Osama bin Libertarian

Concerning the “fool,” G. K. Chesterton wrote:

For many years I had sought him... I had been told that he was everywhere; but I had almost begun to think that he was nowhere. I had been assured that there were millions of him; but before my late discovery I inclined to think that there were none of him. After my late discovery I am sure that there is one.

I have never been able to discover that "stupid public" of which so many literary men complain. The people one actually meets in trains or at tea parties seem to me quite bright and interesting; certainly quite enough so to call for the full exertion of one's own wits. ... I have sometimes felt tired, like other people; but rather tired with men's talk and variety than with their stolidity or sameness; therefore it was that I sometimes longed to find the refreshment of a single fool.

I have always liked this passage because I felt, like G. K., that fools were harder to find than most people thought. Chesterton did find his fool, and I have found mine. Chesterton's fool was a man who would shoot all the coal miners in order to improve the supply of coal. Mine is a libertarian who would invite our enemies to shoot our citizens in the name of preserving our freedom, a word which means, for this particular libertarian, our freedom from taxes. Now, that is a hard charge to make against any man, and should only be made on strong testimony. And the strongest testimony is the words of the fool himself. Speaking of the national defense, which our philosopher believes should be done not by taxes, but by voluntary, he has a simple plan to encourage “voluntary” donations:

And even if we stipulate, for the sake of argument, that there really are free riders gaining from the investments of others, there are still ways to internalize the externality. We announce to the Soviets, or the Cubans, or the Bosnians, or whoever are the bad guys at a given time, that Joe Blow has not contributed to the defense fund, and that he is therefore fair game. This ought to get them to think twice about trying to free ride on the defense expenditures of others. (Walter Block, “Hayek's Road to Serfdom”; Journal of Libertarian Studies 12:2 (Fall, 1996) 348)

Chesterton did not give his fool a name, but as I have quoted him, I have already given his name: Walter Block. Now, I wish to be very clear that I do not regard all libertarians as fools—far from it. Many, especially the so-called “left” libertarians are quite sound and deserve our full attention, if not always our full allegiance. And I believe a distributist state would more closely approach the libertarian ideal than any other state, since liberty in such a state (both political and economic liberty) would be guaranteed by the widespread dispersion of property (without which liberty is impossible), and people would have less need for the government and more need for each other, less dependence on remote bureaucrats and more dependence on their near neighbors.

Mr. Block's simple idea of using our enemies to murder our friends does have a certain charming simplicity about it. Osama bin Laden would become the chief enforcer of the libertarian ideal of freedom. Let us re-christen (if that is the right word) him Osama bin Libertarian. Alas, it has a few flaws which even (should I say it?) a fool could spot. It seems to me, fool that I am, that Osama & Co. would hardly want to murder citizens who refused to contribute to the nation's defense. Quite the opposite; they would want to reward such people. They would want to lavish gifts upon them. They would want to provide an incentive, and self-interest is, for the libertarians of Mr. Block's stripe, the only real motive for action. And Mr. Block, presumably, would have no objection to that for the right to favor our mortal enemies over our neighbors is, apparently, one of the “freedoms” that Mr. Block admires:

If it cannot be denied that national defense is an external economy for most ordinary people, then it also cannot be disproven that it is an external diseconomy for the pacifist and the person who favors our enemy over this country.

Mr. Block is sharing all this wisdom in the context of an article attacking Friedrich von Hayek for being a Socialist. Now, I don't think that Hayek is beyond critique. Indeed, I have done so myself (Hayek's Super-Highway). The particular point at issue is the externalities, that is, the cost of a transaction that is borne by persons not a party to the transaction. Pollution for example. A company lowers its costs by dumping its toxic wastes into the river. Downstream there are dreadful costs, but for the company there are huge benefits. This is an externality, where the costs are on one side and the benefits on another. Externalities have always been rather an embarrassment to libertarians in general and right-wing libertarians in particular. By definition, such things are external to the market and cannot be handled by market mechanisms. But the right-wing libertarians want to make the market the arbiter of all things.

The market ought to be the arbiter of marketable things, but all things human are not marketable. The common good requires a common defense, and despite the claims of Halliburton, Blackwater, and a thousand other war profiteers, these things cannot be left to the market. Many other common goods fall in the same category. For example the air we breathe is a common good, but has no market, unless one can control it and make it scarce; then it can be sold at a high price, the price of a man's life. And to certain fools, that would be just fine. The common goods require common decisions, and the externalities require some mechanism beyond the market. The right-wing libertarians have no coherent theory of government, and hence have no coherent way to limit government. Governments have never grown as rich and powerful as they do under regimes which claim to be devoted to the disappearance of governments, and this is as true of the laissez-faire regimes as it is of the communist ones. The socialist and the libertarian end up conspiring against the public, and in the case of Mr. Block, are more than willing to bring our enemies in as part and parcel of the conspiracy.

I do not mean by this to ridicule the libertarians. Far from it. I do wish to point out that devotion to an ideology—any ideology—can trump reason and make a man, quite literally, a fool.

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Subsidizing Wal-Mart

The recent collapse of the dollar vs. the Euro has intensified the debate over whether we should have a “strong” dollar vs. a “weak” dollar. The extent of the collapse is indicated by the fact that in January, 2002, you could buy a Euro for $0.86. Today, you will pay nearly $1.43, a whopping 66% increase. Should the United States have a strong dollar or a weak one? In an economy that didn't depend on the imports, the question would not be important. But, as we are dependent on foreign oil and foreign goods, the question is of critical importance to each and every American. They may find (as I do) the question of exchange rates to be supremely confusing, not to mention boring. Nevertheless, the price of the dollar affects each and every American consumer and worker, and does so every day.

Jane Jacobs, in Cities and the Wealth of Nations: Principles of Economic Life, explains the way currency fluctuations are supposed to work:

When a nation's currency declines in value relative to the currencies of the other nations with which it trades, theoretically the very decline itself ought to help correct the nation's economy. Automatically its exports become cheaper to customer nations, hence its export sales should increase; and at the same time, its imports automatically become more expensive, and this should help its manufacturers. Theoretically, then, a declining national currency ought to work automatically like both an export subsidy and a tariff, coming into play precisely when a nation begins to run a deficit in its international balance of payments... Furthermore, this automatic export subsidy and tariff ought to remain in play precisely as long as it is needed, no longer.

In other words, currency fluctuations function as an automatic way of balancing trade, no government intervention required. No spurious debates on free trade and protectionism, no political wrangling of any sort. However, in practice this doesn't actually happen. The major reason this happens is that we don't just import and export goods, we also import and export money, and these capital flows work in the opposite direction of trade flows, thereby confusing the signal.

International imports and exports of capital work in just the opposite way. If a country has been importing more capital than it has exported (by borrowing abroad, for example), the value of its currency is automatically bolstered. Conversely, if it has exported more capital than it has been importing (by lending, making gifts, paying interest on prior foreign loans, exporting the profits of foreign-owned industries), the value of its currency is automatically depressed to that extent.

This gives governments a way to manipulate the currency of another country, if they have a mind to. They can simply lend the gullible country vast amounts of money, keeping the value high, or buy up its currency to hold in reserve. Why would any country want to do such a thing, since it would not only be very expensive, but constitute a trade war and perhaps provoke a reaction? Well, in the short term, to smooth out trading fluctuations, such manipulation does no harm. However, a country convinced that it can only grow by exports and not by raising the living standards of its own people (thereby expanding its internal market) may well elect to manipulate its trading partner's currency. Is there such a country so ignorant of basic economics that it would spend its valuable capital to shore up the currency of another country rather than invest it in its own? Yes, there is.

That country is Communist China.

Granted, they are new to this whole “market” thing, and so perhaps haven't gotten it down yet. And since they have a long history of abusing their own people, a little more “market” abuse would hardly seem to make any difference. Finally, their “success” in international markets creates a strong constituency for continuing a rather foolish policy. But this success isn't real, and it is coming at a terrible price for their own people, a price that will one day have to be paid.

The Chinese also have another way of “cheating” in the game of international trade. They can simply “peg” their currency, the Yuan, at an artificially low rate. That is, they can guarantee that no matter how strong their currency gets, they will still give the same amount of dollars from for each Yuan; they alow the Yuan to trade only in a very narrow range (about 13 or 14 cents). In effect, this is an export subsidy and an import tariff by another name.

And this brings us to the subject of Wal-Mart, the “low-price” people. Wal-Mart just happens to be Communist China's largest trading partner, but its “low prices” are not the result of either a free market or of free trade. Rather, it is the beneficiary of government manipulation of the markets. In fact, Wal-Mart is an island of corporate privilege floating on a sea of public subsidies. These subsidies and privileges come from every level of government. At the local level, they often get special zoning and tax treatment from governments desperate for development, even if such “development” means impoverishing local entrepreneurs. At the state and federal level, the whole business plan is in fact a creation of the highly subsidized “freeway” system, (see “Free Markets, Free-ways, and Falling Bridges”), without which Wal-Mart would not exist. And our own government, for political reasons, tends to keep the value of the dollar artificially high (although that policy is weakening). But the biggest subsidy comes not from our government, but from the Chinese Communists. It is a subsidy that, in the long-term, must impoverish both countries. Our manufacturing is hollowed out, while the real needs of the Chinese people are ignored.

America has nothing to fear from real free trade and truly free markets. We benefit from having strong trading partners; the rise of Japan, Europe after the devastation of war, Taiwan, Korea, Singapore, etc., makes both us and them stronger. And on a level playing field, American workers and American firms can compete. Some firms it is true, have lost out, such as the auto industry. However, in that case it took a near conspiracy of stupidity on the part of both the companies and the unions, who worked hard in favor of their short-term interests and against their own long-term good. In more normal, and less arrogant companies and unions, even a small perception of the realities is sufficient to get them to adjust their products, technology, and compensation plans to counter the foreign competition. And this benefits everybody.

American consumers believe that they get a benefit from Wal-Mart's low prices, while American workers believe that they pay a high price in jobs, dignity, security, and even national survival. So who is right? The answer is that they both are. But the costs and benefits are not symmetric. American do get lower prices, in the short-term. But only at the cost of enormous and unsupportable trade imbalances, imbalances that most, sooner or later, come out in higher prices, higher taxes, higher interest rates, and higher unemployment or “reduced”employment (e.g., replacing well-paying factory jobs with poorly-paid “service” economy jobs, like maids or hamburger flippers). The benefits are short term, the costs are devestating to the economy and to the dignity and well-being of the workers, their families, and the country.

What's to be done? The American government must inform the Chinese that they must end their artificial currency policies and let the market price prevail. At the same time, America must get its own fiscal and monetary house in order, and not depend on huge loans from foreign governments to finance its day to day operations. Naturally, this must be done prudently, over an appropriate period of time. If the Chinese Communists persist in this trade war (to call it what it is), then we should “adjust” their currency for them, by gradually raising tariffs over a three to five year period to bring the costs of Chinese products to what they should be if their currency were correctly priced. On a level playing field, Americans can compete even with subsistence wages and low-cost lead painted products. This policy would benefit the Chinese people as well, as their government would have more funds to invest in the needs of their own people, and less supporting a corrupted American regime. Of course, such a policy will not be painless. Prices at Wal-Mart will rise and the happy-face price-cutter will not be quite as happy. But the pain will be short-term, the gain will be long-lasting. Just as the fall in the dollar has increased our exports to Europe, so the rise of the Yuan both cut imports and increase exports. That's the way it's supposed to work.

To answer our original question, the dollar should be neither “strong” nor “weak”; it should be right, its priced based on actual market conditions. But neither American nor Chinese trade policy can be based, in the long-term, on simply subsidizing Wal-Mart.

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Investor's Dilemma Part II

This is not, by any means, an investment-advice blog, but nevertheless I advised readers back on August 12^th (The Utopia of Usurers) to buy gold coins and mining stocks in case of a market meltdown. That turned out to be pretty good advice; gold is up about $100/oz. since then and mining funds are up 32%, far in excess of market returns. Now, normally gold is not a good investment; in fact, its not really investing at all. It creates no wealth, no jobs, no nothing; gold is sterile. It is really a kind of hoarding, something which reduces the monies available for productive investment. However, in times of uncertainty, in times when there is a suspicion that the government and the market are about to turn the currency into a kind of toilet paper, gold is a defensive measure. In a later column (The Investor’s Dilemma) I attempted to give the reasons for the kind of credit crunch in which we now find ourselves, precisely the kind of crunch that requires prudent men and women to take defensive measures.

At the current moment, the Utopia of Usurers is turning into a nightmare. Some find this very strange, because they can't see why the sub-prime market, such a small part of the economy in general and only a small part of the housing market in particular could cause such damage. But bacterium are small, but they can be deadly; the smallest virus can kill you. And bad loans spread through the market, making seemingly good investments turn sour. How does this happen? The people who make the bad loans certainly don't want to hold them. Instead, the package them up and sell them to hedge funds, pension funds, banks, SIVs, etc, all of whom are trying to get a decent return in a tight market. Bear-Stearns exhibited the greatest chutzpah in this regard by marketing a fund of sub-prime loans, and then selling it short. In other words, they told the individual investors that it was a good deal, while themselves acting on the presumption that it was a bad deal. Nice.

So, how far does the rot spread? The following partial list of sub-prime holders was compiled by Adrian Ash of The Daily Reckoning:

• Public Pension Funds

  • State of Oregon: $475 million

  • City of Detroit: $39 million

  • Teachers Retirement of Texas: $62.8 million

  • State of Missouri: $25 million

  • State of New Mexico: $222 million (and maybe another $300 million)

• Money Market Funds

  • $11 Billion

  • Wells Fargo Advantage Fund: 5% of assets

  • Credit Suisse Prime Portfolio: 8% of assets

  • A.I.M.: $2.64 Billion

  • PayPal fund: $1 Billion

• Mutual Funds

  • Many of these funds are labeled as high-risk mortgage bond funds, but many have such risks without the investors being aware of it.

  • Regions Morgan Keegan High Income Fund: Assets are down from $1 Billion to $420 million. The fund cannot give a market price for its assets, since there seems to be no market for them.

• Private Pension and Insurance Funds

  • Prudential is suing State Street Global Advisors, one of the world's largest fund managers, for failing to mention that it put subprime based derivatives in its “low-risk” fund, causing Prudential an $80 million loss.

  • Unisystems is also suing State Street on behalf of 25 of its employees.

  • Idaho and Alaska are considering suits as well.

• Banks and Brokerage Houses

  • The Banks have lost well over $20 Billion on mortgage-backed instruments

  • Merrill-Lynch is allowing $5.5 Billion for losses, but many think that there is more to come, since they hold $21 Billion in subprime and CLOs.

  • UBS holds about $20 Billion in such instruments

Of course, this just scratches the surface, just a few random reports culled from the news. This doesn't even get near all the hedge funds and SIV's, etc., that were relying on these instruments to make big returns. But it gets worse. These funds are highly leveraged. That is, they put up a small portion of their own money, borrow a lot more at commercial rates (say 5 or 6%) and buy these risky instruments paying 10-12% and pocket the difference. This means that those who lent to them are now on the hook as well. Nor does it count the countless number of investors who bought into these funds because the rating agencies give them high marks in spite of the low quality of the underlying securities.

How do disasters like this happen? As I explained in The Investor’s Dilemma, it happens because there is too much capital chasing too few good investments. When capital concentrates at the top, it has difficulty finding decent returns, and ends up taking greater and greater risks, which are then spread throughout the markets like a plague. The Fed had cut interest rates to 1% and corporate investment-grade bonds were paying peanuts. People came to believe that the real estate boom was forever, and the rating agencies were touting this junk as triple-A.

Folks in the financial intermediation business like to boast that “the free market is very good at spreading risks.” And this is true, but it is not to be praised, any more than Typhoid Mary is to be praised for spreading what she spreads. Fasten your seat belts. By all accounts, we are only 1/3^rd the way through all of the subprime re-sets. It could be an interesting winter and spring.

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PHILIPPINES CONTINUES TO LEAD THE WAY

One of the hallmarks of a Distributist economy and state is the fostering and strengthening of the cooperative sector. The poor and middle classes pool their resources and talent together to life themselves out of economic misery. And it is done without big government micro-management, which is one of the black marks of a Socialist, Communist or Fascist state.

It is among the nations of the Third World that the promise of a Distributist Earth shines brightly. And among them, the Philippines seems to be making rapid progress. According to a October 19th press release from the Philippine government’s Information Agency, President Gloria Macapagal-Arroyo praised the nation’s cooperatives for strengthening the national economy. In her speech to a cooperative summit in the city of Alabel, the President noted that the coop sector injected - in American currency - about $226 million in capital investments. She also said that the Asian nation would need "a vibrant middle class if we are to reach the verge of the First World in 20 years."

If such great vitality can spring from the cooperative sector for a growing economy like the Philippines, what more can it do for the American economy? Or Russia’s? Or Britain’s? And this is only a part of what Distributism - and the insights of Belloc, Chesterton and their legitimate successors - can do for the world’s nations.

Congratulations to the Philippines’ cooperative sector! May you all learn about Distributism and promote it to your countrymen - and to all of Asia!

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Fire the Boss!

In my last post, I discussed the Acton Institute film, The Call of the Entrepreneur. This compelling but intellectually shallow film converted entrepreneurship from a call to a cult, in my opinion; it treated the entrepreneur as a rarefied and special class of individuals crucial for the success of any economy. In this post, I review a film that takes the opposite tack, that bosses are not really necessary, and the ordinary workers possess the entrepreneurial skills necessary to run the most complex operations. Of course, this is not a new theme. The success of such enterprises as the Mondragón Cooperative Corporation in Spain, or the entire economy of Emila-Romagna, have long proven the success of the worker-manager to produce and manage complex products at a rate of return higher than the so-called “free market” enterprises, and to do so with fair wages and high social services.

The film is called The Take and is shot in Argentina, where, in the 90's, the United States and the IMF forced a program of economic “liberalization” on the country. Government enterprises were sold off, budgets reduced, social spending cut to bone, taxes on wealth reduced or eliminated, etc. The results, in Argentina as in so many other places, was a disaster. After some initial successes, the economy collapsed, which idled thousands of factories and businesses. The rich were allowed to ship all of their money out of the country, while bank accounts for ordinary Argentinians were frozen, so that people could not get at their own funds.

As the factories were being idled, and the workers laid off, usually with millions of pesos in unpaid wages, one group of workers at a suit factory refused to leave. They took over the factory and kept on producing and marketing their products. They made the bankrupt company a successful enterprise. Of course, there was one little problem: they didn't own the place legally. But they got so much support from the public, that the politicians deemed in inadvisable to evict them, at first, and later attempts to do so resulted in riots. Laws were then written to which could make expropriation possible under certain circumstances.

What is crucial here is that the workers here are not the vanguard of some ideology; they are not socialists, or communists, or libertarians, or even distributists. Rather, they are just workers, whose desperation forced them into desperate measures. But their actions did found a movement, and 180 closed factories and businesses have been taken over by the workers. Many of these enterprises exist in legal limbo and face a hostile government and court system. Nevertheless, they have made a success of it, and made it without bosses. The workers manage the companies democratically and set their own wages, policies, and decisions. They seem to be doing just fine without either bosses or government subsidies.

Many socialists have backed the movement, but in fact this seems to be the opposite of socialism, or at least of state-socialism (Marxism); it is not the government taking over the means of production, but the workers themselves. In fact, it seems to be a return to the libertarian and distributist ideal of self-organizing communities, able to manage their own affairs without help from either government or corporate bureaucracies.

But does that still leave a moral problem? Is expropriation just a fancy word for stealing? In the particular cases involved here, likely not. In the first place, the old owners left millions owed to the workers, as well as to the government, and on these grounds alone the workers have a valid claim on the properties. Further, the special treatment given to the rich by the Menem government, treatment that was nothing less than the transfer of funds from the public purse to private fortunes gives the public in general and the workers in particular another claim on these factories. But in the more general case, we must consider the purpose of property. Private property is meant to serve the common good by making the productive capacity of the earth more plentiful and more available to all. The words of John Paul II in Laborem Exercans are useful here:

The above principle, as it was then stated and as it is still taught by the Church, diverges radically from the programme of collectivism as proclaimed by Marxism and put into pratice in various countries in the decades following the time of Leo XIII's Encyclical. At the same time it differs from the programme of capitalism practiced by liberalism and by the political systems inspired by it. In the latter case, the difference consists in the way the right to ownership or property is understood. Christian tradition has never upheld this right as absolute and untouchable. On the contrary, it has always understood this right within the broader context of the right common to all to use the goods of the whole of creation: the right to private property is subordinated to the right to common use, to the fact that goods are meant for everyone.

They cannot be possessed against labour, they cannot even be possessed for possession's sake, because the only legitimate title to their possession- whether in the form of private ownership or in the form of public or collective ownership-is that they should serve labour, and thus, by serving labour, that they should make possible the achievement of the first principle of this order, namely, the universal destination of goods and the right to common use of them. From this point of view, therefore, in consideration of human labour and of common access to the goods meant for man, one cannot exclude the socialization, in suitable conditions, of certain means of production. In the course of the decades since the publication of the Encyclical Rerum Novarum, the Church's teaching has always recalled all these principles, going back to the arguments formulated in a much older tradition, for example, the well-known arguments of the Summa Theologiae of Saint Thomas Aquinas (Summa Th., II-II, q. 66, arts. 2 and 6; De Regimine Principum, book 1, chapters 15 and 17. On the social function of property see Summa Th., II-II, q. 134, art. 1, ad 3.).

In the light of the above, the many proposals put forward by experts in Catholic social teaching and by the highest Magisterium of the Church take on special significance: proposals for joint ownership of the means of work, sharing by the workers in the management and/or profits of businesses, so-called shareholding by labour, etc.

And his words from Centesimus Annus would seem to provide a clear warrant for the actions of the workers:

Ownership of the means of production, whether in industry or agriculture, is just and legitimate if it serves useful work. It becomes illegitimate, however, when it is not utilized or when it serves to impede the work of others, in an effort to gain a profit which is not the result of the overall expansion of work and the wealth of society, but rather is the result of curbing them or of illicit exploitation, speculation or the breaking of solidarity among working people. Ownership of this kind has no justification, and represents an abuse in the sight of God and man.

In any case, the film raises the question of whether we really need bosses as much as we have been led to believe. Contrary to the cultic view of the Acton Institute, all men seem to have the spark of the entrepreneur within them, and it does not take the cut-throat world of competition to bring it out. Rather the opposite seems to be true: in a spirit of cooperation, companies flourish even when the “bosses” drive them to bankruptcy. As on of the workers in the film says, “We don't know why accounting was such a problem for the bosses; we are able to do it easily enough.”

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The Cult of Entrepreneurship

A few days ago, I was asked to serve on a panel discussion at the University of Dallas concerning a film produced by The Acton Institute. The title of the film was The Call of the Entrepreneur, and its central question is, "Is the entrepreneur virtuous or vicious?" Like most of the products of The Acton Institute, it was media slick and intellectually shallow. Here are the comments I gave to the group:

One reason that this film is important to me is that the social justice class which I teach emphasizes the role of the entrepreneur in shaping the business world, and hence the moral and economic universe in which we live. The book we use, which I had the honor to write, is called The Vocation of Business: Social Justice in the Marketplace. It's point is that business, in my view, is not merely a job, but a vocation, a calling to change the world, that is, to apply our moral imagination to the problems of the world. The proper understanding of entrepreneurship is crucial, in my opinion, to the proper understanding of the connection between human development and economics. And since entrepreneurship is so crucial, it is crucial to get it right. When we have an incorrect or incomplete understanding, we end up distorting the meaning of entrepreneurship; we end up limiting it by converting it from a call to a cult, one limited to the few, rather than extended to the many, as it should be. All are called to invest their talents, and not to hide them. And indeed, all people want to do so, or nearly all. It is usually cultural and institutional bars to creativity that limit us, not something lacking in the human person, or limited to only a few. For the person is, or so we believe, the very image of God, the creator of all, the first worker, and the first to earn his day of rest.

The strengths of this movie, aside from its excellent production values, are two. The first is the engaging personal stories, especially of Jimmy Lai and the Compost King. Entrepreneurship is essentially a narrative, a story whose end cannot be known in advance, but it always an adventure, possibly a romance, and more than occasionally a tragedy. We cannot know, we can only do, and do our best. And so personal history is perhaps the best way to convey the point, rather than abstract demonstration. The second, and even more important point, is the strong connection the film makes between entrepreneurship and personal virtue. Indeed, virtue is the foundation of all human action, and every successful action requires at least some degree of personal virtue. Even robbing a bank requires virtues of courage, planning, perseverance, and so forth.

And therein lies the problem; for if virtue in some degree is required even to rob a bank, then personal virtue alone cannot determine the virtue of an act, or of an enterprise. Something else is required. Or rather, two other things are required: the ends, the purpose of the act, or in this case, the purpose of the firm, must tend towards the common good, and the means must themselves be good. A failure in either the means or the ends makes an act—or an enterprise—vicious, even when virtuously performed. Extolling entrepreneurship without directing it towards the common good gives us an incomplete understanding.

The point is this: Entrepreneurship by itself is neither good nor bad. Rather, it is the field of human action in the social and economic order. But the direction we choose to go on that field is another matter.

We can illustrate the range of human actions that are “entrepreneurial” by two activities that lie at opposite poles of that range: at one pole we have motherhood. The mother “produces” (if I may put it that way) a unique human product (if I may put it that way), that is, the human being, the active agent, end, and purpose of all human production. She injects a value into the world, and into the world of business, whose value can never be known, and for which a price can never be set. And although the family is the basic economic unit, her recompense is never in money. She takes on a long-term commitment whose course she cannot know, but which most women find difficult to repudiate, even in the most dire of circumstances. At the other end of the pole, we have the bank robber, who creates no wealth of his own, but merely appropriates the wealth of others. His actions are purely for profit, without adding anything to the stock of society. At one end of the scale, we have a pure self-giving; at the other, only a self-interested taking.

Therefore, we can never judge entrepreneurship to be good per se. Rather, we must judge it by the contribution it makes, or fails to make, to the common good. For many enterprises fail to make such a contribution. Certainly, we know that harmful products find a market, no less than good ones, products such as drugs, pornography, and sub-prime loans. I have little business experience with the first two, but a great deal of experience with the last. For the last five years, I have seen increasing corruption in the mortgage markets, aided by an army of entrepreneurs working from the highest levels of finance down to brokers working out of their spare bedrooms. The deals given to buyers got to be so dirty, that after each closing you just wanted to go home and take a shower. This was entrepreneurship that more resembled bank robbery, even though it was the bank pulling off the robbery.

We should also be aware of the institutional barriers to entrepreneurship. The film did a good job of pointing out the barriers in a communist tyranny. Indeed, raising such barriers is part and parcel of any tyranny, and tyranny can be judged, at least in part, precisely by the barriers it raises to such human development. We know that entrepreneurship tends to die in socialist collectives; however, when production is gathered into gargantuan corporate collectives, with immense private bureacracies, does entrepreneurship suffer a similar fate? In other words, in our society, is the corporation the place where entrepreneurship goes to die? My own experience of 17 years in large corporations would lead me to believe this.

Finally, there are cultural barriers to entrepreneurship, to the full development of the human person in the business world. Most of us, alas, are culturally conditioned to seeking a “good” job rather than following a real vocation. We tend to believe, unconsciously perhaps, that our well-being depends on being in the good graces of ruling bureaucracies. We are losing—or have already lost—the habit of entrepreneurship, or that creativity that is part and parcel, to a greater or lesser degree, of every human being. Indeed, entrepreneurship is viewed, to often, as something “special,” something reserved to a group set apart from the rest. At this point, it becomes not the call, but the cult of the entrepreneur. And the cult of the entrepreneur is very like the romantic “cult of the artiste.” This cult, we know, limits art to a few rarefied individuals; it results in both less art and worse art. Both art and entrepreneurship are part and parcel of what it means to be human. One applies to the aesthetic realm, and the other to the moral realm. But both apply to all men and women.

In short, then, entrepreneurship is basic to human development and creativity, and raising barriers to it, whether public or “private” barriers, is part of the essence of tyranny. But we need to see it as the field of moral action in the world, and judge it by its contribution to the common good, and human development.

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If You Meet the Buddha on the Road, It's a Photo Op!

I don't often get the chance to praise President Bush, but his meeting the Dalai Lama in defiance of the Chinese, qualifies as praiseworthy. Some might question whether it is prudent, given that China holds the mortgage on the United States just now, and given that we are seeking their cooperation over a wide range of issues, from North Korea to Burma to Iran. Still, it was a meritorious act. The Tibetans have suffered greatly at the hands of China, and their plight deserves attention and respect.

Or at least I think it is meritorious. One never really knows. The timing of such events is never accidental and precisely what political purpose there may have been, I do not know. But taking the affair at face value, we can join the President in welcoming the spiritual leader of Tibet.

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Amnesty for Infants?

The following is contributed by Kate Bluett

The Texas Catholic Conference of Bishops has issued a statement calling for a severance of ties between Catholics and Amnesty International. Additionally, the statement calls on AI to "reconsider its error, and reverse its policy on abortion." The policy in question is AI's decision to advocate abortions for women who have been the victims of rape, especially in developing nations.

According to AI's press release on the subject, "reproductive rights" for such women will prevent further harm to the victims: " Our policy reflects our obligation of solidarity as a human rights movement with, for example, the rape survivor in Darfur who, because she is left pregnant as a result of the enemy, is further ostracised by her community." The Texas bishops, on the other hand, counter that "Abortion is an act of violence against both the child and its mother. Any organization truly committed to women's rights must put itself in solidarity with women and their unborn children."

The dispute between AI and the bishops comes down to an old question: Do two wrongs make a right? Does abortion somehow heal rape or address its consequences, or does it only compound those consequences? True, it can eliminate one consequence—the child conceived through rape—but does it actually do anything to lessen the stigma attached to being raped in many cultures? Does it in any way redress the wrong done to the raped woman? Does it somehow prevent other rapes from taking place? Abortion does none of these. Instead, it burdens women with one more trauma, one more violent invasion of their bodies, one more grave to visit, even if only in the mind.

Of course, action must be taken to redress the wrongs of rape and prevent its happening again. The Texas bishops stress this in their statement: "While no human rights organization should turn away from the suffering that women face daily in the form of sexual violence, it should not prioritize a mother's life above that of her unborn child. It is better to advocate advancing her educational and economic standing in society and resist all forms of violence and stigmatization against her and her child." In other words, it would be better to direct our energies to measures that will actually make life better for women. Abortion advocacy is, in this instance, a stop-gap measure at best and at worst a distraction from the real work that needs to be done.

At best, decriminalizing abortion is a temporary solution to a thorny set of problems. If hiding the fact of a rape keeps a woman from being stigmatized, that's still only temporary solution to removing the stigma of rape. If abortion means one less mouth for a refugee mother to feed, that still doesn't return the mother to her homeland. After all, keeping one's mouth shut in Burma keeps one out of prison, but that doesn't address the issue of human rights in Myanmar. AI and other human rights organizations do better when they work on addressing the real problems. Fortunately for those of a philanthropic bent, there are plenty of organizations that focusing on improving the status of women and children and reducing the victimization of those groups. Heifer International is one, for starters; there are plenty of others to absorb any donations withheld from AI.

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KEEP COSTA RICA OUT OF CAFTA

This report, dated October 6th, is written by Doug Palmer for Reuters news service, and was posted that day on Yahoo News.

Costa Ricans will be voting on Sunday, October 7th, whether they should join the U.S.-Central America Free Trade Agreement (CAFTA). The Bush Administration, through a spokeswoman, warned that if her voters turned down the Agreement, it will refuse any renegotiations on it. They also hinted at eliminating some benefits it already has under the Caribbean Basin Initiative (CBI).

According to the left-wing Huffington Post, commentator Mark Weisbrot notes that no country ever had it’s citizens vote on a “free trade agreement” before. He reports that America’s ambassador to the country claimed that some markets for Costa Rican goods would be shut down if the “No” vote won.

And according to an Associated Press report published in the San Luis Obispo (CA) Tribune, CAFTA would force the local service and telecommunications industry to accept foreign rivals.

When the American government foisted NAFTA onto the people, it claimed it would create jobs and businesses. Instead we lost millions of jobs, especially in light and heavy manufacturing, much of it shipped to Mexico, which is now losing many of those jobs to Red China. Worse, it reduced her economic and political sovereignty, as it did also to both Mexico and Canada.

Something similar may happen to Costa Rica if it approves this travesty of justice.

We at the Review encourage any readers from Costa Rica to vote “No” on the CAFTA issue. Even more, we encourage you to read more about Distributism, both in English and Spanish. Tell those who are interested to find out more about this alternative to BOTH Socialism and Capitalism.

And then act on what you read to build a better Costa Rica…a Distributist Costa Rica.

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