some old woman who works hard for the poor but doesn’t have the opportunity to see them. I’m sure SHE recognizes the need for direct acts of mercy and performs them daily to those who she does encounter even if she’s not so crass as to list them for you.

    Mike,

    love is an action, not merely a decision. You completely misunderstand my point if you think it’s rooted in the false notion of emotion.

    dymphna,

    I’m sorry, the most important element of charitable works is not material and so can not be fulfilled simply by writing a check. Frankly, if all of the large aid organizations that live on cash were gone, and charity began an ended in the parish hall with donated food and clothing distributed by those who sacrificed to provide them it would be, I think a much greater blessing, especially when dealing with the needs of those in our own communities. That certainly resembles more closely how Christians became known for their love.

    I’ll say it again to avoid repeated intentional misrepresentations… it is ALSO important for us to provide out of our wealth, and that should not be written off as useless has others have tried to suggest I was implying.

  • out damn italics.

  • Matt,
    The twinge of guilt that you perceive is the result of unfair, unChristian, and self-ighteous inferential liberties. You have no idea how your works of mercy, however defined, stack up to others here, and you won’t since only a jerk would discuss them with you.

  • The rather virulent over-reactions to the suggestion that if you love someone you might want to ACTUALLY SEE THEM IN PERSON suggests to me a twinge of guilt perhaps of being isolated from the destitute.

    The characterization of folks’ unfavorable response to the statement “If none of your charitable work involves direct contact with those you are trying to help, how could it be love?” suggests ya might be dealing with a bit of guilt yourself.

    For a very simple example, I know that the care packages I got when I was on the Essex touched me deeply, and that the folks who donated the cash to make them, the folks who carefully designed what went into each one so that there was variety but also good coverage of needs, and the folks who physically packed the boxes were all showing love for sailors like me– none of them had any physical contact with me.

  • Another example: cleaning up a common area when you’re done is showing care for the folks who will come after you– does anyone doubt that leaving a stinking pile of garbage and trash spread all around demonstrates a lack of care for those who will come after you? Even if you never see them face to face?

    The old “China Man Experiment”– I can’t remember the exact story, but a researcher told folks that if they pushed a button in a booth, it would kill a man in China, but they’d get some kind of small possible improvement, and nobody would know what they’d chosen to do; the researcher then kept track of how many people pushed the button.
    Anyone doubt that folks who believed they were killing a man, but did it anyways for some small benefit, were showing a lack of love?

  • Mike,

    The twinge of guilt that you perceive is the result of unfair, unChristian, and self-ighteous inferential liberties. You have no idea how your works of mercy, however defined, stack up to others here, and you won’t since only a jerk would discuss them with you.

    I think you’re proving my point by slanderous reaction. I made no claims about the quantity or kind of MY works of mercy or how they may stack up to yours or those of anyone else. I did not make this personal, it is an intellectual discussion. I’d be very happy to see you counter argue.

    Foxfier,

    The characterization of folks’ unfavorable response to the statement “If none of your charitable work involves direct contact with those you are trying to help, how could it be love?” suggests ya might be dealing with a bit of guilt yourself.

    I need only to point out Mike’s tirade above as ample evidence of the accuracy of my characterization.

    For a very simple example, I know that the care packages I got when I was on the Essex touched me deeply, and that the folks who donated the cash to make them, the folks who carefully designed what went into each one so that there was variety but also good coverage of needs, and the folks who physically packed the boxes were all showing love for sailors like me– none of them had any physical contact with me.

    I sincerely appreciate your service on board the Essex.

    I don’t know how things were there in terms of supply, but the months I spent in isolated army camps there was really no shortage of material goods, I truly believe what raised our spirits was the love with which those care packages where prepared, not the physical contents (though a pound cake or batch of 4 week old cookies can taste mighty good when you’re a week on IMP’s or MRE’s as they are known in the US).

    This is all very good and true, but it doesn’t respond to my point. I’m not saying that efforts which lack direct contact can’t be deeply appreciated, helpful, or even lifesaving. Only that if ALL OF YOUR WORKS OF MERCY are intentionally in isolation from those you seek to help because you LOVE them it is not a good thing. I would also suggest that the folks funding and preparing those packages NEVER missed an opportunity to cheer the Essex when she came to port, or the returning soldiers marching though town. I suspect they are the same ones who thank every servicemen they see carrying a rucksack through the airport bound for or returing from the Middle East or Central Asia.

    I will concede that there are certain things which go beyond the material even if done in isolation. Knitting sweaters, baking, writing cards and letters and perhaps carefully selecting comfort items for a distant stranger standing guard for example, I believe have a special way of reaching across the distance in a way that writing a check, or doing most forms of work do not.

    I wanted to point out regarding the word “almsgiving”, alms means “mercy” not “money”.

    http://www.newadvent.org/cathen/01328f.htm

    It seems to me that virtually all the references to the Christian duty of alms-giving speak of serving the poor and acting directly, while very few imply any sort of detached assistance. I refer again to my above citation of the acknowledged corporal and spiritual works of mercy, there is a clear focus on personal acts, though not exclusively.

  • Matt McDonald-
    Nobody is debating the meaning of “almsgiving”– it was only mentioned once before your statement, and yet the very first sentence of your link supports the broader definition that the OP suggests: Any material favour done to assist the needy, and prompted by charity, is almsgiving.

    The habit of people to puff themselves up, because their act of charity is in a different and more public form, is not supported by your link.

    Simple reason tells us: what good is it to offer your time to hand a sandwich to the poor, if there is no bread, meat or cheese with which to make a sandwich?

  • Matt,
    When you accuse others of acting or reacting out of guilt you ARE making it personal. To pretend otherwise is hardly in keeping with an intellectual discussion.

  • Matt,

    You’re really something.

    I take it that all those people donating money to help sick & impoverished 3rd world children, who they haven’t even seen face-to-face and met personally, are but fiends who do so not out of any wholesome Christian goodness, and not even based on *True Charity* or even *Real Love*.

    Amazing.

  • e.,

    what did i say that would support such an absurd notion? See my post about twinges of guilt.

  • On this related subject, since I heard it on Drew Mariani, Relevant Radio last week about CCHD (Catholic Campaign for Human Development), it seems we’ve got to be careful in donating to them. I see they cut off ACORN funds last year: http://www.catholicnews.com/data/stories/cns/0805268.htm . People to be wary of and become informed about: http://www.usccb.org/cchd/ though I don’t mean to demean them, I know this subject has probably been talked about before. Sure, I give to CRS and would be hesitant about CCHD.

  • Matt,

    That absurd notion came from your absurd statement:

    If none of your charitable work involves direct contact with those you are trying to help, how could it be love?

    which was subsequently followed up by what was largely an attempt of justifying it:

    The rather virulent over-reactions to the suggestion that if you love someone you might want to ACTUALLY SEE THEM IN PERSON

    If anybody here has cornered the market on absurdity, it is you.

  • I think that all that ought to be said has probably be said at this point, and then a couple. I’m closing comments.

Do you trust people who profit from you?

Tuesday, September 15, AD 2009

We’re often told that we shouldn’t trust people whose only interest is to make a profit from us. I ran into a brief piece by economist Russ Roberts which stands that conventional wisdom on its head in an interesting way.

The other day I had to get some important tax receipts to my accountant. He’s in St. Louis, it was getting close to April 15, and it was very important that the papers didn’t get lost. To give my accountant plenty of time, I wanted the papers to arrive the next morning.

So what did I do? My first choice was to get on a plane and deliver the letter myself. Too expensive. Too much time.

So I did the next best thing. I went down to the airport and found someone headed to St. Louis. I told her how important it was for my accountant to have my receipts by the next day. Fortunately, she seemed really nice. She said she’d be happy to help me out. I sealed up the envelope, and she promised not to open it after I left.

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  • Can you say Fedex??

  • You could say this about all the Catholic apologists who make a profit from being Catholic.

  • That might be the dumbest thing I’ve read. He could have hired a taxi to private courier the thing for $500, but I bet he still would have felt more secure with FedEx for the simple reason that legal recourse against FedEx, a multinational corporation, is easier than legal recourse against an individual.

  • The legal recourse against FedEx?

  • MZ,

    Yes, the opening, which I quoted, is a bit cute, perhaps. But I think his overall point (you read the rest of the post via the link?) that whereas we would never think of going up to a stranger in an airport and asking her to carry valuable documents to another city and get them there the next morning, it works very well to go up to a stranger in a FedEx uniform and offer that person to achieve a very complex task for a small amount of money, is a sound one.

  • Remuneration is only possible in an environment of trust and accountability; otherwise you are a sucker for trusting someone you don’t otherwise know and you’d have no recourse. That doesn’t mean it won’t work out — but there is a significant chance it won’t and there is no legal recourse if it doesn’t. the profit-motive is simply a barometer for what we value. The Church has no fiscal profit motive, yet we tithe becuase without revenue we would not have a Church. Money is important and it is a very useful media for facilitating the trade of free individuals. It is the LOVE of money that is the problem. You know who doesn’t like money — Socialists. And that twisted ideology is evil, anti-Christian and diabolical.

    Moreover, I would NEVER accpet a package from someone I did not know, especially to take on an airplane. Can you imagine some terrorist duping you into carrying a bomb on board!!!!

    We may live in the remnants of a Christian civilization but we are a fallen race. This was a dumb move.

  • DarwinCatholic: What? And I thought only communists (pace JH) despise those who consort with the demons of Western Capitalism!

Income Gap Narrowing

Thursday, September 10, AD 2009

A year into the economic downturn, the much decried income gap has narrowed.

The deepest downturn in the U.S. economy since the Great Depression may finally shrink the gap between the very best-off Americans and everyone else.

If so, it won’t be by lifting up the bottom. It will be by pulling down the top.

Over the past 30 years, chief executives, Wall Street bankers and traders, law-firm partners and such amassed ever-greater incomes, while the incomes of factory workers, teachers, office managers and others in the middle grew much more slowly. In 2007, the top 1% of U.S. families accounted for 23.5% of all personal income in the U.S., according to economists Emmanuel Saez of the University of California at Berkeley and Thomas Piketty of the Paris School of Economics. That was a level not seen since the Roaring Twenties.

The top 1%’s share appears to be falling fast. Mr. Saez and other economists expect income going to the top 1% of taxpayers — currently, those with about $400,000 a year — will drop to somewhere between 15% and 19% of all income by 2010. That still would leave income distribution more top-heavy in the U.S. than in many other countries.

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Smith, Hume and the Servile State

Wednesday, September 9, AD 2009

I was recently listening to an interview with Stanley Engerman, co-author of Time on the Cross: The Economics of American Slavery. It was an interesting discussion overall, but what particularly caught my attention was basically a side-note.

Engerman referenced Adam Smith’s understanding of slavery which he described as being that slaves had no incentive towards greater productivity, with the result that using slave labor rather than free labor was inefficient. Smith thus attributed the fact that people use slavery despite it’s inefficiency to the will to domineer over others:

But if great improvements are seldom to be expected from great proprietors, they are least of all to be expected when they employ slaves for their workmen. The experience of all ages and nations, I believe, demonstrates that the work done by slaves, though it appears to cost only their maintenance, is in the end the dearest of any. A person who can acquire no property, can have no other interest but to eat as much, and to labour as little as possible. Whatever work he does beyond what is sufficient to purchase his own maintenance can be squeezed out of him by violence only, and not by any interest of his own. In ancient Italy, how much the cultivation of corn degenerated, how unprofitable it became to the master when it fell under the management of slaves, is remarked by both Pliny and Columella. In the time of Aristotle it had not been much better in ancient Greece. Speaking of the ideal republic described in the laws of Plato, to maintain five thousand idle men (the number of warriors supposed necessary for its defence) together with their women and servants, would require, he says, a territory of boundless extent and fertility, like the plains of Babylon.

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  • This is one area where my skepticism peeks up. My knowledge base is stronger toward the comparative situation of Russian serfs. I pretty sure your stronger area is the ancients. In all 3 cases, the excess above subsistence was not a lot. I some cases and times, subsistence could not even be maintained. The idea of the lazy slave or the lazy serf doesn’t seem to mesh very well in that environment. For the sake of argument, assume the slave was 10% less productive than the free man. That 10% may have been the difference between subsistence and death.

    As far as efficiency goes, I would think the base evaluation would be the mill. Certainly, centralization isn’t required to support a mill, although it can make it easier. The big difference between cotton and corn though was that corn was eaten. If you were a subsistence farmer devoting 10% of your land to cotton to gain extra income, you may have found very little income by the time everyone in the ladder got paid. A cotton plantation removed the middleman in the process. Just a few basic thoughts. Perhaps I’ll write more later.

  • I don’t think “laziness” is a useful concept here. Suppose that a slave would make a good doctor. If you put him to work in the fields picking cotton he may be working as hard as he can, but he’s still not being anywhere near as productive as he could be. Slaves tend not to reach anywhere near their productive capacity because a) they have no incentive to, and b) the more educated/skilled a slave is, the more dangerous.

  • This is one area where my skepticism peeks up. My knowledge base is stronger toward the comparative situation of Russian serfs. I pretty sure your stronger area is the ancients. In all 3 cases, the excess above subsistence was not a lot. I some cases and times, subsistence could not even be maintained. The idea of the lazy slave or the lazy serf doesn’t seem to mesh very well in that environment.

    You’re right, my familiarity is mostly with the ancient world, though over the last couple weeks I’ve been working through a set of lectures on the early history of the American colonies, which obviously talks a bit about the tobacco farming economy.

    There was at least some kind of acknowledged motivation problem with slaves (those you weren’t actively trying to work to death like those in the mines or the galleys) in the ancient world. Xenophon write a bit about the necessity of trying to find ways to keep slaves motivated. Engerman argues that Smith’s claim that slaves lack incentive to work displays an ignorance as to how plantations were actually in in the 1700s, since according to his research non-monetary rewards (such as time off, better clothes, more food, etc.) were frequently used in order to motivate slaves.

    Looking at the colonies, it does seem like slaves were mostly only used in situations where they were producing high value cash crops, not for basic food production. But my thought would be that with lower profits per worker growing corn that tobacco or sugar, there wasn’t as much incentive to do that work via slave plantations, since the profits to be skimmed off were smaller.

    It seems like the temptation to use enslavement would be the greatest when you have a situation where a large number of fairly low skilled but highly manual work can be used to produce a very high value product. If the work has to be skilled, or it isn’t highly manual, or the produced product was low margin, it would seem like there simply would be little temptation to engage in slavery.

  • Your discussion of slightly higher subsistence put me in mind of Communist countries. My wife emigrated fromPoland around the time Communism collapsed, and some of her relatives (who are generally very working class) there now look back on the pre-collapse times nostalgically, because they had basic levels of subsistence with job security and relatively low labor, although they lacked many of the luxuries you mention (car, color TV, multiple channels). In Poland, these views are only very common among pensioners and people who worked in industries that collapsed, and they’re tempered a little by Catholicism and nationalism, but in Russia they’re much more common.

    On the issue of motivation, I recommend American Slavery, American Freedom by Edmund Morgan. The indentured servitude that preceded large-scale slavery in the British colonies and the labor issues in Britain saw the problems of unmotivated workers, if I recall correctly. Maybe it’s the notion of lazy English proles that inspired Smith, as well as Belloc (and Marx & Engels)? On the other hand, it was Orwell who found hope in England’s proles, so maybe not.

  • As I recall, Darwin, slavery as practiced in the Colonial period differed (generally speaking) from that in the antebellum period in that there there were fewer of the 19th-century equivalent of the agribusiness– i.e. big cash crop plantations (mostly cotton and rice, in my environs.) There was also some of that Enlightenment thinking that if you were going to keep slaves, you had a responsibility to be humane–thus many plantation owners were running creches, retirement homes, and training schools at their own expense and were only profiting from a segment of their “property” at any given time.

    The big plantations of the antebellum period operated on the assumption that the work force was going to have to be entirely replaced every seven years or so–slaves tended to be literally worked to death.

    It seems to me that “laziness” of the work force was a favorite topic for the ownership in both the above cases; small wonder that a work force under coercion should do as little work as possible. I think the difference was that in Colonial times the inherent flaws and inefficiencies in the system were more generally recognized by its practitioners.

Concord Coalition: 14.4 Trillion Dollar Deficit

Friday, August 28, AD 2009

14.4 trillion

In this earlier post I reported that the Obama administration is predicting a 9 trillion dollar deficit over the next ten years.  Now, the non-partisan Concord Coalition is predicting here a 14. 4 trillion dollar deficit over the next 10 years.

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The Prudential Science

Wednesday, August 5, AD 2009

I ran into this quote going through an old EconTalk the other day, and thought it interesting:

As economists, we’re specialists in prudence only.

That, as you say, is not what Adam Smith recommended. Not at all. I and a number of other people would like to get back to a Smithian economics, which although it didn’t throw away the very numerous insights that we get from thinking of people as maximizers — maximizers in this narrow sense — acknowledges that temperence and justice and love and courage and hope and faith can change the way the economy works.

UIC Economist, Deirdre McCloskey

I’m trying to decide if I agree with it or not. I would certainly agree that economics basically only looks at certain prudential concerns, it doesn’t consider humanistic or theological questions. However, I’m not sure if economics should acknowledge those concerns, or if it is more the case that economists (and others dealing with the field) should clearly acknowledge that there is much more to any question than the question of what is most economically efficient.

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10 Responses to The Prudential Science

  • Do one thing well or many things badly. That’s often the choice we face.

  • I’m not clear that there is a need for (or indeed that there can be) a “Christian Economics” so much as that economists should be Christian.

    My feelings exactly.

  • I think you have answered your own post rather effectively when you bring it full circle to the idea of economists as Christians and not the other way around.

    The very concept of a dichotomy in science between a Christian and secular reality is absurd. The pursuit and measure of science has to be the preciseness with which it conforms to and describes the reality which it seeks to know. And as a corollary, the scientifc accuracy of knowledge is not a function of theology.

    It is self-serving and disingenious of McClowsky to talk about prudence without recognizing that prudence, like any virtue, depends on the underlying theological/philosophical base from which it takes meaning.

  • In what respect can “Economics” be called a science? In physics and the physical sciences, things are discussed in terms of measure, weight and number: the whole of related physical things which is the universe.

    Newman called science an organized body of knowledge. But then one must agree rigidly on terms.

    What can economics do with, for example, taste [about which there is no disputing] when it comes to eating cake, or fashion in clothes. What can it do about the weather, which is so important in agriculture? J.K. Galbraith, son of a farmer, answered simply: there is no real economics of agriculture, as the Soviets discovered.

  • Gabriel,

    It is scientific inasmuch as a disorganized approach to the economy is not helpful.

  • It is science in terms of that which be evaluated based on a cause and effect relationship.

  • # j. christian Says Wednesday, August 5, 2009 A.D. at 5:45 pm
    “It is scientific inasmuch as a disorganized approach to the economy is not helpful”.

    # PDiddy Says Wednesday, August 5, 2009 A.D. at 6:38 pm
    “It is science in terms of that which be evaluated based on a cause and effect relationship”.

    These are not much by way of definition of the nature of science. The first is merely negative. The second raises the issue of whether cause and effect can be clearly and rigidly defined.
    And then there is the question of defining what is meant by”the economy”. What does it include, what exclude?

  • Just out of curiosity, Gabriel, how much have you studied economics? It’s hard to tell what you’re getting at it without knowing where you’re coming from.

  • j. christian Says Thursday, August 6, 2009 A.D. at 12:25 pm
    “Just out of curiosity, Gabriel, how much have you studied economics? It’s hard to tell what you’re getting at it without knowing where you’re coming from”.

    When someone defines economics, I will learn how much I have studied. [Would Keynes’ GENERAL THEORY count?].

    I note, if you will forgive my saying, that you, perhaps unconsciously, resort to an attempt to reduce the discussion to a personal matter. It seems to be an increasing malady these days. “That’s just your opinion”. It is like the malignant studies of “the influence of XYZ on ABC”.

    I am reminded of our schoolyard insult “Your mother wears army boots”.

  • DC, regarding your comment on science more generally, I’d propose that one of the “meta” problems of contemporary science is the methodological denial of formal & final causality (to the detriment of science). While natural science may not be able to formally address those forms of causality, it ought not proceed as if they did not exist.

How to Get There from Here

Tuesday, July 28, AD 2009

There’s been much discussion of late about what other country’s health care apparatus the US should consider emulating, and in such discussions France is often mentioned. Now, all cheerful ribbing against the French aside, their health care system is not nearly as “socialized” or nearly as afflicted by treatment denials and waiting lists as those of the UK or Canada. It is also rather more like the system that the US already has, in that it is a hybrid public/private system, though in their case there is a guaranteed base level of coverage everyone has through the government (funded via a hefty payroll tax — not unlike Medicare) which most people supplement with private coverage. Most doctors are in private practice, and 25% do not even accept the public plan, just as some practices in the US do not accept Medicare. However, everyone does have that minimum level of coverage, and the French spend a lower percentage of their GDP on health care than the US (11% versus 16%) which when you take into account that France’s GDP per capita is a good deal smaller than that of the US (which is the polite, economist way of saying it’s a poorer country) works out to the US spending about twice as many dollars per person on health care, while still not having universal coverage.

So what are we waiting for? Why don’t we go enact the French system here right now? Why doesn’t Obama put on a jaunty beret, dangle a cigarette coolly from the corner of his mouth, hoist a glass of wine, and just say, “Oui, nous pouvons.”

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9 Responses to How to Get There from Here

  • Well done Darwin,

    Many factors in health care. One is physician salaries as pointed out in other posts. Many factors in physican salaries as you point out including the high cost of medical school and indirect malpractice costs. If those aren’t addressed while cutting physician salaries, problems will most certainly follow.

  • Dear God… someone finally stopped talking about British and Canadian health care and realized that are quite a number of schemes to reach universal coverage and single-payer systems aside (I don’t feel like having that go-round), France is a pretty good model.

    Moreover, I think if we attacked education (costs) and provided greater assistance to medical students (not just with public funds), we could slightly lessen doctor salaries — as health care costs go down and depending on their specialty.

  • And by ‘lessen’ I don’t mean put caps on it via legislation.

  • Related to this but in a more general sense: I think that dealing with a situation like this (in which it becomes necessary to drive a group of people’s income down for the common good) the impersonal nature of markets is generally more socially acceptable than government action. I don’t think anyone would tolerate reducing doctor pay 30-40% by fiat, even when they generally make a lot of money. But creating the conditions for it to gradually reduce due to market pressure doesn’t have the same antagonistic edge.

    Just had to get the market plug in. 🙂

  • 30 – 40% again seems not to take into account malpractice costs let alone medical school. Maybe your figures take into account malpractice costs. But if not, using your figures, a specialist in the US averages 230k vs 149k in France. Subtract the average 55k for malpractice and you get a difference of 175 vs 149. Excluding medical school costs you’re now talking about a 14% difference, not 30 – 40.

    What’s the average malpractic attorney’s pay?

  • Actually just Googled it. In 2006 it was 100k.

  • I guess, I’m not sure how stuff like malpractice insurance is usually accounted for. Do doctors always have to pay it out of pocket (thus out of their personal pay) or is it often payed by their practice as a business expense?

    Either way, significantly reducing the malpractice lottery would have a salient effect on health care prices — not just in allowing for health care providers to charge less, but also reducing the number of extra procedures which are done for tail covering purposes rather than medical effect.

  • Depends on the practice. Those that are stand alone pay out of their own pocket. Those in large practices or hospital based practices get it paid for. But that will be considered part of compensation and usually salaries are lower to reflect that. Either way, there is a cost to income from malpractice premiums.

  • The cost of malpractice insurance is inflated by insurance companies, just as insurance companies inflate the cost of medical insurance. But the big issue is that usa doctors and hospitals do not like to be held accountable for their bad medical practices and poor outcomes. Their private for profit medicine ranks 37th in outcomes compared to other countries, which rank muych better using national health programs. Malpractice costs would clearly go down if usa outcome rankings improved. The fact that france ranks number one, having the best outcomes, while paying their doctors much less, is all just a further indictment of our private medical system in the usa.

"Federal Budget on an Unsustainable Path"

Friday, July 17, AD 2009

Federal Debt Projections

As regular readers of this blog know, I have been sounding the tocsin regarding government spending since the Bailout Swindle of 2008.  Here is one of my posts in which I list other posts I have written on the subject.

Yesterday the Director of the Congressional Budget Office had a chilling post on his blog which you may view here.  He states in part:

“Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law. Unless revenues increase just as rapidly, the rise in spending will produce growing budget deficits. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy. The following chart shows our projection of federal debt relative to GDP under the two scenarios we modeled.” 

His chart is at the top of this post.

Keeping deficits and debt from reaching these levels would require increasing revenues significantly as a share of GDP, decreasing projected spending sharply, or some combination of the two.

He concludes on this somber note:

The current recession and policy responses have little effect on long-term projections of noninterest spending and revenues. But CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010. This higher debt results in permanently higher spending to pay interest on that debt. Federal interest payments already amount to more than 1 percent of GDP; unless current law changes, that share would rise to 2.5 percent by 2020.

This is fiscal madness.  We have the wealth and the ability to solve this problem by spending cuts, and minor tax increases if, and only if, combined with meaningful and deep spending cuts.  What we lack is the political will.  We are destroying the future prosperity of our kids because of current political cowardice, folly and inertia.

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17 Responses to "Federal Budget on an Unsustainable Path"

  • I read something about this last week. The CBO predicted that our national debt would equal 82% of our GDP by 2019 and insisted that the U.S. could not continue course as is with its fiscal policies.

    I think the solution to this problem is complex. But first is going to require a second glance at the way our government functions.

    I think our Congressman who work only 130-190 days out of the year max — currently making north of $170,000 — is pretty much ludicrous. I, say, lower their salaries to something more reasonable (since it is tax-payer funded) and in fact, every time, we run a budget deficit in a fiscal year, have an automatic 15% pay cut and let this happen continuously until they get things in order.

    I also don’t think Congress should be taking vacations and trips at the rate they are, on tax-payer expense. Allegedly, a U.S. Senator took his family on a vacation for four days that cost $22,000 roughly on the tax-payer’s tab. I see no reason as to why making a six-figure salary cannot pay for his own family vacation when it is expected that the ordinary American citizen making much less is expected to do the same.

    At the more obvious level, I think there should be constant renewal and evaluation of social programs. More than likely, many social programs need massive reform or need to be disbanded all together. Whereas others, I think, largely can be consolidated or passed off to state levels.

    The most obvious problem is our spending habits and our spending priorities. I think we’re funneling money to a number of things not worth the dollar.

    In terms of government revenue to deal with the problem that’s a debate over taxes and borrowing, of which, I’m sure we can all agree on the latter — don’t borrow so much money that we’ll never be able to pay it off for over a century. And, of course, the question of revenue is intimately tied up to the question of spending habits.

    We’re on a crash course…

  • Nothing like a little bit of history.
    After the Revolution in France, the country was running short of money. So the government kept printing it. So much so that the floor holding the currency collapsed.
    What we are doing is like the farmer whose up-to-date grandson persuaded him to take the gold out of his mattress and put in the bank, using checks to draw on the money.
    Came the day when the grandson told his grandfather he had run out of money. “You need money? I’ll write you a check”.
    The Chinese government does not have to invade the U.S. It has just to present the Treasury Bills.

  • This problem cuts across ideological lines. The CBO is mostly right. By now everyone should know the major culprits and the solutions, but no one wants to accept the political suicide they represent: cutting and/or delaying entitlement benefits while increasing payroll taxes, and cutting the defense budget. Other tax increases need to be on the table, although there is a ton of room for discussion about what form(s) they would take. There’s no other way around this one.

  • Donald still won’t answer the question – how much of the fiscal deterioration is due to economic factors and automatic stabilizers, to the effects of Bush-era discretionary policy (tax cuts and Iraq, both far bigger in magnitude than the stimulus), and to the Obama stimulus? If you actually run the numbers, you will see that the latter is small scale. Bottom line: the deficit a percent of GDP is highest in 60 years because the recession is the worst in 60 years. Which begs a question: are you proposing procyclical policies in the midst of a recession?

  • Why does it matter how much of the deficit is “Bush’s fault” versus how much is “Obama’s fault”? Are the effects of the deficit different depending on the party of the person responsible for them?

  • To MM it matters, apparently. Why stop at Bush? Why not go back to Reagan while you’re at it, MM? And then maybe you can go all the way back to FDR who took the greatest liberties with the Constitution and began the project of expanding the federal government into the Leviathan it is today. And maybe along the way back here you can stop at JFK and LBJ. Don’t just pretend that our fiscal situation is the sudden product of the last Republican president.

  • Actually, j.christian, it is first and foremost the result of the recession, and second that of the Bush administration. Taking 1999 as a starting point (you can go back to Reagan if you like, but that won’t do you any favors) and you get: economy 37 percent, Bush policies 33 percent, Bush policies that Obama kept 11 percent, and new Obama policies 10 percent.

    You can fault Obama with not doing anything to stop the fiscal deterioration, but not really for building it up. But is it wise to engage in procylical fiscal tightening during a recession? I can’t think of a reputable economist who would say so.

  • As I recall, there were a fair number of economists signing letters saying that blowing a trillion dollars or so on a random spending wish list and calling it “stimulus” was not a good idea. (Others, of course, thought it was swell — including you.) That significant portions of the deficit result from carried over Bush policies or from the economy does not indicate that Obama’s wild spending spree is therefore okay or responsible. Especially as he seems intend on digging further before he’s done.

    That there were no wonderful options for those serious about fiscal responsibility in the last few elections certainly does not change the fact that Obama has had an absolutely terrible first year in office from a fiscal perspective, and shows every sign of getting worse.

  • Tony, Obama has taken a budget on fire and dumped gasoline on it. Judging from his tanking numbers the entire country is beginning to understand this and to react to it. The days of blaming Bush for the budget are at an end as a political tactic with any utility for supporters of Obama. This situation needs to be addressed now and if the Democrats are perceived as not only not doing anything to solve this budget nightmare, but actively making the problem much worse, your party will be in the political wilderness for a generation. Tony, if I were you instead of spending time making futile “so’s your old man” defenses of Obama, I would be contacting anyone I knew with any heft in the Democrat party and telling them electoral disaster looms unless they act to address this budgetary meltdown now.

  • MM does not site a source for his pie chart. Just out of curiousity, does the refusal to implement debt-for-equity swaps to recapitalise Fannie Mae, Freddie Mac, and the megabanks count as a Bush policy, an Obama policy, or a Bush policy retained by Obama? To which administration do you attribute Mr. Geithner’s handiwork, if that is what it can be called? (He is a discretionary terminable-at-will appointee of the Obama Administration; he was not before).

  • MM, that pie chart “analysis” is laughable. So Obama inherits policies and Bush doesn’t? Attribute everything new since 1999 to the *deficit* and none of it to the structural budget, eh? Because we didn’t need any of it, of course. And only a Republican would’ve, say, created a DHS in response to 9/11. Yeah, right.

    I think a better “analysis” would be to blame Teddy Roosevelt for the deficit. After all, the forerunner to the Commerce Dept. started under his administration, and I don’t think we need it, so let’s say 100% of its budget counts against the deficit.

    See how we can play that game endlessly?

  • get back to me when you guys learn some basic economics. start with the definition of automatic stabilizer. it’s crap like this that makes me question the very notion of democracy, and the universal franchise!

  • MM,

    I have a graduate degree in economics. How about you?

    I understand perfectly well what the cyclical component of the budget deficit is! And you’re not understanding that the very size of the federal budget is never questioned in your analysis.

  • Tony, I suspect your disenchantment with democracy and the universal franchise will only widen after 2010. You do not want to do anything about the budget meltdown because all of your most cherished political goals require a vast incease in federal spending and the size of the federal government, the impact on the economy be hanged. Most Americans, you know, those people whose company you avoid, disagree with you.

  • When all else fails, throw rocks!

  • A hint. Never admit to having studied economics. It is not the dismal science. It is not a science at all but a political program.

    Why is it that women are better at economics than men? Which is to say at running a household? Likewise at investments?

  • “What we lack is the political will. We are destroying the future prosperity of our kids because of current political cowardice, folly and inertia”.

    Sounds like our Catholic bishops. What was the reading yesterday from Jeremiah about neglectful shepherds?

51 Responses to Economics and Morality

  • Excellent topic, Darwin.

    I’ve started to sense that while socialism tends towards forms of totalitarianism, libertarianism tends towards apathy and indifference. I tend towards the later political philosophy because it is at least grounded in empirical reality, leaving us free to take up our Christian (and I’d argue, most human) responsibilities.

    I sat through last weekend and read the whole thing… at some point I’d like to do a closer analysis.

  • Libertarianism has always led to totalitarianism, because the losers will not live with the consequences of libertarianism.

    I don’t see a difference between “Economic Moralists” and “Indifferentists” except for a happy speech the former tell themselves. You seem to share the problem of assigning a certitude among the classical economics that does not exist even with the economics community, let alone in relation to something like biology. Among the heaviest objectors to the new encyclical, their economic beliefs would not find themselves wildly mocked except at a half dozen institutions of higher learning in the U.S.

  • Now, it seems to me that much of the sound and the fury surrounding Catholic discussions of economics centers around Structuralists holding Economic-moralists to really be Indifferentists,

    Ahh, how prophetic.

    I don’t see a difference between “Economic Moralists” and “Indifferentists” except for a happy speech the former tell themselves.

  • Economics is a description of human behavior, rather than a description of the physical world. Economics describes human nature but also our interaction with the physical world. In other words, economics is about the allocation of limited resources. One can say that the strength of human nature’s interaction with each other and with those resources is so strong that the behavior is almost as inviolable as the laws of physics. Supply and demand is as unchangable as the law of gravity. Attempts to consciously choose some other system have always failed, in the long run, even in the face of totalitarian attempts to enforce the “new order.” Structuralism is a fantasy world, which believes that “us smart people” can determine how people should behave, will behave, if we just make things go our way instead.

    Having said that, there is a difference between Economic Moralists and Indifferentists, as I understand your concept. (Which concept, I think, holds a lot of insight.) An indifferentist thinks that whatever is happening is okay. At an individual level, however, we have a responsibility to do things based on love. That means that we do not do some things that others may choose to do even though they are sinful. My economic choices must be informed by a Catholic conscience.

    As a business owner, I can tell you that there are some businesses that are driven solely by greed, through the exploitation of their employees, their suppliers and even their customers. I believe that my company can survive and even thrive without dealing with those companies. I could go into more detail of how my conscience affects the economic choices we make, but, I think, you get the idea. Even as an individual, non-managerial employee, there are things that may be in your best economic interest that you can’t do without violating generally accepted standards of morality. (e.g. asking for and taking kickbacks from suppliers.)

    Some of these issues are addressed by the newer areas of economics, in which economists are investigating behavior (as opposed, say, to building econometric models), including seemingly “non-rational” decision making. There are also business management issues here, such as the conditions in which people work together, whether that’s all employees feel that they are part of making the company and themselves successful, or the company and people outside the company, perhaps including other companies, work together toward common goals. Think, for example, of a company where 99 people are working together, doing what needs to be done, but 1 person is stealing, i.e. allocating resources for their individual benefit, rather than that of the whole 100.

    Is that not similar to the question of who in the whole society gets resources? You can look at working as the way in which you serve others. Not too long ago, I heard a rabbi propound that concept. He then went on to suggest that retirement, then, might be seen as immoral (assuming that you were physically and mentally able to still work, in some form), because it meant that you were no longer serving the needs of others.

    The difficulties that many have with the resources allocation question include what resources/how many resources should be given to those who can’t serve the needs of others (i.e. who can’t work productively, such as children and the sick, as opposed to those who choose not to work), who should have to do things to serve those people (i.e. who pays) and what are the channels of transmission between the productive and the non-productive (e.g. church, state, individuals, voluntary organizations.)

  • It seems to me that whenever people hear a moral argument they don’t like, they call it “moralism”.

    What am I, on this list? First of all, I am a skeptic of economic science. I will not reject what is obviously true for the sake of morality – but I will question the extent to which a certain truth necessitates a certain policy, the extent to which it ought to negate the democratic will of the people (i.e. as in Pinochet’s Chile, which was established exactly on the notion that violent force had to be used to ensure the smooth operation of these ‘objective laws’ of the economy).

    From one point of view in political theory, from Aristotle to Marx, class conflict is what drives society forward. Certainly the struggle between classes is as much a “fact” subject to scientific analysis as the effects of minimum wages. It is also a fact that has a set of dynamics that can be drastically altered by economic policy.

    But do the neoliberals ever really take that into account in their “scientific models”? No, because they do not see classes, only individuals and their utilitarian preferences. Then “institutionalism” came along to redress some of these errors. But it never cut to the foundation.

    My problem with economic models is not that they are scientific – it is that they are usually abstract mathematical models that rarely, if ever, rely upon in historical evidence or political factors to shape and form them.

    All but a few truisms such as “people like more money than less money” or “people like lower prices than higher prices” cannot be applied universally to all times and places. Sometimes they can be very powerful truisms – Trotsky the Marxist revolutionary was saying, long before any free-market liberal economist was saying, that cheap goods from the West would be the undoing of the Soviet regime, some 60 years before it happened.

    But what about areas where legitimate economists disagree? What other reason besides moral values and personal preference does one have to accept the claims of the American Enterprise Institute over the Economic Policy Institute? Both can find various correlations between trend A and trend B. Both can point to the others correlations and point to some third factor C that renders it spurrious. And so on and so forth.

    All of that said, these “structuralists” you want to point out are a strawman. No one wants to ignore what is an obvious economic law for the sake of morality. The problem is that it is not always so obvious that what isn’t really happening is one group imposing its subjective will upon another in the name of some law.

    What I ultimately favor, to put it more crudely, is ‘power to the people’ – political, and economic. And if they make the wrong decisions, then they make the wrong decisions. It is better than being forced by a Pinochet to make the allegedly ‘right’ ones (another area where economists are still arguing).

  • MZ,

    I don’t see a difference between “Economic Moralists” and “Indifferentists” except for a happy speech the former tell themselves.

    Well, how about this concrete example. Six months ago I was filling a position on my team, and the best qualified person for the job was a guy desperate to get our of Michigan where the company he was working for was slowly going bankrupt. Knowing his situation, I could easily have hired him for 10-15k/year less than all the other people doing the same job were making, because his region had a much worse labor market and finding a job outside his region was hard. However, I set him up to be paid the same as everyone else because as an Economic-moralist I did not think it would be moral to take advantage of his situation to pay him less than the others. (However, I differ from a Structuralist, in that I would not support enacting laws requiring that all people doing similar work be paid exactly the same — since I think that restriction of the labor market would end up hurting people more than helping them.)

    In opposite example — seven years ago I was working for a guy who was basically an Indifferentist. I was promoted within the company, but given far less than other people doing the same work, and when I objected I was told very bluntly, “We already know you’ll work for X, why should we pay more?” Now luckily, markets are easily self correcting, so I did the logical thing and found another job within three months and quit.

    But I would say that the different between Indifferentists and Economic-moralists is actually pretty big when it comes to actual moral action.

    You seem to share the problem of assigning a certitude among the classical economics that does not exist even with the economics community, let alone in relation to something like biology. Among the heaviest objectors to the new encyclical, their economic beliefs would not find themselves wildly mocked except at a half dozen institutions of higher learning in the U.S.

    I’m not clear what exactly you’re taking to be the “classical economics” that I’m accused of being too certain on, so I don’t know how to respond. What I was thinking of here is very, very basic observable “economic laws” that one really doesn’t see exceptions to: law of supply and demand, etc. A lot of the basic applications of this are fairly uncontroversial among economists: Excessively high minimum wage laws reduce employment, trade restrictions slow economic growth, etc.

    What I’m discussing in regard to Structuralists is not just a difference over should we have a social program to do X or leave it to private charity, but rather a claim one can ignore very basic economic tendencies in setting policy.

  • Patrick,

    I think those are some very good examples of what I had in mind as regards to the difference between Indifferentism and Economic-moralism.

    (And I’m glad my analysis made basic sense to a business owner.)

    Joe,

    It seems to me that whenever people hear a moral argument they don’t like, they call it “moralism”.

    What am I, on this list?

    Well, I’d put myself down as an Economic-moralist, if that helps any.

  • Exceptions are the rule to the law of supply and demand. “Excessively high minimum wage” isn’t an observed phenomenon, at least not one that has reduced employment. Trade restrictions slow economic growth except in Korea, China, the US prior to the first World War, Britain, etc. The US has seen slower economic growth post free trade than it has pre-free trade, although to retain intellectual honesty I will note that the US had more room for advancement prior to free trade than it did post free trade.

  • But do the neoliberals ever really take that into account in their “scientific models”? No, because they do not see classes, only individuals and their utilitarian preferences. Then “institutionalism” came along to redress some of these errors. But it never cut to the foundation.

    My problem with economic models is not that they are scientific – it is that they are usually abstract mathematical models that rarely, if ever, rely upon in historical evidence or political factors to shape and form them.

    Actually, I do agree that an attempt to act as if people as simply mathematical profit maximizers who can be perfectly predicted by mathematical models invariably ends up running off the rails. People aren’t numbers, and if I were to declare allegiance to an economist it would be Hayak, who had a fair amount to say about the necessity of keeping in mind what actually motivates people rather than just spending all one’s time on statistics.

    However, where we might differ a bit on this is that I think some of the basics (people would rather pay less than more; people would rather have more money than less money; when demand outstrips supply, the price rises, while when supply outstrips demand, the prices falls) actually take one a pretty long way. For instance, I would agree that the entire Soviet experiment was pretty much doomed because it sought to ignore these tendencies, or at least apply them at a class rather than an individual level.

    Which perhaps loops back to another difference, which is that I think it often does work well to model (or just think through) situations as if all economic actors were individuals rather than members of a class — because when push comes to shove most people seem to end up acting that way most of the time.

    Now, that’s not to deny the existence of non monetary cost and rewards. And I think we should, as a culture, definitely seek to increase the non monetary social costs of “doing bad business” in order to encourage right behavior. But I think we might have different ideas of how real class solidarity is.

  • MZ,

    Well, I’m almost out of lunch break — but just real quick:

    Exceptions are the rule to the law of supply and demand.

    I price based on supply and demand every day — believe me, it works.

    “Excessively high minimum wage” isn’t an observed phenomenon, at least not one that has reduced employment.

    As I think BA has pointed linked to studies showing several times, there is very nearly universal agreement that a truly significant increase in the minimum wage would have an adverse affect on employment.

    Trade restrictions slow economic growth except in Korea, China, the US prior to the first World War, Britain, etc.

    Whose trade restrictions and whose economic growth? All of those countries achieved massive growth based upon export economies, though at the same time keeping some restrictions on imports. Is your theory that they were at some magic sweet spot where they would have had less growth if their export trade had been restricted by destination countries, and also less growth if they had allowed greater imports? Evidence shows that growth can be achieved despite some restrictions (especially if other countries decide to allow free trade with you while letting you get away with restricting imports from them) but that doesn’t mean that freeing trade does not in fact increase growth. Again, the agreement on this is near universal — as shown by the amusing display during the campaign of Obama threatening to unilaterally change trade agreements while his advisers ran around assuring all our trading partners that he was lying.

    The US has seen slower economic growth post free trade than it has pre-free trade, although to retain intellectual honesty I will note that the US had more room for advancement prior to free trade than it did post free trade.

    Depends what you’re defining as free trade. The periods when the US suddenly clamped down on trade always had seriously adverse affects. I think you’re right about the different point in the development and opportunity curve.

  • But what about areas where legitimate economists disagree? What other reason besides moral values and personal preference does one have to accept the claims of the American Enterprise Institute over the Economic Policy Institute?

    Thinking of the economics profession as consisting of the American Enterprise Institute and the Economic Policy Institute is probably not a good idea. In any event, it seems to me that one could choose between the claims of AEI and EPI not based simply on moral values or personal preference but based on the quality of the arguments presented and the evidence used to support the claims.

  • “Thinking of the economics profession as consisting of the American Enterprise Institute and the Economic Policy Institute is probably not a good idea.”

    Well, then, its a good thing I don’t, and was simply picking two examples at random to make a point.

    “In any event, it seems to me that one could choose between the claims of AEI and EPI not based simply on moral values or personal preference but based on the quality of the arguments presented and the evidence used to support the claims.”

    That’s just the problem – the quality of the arguments is always good. Different sides can make equally plausible cases for whatever it is they wish to justify.

    The problem is what is emphasized and what is not, what is considered relevant and what is not, what goals for society are considered worthy and which are not. These are ultimately subjective positions.

  • Darwin,

    “But I think we might have different ideas of how real class solidarity is.”

    It became real enough to force every government in the world and the Catholic Church to react to it. But not real enough, it would seem, for a good many economists to react to it. Which is why I have a very hard time taking most of them seriously. Any economic model that ignores or minimizes politics is worthless.

  • That’s just the problem – the quality of the arguments is always good. Different sides can make equally plausible cases for whatever it is they wish to justify.

    Except that this isn’t actually true (if all economic arguments appear of equal quality and plausibility to you, then I would suggest this might have other causes than the inherent deficiency of economics).

  • In support of DarwinCatholic’s comments about free trade or the lack thereof, let me point to the effects of the Smoot-Hawley tarrif during the Depression. I haven’t seen any economist who hasn’t said that Smoot-Hawley deepened and lengthened the Depression, because it did cut off trade.

    Further, in my opinion, opposing free trade is an immoral position. A is making widgets for B. A and B happen to be living in the same country. Now C can make widgets for B just as well as A can, at less cost to B. Is it moral for A to change the law so that B can’t buy from C, esentially to use force to prevent B from buying from C? I would argue that it is not moral, for two reasons. First, it hurts B because he has to pay more for widgets, in effect paying a tax to A. Second, he is also hurting C and all of the people who would work for C making widgets, if B could buy from C. All that law does is allow B to be greedy. (I believe the economic term is monopoly rents.)

    Ah, but what if C is in another country than A and B? (Or did you already assume that? If so, go back and rethink it if they are in the same country.) Is it any more moral for A to keep C from selling to B if they are citizens of different countries? Those who would say yes usually talk in terms of “defending local jobs.” However, while those people usually work for A, those who would be working for C should not be deprived of employment. Protecting A, through artificial means, insures that the people who would work for C can not improve their economic lives. How is that moral?

  • It became real enough to force every government in the world and the Catholic Church to react to it. But not real enough, it would seem, for a good many economists to react to it. Which is why I have a very hard time taking most of them seriously. Any economic model that ignores or minimizes politics is worthless.

    I think it’s important to be clear on what it was that was real: the suffering caused in unskilled or low skilled workers during a rapid economic transformation of society. This provided large numbers of angry people with little to lose who were available to radical political movements.

    That doesn’t, however, necessarily mean that those individual people acted much like classes when they went out and decided what to buy — or to an extent who to work for.

    Also, economists (even very free market ones) don’t necessarily suggest one ignore those social pressures — their answers just aren’t the same as labor organizers or others with a specific class consciousness. For instance, Milton Freedman, as I recall, endorsed the idea of a negative income tax to assure that all people had a minimum standard of living.

    So the dispute isn’t so much over whether things should be done to relieve social pressures on the disadvantages as _how_ to do so.

  • “Except that this isn’t actually true (if all economic arguments appear of equal quality and plausibility to you, then I would suggest this might have other causes than the inherent deficiency of economics).”

    Ah, very funny. But thats not exactly what I said, and I will clarify so there is no misunderstanding – and hopefully, no call for such a snide remark.

    I believe there are different schools of economic thought that each have very able representatives capable of making quality arguments for different interpretations of economic reality and particular economic policies.

    It would be ‘deficient’, not to mention arrogant, to proclaim the triumph of one school or one paradigm over all others, as Fukuyama did when the USSR collapsed in 1991. It was been widely acknowledged that the “end of history” was prematurely proclaimed.

  • I haven’t seen any economist who hasn’t said that Smoot-Hawley deepened and lengthened the Depression, because it did cut off trade.

    It’s a tragedy that you haven’t seen that. Perhaps ideological blindness afflicts you.

  • Joe Hargrave argues that class solidarity trumps economics, and, therefore, economics is bunk.

    I think that the experiences of the 20th century demonstrate that class solidarity can not be the basis for a moral nation. Moral suasion and nuclear weapons were not sufficient to keep the Soviet Union afloat, either politically or economically. China’s survival has only occurred to the extent that Maoist class struggle has been replaced with the motto “It is glorious to get rich.” We can also look at any number of other countries where class struggle proved to be irrelevant to the average person. Class struggle has to be rejected based on our real world experience.

    Class struggle as a theory also represents a violation of God’s law of love. Whom are we struggling against? The plutocrats? The aristocracy? How can we struggle against them, seek their destruction, as Marx taught, but also love them, as Jesus taught? We should not confuse Catholicism with communism. A moral system can not be built on envy and jealousy as the entire foundation of the system.

    Only people in America and western Europe would think of the government as a potential provider of a moral economic system (if only the “right” people can get elected….”) In the rest of the world, people would scoff at the idea of using politics to improve people’s economic situation. In their world (and in ours, too, if you peek behind the curtain), those holding public office merely seek their own ends and that end is POWER! There is no salvation through politics.

  • I believe there are different schools of economic thought that each have very able representatives capable of making quality arguments for different interpretations of economic reality and particular economic policies.

    There are different schools of economic thought. Some (though not all) of them have able defenders capable of making quality arguments on behalf of their respective positions. It hardly follows that each school “can make equally plausible cases for whatever it is they wish to justify.”

  • “Joe Hargrave argues that class solidarity trumps economics, and, therefore, economics is bunk.”

    That is a gross oversimplification of my argument.

    What I actually argued is that an economic theory that does not take the reality of class conflict into account is not worth very much.

    Would it really have been so painful, so difficult, to address what I actually said instead of reducing it to a strawman that you could easily obliterate?

    Economics is not “bunk” – I don’t make that claim. What I think is “bunk” is a pretension to timelessness and universality made by some economists, which I think flies in the face of historical evidence, even if the pure mathematical models indicate something else.

    “Class struggle as a theory also represents a violation of God’s law of love. Whom are we struggling against?”

    This is a misstatement if I have ever seen one. There is a difference between acknowledging the actual existence of class conflict – as political philosophers since Aristotle and as the Church has done – and endorsing the political program of class struggle.

    Please tell me you understand that difference. Acknowledgment versus endorsement. One is not the other.

    “In the rest of the world, people would scoff at the idea of using politics to improve people’s economic situation.”

    What do you base this on?

  • MZ,
    I fail to see the tragedy. Are you seriously suggesting that there are any reputable economists who believe that Smoot-Hawley did not adverely affect the economy? Care to share?

  • “It hardly follows that each school “can make equally plausible cases for whatever it is they wish to justify.”

    I didn’t say that “it follows”. But I do think it happens to be true. What does plausible mean? It just means that the argument appears reasonable. Its the same as saying that each school makes a reasonable argument.

    Obviously I don’t think mutually exclusive arguments can both be true at the same time! Reasonableness is not truth. Plausibility is not truth. But two opposing arguments can both be reasonable at the same time if they are beginning from different assumptions and different perspectives on the available facts.

    I don’t see why anyone would wish to deny such a thing.

  • What does plausible mean?

    Seemingly or apparently valid, likely, or acceptable; credible.

    To say that the case for one position is equally plausible as that of any other is to say that all positions are or appear to be equally valid, likely, acceptable, credible, etc. That’s not the case.

  • I think that it might be important to distinguish between the fields of micro-economics and macro-economics. At least when I was in school (I was an economics major many moons ago), there was very little debate within the field of micro-economics. While models assumed rational behavior it was fully understood that the desires of consumers and producers involved values other than dollars. Indeed, some people who could be investment bankers choose instead to become priests. Macro-economics is trickier, and the efficacy of fiscal policy stimulus in a liquidity trap environment is certainly subject to debate, for instance. Also, there is plenty of room for debate in the context of the economic consequences of tax policy. For example, do higher tax rates induce less savings (because the reduced after-tax return from investments makes consumption more desirable) or more savings (because the reduced return requires taxpayers to save more in order to satisfy their savings goals. In truth, we probably don’t really know. But debate does not mean that economic principles do not apply; instead it signifies that understanding the disparate motivations of people is complex, even if one assumes that people are fully rational and have adequate information to make proper decisions in light of their particular objectives. The key is to apply economic principles more carefully and mindful of our limitations. But ignoring such principles as though they are fictions or less than real is really very naive and quite dangerous.

  • “To say that the case for one position is equally plausible as that of any other is to say that all positions are or appear to be equally valid, likely, acceptable, credible, etc. That’s not the case.”

    So plausibility is validity now?

    I also hoped that it would have been obvious that I was referring to debates among economists themselves (in fact, I think I said that) – and not necessarily just any old person. I’m assuming a methodological framework and minimum analytical competence here. So no, not “all” positions and arguments if “all” includes any argument that could possibly be made. But among professionals and well-educated laypersons, yes – I’d say opposing views can both be plausible at the same time.

  • “But ignoring such principles as though they are fictions or less than real is really very naive and quite dangerous.”

    Sure, I agree – and my point is that ignoring things that are not directly economic, such as political conflict, class conflict, or any number of potential issues when trying to make an economic analysis, is also really naive and really dangerous as well.

  • Author: Joe Hargrave
    Comment:
    “Joe Hargrave argues that class solidarity trumps economics, and, therefore, economics is bunk.”

    That is a gross oversimplification of my argument.

    What I actually argued is that an economic theory that does not take the reality of class conflict into account is not worth very much.

    Would it really have been so painful, so difficult, to address what I actually said instead of reducing it to a strawman that you could easily obliterate?

    Economics is not “bunk” – I don’t make that claim. What I think is “bunk” is a pretension to timelessness and universality made by some economists, which I think flies in the face of historical evidence, even if the pure mathematical models indicate something else.

    Patrick Duffy replies:
    I apologize for not repeating every word you used.
    I truly do not wish to be irritating, but we do fundamentally disagree.

    You apparently place a great deal of importance on class struggle. Class struggle, at least in my mind, is a term of art used in Marxist theory for what the true believers think will result in the ultimate triumph of the proletariat. Marxist theory can be rejected as having any value on moral, historical and practical grounds, as I attempted to outline earlier. The pages of 20th history have written fini to Marxist theory as the way to organize a country. If you believe that class struggle is a good way to analyze society, that’s your right, but it is not one shared by the common man, in my experience. Not one member of what you would call the proletariat (aside from middle class intellectuals who like to pose as part of the downtrodden masses) that I know, and I know hundreds, uses that term.

    “Class struggle as a theory also represents a violation of God’s law of love. Whom are we struggling against?”

    This is a misstatement if I have ever seen one. There is a difference between acknowledging the actual existence of class conflict – as political philosophers since Aristotle and as the Church has done – and endorsing the political program of class struggle.

    Please tell me you understand that difference. Acknowledgment versus endorsement. One is not the other.

    Patrick Duffy replies,
    Please excuse me for not going into every implication or assumption of everything I wrote.

    Do people of lesser means want to do better economically? Yes. I reserve the right to point out that “lesser means” is relative to the times and place in which they find themselves. The poor in America have more, economically, than most in many other countries and certainly more than even the wealthy in times past. (E.g. electricity, hot water, indoor plumbing, maybe even a television?)

    If you want to call that “struggle,” then so be it, but it is still not a term that resonates with the public. Can you substitute “making a living?” To limit it to people of a certain class is to write off the ambitions, hopes and dreams of anyone not in that class. I will point, in passing, to the line of thought among many (maybe not a majority, certainly not all, but definitely more than a small number) of the poor, the blue collar, the proletariat, who don’t think that others of their class should try to better themselves. “Getting above themselves” or “putting on airs” are the putdowns used for the ambitious. In short, members of the proletariat who choose not to “struggle.”
    The key, though, is how one tries to advance oneself economically, not whether they are successful, either in absolute terms or relative to others. One can give oneself up to greed, envy, jealousy, even violence in doing so. Politics, as practiced in the real world, is a means of trying to advance oneself by non-economic means. Guess what? Every human being is a sinner. Some sins are manifested in the economic sphere and definitely in the political sphere. Those who are successful in politics are able to draw a smokescreen across their personal interests and talk in terms of lofty ideals. Machiavelli was a realist about politics. At the same time, that’s not the way the game should be played, but power corrupts. My point, and I do have one, is that politics is not more important than economics, anymore than politics is not better than chemistry. Does chemistry have to take politics into account? I don’t think so. Economic theory can talk about what people will do, absent politics. Yes, politics can influence economic decisions (which, I think is what you want me to admit), but so does envy, jealousy, lust and a host of other things. So what? Does that mean that economic theory is not predictive? Yes, it is, in the long run, even if, in the short run, other factors may distort the results. I know I don’t have it quite complete, but Daymon Runyon wrote something like “The race isn’t always to the swiftest, but that’s the way to bet it.”

    “In the rest of the world, people would scoff at the idea of using politics to improve people’s economic situation.”

    What do you base this on?

    Patrick Duffy replies,
    Africa, the Middle East, south Asia, Russia, South America today. Before today, ancient Rome, Europe (before roughly 1800), Africa, China, Russia, the Middle East, south Asia. Perhaps I could have been more exact by saying that “ordinary people would scoff at the idea that politics will improve their lives, unless they are the ones in power, or their minds have been temporarily clouded by the promises of the snake oil salesman.” Politicians may promise that life will be better if they are elected but the sad experience of humanity is that taking money from one group of people to give it to another group is a short term improvement that is not sustainable. Sooner or later, the involuntary payors run out of money. (also cf. California.)

  • i wonder if surgeons have to endure these kinds of debates with people who don’t know anatomy? debates in the catholic blogosphere about economics always seem to have that quality.

  • “AS I PASS through my incarnations in every age and race,
    I make my proper prostrations to the Gods of the Market Place.
    Peering through reverent fingers I watch them flourish and fall,
    And the Gods of the Copybook Headings, I notice, outlast them all.

    We were living in trees when they met us. They showed us each in turn
    That Water would certainly wet us, as Fire would certainly burn:
    But we found them lacking in Uplift, Vision and Breadth of Mind,
    So we left them to teach the Gorillas while we followed the March of Mankind.

    We moved as the Spirit listed. They never altered their pace,
    Being neither cloud nor wind-borne like the Gods of the Market Place,
    But they always caught up with our progress, and presently word would come
    That a tribe had been wiped off its icefield, or the lights had gone out in Rome.

    With the Hopes that our World is built on they were utterly out of touch,
    They denied that the Moon was Stilton; they denied she was even Dutch;
    They denied that Wishes were Horses; they denied that a Pig had Wings;
    So we worshipped the Gods of the Market Who promised these beautiful things.

    When the Cambrian measures were forming, They promised perpetual peace.
    They swore, if we gave them our weapons, that the wars of the tribes would cease.
    But when we disarmed They sold us and delivered us bound to our foe,
    And the Gods of the Copybook Headings said: “Stick to the Devil you know.”

    On the first Feminian Sandstones we were promised the Fuller Life
    (Which started by loving our neighbour and ended by loving his wife)
    Till our women had no more children and the men lost reason and faith,
    And the Gods of the Copybook Headings said: “The Wages of Sin is Death.”

    In the Carboniferous Epoch we were promised abundance for all,
    By robbing selected Peter to pay for collective Paul;
    But, though we had plenty of money, there was nothing our money could buy,
    And the Gods of the Copybook Headings said: “If you don’t work you die.”

    Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
    And the hearts of the meanest were humbled and began to believe it was true
    That All is not Gold that Glitters, and Two and Two make Four
    And the Gods of the Copybook Headings limped up to explain it once more.

    As it will be in the future, it was at the birth of Man
    There are only four things certain since Social Progress began.
    That the Dog returns to his Vomit and the Sow returns to her Mire,
    And the burnt Fool’s bandaged finger goes wabbling back to the Fire;

    And that after this is accomplished, and the brave new world begins
    When all men are paid for existing and no man must pay for his sins,
    As surely as Water will wet us, as surely as Fire will burn,
    The Gods of the Copybook Headings with terror and slaughter return!”

    -Rudyard Kipling

  • So plausibility is validity now?

    I didn’t come up with the definition. Blame the dictionary people.

    I also hoped that it would have been obvious that I was referring to debates among economists themselves (in fact, I think I said that) – and not necessarily just any old person. I’m assuming a methodological framework and minimum analytical competence here.

    Okay, but in that case there are going to be a fair number of issues on which economists agree. And even where you have minimally competent economists disagreeing with each other, it will still often be the case that one side’s arguments are more plausible than the other’s.

    Assume for a moment, though, that arguments on both sides of a question are equally plausible. You sometimes speak as if this means we can just ignore the arguments. But I don’t think that’s right. Take the minimum wage as an example. A lot of economists say that the minimum wage hurts the poor. Others say that it helps the poor. Suppose that the arguments of both sides seem equally plausible to you. What should you do? If you really aren’t sure whether the minimum wage helps the poor or hurts the poor, then advocating the minimum wage as a means of helping the poor does not seem sensible (in the same way that if you weren’t sure whether the liquid in a bucket was water or gasoline it wouldn’t be sensible to use the bucket to try and put out a fire).

  • PD,

    “I apologize for not repeating every word you used.”

    You don’t have to repeat every word I use to avoid making absurd strawmen out of my arguments.

    “I truly do not wish to be irritating, but we do fundamentally disagree.”

    I don’t really think we do. You’ve misunderstood me, that is for certain.

    “You apparently place a great deal of importance on class struggle. Class struggle, at least in my mind, is a term of art used in Marxist theory for what the true believers think will result in the ultimate triumph of the proletariat.”

    Ok, I see what is in your mind – how about now you try to see what is mine? “Class struggle”, regardless of what we think about it – I’d say class conflict, myself – is a reality. Just like the “laws of economics”, the conflict between classes might also be said to be a “law of history”, one related to economics.

    You do not have to support one class or another in order to acknowledge that they are in conflict. If you see two people in a fistfight on the street, saying, “hey, there’s a fight going on there” is not the same as saying, “hey, I want that guy to win”.

    This is a very, very simple point.

    “Marxist theory can be rejected as having any value on moral, historical and practical grounds, as I attempted to outline earlier.”

    Well, I disagree that it has no value. Love it or hate it, it presents an analysis that cannot be ignored. If the Church can address it, so can we.

    “If you believe that class struggle is a good way to analyze society, that’s your right”

    A good way to analyze society? In the sense that I acknowledge that it is a reality and incorporate it into any understanding of society that I have, then yes.

    But following the example of the Church, my goal is to minimize it, not to exploit it.

    “Please excuse me for not going into every implication or assumption of everything I wrote.”

    Should I forgive you for completely ignoring the main point? You are arguing with me as if I were arguing for a proletarian revolution. Do you really think that’s fair? Do you really think anything I said implies that that’s what I want to see happen?

    As for what “struggle” means, you are mixing up the struggle for individual existence with the struggle between groups for the wealth of society. The battle over wages between workers and employers is a struggle between classes.

    If you follow my postings, however, you know that I do not believe that arbitrarily imposing higher wages is a viable solution to this problem. I do believe workers have a right to organize and collectively bargain, but I believe a better long term solution is to eliminate the conflict between worker and owner by making more workers owners.

    And this solution comes right out of an extended passage in Rerum Novarum, the original document outlining the Church’s position on economic issues.

    “My point, and I do have one, is that politics is not more important than economics, anymore than politics is not better than chemistry. Does chemistry have to take politics into account? I don’t think so. Economic theory can talk about what people will do, absent politics.”

    Economics is not a physical science, it is a social science. It’s subject is never impersonal, inhuman atoms or molecules, but men with free will living in particular social and cultural conditions. That will always make it distinct from physics or chemistry.

    In all this I know it must seem as if I totally reject economic science, but I don’t. What I reject are the pretensions of neoliberals who do not give adequate space to non-economic factors when trying to come up with policy recommendations. No country has ever adopted a perfect, ideal market model, and no country has ever completely collapsed because of it.

    It is arguable that they have been much better off thanks to regulation, periods of economic protection, strong trade unions, social investment and redistribution of wealth.

    It is also evident that different cultures – such as, for instance, Japanese culture – can accommodate much more state involvement in the economy, and greater limits on the accumulation of personal wealth, and still manage to become the second most prosperous nation in the world. In this country we hear that only the promise of God-like wealth will induce anyone to want to do anything important, like start businesses and create jobs. This is often presented with the air of an economic law – in spite of the fact that other countries and cultures show that this is just not the case.

    All of that said, my preference is not necessarily for more state involvement but a new localism that gives people more control over their own economic fate. Honestly, the supply and demand stuff, I take no issue with – I don’t want a command economy. I want an end to economic oligarchy and autocracy, and I believe that is a political question.

  • MZ, can you give an example of libertarianism leading to totalitarianism? Before the Chinese takeover, Hong Kong probably came closer to Ayn Rand’s dreams than any other spot on earth – and the place seemed to be doing pretty well. Control was ceded to China because the British lease was up, not because the have-nots rebelled. America in the late 19th century was also a pretty free-wheeling place and, while the corruption and lack of social services and safeguards led to the reforms of the Progressive Era, we clearly didn’t end up living under totalitarianism.

    In fact, I’m very hard pressed to think of any countries, outside of the 2 examples I mentioned, that have come close to having libertarian economic systems, let alone ones which then became totalitarian.

    Czarist Russia was not economically libertarian. Neither was Weimar Germany. Bismarck had laid the foundations for the German welfare state back in the 19th century. The post-defeat malaise and moral decay of Weimar Germany is well-known and certainly contributed to the rise of the Nazis, but libertarianism does not mean “an abundance of libertines,” although when I read libertarian blogs, I see how someone could confuse the two:-)

  • “Suppose that the arguments of both sides seem equally plausible to you. What should you do?”

    This is funny because it is an issue where I actually agree with you and all the other economists. But I don’t go out there arguing against the minimum wage without offering an alternative that addresses the reason why people wanted the minimum wage to begin with.

    On the other hand there are people who have these “all good things will come in the fullness of time” arguments, the long historical view (also typical of socialists on the other side) – these arguments mean nothing to people who are struggling today.

    Ultimately, though, when there is such disagreement, what it means to me is this: certainty is not warranted. Grandiose proclamations that one and only one approach could possibly be acceptable are not warranted. Rigid applications are not warranted. There must always be room for revision and compromise over time. These are no idle concerns, because we have examples of regimes in history that have done these sorts of things in the name of science, even economic science – terrible, inhuman things.

  • According to the 2009 Index of Economic Freedom, Hong Kong is still in the top spot:

    http://www.heritage.org/index/ranking.aspx

    Again, I’d like to know how libertarianism supposedly leads to totalitarianism. When I scan the dismal bottom half of that list, I don’t see many nations – heck, I don’t see any nations where libertarian economic principles once held sway.

  • There’s a lot being said, so I’m going to jump in blind and hope I don’t make a fool of myself…

    “Economics is not a physical science, it is a social science. It’s subject is never impersonal, inhuman atoms or molecules, but men with free will living in particular social and cultural conditions.”

    “What I reject are the pretensions of neoliberals who do not give adequate space to non-economic factors when trying to come up with policy recommendations.”

    Economics, as a science, deals with human choices with observable laws that are discoverable. The law of scarcity is not something that can be argued against – resources are always finite and therefore “scarce”. The division of labor is an observable phenomena characteristic of prosperous and developed economies. (Even biology in a sense follows the division of labor!)

    This does not mean that economics is mathematical. No equation is going to fully encapsulate human action. However, nor does it mean that economics is a field of study in which “models” and “isms” ought be created or selected at whim. The consequences of economic choices can be observed and foreseen.

    As we continue to discover the laws of economics, we have to reconcile those laws with our behavior. Our decisions in response to those laws are indeed moral in nature, or at least have moral consequences. Economics, while in and of itself a “valueless” science, involves HUMAN ACTIONS which have moral dimensions. It may sound like hair splitting, but I think its a crucial distinction to make in order to improve our understanding of the world and how we can improve our “lot”.

    No one is arguing that the story begins and ends with economic realities. No economic observation can offer salvation. What defenders of free-market economics argue is that state interventionist policies run completely contrary to reality. It makes perfect sense to want to further build and develop the world, but socialist/Marxist ideals do not accomplish this. Defying the law of gravity took building airplanes with an understanding of physics. It would not have helped aviators to just jump off cliffs over and over again hoping for a different result while whining about physicists’ warnings.

    “No country has ever adopted a perfect, ideal market model…”

    I’d argue that maybe there isn’t a “model” to adopt. There’s just reality next to various degrees of deviation.

    “It is arguable that they have been much better off thanks to regulation, periods of economic protection, strong trade unions, social investment and redistribution of wealth.”

    How so? It all comes at a price, and often the price here is a loss of jobs and a loss of stable growth. New laborers get priced out of the market, resources are sapped away from productive investment and benefits are dolled out not to who needs it most but rather to political constituencies. Protectionism only entrenches the political classes while simultaneously denying foreign infusions of needed capital. Never mind the fact that forced “redistribution of wealth” is just another word for outright theft. If we are so concerned about the morality of economics, how can we justify forcibly taking other people’s property?

    There is a such thing as a moral “redistribution”. Its called charity, and what makes it beautiful and meaningful is that when its done voluntarily and in concert with economic realities great things can be built.

    Perhaps the “models” we ought be looking for are not different economic or state models, but new kinds of businesses and forms of cooperation.

    “It is also evident that different cultures – such as, for instance, Japanese culture – can accommodate much more state involvement in the economy, and greater limits on the accumulation of personal wealth, and still manage to become the second most prosperous nation in the world.”

    But how was this possible? The Japanese people SAVED. That is why they could accommodate the insane policies of their government and central bank. What makes the U.S. situation so much worse is our lack of savings, thanks to the Fed’s long period of low interest rates which rewarded bad behavior. And yes, Japan is a large economy… but they could be doing so much better. I never hear about how great Japan is like I did in the 80’s, I just keep hearing about their “lost decade” now.

    “All of that said, my preference is not necessarily for more state involvement but a new localism that gives people more control over their own economic fate. Honestly, the supply and demand stuff, I take no issue with – I don’t want a command economy. I want an end to economic oligarchy and autocracy, and I believe that is a political question.”

    I think these kinds of things will happen and are happening as the correction continues. For me, the first major step is for the American people to return to honest money. I don’t believe any genuine recovery can be built if the very blood of the economy (money) is poisonous.

  • “Again, I’d like to know how libertarianism supposedly leads to totalitarianism. When I scan the dismal bottom half of that list, I don’t see many nations – heck, I don’t see any nations where libertarian economic principles once held sway.”

    If it was framed that libertarianism inspires a totalitarian reaction from those that resent the prosperity of others… I can buy that. But I don’t see how libertarianism naturally could slide into totalitarianism.

  • “If it was framed that libertarianism inspires a totalitarian reaction from those that resent the prosperity of others… I can buy that. But I don’t see how libertarianism naturally could slide into totalitarianism.”

    Historical examples? Neither Weimar Germany nor Czarist Russia were bastions of economic libertarianism. In both cases of course there were other factors that led to totalitarianism in each of those nations. In regard to both Weimar Germany and Czarist Russia for example anger at defeat in war were key factors, the existence of ruthless parties willing to use any means to seize and keep political power, an inability or unwillingness to take necessary measures to stop violence as a means of attaining political power, intellectuals prostituting themselves at the altar of totalitarian ideologies, etc. Economic distress, the norm throughout most of human history, rarely leads to revolution unless other more important factors are in play.

  • Two things.

    For those asking for examples of what MZ was talking about, I would say Chile is the prime example, though it wasn’t libertarianism “in action” leading to dictatorship, but rather a dictator using oppression to implement the policies of his choosing, which happened to be neoliberal (if you want to call that “libertarian”).

    Unless he was talking about something else entirely.

    Second thing: I’m going to make it a policy not to argue with more than two people at once, which probably means no more arguing about economics on this blog. I don’t know where Tim and Eric are or for that matter, Morning’s Minion or Michael Iafrate, all of whom I think might be more inclined to see my point of view more sympathetically and balance this out a bit. Five or six on one is a game I don’t wish to play.

  • I have a feeling that the conversation is becoming something like a squid fighting with itself, but I’d like to see if maybe we can gain some clarity on one thing (or perhaps this would more be a post request).

    Joe, you say:

    Ok, I see what is in your mind – how about now you try to see what is mine? “Class struggle”, regardless of what we think about it – I’d say class conflict, myself – is a reality. Just like the “laws of economics”, the conflict between classes might also be said to be a “law of history”, one related to economics.

    You do not have to support one class or another in order to acknowledge that they are in conflict. If you see two people in a fistfight on the street, saying, “hey, there’s a fight going on there” is not the same as saying, “hey, I want that guy to win”.

    This may seem dense of me, but I’m actually not sure what it is that we’re talking about here. Looking at history, I very seldom see a class conflict dynamic at work. And the example you give (class struggle between employers and workers) is again something that I just don’t see.

    Maybe this is partly just a matter of perspective. When I look at workers and employers (with some experience as each) I see that workers want to make as much money as they can while still having the time and peace of mind to enjoy their leisure (and wanting to avoid unpleasant work) and that employers want to find good workers who will help them achieve their business aims while remaining affordable. This leads leads to constant exchange and interplay, but I don’t really see a whole lot of struggle involved, and it strikes me as a complex interplay or direct relationships rather than some sort of society-wide struggle.

    I’m not sure if we mean different things by the terms or if we’re seeing different things or what. Would you consider expanding on the topic in a comment or post?

  • I’m going to make it a policy not to argue with more than two people at once, which probably means no more arguing about economics on this blog. I don’t know where Tim and Eric are or for that matter, Morning’s Minion or Michael Iafrate, all of whom I think might be more inclined to see my point of view more sympathetically and balance this out a bit. Five or six on one is a game I don’t wish to play.

    Incidentally — I think that’s a fairly sound approach. The other thing I sometimes do when I venture onto heavily progressive leaning venues is only bother to address the points that actively interest me and not try to take on the whole crowd.

    Picking battles seems essential to sanity on the internet — to the extent I can claim to maintain that.

  • Well said, Anthony, certainly better than I was able to state the argument.

    I’d like to return for a moment to the excessive increases in minimum wage as an employment killer argument. I will disagree with DarwinCatholic on this, at least to the extent that I would like to remove “excessive” from the statement. I believe that any minimum wage keeps people from working, which is immoral on the face of it.

    People are hired to do work because they can produce value for the employer, more value than the employer can produce on his or her own. That’s another way of saying that the employed person can successfully serve the needs of others. That “value” will fluctuate over time for a number of reasons. In the long run, however, people will work at the job that pays the most, in both monetary and non-monetary terms, because that’s how the economy allocates the resource that consists of their time. If a lot of people would pay money to watch me play soccer, why would I work in a warehouse for minimum wage? The enjoyment those spectators would receive clearly outstrips how much good I can do by pulling boxes off the shelves with a forklift.

    But if there is a minimum wage, society is saying that it is better that I have no job than one that pays less than X. In other words, if I can’t produce more value per hour than X (plus payroll taxes, benefits, etc.), then I won’t have a job, even if that job is the highest and best use of my talents. So is it more moral that I can not work, at least not at any legal job?

    That may seem to be very abstract, theoretical economic theory. I assure you that it is not.
    I serve on the board of directors of a Catholic charity that hires people with disabilities. We have a variety of jobs to fill. The top people make minimum wage, most do not. You do not have to be around them very long before you obtain a profound understanding of the meaning of the phrase “the dignity of work.” You discover that it isn’t some Labor Day politician boiler plate phrase. They love their job, they love feeling that they have worth because they are able to do things.

    Why do we pay less than minimum wage? Because that’s all the value they can produce. If we had to pay at least minimum wage, we would have to close the doors, because our employees would not be able to produce as much value as our competition (which does not hire people with disabilities.) [For the record, the minimum wage laws allow an exemption for those who hire people with disabilities, subject to certain requirements that we meet.] We wrote over 2,000 W-2’s last year to people with disabilities. Few of them would have a job if we had to pay minimum wage.

    At the same time, in our state, only 10% of people with certified disabilities have a job. I see the life of the other 90% as a terrible waste of the talents of good people, people who would love to have a job, people that “the system” says aren’t good enough to work, because their work, the value they can produce doesn’t come up to the minimum wage. How can you, in good conscience, say “It’s better that you stay home and watch TV all day, every day, than you go to a job that only pays $5 an hour?”

    Now lets take that a little farther. We, for the most part, deal with people with certified disabilities. A doctor has looked at them and said “Yes, you do have what we call Downs syndrome.” But there are quite a few people that are, frankly, marginal. They may not quite slide over into a government defined certifiable disability, but they’re close. Maybe their disability is that there has been so much trauma in their lives that they just can’t “keep it together.” Maybe they came to this country without ever having any schooling and their spoken language isn’t English. Is it better that these people can not work?

    Unfortunately, I hear too many people who think of jobs and pay as if all employers were some kind of charity, that can just dole out “living wage” jobs to people if their hearts were just in the right place. Without the ability to produce value, however, there won’t be jobs for anyone.

  • Actually Joe in regard to Allende I rather think this is an example of a would be totalitarian, Allende, Castro’s chum, helping to cause a reaction to relative economic freedom. I would note that the democratic governments that peacefully succeeded the Pinochet dictatorship have largely left his economic legacy intact.

  • Castro’s remembrance of his good friend on the centennial of his birth. Hope you have a fond reunion soon Fidel!
    http://www.lankamission.org/content/view/459/9/

  • “Would you consider expanding on the topic in a comment or post?”

    On class conflict? Sure. But I think I may as well say in advance that I’m just not going to reply to comments.

  • …or, better yet, do yourself some service and read Thomas Sowell.

    DarwinCatholic seems to me very much correct in his assessment:

    Looking at history, I very seldom see a class conflict dynamic at work. And the example you give (class struggle between employers and workers) is again something that I just don’t see.

  • Patrick,

    I get your point. (I have one of those “margin” people in the family — probably diagnosable, actually, but doesn’t want to be. And as a result, he’s never been able to hold a job though I try to find stuff he can do from time to time freelance.)

    At the overall level, it seems to me that the minimum wage we have doesn’t increase unemployment much since only a few percent of workers actually make minimum wage. But in that same sense, I don’t see that it helps at all either.

  • On class conflict? Sure. But I think I may as well say in advance that I’m just not going to reply to comments.

    Cool. I’d just like to understand what you’re seeing.

  • Darwin,

    Let me just say right now, for the night, that it sounds like you’re talking about a small or medium business in present-day America. I’m talking about a historical phenomenon that covers many more times and places than that. And it isn’t as if we haven’t seen strikes, unionization drives, protests, even a factory occupation, and other signs of class conflict in America, especially since the economic crisis.

    The American experience is indeed unique with regard to class conflict. But it would be a mistake to assume it isn’t there.

  • Well, in part I’m thinking of my own experience, which is in small (under thirty employees) and very large (Fortune 100) companies in the modern US. But I’m also trying to understand more widely what you’re talking about in terms of class conflict.

    Certainly, it seems uncontroversial that there is at times conflict between some people who are of one class and some people who are of another. However, it doesn’t seem to me that classes really exist as a fixed entity which one can say to be at war with another. Some people find it to their benefit to join some sort of movement or action, but others find it to their benefit to break ranks.

    For instance, in the grocery workers strike in Southern California back when I was leaving (2003) you had grocery workers on strike and grocery chains holding out — but you also had lots of people happy to cross the lines and take the open jobs at the available terms, and as I recall one of the grocery chains made a separate deal with the union.

    In ancient Rome, you had the Roman mob, which could often be bought off to behave as a group in demanding political action, but among the aristocrats you had the Optimates who supported the old institutions and the Populares who gained power by claiming to support the interests of the mob.

    Looking at various events in history, it seems to me that people act the most like a “class” when some group with power uses coercion to try to force them to be interchangeable and expendable, rather than allowing them to make their ways as best they can. For instance, one of the major root causes of Wat Tyler’s peasant rebellion in late medieval England was the Statute of Labourers, which sought to force peasants and craftsmen to work for the same hours and wages as before the black death — rolling back the gains which labourers had made in the wake of the labor supply dearth after the Black Death. This combined with a heavy flat per capita tax (which thus hit the poor much harder than the rich) caused peasants to band together and revolt, despite the likely eventuality of their massacre.

    However, outside of the most egregious abuses such as that, it seems to me that people end up acting as individuals much of the time rather than acting as if they belong to a monolithic class. Poorer workers happily snap up jobs that better off workers won’t take; employers bid each others employees away from each other, etc. There doesn’t seem to me to be a unified class dynamic at play much of the time, and when it is, it’s mainly because people have been forced into a “class” artificially. So for instance, I’d see there as being an actual class conflict between employers and workers only a small minority of the time.

    When you talk about class struggle, are you just observing the tendency to people to band together when collectively forced into a corner like that, or are you talking about some sort of more general dynamic?

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43 Responses to Common Good, Common Sense Economics

  • Is it possible that the frequency and destructiveness of hurricanes hitting Florida and the propensity for Floridians to build their houses “upon the sand” is a factor in the high cost of house insurance there?

    Just a thought.

  • ps. is house insurance REALLY a “necessity”??? Is living in Hurricane ravaged Florida when you can’t afford insurance or to rebuild out of pocket a “necessity”? Lot’s of low cost housing and jobs in Texas, come on over.

  • Unrestrained markets work really well when it comes to most products and services — if a restaurant is too pricey, you can just drive past it.

    But it’s different when we’re dealing with the things that all people must have to pursue their personal happiness in community with others.

    Those include infrastructure, healthy air, food and water….

    Don’t restaurants serve food?

  • Matt:

    You probably should get smacked for those comments. A few points:

    I’m pretty sure Texas suffers natural disasters (tornadoes, droughts, hurricanes, etc.) that you guys are quite thrilled to have the federal government and insurance companies come in and pay for. If insurance companies started preventing you from having insurance, so that you’re a disaster away from having nothing, I’m pretty sure you’d be a little upset.

    “Just move?” You say that so casually. Moving away from your home, culture, and family isn’t a joyful thing. It’s not a conservative thing either, unless you’re just pretending about all the stuff about community and family and tradition, etc.

    Every community has its dangers, but every person is born into that community. Whether it’s the blizzards in the north, earthquakes in the west, tornadoes in the midwest and texas, or hurricanes in the south people should be able to purchase insurance for their homes and possessions at a reasonable rate and have those companies treat them fairly.

    Telling them to move or live without insurance shows a lack of understanding and charity.

  • Michael Denton,

    You probably should get smacked for those comments. A few points

    just like a lefty, resorting to such behaviour when arguments fail.

    I’m pretty sure Texas suffers natural disasters (tornadoes, droughts, hurricanes, etc.) that you guys are quite thrilled to have the federal government and insurance companies come in and pay for.

    Well personally I’m generally opposed to FEMA, but I’m in favor of insurance companies paying out to those insured who have suffered losses. While we do have natural disasters, the overwhelming majority of Texans do not live in areas which are regularly inundated. Those that do wish to live upon the sand, should pay for insurance based on their risk, or pay for their own repairs.

    If insurance companies started preventing you from having insurance, so that you’re a disaster away from having nothing, I’m pretty sure you’d be a little upset.

    Insurance companies aren’t preventing anyone from doing anything. They are simply not offering services. DO you think every business should offer services to everyone regardless of the cost of doing so??? That’s absurd.

    “Just move?” You say that so casually. Moving away from your home, culture, and family isn’t a joyful thing. It’s not a conservative thing either, unless you’re just pretending about all the stuff about community and family and tradition, etc.

    I didn’t say it casually, but it must be said. If you can’t find work, or afford to live where you have been living, you MUST move to support your family, that is a MORAL obligation. It’s not the governments responsibility to make every region affordable so that you can live where you chose regardless of ability to pay. That IS conservative.

    Every community has its dangers, but every person is born into that community. Whether it’s the blizzards in the north, earthquakes in the west, tornadoes in the midwest and texas, or hurricanes in the south people should be able to purchase insurance for their homes and possessions at a reasonable rate and have those companies treat them fairly.

    Of course the companies must treat people fairly, but why do you think hurricane insurance is so expensive in Florida, and less so elsewhere? What is a “reasonable rate” for insurance? It’s the risk of loss * the amount of losses, simple as that, higher risk (such as hurricane’s in florida) means higher rates. Are you saying that people who live in the Mid-West should subsidize Floridians to be insured for losses in a hurricane?

    Telling them to move or live without insurance shows a lack of understanding and charity.

    Not in the slightest, it’s just common sense.

    ps. I’m not suggesting there aren’t legitimate gripes with how insurance companies deal with people, it’s the nature of the demands being made above that are erroneous.

  • Home insurance is essential if you want a state/nation of home owners according to how our mortgage system is set up- this is so that if catastrophe hits you don’t decimate whole neighborhoods by having destroyed homes left abandoned and rotting next door I suppose- if someone has a better idea for continuity for home owners then that might be worthy to hear about. But this post is really meant to connect up with the Pope’s encyclical, so try and keep your proposed solutions based upon something from that authoritative source.

    The exact list of what is essential to live a decent life here in America may vary- but what about the main points here?

  • Just move? You say that so casually.

    To be fair, there are those territories below sea level that most assuredly will suffer repeat disasters, where homes should never have been built in the first place.

    Is it really reasonable that billions of dollars be devoted to the rebuilding of homes, etc. in areas that will simply end up experiencing the same disasters all over again the following years?

  • just like a lefty, resorting to such behaviour when arguments fail.

    Did you just call me a lefty? If so, I am certainly not. I am proud son of the state of Louisiana, which is why i took offense to your ignorance and indifference. As it is attitudes like yours that have left many of my neighbors destitute, the adjoining neighborhoods abandoned, and the city of New Orleans struggling, allow me the indulgence of being upset.

    Well personally I’m generally opposed to FEMA, but I’m in favor of insurance companies paying out to those insured who have suffered losses. While we do have natural disasters, the overwhelming majority of Texans do not live in areas which are regularly inundated. Those that do wish to live upon the sand, should pay for insurance based on their risk, or pay for their own repairs.

    Without trying to wade into the mess of what “personally I’m generally opposed” is supposed to mean, the assertion that Texas is a utopian place immune to nature is laughable. Even not considering Houston, Galveston, and Corpus Christi which suffer from hurricane danger, Texas routinely suffers tragedy from nature.

    Insurance companies aren’t preventing anyone from doing anything. They are simply not offering services. DO you think every business should offer services to everyone regardless of the cost of doing so??? That’s absurd.

    Nonsense. You need insurance to get a mortgage; you need a mortgage to buy a house. No insurance=no mortgage=no house. If the insurance companies gouge prices, then they are most certainly forcing people to move.

    As for them offering services regardless of the cost, I’d think you’d be hard pressed to find that the insurance companies are really charging appropriate prices. After all, in the year following Rita & Katrina, the insurance companies made billions. They’re not hurting and they’re certainly making enough money to not have to raise prices they way they did.

    I didn’t say it casually, but it must be said. If you can’t find work, or afford to live where you have been living, you MUST move to support your family, that is a MORAL obligation. It’s not the governments responsibility to make every region affordable so that you can live where you chose regardless of ability to pay. That IS conservative.

    No, you sound so upset and heartbroken that families have to be torn apart and communities abandoned. Indeed, it is clear that you feel our pain.

    It is most certainly the obligation of government to preserve the community when it threatened by companies gouging prices. It is NOT conservative or Catholic to allow big corporations to become the arbiters of what is moral and to allow them free reign. It is is a legitimate use of governmental authority to step in and ensure that the insurance companies are charging appropriate rates.

    Of course the companies must treat people fairly, but why do you think hurricane insurance is so expensive in Florida, and less so elsewhere? What is a “reasonable rate” for insurance? It’s the risk of loss * the amount of losses, simple as that, higher risk (such as hurricane’s in florida) means higher rates. Are you saying that people who live in the Mid-West should subsidize Floridians to be insured for losses in a hurricane?

    I’m not saying the rates in Florida should be the same as in everywhere else. You live on the beach you have higher rates, just like if you drive more recklessly you have high rates. that’s understandable. The problem is when insurance companies are pricing out entire cities and communities. Not everyone “lives on the sand” as you fancifully put it.

    I think they should be reasonable and affordable. As far as what those rates are, I’m not an insurance adjuster, but I can tell you that a 100% hike is probably not justified, which is usually what happens after a storm. If it is, then the government should step in and make sure that they can subsidize those rates. After all, the people in Louisiana and Florida often live so close “to the sand” in order to provide oil for Texan Suburbans and shipping portals for Midwestern farmers. Louisiana gladly subsidizes other states when they have an emergency and it’s not unreasonable to expect the same kindness.

    So don’t give me this nonsense about your indignity about helping people pay for insurance or with the government making sure the prices charged are fair.

    I’m not suggesting there aren’t legitimate gripes with how insurance companies deal with people, it’s the nature of the demands being made above that are erroneous.

    Mention State farm or Allstate in any gathering space in the state of Louisiana, and you’ll understand “legitimate gripes.” For example, the insurance companies changed their mind about how high they wanted certain houses raised, so that all of sudden some people houses which originally met minimum requirements were now 2 inches too tall and were denied coverage.

    Communities and their heritage and families are more important than the profit-margins of insurance companies.

  • On the issue of home insurance, my question would be this: Tim says in his editorial that “the big insurance providers don’t truly compete against one another on price.” If this is true (and it would be interesting to hear how he knows this) the obvious question is why not? After all, presumably people would prefer to pay less on home insurance rather than more. Why doesn’t some insurance company reduce their prices and take all their competitors’ business?

    I used to live in Florida and in fact the area in which I lived was hit by a major hurricane while I was there. It was a gorgeous area and there were many beautiful houses right up against the beach. It was a nice way to live, but building so close to the water meant that the chances were greater you were going to get flooded or your house would be destroyed in a storm. If you are willing to pay for that in the form of higher premiums, I have no problem with that (and if you can’t afford to, then I’m sorry but owning beachfront property is not a human right). The problem comes when people expect others to subsidize their repairs and/or restrict the ability of insurance companies to charge them higher premiums based on their higher risk. At that point you create a situation where people in less desirable neighborhoods are effectively paying extra so that folks in good neighborhoods can keep their nice houses, which is not only unfair but also encourages more risky building.

  • “the big insurance providers don’t truly compete against one another on price.”

    I’ll only add that my actuary friends would be fascinated by this line of argument – and unemployed if it were accurate. A complaint about high housing insurance premiums is basically an argument that other people should be paying more to subsidize your residential choices; it’s nice when other people pay for stuff for you obviously, but it’s often unfair to them.

  • To be fair, there are those territories below sea level that most assuredly will suffer repeat disasters, where homes should never have been built in the first place.

    Those homes are not all the homes of the wealthy who want an ocean view, as view and Blackadder seem to suggest. Most of the homes affected are the homes of the poorer who are trying to be closer to the resources (fishing & oil) which the rest of the country depends upon.

    Is it really reasonable that billions of dollars be devoted to the rebuilding of homes, etc. in areas that will simply end up experiencing the same disasters all over again the following years?

    Unless you’d be happy to have the price of oil, fish, etc. factor in the increased cost of transportation for workers, then yes, it is. People rebuild in Tornado Alley all the time; the city of San Francisco and Los Angeles are begging to be destroyed by an earthquake, yet people only complain about New Orleans and Florida residents being selfish for wanting protection for insurance gouging.

  • Michael,

    I just don’t see the logic in committing billions of dollars to rebuilding efforts for homes built in territories below sea level since most assuredly (by nature) they’ll simply suffer the same catastrophes all over again the following year, with not only disasters wreaked on homes but lost of lives as well.

  • Unless you’d be happy to have the price of oil, fish, etc. factor in the increased cost of transportation for workers, then yes, it is…

    Is there any reason why these costs shouldn’t be factored in?

    People rebuild in Tornado Alley all the time; the city of San Francisco and Los Angeles are begging to be destroyed by an earthquake, yet people only complain about New Orleans and Florida residents being selfish for wanting protection for insurance gouging.

    So, are you suggesting that private insurance companies are acting irrationally? In other words, that they are either taking risks they shouldn’t be taking in San Francisco/LA/Tornado Alley or that they are irrationally conservative in protecting themselves from exposure in N.O. or FL? If so, it’s odd that you think you are better at predicting these things than the actuaries/etc. who do this full time. Maybe the difference is related to the actual risks involved…why do you think it isn’t?

  • With respect, earthquakes, while they do happen in places like Los Angeles and San Francisco, do not happen with such assured frequency as do those disasters wreaked in places located in territories below sea level which seem to occur almost annually, if not every other year.

  • People rebuild in Tornado Alley all the time.

    True enough. And as I said before, if people are willing to accept the costs of doing this is the form of increased premiums, I have no problem. That goes for people in Kansas and California and Texas and Florida and Louisiana and anywhere else.

  • I want to build a house on the edge of a live volcano that is currently covered with snow; I plan to build right beneath an enormous snow flurry that would turn into the world’s largest known avalanche upon the slightest disturbance. This is a very delicate operation. Unfortunately, insurance companies are so mean that they want me to pay higher rates. I demand that someone else subsidize my insurance. It’s only fair.

  • The bit about how the big home insurers don’t really compete on pricing was something that was concluded during the Florida Today sponsered forum with experts- it was the conclusion drawn by the chief investigative reporter and no one challenged it- so I used that line in my column to see if there was any denial from other sources from within the industry or elsewhere- no one wrote in or blogged in to dispute it- so I don’t know- I’m not privy to the insides of the big insurance companies any more than I am with Big Oil- but it certainly has been the case in Florida that all the majors that were here had similar rate hikes and also made a lot of money even after the hurricanes hit- and I compare this to oil companies who seem to arrive at similar prices and then also set record profits- it would seem that with all the profit margins someone would take a big price dip to gather in more customers- but it hasn’t happened- it is very hard to prove monopoly abuses, but certainly there can be many unspoken agreements to keep all the big players extremely profitable while the average consumer is left with little of no choice. In Florida we have had Citizens insurance which is the place of last resort, but the rules were drawn up that Citizens could NOT be priced lower than the private companies.

    Now I am not claiming that all areas should be developed for homes- there can certainly be discretion when deciding whether permits should be granted in the first place- or second place when homes are repeatedly hit by violent storms predictably.

    Wow- this whole blog has turned into an insurance deal- I’d like to see some application of the pope’s encyclical for my own edification- I want to reflect an authentic Catholic worldview that is my goal- so let’s not bog down into a single issue complaint that has more to do with Florida living and politics than with the bigger picture perhaps. Though I do think I hit on an issue that has many people upset and looking for the right solutions- all of us who are homeowners anyway.

  • it certainly has been the case in Florida that all the majors that were here had similar rate hikes and also made a lot of money even after the hurricanes hit- and I compare this to oil companies who seem to arrive at similar prices and then also set record profits- it would seem that with all the profit margins someone would take a big price dip to gather in more customers- but it hasn’t happened

    I don’t know much about how insurance companies operate in Florida, but the average profit on a gallon of gas is less than $.10. You’d think that if oil companies were colluding together to set prices they would set it higher than that (an alternate explanation for the similarity in prices is that there is very little to differentiate gasoline other than price, and comparing prices is fairly easy).

  • Tim:

    Sorry to have helped hijack the post; I do think what you said has a lot in common with the pope’s encyclical.

    S.B.

    You’re embarrassing yourself. Your example has nothing in common with the situation of a functioning and productive community that has existed for hundreds of years. Moving on.

    Blackadder

    True enough. And as I said before, if people are willing to accept the costs of doing this is the form of increased premiums, I have no problem. That goes for people in Kansas and California and Texas and Florida and Louisiana and anywhere else.

    Yes, but just b/c we should have increased premiums does not mean all increases are justified and all levels are justified. If tornado or earthquake rates got to the point or pricing out large sections of Tornado Alley or Los Angeles, I’d have a problem and would like to see the government step in.

    e.

    With respect, earthquakes, while they do happen in places like Los Angeles and San Francisco, do not happen with such assured frequency as do those disasters wreaked in places located in territories below sea level which seem to occur almost annually, if not every other year.

    I don’t think the frequency conceptions you have are accurate. New Orleans has been devastated by a hurricane so badly I think 3 times since 1900 (Katrina, Betsy, and what I think is the Labor Day hurricane in the 20s). That’s hardly “frequent.”

    One might argue that if global warming is created by human action, then the frequency is not the fault of location as the higher temperatures have led to higher hurricane numbers. One could also argue that the damage done has been increased the negligence of the farmers up north who allow the toxins in the fertilizer to drift down here and destroy our wetlands, which for centuries were natural barriers that minimized hurricane damages. These argues could say that the location has been made less suitable not due to the stupidity of the people of New Orleans but the actions of others.

    In short, I don’t think it’s terribly unfair for New Orleans to ask for help against price gouging from insurance hurricanes just b/c of their location.

    So, are you suggesting that private insurance companies are acting irrationally? In other words, that they are either taking risks they shouldn’t be taking in San Francisco/LA/Tornado Alley or that they are irrationally conservative in protecting themselves from exposure in N.O. or FL? If so, it’s odd that you think you are better at predicting these things than the actuaries/etc. who do this full time. Maybe the difference is related to the actual risks involved…why do you think it isn’t?

    Do I believe insurance companies are human and therefore can act irrationally and dare I say greedily? Let me think…YES!

    I mean, perhaps your actuaries are above sin but if they can figure out they can charge a much higher price and get away with it, even if it’s mostly just to increase their own wealth, then yes, I think they’ll do it.

    Companies acting greedily and needing regulation…it’s almost like I read that somewhere yesterday…something about Caritas in the title…

  • Michael — it’s just a reductio ad absurdum. The principle is the same, though, as the notion that people who choose to live in high-risk areas should have their insurance subsidized by folks elsewhere.

    For those of you calling for regulation: Are you aware of the existence of state insurance departments that already regulate rates and services quite thoroughly? For Florida, see http://www.floir.com/pcfr/is_pcpr_index.aspx and http://www.floir.com/pc/oir_pcfo_index.aspx

  • Do I believe insurance companies are human and therefore can act irrationally and dare I say greedily? Let me think…YES!

    I mean, perhaps your actuaries are above sin but if they can figure out they can charge a much higher price and get away with it, even if it’s mostly just to increase their own wealth, then yes, I think they’ll do it.

    Michael, that’s a silly distortion of my question. You are alleging insurance companies are acting irrationally: you’ve provided no evidence for this assertion, and, as far as I can tell, have no basis from which to make this determination other than you feel the premiums are too high. There are three interpretations of the fact of high premiums: 1) the insurance companies are right and you are wrong about the risk profile of the properties; 2) You are right, and they are mistaken – that N.O. is actually a wonderful haven of profit opportunity for a smart insurer who correctly evaluates the risk and prices out their competitors; 3) You are right, and the insurance companies know it; they are breaking the law, engaging in collusion, and overlooking a great opportunity for profit out of pure spite. You’ve selected option 3. Is there any particular reason why?

  • Why ascribe something to sin that might more readily be explained by probability? Just asking.

  • Michael,

    Trying not to focus on the insurance aspect here, but I wonder what you think of this. First let me say that I’m a big proponent of family and community, and of the common man being able to go about living his life. And not to seem cold hearted about the plight of those from New Orleans, but is it not a valid consideration that N.O. was an experiment that failed, that this is one part of nature that man shouldn’t try overcoming? I mean, do the people of Chernobyl have the right to demand that the region be scraped down 10 feet, the soil hauled out, and the city rebuilt? I don’t think there’s much difference, really. N.O. belongs just as much to the sea as it does the land. Perhaps society would have been better off letting her go.

    I have mixed thoughts on the matter, but i think it’s a valid consideration and if so, to what extent does the rest of society have an obligation to support it?

  • John Henry,

    Well said.

    Doesn’t option 3 seem highly unlikely given the scrutiny that state regulators place on insurance companies? If there is evidence of collusion, where is it? That’s a serious charge that requires more than “I just feel that premiums are too high.”

  • If tornado or earthquake rates got to the point or pricing out large sections of Tornado Alley or Los Angeles, I’d have a problem and would like to see the government step in.

    I’m not sure I get the logic here. Presumably you agree that there are some areas in which people just shouldn’t live because the costs of disasters that will befall people living there are too high. I would think that if the cost of insuring against such disaster in a particular place becomes prohibitively expensive for most people, that might be an indication that that place is in one of those areas.

    Do I believe insurance companies are human and therefore can act irrationally and dare I say greedily? Let me think…YES!

    There’s a difference between acting irrationally and acting greedily. Greed can’t explain why insurance companies would be undercharging people in California.

    To put it another way, my understanding is that while home insurance in Florida costs more than the national average, the cost of car insurance is not much higher than usual. Not only that, but in some cases it is the same companies selling the car and house insurance. It could be that these insurance companies are really greedy whenever they deal with house insurance but inexplicably become non-greedy when the subject turns to cars. But that seems unlikely. Another possibility is that the costs of insuring houses in Florida are just higher than average, and the higher insurance premiums are a reflection of that.

  • John Henry:

    You have no reason to assume that they are acting rationally yet you seem incredulous that I could postulate such a theory, so it’s not a distortion.

    Yet you assume that they are quite reasonable. I see I’ll have to go back and look up some numbers, but the fact is that insurance companies had lower rates and were making plenty of money in New Orleans long before Katrina. It’s the same city; the protections are even better than before. Heck, until Monday when the levee broke New Orleans was in the clear. The risk is the same, yet the prices are now sky high or inaccessible. I don’t think it’s that unreasonable to think that the insurance companies saw an excuse to do a price hike that isn’t entirely justified by need or risk.

    SB:

    It’s not a reduction ad absurdum, it’s a false analogy. As for the insurance departments, I’m well aware of them. Louisiana has a long history of commissioner department being bribed by the rational and innocent insurance companies and going to jail for it.

    Rick:

    While I appreciate your effort at being kind, there really isn’t a way to not be cold-hearted when telling someone their city should be in the sea. But I do appreciate the effort, so I’ll answer your question.

    There’s a MR-GO canal, a federal project pushed by shipping interests that ended up providing a canal right for the water to flow into New Orleans East. That is an example of man not respecting nature, as is some of the projects that have damaged the wetlands. So man’s arrogance plays a part, but that does not mean NO is a failed experiment. NO has survived the British, fires, and hurricanes before. Other cities have been rebuilt before. They have been rebuilt

    1) b/c lessons were learned to help ward off the impact of future disasters. This is true in this case. The MR-GO is being closed and filled, more effort is trying to put into wetland conservation (LA had negotiate hard to get money from LA oil revenue that the feds were taking to pay for it, speaking of things that are not LA’s fault, but that’s another issue), the levees were rebuilt, homes in flood-prone areas are being raised. The levees have been restored and we’re looking into ways to further improve them.

    2) A city, especially New Orleans, cannot be replaced. It would be a great loss to the US if New Orleans is lost. Not only does it represent a different culture from anywhere in the US (part of why it’s maltreated as opposed to say Miami, which is in an even dumber spot), it represents a valuable culture. Especially for Catholics: how many other cities point to a cathedral as its main monument? Sure, Mardi gras has gotten out of hand but there is a rich Catholic culture here, one that preserves many things that ought to be preserved. Whether it’s London, Chicago, or Los Angeles, losing a city means losing a lot. Of course, I haven’t even begun to discuss the impacts on the economy losing NO would have. From the oil fields largely serviced by headquarters in NO to the shipping from the Mississippi, etc. NO is a valuable asset. Thomas Jefferson seemed to think so, at least.

    So yeah, I don’t think it’s a given that NO belongs to the sea.

  • Blackadder:

    You’re putting me in false position. I’m not arguing that NO rates shouldn’t be higher than other places; I’m saying that they’re too high.

    As far as insurance departments, 1) we have Republicans in office who is they want higher office try to look good big-business and 2) insurance companies threaten to leave the state, in which case LA has to take over insurance coverage. Maybe I’m not conservative enough for most of you, but I’d rather State Farm than the state of Louisiana be my insurance provider.

    In all, I don’t think many of you quite comprehend the scope of what we’re talking about. We’re not talking about some beachfront homes here; look up a map of New Orleans and see how large it is. 500,000 people before Katrina in new Orleans alone; 1.3 in the metro area I believe. Moving does not mean moving a mile or two to higher ground; moving means an hour away if you’re lucky. That you guys can’t understand or even try to sympathize that is amazing for a group of so-called Catholics who claim to practice charity.

  • So the regulators are not to be trusted, then. Therefore what we need is… more regulation?

  • P.S. to Blackadder:

    There’s a difference between acting irrationally and acting greedily.

    To sin is irrational according to Catholic conceptions of reason, therefore greed is irrational and in fact in long-term situations undermines the economic good. See Caritas in Veritate for details.

  • j. christian:

    we need stronger ethics codes which oh by the way Bobby Jindal got done last year while Palin was out looking at Russia from her house.

    Besides, I didn’t ask for another layer of bureaucracy; I’m not a liberal. I just want the people to do the jobs they have now.

  • Michael,

    A couple of points.

    First, if you want people’s sympathy, I’m not sure calling them “so-called Catholics” is a good strategy.

    Second, all greed may be irrational but not all irrationality is greed. In particular, if an insurance company is undercharging people in California, that may be irrational, but it’s hard to argue it’s motivated by greed.

    Third, you say that you’re fine with people being charged higher premiums based on risk but that the rates in New Orleans are too high. Okay. But so far as I’ve seen, you’ve offered no reason for thinking that this is so. Personally I have no idea how high a premium for a house in New Orleans should be. I know nothing about the costs, probabilities, or other factors that are involved. I do know, however, that the insurance companies employ people who do know about such things, and whose job it is to calculate how much a given policy is expected to cost. I also know that, if the calculations turn out to be wrong, the insurance companies stand to lose a whole lot of money. I’m therefore inclined to think that the market rate for insurance is about what it should be absent some reason to think otherwise (greed, you’ll note, is not a reason as it should make a company more desirous of getting the calculations right, not less).

  • The insurance rates on New Orelans are a issue. Sadly too many people see the area of New Orelans as the French Quarter and notheing more. It is a major port and is large part the start of the working Coast that stretches across Louisiana. When I say working Coast I am talking the fact that much of MAerica Seafoold inhustry, transport, and oli and gas needs are met by people that have to live on it. Itr can’t be done by robots.

    Louisina folks including those in New Orleans contribute much to the Economic and National Security of the United States. I hope this problem is dealt with

  • “I just don’t see the logic in committing billions of dollars to rebuilding efforts for homes built in territories below sea level since most assuredly (by nature) they’ll simply suffer the same catastrophes all over again the following year, with not only disasters wreaked on homes but lost of lives as well.”

    Most people do not relaize this but a nice boit of New Orelans is not belwo sea level. That being said this a working Coast

    THe consern should be immediate massive intervention to save the Coast which if not is going to be a huge econolic and ecological disaster for the nation

  • Blackadder:

    First, so called Catholics is a fairly gentle term for what was going through my mind, but I shouldn’t have said it. Regardless, I do not think it is a stretch to say that the indifference towards mass amounts of people having to uproot themselves does not show a strong Catholic example

    Second, allright, let’s give you a number. http://www.usatoday.com/money/economy/housing/closetohome/2007-10-29-new-orleans-housing_N.htm

    For a $175,000 home, a buyer will have to shell out $4,200 to $4,800 a year for insurance, says Lisa Heindel, an agent at Latter & Blum Realtors. Before the hurricane, the cost was about $1,200 annually.

    I believe Texas was around 1,000 for insurance.

    Maybe I’m crazy, but did the risk really triple or quadruple after the storm? Is is possible, just possible that the insurance companies took advantage of situation to make money?

    One course, one could ask if the rate changed so much and they’re right now, how they could screw up so badly before the storm? Maybe in fact, the market forces don’t quite work out all the time.

  • “After all, the people in Louisiana and Florida often live so close “to the sand” in order to provide oil for Texan Suburbans and shipping portals for Midwestern farmers. Louisiana gladly subsidizes other states when they have an emergency and it’s not unreasonable to expect the same kindness. ”

    Michael he hit ot right on the nose. FOr all the talk of environemnt Louisiana is rarely mentioned. And don’t get me started on the idiotic Corp of Engineers that drives me insane.

    Much of the flooding we can lay right at their feet. The Nation is served by things like the Intracoastal Canal which has a had side effect of tearing up the wetlands which has increased flooding. But the nations shipping sinterest still go through it while people go why do yall folks live down there

  • I’ll confess to not having followed this whole thread in detail, this having been a busy day, but the following two thoughts might be useful in regards to the discussion of homeowners insurance:

    – Speaking as a Los Angeles native: After the Northridge quake in the mid 90s, a lot of homeowners insurance companies operating in California dropped nearly all earthquake coverage and offer separate earthquake coverage at additional cost (if they offer it at all.) This means that many Californians are sitting on a potential economic time bomb.

    – As someone who deals with statistics at work all the time: the fact of the matter is that we are not nearly as good at predicting infrequent events as we think we are. Even now, with three data points in the last century, the fact of the matter is that insurance companies do not have a very good idea whether they are over or under charging for homeowners insurance in LA. They took a major bath with Katrina, and they’re hoping that they have it right now, but they really don’t know.

    – If you think about what insurance is, it’s a promise to replace a home and its contents. So insuring a 175k home is a promise to replace up to 200k in total value of house and possessions. So if it’s being priced at 4k per year, that means that the insurance company is betting they’d have to pay out roughly once every fifty years on average.

  • Somewhere out there is my lost posting! I do think this insurance discussion is a good one- it shows that there are many things to consider- the business end, the homeowner’s ability to pay for insurance, the profits of companies, the role of regulators, the development question in areas where nature is often very destructive, and the overall morality for all of those involved in these sorts of transactions, with the common good the ultimate focal point for Catholics and all people of good will.

  • “After all, the people in Louisiana and Florida often live so close “to the sand” in order to provide oil for Texan Suburbans

    What world do you live in? There is no oil or gas pipelines that flow into Texas from NO. We have plenty of oil and gas here thank you very much. Our workers live close to the cost, but mostly not on Galveston Island.

    Louisiana gladly subsidizes other states when they have an emergency and it’s not unreasonable to expect the same kindness. ”

    Yes, and, you may or may not recall it, but those Texans you’re dissin sent more of it then just about anyone else. We took the homeless in with deep generosity.

    The problem with New Orleans (and Louisiana) go way beyond being a bowl that wants to fill with water. It is deeply corrupt (though much improved of late). That’s the real reason that so many died, and so much was lost. Your mayor failed to act in evacuating his people, and so many were stranded, and all the buses destroyed. The governor failed to call in the necessary resources and grant authority to bring in the federal resources being offered. Many policeman deserted, some became looters, and not a few turned out to be not real at all, just a way for some corrupt individual to collect their paycheck.

    Before you respond. None of the corruption is by the hard workers in the oil, shipping and fishery industries, but they take some blame for continuing to put up with the problem.

    ps. who was that congressmen who had a freezer full of cash, and STILL got re-elected in LA?

  • t is deeply corrupt (though much improved of late). That’s the real reason that so many died, and so much was lost. Your mayor failed to act in evacuating his people, and so many were stranded, and all the buses destroyed. The governor failed to call in the necessary resources and grant authority to bring in the federal resources being offered. Many policeman deserted, some became looters, and not a few turned out to be not real at all, just a way for some corrupt individual to collect their paycheck.

    I would differ with you on the state of the police force (most did stay, there were a few who committed suicide, sadly). I think being abandoned in the middle of a natural disaster zone with precious few resources is a tremendously tall order, and while there were lessons learned I think most New Orleanians came away with a better view of the force overall.

    On the government side, while the buses was a terrible decision, just think about how much experience people have with evacuating entire cities. Something is bound to go wrong. Additionally, a lot of people just don’t leave. They don’t want to. They’d rather wait it out, despite warnings.

    The government should have been better, I’d agree.

    To your ps: William Jefferson, who was re-elected primarily b/c all the Republicans voted for him instead of his rabidly pro-abortion opponent. Of course, he was ousted in 2008 for Catholic Congressman Cao and his trial is happening right now I believe.

  • most did stay

    granted, and good for those who did! That, nor anything else you said disagrees with what I said.

  • For a $175,000 home, a buyer will have to shell out $4,200 to $4,800 a year for insurance, says Lisa Heindel, an agent at Latter & Blum Realtors. Before the hurricane, the cost was about $1,200 annually.

    Maybe I’m crazy, but did the risk really triple or quadruple after the storm? Is is possible, just possible that the insurance companies took advantage of situation to make money?

    Why is it hard to believe that would have gone up this much? Katrina, after all, was a fairly major event.

    Insurance companies are in the business of making money. If they aren’t constrained by things like competition or supply and demand in setting their rates, then why weren’t they charging four grand for a policy before the storm? If an insurance company could make money selling policies at a rate most people are willing and able to pay, why would they set rates at a level most people are unwilling and unable to pay? Why, in fact, would companies be refusing to write new policies in certain areas at all, regardless of price? If there motive is making money, then that doesn’t make much sense. You don’t make money by pricing all your customers out of the market. The idea that all the insurance companies would do this, and that no company would step in and offer lower rates to get these potential customers, is just implausible. Saying that the insurance companies are greedy and only care about making money makes it more implausible, not less.

  • the insurance company is betting they’d have to pay out roughly once every fifty years

    Thanks for the von Neumann-Morgenstern napkin calculation, Darwin. Very good point; this would be the “actuarially fair” zero profit premium, of course. And how many hurricanes have hit New Orleans in recorded memory? Three or four since the Louisiana purchase? Sounds like the new rates are probably closer to reality.

  • I have some differing views on the matter I suppose.

    I need food, water, and access to shelter. eating beens drinking well water and living in a shanty is sufficient to meet all of my needs. i don’t “need” electricity or a vehicle, unless I live real far from my job. and if my shanty gets blown over by a hurricane I can rebuild it out of my own pocket probably.