But Is He More Popular Than the Beatles?

An editorial in Politiken, Denmark’s largest newspaper, states that Obama is greater then Jesus. And if you are perplexed by this remark, The Reformed Pastor, David Fishchler helps you understand the logic:

There’s not a hint of satire there that I can see. They seem to be quite serious: they believe that Obama has several nation or world-changing accomplishments to his name… while Jesus…doesn’t. The “marginal Jew” did a few parlor tricks that might have helped a few people, and He said some lovely things, but get real. The One is saving the world, stopping the oceans’ rise, ending poverty and ensuring world peace. What did Jesus ever do that can compare with that?

Nuff said. Happy New Year!

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The Economic Stork

The answers we get are dictated by the questions we ask, but there was one question which always grated on my wife's nerves, no matter who frequently she was asked. That was the question, “Do you work?” As she had five small children and a husband (or, as some would reckon it, six children), she did quite a bit of work. But what the questioner really meant was, “Do you work for a wage?” Being a “housewife” (a term which seems to designate someone wedded to a house) carried no status at all; only work in exchange for wages could have any value, precisely the value of the wage. Work that has no wage has no value.

But we cannot blame the average person for asking this question when the economists have no better understanding of the family and no better questions to ask. Modern economics is a theory about how individuals exchange goods and services, but it has no explanation of how these goods come into being in the first place; that is, it has no coherent production function. Exchange theories deal merely with the change of ownership of already existing goods among freely contracting individuals; it can never explain the appearance of new goods. In these theories, everything is treated as a commodity (even the human person gets commodified as “labor”) but the actual existence of these commodities cannot be explained. But of all the “commodities” whose existence economics cannot explain, the first is the existence of the individual. And without such a explanation, how can economics understand the growth of the economy?

John Mueller of the Ethics and Public Policy Center, has characterized these shortcomings as “The Economic Stork Theory” (EST). Mueller explains this theory in Redeeming Economics: Rediscovering the Missing Element, which will be published this Spring by ISI Books. In the Economic Stork Theory, workers arrive in the economy fully grown, fully trained, and fully socialized. These stork-borne workers are a “given”; that is, there is no way to explain the growth in workers or their level of training and socialization, and hence little reason to support them with political or fiscal policies. Mueller describes the theory as follows:

I call this the Stork Assumption, since it literally means that adult workers spring from nowhere, as if brought by a large Economic Stork. Under the Stork Assumption, the accumulation of workers’ tools—buildings and machines—is the only possible source of economic growth that can be affected by policymakers. Moreover, under these assumptions the total tax burden not only should, but inevitably must, fall entirely upon the incomes of workers (who by assumption cannot avoid such taxes by having fewer or less-educated children, though property owners are assumed able to avoid taxes on property income by investing less in property). The Stork Assumption, not economic theory, underlies the perennial proposals to abolish taxes on property income, which are advocated by a cottage industry of (mostly my fellow Republican) economists centered in Washington, D.C.

As a corollary to the Economic Stork Theory, the only “useful” work done in the economy is work done for wages or other economic rewards, and hence there are only two kinds of human activity, work and leisure. Hence, there are only two kinds of Individuals in this theory: Partially Useful Individuals (PUIs) and Totally Useless Individuals (TUIs). The PUIs are partially useful because they spend a part of their time at “work” producing things in the money economy. The TUIs, however, don’t “work” at all because they earn no wage. Rather, some of the TUIs, otherwise known as “mothers,” spend their time in such leisure activities as taking care of the household pets; some of these pets are called “cats” or “dogs,” and others are called “children,” another form of TUIs.

Since the standard of living in the EST is the result of a positive capital-to-labor ratio, increasing the number of PUIs does not increase the standard of living unless the amount of capital is increased by at least an equal amount. In other words, you can increase the standard of living by decreasing the number of people, or at least slowing the growth of the population. Therefore the crucial element in growth is capital, and people are problematic. The policy implications are that capital should not be taxed, only people, in the form of labor or consumption taxes. This will help to discourage the formation of new PUI/TUIs, while raising the capital-to-labor ratio.

Mueller points out that the EST’s most glaring error is the failure to recognize that the family is the basic economic unit. And within the family, the choice is not so much between work and leisure as it is between production for exchange and production for use. Of course, economic theory simply has no way to account for production for use, even though it is actually the whole point of production for exchange; we work to provide money to buy meat and potatoes which we then use to produce dinner. Production for use does not show up in the GDP, but in fact the GDP presupposes such production; indeed, it is the whole point of the exchange economy.

What the TUIs known as “mothers” are doing is crucial not just to the continuation of the economic system, but to the continuation of civilization itself. There is no economic growth without mothers and the job they do. Moreover, the social shifts of the last 50 years have moved us away from production for use to more production for exchange. Now, one may debate as long as one likes the soundness of this move into the workplace in terms of, say, women’s liberation. But as the feminists point out (quite rightly), if mothers were paid a salary for everything they do, they would earn a hefty salary indeed. But the attempt to monetize the work of mothers, to convert it from production for use to production for exchange, is futile and leads to endless debates that have no possible resolution. There simply isn’t enough money on the planet to replace what mothers do everyday. The transfer of work from use to exchange does indeed show up as an “increase” in the GDP, but not as an increase in any actual output of goods and services, and likely involves an actual decrease in such services and in their quality. When mom cooks you a dinner, the GDP does not record the fact; but when she takes the family to MacDonald's, the GDP rises. But do fast-food stands really substitute for family meals? Do day care centers really provide the same level of “care” as does a family?

The Economic Stork Theory isn't even compatible with the commodification of labor. After all, economic theory recognizes that the price of any commodity must cover all of its costs, not only its production costs, but its maintenance and depreciation costs as well. But labor also has a “production cost” (the family, the school, etc.) maintenance costs (subsistence and health care) and depreciation costs (old age). If the price of labor does not cover these costs, then the economic system does not meet its own basic requirements. An economic system that doesn't understand the basic economics of the family will gradually erode the family, which is precisely what has been happening in the last 30 or 40 years.

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Distributism and the Entrepreneur

My address to the Academy of Economic Studies in Bucharest:













My great thanks to Dr. Claudia Tuclea for the invitation, and to the students of the Academy for their attendance and attention to a wandering foreigner.

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Distributism and Global Warming

Not a Single Cube of Ice

In November of 2008, the cargo ship Camilla Desgagnés delivered supplies to the Arctic village of Kugluctuk. It did so by traversing the Northwest Passage and was first commercial voyage through the passage in recorded history. Normally, the Northwest Passage can be traversed only by powerful ice-breakers, if at all, but on this voyage they did not see a single cube of ice. It is likely that the passage will soon be open to regular commercial shipping, and on a year-round basis. This is likely to cause some problems for Canada, since it claims sovereignty over the passage, a claim which no other nation (including the United States) recognizes. It could even be a causus belli, if Canada decides to defend its claims.

Canada's claims are not my subject; I am concerned with the meaning of this voyage. The voyage of the Camilla Degangés should be sufficient to prove the reality of global warming, which has cleared the passage of ice. At one time, perhaps, it was possible to deny global warming, or to claim that the evidence was not weighty enough to reach a conclusion, but the voyage of a ship of 5,000 metric tonnes should be weight enough to settle the question. But while it settles the question of whether there is global warming, it does not settle the questions of the causes or the cures.

The major question is whether global warming has its roots in human industrial production, and the tons of pollutants spewed into the natural environment. To be sure, there have been changes in the climate within human history prior to the Industrial Revolution. There was the Medieval Warming Period which allowed the expansion of Viking power, and the “Little Ice Age” which ended it. Nevertheless, it would also be a mistake in logic to conclude that because there are natural causes of climate change, there can be no human causes as well.

I must confess up front that I am not smart enough to reach any informed conclusion about the subject; the scientific debates exceed my poor knowledge by several orders of magnitude. But I would be very much surprised to learn that you could dump unnatural chemicals into the environment, or natural chemicals in unnatural amounts, and not have any effect. To expect nature to handle a chemical it has never seen, or to rebalance chemicals it has already balanced, is to expect too much of the natural order. Of this I am sure: The burden of proof must rest on the polluters. Those who wish to use the air, the rivers, the ocean, and the land as public dumps should be forced to demonstrate, on sound evidence, that it will do no harm. Those who would limit such dumping do not have to prove a thing, other than that such dumping is not natural; it is up to the dumpers to prove that nature can take it.

Suspicion about “Environmentalism”

I believe that conservatives express great skepticism about global warming for two reasons at least. One, it is frequently connected with theories of “overpopulation,” theories which by now should have been thoroughly debunked, and two, they view it as an attack on capitalism and a back-door route to global socialism. These are legitimate grounds for suspicion. Concerning the first, if population control is the solution, then China, with its one-child policy, should be well on the way to solving its pollution problem. But in fact, the reverse is the case. China's pollution problems are growing with its demographic problems, not shrinking. Indeed, the one-child policy has made China's problems all that much worse. No matter how bad things get in the United States, they will still be better than what happens in China.

It is not too many people, but too many wasteful people that are the problem. One can confirm this with a little thought experiment. Imagine that the population of Africa is doubled at an instant, but their levels of consumption are held constant. It is likely that there would be little, if any, environmental effect; Africa has more than enough resources to support a much larger population. But now, imagine that the population is held constant, but their consumption levels are raised immediately to that of the Americans or Europeans. This is likely to result in an environmental catastrophe. This thought experiment is being tested in fact as both China and India aspire to American forms of consumerism.

Pollution as a “Property Right”

The other problem is that conservatives see environmentalism as an attack on capitalism and industrialism. However, even if that were true at one time, the reverse is happening now, namely that capitalism itself is being proposed as the solution, through the means of establishing pollution as a property right. This is the meaning of the “cap and trade” system. Government will give the biggest polluters the biggest rights to pollute, and then slowly withdraw the rights, leading to a market in pollution rights. And since the market knows all things, sees all things, the market will solve the problem without any further government involvement.

It is hard for me to imagine a worse solution than making a pollution a “right,” essentially a legal right to poison your neighbor. When you create such rights, you are likely to get more of a thing, not less. And since there are such huge measurement problems, not to mention a host of loopholes, cap and trade will create a vast and profitable market without materially reducing pollution. Indeed, creating a property right in pollution creates a constituency to continue that right, and extend it. The “trade” part of cap and trade will be real enough; the “cap” part is likely to be ephemeral. (For a good left-wing analysis of this program, see Annie Leonard's The Story of Cap and Trade; while you are at her site, see The Story of Stuff.)

Distributist Solutions

The proper answer to bad solutions is not no solutions; it is better solutions. Nor is denial an answer. Even if we are in a “natural” warming period, unrestrained industrial action can only make it worse. Distributism is capable of providing these better solutions, and recognizing the reality of pollution, for distributism itself is an exercise in realism. And distributist solutions are rooted in two sound principles: proper cost accounting and community rights.

Pollution is an “externality.” An externality is the cost of a transaction that is borne by someone not a party to the transaction. When a company dumps mercury into the river, there will be health problems downstream, a real cost. The price of a product should reflect all the costs, but this cost will not show up in the price. The people downstream of the plant will subsidize the company through increased birth defects; the company will get the benefits of using the river as a sewer, and the downstream babies will get the cost of a lifetime of problems. By definition, an externality cannot be handled by the market; it is external to the market. To ask the market to handle the problem is asking it to do something it cannot do, and that is asking for trouble.

The first step in any solution is not to see pollution as a right, but as a wrong. And the nature of that wrong is that it appropriates a community resource (such as the air, the river, the ground) as a private property, and does so without any compensation to the community. The community has every natural right to forbid this, or at least to charge for the use of these resources, up to their full value.

Proper cost accounting insures that all costs show up in the price of a product. In the case of externalities, the market cannot do this; it is up to the community. The community must put a price on its resources, just like any other owner of a resource must do. Some resources cannot be assigned any cost. In the case of mercury poisoning, it can only be forbidden. Other things can be priced, even at a price that restricts their use. Carbon outputs can be priced, and ought to be; the community ought to recover something for the use of its resources, and the overuse of certain things ought to be discouraged. Only proper cost accounting and the proper recognition of community rights can do this. It is amazing, by the way, just how many questions of social justice come down to questions of proper cost accounting. Indeed, one of the great uses of distributism is to ensure that costs are properly charged to cost causers.

Distributists should be leaders, not laggards, in dealing with these questions. Aside from the economic issues, distributism is rooted in Christian principles which dictate a reverence for nature. This reverence is not a worship of nature in the raw, but a proper respect for the created order over which man has proper dominion. This dominion is not a tyranny which allows us to abuse nature, but rather to care for it. We make nature serve human ends; this is right and proper. But in doing so, we do not violate its “natural” status; we do not convert the river into an open sewer, the ground into a cesspit. At that point, it is not natural, and quickly ceases to serve any human purpose, other than the purpose of letting a few humans get rich at the expense of their brothers.

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Into the Deep

My friend and Co-editor on the Romanian anthology, Dr. Ovidiu Hurdezeu, has put together a little film of our journey to Romania.



I have written of the village depicted in this film at Burn the Vineyard!

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Fall of the Republic

There is an interesting video produced by Alex Jones called "Fall of the Republic", which in my view merits watching, and is available for free here.

Though I don't agree with everything in the video, and think certain things are overly sensationalist, the main points of the video are sound.

One of the amusing things is in the beginning is that one of the contributors attributes to America the concept of the separation of powers, limited government and the establishment of government in such a way that it serves a common good. This idea actually comes from St. Robert Bellarmine, whose political treatises never left Thomas Jefferson's desk.

Nevertheless, they trace the work of globalism and the current globalist banking industry in creating the crises that grips us presently. The contributors to this documentary compare it to oligarchy, and demonstrate how the international elite function by that and force various policies to erode the rights of the general population.

The video also exposes the establishment of a world governing body of scientists who enforce the state doctrine of population control, family planning, social engineering and climate change.

The significance of global warming doctrine is that by identifying carbon dioxide as the evil which is "destroying the planet", the world governing body will have the right to tax you and me for the right to breathe. This is essential to breaking down sovereignty and self government, which are so necessary to defending a society from control by an external force.

It also shows us many examples of how a police state is on the verge of being created, and (in my opinion) strongly makes the case for a hidden hand controlling Obama by demonstrating the numerous flip flops from his campaign promises of transparency and change and the reality of continuation of Bush policy, and has nothing at all to do with change.

The movie also has the benefit of not being partisan with respect to right and left, taking aim at both Obama and Bush and demonstrating continuity of Obama and Bush's administrations. In reality of course (as it seems to me), there is total continuity of government since 1988.

The film, bringing us several contributors in the form of economists, climate scientists, researchers and bloggers, really hits the nail on the head of the present crisis. It is also aided by numerous video clips of the elites themselves telling us from their own mouths that accountability, sovereignty and freedom do not matter.

Where the movie fails in my view, is in the concluding half hour they describe the work of the global financial elite as trying to destroy capitalism. What they fail to note is that it is the logical and necessary conclusion of capitalism. The instabilities of capitalism are only solvable, those who have can only make certain they continue to have if they turn modern economies into a slave state. The world the film attempts to show us was predicted by Hilaire Belloc nearly 100 years ago in his work "The Servile State", which he makes the case that capitalism must ultimately end in the restoration of slavery.

Another shortcoming (in my view) of the film is that they do not spend enough time explaining the mechanisms of banking. They spend some time talking about derivatives, and the breakdown of regulation with respect to them, but they do not spend enough time talking about banking either in its proper role or its abuse which is at the heart of today's problems.

The proper function of a bank is to put capital into the community. If x number of people have invested in a bank, and they find (as has always been the case) that people need only 10% of their money at a time, they make an investment on some kind of productive enterprise. This gains the bank a profit, and it was on a productive loan for something say such as mining or manufacturing. The fee they charge for the use of their money is just, it is a percentage of the profit earned with their productive loan. In that sense their money was capital, without which the productive venture could not have worked, and thus the bank has infused capital into the community.

Banking today by contrast takes capital out of the community, and then demands more from the government when they run out of money.

Another of the film's flaws is they act as if America is now the last country standing in the way of the global elite. There are many other countries with many members of their populace just as alarmed as we are, albeit they might be a little less organized and noted than resistance in this country.

Nevertheless, in spite of these and other shortcomings or its Amero-centric outlook, "Fall of the Republic" is an important movie with an important message, our allegiance ought not be to democrats and republicans, neither to 3rd parties, but to a unifying principle of society guaranteeing our freedom and sovereignty, which as Americans is the constitution and the bill of rights. Even as a monarchist I can take that over the new order that is coming.

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Burn the Vineyard

I have just returned from one of the most remarkable journeys of my life, a ten day tour of Romania to promote an anthology of distributist and localist essays, Economic Freedom: The Renaissance of Deep Romania. Each day brought a new adventure, and I will be writing a great deal about all the marvelous things that happened and wonderful people that I met. But I think it most appropriate that I start this story at the end, for it was the last day that illuminated all the other days, that made sense of the whole trip and showed what it is we are fighting for, both on this journey and on The Distributist Review.

Along with my co-editor, Dr. Ovidiu Hurduzeu and the publisher, Alexandru Ciolan and his son Andy, we were driving from the city of Iasi, in the North of Romania, where we had gone to debate a mainstream and an Austrian economist. More of this debate another time. Since the book was about "Deep Romania," my colleagues wanted me to see this Romania, a Romania that comprises 46% of the population. On the way up, we had driven the National Roads, but on the return trip we were taking the back roads along River Prut, which forms the border with Bessarabia, which is now called Moldava, though it isn't. The Bessarabians and the Romanians speak the same language and share a good deal of their history.

It is a country of rolling hills, populated by a succession of farms and villages. We pass endless horse-drawn wagons, small Orthodox churches, and roadside shrines. Our destination was one of these villages, Oancea, where Alexandru's relatives have a farm, and where we stopped for lunch and a tour of the village. We were the guests of the Gorovei family: Florica, the family matriarch, her daughter and son-in-law, Dorina and Georghe, and their son and daughter-in-law, Mihail and Domnica, who is Alexandru's daughter. The Gorovei's took a great deal of pride in showing us the farm, and indeed there have a lot of reasons for their pride.

The oldest building is a mud and straw house with a thatch roof. "Mud" sounds very temporary, but in fact the building is at least 100 years old and as sturdy as concrete. Indeed, it survived an attack of Russian katusha rockets. The thatch roof, however, has to be replaced every 40 or 50 years. The building is now used for storing the farm's wine in barrels, while the wine is fermented in the cellar. The "new" house (about 50 years old, I suspect) is heated by two wood stoves, one covered in decorative ceramic tiles. Georghe, a jack-of-all-trades, is wiring the house for electricity and has just added an indoor bathroom to replace the outhouse. The front yard is part of the vineyard, and underneath the grapes they grow strawberries. In the back there are two chicken coops. There used to be a sty, but they no longer keep pigs. There is a workshop, were they keep the grape press, oak barrels, and other wine making and distilling equipment.

The meal began with home-make polinka, a distilled plum wine that the Romanians drink as an aperitif, and for most any other reason as well. This particular bottle was triple distilled, quite potent but very good. Then came deviled eggs and salami as an appetizer. This was quickly followed by Romanian Borsh, which unlike the Russian borscht, is fermented from wheat bran, and filled with meatballs, pork, and potatoes. Topped with sour cream and served with bread, it was suburb. And, of course, the farm's own wine.

After these first courses, we then went off to tour the village while Georghe grilled the chicken on a fire, not of charcoal, but of corn cobs from his own corn crib. We saw the Orthodox Church, recently renovated with its complex iconography and surmounted with the traditional Christ Pantocrator (all-ruler). We saw a monument to King Carol I who gave the land to the peasants. His charter is reproduced in brass on the monument, the guarantee of the farmers’ freedom, that is, of their land. The communists, of course, destroyed the monument and it had to be rebuilt. We toured the vineyards, with soil soft as butter.

When we returned the chicken was ready. These were birds from their own farm, not only fresh, but of a different variety from the American, where we breed avian Dolly Partons for quick growth, large breasts and a bland taste. But this chicken, done to perfection and served with cucumbers (their own, of course), was easily the best chicken I have ever tasted. It was served with the red wine of the farm, and it is worth having more than one glass of this, which of course I did. Maybe a lot more than one. After that came a desert of fritters, crepes, and thick, Turkish coffee. And while we were enjoying this, Georghe was grilling catfish fresh from the Prut, prepared rather like the blackened catfish of New Orleans. It was the first time I ever had fish as a last course.
As we ate (and ate and ate), we filled the room with laughter. Wouldn’t it be a great thing if Phillip Blond, Stefano Zamangi, and a few of the Front Porch Boys and Girls could be around that table, drinking Polinka and laughing the capitalists to scorn. Then we could get the International Distributist Conspiracy off to a fine start.

Grandmother Florica sat in the corner watching us. She could not understand our talk, but certainly understood our laughter and enjoyment; the proud smile never left her face. 87 years old, she still stands ramrod straight and still works the grape harvest. She was showing us the abundance and goodness of her farm, and she had good reason for her pride. Her farm has been threatened nearly every one of her 87 years. She has seen the fall of the kingdom, the rise of the peasant parties, and their fall under coming of the German Übermensch. These would fall in turn to the new Soviet Man from Russia, who is now replaced by the cosmopolitan Capitalist, another abstract creation ripe for an extinction as definitive as the others. But of all these invaders, none of them, not even the communists, did as much damage to village life as the new globalists, with their own Internationale sung to the tune of a cash register, with accompaniment by the unholy trinity of the WTO, the World Bank, and the European Union.

These farms are efficient and abundant, and should be prosperous, but they are not. The post-communist government had to break up the collectives and return the land, but they withheld the equipment; indeed, they closed the tractor factory. They were never very enthusiastic about Romania’s farmers, labeling the rural economy “bazaar Capitalism.” Which sounds pretty good to me, but the new rulers, like the old, saw Romania’s future in heavy industry. There is some sense in this, if not pursued exclusively, since it is a mineral rich country with a trained workforce. But even then, they sold the industry off to foreigners. In one bizarre example of “privatization,” they sold the state telephone company to the Greek state. It never occurred to them to sell it to the Romanian telecom workers.

More than half the farmers have to supplement their incomes with work in the cities, work that is becoming increasingly difficult to get. The next generation has great doubts about their ability to do this. As one son told his father, "Burn the vineyard; I can't take care of it." And villages of mud streets and outhouses have little appeal to the young. Nor to me, but the remedy is rather easy and inexpensive. The irony of the situation is that with so much of the population having relatives on the farms, much of the produce goes the cities to supplement the inadequate incomes of the urban sectors. The farmers must work in the cities to supplement the farm, but the farm supplements the urban areas gratis. But why should such prosperous places be in such poor shape?

I will not pretend to be an expert in Romanian agriculture, but I do know that the country runs a large trade deficit in food (and in everything else). This makes no sense in a country that consists mainly of fertile fields and experienced farmers. It is not the farms that are inefficient, but the system of financial capitalism that understands neither finance nor capital. Indeed, with just a modest amount of capital, these homes and villages can be brought up to modern standards, with graveled streets and indoor plumbing. And the farms should be able to generate such capital themselves, with the proper system of finance. But, alas, "finance" now means something entirely different; it does not mean, as it should, the capitalizing of productive ventures in return for a share of the produce, but only of financing speculative schemes and government waste in return for a share of the plunder. A system of producer and marketing cooperatives, for example, would improve both the productivity and market power of the farms, and this would take very little investment, compared to that required by the grand and (usually) bankrupt schemes of the globalists.

Ceausescu, the last communist president of Romania, starved his people to pay off the foreign debts, and the new "democratic" government took office without a penny owed to anyone. Now they have a debt comparable to the Americans, and are still begging in Brussels for more of the Euros that will make them poorer, as debts usually do if not properly invested. These loans will make Romania even more dependent on their masters in the European Union. Indeed, it is likely that Basescu, the current president, will not have even as much independence from Brussels as Ceausescu did from Moscow. These days, the proper pose for a President of Romania is on his knees to get yet another round of loans to finance yet another cycle of waste.
I am grateful that I got this opportunity to see and enjoy "deep Romania." It is a meal and a family I will not soon forget. And it is also a constant reminder of what we are fighting for: the right to the fruits of one's own labor earned from one's own resources, whether that labor occurs on the farm, or in the factory, the mine, or the shop. And I do not think it trivializes the question to say that we are fighting for a decent lunch as a routine part of life, one enjoyed with friends and family. Life offers few greater pleasures.

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