The Distributist Review

We've Moved!

2010-07-04T16:13:00.001-05:00

Dear Friends of The Distributist Review and The ChesterBelloc Mandate,

On the 4th of July, we are proud to present our brand new web site, The Distributist Review. The Distributist Review will provide analysis of our contemporary social and economic world, with the addition of vintage essays from G.K. Chesterton, Hilaire Belloc, and the early Distributist League. The site’s primary focus is Distributism and its relationship to the world we live in. Whether discussing capital and labor, urban and rural reform, politics, or “what is wrong with the world,” we strive to deposit the proper perspective on the fundamentals needed for social and economic restoration, as our readers want to know what prescription we can offer for the building of a practical Distributist culture.

Our mission is to pave the way for common ground between diverse political backgrounds, working tirelessly to harmonize social justice and orthodoxy, and helping to build the framework necessary for the creation of a popular Distributist movement.

In addition, our web site will now include guest contributions, movie and book reviews, audio and video resources, downloadable materials, and a print/PDF feature for all of our articles.

Please join us, bookmark our site, and help us to spread the word.

Go to www.distributistreview.com/mag and do not forget to order “Jobs of Our Own” by Dr. Race Mathews by going to www.distributistreview.com/press.

Neither Left nor Right. Looking back and moving forward. The restoration is up to you.

Schedule Change for Chesterton Conference

2010-06-24T11:55:00.000-05:00

Friends,

If you plan to attend this year's Chesterton conference, please be aware that changes have been made to the schedule. Joseph Pearce will now speak on Friday.

http://chesterton.org/2010conference.htm

The New Devereux

2010-06-21T16:46:00.022-05:00

Dear Friends,

For some time the editors of The Distributist Review have been on a mission to move beyond the shores of Blogger. While this has been our happy home for almost six years, our principle objective to find a new design that could marry The Chesterbelloc Mandate and The Distributist Review is now mission accomplished. With this new site our readers will receive the best vintage material and current analysis of the Distributist model, and we are confident our template has the right spit and polish to attract new readership and bring attention to this very important journal.

What Can You Expect?
The Distributist Review's new home promises a fresh dynamic. While retaining its hard-hitting commentary and superb analysis, our site's attractive features will increase readership and re-energize the Distributist movement. We've added book and movie reviews, foreign language articles, guest contributions from academics and laymen in the trenches, social networking icons so you can post our articles on Facebook or Tweet them, podcasts, written interviews, and printing or PDF options (TBA).

An announcement with the new url for The Distributist Review will be made over the 4th of July weekend. We invite you to join us at our new home, add our new address to your websites, and tell your family and friends about us.

On a personal note, I wish to thank all our contributing editors over the years for giving so much of their time, effort, and heart. They truly outline sanity. They do not do this for thanks nor do they receive the compensation they deserve. What they do is not just for us, but for Christ the King! May God bless all of you. Your articles reflect how grace is a call to action.

Servire Deo regnare est!
Richard

PS: While some articles will be migrated to our new domain, this web site will remain available as an archive.

Chesterton Conference 2010

2010-06-18T07:09:00.006-05:00

Remember friends, if you cannot make the entire conference you can always purchase tickets for just one day. This is a great opportunity to listen to some great Chestertonians and talk shop. Networking with one another is an excellent way to organize and build future relationships. I want to personally meet every single one of you.

So if you cannot make the entire event, consider coming out Friday or Saturday. Talks will include "Scientism: The Mistake About Science," "GKC and Edmund Burke: The Mistake About Conservatism," "The Mistake About the Social Services," and the highly anticipated talk by Joseph Pearce (author of "Small Is Still Beautiful") titled "The Mistake About Progress."

If you can't make all three days, come out Friday or Saturday. See you there!

To register, go to http://www.chesterton.org/2010conference.htm

29th Annual G.K. Chesterton Conference
Mt. St. Mary's University
Emmitsburg, Maryland
August 5-7th

The Distributist Review on Facebook!

2010-06-17T16:59:00.001-05:00

Join our The Distributist Review Facebook page today!

What Would Frodo Do?

2010-06-16T22:14:00.002-05:00

By Jason Hamza van Boon, Reprinted by permission of Tikkun Daily Blog

I recently posted on Tikkun Daily the following quote on JRR Tolkien vs Ayn Rand:

“There are two novels that can transform a bookish 14-year-kld’s life: The Lord of the Rings and Atlas Shrugged. One is a childish daydream that can lead to an emotionally stunted, socially crippled adulthood in which large chunks of the day are spent inventing ways to make real life more like a fantasy novel. The other is a book about orcs.” – “The Value of Nothing” by Raj Pate

It’s been somewhat of a hit with Tikkun Daily readers (as I write this, it’s ranked #5 on our “most read posts of the past 7 days” list). This led me to wonder: Did Tolkien have a view on political economy?

We know what kind of economics John Galt and other Randian heroes espoused. And many more people get turned on to lassez-faire capitalism by Rand’s novels than by libertarian economics treatises. (The first history of libertarianism, by Jerome Tucille, is actually titled It Usually Begins with Ayn Rand). So, if fantasy novels can provide an ideological basis for the opposition, can progressives find inspiration from Tolkien, one of the greatest storytellers of all time?

In other words: What would Frodo do?

I’m not an expert on Tolkien. Whether he had a worked out view on economics is an open question for me. I do know that he was part of the great English reniassance of writers and thinkers from the first part of the 20th century, largely Roman Catholic and Anglo-Catholic. Tolkien was a member of the Inklings, a literary discussion group that included such luminaries as C.S. Lewis, Owen Barfield, and Charles Williams, and was also a friend of the illustrious Dorothy Sayers. (Alas, Albion, how far hast thou fallen!)

The milieu they inhabited was friendly to a movement called “Distributism” (also known as “Distributivism”), an alternative view on economics developed by Hillaire Belloc and G.K. Chesterton. They were inspired by the encyclicals of popes such as Leo XIII and Pius XI, who took prophetic stances against both robber baron capitalism and totalitarian Communism. They taught about he need to find a balance between individualism and totalitarianism through a judicious blend of market processes, co-operative associations of labor and capital, and progressive legislation.

In response to these teachings, the Distributists proposed that there was an alternative to the extremes of laissez-faire capitalism and complete state ownership of the economy. In fact, they pointed out these two extremes shared a common feature: the means of production become concentrated in the hands of a few. The “choice” is between a corporate oligarchy and a governmental one. As G.K. Chesterton said, “Too much capitalism does not mean too many capitalists, but too few capitalists.”

An alternative would be to have private property widely distributed throughout society, so that every adult person is an owner of capital, or productive property. They proposed a commonwealth of independent farmers, small proprietors, and worker-owners in co-operative firms and guilds. Each household would have enough to live a life of dignity, but not so much that they could tyrannize over others.

A nice vision, one that’s often been criticized as utopian and romantic. Recently, however, there’s been a Distibutist and “natural law” economics revival, with sharp thinkers such as John C. Médaille working out the economic logic of a feasible Distributism.

But back to Tolkien. I knew that he wrote when Distributism was in its first heyday. And the Shire does seem like an ideal Distributist society. So, was Tolkien a Distributist?

Matthew P. Akers makes a case in St. Austin’s Review that Tolkien’s Middle Earth writings do exemplify the principles of Distributism–both as a positive model in the Shire and critically through showing the destructive processes of an inhuman, anti-natural regime (think of Mordor as the first BP!) St Austin’s is a conservative Catholic journal, but of a distinctly non-Ayn-Rand, non-neo-conservative kind, and progressives will find Akers’ remarks on economics, the environment, and imperialism to be very congenial.

Some selections:

In the modern world, we are accustomed to a highly-centralized industrial economy that engages in international trade and is controlled by the twin powers of “big government” and “big business”. In contrast, the Shire’s Distributist economy is a diffuse system based upon small farmers, small business, and local trade….

The two controlling powers of the modern industrial economy — big government and big business — are absent from the Shire. Bigness in any form is foreign to the Shire’s economy, which is localized, agricultural, and hobbit-sized in every sense.

After Sam, Frodo, Pippin, and Merry leave on the quest to destroy the ring, the Shire’s economy changes dramatically.

When the four hobbits return from their quest, big government and big business have encroached upon the former hobbitsized economy, industrializing it. A large bureaucracy comprised of outsiders now controls the Shire’s economy, and its principles of production have expanded well beyond what is necessary simply for maintaining the needs of the Shire and its inhabitants. Pimple and Sharkey, two aptly named villains who lead this attack upon the hobbits, buy up much of the Shire, concentrating land and resources in the hands of a few, which is antithetical to the Distributist insistence upon the necessity of widely distributed private property….

This environmental destruction has also destroyed the indigenous culture of the hobbits. They have become industrial serfs rather than agricultural freemen (sic). Now, the hobbits depend upon the industrial work they perform at the new mill for their livelihood rather than enjoying the fruits of their agricultural labor. They also crouch in fear before the big government that has taken over the Shire, for this new government controls the mill, the hobbits’ source of livelihood. Once the hobbits are severed from nature, they are severed from their very essence: they are no longer free and fun-loving. Instead, they have become industrial slaves, both to their masters at the mill and to their bureaucratic masters in government. Ted Sandyman, the former owner of the mill, now works there as a wheel cleaner — a menial laborer — for the new owners. Once the hobbits’ reliance upon nature is destroyed, their self-sufficiency follows. The hobbits and their community are lost when the land is forsaken….

Like Sauron, Sam wishes to use the ring, but, unlike Sauron, Sam wishes to use the ring to promote freedom. He has a vision in which he sees himself brandishing a sword and using the ring to lead an army into Mordor in order to conquer it and to transform the industrial wasteland into a giant garden. While this vision is highly appealing to Sam, he ultimately realizes that “the one small garden of a free gardener was all his need and due, not a garden swollen to a realm; his own hands to use, not the hands of others to command.” Sam recognizes that he cannot make his agrarian vision a reality through imperialism, and he rejects this imperialistic and militaristic temptation.

I certainly recommend reading the whole article.

Now, I can anticipate some snarky comments from the pro-capitalist Right. I do not propose using magic rings or elvish charms to fix the economy (although I suspect those are less fantastic than supply-side economics, or certain forms of Keynesianism). The case for a progressive, “third way” economics must be made through the cold logic and dry prose of economic theory and empirical analysis.

But, to her credit, Ayn Rand did show us something. An economic policy will never gain popular support unless we show how economics relate to meta-economic principles of ethics and “the nature of things.” Literature is certainly an appropriate vehicle for this. And, to paraphrase E.F. Schumacher, Tolkien shows us that hobbit-sized is beautiful.

The Biggest Earmark is Empire

2010-06-13T21:44:00.001-05:00

Lethal Loyalties: Dulce et Decorum Est...

2010-06-11T14:42:00.008-05:00

It is, alas, a story we hear almost everyday. A “terrorist” straps explosives to his body and walks into the crowded market to cause mayhem. Or “Holy Warriors” fight endless battles to prevent the spread of democracy in their homelands. When we see these things, we shake our heads and lament that in the name of God, these people not only commit terrible crimes, but resist the very things—democracy and liberalism—which will bring them the same peace and prosperity that we enjoy. We have no doubts about how these events are to be interpreted, for we know that misdirected and irrational violence is part of our own history, a history from which we were rescued by the liberal state, and the separation of religious and temporal affairs.

But what if our understanding is wrong? What if the nation-state was not the cure but the cause of the wars that we term “religious”? In other words, what if all that we “know” isn't so, is in fact a myth used to justify the nation-state and marginalize certain kinds of discourse, most particularly “religious” discourse? This is the theme of William T. Cavanaugh’s The Myth of Religious Violence.

We know the story very well: after the Reformation, Europe fell into a murderous cycle of sectarian violence, from which we were rescued by the nation-state, which cordoned off “religious” concerns from the temporal order, imposing a political tolerance on the contending faiths while concentrating on building prosperous kingdoms (at first) and then liberal democracies, in which the religious realm was kept separate from the secular. It is this story which provides us—all of us, whether “left” or “right—with the framework by which we view both domestic and international events, and most particularly the Muslim world.

But is this story a history or a myth? Prof. Cavanaugh contends that it is a myth, one that simply does not conform to the facts of history. In support of this thesis, he makes a number of remarkable claims:

Religion in not a severable category from cultural political, and economic life. IN fact, “religion,” as we understand the term is a creation of modern West, and would have been unintelligible to previous ages and cultures.
The modern state precedes the so-called wars of religion, Indeed, the “wars of religion” weren’t about religion at all.
There has been a transfer of the sacral from the religious order to the political. Far from separating religion from the state, the modern state creates its own sacred space, with its own rituals, hymns, and theology, and its own universal mission.

The universal mission of this new Church is mainly tied up with practical solutions to particular problems elevated to the status of transcendent truths. As Alasdair MacIntyre put it:

The modern nation-state, in whatever guise, is a dangerous and unmanageable institution, presenting itself on the one hand as a bureaucratic supplier of goods and services, which is always about to, but never actually does, give its clients value for money, and on the other as a repository of sacred values, which from time to time invites one to lay down one’s life on its behalf… [I]it is like being asked to die for the telephone company.

If Cavanaugh is correct, than it would have a profound effect on the way we view the world, or rather, on the story we tell ourselves about how the world works. Humans always tell themselves stories about how things are; it is the only way to organize information into a coherent whole. But it does help if the story bears some relationship to the way the world is, or was; if its details can in general be correlated with some actual history, and in this case, it is not. But even if we allow that religion is not something severable from the rest of life and culture, can we go along with Cavanaugh's claim that religion itself is a modern invention?

The moderns would hold that “religion” is a trans-cultural, trans-historical reality, a universal genus of which “Christianity,” “Hinduism,” “Islam” etc., are particular species. The problem is, any attempt to define this genus in such a way as to include what the moderns want to include and to exclude what they wish to exclude turns out to be contradictory. Nationalism is no less a cult than Catholicism. Including a belief in God would exclude many major “religions.” One might attempt to limit religion to the “transcendent,” but ideas such as “the nation” or “liberty” are transcendent ideas, as are all values. Hence, there is no coherent way to distinguish “religious” from “secular” violence. What counts as “religious” or “secular” in any given society always depends on the configuration of power within that society. Indeed, the demarcation of the “religious” sphere is itself an expression of secular power, a political act.

Our concept of “religion” was simply unknown to the ancients. There is no word in Greek, Latin, Egyptian, Aztec, Chinese, or the Indian languages that precisely corresponds to our term. The Latin religio, “re-binding” referred to the rites which bound the social order together, and would include anything from the Japanese tea ceremony, to the rites of hospitality, to the temple rites of the various gods. Augustine writes De Vera Religione, “Of True Religion,” but his subject is not Christianity. Rather it is about worship, which can be given either to the creator or to the creation. But true religion is directed toward the creator alone, and religion is not something contrasted with a secular realm. In the City of God, Augustine uses the term religion to refer to the worship of God, but he finds the term ambiguous, because:

In Latin usage...”religion” is something displayed in human relationships, in the family (in the narrower and wider sense) and between friends; and so the use of the word does not avoid ambiguity when the worship of God is in question. We have no right to affirm with confidence that “religion” is confined to the worship of God, since it seems that this word has been detached from its normal meaning in which it refers to an attitude of respect in relations between a man and his neighbor.

When we turn to a work like Aquinas's Summa Theologica, we would expect it to be concerned with what we call “religion,” but Thomas uses the term only once, as one of the nine virtues that are a part of justice; it is that part which renders to God what is due to God and refers to the rites and practices that offer worship to God. It is not a term that designates a sphere of human activity that stands apart from some other sphere, called the “secular.” Indeed, the terms “religious” and “secular” in the middle ages normally referred to the two orders of clergy, those bound to monastic vows and those which were a part of the diocesan structure. The different “religions” were Benedictine, Cistercian, Dominican, etc.

If there is no analytical severable category of “religion,” then the idea of the “wars of religion” from which we were saved by the secular state can’t be correct either. The neat narrative of a struggle with Catholics on one side and Protestants on the other simply doesn’t work out. The framework of the 30-Year’s War was a struggle between three Catholic monarchies, the French and the two branches of the Hapsburgs. Prof. Cavanaugh gives of 10 pages of examples that run counter to the standard narrative: Catholics allied with Protestants against Catholics, Protestants allied with Catholics against Protestants, Protestants battling Protestants, etc. Obviously, the facts exceed the narrative.

Nor was the rise of the modern state the solution to the problem, it was the cause. Long before the Reformation, the state was expanding its power at the expense of the Church. The taxing of the clergy, the consolidation of ecclesial courts into civil ones, intrusion into the educational system, the replacement of the Church’s charities with the welfare state, and royal control of clerical appointments were some of the signs of the expanding power of the state. The Reformation itself was part of this process, since so many of the “reformers” were more than willing to replace the pope with the prince to enforce a confessional conformity. The Reformation depended on lay power, and gave a justification for that power. The biggest source of power is always property, and the wealth of the Church was a tempting target. In 1524, King Gustav Vasa of Seeden welcomed the Reformation because it allowed him to transfer the tithes from the Church to the crown, and three years later he appropriated all Church property, nine years before Henry VIII did the same. In France, “secularization” meant the transfer of Church property to the crown.

But this confessional conformity required that local privileges and independence to be overturned. The Catholic Monarchs desired absolutism as much as did their Protestant counterparts. Charles V made war against the Protestant princes, with the help of at least some Protestants, in an attempt to turn the Holy Roman Empire into a centralized, sovereign state. In France, the crown attempted to unite the country under un roi, une foi, une loi, which required a war against the nobility. The nationalized churches became part of a clientage system, so much so that Pope Julius III could write to the French King Henry II, “You are more than pope in your kingdoms.”

Having been a cause of the wars, the state and its apologists now proposed the state as a solution. Hobbes, Locke, Voltaire, and Rousseau saw a state religion as a necessity. After all, membership in a religion was voluntary, but membership in the state was compulsory, and the state required a degree of conformity. It is not that the new state would be intolerant. On the contrary, it would enforce religious “tolerance,” but only for a “religion” shorn of any civil interests. Religion was to be a private passion—or fantasy—one which would not be allowed to serve as a source of resistance to the totalizing state. Hence, Catholics were excluded from this tolerance, not because of bigotry, but on the quite rational grounds that the Catholic Church could never confine itself to being a “religion” that could be conveniently domesticated and striped of its civil and economic concerns. This church could never fit into the truncated category of religion, and hence could not be compatible with the modern state. The actual trajectory is that first the state was “sacralized” by absorbing the powers of the Church, and then the state was “liberalized” by being tolerant of the “religions,” but only insofar as they present no genuine opposition to the power of the state.

Seen in this light, the so-called “separation of church and state” is a complete sham. As Robert Bellah put it, the state becomes “an elaborate and well-institutionalized civil religion” that “has its own seriousness and integrity and requires the same care in understanding that any other religion does.” the real issue is where we place what Cavanaugh calls our “lethal loyalties,” which have been transferred to this new religion and its universal mission: the imposition of democracy and market economics on the whole world. None of us would think of killing for the faith, but killing for the state becomes “patriotism.” It was in the trenches and the gas attacks of World War I that Wilfred Owen discovered the price of this new religion in “the old lie, Dulce et Decorum est, pro patria mori.” And of course, what we die for, we also kill for.

The actual trajectory of history is that the state absorbed the powers of the church, and then “solved” the problems this creates by offering “tolerance” to any church which would become a “religion,” a domesticated, private fantasy that could pose no challenge to secular authority. As Christians, our best response is to accept the role that Hobbes and Locke assigned to us: permanent outsiders, to be viewed with suspicion at best and persecution at worst. This new state, actually just another cult, rationalizes some forms of violence and condemns others. We are horrified at the violence of those whose countries we invade, but “shock and awe” over Baghdad is a regrettable, but rational form of violence in a noble cause; in the end, it will bring free trade, democracy, and better phone service.

The obedience that the state requires is total, and dissent is worse than traitorous, it is unpatriotic. Every combat soldier instinctively recognizes the truth of Randall Jarrett's The Death of the Ball Turret Gunner, and tells his own version of the grim joke:

From my mother's sleep I fell into the State,
And I hunched in its belly till my wet fur froze.
Six miles from earth, loosed from its dream of life,
I woke to black flak and the nightmare fighters.
When I died they washed me out of the turret with a hose.

Light in Darkness: Mondragon and the Global Economic Meltdown

2010-06-10T13:20:00.001-05:00

By Dr. Race Matthews

The current economic crisis will not have been in vain if the world is reminded that grass roots initiative can triumph even over seemingly overwhelming adversity. In the aftermath of the devastation of the Basque region of Spain in the Spanish Civil War, a young priest, Don Jose Maria Arizmendiarrieta, himself only recently released from concentration camp confinement and narrowly spared imminent execution, was sent by his bishop in 1941 to the small steel industry town of Mondragon. It was here over the subsequent decade and a half that he through painstaking pastoral care, grassroots organization, community development, consciousness-raising and technical education laid secure foundations for the great complex of some 260 worker-owned industrial, retail, agricultural, construction, service and support co-operatives and associated entities that the world now knows as the Mondragon Co-operative Corporation.

From a standing start in 1956, the MCC has grown to the point where by mid-2008 it was the seventh largest business group in Spain. Annual sales increased between 2006 and 2007 by 12.4 per cent to some $US20 billion, and overall employment by 24 per cent, from 83,601 to 103,731. Exports accounted for 56.9 per cent of industrial co-operative sales, and were up in value by 8.6 per cent. Mondragon co-operatives now own or joint venture some 114 local and overseas subsidiaries.

Hard-hit by the economic meltdown as like other business the co-operatives now find themselves, their members are tightening their belts in a further exercise of the solidarity that has enabled them to weather previous major downturns, and achieve new heights. For example, in 2008 worker owners at the Fagor appliance co-operative elected to forego the additional four-week’s pay normally due to them over the Christmas period, and have subsequently cut their pay by eight per cent. As the MCC’s Human Resources Director, Mikel Zabala, points out, “We are private companies that work in the same market as everybody else. We are exposed to the same conditions as our competitors”. What then are the attributes to which Mondragon owes its remarkable success?

Industrial Co-operatives

The basic building blocks of the MCC have been its industrial co-operatives. The industrial co-operatives are owned and operated by their workers. The workers share equally in the profits - and, on occasion, losses - of the co-operatives, and have an equal say in their governance. That they are able to do so is due to the unique structures and systems of governance and financial management which the Mondragon co-operatives have developed. In the case of governance, the workers in a co-operative have their say in the first instance through its General Assembly, where the performance of the co-operative is discussed and its policies determined. The workers also elect a Governing Council, which conducts the affairs of the co-operative between Assembly meetings, and an Audit Committee - referred to by some as the "Watchdog Committee" - which monitors the co-operative's financial operations and its compliance with its formally established policies and procedures. Only members of the co-operative - all of them workers - are eligible to stand, and voting is on a one member/ one vote basis.

Successful candidates hold office for a four-year term, but continue to be paid their normal salaries and receive no compensation for their Council responsibilities. Council meetings are normally held before the working-day begins, and members then resume their normal workplace duties. The Council appoints a Manager for the co-operative on a four-year contract, which may be renewed subject to a mandatory review of his performance by the Council. The Manager may attend Council meetings in an advisory capacity, but is not a member and has no vote. There is a separate Management Council where the top executives and officers of the co-operative liase with one another on a monthly basis. The separation of the Management Council from the Governing Council reflects the clear distinction which the co-operatives draw between the governance function which is properly the prerogative of their members and the carrying on of operations for which management is responsible.

A final body - the Social Council - is elected annually, by and from shop-floor groups of from twenty to thirty workers. Members of the Social Council hold office for a two-year terms, and may offer themselves for re-election. The Council is a unique structure, with a highly distinctive contribution to the well-being of the co-operative. Whereas the Governing Council represents the members of a co-operative primarily in their capacity as its co-owners, the Social Council represents them primarily as workers. The Council's character in this respect reflects in part the fact that the co-operatives were established during a period when trade unions had been outlawed by the Franco government. Franco's negation of workers' rights was unacceptable to Arizmendiarrieta and his associates. In effect, the Social Council has had built into it the union function of enabling members to monitor, question and - if necessary - oppose the policies of the Governing Council and management. The Social Council is required to give advice to the Governing Council on industrial and personnel issues - for example, working hours, the evaluation and classification of jobs, and occupational health and safety - which the Governing Council must consider before its decisions on them are finalised. In recent years, some co-operatives have mandated their Social Councils to bargain formally for members with their Governing Councils.

The earnings of a Mondragon co-operative are the property of its members. In place of wages, members are paid monthly advances - referred to as anticipos - against the income their co-operative expects to receive. Two further advances required by Spanish custom are made available at Christmas and for the summer holiday period. The co-operatives observe a "principle of external solidarity", under which no advance should exceed by more than a narrow margin the wages paid for comparable work by nearby private sector businesses. The level of each member's advance is determined in the first instance by a labour value rating which the Social Council of the co-operative assigns to the job. Overall, incomes are kept as equal as possible. The highest advances a co-operative pays its members cannot exceed the lowest by more than eight to one. By 1990, members had had an estimated increase in their purchasing power since 1956 of around 250%.

A further share of the co-operative's earnings is credited to the members as capital. The capital structure has been designed to produce the greatest possible consciousness on the part of the each member that he is a stake-holder in the co-operative. The identification is achieved initially by requiring as a condition of entry to the co-operative that each member should make a direct personal contribution to its capital. There is an entry fee which currently stands at about $US12,500. Payment can be made on the basis of a 25% initial contribution, followed by monthly instalments. The co-operative then establishes an individual capital account for the member, to which 70% of his initial contribution is credited. The capital accounts earn interest at an agreed rate, and are credited each year with - say - 40% of the co-operative's surplus, apportioned among members on the basis of their salary grades and the hours worked. Members may draw on the interest accumulated in their accounts, or use the accounts as collateral for personal loans, but the principal cannot normally be touched until they resign or retire. Payouts from the capital accounts of members currently retiring in Mondragon - over and above their superannuation entitlements - are in some instances in excess of $US100,000. A further fifty percent of the co-operative's surplus goes to its permanent reserves, while Spanish law requires 10% to be set aside for social and educational purposes. A co-operative which incurs a loss may require its members to re-invest the extra Christmas or summer holiday advances which they would otherwise have taken in cash. Alternatively, they can forego the interest which would otherwise have been paid on their capital accounts. In extreme cases, the value of capital accounts can be written down or even written off.

Worker/Consumer Co-operatives

Mondragon's initial focus on industrial co-operatives was expanded by the creation in 1968 of its Eroski worker/consumer co-operative. Reflecting the overall Mondragon approach, Eroski - unlike traditional consumer co-operatives - is not limited to consumer members. Instead, its membership falls into two categories, namely, the workers who operate its outlets and the consumers who shop at them. The Governing Council has equal numbers of worker and consumer members, with the position of chairman always being held by a consumer. A further difference is that Eroski does not pay the traditional consumer co-operative dividend, but instead concentrates on low prices, healthy and environmentally-friendly products and consumer education and advocacy.

Eroski is today the most rapidly expanding component of the MCC, with some 2,441 retail outlets, ranging in size from petrol stations and small franchise stores to hyper-markets and shopping malls, in locations that now extend beyond Spain to France and Andorra. It is a key participant in the Spanish Confederation of Consumer Co-operatives, speaks for the Confederation in its dealings with government and the media and is also active in the affairs of the Consumer Advisory Council in Brussels.

Mondragon Mark I

The industrial, worker/consumer and service co-operatives at Mondragon have benefited from a unique system of second-order or support co-operatives and groups. Just as the primary co-operatives were formed in response to a pressing need on the part of workers for jobs - and of the Basque region more generally for economic development - so the secondary co-operatives have been a response to the need of the primary co-operatives to co-ordinate their activities and access capital and support services such as social insurance, education and training and research and development. The co-ordination and support structures and procedures - as distinct from the primary or frontline co-operatives - have undergone major changes. A broad familiarity with the arrangements in their original form - with what was in effect Mondragon Mark I - is needed in order to properly understand the nature and purpose of the Mondragon Mark II which in key respects has replaced them.

The Caja Laboral Credit Union

The core and nerve centre of what is now the MCC was originally the Caja. Arizmendiarrieta realised at a very early stage in the life of the group that expanding the existing co-operatives and creating new ones would require reliable access to capital on affordable terms. "A co-operative", he wrote, "must not condemn itself to the sole alternative of self-financing". As has been seen, his insight resulted in 1959 in the establishment of the Caja in order to mobilise capital for the co-operatives from the local and regional communities. The slogan used by the Caja in the early stages of its development was "savings or suitcases", indicating that local savings were necessary in order for there to be local jobs. The Caja also provided a means for the co-operatives to manage the capital held in their permanent reserves and individual capital accounts, so enabling them to retain within the group all of their surpluses other than the 10% allocated by law to community projects. The effect overall was to free the co-operatives from the capital constraints which otherwise would so drastically have curtailed their development. The Caja enabled the co-operatives to borrow at interest rates which were 3% to 4% below those of conventional financial intermediaries.

From functioning purely as a source of capital for the co-operatives, the Caja then moved on to become the mechanism through which their association with one another was formalised and their activities integrated. The individual co-operatives were linked to the Caja through a Contract of Association which set out in detail their respective obligations and entitlements. For example, it was a requirement of the Contract of Association that an affiliated co-operative should adhere to an agreed system of wage levels and ratios. Returns to members on their capital contributions should be at a fixed rate on interest. The co-operative should invest in the Caja and the surplus cash and liquid assets of the co-operative should be held for it on deposit by the Caja. The co-operative's deposits with the Caja should also include all holdings on behalf of its members, such as pension funds, social security funds, and workers' share capital. The co-operative should adopt a five year budget and report on it to the Caja at monthly intervals. The financial affairs of the co-operative should be subject to audit by the Caja at intervals of no more than four years.

The Caja lastly had a key role in developing new co-operatives, advising and otherwise helping out co-operatives which were experiencing difficulties and, more generally, providing an integrated mix of services for co-operatives in all stages of their development. These functions of the Caja were performed by its Empresarial Division. The Division consisted of seven departments - Advice and Consultation; Studies; Agricultural and Food Promotion; Industrial Promotion; Intervention; Auditing and Information; and Urban Planning and Building - with around 120 worker-members.

Where new co-operatives were concerned, a group of workers who were interested in establishing a new venture had first to find a product or service for which they believed there was a market, along with a manager. They were then in a position where an approach could be made to the Empresarial Division. If the Division believed that the proposal was sound, it assigned an adviser - sometimes known as the "godfather" - to the group. The group in turn registered as a co-operative and accepted a loan to cover a salary for the manager while pre-feasibility and feasibility studies were conducted. The studies usually lasted between eighteen months and two years. In the course of that period, the group's preferred product might be discarded in favour of an alternative drawn from the ideas bank which the Division maintained from its own market research. Attention then focused on factors such as factory design, production processes, marketing strategies and export opportunities. The completed study was presented to the Operations Committee of the Banking Division of the Caja, which determined whether the venture should be approved. Where a co-operative proceeded, the Empresarial Division godfather usually went on working with its manager until the break-even point was reached. The co-operative and the Division then remained in touch through the monthly return of operating and financial information the co-operative agreed to provide as a condition of its Contract of Association. The information was stored in a computerised data bank, so enabling the Division to at any time call up a comprehensive account of the status of the co-operative and the trends currently being experienced.

Where an established co-operative experienced difficulties, the Empresarial Division had the capacity to help out through the professional services of its Intervention Department. The data base compiled from the monthly returns of the affiliated co-operatives enabled the Department to have emerging problems brought to its attention, in some cases earlier even than the managers of the co-operative directly involved. An intervenor was then appointed, who assessed the situation of the co-operative in terms of three categories of risk. A summary of the categories by two American scholars reads in part:

1. High Risk. The life of the co-operative is threatened. The intervenor reviews every aspect of operations and in effect takes over management on a full-time basis until a reorganisation plan is approved or the co-operative must be closed. Interest payments on outstanding loans are suspended until the plan is in place.

2. Medium Risk. Bankrupcy is not imminent but could occur in the near future. In such cases the intervenor spends at least one day each week at the co-operative during the reorganisation but does not take over the management of the firm. Interest on loans is reduced temporarily by - say - half, but returns to the full rate as the reorganisation progresses.

3. Warning or alert level. Here the threat of failure is not imminent but current trends are negative, suggesting a need for remedial action that may be beyond the capacity of the co-operative. No interest rate concessions are offered, as it is anticipated that the intervention will make the interest burden manageable.

Once the seriousness of the situation has been determined, the intervenor has the task of working out with the co-operative a new business and re-organisation plan.

The plan might require changes in the marketing strategies, manufacturing methods or product mix of the co-operative. Other changes might involve the organisational structure of the co-operative or the appointees currently occupying its key management positions. Members might be required to accept reductions in their anticipos or contribute additional capital. Where in extreme cases a reduction in the workforce was necessary, it fell to the Social Council to identify in conjunction with management those members who were to be retained in their current positions, those who were to move to new positions and those who were required to leave, normally by transferring to another co-operative whose business was expanding. Once agreement on the plan had been reached, the co-operative was responsible for securing approval of it from the Financial Division of the Caja. The Financial Division was required to determine whether interest on the co-operative's loans should be suspended or reduced or in what other ways - if any - the co-operative should be assisted.

The mutuality of interest between the Caja and the primary co-operatives which are linked with it through their Contracts of Association - together with the credit union's functions in regard to the co-operatives of capital mobilisation and management, integration and support - were entrenched in its structure and governance. Forty-two percent of the delegates to the General Assembly of the Caja are from its workers and 58% from the affilated co-operatives. Seven seats on the Board are for the affiliated co-operatives, four for workers in the Caja and one for a representative of wider sectorial groupings of co-operatives. Rather than the Caja's workers having allocated to them a 40% share of its annual surplus as is the case in the affiliated co-operatives, their capital accounts are credited with the average of the amounts credited to members of the affiliated co-operative. The Caja has succeeded so spectacularly as to have now become effectively the tenth largest bank in Spain. Its assets are now so large that loans to the co-operatives now account for no more than 25% of its overall lending - or 10% of its capital - with the balance available for regional economic development and other investment projects, often in partnership with the Basque government. Its example triumphantly vindicates Arizmendiarrieta's faith in the capacity of working people to provide for themselves through co-operation and economic solidarity the jobs for which they can no longer rely on others.

Lagun-Aro Social Insurance Co-operative

A second support co-operative - the Lagun-Aro social insurance co-operative - began as a division of the Caja. Being co-owners of the businesses where they work instead of employees meant at the time that members of the Mondragon co-operatives were ineligible for health and retirement benefits under the Spanish social security system. What was originally the social insurance division of the Caja was established to remedy the deficiency, by providing a fund to which the co-operatives could subscribe through pay-roll deductions and from which benefits for their members could be drawn. In 1967, the division became independent of the Caja as Lagun-Aro, with a Governing Council which included representatives of the co-operatives affiliated with it. The functions and service-mix of the co-operative have varied over time, reflecting changing needs and government policies. The health care clinic Lagun-Aro conducted at Mondragon for many years was taken over by the Basque government in 1987, as a model for other towns in the province. Rather than administering pensions as previously on an in-house basis, Lagun-aro now contracts out the function to a fund - Mutualidad de Autonomos. - conducted by the state. At the same time, a general insurance subsidiary - Seguros Lagun Aro - and a life insurance subsidiary - Seguros Lagun Aro Vida - have been established, as have subsidiaries for leasing and consumer finance - Aroleasing and Arofinance - and Lagun-Aro Intercoop (Max Centre), a subsidiary for the development of shopping malls in conjunction with the Eroski worker/consumer co-operatives.

Hezibide Elkartea Education and Training Co-operative

A third support group - the Hezibide Elkartea - stemmed from the establishment by Arizmendiarrieta of the training school for apprentices in Mondragon in 1943 and of the League of Education and Culture - a body to promote and co-ordinate education on all levels for all children and adults - in 1948. The apprentice school and the League played a key part in the consciousness-raising through which the establishment of the first of the industrial co-operatives - Ulgor - was instigated. The Hezibide Elkartea has come to cater for programs ranging from day-care to advanced technical and management skilling to adult education. The apprentice school is now a university-level polytechnical college - the Eskola Politeknikoa Jose Maria Arizmendiarrietra. Over and above its mainstream teaching programs, the Hezibide Elkartea brings together specialist bodies such as the Saiolan centre for new business activities education, training and development; the Goeir centre for the co-ordination and promotion of overseas postgraduate engineering and technical studies; the Eteo school of business management; the Iraunkor centre for continuing education and in-company training; the Ahizke-CIM centre for language studies; and the Otalora Centre for co-operative research, education and management training.

Students at the Eskola Politeknikoa have a co-operative of their own - Actividad Laboral Erscolar Cooperativa or, for short, Alecoop - that enables them to support themselves financially during their courses, while at the same time obtaining a hands-on experience of how co-operatives work. A further network of educational co-operatives offers a bi-lingual education in the Basque and Spanish languages at the pre-school, primary and lower secondary levels. Funds for the schools are drawn in part for the social allocations of the Caja and its affiliated industrial co-operatives. Their General Assemblies include staff, parent, student and affiliate members. Faced in 1993 with demands by the Basque government that schools receiving government funds should join the government system, 80% of the schooling co-operatives voted for rejecting the government's money and retaining their independence.

Ikerlan Research and Development Co-operative

A fourth support co-operative - the Ikerlan research and development co-operative - reflects the high priority which the Mondragon co-operatives have attached to keeping abreast of modern technology. This pattern, like so much else about Mondragon, was shaped by Arizmendiarrieta, through his initial choice of technical education as the means of bringing the community together and instigating change, and his insistence throughout that by mastering technology it would be possible to bring about higher forms of human and social development. "Our people", he argued, "require of our men the development of the means to scale the heights of scientific knowledge, which are the bases of progress". Arizmendiarrieta's advice caused research and development to be pursued vigorously from the start by individual co-operatives and the Mondragon polytechnical college, but this allowed insufficient scope for inter-disciplinary problem-solving and cross-fertilisation within the overall scientific and technical workforce. Ikerlan was hived-off from the college in 1977 as a separate support co-operative, in order to overcome these shortcomings, and further strengthen the competitiveness of the industrial co-operatives in the export markets where their future was seen to lie. As in other support co-operatives, the General Assembly consists of the worker/members of the co-operative and representatives of the affiliated primary co-operatives.

An extensive staff of highly qualified engineers and technicians enables Ikerlan to provide contract research and development services for co-operatives affiliated with the MCC, private sector businesses other than those in direct competition with the co-operatives and agencies of the Basque government. Ikerlan is also an active member of the European Association of Contracted Research Organisations, and offers competitive research fellowships for visiting scientists and engineers under industry re-vitalisation programs funded by the Basque government. A further support co-operative - Ideko - specialises in machine tools research and development.

Co-operative Groups

Over and above its unique support co-operatives, Mondragon was reinforced by a structure of groups or divisions which linked individual co-operatives together, both geographically on the basis of their proximity to one another, and by similarity of the sectoral activities in which they engage. Geographically, there were twelve regional groups of co-operatives. The structure stemmed from the rapid growth of the original household appliances co-operative, Ulgor, in the early nineteen-sixties. Faced with a co-operative which was outstripping by far the limits within which the advantages of growth could be achieved without succumbing to the bureaucratic rigidities, Arizmendiarrieta and his associates developed a policy of spinning-off those sections where a level of efficiency was achieved such as would enable them to function successfully as independent entities.

In this model, the components manufactured by the new co-operatives had an assured market in Ulgor, but could also be sold to other buyers. In order to balance the interests of the new co-operative with those remaining behind in the parent body - and to avoid loading the new co-operative with costs such as the establishment of marketing and other specialist divisions of its own - a co-operative group, ULARCO, was formed from Ulgor itself, the Arrasate co-operative which supplied machine tools for Ulgor and the Copreci co-operative which supplied Ulgor with parts for its gas stoves and heaters. A fourth member - Ederlan - resulted from a private sector foundry being taken over and combined with the foundry at Ulgor. Fagor Electrotechnica became the fifth member when it was spun-off by the three foundation co-operatives, as an independent co-operative manufacturing electronic components and equipment.

ULARCO adopted a structure similar to that of the individual co-operatives. Its General Assembly comprised the members of the governing councils, management councils and audit committees of the affiliated co-operatives, and was responsible for determining the policies of the group, making decisions about admissions to - and exclusions from - the group, and approving all accounts and budgets. There was also a Governing Council, made up of one member from each of the affiliated co-operatives, a General Management Committee chosen by the Governing Council and a Central Social Council comprising one representative from each of the Social Councils of the affiliates. Similar structures were adopted by the other regional groups.

The groups enabled key planning and co-ordinating functions to be undertaken in the interests of their affiliates. From 30% to 100% of the surpluses earned - or losses incurred - by individual co-operatives were pooled through their regional groups, so providing further protection for the co-operatives against the problems to which short-term market fluctuations might otherwise expose them. The groups facilitated the exchange of members between co-operatives whose markets were expanding and those experiencing contractions. Dialogue between the Governing Councils and Central Social Councils of the groups - reflecting in part discussion within and between the affiliated co-operatives - in some instances played a major part in enabling the co-operatives to implement the re-positioning and re-structuring forced on them by Spain's entry into the European Community and the economic stringencies of the nineteen-eighties and nineteen-nineties.

Mondragon Mark II

What has been effectively the replacement of Mondragon Mark I by Mondragon Mark II between 1987 and 1991 reflects the capacity of the co-operatives to re-invent themselves in the light of new challenges and changing circumstances. A series of congresses of the co-operatives since 1987 - drawing in part on recommendations from the Caja adopted by a pre-constituente congress in 1984 - has radically altered the original structure, so that the co-operatives now relate to one another in new ways. The governing philosophy of the co-operatives was codified by the 1987 Congress in an explicit ten-point declaration known as "The Basic Principles of the Mondragon Experience". The ten points are respectively open admission, democratic organisation, sovereignty of labour, the instrumental and subordinate character of capital, participatory management, payment solidarity, interco-operation, social transformation, universality and education. The declaration reads in part that admission to a Mondragon co-operative is available without discrimination on religious, political or ethical grounds or due to gender, subject only to applicants agreeing to be be bound by the principles and proving that they are professionally capable of carrying out such jobs as may be available. Members participate in the governance of the co-operative on a "one member, one vote" basis, irrespective of their positions, seniority, hours worked or capital contributions. The co-operative recognises the primacy of labour in its organisation and the distribution of the wealth created; rejects the contracting of workers who are not admitted to membership; and seeks to provide work for all who are in need of it.

Capital is seen as being an instrument, subordinate to labour and subject to a maximum rate of return. The democratic character of the co-operative implies a progressive extension of opportunities for involvement by its members in business management, through mechanisms and channels for participation, freedom of information, consultation, implementation of social and professional training plans for members and the establishment of internal promotion as the basic means of filling positions of higher professional responsibility. Solidarity should be observed externally, so that rates for equal work are roughly the same within the co-operative as in the wider community. There should be co-operation by co-operatives, both within and between sectoral groups, and by the MCC with the Basque and international co-operative movements. The MCC should contribute to economic and social reconstruction and to the creation of a Basque society which is more free, just and expressive of solidarity; act in solidarity with all those working for economic democracy in the sphere of the social economy and championing the objectives of peace, justice and development which are essential features of international co-operativism; and provide education and training in co-operation for its members, management bodies and in particular the younger generation of members on whom its future depends. The Basic Principles broadly reflect - and in key aspects improve upon - those of the International Co-operative Alliance.

The 1987 Congress also established a special fund - the Interco-operative Solidarity Fund (Fiso) - to help out co-operatives in economic difficulties with resources over and above those available from the Caja, and so avoid job losses. A further fund - the Fund for Education and Inter-co-operative Development (FEPI) - was established by the 1989 Congress, to assist participation by smaller co-operatives in larger and longer-range projects, with funds drawn from the social contributions of those which are larger or better-off. The 1991 Congress endorsed recommendations from the Governing Council in 1989 for the move to the sectoral groups and the establishment of the MCC. The Caja has surrendered its central co-ordinating functions, and is now a conventional co-operative financial intermediary, lending largely to private sector businesses. Co-ordination and strategic planning are now the responsibility of the MCC. The MCC is a tripartite structure, made up at its base of three sectoral groups - the Financial Group, the Industrial Group and the Distribution Goods Group. The Industrial Group in turn has a further eight sub-groups, namely Capital Goods I, Capital Goods II, Automotive Components, Domestic Appliance Components, Industrial Components and Services, Construction, and Household Goods.

The General Assembly of each co-operative affiliated with a group sends a delegate to a Group Assembly. The Group also has a General Council made up of the chairperson of each co-operative together a further member from each co-operative's Board, and a Management Committee consisting of the managers of the co-operatives. The General Council selects a member of the Management Council as the Group CEO. The aim is to have a common business strategy for each sector, including the adoption of common identifiers such as brand names, trademarks and logos. The groups have also had devolved to them the intervention function which was previously performed by the Empresarial Division of the Caja. Other function of the Empresarial Division have been assumed by the Lankide Suztaketa I and Lankide Sustaketa II management and engineering consultancy co-operatives, the Saiolan business activities development co-operative and an MCC Services Co-operative within the corporate headquarters of the MCC.

The groups are responsible for the management of workers whose co-operatives cease to have positions for them. Workers so affected are normally relocated - and where necessary re-trained - for positions in co-operatives whose businesses are expanding. While the objective of protecting employment has largely been achieved, the groups have not necessarily in all cases been thanked for their efforts. Transfers are seen to have generated frustration, rejection and ill-will among these affected by them. "The transferee", in the view of a major study, "feels himself/herself to have been 'managed' rather than consulted; feels less a co-operative member than the rest, as if he/she were a second-class citizen".

Members of the co-operatives affiliated with the MCC elect delegates to a Mondragon Co-operative Congress. The Congress meets at intervals of not more than two years, to consider the philosophy, policies and operation of the MCC. Two further bodies - the Standing Committee and General Council of the Congress - look after the affairs of the Congress between its meetings. The Standing Committee consists of the president, vice-president and secretary of the Congress, together with representatives from each of co-operative groups and secondary support co-operatives. The members of the Council are the heads of the co-operative groups and support co-operatives. Congress decisions "in general will have the character of recommendations to the co-operatives represented in the Congress". In order for a decision to be binding on the co-operatives, "it must be proposed by the Governing Council, be presented by the Standing Committee and be approved by the full Congress by an absolute majority".

Conclusion

In the face of the world’s economic vicissitudes, Mondragon has been steadfast in its adherence to the fundamental principles with which its founders endowed it, and continues to enlarge the scope of their application. Eroski currently is adopting new measures to enfranchise the 35,000 of its 50,000 workers who are not currently worker members. The co-operatives have entered into a solemn commitment to extend worker ownership measures to their local and overseas subsidiaries on a case by case basis, consistent with their differing cultural, legal and financial circumstances.

In a passage written a few days before his death in 1976. Arizmendiarrieta wrote in part:

Hand in hand, of one mind, renewed, united in work, through work, in our small land we shall create a more human environment for everyone and we shall improve this land. We shall include villages and towns in our new equality; the people and everything else: "Ever forward". Nobody shall be slave or master to anyone, everyone shall simply work for the benefit of everyone else, and we shall have to behave differently in the way we work. This shall be our human and progressive union - a union which can be created by the people.

It is not necessary for us to suppose that the Mondragon model can be transplanted in its entirety to other countries. What is required of us is rather that we should take from Arizmendiarrieta the message of hope his words hold out to us, study such aspects of the Mondragon experience as are relevant to our needs and circumstances and open our minds to what it can teach. Arizmendiarrieta summarised the Mondragon approach as "We build the road as we travel". The question in these straitened times is whether we will make for ourselves the future of our choice - whether we will take back control over our lives and destinies by the co-operative means whose availability Mondragon so plainly demonstrates - or by default allow others to choose the future for us.

The Hon Dr Race Mathews is a former academic, federal MP, state MP and minister, municipal councillor and chief of staff to Australian Labor Party Leaders in the federal and state parliaments. A new and updated US edition of his 1999 Mondragon book ‘Jobs of Our Own: Building a Stakeholder Society’ is available on order from The Distributist Review Press or Amazon.com.

29th Annual G.K. Chesterton Conference

2010-06-10T12:59:00.002-05:00

Friends, join us this August for ChesterTEN!

29th Annual G.K. Chesterton Conference
Mt. St. Mary’s University
Emmitsburg, Maryland
August 5-7, 2010.

WHAT’S WRONG WITH THE WORLD

Thursday, August 5

4:00 pm Registration begins

6:00 pm Dinner

7 pm Welcome

7:15 pm
Dale Ahlquist (President of the American Chesterton Society)
“In Praise of Jones”

8:30 pm
David Zach (Futurist)
“A Great Many Clever Things: The Mistake about Technology”

Friday, August 6

9:00 am
Geir Hasnes (Chesterton’s Bibliographer)
“Scientism: The Mistake about Science”

10:30 am
Nancy Brown (Author and ACS Blogmistress)
“The Woman Who Was Chesterton”

12:00 pm Lunch

1:00 pm Annual Meeting of the American Chesterton Society

Also at 1:00pm Chesterton for Beginners (with Dr. Pasquale Accardo)

2:30 pm
James Woodruff (Mathematics Instructor at Worcester Academy)
“GKC and Edmund Burke: The Mistake about Conservatism”

4:00 pm
Fr. Peter Milward (Professor Emeritus from Sophia University, Tokyo)
“Chesterton and Shakespeare and Today”

6:00 pm Dinner

7:00 pm
Tom Martin (Philosophy Professor at University of Nebraska-Kearney)
“ The Mistake about the Social Sciences”

8:30 pm
James O’Keefe (Independent Video Journalist)
“The Mistake about the Social Services”

Saturday, August 7

9:00 am
Msgr. Stuart Swetland (Theology Professor at Mt. St. Mary’s University)
“Out of the Desert: The Mistake about Islam”

10:30 am
Regina Doman (Author)
“The Evangelization of the Imagination”

12:00 pm Lunch

1:00 pm Special Presentation:
“The Faith of the Father (or the Mistake that people make about the Church)”
The Theater of the Word, Incorporated (Starring Kevin O'Brien)

2:30 pm
Fr. Ian Ker (Theology Professor from Oxford University)
“Chesterton and Newman”

4:00 pm
Joseph Pearce (Author)
“The Mistake About Progress”

6:00 pm Closing Mass

7:00 pm Banquet

8:00 Traditions: Jokes, Toasts, Readings, Clerihews

Register here:
http://chesterton.org/ON-LINE%20REGISTRATION%202010.htm

What's Hellman's(tm) Game?

2010-06-04T19:32:00.003-05:00

I have to wonder if Hellman's(tm) is trying to cash in on the Local Food trend, and the broader movement towards a rational food system.

See the video here.

I love it - it's a great, thoughtful video, and hits the really big, really important points. But why is a multinational like Unilever(tm) saying it? I mean, they bear personal- well, as personal as a multinational corporation can be- responsibility for the disastrous trends outlined in the advertisement.

Is there anyone else who sees the remarkable irony here? One poster on YouTube(tm) said it well... kinda like the Devil selling air conditioners. My goodness.

pax, caritas, et bonum

Doing God's Work at Goldman

2010-06-03T15:58:00.005-05:00

Nothing is quite as boring as reading about a banking crisis, unless it is reading about somebody else's banking crises. It is hard enough to follow the mind-boggling maneuvers of Wall Street and its complex, ponzi-scheme finance. But when it comes to the banks in Athens, most of us say, “It's Greek to me.” But we generally assume that the Greeks deserve what they are getting. Besides being Europeans, a category just a cut above being French, with their welfare states and high taxes, they seemed to be overly generous with their government pensions (often starting at age 50—a mere youth by my standards) and have surrendered the economy to the unions and other nefarious interests. And so we treat them like all the other “lesser breeds without the (financial) law.”

Simon Johnson is a man who reads about banking failures for a living, both here and abroad. As an economist with the IMF, it was his job to read about banking failures the world over, and then move in with the IMF's rather peculiar brand of tough love. And it was very tough indeed, because it was dictated by the so-called “Washington Consensus,” which called for the break up of the offending country's banks and the removal of their political influence and protection as well as conforming to a strict “free market” regime. The root cause of the failures was a Crony Capitalism that privatized profits and socialized losses, leading to certain collapse.

But when Johnson turned his world banker's eye on the United States, he found something interesting:

The challenges the United States faces are familiar territory to the people at the IMF. If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say: nationalize the troubled banks and break them up as necessary.

This “break 'em up” strategy was enthusiastically supported by both the Bush administration and the people who now run the economy in the Obama regime. So you would think that they would apply the same tough lessons to our own economy. You would, of course, be wrong. The failure is bi-partisan; not only did the Reagan and Bush administrations support the tough-love policies, but so did Rubin, who ran the treasury for Clinton, along with Summers and Geithner, who run the world for Obama. But when came to domestic banks, these tough men became rather domesticated.

Professor Johnson (along with James Kwak) has written a book about this crisis, 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown. Johnson also runs an excellent blog of financial commentary, The Baseline Scenario. The authors do an decent job of documenting an industry that had been freed of any meaningful regulation or limitation, and whose outsized rewards went to traders who boasted of “ripping the face” off their customers. Nice fellows, to be sure, but the industry itself was based on engineering financial “products” that had no relationship whatsoever to the productive economy.

There was a near-religious rationale to all of the shenanigans. Regulation, as we all know, was merely a demonic attempt by closet communists to deprive us of our liberties. And the markets, being made of of sophisticated buyers and sellers was self-regulating, so the government could just bug-out. This was an article of religious faith, one which transcended party lines. As Johnson notes:

Defending the huge bonuses in St. Paul's Cathedral in London in October 2009, Goldman Sachs executive Brian Griffiths went Gordon Gecko one better by invoking Jesus: “The injunction of Jesus to love others as ourselves is a recognition of self-interest...We have to tolerate inequality as a way to achieving greater prosperity and opportunity for all.” Goldman CEO Lloyd Blankfein even claimed to be “doing God's work” (because the banks raise money for companies who employ people and make things).

Perhaps Jesus should apologize to the money-changers. After all, at least they were dealing in real money, no matter how predatory their exchange rates. But our bankers create money to make “products” that have no meaning in terms of real production. Contrary to Blankfinn's rationale, the banks became less interested in financing actual production. Lending to an actual productive enterprise is a low-profit business, because it is competitive, and any number of banks are willing to make the same loans. But the creation of financial instruments which were no more than a sophisticated form of gambling, commanded high margins and was a game that could only be played by the big boys. Large banks and large hedge funds became involved in an elaborate Ponzi-scheme in which the banks create money to lend to the hedge funds, which then buy the Ponzi equities from the banks to sell to the soon to be faceless customers.

Of course, at some point there must be at least a tenuous connection to real goods; even the tulip bubble involved real tulips. The tulips in this case were mortgages, credit cards, and commercial properties. All of these could be turned into securities to bank bonds, which then backed CDOs, which were “insured” by CDSs. But there were not enough solvent buyers to pump up these markets, so the banks created the money and lowered the loan standards. Even this did not produce sufficient instruments to satisfy the markets, so they produced “synthetic” versions, which had no actual relation to these markets. So instead of a CDO being backed by real mortgages, they were backed by CDSs which were just bets on the payment rate for a given security. If the rate fell below a certain amount, the seller of the CDS would pay the buyer a certain amount. It was like buying an insurance policy on your neighbor's home in hopes that it would burn down. If a thousand people do this, and the house does burn down, the insurance company would have to 1,000 claims instead of just one. Insurance companies like AIG were willing to do this (at extraordinarily low rates) because even if they did have to pay a 1,000 claims for one fire, they couldn't imagine more than one fire at a time; they could not foresee the whole neighborhood burning down. (This simplifies the process; the degree of financial engineering (that is, fraud) was staggering. My favorite instrument is the “reverse floater” which caused the bankruptcy of Orange County's retirement funds. But you get the idea.)

But the very need to make loans of whatever quality practically guaranteed a such a conflagration. As the market deteriorated, the banks lowered their lending standards to get more loans to create more ponzi bonds, a process Johnson calls “force-molting”. The term is from factory farms; when hens slow down egg production, they are starved of food and water to force one final bout of egg laying before they die.

It is really possible that the banks and insurance companies didn't see the collapse coming? More likely, they didn't care. The market was so large, the government so captured by the banks, and the banks so critical to the economy that there was an implicit guarantee from the government that the big banks would not be allowed to fail. The six largest banks controlled assets equal to about 60% of GDP (up from less than 20% in 1995). The big banks exercised an economic and political veto. It was a duplicate of the situation in third world dictatorships: political power translated into economic power which translated into further political power. This is the cycle the IMF (at the direction of our Treasury Department) wanted to break.

Johnson's target is the Too Big To Fail banks, which he says should be nationalized and broken up. The rescue plans have accomplished just the opposite; the big six are bigger than before the crises, having gobbled up their weaker rivals. They now control a bigger share of the economy than before, and they are making the same risky loans that they did before the crises. In other words, the situation is worse than before, not better. And the tepid “reform” does nothing to change the situation, even supposing that the regulators have the knowledge and will to enforce their will on the banks. More likely, we will have the same regulatory capture (where the banks virtually run the agencies that should be regulating them.)

Johnson would have us apply the solution that he himself applied to so many “customers” of the IMF: break 'em up and sell 'em off. And then work to keep them small. The arguments for doing so are sound. Banks, after a certain minimum size, do not get more efficient by becoming larger; they just get more difficult to manage. In economic jargon, they exhibit “constant returns to scale,” meaning that they get the same efficiencies regardless of their size. But size does confer political power. The large banks have implicit and explicit guarantees from the government. This gives them a tremendous competitive advantage, since it lowers their cost of funds. The Big Six can borrow at a rate .78% lower than their smaller rivals (down from .29% in 2000). In other words, the bigger they get, the more advantages they receive and the bigger still they get.

The situation we have now just sets up the next collapse, which will come sooner than we think. And with each successive crises, we become less able to handle the next. Under the Bush-Obama bailouts, the government is on the hook for as much as $23.7 trillion, or 150% of GDP. It is unlikely that we will lose that much, but we could. Liabilities have been socialized, while the profits continue to be privatized. No wonder the banks show little willingness to change. After all, they can make money—lots of money—by ripping the faces off their customers. And if that fails, they can rip the faces off the taxpayer. What is their incentive to change?

Johnson points to the obvious (which is always difficult to see), namely, that the country is formally an oligarchy, with a government of the rich, by the rich, for the rich. Partisan fights are beside the point. As Obama amply demonstrates, “change” means more of the same, for the same people fund both sides. As entertaining as our political process is, it is meaningless, full of the sound and the fury, no doubt, but signifying nothing. The real power lay elsewhere. The president and the congress seek office to run the country, only to find that the country runs them. Or rather that part of the country in and around Wall Street.

We are now in a trap from which we cannot escape. As Nouriel Roubini notes, the transferring of private liabilities to the public balance sheet has meant high government debts. To pay the debts, there will have to be higher taxes and/or lower government expenditures. But the government has been, for that last 60 years, since a large part of the economy that lower expenditures (or higher taxes) would lower output and make it impossible to pay off the debt. There is no way out, this side of collapse. The situation is worse in countries like the United States that have dismantled so much of their productive capabilities. Because in the end, countries get prosperous by making things. It is in the fields, farms, factories, fisheries, and mines that wealth is first created, and the rest of us must eat what they produce, must wear what they make. This is where our efforts to rebuild the economy must focus, and hence this is what finance must support, and if it doesn't support these things, then it can only be a destroyer of the economy, however much it may benefit the bankers and politicians. We can get along without synthetic CDOs, but we do need to eat.

National Small Business Week

2010-05-25T10:01:00.003-05:00

I thought folks might like to know that it's National Small Business Week this week, and find some small way to celebrate the local businesses we know and love. One thing we can all do, is make our needed purchases locally when at all possible. Many times that's harder than it ought to be; but ultimately worth the effort.

Everyone needs food and books, and every so often you need clothes - try searching these sites for locally owned retailers in your area:

Local Harvest

Independent Bookstore Finder

Thrift Store Directory

Those of us called to invest a little more in our communities, might like to check this out:

Big Box Tool Kit

I beseech you, if you do nothing else at all - just make room in your inbox for their newsletter, and keep the practice of shopping local on your radar. However, there are a wealth of tools on their site for taking constructive action to promote local businesses, and defend your community from absentee chain stores.

pax, caritas, et bonum-
(h/t to Nathan Origer)

New book on Community Land Trusts

2010-05-22T15:49:00.002-05:00

For all the Georgists in the audience, you'll want to know about The Community Land Trust Reader.Recently published by the Lincoln Institute of Land Policy, The CLT Reader is a new collection of essays tracing the roots of the land trust movement; and this is an opportune moment in time for this reflection. In this age of soaring foreclosures, foreclosure rates among CLT homeowners are just under half the rate for market-rate homeowners.

Looks like good reading... I'll have to get back to you after I find a chance to sit down with it. Of course, if you get a chance to read it before I do - I'd love to know what you think.

pax, caritas, et bonum.

It's never easy...

2010-05-21T23:39:00.003-05:00

I make a good faith effort to buy as locally as I can when it's time to make a purchase. My husband and I recently bought an older home, and we find it is time to make several purchases. The sad thing I encounter, again and again, is just how hard it is to choose a locally produced item. Often, the item is not labeled, and clerks are not clear on the item's provenance. Also, increasingly- there simply is no local alternative. But I've found that the looking can be half the pleasure.

In my searching, I've used this site to find products that are at least USA-made:

Still Made in the USA

Every time I go there, I wind down the most delightful rabbit holes, and often find just what I'm in the market for. She does quite a bit of research, and keeps the site regularly updated with breaking news on industry changes. She blogs here.

(I should probably tell her about the beautiful wood flooring I discovered that is made in Michigan from Michigan wood, by Chelsea Plank Flooring in the lovely small town of Chelsea, MI.)

pax, caritas, et bonum

La Grande Illusion

2010-05-20T19:12:00.019-05:00

The first rule in motion picture funding is “never use your own money.” Approach potential investors and get what you can from state and local grants. States pour millions into the movie industry each year. Why should Hollywood receive subsidies with worldwide box office receipts and home entertainment sales turning flops into moneymakers, and with 50 of the largest companies accounting for 80 percent of $55 billion in annual estimated returns? The film business is far from going under.

Don’t tell Hollywood. Armed with powerful lobby, top studios habitually complain before Congress about massive financial losses as a result of piracy, often using data from “independent” firms to support their claims. For example, in 2005 the Motion Picture Association of America commissioned a study reporting 44% decline in revenue due to college student piracy. Two years later, the same firm revealed the percentage was erroneous. Losses were closer to 15%. Other analysts say the actual figure is 3%.

Bureaucrats in city hall bend over backwards to attract production companies with large grants. Films create jobs, bring in valuable income for local businesses, and support tourist industry. But subsidies also come at a high price. According to Luke Malpas of the New Zealand Sunday Star Times, the $45 million in tax subsidies James Cameron received to shoot Avatar in New Zealand cost their taxpayers $50,000 for every employee hired by effects house Weta Digital.

Regardless of how good Weta’s work is (and it is excellent), there is no principled argument to be made for taxpayers subsidising jobs in the film industry and paying film industry salaries, as opposed to any other. Why are those involved in film-making more deserving than those at a forestry mill that might close? Or a rural hospital that could be kept open?

Good question. Film subsidy programs do not reflect significant advantages for employment. According to Livingston Daily, the state of Michigan’s hefty 2008 film tax incentive revealed an almost 10% decline in film employment 17 months after passing legislation.

After describing tax incentives as hand-outs for rich corporations, documentary filmmaker Michael Moore became the happy recipient of a $1 million dollar subsidy from the state of Michigan for the film “Capitalism: A Love Story.” Of course, as a member of the Michigan Film Office Advisory Council, he is responsible for nominating beneficiaries of the subsidy to the Michigan Film Office. Since the controversial story broke out, Moore has become a self-described moderate regarding film subsidies.

Few states are willing to cap tax incentives or use them to favor local production houses. For example, in 2007 the government of Massachusetts eliminated the state’s $7 million subsidy cap per movie in favor of limitless subsidies. According to the website Wicked Local Cambridge,

Supporters of reducing the cap said that the state should not offer subsidies to a wealthy, private entertainment industry while education, human service programs and local aid are still severely underfunded. They noted that the state-funded $5 million portion of Leonardo DiCaprio's estimated $20 million salary for 60 days of work on a movie here would pay $45,045 salaries for 111 teachers for one year. They argued that the state lost $95.5 million in 2008 by subsidizing $113 million for these movies and receiving only $17.5 million in taxes and other revenue generated by the companies.

While profits in Hollywood continue to soar, postproduction expenses for indie filmmakers slimmed down considerably. The cost of CGI animation notwithstanding, the exit of celluloid and the advent of digital cinema allow even inexperienced filmmakers to produce short and full length features for a fraction of the cost. Producers no longer have to tremble at the sight of Kodak price lists as my friends and I did almost eight years ago when making our first movie. Back then even using the cheapest stock and processing cost well over $5,000 just for a ten minute short film; $11,000 considering the price of rentals, permits, and editing costs. Today cameras are affordable and an abundance of software is available targeting the indie filmmaker, including Apple’s Final Cut Pro, Adobe’s After Effects, or the Linux-based Cinelerra.

Of course, filmmaking at the studio level is still far from pedestrian and it would be simplistic to say otherwise. Besides production and postproduction expenses, distribution costs remain challenging for the average professional straight out of film school. But in a world where films are made on shoe-string budgets and Internet marketing becomes increasingly relevant, cinema as art (and as business) enjoys the benefit of wider and healthier competition.

Wouldn’t thousands in subsidies to small or local production houses beat millions spent to court Tinseltown and create seasonal jobs?

Preference given to small production houses, artistic cooperatives, and locally-conceived projects would benefit the local economy on a consistent basis. Cooperatives could flourish using the combined skills of actors, writers, cinematographers, grips, etc.; each member belonging to local guilds reflecting their craft and serving God in their art through a greater diffusion of creativity unattainable in the industry of the status quo. These men and women, in touch with the joys, struggles, virtues, and experiences of their neighbors, would rival existing national guilds that cater to the objectionable content of major production companies, taking care never to glorify indecency and committed to their immaterial intentions. Tax subsidies for these groups could also come with caveats benefitting the local community. Out of state or regional small movie firms might be required to work with local businesses for set construction, sound recording, etc. so as to ensure lodging and catering are not the only industries receiving a boost. Finally, local policy could also stipulate a percentage of box office receipts, DVD sales, and other residuals set aside for the improvement of infrastructure, education, mom and pop business incentives, or dividends for residents in the area.

Difference in Values

Moguls slammed 2004’s The Passion of the Christ for its excessive violence while eagerly cashing in on three decades of blood baths like Halloween, Hellraiser, and psychopathic-comedies such as the A Nightmare on Elm Street series (Interestingly, the very same year Gibson’s film was released the pedophile-friendly Birth was panned by audiences who no doubt were “not ready” to stomach the perversion of adult-child “love”). They resorted to denouncing the film’s graphic content after an A-list actor broke the 30+ year old moratorium on religious-driven stories, a silence allegedly due to the unprofitability of religious films. Mel Gibson’s instincts were vindicated when he turned a $25 million investment into a profitable movie drawing in excess of $370 million domestically ($611M worldwide). Rather than take advantage of this success the studios sat on it. Leonardo Defilippis (director of the film Thérèse) credited Gibson’s The Passion of the Christ as “opening the doors for all kinds of religious projects,” but Paramount never came knocking. Lionsgate did not trip over itself to acquire the rights to the lives of the Saints. Quite the opposite, movies attacking Christianity or western culture continue to be greenlit (e.g. The DaVinci Code, Angels and Demons, and The Golden Compass).

Capitalizing on successful predecessors – as quickly as possible – is a time honored tradition in Hollywood. With the financial powerhouse of Hollywood these lackluster productions are cheap, relatively easy to make, and turn a modest profit. For example, films featuring Native Americans followed the success of Kevin Costner’s Dances with Wolves. Television remakes blitzed after the success of The Addams Family. In many ways insignificant and formulaic copycats fuel the industry’s more ambitious productions, and sequels like the upcoming The Hobbit fill the pages of trade magazines with buzz. Not so with the $611M earning Passion play.

At the time of The Passion’s debut two further “missed” opportunities may be pointed out. Both of them are common practice. First, there was a failure to reissue classic, religious-themed movies for DVD that were exclusively available on VHS, to coincide with the film’s premiere (e.g. El Cid, Quo Vadis, David and Bathsheba, etc.). Second, competing studios also missed out on the opportunity to scour their inventory for related material and thus capitalize on the genre. For example, with the theatrical release of MGM’s remake of Michael Mann’s Manhunter (Red Dragon), a DVD of the original picture was reissued on DVD by Anchor Bay (MGM has recently acquired Manhunter and has released a DVD versio). So why would the movie industry divest from these typical business practices? The only answer I can come up with is Hollywood’s disconnect with the values and beliefs deeply held by mainstream Americans. “Doors for all kinds of religious projects” should have opened. But they didn’t. Hollywood continues to churn out countercultural films which do not edify or illuminate but degrade and corrupt. The dishonesty is only made worse when taxpayers have to foot the bill.

Machete as Genetically Modified Organism

The city of Austin has recently come under fire for subsidizing what some call a racist movie. Robert Rodriguez’s Machete is a film embroiled in speculation and controversy. Set for a September release, Machete is the story of a former Mexican Federale looking for an honest day’s work in the streets of Texas, who becomes an accessory in the plot to murder a U.S. Senator bent on deporting illegal immigrants. However, Machete is double-crossed in a false flag, tricked into playing patsy to garner public bitterness against Mexicans and support for the anti-immigration laws of the U.S. Senator he was originally hired to kill. With the help of an ethnocentric Catholic priest more interested in nationalism than the salvation of souls, Machete goes on a murderous rampage after the white men who betrayed him.

Machete’s trailer comes in the nick of time. Arizona’s recent no-nonsense anti-immigration legislation even spawned a radical trailer on Cinco de Mayo, with an outraged Machete (actor Danny Trejo) referencing the state saying they, “****** with the wrong Mexican.” No doubt the reference to Arizona and the date was chosen to highlight Mexico’s independence from Spain, a signal to European-Americans that there is going to be trouble for the state or possibly for the country. The trailer continues depicting the protagonist as he leads a mob of machete wielding Mexicans who raise their arms in the air, and prepare for an inevitable revolution.

Whether the trailer was serious or manufactured hype, by playing into the anger of Mexicans over the Arizona law, Robert Rodriguez may be playing with fire he will be unable to control. Ideas have consequences. So do films. Revolutionary U.S. and Mexican-based nationalist front groups know this and are seizing the opportunity to promote their racist and violent agendas.

What a waste. Given the recent Arizona law, a good filmmaker could have taken this opportunity to build solidarity between Latin American workers and their U.S. counterparts, after all NAFTA has indiscriminately wielded a double-edged sword. GMOs like BT Corn have not only devastated American farms but Latin American agriculture as well. Excellent films like Food, Inc demonstrate how billboards and ads were placed in foreign countries to recruit migrant workers by corporations complicit in the smuggling of undocumented workers across the U.S. border. Corruption by central banks, free trade, and collusion between Big Government and Big Business are topics average Americans and Europeans are well acquainted with and, while never condoning illegal behavior, can help build much needed empathy for those desperate in today’s economic climate.

Artistic Freedom and Decency

The film industry is a business when it is convenient to hide behind the corporation and when not, it hides under the immunity of artistic freedom. But it wasn’t always this way. In 1915 the United States Supreme Court ruled that motion pictures were a business not covered by the First Amendment. Following several scandals during the industry’s infancy, the public outcry led to the creation of city and state censorship boards. Fearing federal censorship, the Motion Pictures Producers and Distributors Association (now MPAA) was established as a trade lobby to police its own ranks and stop federal government intervention. Over the years MPAA ratings diminished in relevance and stripped down to the G, PG, PG-13, R, and NC-17 ratings we have today. In time the MPAA reduced its attention to censorship in lieu of the industry’s business interests.

Perhaps we need to have a serious conversation about the elephant in the room one dare not challenge: artistic license. Censorship is an unappealing subject to modern man yet we cannot speak of the ills of economic license and give a free pass to deregulated art, especially when public assistance is used to fund it. Decency standards must not simply be left to market forces any more than the economy should, particularly as art increasingly contributes to the development of our children and the household. Nor should standards be limited to evaluating violence, nudity, language, and sexual content. They must go further. As Archbishop Giovanni Cicognani accurately predicted in the 1930s, motion pictures pose a menace to morals and “massacre the innocence of youth.”

Until such a conversation takes place, and as long as the top studios run the show, the first step towards restructuring the movie industry is to resurrect the National Legion of Decency. This Christian organization successfully opposed and protested against content it objected to on moral grounds. The rise of the Legion caused fear among the trade papers. In 1934, Variety published a warning under the headline,

"CATHOLICS WOULD ENLIST ALL FAITHS—Need for Prompt Action to Avert Drastic Penalties Upon Picture Industry Urged in East—Real Danger—"

And they did. According to a Jun 11, 1934 article for Time Magazine, “Aiming at enlisting at least half the U. S. Catholic population of 20,000,000 as well as all Protestants and Jews who care to sign, the Legion last week claimed 2,000,000 members.” Imagine a number like that one in just one week.

What we need today is an aggressive, unified censor that will impress upon the faithful the need to abstain from art that is detrimental to the soul. Groups should be formed that will act in the capacity of a local Legion chapter, informing both the public at the parish level, the priest in his sermon, and especially women’s groups as mothers are the intelligentsia of the family. We need serious people creating and joining an active association which does more than simply emit pious movie reviews (although this would be a refreshing start.).

As we ponder the potential guilds and cooperatives, the craftsmen, the artists, and all those devoted to St. Gregory the Great, St. Joseph and his adopted son, our Heavenly King, let us recall the original 1933 membership pledge composed by Archbishop John McNicholas:

I wish to join the Legion of Decency, which condemns vile and unwholesome moving pictures. I unite with all who protest against them as a grave menace to youth, to home life, to country and to religion. I condemn absolutely those salacious motion pictures which, with other degrading agencies, are corrupting public morals and promoting a sex mania in our land…Considering these evils, I hereby promise to remain away from all motion pictures except those which do not offend decency and Christian morality.

Servire Deo regnare est!

From Dale Ahlquist

2010-05-17T11:10:00.005-05:00

An urgent appeal from Dale Ahlquist, President of American Chesterton Society:

Chestertonians !!

In all of the American Chesterton Society’s good work, one of the most exciting things we have ever gotten involved in is helping to start a new high school. Chesterton Academy is just completing its second year of operations in St. Louis Park, Minnesota. We featured a cover story about it in Gilbert Magazine not long ago, but it has received other national press because of its uniquely integrated curriculum, its comprehensive approach to classical learning, its faith-based education, its affordable tuition and the fact that it is a grass roots effort. We are trying to fix what’s wrong with the world, and we’re doing more than sitting around and talking about it.

(For more information about Chesterton Academy, visit our website here: http://chestertonacademy.org/)

I am contacting you today because we have just received an amazing fund-raising opportunity. A Minneapolis entrepreneur named Andrew Redleaf has announced that he is offering the school a challenge grant of up to $75,000. That means that for every dollar we raise from now until June 15, 2010, he will match it, dollar-for-dollar, up to $75,000. This means we can raise $150,000 for the school. This gigantic for us because we are a modest operation that makes a little go a long ways.

There are several reasons why this is significant, but perhaps the most important one is that this school has impressed Mr. Redleaf, who is looking at this venture of ours as a total outsider. He is not Catholic (he was raised Jewish), and he has not studied Chesterton. But he likes what we’re doing. You can find the full story on Mr. Redleaf and his amazing offer to us here: http://chestertonacademy.org/news

We have less than a month to raise the money for this matching grant. I know that times are tough, but I am calling on you to help us in any way you can. Please make a tax-deductible contribution today. Any amount will be helpful.

You can donate here: http://chestertonacademy.org/support

We will be very grateful for your help.

Your servant,

Dale Ahlquist
President, American Chesterton Society
4117 Pebblebrook Circle
Minneapolis, MN 55437

The New "New Liturgy"?

2010-05-17T10:22:00.001-05:00

Too funny:

"Sunday's Coming" Movie Trailer from North Point Media on Vimeo.

Tip of the hat to Brennan Hartley.

Ora Pro Nobis

2010-05-14T19:04:00.004-05:00

I have been contacted in the last few days by several people who want me and the loyal readers of this blog to pray for them. I don't even have to tell you the stories, because you already know them—lost jobs, mortgages due, babies on the way, etc. Now, the odd thing about asking me for prayer is that I am not a great prayer. Like a lot of people who fondly imagine themselves to be “intellectual”—usually on very little evidence—I tend to take prayer at entirely the wrong level. (By the way,“intellectual,” in my case at least, is a Latin term meaning, “doesn't like physical labor.”) But I suspect that there are really great prayers among our readers. After all, reading this blog is an act of faith in itself. And it is on these “great prayers” that we call.

The job of a distributist is to build up community, and nothing builds community like shared prayer. Community is always an act of faith in each other and in God, and does not exist without both. And aside from charity, prayer is the ultimate act of faith. The Jews have the concept of the minyan, a quorum necessary for public prayer. It was for this reason that the Eucharistic prayer summons a minyan of saints:

In union with the whole Church we honor Mary, the ever-virgin mother of Jesus Christ our Lord and God. We honor Joseph, her husband, the apostles and martyrs Peter and Paul, Andrew, James, John, Thomas, James, Philip, Bartholomew, Matthew, Simon and Jude; we honor Linus, Cletus, Clement, Sixtus, Cornelius, Cyprian, Lawrence, Chrysogonus, John and Paul, Cosmas and Damian and all the saints. May their merits and prayers grant us your constant help and protection.

Thus, the required minyan was extended from the saints of the Church Militant to those of the Church Triumphant, the ultimate community. Now, we always get the question, “what practical things can I do to build up a distributist community” and the most practical thing, the thing on which everything else depends, is prayer. And especially prayer offered in communion with others. The “others” need not be physically present to us, just like the saints in the Eucharistic prayer. But the cloud of witnesses is always present when we pray with them.

No doubt there are many who will consider this to be too mystical. We are (according to the reigning public orthodoxy) all individuals and responsible for our own destinies. We live in an age of “consumer sovereignty” where the customer is king, and everything depends on our private choices. This view, I suggest, is the real mysticism, because it directly conflicts with everything we see. Far from being self-reliant individuals, we find ourselves at the mercy of forces we do not understand and events in places remote from our daily experience. Profligacy in Greece threatens the economy in America. Choices in China affects the jobs we will have, or will not have. Actions of banks require us to support their losses. Everywhere this “sovereign individual” is crushed by forces beyond his control, forces he didn't even know existed. Forces we cannot see, things we cannot touch, touch us with pitiless might and power. To maintain the myth of individualism in the face of such unseen forces is the ultimate mysticism.

Very well then, but we have a few unseen forces at our own command. Of course, they are not really at our individual command; prayer is not magic. But because we are joined with each other and the saints, the community claims the right to call upon these forces. We do not know how they work, but then, we really don't know how the banking system works either, a statement which is true even, or especially, for the bankers. We do not deny the important task of building up the individual, but the individual is created in community, and grows only in that rich soil.

The real point of this essay, if it has a real point, is to throw off my own duty of the prayers that were requested of me onto the readers, to summon a distributist minyan to aid our members in need, and to commit that ultimate act of community, ora pro nobis.

Lessons from the Amish

2010-05-13T16:16:00.005-05:00

In the Spring 2010 issue of the College of Wooster's alumni magazine, there is a very engaging article about the work of two of their professors- one of sociology and one of anthropology. The two have spent the last seven years interviewing and coming to know their local Amish community in depth; and have just published a book on the subject: "The Amish Paradox" detailing much of what they have learned in their seven years of study.

What I find most intriguing is the Amish value of 'gelassenheit', and how it has preserved their culture, and shaped their economy. This value essentially places G-d first, community second, and leaves self-interests last. It is in effect, a cultural value that orders something very close to a Distributist society, in my view.

But don't take my word for it- please read the article. When you click on the link, it will take you to an online copy of the magazine-you can 'turn' pages of the magazine; the article starts on pages 12/13.

pax, caritas, et bonum.

Chemical or Organic? The Problem of Modern Agriculture

2010-05-13T09:48:00.002-05:00

I'm just an amateur gardener; I'm not even a real gardener, truth be told. I've got two short rows of corn, which I've never grown before this year, enough beans to fill my pantry for a while, and tomatoes to keep us happy. I'm also experimenting with cucumbers and a couple of apple trees, carefully pruned to keep them compatible with my small-city urban lot. But John Médaille's recent note on the current woes of chemical farmers seems to call for further comment.

As an amateur gardener, I latched onto the organic bandwagon pretty quickly. It's much cheaper, for one thing; I've got the garbage that I need for composting anyway, and I need little else in the way of fertilizer. I buy open-pollinated crops (Redwood City Seed Company has some interesting breeds, but they're everywhere these days if you keep your eyes out) so that I can save the seeds, so once I've bought a packet I've got seed forever, barring some catastrophic crop failure. More importantly, though, it allows me to pursue (very) small-scale agriculture without complete dependence upon fertilizer producers and Monsanto; they won't let you save their seeds.

Geoff Hamilton's Organic Gardening was such a wealth of information to me that I can't begin to praise it enough. Eminently practical, Hamilton acknowledges the huge advances made in agricultural science in the past century; he then proceeds to harness those advances for organic production. He explains, "[t]he purely chemical gardener uses his soil simply as a means of anchoring plant roots and of holding artificial fertilizers to provide plant nutrients," noting that "[t]his approach does have excellent results, in the short term." On the other hand,

[i]n the long term ... it has two disastrous consequences. Because organic matter is not replaced, the soil organisms die out; without them the soil structure breaks down and the soil becomes hard, airless and unproductive. Attempts at “force-feeding” the plants result in soft, sappy growth, which is prone to attack by all manner of pests and diseases. In order to control them, chemical pesticides are used, often with short-term success. But, in killing the pest, they also kill its natural predators so, eventually, the problem gets worse. Stronger and more poisonous pesticides have to be resorted to, and so it goes on. It is a vicious circle that, once started, is difficult to break.

The organic gardener, on the other hand, is really cultivating soil rather than merely plants; he's ensuring that the earth is healthy, so that the fruit of the earth will also be healthy. Hamilton illustrates these principles throughout the book, and he does so in such an erudite and convincing way, based on his own decades of experience as both a chemical and organic gardener, that it convinced a puny little upstart like me most thoroughly.

Nor is Hamilton the only one singing the praises of organic crop raising. For example, Gene Logsdon, in his own words a "contrary farmer," has published a new edition of Small-Scale Grain Raising, a fantastic explanation of organic grain raising on a reasonable scale. (This, incidentally, is what convinced me that growing corn on my little bit of land wasn't an idiotic idea; next year, if I can get a decent crop this year, I'll grow a lot more, Deo volente.) Logsdon has written extensively, and an abnormal amount of very interesting work can be found for free at his blog. He's been farming since horses were the up-to-the-minute tools, and he continues to farm even in his old age. And he's got some very interesting things to say about chemical and organic farming.

What sparked this article was a note that weeds, especially pigweed (a useful plant in itself, but not compared to the crops it's supplanting), are becoming resistant to Monsanto's famous wide-ranging poison, Roundup. But in Small-Scale Grain Raising, Logsdon notes that there is one weed control mechanism that pests will never become resistant to: the hoe. And on his blog he has a paean to hoemanship that nearly brings tears to the eyes of a romantic wannabe agriculturalist like me. This is just one of Logsdon's examples of where our modern farming methods are going wrong, and really a pretty superficial one at that. But Logsdon has written countless works illustrating the problem with modern farming methods; all are worth some perusing.

Hamilton and Logsdon are just two examples of the great organic revolution that seems, slowly but surely, to be gaining ground. It's gaining ground because there's a fundamental problem with the way we currently do our agriculture. That fundamental problem is this: we're extracting the nutrients out of our soil without replacing them, in the same way that we're pulling oil out of the ground without replacing it. Because we're not cultivating healthy soil, we're forced to rely on chemical fertilizers, which are expensive and make the farmer dependent upon fertilizer producers for his livelihood. Furthermore, this chemical farming encourages enormous plots, making traditional weed-control methods impractical. As a result, farmers are forced to use chemical poisons like Roundup, which leads to the development of Roundup-resistant weeds, which leads to the application of still more Roundup mixed with still more chemical poisons. These large plots also tend to be monocultural, allowing pests that feed on those crops to reproduce much more quickly than they otherwise could. The solution to this, of course, it still more poisons, these directed at insects rather than weeds. The cycle continues indefinitely.

The sad thing is that weeds can be controlled without this expensive dependence on Monsanto, with the plow and the hoe. The sad thing is that soil nutrients can be replaced, and even sustained indefinitely, without this expensive dependence on chemical fertilizers and their producers, with manure and green manure crops. Logsdon shows this through the example of his own farm, and can cite many other examples and techniques by which this is done. Some studies have even shown organic farming to produce as good or better yields than chemical farming, and that organic farming has some other significant advantages, as well.

Organic methods are more sustainable, at least tolerably efficient, and most significantly less poisonous than chemical methods of agriculture. So why can't they be more widely adopted?

The answer is that these methods can't be used on our modern enormous monocultural fields run by huge and distant businesses. Such businesses have a vested interest in the highest possible yields per acre and the purchase of chemical fertilizers and weedkillers; they have no interest in preserving the long-term stability of the soil (they can just keep dumping chemicals on it, after all) or in the massive pollution of the countryside, an externality that has little to no effect on their bottom line. Society needs smaller farms run by independent farmers, farms small enough that these traditional, and invincible, methods of soil cultivation and weed control, coupled with new scientific discoveries and practices, are both practical preferable. In other words, we need distributism applied to agriculture.

But wouldn't this drive the price of food up? Isn't that why organic food is more expensive than "regular" food? Yes, it would. But that's not necessarily a bad thing.

The fact is that food is expensive. It's the most important thing that a society produces, without which society can produce nothing else, and it takes time, work, and resources to do so. That all adds up to cost. But what the above paragraph is concerned about isn't cost considered simply; rather, it's cost in the grocery store. If Americans can't get their beef for three dollars a pound, why, there'd be a riot!

But the cost in the grocery store is only a tiny part of the whole picture. The real costs of food production aren't remotely all reflected in the price we pay for it at Food Lion. Time Magazine not long ago ran a piece well titled Getting Real About the High Price of Cheap Food which explains some of these extra costs nicely. Take, for example, chemical fertilizers. These are not natural chemicals, and the natural world does not react well to them. Millions of tons of the stuff is poured onto crops within the Mississippi basin; this fertilizer washes out of the soil and into the Gulf of Mexico, where it produces a huge region with little oxygen and therefore few fish. Nor is this, by far, the only "dead zone" in the oceans. And that's just one effect of the fertilizer bombardment, leaving out the problems of the pesticides.

These costs are there, an integral part of modern industrial food production (which we still euphemistically call farming). But they're not passed on to consumers; they're shoved onto society at large. In other words, these costs are externalized. So we feel like we're getting cheap food when we buy a pound of apples for a dollar at the grocery store; but we're not. We're getting food that doesn't cost much money; it's still extremely expensive, more expensive than we can really afford. It costs us a dollar a pound; but it also costs us our topsoil, our fisheries, the health of our rivers, and the health of ourselves. Rationally, we ought to pay the farmer a bit more money than sacrifice everything else.

So not only do small farmers need distributism in agriculture; the world needs it, as well. We're not only wiping out our small farmers with our current methods, we're also wiping out our soil and the rest of our natural world. Catholic social teaching provides us the solution to this societal problem. We need to apply it to agriculture, the fundamental industry of all human civilization.

Praise be to Christ the King!

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.

Ford Distributist Writes His Plant Manager

2010-05-07T06:56:00.002-05:00

Dear Dale,

I am writing this letter in response to your communique issued April 7, 2010. Like you, we too have a vested interest in the continued success of Ford Motor Company that hangs somewhere in the neighborhood of live or die, in terms of our own families’ economic security. In spite of the wretchedness of life on the assembly line, a life freely chosen, a good number of us simply have no other reasonable options. Therefore, we must deal with our collective situation on whatever terms we can accept as a matter of simple family survival.

Reading of your interest in improving our plant’s culture, specifically in regards to the historically antagonistic relationship between hourly workers and salaried personnel, has given me great hope for our collective future. It is true, Dale, we can no longer afford to engage (read lose) in this brutally competitive, capitalistic model of production. It has failed and will continue to fail and ought to fail on its own merits, as a workable system in the production of goods and services in the modern global economy. National and state treasuries are being looted. Whole generations of worker-citizens have been reduced to mere hosts by money-grubbing, parasitic business interests. In short, I agree, gentlemen, a better way- like the one taking form in the states by the new cooperative Mondragon/United Steelworker initiative, is not only possible, but morally imperative, as we move into the future.

If not pursued, we will hasten a return to human slavery- the natural and logical end of this broken and twisted industrial philosophy where sweatshops run roughshod over workers in the hysterical production of cheap goods for impoverished consumers. According to a Daily Mail article, dated April 18th, the National Labour Committee has released photos taken as part of its three-year investigation of the KYE Systems factory in Dongguan, China, which produces electronics for Microsoft, showing mostly women asleep at their work stations- a measure newly introduced to increase productivity. Overloaded jobs performed in fifteen-hour shifts with no bathroom breaks, bad food, and deplorable working conditions have taken their toll. One employee told the NLC:
'
We are like prisoners. It seems like we live only to work - we do not work to live. We do not live a life, only work.

Only a madman, bent on the destruction of all we hold dear, would dare continue down that ugly and brutal path. After all, Dale- we are Americans… And though we as patriotic citizens still have a long road ahead of us in building and extending that democracy to include every workshop within the continental borders of the United States- we proudly admit both parties have come a long way since those despicable days of Fordism.

I am heartened by the improvements made in the overall health and safety of our workforce. We human beings operate more efficiently in a healthful state- which is all the more reason we strive to maintain safe and healthy workloads now and in the future. We do, however, find it difficult to reconcile the recent increase in line speed (which cumulatively, over time, must lead to repetitive stress injuries, excessive absenteeism and very real mental and physical stress for us hourly folk) with your genuine sentiments of concern. A clarification on that phenomenon would be most helpful, I think.

The quality awards are a glowing affirmation of what we already feel in our hearts and know in our minds- namely, that we at the Kansas City Assembly Plant have always consistently produced some of the finest motor vehicles the world has ever known. The surest path of least resistance to high quality rests in the up-building of morale through the general improvement of working conditions in the factory. Our continued success relies heavily on not only maintaining, but increasing that very high level of morale, which can only be truly sustained long-term by fair and reasonable workloads, a genuine spirit of cooperation between labor and management with good wages, benefits, and working conditions for all. Blow pops and movie tickets and free pizza and certificates for good deeds and pats on the back may work on children, but these weird rewards tend to make me edgy.

I agree with the general thrust that operational costs must be kept to a minimum as we are now in direct industrial competition with global, third-world slave production systems for the manufacturing of motor vehicles, but the recurring sharp focus on hourly sacrifice gives me pause. Your letter states “We are driven to do this by the brutal competition we face from other auto companies.” This seems to paint the picture that Ford Motor Company is somehow a hapless victim of brutal, external market forces rather than the century-old leader of its creation. Very public record based on years of exhaustive, academic research shows Ford Motor Company being the foremost pioneer, developer and champion of the “more-for-less” philosophy in motor vehicle production for over one hundred years.

Workplace efficiency makes logical business sense; however, when concentrated on the over-regimentation of the hourly worker, we begin to see wholesale decreases in decent manufacturing jobs, which are vital not only to our own national economy, by clearing the market of goods, but also to the health and happiness of the American worker-citizen and the future satisfaction of Ford’s own very real business interests- the buying and selling of motor vehicles. Say every company in every city, state, and country across the globe reduces to skeletal manpower in these good manufacturing jobs… With base models hovering around the $25,000 mark, who, pray tell, will be buying a brand new F-150 or Escape in the coming years?

In closing, I hope this little note finds you well. Your prolific updates and “open-door” policy have laid a very solid foundation for the honest exchange of thoughts and ideas in our facility- a quality you and I agree could only lead to our future success. I look forward to your response.

Warmly,

Santino Scalici, Lineworker
Kansas City Assembly
Ford Motor Company

"Democracy is two wolves and a lamb voting on what to have for dinner;
Liberty is a well-armed lamb, contesting the vote." - Benjamin Franklin

"The act of defending any of the cardinal virtues has today all the exhilaration of a vice." -GK Chesterton A Defense of Humilities, The Defendant, 1901

Revenge of the Weeds

2010-05-04T22:44:00.002-05:00

"“It is the single largest threat to production agriculture that we have ever seen,” said Andrew Wargo III, the president of the Arkansas Association of Conservation Districts."

Farmers Cope With Roundup-Resistant Weeds.

H/T to Grace Potts.

Open Books, Open Minds: The Great Game of Business

2010-04-28T20:14:00.002-05:00

In 1983, Jack Stack led a group of employees to buy-out a division of International Harvester, the Springfield Remanufacturing Company (SRC). But Stack and his associates where not just interested in building another business, but a new kind of business. It would be an employee-owned business, to be sure, and that was rare enough. But Stack wanted more. He wanted employees who had enough business knowledge to run the company themselves. Ownership was not enough; the employees had to be their own bosses. But to do that, they had to have business skills and access to the books. The key, he realized, was open-book management and business education. So the books, all of the books, were open to all of the employee-owners. Going beyond that, he established "The Great Game of Business," a system of informal but continuous education, which raises all employees up and allows all of them to make informed judgments about the course of the business. Of the success of this system, Mr. Stack says, "We've had dozens of employees rise from the shop floor to top management positions, and they're far better qualified than a lot of MBAs I see."

Twenty years ago, the PBS Newshour ran a segment on SRC, and tonight they revisited the company to see how they were weathering the current economic storms. It is worth seeing this segment:

What Jack Stack and his colleagues are giving us is a practical lesson in The Principle of Gratuitousness, which Pope Benedict identified in his latest encyclical. Far from being a mere platitude, it is a practical principle of business, far more practical than most of what is taught at b-schools. Stack understands that the business is really about the people who are part of it, and to build the business, you must build the people, by ownership, by education, by trusting them to make good decisions.

In this day, when nothing seems to be working, we at the Distributist Review need to be on the lookout for things that do work. And this works. As Jack Stack says:

When you open your books--really open them--you also open your mind, and neither your books nor your mind will be closed again.

More State Capitalist Duplicity

2010-04-28T11:38:00.002-05:00

So how are those bailouts going?

Swimmingly, we're told. Indeed, Ed Whitacre, CEO of what is still euphemistically called the private corporation of General Motors, has been bragging about GM's many accomplishments this past year or two. He notes that many people didn't want to give "GM a second chance," which seems an odd way of referring to bulldozing boatloads of public funds into a corporation dedicated to private profit. But Mr. Whitacre proceeds further, justifying this public largess by arguing that GM has paid back its full loan, with interest, five years early. (This bold claim occurs at 0:15.) Mr. Whitacre then states, "But there is still more to do."

He's absolutely right, of course. Not about the paying the government loan back; that's a deliberate deception, though the shenanigans GM played with public dollars do make it fall short (just short) of a bald-faced lie. He's right about there being still more to do. Specifically, paying back most of the fifty billion dollars poured into GM's trough in 2008. Not to mention, of course, the more than eight billion dollars generously donated by the Canadian government.

GM, see, received nearly fifty billion dollars ($49.5 billion, more precisely) from the American government in 2008. Of that, precisely $6.7 billion was an actual loan, which required paying back with interest. (7%, which is apparently an extremely generous, to GM, interest rate given the enormous risk of investing in GM at the time.) The rest was a purchase of stock, stock which was worth practically nothing at the time; in other words, the rest was a gift. GM has paid back the $6.7 billion loan; the rest of the $49.5 billion remains in its coffers, still a gift from the public to the already rich.

That alone makes Mr. Whitacre's claim a bit deceptive; he makes it sound as though the taxpayer's been made whole, which he clearly hasn't. But it gets even better. GM didn't pay this $6.7 billion dollars back from its own earnings; indeed, GM hasn't posted a profit since 2004, even with all the bailout money we've given it. No, GM paid back its government loan with---wait for it---its government gift!

Let me explain. $13.4 billion of the bailout money was put into an escrow account for GM. GM paid back the loan from this money. In other words, GM paid the public back part of its bailout by using another part of its bailout. Brilliant; only twenty-first century capitalism could possibly analyze this and call it a free and fair loan repayment.

But, just when we all thought it couldn't, it gets even better. GM has recently applied for another government loan, this time from the Department of Energy. This loan will have only a 5% interest rate, much lower than that of the TARP loan. So GM paid back the government with government funds in order to get more government money at a lower interest rate. Score: GM 50 billion, public -50 billion. Not counting, of course, the new loan from the Department of Energy.

The whole sordid scheme is well-known and well-demonstrated, despite the media's persistent parroting of Mr. Whitacre's line.

So what can a distributist draw from this comedy of errors? Quite simply, we can note that this proves us right.

Belloc noted nearly a century ago in The Servile State that capitalism inevitably either devolves into socialism or collapses under its own weight. It took longer than he expected, but we're on the cusp of one or the other right now. When productive property is concentrated entirely or almost entirely in the hands of the few, and the many are simply laborers on that productive property (in other words, a proletariat, whether white- or blue-collar), those owners of productive property become extremely powerful. They become so powerful, in fact, that the government comes to serve them, rather than the public. That's exactly what happened with our bailout, and what happens daily with our regulations and even our culture. The extent of this ownership of our government by wealthy, private interests has been more extensively explored elsewhere, and in the end it's undeniable. How long until, as John Médaille facetiously but possibly presciently quipped, "politician[s] [are] required to begin and end each speech with the statement 'This message brought to you by ...' and list the names of his three top contributors?"

The capitalists, those few owners of productive property, own our society, and they will not give that up just because one of their own was caught in a clear deception on national television. Indeed, that deception is still being aired on the networks on a nightly basis, despite its being thoroughly and publicly revealed as such. No, they will continue as they are, secure in their knowledge of their ownership of America.

So insurance companies will rejoice in legislation that requires everyone to buy their plans while offering no real competition to them. Goldman Sachs will support Wall Street reform, because they know that in the end it will only benefit them. Goldman Sachs is the government; so are the insurance companies. The government is bought and paid for; we live in a plutocracy.

As distributists, we cannot let this continue unabated; we must oppose it from start to finish. But let's not just continue to address the symptoms; we must address the disease. The disease is the concentration of productive property in the hands of the few, while the many are consigned to remain proletarians; that is, the disease is capitalism itself. Only when property is so widely distributed that society as a whole takes on the character of owners rather than of nonowning workers will the plutocracy end.

Praise be to Christ the King!

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.

The market and the moral man

2010-04-24T06:08:00.004-05:00

Free Market advocates often make arguments for the strength of their system based on the strength of the market, or the effects that may be produced by the market for the economy, society, technology, etc.

When however, we come to the subject of morality, there is very little cause effect argumentation which is demonstrated for the market and morals. This is because it is painfully obvious that the market does not of its own workings produce moral men. This does not mean by contrast, that there are no moral men in business today, though in places like Goldman and Sachs they are no doubt difficult to find. Rather, I mean to say that when we look at the effects of the market on man, we must say that it creates primarily greed, and spirals to many other vices.

Moreover, the market does not of its own accord make the populace moral. If by no other method, we could show this by tracing the decline in religion and morals since the advent of English Capitalism in the 18th century. The most preeminent case to be made against the market in the area of morals, is pornography.

In the year 2000, Hollywood put out just over 400 feature films. The "adult entertainment" industry, so-called, produced 11,000. This is not some communist scheme to undermine American morals. Crypto-commies are not funneling millions into production and spiriting away billions to fund revolution for the proletariat. Quite the contrary, the rise of the "adult" industry, which was estimated at $5 million in 1970 is estimated around $10 billion today (Reefer Madness, Sex drugs and cheap labor in the American black market, by Eric Schlosser, pg. 115) is due precisely to the demands of the market. This is not merely a modern phenomenon, it started in the 1920s where peep shows, seedy stores and back alley theaters began making profits from men who would slip away. I mention by the way communists because in arguing this point previously with a colleague, he argued pornography's presence was due to the ACLU, which is sadly naive at best.

Two main revolutions happened to increase both the demand and the distribution of pornography by moving it out of the seedy back alley into the home or an accepted mainstream. The first was Hugh Heffener, who took sex to the next level and moved his cut and paste operation on his kitchen table to his first issue with a Marylin Monroe centerfold which printed 70,000 copies in its first run. Within three years he had a millions subscribers.
The second, and far less known, is a hard working entrepreneur by the name of Reuben Sturman. Sturman worked hard selling comic books he had obtained which were sent back to the publisher or to be destroyed, and moved into several other fields. The success of Playboy had brought about numerous imitations, and the high demand for magazines and books caught his eye. Seeing the chance to make money Sturman embarked on distribution of as much as he could get his hand on. This is important, whether Sturman viewed the stuff he distributed is largely immaterial, he was a hardworking businessman who saw a chance to make millions, like any good entrepreneur, and he went for it. He was not a communist or an ACLU guru, he was a hard working capitalist responding to the demand of the market, and even increasing the demand. When he came hard up against obscenity laws, he laid out a clever procedure, sue the government and drag cases out. To avoid the government, he began setting up shell companies for distribution and paying men money just to have a name on paper who didn't even have to do anything. At one point, according to Schlosser, Sturman actually picked names out of phone books to make as CEOs of distribution companies.

A clever businessman, Sturman realized that his business could be taken to the next level, and in 1976 prepared for the audio visual tape, we know today as VCR. Hollywood studies resisted the medium, but adult video was ready for it and in 1979 75% of all video cassettes were pornography. (Schlosser pg. 148) This means functionally that the porn industry was responsible for the launch of the VCR. He would not have entered into a medium that was at first cost prohibitive unless the demand was there. Sturman's logic is impeccable, most of his clients don't want to handle the stuff, and most men who deal in porn or would otherwise venture to a seedy theater are afraid of the social stigmas attached to it, or if the wives find out (since most women, retaining their common sense, have righteous indignation over the sacrilege against their wedding vows. People commonly site playgirl as evidence of womens' interest in porn, but the majority of the subscribers are gay men); thus Sturman took the business to them.

In 1992, after failing for 20 years to prosecute Sturman for obscenity, the he was prosecuted for tax evasion once one of his Swiss bank accounts were discovered. This ended his control over distribution and control of adult entertainment. He had established numerous front companies, which with him out of the picture took control themselves. As I mentioned, in the year 2000, Hollywood produced over 400 feature films. The porn industry produced 11,000. This is due to the market. People want these products. It is the largest export in America and perhaps the most shameful tribute to our decadence.

All of this should serve as a reminder that the "market" is a-moral, it is not moral in itself or immoral. It is a tool, and it must be controlled by a user as all tools. Irrespective of who controls it, it will be controlled because there is in truth no such thing as a "free" market. It is simply the market, and it will be controlled by those with the most wealth in influence if there is a vacuum, and if the government exerts too much control such as in a command economy or a communist country, there will be little activity in the market to sustain healthy economic activity. Yet the market is not capable of producing moral men, it is only capable of producing goods to be bought and sold. Sturman is an example of a product of the market, and if anything a champion of it. He responded to demand by increasing and distributing the supply, including financing new mediums that would take years to hit critical mass such as VCR. He did it by contributing to America's moral decline and descent into anarchy.

The fact is, and this can be observed in all societies and follows from natural law, vicious men must be controlled either from the inside (by changing their will, doing penance and converting to good) or from the outside (prison). A society that becomes dominated by vicious men is doomed. This is due to the fact that it can not operate for the common good. Those in charge look to what pleases them, and we see this today with our representatives in government. They don't care about the common good of this country. Men do not care what is good for their families. As Pope Leo XIII observed in Rerum Novarum, the family is the basic building block of society. As the family goes, so does society. Plain and simple.

Thus the market needs to be regulated by some force, not necessarily by a central government, it can also be by a local government accountable to its local citizens. Yet if a government does not rule justly, then men will rule for themselves and when that happens the most puerile and wealthy rule for their own interest. As the old rule goes, might makes right, and when man is left to his own devices, without grace, he will incline toward evil, not good, because the will is fixed on imperfect goods after the fall.

Michael Novak observed, in response to Sohltshenitsyn's Harvard address, that he would rather see a government that allowed pornography because that meant we are free. This is the same bedrock principle of men such as Sturman, Heffner and Flynt, they should be absolutely free to market filth, and to profit from it. The problem is it is not true freedom. Even if all of religion were wrong and porn were okay rather than a complete degradation of the human person to an animal and sense experience without dignity, the concept itself does not represent freedom, but anarchy. If everyone is free to do what he wills he is not capable of choosing the good, or at least, something outside himself. He is only free to choose what is on the inside, what he immediately desires. This principle is the complete corruption of the common good. There are some things which are more important than market forces, and which need to be suppressed. Now could the government stop all pornography if it criminalized it? Probably not. This is a long standing problem stretching back to the 19th century when the work of some entrepreneurial French photographers had produced a flood of nude photos circulating around the US and especially in the Union Army. Yet a culture which vilifies and prosecutes porn, keeping it out of the public as best it can, will find that vicious men are kept in control, and is a fundamentally healthier society than where men are free to do whatever the market leads them. Just ask your wife.

We Are All Goldman Sachs

2010-04-21T10:17:00.000-05:00

I should not eat Snickers Bars in the afternoon. While it is not yet illegal, and probably not immoral, it is certainly fattening. But I like the veneer of chocolate and by now my body has become dependent on the food-like substance of the interior and my brain dependent on the chemical additives with unpronounceable names. So I sauntered down to the diner in the first floor of our office building and checked myself into the small diner for my afternoon fix.

Diners like these are one of the last bastions of free enterprise in the country, run by the lady who owns it. No doubt some day one day it will become a branch of DineMart, and the owner-cook will become an hourly Food Preparation Specialist, forbidden by corporate policy to serve anything that actually resembles food, but for now it remains an honest establishment. It is some standard features. The upright cooler with glass doors that contains a variety of the those various combinations of corn syrup, caffeine and red dye that we imbibe in great quantities because it would be Just Terrible if we had a glass of beer or wine with lunch. It has a machine which, if you inject a little plastic capsule into it and push a button, will churn out a hot brown liquid whose taste reminds many people of coffee. A few tables and chairs, a counter with a cooler for the various salads, and a grill and cooking equipment behind the counter completes the ensemble. For a few dollars you can get a large breakfast and a decent lunch, and the menu is surprisingly creative and varied for such a small place.

I doubt if the business is all that lucrative. It is a small office building, slowly leaking tenants as the recession (now declared “over”) takes its toll. The prices are low enough that there can't be much of a margin, and surely she lacks any buying power and pays retail for her ingredients. But it is her's and it's honest and forms a decent amenity for our shrinking cadre of office grinds.

But the first thing I noticed was that the candy bar rack was empty. “Hey,” I called out, “Who's the Vice-President of Junk Food?”

“I am,” said the owner.

“Well, where are the Snickers Bars?”

“I had to put all the candy behind the counter.”

“Why?” I asked, thinking that it was some weird new “health” regulation, which are surely the bane of operations like these.

“People steal them. When I turn my back to cook, they slip them into their purses or pockets.”

“What?” I had difficulty processing this information. Who would steal from this lady? Since the clientele is mostly the office workers who see her regularly, it must be people who know her. “I'm a real estate agent,” I said, “I know how to steal. You don't steal candy bars!”

Amateurs. There is nothing a professional hates worse than competition from amateurs.

“And I can't keep dollar bills in the tip jar. People take them.” This is astounding. Stealing tips? It's unbelievable.

It is in moments like these that I most fear for the future of the Republic. Trouble in the life of a nation comes as reliably as trouble in the life of a person. It is not the trouble that destroys us, but how we respond to it. That the people at the top are thieves, the people who run Goldman Sachs, for example, is hardly surprising; corruption at the top is nearly an historical constant. What holds society together is what happens at the “bottom,” as it were. All the little courtesies which make a community possible, a community where you don't have to hide the Snickers and the tips.

For example, in the 1930's, when the depression and the dust-bowl forced the Okies to migrate to California (“Thereby raising the IQ of both states,” as Will Rogers observed) they carried, along with their mean collection of possessions, some things of real value. Strong families, solid morals, a willingness to work. And we survived the depression in good order, in ways that Germany did not. Germany was surely a civilized country, but the breakdown of trust and decency led, as it will, to indecent actions, actions that brought the world down in an orgy of violence and hatred. High civilization is no substitute for common courtesy.

What will our future be like? If stealing tips is general enough to make us hide them, then I think there might be some dangers for us. I look at my generation, and I am ashamed. We got everything, and paid for nothing, leaving our children debts they cannot repay, and a nation that needs to be rebuilt. I look at the Tea Partiers of my age, the ones who object to socialized medicine for the young because it might compromise the socialized medicine they already have. They object to paying taxes, but object equally to cutting any services. They want their wars, their pensions, their socialized healthcare, and they want the children to pay for it. My colleagues—all supporters of limited government—are angry that the $8,000 subsidy to home-buyers is about to expire. We want what we want. We just don't want to pay for it. And we look at our children and say, “Where did we go wrong?”

I am no better at the small courtesies. I see this lady two or three times a month, and I do not know her name. We meet in real life, not on the internet, so we have no handle, no avatar, by which to greet each other. Our relations are increasingly impersonal, which makes rudeness and theft easier. (BTW, we at the Distributist Review live in a something of a bubble in this regard. Compare the discussion of my recent post on Goldman Sachs with the discussion on the same post at “BlogsforVictory”. Scary stuff.) We need to have a real political dialog. We need to tackle the serious tasks of rebuilding the economy and society. We cannot do that, as our grandparents did it, with the morals of Goldman Sachs.

And we are all Goldman Sachs now.

Note: No promotional fees or other considerations were paid for any product placements in this blog. But I think Snickers ought to pay me.

Aristotle and Aquinas, Bank Regulators

2010-04-18T20:51:00.000-05:00

Okay, so after years of inaction, the SEC has finally taken the offensive. True, they went after a small deal, a mere billion in “designed to fail” CDO's on which Goldman Sachs made a paltry $15 million, an amount which, in the overall scheme of these frauds, doesn't even amount to a rounding error, as Gretchen Morgenson pointed out. Still, it's enough to damage the reputation of Goldman Sachs, perhaps fatally, and perhaps enough to re-establish the SEC as a regulatory force. However, there is a deep problem: what should the regulators be regulating?

We live in an age of regulation. But surprisingly, there are very few principles of regulation. As Karl Polyanyi said, “Laissez-faire was planed; planning was not.” Planning always seems to be something that always arises ad hoc, to address a particular situation, but hangs on and acquires a life (and a bureaucracy) of its own, even after the situation changes. The result is that we are simultaneously over-regulated and under-regulated; we have thousands of pages of regulations that deal with situations that don't require any, and no regulation in areas that need to be closely watched. The regs raise formidable barriers to competition, as the small businessman often finds that the cost and trouble of dealing with them is an insurmountable barrier to entering a given business. This leaves only the large players, for whom such regulation is a mere nuisance, a cost of doing business that brings a benefit of reduced competition. And since there are fewer competitors, they tend to be more politically powerful, and proceed to capture the very regulatory bodies that are intended to curb them. The government becomes, in effect, the protector of the oligarchs rather than their regulator.

The current case is a case in point. We often hear how “complex” these schemes are, but in fact this fraud was simplicity itself. Goldman Sachs allowed a certain hedge fund trader, John Paulson, to put together a group of mortgages that would be packaged into a CDO, a “collateralized debt obligation” which was sold to Goldman's investors. However, Paulson was also known to be shorting the mortgage market. Paulson deliberately assembled a package of loans whose underlying risk was much higher than the credit ratings indicated. Goldman Sachs then marketed Paulson's poison-pill CDO to other banks, pension funds, and individuals. But Paulson, knowing the true risk of the security, purchased CDSs on the package. A CDS (“credit default swap”) is an insurance policy on a security that pays off when the underlying security fails. But the term “underlying security” is a fiction; Mr. Paulson did not own the CDO he was insuring. There was no “underlying security.” It is like buying a fire insurance policy on your neighbor's house, and hoping it burns down.

Goldman Sachs didn't bother to tell its investors that the CDO was put together by someone who was betting that it would fail. Instead, they said in their prospectus that it was put together by somebody else. Why they bothered with this lie is a bit of a mystery, since nobody ever actually reads a prospectus.

The man at Goldman responsible for selling these securities, Fabrice Tourre, knew they were about to fail. In an e-mail to a colleague, he stated,

More and more leverage in the system. The whole building is about to collapse anytime now... Only potential survivor, the fabulous Fab[rice Tourre]... standing in the middle of all these complex, highly leveraged exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!"

You can bet that wasn't in the prospectus. But if there is one thing that both Democrats and Republicans agreed about in the 90's, it was that these “monstrosities” didn't need to be regulated. The market for them was composed of sophisticated investors who were more than capable of evaluating the risks and taking the losses, should their be any, and the public need not trouble themselves about such things. Senator Phil Gramm led the Republican efforts to deregulate this market, joined by such Democratic stalwarts as Robert Rubin and Larry Summers, and President Clinton signed the bill with little fanfare in 1999. But as things turned out, when the highly leveraged bets brought down the whole economy, the risks were socialized, and the profits were privatized. The US Treasury became the hedge funds Ultimate Hedge.

So what should the regulators be doing? One could pass this off as mere fraud, which is already illegal, but that would miss the point. The practice of touting such complex instruments to customers while shorting them in your own portfolio is common enough. Indeed, the appetite for these CDO's was immense, but the number of solvent borrowers in the mortgage market is limited. To meet the demand, banks and mortgage companies pushed their loan officers to ignore underwriting standards and to make as many loans as possible, prudent or not. For example, in one CDO examined by Roger Lowenstein, on 43 percent of the underlying loans, the lender hadn't bothered to verify the borrower's employment and income. These were part of the famous “Liar Loans” and NINJA loans (“No-income, no job or assets.”)

So what can be done, apart from sending a bank regulator on every loan interview? For one thing, we could listen to Aristotle on this subject. Not too long ago, a Prominent Economist told me that Aristotle had nothing to teach us about modern finance. I beg to differ; Aristotle, and the Scholastics who adopted his approach to economics, were surprisingly sophisticated on these topics, while so many Prominent Economists are surprisingly naïve. Indeed, Aristotle left us a principle of commerce that serves very well as a principle of regulation. This principle is the distinction he makes between natural and unnatural exchange. Modern commentators, who make no distinctions, have viewed this as a mere primitive hostility to business; actually, it was a shrewd appreciation of commerce. For Aristotle, natural exchange was that which was necessary for the provisioning of the family (the true meaning of economics.) Unnatural exchange that which had only money as it object.

The former is “natural” because it limits itself; that later unnatural because is has no natural limits. For example, a man wishing to buy bread for his family will buy only as much as he needs; this is a natural exchange. But a man wishing only to make money in the bread biz may wish to buy up all the bread and corner the market so as to raise prices and make a fortune on others' necessities; this is an unnatural exchange. When applied to finance, a transaction is natural when it is when it is firmly and directly tied to the production of some actual product; it is unnatural the more abstract and derivative it becomes, and when its only object is to make money rather than profit from production. Thus, we may say that banks directly financing home purchases or construction are natural transactions, and less natural when they become “securitized,” bundled together and sold in packages to remote investors who will have no contact with the actual homes, banks, or borrowers. The situation becomes even more abstract when you speak of securitizing the securities (“CDO-Squared” or even “CDO-Cubed”) or with CDSs, which become pure speculative bets on the market. The more abstract the instrument, the more closely it should be scrutinized.

As things now stand, we have reversed Aristotle's order: the natural exchanges are highly regulated, while the unnatural ones are often unregulated. In more normal times, when you went to George Bailey to get a mortgage, he squinted at you real hard to see if you are the kind of person who will pay him back for 30 years. George needs little oversight to encourage him to be prudent, since he has the bank's capital and the depositors' money at risk. But if George merely intends to securitize the loan, then he merely glances at you to see if you are the kind of person who will pay for two weeks, because after that you are somebody else's problem. In the meantime, dear old George has made a bundle on excessive loan fees and commissions on the sale of the security. George has every reason to write every loan he can, even liar loans, because they all bring him a profit, and he hopes he can park the loss with someone else. And even if he can't, he knows that the Fed is there to provide him with any amount of “liquidity” he may require, and if he gets big enough, he can always call on the United States Treasury, since the consequences of his actions will be catastrophic; he is in a position to blackmail an entire nation, or even the entire world.

Applications of this principle will be fairly obvious, in most cases. Take the example of CDSs. As an insurance policy, it is surely a natural exchange, a real service that guards against real loss. But when people insure things they do not own, the exchange becomes unnatural and the CDS becomes a mere speculative bet on a given market, one that produces no social gains. The rule should be a rather simple one: “No harm, no foul.” If there is no loss suffered, there should be no claim paid. If you do not own the failing security, you cannot claim a loss on it. Consider that at its height, the notional value of the CDS market was $600 trillion, or eleven times the GDP of the entire planet. Likewise, MBSs and CDOs, should be subject to heavy scrutiny, and even more so when they are squared or cubed; the amount of the regulation is given by their distance from the “real” transaction to which they refer.

In the bad old days, before we became enlightened, we had to think things through for ourselves. Now we have farmed the job out to experts who claim to understand the complexities that their own “expertise” created. In those times, philosophers did not hesitate to address themselves to mundane subjects of commerce and kingship, and every theologian worth his stipend routinely addressed matters of state and business. It was considered part of their job. But the “experts” have, once again, botched things up; Fab Tourre failed to understand the monstrosities he created, although he did understand how to profit from them, at our expense; he was an expert in all the wrong things. It may be time to call again on the philosophers; the Prominent Economist may have to subject his thought to the theologian, the banker to the philosopher.

The SEC has finally moved, albeit somewhat after the fact. It may be merely a political ploy, a way for the Administration to put some pressure on the Republicans, who have vowed to stop any banking regulation, no matter what. The Administration will dribble out cases like this from now to election day, and will call some votes in the Senate that will be stopped short of action by the Republicans. They will force the Republicans to stop them from doing what they don't want to do, make real reforms. They can embarrass the Republicans, even in front of their Tea-Party supporters, while not actually having to take any action. Politically, it's a good deal, and may give them some leverage going into November.

But just in case anybody does want real reform, we might turn to those who have given the market real thought, thought that has survived 2,500 years of scrutiny. Bank regulation is a MEGO subject (“My Eyes Glaze Over”), and if you, loyal reader, have gotten this far in this essay, it is likely that you are a nerd or have mild Asberger's Syndrome; you may be the kind of person who would actually read a prospectus. But despite the lack of interest and understanding, we must have some public interest in these things, apart from the “experts” like Fabrice Tourre and John Paulson. We cannot do without a proper finance system. Between the planting and the harvest, there is a gap, and likewise between opening a production line and the sale of a product. This gap must be financed. But finance itself must be made to serve this gap, to bridge it for the common good. When it has no other point but to enrich the few at the expense of the many, then the real economy has no future, and if it has no future then neither do we, nor do our children. We could do worse than turning the system over to people who have read a little Aristotle and Aquinas.

Yes to a Plan, No to this One

2010-04-14T14:50:00.017-05:00

While I have never voted Democrat, have no Democratic sympathies or interest in joining their ranks, more and more I’ve become convinced the complaints about government interference on the part of the right are not over abortion, Obama, or an Orwellian future but about the preservation of a “pristine” conservatism and the thinning of wallets. This time Marx isn’t waging class warfare; the very capitalists are declaring it. And time and again conservatives raise the argument that public insurance violates Catholic Social Teaching.

My objections to the current Bill that passed the Congress and was signed into law by President Obama are based on sincere objections about the mechanics of the law. In particular I believe this plan will only benefit the already fat insurance companies, Big Pharma, fail in its goal to help the poor, and stifle any serious attempt to stop contraception, abortion, and other pro-life objectives. However, I should be clear that I do not oppose a plan rather I oppose this plan. Yet, some of my fellow distributists and Catholics oppose not only this plan but any plan at all.

The recent accusations leveled against the USCCB are deplorable. Bishops who unambiguously defend the unborn are labeled “socialists” or “traitors” by the conservative political establishment, which currently subsists in Catholic circles, for their support in favor of a public option of health insurance. They are attacked for representing the interests of the poor and for (allegedly) defying the social doctrine of the Church.

Does public insurance violate Catholic Social Doctrine? Perhaps John Paul II can clear it up for us. In Centesimus Annus he writes,

“When there is question of defending the rights of individuals, the defenseless and the poor have a claim to special consideration. The richer class has many ways of shielding itself, and stands less in need of help from the State; whereas the mass of the poor have no resources of their own to fall back on, and must chiefly depend on the assistance of the State. It is for this reason that wage-earners, since they mostly belong to the latter class, should be specially cared for and protected by the Government." (§33. Emphasis Mine)

Government cannot solve all our problems. If the United States were to become the “Social Assistance State” criticized by Pope John Paul II in the same encyclical we should rightly stand against it. But it hasn’t. On the contrary this nation’s reputable past as a “Corporate Assistance State” climaxed with the recent financial bailout. So if, according to John Paul, the poor “depend on the assistance of the State”, what type of aid should they look forward to receiving?

According to the good Pope John XXIII:

“Systems of social insurance and social security can make a most effective contribution to the overall distribution of national income in accordance with the principles of justice and equity. They can therefore be instrumental in reducing imbalances between the different classes of citizens.” – (Mater et Magistra §136. Emphasis mine.)

Was the good Pope John a socialist? Was His Holiness betraying the Catholic faith?

The famed anti-Communist and Jesuit sociologist Fr. John F. Cronin provides the answer.

“In effect, this statement is an approval of the redistribution of wealth through social welfare programs. It considers acceptable the aim of seeking to narrow extremes in standards of living in a country. Conservatives generally do not favor governmental measures of such sweeping scope. They prefer to emphasize programs for economic growth and increased efficiency as the preferable methods for raising the living standards of a nation.” (Christianity and Social Progress: A Commentary on Mater et Magistra)

It is the conservatives who deplore those “controversial” aspects consistent with the traditional social doctrine of the Church and it is the progressives who will mistakenly applaud these comments as some sort of vindication for socialism.

If, as is supposed, a public program for health insurance infringes on CSD the claim is inconsistent with the impact the social encyclicals generated in nations which, in addition to public insurance, offer socialized medicine where the majority faithful is Catholic. Even in Malta, Apostolic See and perhaps one of the last bastions of Christendom, socialized medicine lives harmoniously alongside private medicine. Is it a coincidence that, while critiquing largesse government, none of the bishops of these nations have ever objected to socialized medicine, which according to conservatives conflicts with the doctrine of the Church?

Government funding for programs such as social insurance should be garnished primarily from the private sector. Fr. Joseph Husslein, in his book Work, Wealth and Wages reiterates how, for the employer, insurance should be seen as the cost of doing business:

“Social insurance against sickness, invalidity, unemployment and old age is therefore to be favored and legally promoted…[I]f social insurance is needed it should, as far as possible, be levied on the industry.”

Vocal opponents of social insurance often claim that social justice is synonymous with “Socialism”. More often than not, a finger is pointed in the direction of prevailing unorthodox expressions of social justice, exemplified by groups which have more in common with Karl Marx than with Leo XIII. The debate over the so-called incompatibility between religious orthodoxy and social justice has recently resurfaced on a segment of the Fox Network show Glenn Beck. And yet, in Msgr. John A. Ryan’s 1921 book, A Catechism of the Social Question he answers this very issue.

Q. 7. Is every legislative proposal called "Socialistic" condemned by the Church?

A. “To call a proposal Socialistic does not make it Socialism. Socialism is common ownership and management of substantially all the means of production. For the government to own a few industries and manage them is not Socialism; for the men in an industry to own it and manage it cooperatively under one form or another is not Socialism; for the government to own a few industries and the men in the industry either alone or with the assistance of the government to manage those industries is not Socialism. Workmen's compensation acts and social insurance laws are not Socialism.”

Should we remain unconvinced that a public option is in accord with CSD, shouldn’t we study whether remnant rulers of a declining Christendom introduced similar legislation in their respective countries? According to the pro-capitalist and conservative journal Libertad Digital, “…[in Spain] with the established Law of 1963 passed by Francisco Franco, we can truly speak of an authentic Social Security as we know it today.” It was perceived that through social benefits, “the workers participate in the investment of the nation…which belongs to them not just for the sake of solidarity, but justice”. In Austria, under Chancellor Engelbert Dollfuss, “Only five days after the ceremony celebrating the official founding of the chamber, Dollfuss put forward the draft of a bill to create a national system of obligatory social insurance for all Austrians working in agriculture: peasants, their wives and children, as well as their employees.”

Public insurance, in principle, either violates Catholic Social Doctrine or it doesn’t. Should a public option of health insurance be consistent with our faith in most countries and a breach of it in ours, the inconsistency in the Church’s doctrine can only be labeled as schizophrenic. Should institutionalized public insurance defy Catholic Social Doctrine all around, a serious dilemma is present of immense magnitude.

(Nota bene: this is not non sequitur. An implementation of public insurance is based on prudential judgment. I am not insisting all nations must provide their citizens public insurance. Neither do I claim one must vote in favor of social insurance when it violates “non-negotiables”. I am simply submitting to the evidence that social insurance - in principle - does not per se violate CSD. On the other hand, some Catholics are claiming that public insurance does violate the principles of the social encyclicals.)

Public insurance is not a violation of Catholic Social Doctrine. It isn’t socialism. It isn’t government overstepping its bounds and interfering where it shouldn’t. Given this, is it possible public insurance may not be a Catholic predicament after all but rather a conservative one? Is it possible that public insurance is a challenge to American “rugged individualism”?

What-Ever

2010-04-13T20:44:00.002-05:00

With a tip of the hat to Mark T. Mitchell of the Front Porch Republic:

Michael Wesch: The Machine is (Changing) Us.

The Evangelization of Business

2010-04-03T09:10:00.002-05:00

For our readers in the Oakland area who have nothing in particular to do next Saturday, I will be speaking at the Manhattan Forum, sponsored by the St. Anthony of Padua Institute, at St. Margaret Mary Church, 1219 Excelsior Ave. The talk will be on "The Evangelization of Business" and I will tackle the subject from the standpoint of Caritas in Veritate. The talk begins at 3 pm with Mass at 5 and a reception at 6.

Technology and Culture

2010-03-31T08:14:00.004-05:00

Note: An older piece I came across recently, which I thought might be shared with the wider community. (Hence the references to Advent, when here we are in Holy Week, and to my three children, when since we've been blessed with a fourth.) Given that Luddism is an accusation constantly hurled at distributism, I hope this will spark some discussion about distributism and technology.

The abuse of technology is rapidly killing culture.

I'm not just talking about creepy technology, though that exists, as well. We've all seen creepy technology. You know, the kind that's just obviously creepy, like this and this. This sort of technology isn't particularly alarming; I don't foresee a whole lot of danger coming from it. It's just really weird.

In this post, though, I'm referring to really creep technology; scary things, like so-called "earbuds." I find these horrible little devices considerably creepier than either of the above examples. It came to mind yesterday, while I was out with my family shopping for some odds and ends for the Advent season. There I was, pushing my cart with my three energetic and excited (they're always excited; the oldest is four, and the younger ones follow his lead) children through the store, and another gentleman approached. He, too, was pushing a cart, and there was no one with him. But he was chattering, on and on. Just talking. When I first caught his voice, I thought he was talking to me, and I studied his face, trying to remember from where I might have known him. But he blew by me without a glance; I might as well not have even been staring at him, which I probably was. He passed not ten feet in front of me.

Odd, I thought. The poor man is talking to himself. Only as he went by did I notice that omnipresent little monstrosity hanging in his ear.

The earbud. The final solution to that obnoxious, unpardonable peace and quiet that man has sought for so many generations. Where our forefathers spoke with one another, sang, drank, and enjoyed one another's fellowship, we are more connected with men at distant places than with those who are right beside us. This is sad. This is the sort of person who goes to a bar so he can sit in silence and drink his beer and watch a football game. He might even cheer or boo the game, and he may, conceivably, do it with someone else (if his earbud is silent, that is). But one thing that he will not, under any circumstances, do is turn away from the game and relate with the people around him. No; it's much more fulfilling to relate to people he doesn't know, playing a game he doesn't play, in a city he's never been to, through a screen that's posted on the wall.

Thus does technology kill culture. This sort of technology, the kind that makes blogs and emails possible, is one thing. It's really just an accelerated postal service and publishing industry, when you think about it. And there's certainly nothing wrong with football games, or even telephones; I'm no Luddite. But it's downright creepy when technology and the obsession with it reaches the point that one's more inclined to talk on the phone than to tip one's hat and greet the passers-by. When men are more aware of what's going on hundreds of miles away than of what's going on right next to them, something's gone horribly wrong.

And yet that's the situation, and nobody remarks about it. The President of the United States, as lofty and remote a figure as one could hope for, is daily in our living rooms via the almighty TV god; yet most Americans couldn't even name their neighbors, much less their local government officials. Who knows their city manager's name? Their county supervisor's? A small handful of people involved in local politics; the average American doesn't know, and what's worse, doesn't care. What does it matter, after all? The really important things aren't local things. Why, those people hardly ever get on TV!

We don't sing; we don't dance; we don't talk; we don't argue; all we do is immerse ourselves in the numbing influence of mass entertainment. When was the last time that, wanting music, you got out an instrument and started playing? Or gathered your children and began to sing? When was the last time that, your children wanting entertainment, you took them outside and gathered up some neighbors for a ball game? Once, when we wanted baseball, we gathered up some friends and played baseball. Now, we turn on the Yankees.

Isaac Asimov (no technophobe by far) once wrote a story, "It's Such a Beautiful Day" (it can be found in Nightfall and Other Stories) in which mankind had developed "Doors" which take them from building to building without ever having to step outside. Men developed a strong phobia of going outdoors, terrified of the dirt and the germs and the weather and all those horrifically frightening things that exist in nature unrestrained by man's benevolent, technological touch. A child who once, through necessity (his Door was broken), went outside in order to get to school, developed a real love for it. He experienced what was real---and was nearly diagnosed with a psychosis. That's exactly what is happening to us today; we're so involved in what's passed down through the media, with things that are happening hundreds of miles away to people we've never met, that we barely even notice what's happening right next to us to the people who live across the street.

Technology has killed our culture and erected in its place a monstrous substitute which gives us neither joy nor fellowship. We no longer create our own culture with the songs that we sing, the stories that we tell, the books that we read, and the topics we discuss. Instead, our culture is fed to us, donated from on high by the corporate interests which dominate mass entertainment. Instead of telling great tales of soldiers for Christ in the Crusades, or of the great Catholic kings of old, or the heroics of our ancestors in fields and in war, we talk about Batman and the X-Men. And we wonder why Catholic culture is dying? It's because Catholic culture is not allowed to live.

Remember always the principle of subsidiarity. Does it make sense that culture---the songs that we all know, the stories that we all recognize---should be made by disconnected producers in Hollywood, or in the streets of our cities and the hearths of our homes? Which can do it better? Which has been doing it since man first awoke in the Garden? Do you want to decide what your children think about? Do you want to decide what they consider important and what they consider worth repeating time and again? Or are you happy with corporate warlords doing it for you?

But we can only make our own culture if we limit the influence that the media culture-masters have over us. Can we watch television? Certainly. Can we watch movies? Of course. But make it conscious. Choose them carefully. And most importantly, don't do it too much. We must never allow what we're taking in in this way to override and drown out what we've received, recreated, and want to pass down to our children.

So take out the earbud; turn off the TV. Gather some friends, open a bottle of wine or some beers, and argue about local politics with one another. Get your wife and your children together and sing some songs, such wholesome songs as you can remember from your childhood. Look up new songs and learn to sing them. Perhaps even devise some songs of your own. Practice playing that musical instrument you haven't touched since you graduated from high school and, horror of horrors, make some music of your own. The RIAA won't like it, but you will. A lot. I promise you.

Praise be to Christ the King!

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.

Some Videos of Note

2010-03-29T15:59:00.005-05:00

Part I of The history of Argentina's economic collapse and what may come.

The late Jacques Ellul authored over 50 books, some of which famously explored the limits of technology and the dangers it poses to modern society.

The Illiberal Legacy of Liberalism

2010-03-27T20:40:00.003-05:00

Phillip Blond at Villanova University: Well worth the 90 minutes.

http://www.youtube.com/user/villanovauniversity#p/a/u/1/S2LWc5DIQrc

Mr. Blond notes that we are witnessing the simultaneous collapse of the Left and Right because, at base, they are the same thing. One proposes a libertarianism of sexual morality: all "liberty" is about choice, and all choices are equal. Those who try to impose any restrictions interfere with liberty.

The other proposes an economic libertarianism, where isolated individuals make autonomous choices guided by the invisible hand. Behind both of these is a bankrupt account of liberty. We end with a society founded on "rights," rather than goods. In our radical individualism, we abandon all shared notions of good. Each person's good is incommunicable, therefore there can be no community of goods, only radically isolated individuals bound together only by thin, contractual relations, and the state can have no other legitimate function than to enforce contracts. Hence, it is small wonder that we have abandoned the old and don't care for the young.

Liberalism (of the Left or Right) cannot deliver what it promises: Liberty. Instead, the polity of self-interested individuals becomes the war of all against all as each isolated individual seeks to maximize his private good at the expense of all others. And the state, instead of shrinking to the mere guarantor of contracts, becomes the only force capable of policing the incessant warfare, becomes the supreme arbiter if all relations. Indeed, since the notion of objective good is discarded, the good itself becomes an arbitrary quantity, and each seeks as much of this as he/she can get. The state becomes the means to achieve the "greatest good for the greatest number," but has itself no mechanism to determine what the good is. "Push-pin is as good as poetry," as Jeremy Bentham noted, and the community has no interest in encouraging the Bard more than the game, and no right to do so. Only the market, whether political (one man, one vote) or economic (one dollar, one vote) can distinguish the relative worth of each. The only "good" in these markets is equality of men with men (and women).

In response, Mr. Blond proposes "The Civic State." This state is based on three principles: re-moralizing the markets, re-localizing the economy, and recapitalizing the poor. It is a state of shared values and objective truths. It is not a static society, since man's knowledge of this truth is always approximate; we are always in the mode of discovery, and hence we are always journeying through history. Still, there is sufficient confidence in what we have learned to state "this is good" and "that is bad" and "this is worth more" and "that is worth less." It is a state that admits not only of private goods, but of the common good as well.

This poor summary does not do the subject justice (and what makes no sense should be blamed on me rather than Mr. Blond). (There is a somewhat longer summary here.) But I think it would be a good thing if we, as distributists, began a conversation on Phillip Blond's work. So if any of our esteemed contributors would like to comment, I encourage them to do so. And if any of our readers would like to submit an article that is too big for them combox, please send it directly to me.

The Closing of the Conservative Mind?

2010-03-25T16:41:00.001-05:00

No fan of Frum am I, but this is disturbing:

http://capitalgainsandgames.com/blog/bruce-bartlett/1601/groupthink-right-would-make-stalin-proud

Steelworkers with Mondragon

2010-03-24T05:48:00.003-05:00

Keynote speech by Rob Witherell

Western Mass. Jobs with Justice Conference

March 6, 2010

· An official unemployment rate of 10%

· A real rate of unemployment and underemployment of 17%

· Millions of good paying jobs lost, including 2 million manufacturing jobs in the past year alone

· Stagnating wages

· Frozen pensions and inadequate 401(k) plans

· Sky rocketing health insurance costs

· Millions of people without health insurance

· Millions of people falling into poverty

· Millions of people receiving food stamps to feed their families

· Millions of people homeless and millions more struggling to stay in the homes they have

In the middle of the worst recession we’ve seen in the past 70 years, conservative politicians in Washington, DC are defiantly putting the purity of their ideals before the reality of the painful consequences. Congress is not a high school debate club. People need help, not talking points.

Wall Street executives, who were part of creating this crisis, were the first ones with their hands out, asking for help from Main Street taxpayers. We gave them billions and billions of dollars. As panic began to recede, they gave some of those billions back rather than have to live with the few strings attached. These fat cat executives are trying to avoid accountability and transparency, regardless of the cost. The millions of dollars in bonuses being paid again to executives, while insulting to the rest of us, are less harmful to our economy and our communities than the fact that little has changed in how Wall Street works. Years of increasing deregulation have left us with a Wild West of finance where anything goes.

Corporate executives have not done much better. In response to this crisis, corporations cut pay, laid off workers, and closed operations – too often as the first option rather than the last. Year after year, shedding jobs and shuttering plants has become an all too familiar pattern in what remains of our manufacturing sector, as production, investment, and jobs are shifted to other countries with the fewest amount of labor and environmental protections possible.

The result of years and years of neglect have left us an economy that is rotting from the inside out. Our manufacturing sector has been hollowed out and our standard of living has at best stagnated, or worse, declined. Under the added weight of the financial crisis, our economy nearly collapsed.

Due to decades of decay, we no longer have an economy capable of a quick recovery. The “good” news announced yesterday was that we “only” lost 36,000 jobs last month. If last year’s stimulus bill has been effective as economic triage, and most likely it has been, then there is still a long, uncertain road to rehabilitation and recovery.

So what are we to do?

Maybe we need to rebuild from the ground up. But how? What should our blue print look like? What historical examples might we look to?

Let’s imagine the situation in the Basque region in 1943. Still devastated from the Spanish Civil War, most notoriously the bombing of Guernica in 1937, the Basque region continued to be punished by Franco’s regime, which forbid use of the Basque language and repressed Basque culture. Thousands were murdered for supporting the Republican forces, including the priest that Father Arizmendi replaced two years earlier, and nearly Father Arizmendi himself.

High unemployment. No social safety net. No pensions. Little access to capital and investments.

It is in this context that Father José María Arizmendiarrieta started up a small polytechnic school that was the seed for the phenomenon we know today as the Mondragon cooperatives. In 1956, five graduates of that school, with the assistance of Father Arizmendi, started the first Mondragon cooperative, Ulgor. A little over 50 years later, the Mondragon Cooperative Corporation employs over 100,000 people, with nearly all of them worker owners, and over $20 billion dollars in annual revenue.

Maybe there’s hope for us after all.

So, what can we learn from them?

To start with, let’s always remember that these cooperatives were started and supported not out of some utopian ideal, but rather a very pragmatic means of helping people put a roof over their heads, clothes on their backs and food on their tables. The goal was, and remains, to create jobs that can support their families and their communities.

The success of the Mondragon cooperatives comes from putting people first. Prioritizing people before profits – imagine that. We have become so conditioned to think that companies must prioritize profits above all else, usually for the sake of some group of unnamed, unknown shareholders, that’s is hard for us to imagine any alternative.

Now keep in mind that this is no utopia, this is a highly competitive, for-profit business – just organized differently than most . As the saying goes at Mondragon: “This is not heaven and we are not angels.”

At its best though, Mondragon could be a better way to run a business. A business that is sustainable, supports jobs, supports families, and supports communities.

So how has Mondragon been able to put people first and still be competitive, growing, and profitable?

The first thing we might want to consider are the ten Basic Principles of the Mondragon cooperatives:

· Education

· Sovereignty of labor

· Instrumental and subordinate nature of capital

· Democratic organization

· Open admission

· Participation in management

· Wage solidarity

· Inter-cooperation

· Social transformation

· Universal nature

How many corporate mission statements are out there where you can find ideals like “sovereignty of labor” and the “instrumental and subordinate nature of capital”? Not many, I’m sure. Yet these principles are why job creation and sustained employment are top priorities. Even during economic downturns, when unemployment is high, as it is now, the amount of layoffs within MCC are few and limited in duration. As noted by Judy Schwartz in a recent article, “During the 1980s, when Spain's unemployment hit 27 percent, Mondragon’s hovered below 1 percent.”

As a worker owned cooperative, ultimately all profits are kept by the workers. Although some portion of profits are pooled with other coops and used for finance, education and R&D, a significant piece of the pie is distributed directly to workers in the form of profit sharing or put into the workers’ individual capital accounts. Shared risks become shared rewards.

Another key differentiation for Mondragon is the principal of democratic organization with “one person, one vote”. Every worker-owner owns an equal share and has an equal vote through “one class” ownership. All worker-owners can participate in the General Assembly to elect its Board of Directors, which is comprised of fellow worker-owners in the cooperative. The Board appoints management within the cooperative for a limited term. Workers also directly elect a representative, internal Social Council to advise the Board and management on a range of employment issues, including wages and benefits.

Mondragon cooperatives also subscribe to a principle of wage solidarity. In most cases, the highest paid worker in the cooperative makes no more than 5 times the lowest paid worker in the cooperative. In contrast, CEO’s at many multinational corporations take over 400 times the pay of the lowest paid worker. Wage solidarity means there is less disparity among workers and the communities in which they live, reinforcing the equality, and quality, of ownership.

Finally, the principle of social transformation means that a key part of the coops’ mission is to support and invest in their communities by creating jobs, funding development projects, supporting education, and providing opportunity. Their communities, in turn, support the coops.

There is no doubt in my mind that there is plenty we can learn from Mondragon. If we are going to dig ourselves out of this recession, we need every good example we can find. A business model that makes employment a priority and solidarity a principle would certainly reflect some of the key values of our Union.

I had the opportunity to visit Mondragon in September 2008. I was in nearby Bilbao for a different meeting when a good friend, who also happens to be Mondragon’s North American Delegate, suggested I go meet with the President of Mondragon Internacional at that time, Jesus Herrasti. In a good conversation, we found our organizations shared many key principles and ideas.

Over the year that followed, more conversations involving more people began to turn to specific ideas on how we might work together on projects in the U.S. and Canada.

In the context of the severe recession, we ultimately thought this was an idea and a partnership that shouldn’t be kept under wraps until we figured out all the intricacies of launching a specific union co-op project.

The USW and Mondragon announced our alliance on October 27, 2009, with little more than a common set of principles and a general framework of how our alliance would work. Risky? Absolutely. Success is by no means guaranteed.

How do we define success though? Is success only the physical manifestation of a USW/Mondragon affiliated coop?

Despite still being in the preliminary stages of this alliance, I would argue that it has already been a success. Since our October announcement, we’ve gotten interest from people in all corners of the U.S. and Canada, plus the UK, France, Australia, and of course, Spain.

Maybe success is shining a spotlight on a really interesting idea, at a time when it is desperately needed.

But can it work here?

I’ve heard a number of people wonder openly about whether such an idea could really take root in an American culture steeped in individualism. I would reframe such questions in a slightly different way though. In the midst of economic devastation and oppression, the people who originally formed and supported the Mondragon cooperatives did so out of necessity to feed and provide for their families. They started their own schools, created their own jobs, provided their own health care and met their own banking and financing needs. Theirs is a story about self-reliance and pragmatism, not just idealism. Shared values such as self-reliance and ownership have deep roots in our culture and history. In the middle of this economic crisis, people are desperate for answers. Since our announcement, I’ve gotten email and phone calls almost every day from people asking, pleading, for help.

We have a real opportunity to rebuild our economy from the ground up, in a way that is sustainable and creates good jobs. We cannot afford to wait for someone else to do it for us.

So, what is the Union’s role in this?

There are natural and historical alliances between the cooperative and labor union movements. Where those have diverged, we believe now is an important opportunity to bring them back together.

With Mondragon’s assistance, we will seek to closely implement their worker-owner model in combination with our collective bargaining model in a way that makes the workplace more participatory and more accountable to the workers, but also protects the interests of the workers and establishes guidelines to ensure that all workers are treated fairly.

We must ensure that ownership means more than just the value of a share.

A core part of this hybrid will be to transform the role of the Social Council into a Union Bargaining Committee. To sustain this model, we must also ensure a dynamic labor-management relationship rooted in partnership, understanding the needs of both the business and the workers, and respect for the advocacy roles each must take on.

Now some of you may be wondering why the USW is spending this much time and effort trying to develop coops. Well, we are indeed probably working outside of our comfort zone, but to me, that’s one of the aspects of my Union that I’m most proud of.

Leadership means taking risks.

My Union is undertaking this effort, like so many other things we do, because we know we cannot afford to rest on our heels. We cannot afford to insulate ourselves in the ongoing work of negotiating contracts and processing grievances. We must do more. For our members and for all workers.

We fight to protect the jobs we already have and the industries in which we work, but we also believe that our Union can play an important role in creating new jobs, developing better business models, and growing new industries.

We are in this alliance with Mondragon because we believe there’s got to be a better way to run a business that is sustainable and accountable to its workers and its communities.

We know change is hard.

While we must understand and learn from the past, we must not be beholden to it. We cannot simply tell ourselves “that’s just the way it is” or “that’s the way it’s always been”. We must set our own course for the future. Our children, our grandchildren, and everyone else that comes after us depend on it.

I have a small poster hanging above my desk with this quote from Margaret Mead:

“Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.”

Father Arizmendi and five of his former students started a small co-op in the Basque region in 1956.

Imagine what we can do.

We have the power to change the world. The people right here, in this room, have the power to change the world, in ways both big and small.

What are we going to do with it?

We cannot afford to sit on our hands, we must act. We have the power and the responsibility to act. We can create good jobs. We can create jobs with justice.

Now let’s go do it!

Plutonomics, Citibank, and the Doom Cycle

2010-03-18T21:03:00.001-05:00

Regular readers of this column (and there might be some) know by now that I am given to rants against the banks, accusing them of being plutocrats and oligarchs, and sometimes descending into even stronger language. But I did not expect to receive confirmation of this thesis from the nation’s biggest bank. Citibank uses a term to describe our economy which has never occurred to me, “plutonomy,” an economy run for the benefit of the rich. This is the term we find in a Citibank investment advisory letter from March, 2006. The memo (which Donald Goodman mentioned in his last post) is rather remarkable. It sounds like a satire written by some mad Distributist (like me, for example). But no, they are in deadly earnest, and unlike the mad Distributist, they are quite happy about the situation.

On Citibank’s analysis, in the U.S., the UK, Canada and Australia, “the rich take an increasing share of income and wealth over the last 20 years, to the extent that the rich now dominate income, wealth, and spending in these countries.” They speak but the truth; the top 10% of households accounted for 43% of income when the memo was written. “In total, the top 20% accounted for 68% of total income; the bottom 40%, for just 9%.” And the situation is worse when we look at wealth. The top 10% account for 57% of household net worth; the bottom 40% share only 9%.

The writers of this letter point out that in other places, such as Japan and much of Western Europe, the rich were confined to pretty much the much the same share they had in the 80’s, but in the plutonomies, such as the US, the “capitalists benefit disproportionately from globalization and the productivity boom, at the expense of labor.” In other words, the imbalance is not necessary, but a creation of particular forces within the plutonomies.

Citibank does note that the rich face some problems. For example, the CLEW Index has rising much faster than the Consumer Price Index. And what is the CLEW, you may ask? It is the Cost of Living Extremely Well, which measures such essential items as the price rise in Beluga caviar or a suite at the Four Seasons. Pity the poor rich. As the authors note, “In 2005, the CLEW Index rose 4%, while US CPI rose at 3.6%.” Well, no wonder the rich have to claim such a large share of the income “at the expense of labor.” What laboring man really needs Beluga caviar in his lunch box?

The Citibank analysts note that plutonomy explains many of the conundrums in the economy. For example, they note that the rising price of oil did not dampen demand, for the simple reason that the price means nothing to the rich. They can fill their Hummers and Porsches with what amounts to spare change, in effect outbidding everybody else, who must economize in hard times. The economy of the many should drive down usage, and therefore the price, but that simple market wisdom does not work in the face of great imbalances.

Another conundrum explained by this imbalance is the low savings rate. It is received wisdom that Americans are profligate, especially the poor and middle classes. They don’t save, which is precisely why they are poor, and because of their bad habits the nation has a net negative savings rate. The truth is otherwise, as the authors point out. The bottom 2 quintiles were actually saving at a respectable 7% rate in 2000. Meanwhile, the top 20% were actually dissaving (their word, not mine) at a rate of 2% of their considerable incomes. But since they so dominate income, their dis-savings consumed everybody else’s savings, leaving no net national savings.

The authors do note one threat to the hegemony of the rich:

[T]he rising wealth gap between the rich and poor will probably at some point lead to a political backlash. Whilst the rich are getting a greater share of the wealth, and the poor a lesser share, political enfranchisement remains as was – one person, one vote (in the plutonomies). At some point it is likely that labor will fight back against the rising profit share of the rich and there will be a political backlash against the rising wealth of the rich. This could be felt through higher taxation (on the rich or indirectly though higher corporate taxes/regulation) or through trying to protect indigenous laborers, in a push-back on globalization – either anti-immigration, or protectionism.

In other words, Joe the Plumber might get a brain and actually start voting against the policies which keep these people in power. But I doubt it. Most people subscribe to the “John Gault” myth that the rich are rich because they have earned their incomes by contributing to the productive powers of the economy. And some have. But by and large, the increasing share that the rich get is not due to productive power, but to political and economic power, and particularly the power to free themselves from any public obligations,through lower taxes, for example, or any public control, through de-regulation, especially of the finance industry. And here we get into arcane matters to which Joe the Plumber does not give much thought. At least, not now. And probably not until the situation becomes so bad that it can no longer be ignored. I think that day is now in sight.

Why? Because this situation has been building for 30 years, and has involved repeated crises, all of which have been covered by an increasing scale of government intervention in behalf of the rich. The authors of the memo venture no explanation of why the rich have been able to claim a larger share. For that, we need to turn to the analysis of Simon Johnson, former chief economist at the IMF. And Johnson finds a “doom cycle” built into the very structure of the financial system, ever since the Reagan Revolution. Johnson summarizes his analysis in this short film.

He finds that since Reagan, the banks and other financial institutions have an in-built incentive to take ever-greater risks, and to grow as large as possible. This is because the risk rewards are asymmetric. The bankers can make massive amounts of money by taking massive risks. But when the bets fail, they can get bailed out. Thus, there are great rewards for success, and no penalties for failure. The profits are privatized, the losses are socialized. How far are they socialized? The Congressional Budget Office estimates that the portion of the public debt attributable to bailouts amounts to 40% of GDP. And then there are the 8 million jobs lost. That’s a lot of socialization.

What deregulation has set up is a doom cycle. An increased incentive to take risks, resulting, initially, in out-sized profits, then in massive failures, creating a need for bailouts, which leave the same people in charge, and the game begins again. Already, the profits of the banks are rebounding to pre-crash levels, but not on the strength of their lending to productive businesses (which by and large they aren’t doing) but by the same risky ventures that got us here in the first place. We are already repeating the cycle.

The rewards from the finance sector far outstrip the profits from manufacturing and other non-financial sectors of the economy. But in a sane economy—in an economy that is not actually a plutonomy—this cannot happen. The purpose of finance is to assist productive activities, and the rewards cannot logical exceed those of the things they finance. Yet that is precisely what has happened.

Further, the grip of the financial sector over the economy continues to grow. In the 1990’s, the Big 6 financial institutions controlled assets equal to 20% of GDP; today their assets are 60% of GDP. “Too big to fail,” and getting bigger by the moment. This is in an industry which, as Simon notes, “involves massive abuse of consumers, where they speak openly about ‘ripping the face off their customers.’”

But plutonomies are not stable, and doom cycles end in doom for everybody involved. The task of Front Porch Republicans, I believe, is to save what can be saved, and build what must be built. Up to this moment, that task has been theoretical; soon it will be actual.

Down with the Plutocracy!

2010-03-17T09:30:00.003-05:00

It's ever-increasingly clear that the Republicans and the Democrats are really just two opposing factions within a single plutocratic party. Their official platforms vary considerably, of course, and their favorite dead horses to beat are different dead horses. But in the long run, they both hold the same basic principles.

Both parties hold that American spending on the military is appropriate, and attempts to cut that spending in any significant degree are met with extreme opposition.

Both parties agree that unqualified support for the Israeli state is a vital part of American foreign policy.

Both parties agree that the "Global War on Terror" is an essential piece of American foreign policy, and that the American military should not be withdrawn from either of our current wars or from any significant number of our countless foreign bases.

Both parties agree that the president, without a declaration of war from Congress, is free to send the American military on adventures that he sees fit, and that defunding such adventures when, very belatedly, they meet with one or the other faction's disapproval is not an appropriate remedy.

Both parties support the decriminalization of sodomy and other perversions.

Both parties believe that abortion should not be criminalized. I'm aware that this assertion is controversial, but look at the facts. Look at the major candidates presented by the Republican party, for example, in the last presidential election: John McCain; Mitt Romney; Rudy Giuliani. Look at the ostracism that was displayed for the pro-life candidates, who despite temporary success made no headway: Mike Huckabee; Ron Paul. Is there any meaningful difference in the opinions of these major candidates from those of the opposing faction? Yes, Sarah Palin is pro-life (though ludicrously bizarre in many of her other views), but that doesn't count, because as Franklin Delano Roosevelt's first vice president, John Nance Garner, correctly observed, the vice-presidency is "not worth a warm bucket of piss." A lower half of a ticket thrown as a sop to pro-life constituencies does not a significant difference make.

Most significantly, both parties depend upon large quantities of money to gain and maintain office, and both derive the vast bulk of that money from the same corporate sponsors.

It's the last bit that I'm concerned with. Plutocracy is rule by the wealthy; it is often used interchangeably with plutarchy, a combination of plutocracy and oligarchy, which is the rule of the few. What we have in America today is not a democracy; it is not a republic, though it has some of the remnants of the old Republic; it's a plutarchy. But for convenience's sake, and also because "plutocrat" sounds better than "plutarch," I'll be referring to it as a plutocracy.

As the aforelinked Wikipedia article correctly notes,

In a plutocracy, the degree of economic inequality is high while the level of social mobility is low. This can apply to a multitude of government systems, as the key elements of plutocracy transcend and often occur concurrently with the features of those systems.

That fits modern American society exactly. The degree of economic inequality in America is high. It's middling-high according to the commonly used metric, the Gini coefficient (though even then it's higher than Canada and Europe, particularly Scandinavia, as well as India and Indonesia, and it's in the same category as such political and economic utopias as China and Malaysia), but to illustrate the enormous factual inequality only a few numbers will suffice.

The average CEO in America in 2007 made 364 times the salary of the average worker, and the average hedge fund manager makes 16,000 times that average worker's salary. This is truly enormous, even compared to the recent past; only twenty years ago, the average CEO made only 71 times that of the average worker. This indicates that the income gap has been expanding extremely rapidly; and that is, in fact, the case.

Some very disturbing numbers from the University of California at Santa Cruz indicate an alarmingly widening wealth gap in America. From 1983 until 2007, the total net worth of the bottom 80% of the population went from 18.7% of the nation's wealth to 15%; in the same period, the total net worth of the top 20%, minus the top 1%, went from 47.5% to 50.5%. The astute reader will notice that that's an increase of only 3% to balance a decrease of 3.7%; that's because a full 0.7% of that increase accrued only to the top 1% of the population. And this over less than a quarter century.

The bottom line is that the top 1% of the population controls a full 34.7% of the wealth in this country, and the top 20% controls a full 85.1% of that wealth, leaving only 14.9% of the wealth for 80% of the population. That's less than one sixth of the wealth being owned by a full four-fifths of our population. Surely this is an enormous inequality of wealth by any reckoning.

The other characteristic of plutocracy is low social mobility. Arguably, we don't have that in America. Anybody can become fantastically rich without starting that way, the tale goes, and that's at least facially true. There are no institutional barriers to the child of a homeless migrant laborer becoming president of the United States, or CEO of the country's largest corporation. We don't have a caste system, in other words, in which citizens are formally prohibited from being mobile outside of their particular classes. However, the story really isn't that simple.

The absence of formal, institutions prohibitions on social mobility does not make a society highly mobile; it merely indicates the absence of one means of preventing that social mobility. There are others, of course, some of which are mostly invisible. Tom Hertz of American University has published a lengthy report detailing the state of social mobility in America, and his results may be surprising to those wedded to the standard story we've heard so long that in America, all you need to succeed is hard work. You need, as it turns out, a bit more than that.

Low-income children have only a 1% chance of becoming one of the wealthiest 5% of society.

Middle-class children (by which I mean here "children born in the middle quintile of parental family income") have only 1.8% chance of becoming one of the wealthiest 5% of society.
"By international standards, the United States has an unusually low level of intergenerational mobility: our parents’ income is highly predictive of our incomes as adults. Intergenerational mobility in the United States is lower than in France, Germany, Sweden, Canada, Finland, Norway and Denmark. Among high-income countries for which comparable estimates are available, only the United Kingdom had a lower rate of mobility than the United States."

The middle classes are less secure in their income, and getting less secure in it over time, as opposed to the upper classes, who are more secure in their incomes, and are getting more secure in it over time.

In other words, the United States is not particularly socially mobile, at least not as much as we think we are.

Is high social mobility even a good thing? Arguably not; however, its presence in a society in conjunction with a high inequality of wealth is a strong indicator that we're living in a plutocracy.

So we live in a plutocracy; what does this mean? It means that the people who make the decisions are, to an overwhelming extent, the people who have money. Lots of money. We can see clear evidence of this in the sorts of laws that they end of passing. The financial bailouts are the most obvious example; twenty-three trillion dollars to ensure that the wealthy bankers and speculators are kept safe, because they're "too big to fail," a cost which must be born by the public even while their own private interests get the benefit. If there were any doubt that the bailouts were largely motivated by the private interests of the plutocrats, all such doubt should be gone by now.

These, of course, are merely legislators; what about the so-called regulators, who hold much of the real power in the nation? The situation there is, if possible, even more dire. The regulators of our industries are literally in the pockets of those industries, a phenomenon that is well-known in political circles and called "industry capture." Of course, despite it being well-known nothing is ever done about it because the situation is extremely helpful to the plutocracy. Two great examples will suffice to demonstrate this condition of our regulators, the Department of Agriculture and the Department of the Treasury.

The Department of Agriculture is put in place to regulate, as the name implies, agriculture throughout our nation. As such, it's supposed to regulate all of agriculture, from the largest of factory farms to the smallest family one. However, family farms have only a little money, while factory farms have a lot of it, and as such the Department of Agriculture ends up regulating family farms right out of business and factory farms into ever-increasing piles of new wealth.

Monsanto, a ridiculously huge agribusiness corporation, is a producer of many farming chemicals, most particularly the fantastically deadly herbicide Round-Up, along with seeds which are genetically engineered to be resistant to Round-Up, which it calls "Round-Up Ready" seeds. Of course, it alone can sell Round-Up Ready seeds, because it has a patent on them. It is illegal, therefore, for a farmer to save Round-Up Ready seeds from his own plants. This is a fairly standard market capture technique here, very similar to that practiced by Microsoft in the computer field, and as such isn't particularly surprising, nor even particularly plutocratic. But things get even better from here.

Monsanto has totally dominated the Department of Agriculture, to such an extent that one reviewer has noted that "Monsanto employees and government regulatory agencies employees are the same people. Examples of this sort of thing abound. It doesn't help, of course, that Monsanto spent nearly nine million dollars lobbying in 2008 alone, or that another Monsanto alumnus was appointed to the FDA in 2009. And yet, when the Department of Agriculture, the FDA, and similar farming-related agencies constantly propose and support laws that will make small farming more difficult or impossible, no one in authority ever asks any questions. Because these, remember, are their fellow plutocrats.

The situation is much the same with the Federal Reserve, as well as the Department of the Treasury and similar federal agencies. Goldman Sachs is the name of the game here. Henry Paulson, George Bush's Secretary of the Treasury, was a Goldman Sachs CEO; Timothy Geithner, our current secretary, is a Goldman Sachs alum prior to serving the Federal Reserve in New York. These officials literally speak out of both sides of their mouth, saying that they want to reduce lobbyist influence while appointing lobbyists---Goldman lobbyists, of course---to their staffs. Neel Kashkari, in charge of overseeing TARP distributions, was moved to that position by Goldman Sachs alumnus Hank Paulson from---guess where?---Goldman Sachs. Joshua Bolton, John Corzine, Stephen Friedman---the list goes on and on and on. And SEC chief operating officer? Meet Adam Storch, Goldman Sachs alumnus, hired at the ripe old age of 29. Yet these are the same men who are supposed to regulate the industry that formed them.

So vote, we are told; if you don't like the situation, throw the bums out! Vote for somebody new! The only response to this can be, for whom else shall we vote? We're presented in nearly every election with someone from one or the other faction of the same plutocratic party. We can throw one bum out, but only by throwing another bum back in. How else can we explain the fact that Congress consistently gets less than 50% approval ratings while maintaining a higher than 85% reelection rate?

The situation is so blatantly plutocratic that the plutocrats are starting to be very open about it. Citigroup, a large investment firm which only continues to exist thanks to the plutocracy (bailouts), is the best example. Utilizing the neologism "plutonomy," Citigroup praises the situation of "income and wealth inequality," praising the fact that "[t]he rich are in great shape, financially." They further note that those great religious causes of the plutocracy, globalization and the constant advance of technology, "contribute to the plutonomy," and do so "at the expense of labor." In other words, they benefit the rich and harm the poor. All of this, according to Citigroup, an unquestioned and honored member of the plutocracy, is a good thing.

Welcome to the plutocracy, ladies and gentlemen. You've been here for a while already.

So what can we, as distributists, do about this situation? The sad answer is that we can do very little, in the short run. The very nature of the plutocracy is that it's tight-knit, hard to break into; unless you're very rich, or at least can become very rich, you're just not in it, which means that you're more or less excluded from the echelons of power. But that doesn't mean that we can do nothing.

The most important thing to do is take control of our own lives. We are men, not automatons, nor slaves of the machine on which the plutocrats are still, even now, just putting the finishing touches. Most of us may have the knowledge of infants, but we still have the souls of men. Let's exercise them, train them, and make ourselves what we ought to be: free citizens. A society made up of free citizens itself cannot help but become free itself.

Becoming a free citizen involves some of the same things we've been hearing about since our teachers forced us to memorize the Bill of Rights in elementary school. (I know they don't do that anymore; but they ought to.) We must speak our minds; speak out against the plutocracy, against capitalism, against greed, and in favor of free government, distributism, and moderation. Refuse to be a part of the plutocratic machine. Refuse to confine ourselves to the rival factions; vote for the candidate whose policies are best, not whose are least worst. It may even be feasible to seek political office ourselves, particularly on the local level.

But it also involves things that we didn't have to memorize in elementary school. Distributism is about freedom, of course, but it's about economic freedom in particular. There are many things we can do to fight the plutocracy that capitalism has wrought, and that fight can itself further the distributist cause. They are legion, and each distributist will undoubtedly be able to come up with many of his own. A few that immediately present themselves are as follows:

Begin to produce. Don't rely on the machine to produce everything for you. Even if you don't have a lick of soil to your name, grow something in pots. Keep small livestock, like rabbits or chickens. If you are fortunate enough to have any land, no matter how little, you can grow more than you think. Study the matter. Hamilton's Organic Gardening is the stuff of legend. Most of Logsdon's works are also excellent, particularly Small-Scale Grain Raising, either the first or second editions; it's persuaded me quite thoroughly that grains, particularly corn, are feasible even for a small gardener on an urban lot. Storey's many guides, like the Guide to Raising Rabbits or Guide to Raising Chickens will probably be all the small producer needs to know. And "grazing" or foraging is available to anyone, opening up a world of food products for which we need not depend on the vagaries of an industrial and plutocratic capitalism. Few more distributist tasks can be imagined.

Walk somewhere. Really, put the keys of the car away and just walk somewhere. We should consider locating ourselves close enough to our places of work to walk there. We must not fall into the modern trap of considering anything longer than a hundred yards too far, either; I might be a young man, but I've got a bad knee on one leg and a bad ankle on the other, yet I manage to walk two miles to work nearly every day (I do carpool home pretty frequently), a walk of only about half an hour. If such relocation is not possible, let us walk to the store; walk to church; or just walk for walking's sake. See people and say hello. Look into shop windows on a main street somewhere. Walk down the street and hear the tweeting of the birds, the barking of the dogs, the cries of the children at their play. Feel the weather. The universe is not seventy-two degrees at all times, and neither should our skin be. Accustom ourselves to the real, physical world. Distributism, despite protestations from capitalists to the contrary, is fundamentally about the real; let us remember what the real is by being part of it again.

Buy. No, that's not a typo, but it's not consumerism, either. Buy selectively. We should refuse to be engulfed in the "save a buck at all costs" mentality that our plutocratic society tries to thrust on us. Try to pay attention to slave-made goods, and avoid them whenever possible. Try to buy local in preference to remote. And support those businesses which respect distributist principles while declining to support those which don't.

Relate. Above all, don't just buy local, be local. Relate to the people around us. Get involved in our local parishes, perhaps trying to spread distributist principles and practices through them. Get to know our neighbors; think how many of us probably can't even name our neighbors? Next time we have a barbecue, invite a few of them over. Let's talk to them when we see them outside; share our produce with them; listen to them tell us about their children, their hedges, the annoying person who lives on the other side of their house. These are the people we live with; it's only decent to get to know them.

The plutocracy hates all of these things, because none of them are profitable for it. Seeking money and power before all else, these practices deprive them of both. These are the actions of a free people taking charge of their own destinies and their own communities. These are really the only ways we can effectively fight the plutocracy. Let's embrace them, and fight to our last breath.

Praise be to Christ the King!

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The Red Tories in Washington

2010-03-12T09:13:00.004-06:00

And Philadelphia. Previously, I had written about Phillip Blond and the Red Tories. Thanks to the efforts of the folks at the Front Porch Republic and others, Phillip Blond will be speaking at Georgetown University on March 18, and Villanova on March 22. And he will have an all-star cast to comment on his work: Andrew Abela, John Milbank, Ross Douthat, Rod Dreher, Patrick Deneen, and Daniel McCarthy. These should be first rate events. I wish I could go myself, but I hope some readers of this review will go and give us all a report. More details on the event click here.
Phillip runs an excellent "think tank" ResPublica, which has it own blog, The Disraeli Room.

Our Disastrous Debt Economy

2010-03-03T15:51:00.008-06:00

I'm pretty old-fashioned economically, really. I put a relatively new name on my economic opinions (I call them "distributism," a term derived from "distributive justice" and only in existence for less than a hundred years), but it's really a set of pretty conservative principles, some of which even Republicans and libertarians will agree with. A few of my fundamental principles:

An economy, like all parts of society, exists to help its members proceed away from vice and toward virtue. The provision of sufficient quantities of material goods, however it may be done, is a necessary part of this.

Because economics deals with the distribution of material goods in a society, distributive justice is its fundamental principle. This distinguishes it from, say, criminal law, in which retributive justice is the fundamental principle.

The bedrock of any economy is production of useful goods for human consumption. We cannot consume what has not first been made. Putting consumption before production is putting the cart before the horse.

At least considered in the abstract, local is better than remote. The perfection of a society comes in part from possessing the greatest possible degree of self-sufficiency. Thus, encouraging reliance on remote, or even foreign, sources of goods when such goods can be produced locally is a Bad Idea.

Debt is a burden on an economy; too much debt will cripple or kill it. My grandmother once told me, "If you can't afford it until tomorrow, wait until tomorrow to buy it." But she is a child of a different age, with saner principles in her mind.

That last is my topic today. We're awash in debt. The primary issue most businesses have had during our current "economic crisis" is the inability to acquire more debt quickly enough. Our federal government, even, is in the hole nearly twelve trillion dollars, and that crushing debt is increasing at a record pace while our government lives out to its fullest Dick Cheney's idiotic principle that "deficits don't matter".

The average American's credit card debt is $8,329. That's just credit card debt alone; that doesn't include pesky little things like mortgages, car payments, student loans, hospital bills, and the million other things that people need to take out credit for. Indeed, in 2007 14.7 percent of U.S. families had debt exceeding 40 percent of their income. And then they still had to pay their mortgages, pediatricians, and so on.

Can anyone seriously look at this situation and claim it represents a healthy government and a healthy economy? At first, of course, it seems great; that's why the Fed "stimulates" the economy by lowering interest rates to encourage people to borrow more. People are flush with cash with which they buy lots of stuff that they otherwise couldn't afford; this makes car dealers and television salesmen very, very happy, which makes stocks go up, which means people borrow even more because they feel that things are only getting better, and so on. But this is a very limited boost to the economy.

Because, of course, it can only last so long. Eventually, the people lending this money out do actually want it back. With interest. And people begin struggling to make their payments. Many of them default; many of those who do not are forced to forego many purchases which they would otherwise make in order to pay off those bills. Businesses which might have hired one more person with real money, rather than three with debt, have to fire their three debt employees and hire nobody instead while they pay it back. It's clearly a loss from the individual perspective; but for a while, the economy manages to cancel out those negatives and continue apace, building itself on ever-increasing piles of debt.

Too bad it's bad debt. Eventually, those individual financial disasters begin to accumulate. They start as a trickle, increase into a flow, and finally crest as a tidal wave. And here we are, at the beginning of the tidal wave, right now, while our years and years of living beyond our means by borrowing for things that we couldn't afford finally, at long last, catch up to us.

Who's responsible for this situation? Facially, of course, it's citizens and businesses who engaged in very risky credit behavior. Namely, it's almost everybody in the country. But most of these people were relying on advice and on policies from higher up, coming from everywhere from the banks to the Fed itself. I myself, when buying my house, had to deal with constant encouragement from mortgage lenders to spend more than I had, despite my repeated insistence, and provision of a specific maximum figure, that I would spend only this much and no more. Those with less control or knowledge over their financial situation are surely much more likely to succumb.

The banks are really responsible, taking their cue from the Federal Reserve, who encouraged their reckless lending behavior with obscenely low interest rates. (Rates which remain obscenely low even as we speak.) And so, naturally, the banks ended up holding the biggest and heaviest bag when the debt hit the fan. But the banks also had the most money, even if it was funny money. They asked their friends at the Fed and the Treasury to help. And those friends moved heaven and earth to ensure that these banks would never, under any circumstances, face the consequences of their own actions, even as the poor in this great country literally lose house and home for following the advice that the Fed and these banks gave them.

So the banks are the truest of capitalists. Profit is privatized, as they made billions of dollars thanks to the government's easy-lending policies. But costs are publicized, as the taxpayers of this generation and of countless generations to come pay the price when those policies finally run up against the inevitable wall. This is wrongdoing in the extreme. We have become a country run not by the people, nor even by a despot. We are an oligarchy, in which our very richest get whatever they want, taking the profits of the public largesse while forcing the hoi polloi to stomach the losses.

MSNBC, of all places, put up an interesting monologue which prompted me to return to this topic:

What is said in this video is true. The "Troubled Asset Relief Program," which sprayed seven hundred billion dollars in free money all over the big banks like a fire hose, is just a drop in the bucket. TARP, combined with other federal programs bailing out the already rich and powerful, comes to 23.7 trillion dollars. This figure comes from our government itself, surely not given to inflating its estimates of its own reckless expenditures.[1] For comparison, the combined GDP of the entire world is only about sixty trillion dollars. And while some might rightly object that that figure is only an estimate, the same report makes it clear that the Federal Government is already irrevocably on the hook for a full three trillion dollars, still an order of magnitude more than the TARP represents and nearly a full fifth of our gross domestic product. And, more importantly, over three hundred billion dollars more than our yearly tax revenue.[2]

I mentioned earlier my grandmother's statement, which I'll go ahead and call Nana's Principle: if you can't afford it until tomorrow, don't buy it until tomorrow. Reactionary advice, indeed. This seemed perfectly natural common sense to her generation; bred in the roaring twenties, matured in the Depression, steeled in the furnace of the Second World War. She and my grandfather, a combat veteran of that war and a sometime coal-miner, were much alike in that way; they grew up growing their own potatoes and shooting a lot of their own meat, and even in their adulthoods didn't buy what they couldn't afford. My own mother spent her infancy sleeping in an opened dresser drawer because they couldn't afford a cradle.

It appears, though, that the apparatus of our government, much of which is only a decade or so younger than that heroic woman from whom I'm honored to be descended, is incapable of digesting even in its maturity the lessons that she understood by the time she was ten years old. Nana's Principle, so simple as to seem obvious, is completely beyond it. Its dependency on rich and powerful interests is so pervasive and so complete that it simply cannot contemplate not giving those interests everything they desire, up to and including indebting their country in the amount of over a third of the global gross domestic product to make sure that those interests remain ever rich and ever powerful, and leaving the poor, the workers, and the middle class to foot the enormous bill.

As I mentioned earlier, my economic opinions are pretty old-fashioned, though they go by a fancy name. That name is derived from an ancient concept, one hallowed in the annals of philosophy and politics for thousands of years: distributive justice, the giving to each what is his due. That is what distributism is, at its core: the implementation of distributive justice within an economic system. But this bailout system is the exact opposite of distributive justice. It gives profit to recklessness and costs to frugality; it gives benefit to fiscal incompetence, and even to fiscal malice, while thrusting its costs onto the complicit but largely innocent, and certainly less responsible, public. It's an injustice, pure and simple, a violation of the principles which should guide all economic activity.

We must all pray that our nation recovers from and remedies this idiocy soon.

Praise be to Christ the King!

1. July 2009 Quarterly Report to Congress 137-38 appears to be its first acknowledgment in governmental literature. It appeared in some subsequent quarterly reports, as well; in the January 2010 report, however, it and the entire section it represented appears to be completely missing, without any explanation for the omission that I have uncovered.
2. Based on our 2007 tax revenue of $2,674,007,818,000, according to Federal Tax Revenue by State.

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Hudge and Gudge Watch: Big Business squashes your rights

2010-03-03T08:50:00.002-06:00

It is common thinking among conservatives that the government getting too big is the only problem, and once that is dealt with our freedom will be secure.
However, this view forgets that big business can be just as bureaucratic and invasive as big government.
Recently this year, a hospital decided that it will no longer hire anyone who smokes. You thought the government was the only one running the anti-smoking campaign? Think again. It was neither the first nor will it be the last.

According to the hospital's new policy, anyone who tests positive for nicotine in their drug screening will now be considered in the same group as illegal drug users. From the article:

As part of the pre-employment drug screen, they will be looking for nicotine. If a prospective employee tests positive for nicotine, the offer of employment will be rescinded. Even nicotine gum or the patch would make a potential employee ineligible.

Officials with Memorial say the new policy isn’t designed to save money on health care costs, but because a hospital should set a healthy example to the community.

“I understand the concerns people have, but we are here for the health of our community,” Brad Pope, vice president of human resources said. “Like it or not, what’s proven is that tobacco is the most preventable cause of death and disability in the United States. I think the Chattanooga and surrounding communities should expect this from Memorial.”

Thus, based on an unprovable statement with no evidence to back it up (as the majority of people who smoke do not even die from it) Gudge is now going to tell his slaves what they can do when they sit at home in their living room in a manner that concerns him in no way whatsoever. Now what concerns me here is not that a majority of us here at the Review smoke (even though such contributes to our sober and balanced atmosphere), nor the fact that I smoke and I love smoking and would no sooner part with my pipe than I would with food, I might very will have a distaste for smoking and be alarmed by this event.

Mr. Pope has decided that he is the Pope of the holy office of discipline in his company, and he is going to regulate not just what the employees of his temple of Asklepios do while they're there, or with company things (which he is within his right to do), but what they do with their own things at home (which he is not). Imagine Dr. Smith at home in his living room. He decides that he should like a small cigar to go with his coffee while he reads his a very thrilling novel. No, my Pope (that is of the HR department) will fire me. Or again Dr. Smith is invited out for a round of drinks with some friends, but wait, they smoke. Not only might nicotine get in his blood stream from second hand smoke, but he will get it on people at work through third hand smoke. So Dr. Smith is now forced to contract his social circle.

Moreover, as Mr. Pope has pontificated, the hospital is not treating smokers in the same class as those who use illegal drugs because they think it will save them money on insurance, but because they are positively opposed to the thing in itself, irrespective of whether or not the research behind it is correct. The hospital is not saying "do not smoke in the building around the patients" etc. which is reasonable on various levels. They say do not do it at home. What else might a Mr. Pope decree with the dubious infallibility of statistics and studies? What about obesity? We saw the spectacle of a woman nominated for Obama's Surgeon General who was slightly pudgy, shapely might be the correct description, rejected on the basis that she was fat and this would send a bad message. What if Chatanooga's Pope should decide that the hospital needs to set the standard and fire anyone who is fat (or perceived to be fat, since our society has a strange and unhealthy obsession with being skinny, the goal should be to acquire fitness)? Dr. Smith, even though you are an award winning pediatrician who has worked with children for 20 years, you don't set the example of what a healthy person should look like because you are fat. You have been excommunicated.

Then it comes down "If anyone should on his own time eat at McDonalds, anathama sit." If that sounds far fetched and ridiculous, think again. It follows exactly from big business getting the power to determine what you can and can't do. The Nazis embarked on a massive anti-smoking campaign, and the reason was if people could accept the government's right to regulate their personal behavior, they could accept the principle that the government can regulate other behavior, and they selected that which was becoming scientifically unpopular and thus could have the weight of doctors, scientists and the gestapo behind it. Soon any behavior seen as unpatriotic, much like "counter-revolutionary" in the Soviet Union, became criminalized. How has big business gotten this power might you ask? Gas prices. Not from the gas prices, but rather the gas prices show us how they have gotten a strangle hold on us. We can't afford to lose our jobs, particularly in a volatile economy, and we can't afford to not work. This is why when gas prices went over $4 people continued to buy, although other sectors of the economy weakened, not because people are addicted to oil, but because without it we can't get to work, and end up living in the street.

In truth, big business is little different than big government. They think that they own you, the former because they pay you, the latter because they take from you. Next it becomes, I don't like the Pope (because Mr. Pope correctly observes that there can only be one at one time) so anyone whose religious affiliation is Catholic must be sacked. This has already been done for any appointment in congress who might be Catholic and faithful to the Church. Then perhaps you drink coffee. Coffee is found to cause heart problems based on these studies, so drink tea instead. Testing positive for coffee in your system will lead to rescinding of job offers or firing. Then, it will become more ridiculous, not to mention stressful without that cup of kona in the morning. On the other hand, in Michael Novak's estimation that might be a boon to capitalists in the medical field.

One may not like smoking, I for example detest cigarettes, but proudly smoke a pipe and cigar, but none of that really matters. What matters is neither big business nor big government (hudge and gudge) believe in the family. They both believe the man who works for them is but a cog in their machine, and that his is their cog in their machine. The big business doesn't believe in the family because it is inconvenient for him, the government because it believes it is the Pater Familias. Since the two become more and more alike, the two begin acquiring the other's traits, like a married couple who begin to behave like each other. The family becomes inconvenient to the state, because the state brings about a new concept of the family that clashes with tradition, so it forces compulsory education where its policies are right and mom and dad are wrong, or children can be taken away because parents taught the wrong values. The big business begins thinking it is the head of the family, and begins to control it. Yet that is the future because big business and big government are the same thing.

Now the libertarian, or some other fool who doesn't believe in the effects of original sin but sees man only in a vacuum of reality, might remark, well, work somewhere else. The market will not allow them to continue for long if that is what people want. In a vacuum that might even work, but in reality it is senseless.

In the first place, one may not be able to get another job. Let's even say he can, to get away from a tyrannical HR Pope, he must contend with other businesses which will eventually adopt the same thing. The libertarian fails to take into account what is fashionable, except in the metric of selling garbage, which capitalism does very well. It takes good products, like a bit of virginia cut tobacco leaf rolled up into a natural tobacco paper, into a disgusting capitalist product half tobacco and half chemical filled saw dust and bleached paper, not to mention fiberglass filters. It is good at selling crap, but we must not forget that when the wealthy put their wealth to something, it creates an effect irrespective of what people want. The wealthy want women to be dressed up like prostitutes even at age 4, so they flood stores with clothing of this style and mark it $4. A sweet dress such as girls about 4 should be wearing, $20. There is no market force involved, but the forces of the wealthy and social destruction. Nevertheless, let us say again that Dr. Smith has several children, and as costs go up providing for his family has gone up. So maybe he can't leave, but wishes to escape the bull of his HR Pope, yet is stuck there. So he must change certain virtues he engages in at home to suit his employer, which are but the beginning of the first. Most men will fall into this category, especially when real unemployment numbers factor in pretty high.

It is much like the gas prices. The market can bear it not because that is what people want to pay, but what they must pay to avoid being fired and living with their family on the street. It is why people worked 15 hour days before government correctly began regulating big business, not because they wanted to, but because they had to. The big business is betting that if you don't like it you will step in line, because (especially in this economy) you must or else risk joblessness and homelessness.

Nevertheless, let us suppose that Dr. Smith does move. He moves to a new city where he knows no one, that he doesn't care for because that is where he could get a job without a Pope of the home as well as the workplace.

Why should a man leave off of hearth and home and go to a new place? There are all kinds of legitimate reasons, war, or personal tragedy, or some other calamity, but not because he is required to give up smoking at his former job! Its ludicrous. Hearth and home are no longer the sacred domains of the family, but subject to the whims of the bureaucratic befuddlements of Hudge and Gudge. The Caesars rose to many heights, they also descended to many lows, but they never descended so low as to try and be worshiped as the gods of the hearth and home. Big business has done Caesar one better.

A Tale of Two Banks

2010-02-26T10:42:00.000-06:00

Everybody is aware that the great and powerful banking institutions run by the new class of “masters of the universe” have failed, and now exist only by their privileged access to the public purse. And you will no doubt be happy to know that they are once again profitable and paying big bonuses. Of course, they are not profitable due to their lending activities, which largely they aren't doing, but by the same sort of financial speculation that got them—and us—into this mess in the first place. The banks won't lend because they can't find borrowers who will pay them back, and the borrowers can't pay them back precisely because of the way the banks wrecked the financial system and the economy along with it.

Yet through all this there is a bank that did not fail, that is not in trouble, that has no difficulty in finding borrowers and in getting repaid. That bank is the Grameen Bank, the institution that practically invented micro-finance. I had the distinct pleasure last night of hearing an address by its founder and guiding light, the Nobel-laureate Dr. Muhammad Yunus. The Grameen banks lends 100's of millions of dollars to poor people in Bangladesh and around the world. The good doctor now heads a vast organization which employs 27,000 bankers in Bangladesh. Yet he was not a banker, but an economist. So how did he learn to run a bank, to set up the complex procedures and safeguards that such institutions require? It was very simple, he explains. They just went to the existing banks, the experts who have been in the business for a long time and who know how to get they job done. They examined all their practices and procedures, and then did exactly the opposite.

The banks lend to the rich; Grameen lends to the poor. The banks require collateral; Grameen's borrowers have none. The banks require complex legal documents and teams of lawyers; Grameen has no such documents, nor any lawyers. The banks lend mostly to men; Grameen lends mostly to women. But there is an even more fundamental distinction between Grameen and Citibank. The too big to fail banks are mostly in the business of creating money and investing it in financial speculation; their activities have only a remote connection with the real economy, the economy of production and jobs and the creation of real wealth. Yet their speculative activities have the power to wreck the real economy. Grameen, on the other hand, is connected with the real economy. When they lend $50 to a women, she buys chickens, or goats, or a sewing machine, or some actually productive asset, something that actually adds to the real wealth of the borrower and the nation.

There is of course another distinction. Grameen is not in business to make a profit. It does in fact make a profit, but that is not the point. Making a profit only allows it to continue in being so that it can continue to fulfill its function, which is to bring people out of grinding poverty into self-sufficiency and self-reliance. It aims at building strong families, strong communities, a strong economy, one centered on the lowest rather than the highest. That is to say, it is a social business, a business that has a social point and helps to create a particular kind of social environment.

Looked at in that way, all businesses are social businesses; they all contribute to a particular kind of social order. But different kinds of businesses presume—and build up—different kinds of social order. Citibank has its own view of what a just society ought to be. Of course, they would never articulate this vision in polite company. They will fall back on the libertarian rhetoric of “freedom,” even as they work to destroy the material basis of that freedom. Liberty in this view is a commodity like any other, one that has a price. Think of our Supreme Court, which has ruled that “money is speech,” and hence those with more money have more rights to free speech, and the corporations, with nearly limitless access to money, have nearly infinite rights to “free speech,” surely more rights than any mere citizen, any real person.

Dr. Yunus is familiar with talk. He was formerly the Chairman of the department of economics at Chittagong University. Yet it was contact with the villages surrounding his university that made him realize that all the complex formulas, all the high finance and foreign borrowing were not working. Or rather they were working, but only to increase the poverty and misery of the people. He discovered that he could solve the dependence on loan sharks in one village with a mere $27 in capital. For a man who was used to working in millions and billions, this was a real revelation. And that was the beginning of the Grameen Bank.

What Dr. Yunus came to realize is that all economic theory was built on considering only half of what men really are. It is built on the fact that men are selfish. And so they are. But that is not all that they are. Men are also unselfish, because without that, no social order—and no economy—would be possible or sustainable. So the good Dr. set out to found an economics, and a bank, built on the whole man, and not just the half-human.

In his most recent encyclical, Caritas in Veritate, Benedict insisted on the Principle of Gratuitousness as a necessary principle of economic order. This makes no sense, indeed, has no meaning, to the economist. Business and economics is merely about wealth creation, and no principles of love and gift are involved. Further, the introduction of such a principle can only compromise the “scientific” basis of economics, and only hamper the “efficiency” of the business. And yet, it is Grameen that is standing on the strength of its borrowers, while Citibank stands on the public purse. Citibank grinds us all down with their debts; Grameen lifts up its borrowers to real freedom.

I believe that Dr. Yunus, and Pope Benedict, are right and the bankers are wrong. Man is indeed selfish, but he is more than that. A banking system that is built only on selfishness will only build up a social order of selfishness. But this order will turn out to be disordered, and in constant danger of collapse. Further, this disorder privileges the possessors of capital, who must always be few, and sets them at war with those who possess only their labor, who will always be the many. But Grameen unites capital with labor to make the person and the family productive and self-reliant. Like other businesses, it makes a profit, which it distributes to its owner-depositors, but its purpose is to make a gift. The gift is funded by an exchange, but is not reducible to that exchange.

The social order needs to be funded; we all need to eat. But it cannot be reduced to mere eating, or soon we will be eating each other. Indeed, banking reducible to greed alone is a kind of eating of the other, or at least eating their substance and reducing their livelihood. But there is not the slightest reason it has to be that way, and the distinction between Citibank and Grameen Bank proves this. Indeed, it is the difference between greed and gift; between business understood as a taking of all you can get, and business as a means of giving all that you can.

Consumer Confidence or Consumer Recklessness?

2010-02-23T11:28:00.005-06:00

Note: Apologies to those readers who have seen it elsewhere, but given the recent reports of recent consumer confidence lows, I thought a rehash of this issue was warranted. This provides further proof of the point, though; consumers are apparently not only lacking in confidence, but also incredibly fickle, their willingness to waste money on things they can't afford constantly waxing and waning based on the most transitory news. I hope these considerations provoke as lively a discussion as they have in the past.

The current economic crisis is often blamed in part on a "crisis of consumer confidence." The essential problem, according to those who place such blame, is that consumers just aren't confident enough. Because they're not confident enough, they're not making lots of purchases, which cuts down on orders from retailers, which cuts down on transportation orders for distributors, which cuts down on orders from manufacturers, and thus hits everybody. The important thing, it's said, is to get consumers confident again so that they'll start spending again.

Along this vein is the oft-repeated statement that "the consumer is two-thirds of the economy." Since the consumer is two-thirds of the economy, we need to get him spending his money, or the other one-third won't work anymore. What's more, that single two-thirds will shrink, thus costing everybody, consumer and otherwise.

Let's think about those statements for a moment, however. First, let's take "the consumer is two-thirds of the economy." Let's take care to ensure that we're understanding this statement properly, and that I'm communicating my own thoughts about it clearly. The statement reflects the fact that consumer spending makes up about 70% (rather more than two thirds, really) of America's Gross Domestic Product (GDP). GDP, in turn, is the market value of all goods and services made in a country in a given year. It can be calculated in a number of ways; however, because of easy availability and good reliability of figures, the "expenditure approach" is generally used. This approach simply sums the total consumer spending, investment spending, and government spending within that country, adding in also the difference between exports and imports.

Investment spending is a bit counterintuitive in this case, because it doesn't refer to what we normally think of when we think "investment", which is the purchase of stocks and the provision of venture capital. Investment spending for GDP purposes, in fact, specifically excludes such spending. Rather, it includes money spent on clearing fields; building factories; buying better equipment; upgrading old equipment; digging new mines. In other words, it includes money spent on production, either improving ongoing production or beginning new production.

Consumer spending, on the other hand, includes just about all other private spending. Money spent on goods, whether durable or nondurable, and all services are included. So every time we go out to eat; buy a computer; get some new clothes; this is all consumer spending.

So when we consider this "two thirds of the economy" figure, what we're looking at is a stark and worrisome fact: our spending on consumption is well over twice what we're spending on improving and sustaining our production; it vastly outweighs government spending and investment in production, and even partially offsets (though only unsustainably) our dismal import-export ratio. We'll always spend more on consumption than production, for the simple reason that productive assets tend to be more enduring; but while our consumer spending has risen, our net exports have fallen drastically (indicating reduced domestic production), and our investment spending has dropped precipitously in the last few years (The Changing Composition of GDP).

Think about this for a moment. If we're spending so much more simply consuming stuff than we are on actually making it, who's spending money on producing the things that we so voraciously consume? The answer is China; Japan; Europe. In short, people other than us. And because we're spending so much on consumption and so little on production, and because production is the real and original source of wealth, we're spending much more than we really have. Where does the extra money come from? The answer is China; Japan; Europe. In short, from people other than us. In other words, we're borrowing to cover for all the consumptive expenditures that aren't balanced by proportional appropriate investments in our productive infrastructure. And, as a corollary, we're accumulating a great deal of debt and paying a great deal of interest on it.

And that leads us to thinking about the other notion now, that the problem here is one of "consumer confidence." Don't we really mean "consumer recklessness?" The problem, such people say, is that consumers just aren't spending their money like they used to; they're saving it instead. Tightening their belts. Never mind that once this great country prided itself on the thrift of its hard-working citizens, noting that said thrift and hard work are the elements which made it economically great. Such people, though, want us "consumers" to just keep spending our money, even though we really need to save it. Even though, in the past, the money that we've spent is often money that we didn't have, and that we had to borrow to spend. We need to retrench; pay off our past debts; save up a cushion in case of a fall. That means that we, as consumers, are not "confident."

In reality, though, it means that we, as consumers, are not reckless. We're being wise for a change; we're being careful only to spend money that we actually have; we're foregoing present pleasures for the sake of future safety; we're actually, horror of horrors, paying off some debts instead of constantly racking up new ones. This is terrible! Consumers aren't confident! Can you imagine what might happen to the economy if this spreads? What horrible disasters might befall our nation if such ludicrous practices spread, and our government adopted such an insane scheme so lacking in "confidence?"

Modern economics have led us to a strange place. Though this country was built on working hard, producing goods, foregoing unnecessary consumption, taking debt as rarely as possible, and paying off necessary debt as quickly as possible; though the wealth of every country has been based on these perennial, thrifty, and diligent practices; we have nevertheless convinced ourselves that our wealth is based on spending as much as we can, racking up as much debt as we need to in order to get everything we currently want, and letting other countries bother with the annoying hard work, production of useful goods, and delayed gratification.

Here is national suicide. We need to return to the basic principles of sound economic management. Namely, that it is production which is primary, not consumption; that it is better to save than to buy what we don't need; that it is better to be free of debt than to have debt; and that gratification of our present desires need not be immediate, or even occur at all. Thrift; moderation; looking to the future. There is national prosperity. There, and there alone, is the solution to our economic crisis.

Praise be to Christ the King!

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.

Should I Laugh or Cry?

2010-02-21T23:09:00.002-06:00

If you need a good break from things, spend some time at James Howard Kunstler's "Eyesore of the Month" page, wherein he documents a different architectural abomination each month. This month's eyesore is particularly disturbing, an art gallery for people who hate art. What kind of exhibits suits this kind of building?

"CBC News spoke to Reed Clarke at an exhibit that allows visitors to experience being in an abandoned Japanese dentist's office during a storm. He said the exhibit was very realistic."

Cairo's Christian Entrepreneurs

2010-02-18T21:26:00.002-06:00

The Zabaleen are the Christians of Cairo, and as Christians they are a marginalized people doing a marginalized job: collecting garbage. The solid waste they recycled, but the organic waste they fed to their pigs. Muslims can't keep pigs, since pigs are "unclean," but the pigs were what kept Cairo clean. The government learned this to their sorrow, when they had all the pigs slaughtered, supposedly to prevent "swine flu." Now the Zabaleen have no incentive to pick up the organic wastes, which now pile up in the city.

The government thought they could farm the job out to big western companies, but the Zabaleen consider themselves entrepreneurs, and weren't going to do the job for wages, much less for foreigners. The western companies couldn't hire the Zabaleen, and the Muslims consider the job beneath them. Now the big companies have to negotiate with the Zabaleen.

PBS did an interesting report on this situation:

St. Augustine on the Liberal State

2010-02-16T14:48:00.001-06:00

Comparisons of the modern state to the Roman Empire are common enough but Brad Littlejohn of The Sword and the Ploughshare brings this passage from The City of God to our attention. It is, I think, particularly relevant to the modern state:

'So long as it [the republic] survives,' they say, 'so long as it prospers, rich in resources, self-confident in victory, or, better still, secure in peace, what difference does it make to us? What matters is that there is money to be made to support our lavish style of life, and to give the stronger their hold over the weaker; that the poor treat the wealthy with compliance, to ensure their daily bread--the poor depending on the patronage of the wealthy for a quiet life, the wealthy calling on the poor for support to boost their public standing. Popularity should accrue not to those whose policies promote public welfare, but to the big providers of public entertainment.

Law should not be rigorous; low indulgences should not be proscribed. Rulers should not bother themselves with getting virtuous subjects, simply quiescent ones. Territories should view their rulers not in the light of moral educators, merely as economic managers and purveyors of satisfactions. It does not matter if they do not seriously respect them, so long as they treat them with a calculating and subservient fear. No one should be liable to court proceedings if he has not infringed or done harm to the property, real estate, or physical safety of another person without consent;* but everyone should be free to do with himself, his dependents, and consenting associates exactly what he likes. Sexual satisfactions should be freely available on the open market for those who want them, especially those who cannot afford to maintain facilities privately. Domestic architecture should be expensive and ornate, to accommodate large and lavish parties where anyone may game and drink all day and night, if he pleases, till he brings it up or sweats it out. The sound of dancing should be heard in every neighborhood, and theaters should be humming with excitement at their coarse amusements and their various brash entertainments.

Should someone disapprove of this perfect contentment, he must expect to meet public hostility; and should someone attempt to reform or abolish it, the spirit of popular freedom must know what to do with him: shut him up, pack him up, beat him up! Religion ought to make a case for itself by guaranteeing and perpetuating these conditions of life for the greatest number of people. Let the gods have all the worship they want, and all the games that they want, to enjoy them with (and at the expense of) their worshipers, just so long as they ensure this satisfactory state of affairs against threat from enemy, plague, or disaster.' (Book II, 20, Brad's italics)

It seems to me that this is a perfect description of the modern liberal state and its conception of law and economics. The idea of virtue in general, and the specific virtue of justice in particular, have been exiled from our notions of politics, law, and economics. But a political order divorced from justice can only be about power; a legal order divorced from justice is merely a contradiction; an economic order divorced from justice is always on the verge of collapse (as ours is.)

Distributism is about restoring justice to the political and economic orders (orders which we refuse to separate), and especially distributive justice. In thinking about these questions, we can take another passage from The City of God:

Remove justice, and what are kingdoms but gangs of criminals on a large scale?

About Those "32,000 Skeptical Scientists..."

2010-02-14T16:41:00.002-06:00

One would hope that in the "Information Age," there would actually be more information. And there is. The problem is that there is also more disinformation, and better means of disseminating it. Those who are well-organized and well-funded can easily spread out-right lies long before the truth has a chance to catch up. Nowhere is this more evident than in the global warming debate, an issue that excites a peculiar passion on both sides, but particularly (in my experience) on the side of the deniers.

One bit of nonsense circulating the blogosphere is the tale that 32,000 "leading scientists" are skeptical of climate change. This charge is so easy to debunk, for anybody actually interested in the facts, that you wonder how it could of gotten so much play. But that assumes that anybody is actually interested in the truth, rather then in defending some pre-packaged ideological position. For what it's worth, here is a film that deals with this particular claim:

What saddens me about this debate is that this is an issue where genuine conservatives--meaning those who actually wish to conserve something--should be the leaders and not the deniers. Reverence for the natural order is conservative, or else "conservatism" means nothing at all. The idea that our God-given dominion over the natural order can be expressed as a tyranny, as a bending of nature to our will, no matter how mis-directed that will is, strikes not just at the natural order, but at the moral order as well.

Last week, I published a post which contained some sexual innuendos, which scandalized some of my readers. I suspect, however, that the howls of protest will be much louder in this case. That's okay, so long as we can start a reasonable conversation, one that deals with real issues, and not with trumped up charges from phony "institutes." Let's see how it goes.

Update - The Distributist Review

2010-02-13T07:02:00.000-06:00

Dear Friends of The Distributist Review,

For some time our readers have asked us when we would leave the shadows of Google Blogger and move on to greener pastures. What you are looking at is an image file of the site currently in development. Promising to pack a punch, the new Review will offer commentary on economics, politics, history, philosophy, and even book/movie reviews. A launch date will be announced soon and we hope all of you will continue to follow us and spread the word.

Catholicism Lite vs. Taliban Catholicism?

2010-02-12T20:28:00.002-06:00

The following is reprinted from the National Catholic Reporter

by John L Allen Jr on Feb. 05, 2010

In Georges Bernanos' Diary of a Country Priest, the elderly Curé de Torcy gives his young priest friend a bit of advice about proclaiming the Gospel: "The Word of God is a red-hot iron," he says. "Truth is meant to save you first, and the comfort comes later."

One could probably craft a meditation on the state of the Catholic soul today in terms of the tension between those two values -- truth and comfort. We want the church to offer comfort, which among other things implies that Catholics shouldn't brutalize one another in internal tribal warfare. Yet we also want the church to be bold in proclaiming the truth that saves, which inevitably means that sometimes lines have to be drawn and feelings may be bruised.

The $64,000 question is, can we do both? Can the Catholic church be both the "sacrament of the unity of the human race" and a fearless evangelical force?

One place to watch these tensions play out is the University of Dallas, where I took part in a panel discussion Monday night devoted to "the identity of a Catholic university." The point of departure was Bishop Kevin Farrell's commencement address last May, in which he warned against "dogmatism, closed mindedness, judgmentalism, [and] suspicion of another's motives" in the life of a Catholic university.

Here's what makes the situation especially interesting.

A strong current in Catholic life these days is what I've called "evangelical Catholicism," meaning a drive for clarity and courage about Catholic identity. It's both top-down, the most important policy-setting instinct in Catholicism, and also bottom-up, especially palpable among a cohort of younger Catholics usually tagged the "John Paul II generation."

Dallas has just such an evangelical ethos. Given its recent history and the kind of person it tends to attract, the university is popularly regarded as a "conservative" alternative to Catholic institutions sometimes seen as more secular and liberal. (I chatted with one young man Monday night, for example, who told me there's a cluster of students at UD from California who came here because they didn't feel they could find a "serious" Catholic university back home.)

In other words, if you're looking for an experiment as to whether it's possible to be both unapologetically Catholic and yet civil in engaging disagreement, the University of Dallas represents a mighty interesting laboratory.

Moreover, the powers that be seem to understand that. Back in 2001, the staff of what was then called the "Institute for Religious and Pastoral Studies" defected to the new Ave Maria College, and then-Bishop Charles Grahmann called their exodus a "blessing." (The bishop of Dallas is also the chancellor of the university.)

Grahmann said the leaders of the institute had become "advocates of an ideal orthodoxy and built walls that no one could penetrate." When the dust settled, the result was a new School of Ministry self-consciously designed to be more mainstream.

Farrell's commencement address last May forms part of the same picture.

"We need to be self-critical and realize that no one of us has the only approach to Catholicism," Farrell said. (His address was published in Origins in August). "Honest debate, not confrontation -- true dialogue where we seek to understand the other, not facile condemnation -- should be the overarching way we move forward."

"The word 'heretic' has been reserved for precious few people in our Catholic tradition," Farrell said, rejecting what he called "verbal fratricide" and a tendency to become "smug, dismissive and righteous" about the Catholic intellectual tradition.

"No theologian, or professor or pope, has ever had or ever will have all the answers to what it means to be authentically and fully Catholic," Farrell said.

Obviously, Farrell didn't craft these remarks in a vacuum. He challenged "verbal fratricide" because, at least in the eyes of some, that occasionally describes the climate at the University of Dallas. As one insider put it to me, the official motto is "The Catholic University for Independent Thinkers," but in practice it can feel like a university for people who think only one way about being Catholic.

To be sure, Farrell is no milquetoast on Catholic identity. Recall that he and Bishop Kevin Vann of Fort Worth issued a joint pastoral letter on Catholics and politics in October 2008, calling abortion "the defining moral issue, not just of today but of the last 35 years." It was widely seen as a warning to Catholics about supporting Obama (or, at least, doing so uncritically), and led to protests outside the chancery.

Yet Farrell's commencement address amounted to a plea to blend orthodoxy with openness, clarity with generosity of spirit. That's a beguiling vision, but just because somebody decrees it doesn't automatically make it so.

I spoke with a few students and faculty on Monday night who embody the evangelical outlook, and who told me they feel stigmatized by some elements in the university's leadership. They worry that what's precious to them about the university, meaning its robust Catholicity, may be at risk. Meanwhile, others told me they're weary of feeling that their orthodoxy is constantly under a microscope, and that someone always seems ready to question their Catholic credentials over any disagreement, however trivial.

In other words, things are still messy. Yet the reality is that there are precious few places where what we might call the "evangelicals" and the "moderates" in the Catholic world actually live cheek by jowl in significant numbers, and the tensions at UD are therefore also an index of possibility -- the possibility that the university could offer an object lesson in how truth and comfort, clarity and dialogue, can coexist.

Especially with a new university president taking over on March 1, the "Dallas experiment" bears watching.

* * *

As a footnote, I may have inadvertently added fuel to the fire by introducing something new to fight over: My phrase "Taliban Catholicism" to capture a certain trajectory within the church. (At least I think I coined the term, though for all I know somebody else got there first.)

In my brief remarks Monday night, I applauded Farrell's vision, underscoring it with a bit of rhetoric that's become part of my standard stump speech. A defining challenge for the church these days, I said, is to craft a synthesis between entirely legitimate hunger for identity on the one hand, and engagement with the great social movements of the time on the other.

That synthesis, I said, has to involve striking a balance between two extremes. Here's how I described them:

"On the one extreme lies what my friend and colleague George Weigel correctly terms 'Catholicism Lite,' meaning a watered-down, sold-out form of secularized religiosity, Catholic in name only. On the other is what I call 'Taliban Catholicism,' meaning a distorted, angry form of the faith that knows only how to excoriate, condemn, and smash the TV sets of the modern world."

Some in the audience chuckled, but others weren't so amused. One younger faculty member rose during the Q&A period to offer a thoughtful, and heartfelt, challenge:

"To say things with clarity is not to be the Catholic Taliban," she said, adding that she found the phrase "profoundly offensive."

"There are no suicide bombers in the Catholic church," she said, "but we have had an epidemic of Catholicism Lite for the last 30 years." Younger Catholics, she insisted, should not be dismissed as fanatics simply because they seek "fidelity and clarity."

Her remarks were met with applause, suggesting she had struck a chord, though others later pulled me aside to say they found them strident. (By the way, it turns out the questioner is a relative of a friend of mine in Rome ... small world.)

For the record, she's not the first person who's objected to the term "Taliban Catholicism," just as others protested when Weigel first started talking about "Catholicism Lite." Of course, when pundits employ such sound-bites, part of the point is to provoke a reaction, so it would be disingenuous to proclaim shock that anyone could take offense.

That said, let me offer two clarifications that may help.

First, at least when I use them, the phrases "Catholicism Lite" and "Taliban Catholicism" are not intended to describe real people. Instead, I understand them as states of mind, instincts, and psychological tendencies -- potential distortions in Catholic life that can flare up anywhere if we're not careful.

To be honest, there's probably a little Catholic Lite and a little Taliban in all of us.

Second, I suspect many people assume that by "Catholicism Lite" I mean the Catholic left, and by "Taliban Catholicism" the church's conservatives. Not so.

In fact, there's a right-wing form of Catholicism Lite that's just as watered-down and sold out to secularism as its kissing cousin on the left. In the States, it can take the form of a country club Republican Catholicism -- untroubled by the inequities of global free-market capitalism, quite at home with anti-immigrant rhetoric, the death penalty, and the use of armed force.

At least in my mind, the defining feature of "Catholicism Lite" is not a liberal or conservative outlook, but rather taking one's cues from secular culture rather than the faith. No ideological camp has a monopoly on that.

Similarly, there's a Taliban instinct on the Catholic left that can be just as noxious as its right-wing version. It generally includes paranoia about almost any exercise of authority in the church, coupled with derision of any attempt to defend traditional Catholic thought, speech or practice -- a liberal "hermeneutic of suspicion" that can easily shade off into rage. Try telling a certain kind of Catholic liberal that Benedict XVI isn't actually "rolling back the clock" on Vatican II, for example, and you'll want to duck and cover before the shooting starts.

Bottom line: When I talk about "Taliban Catholicism," I know I'm playing with fire -- but the point is to invite an examination of conscience across the board, myself very much included, not to slur one side or the other in Catholic debates.

[John Allen is NCR senior correspondent. His e-mail address is jallen@ncronline.org.]

Sarah Palin's Hand Job

2010-02-10T09:00:00.003-06:00

There has been much buzz in the blogosphere about Sarah Palin's Hand Notes. After criticizing Obama for using a teleprompter, it was discovered that she had crib notes written on her own hand to answer a rather simple, straightforward and indeed "softball" question. This means that she was given the question in advance, but still needed help in answering it.

But missed in all the merriment is what she had actually written, because that tells a story all its own. She wrote "Budget cuts" and then crossed out "budget" to write "tax" cuts. This is the hallmark of the "gimme" generation, the problem with the Politics of Ingratitude. She wants to cut taxes, but is unwilling to talk about cutting the budget. She wants the wars without the cost. She wants the National Security State without paying the cops. She wants the services, but not the expense.

This by now is a time-honored tradition, dating back to Ronald Reagan, who convinced the public that he could finance his tax cuts by eliminating "waste, fraud, and abuse." That is, no one need fear that their subsidy was in any danger. Anybody who actually advocates a particular service cut will not be elected, and anybody who actually makes a cut will not be re-elected. But even a person who needs crib notes for simple questions can understand that you cannot cut taxes without cutting expenses. That just drives up borrowing, and borrowing is also a tax, just a tax shifted to the next generation. The Tea Baggers are perfect representatives of this mentality. While I certainly respect their righteous anger, I marvel at their incoherence.

We are all taught by the consumerist mentality, a mentality reinforced by the relentless propaganda known as advertising, to seek instant gratification, to live beyond our means, to live our lives on credit and not let anything stand in the way of our pleasures, to demand tax cuts without budget cuts. It is unfortunate that the Tea Party movement is not the antidote to this mentality, but just another sign of it.

Well Fed Neighbors

2010-02-07T21:52:00.000-06:00

People always ask, "What can we do?"

This is what we can do:

Obama Agonistes

2010-02-05T10:41:00.004-06:00

Revised, 2/6

The forgettable State of the Union speech occupied the press a few news cycles, and its place was quickly taken by the new budget, a document which has a certain entertainment value of its own. But the really significant thing that happened caused only minor comment: it was that Ben Bernanke was reappointed. This did gather some brief commentary because there were a total of 30 votes against him, an unprecedented number when dealing with a Fed Chairman. This raises the question of why the congress should be so kind to Fed chairmen in general, and this Chairman in particular. In a town were everything is contentious, and in a Senate where everything requires a super-majority but nothing gets it, the re-appointment got it with room to spare.

The President who promised change could not even change the Chairman, not even one who had failed so badly, and who continues to fail. The Senate for its part admitted that they were united in one thing only: their cluelessness on economic policy. Because the Fed provides the reserves to the banks, and because the banks provide credit to the economy, and because the economy cannot function without credit, the Fed is the most important institution in the economic life of the country, arguably more important than the Congress or the President. Yet both have been reluctant to control the Fed. This is not new. Banking and credit is supposed to be a “technical” matter, best left to the technicians and isolated from the politicians. This means that in our democracy, the democratic institutions have little control over the institution that makes the most difference in the economic life of the country.

The same problem has afflicted presidents back to Carter, at least. They felt they were not able to confront the Fed Chairmen. Volcker single-handedly wrecked the Carter administration, and nearly did the same to Reagan, until the White House finally found the guts to get him to stop. Both Volcker and Bernanke are Monetarists, who believe (believed, in Volcker's case) that money problems could be cured by controlling the money supply. Volcker tried to cure inflation and Bernanke deflation using the same philosophy, and both failed. Volcker raised the fed funds rate to 20% in an effort to reign in lending; it failed. Bernanke has created unimaginable piles of money to get banks to start lending again, and he has failed. You would think by now that Monetarism would be thoroughly discredited. But Bernanke got 70 votes.

Without making substantial changes at the Fed, there is little change that Obama—or the congress—can make. But then Obama has found that he has little enough room for maneuver. The Senate requires a super majority which he cannot command, the Fed is out of his control, and the Supreme Court has formally turned the political process over to the plutocrats. He has nowhere to go and nothing to do, save have lunch with Pelosi and fly about the country in Air Force one. He has the trappings of power, but none of the substance. He can make speeches about bipartisanship, but he knows that no one is listening. His own base has abandoned him, and his administration seems clueless about the crises.

The new budget is a sign of his impotence. He boldly proclaims an austerity program, which turns out to concern at best the 17% of the budget that is deemed “discretionary.” At what point, we may ask, did the bulk of our budget escape our control? But it has certainly escaped Obama's, and he hasn't a means to take the reins of power. The Democratic Party has proven a weak support at best; even with majorities larger than any that Bush or Reagan could command, they have not been able to impose their will upon the country, for the simple reason that they have no will. As Paul Craig Roberts noted,

Obama and the Democrats cannot be an opposition party, because Democrats are as dependent as Republicans on corporate interest groups for campaign funding.

The Democrats have to support war and the police state if they want funding from the military/security complex. They have to make the health care bill into a subsidy for private insurance if they want funding from the insurance companies. They have to abandon the American people for the rich banksters if they want funding from the financial lobby.

Now that the five Republicans on the Supreme Court have overturned decades of U.S. law and given corporations the ability to buy every American election, Democrats and Republicans can be nothing but pawns for a plutocracy.

Most Americans are hard pressed, but the corporations have only begun to milk them.

So far, the President has nothing to show for his tenure but a failed stimulus and an empty Peace Prize. The recent job numbers were revised to show that the economy lost 1.2 million more jobs than was previously thought. And the unemployment lines are getting longer, not shorter. That the stimulus has failed must come as a great surprise to his economic team, since stimulus has generally worked in the past. However, that past was one in which we made more of the goods that we consume. In an economy that imports so much, much of the stimulus leaks off-shore. If stimulus was going to work, it would have worked for Bush, who ran up $6 trillion in debts, but all we got for that was two wars and a housing bubble.

Obama came to Washington as a Samson, ready to do battle with the Philistines who controlled all the levers of power. Or so his supporters imagined. They invested all their hope in him as a person capable of rousing the Democrats to battle and the country to real change. Yet, instead of doing battle with the Philistines, he invited them into his cabinet, he gave them what they already had. It is possible, I believe, to locate the precise moment when Obama failed: it was the moment that he appointed Timothy Geithner and Larry Summers to head his economic team. These men have their fingerprints all over the crash, Summers by being a strong advocate of financial deregulation and Geithner as the primary engineer of the AIG bailout. This is to say that Obama stacked the deck against himself even before he took office. He abandoned the change he had promised to embrace the policies of his predecessors. I'm pretty sure he didn't see it like that; he thought that these were technical matters and he got the best technicians he could. Indeed, this is probably the best set of resumes ever to serve in government, but their skills are in all the wrong areas; they are trying to solve the problem with the tools that created it. Obama has no workable economic plan; he can only hope that the recession runs its course. But this is unlikely.

Nor will he get much help from the Republicans. One, they don't have any plans of their own, and two, they understand that their success depends upon his failure. There is simply no incentive for cooperation. As the economy sinks, their fortunes will rise; they expect, not without reason, a sweeping victory this year and a return to power in 2012. But when President Palin, or Brown, or Cheney, or Jindal takes office, he or she will find that power ain't what it used to be. They will be in a somewhat better position than Obama, since they will be able to command super-majorities in the Senate based on blue-dog Democrats, or else they will simply ignore the rules. But lacking any plans, they will not have much they can do. They will get some income and corporate tax decreases and some payroll tax increases; they will find new privileges for the powerful and new subsidies for the rich. In return, they will receive endless benefits and lifelong employment. And their campaign coffers will never run dry.

I cannot recall a president who has made himself so irrelevant so quickly, one who so easily took a haircut. He lacks a base, he lacks a party, he lacks a program. It will be interesting to see how Obama responds to his own impotence, to the realization that he is the prisoner of powers he cannot control, powers he himself invited into his administration. Samson became the laughingstock of his captors, but found the strength to pull the whole wicked structure down upon both himself and his enemies. The best Obama can propose is to appoint a commission to study the problems, a commission that will, no doubt, consist largely of the Philistines. This will not move the pillars of power very much, but it will amuse the Philistines.

Obama's accomplishments will be limited to things like “don't ask, don't tell.” On other issues, he will be a mere observer, like everyone else. The real rulers of the land, represented by Geithner and Bernanke will continue to loot the country, until there is no country left to loot. Unless something changes, he is likely to be a one-term President who will leave office with a Peace Prize and a wrecked economy. And gays in the military.

Middle Ground Between Storck and Sirico?

2010-01-27T11:24:00.004-06:00

The inspiration for this essay is recent a vivid critique of the libertarian-Catholic Acton Institute and it's front man, Fr. Robert Sirico, written by Thomas Storck, an authority on distributism. There is much in this critique that is true, and I will not necessarily be questioning its accuracy. Rather my primary task will be to show the unexplored areas of thought and raise questions as to the viability of collaboration between what appear to be, at first glance, mutually exclusive movements.

There are two things that Thomas Storck argues that are unquestionably true: 1) That Fr. Sirico hasprofoundly misread John Paul II's encyclical Centesiums Annus (and "misread" is a charitable interpretation), which in no uncertain terms condemns a radical capitalist ideology, keeping with his other encyclicals such as Laborem Exercens, and in no way conflates sexual and economic libertinism, and 2) that the Papacy, historically and traditionally, has accepted a much larger role for the state in economic affairs.

In other words, the Acton libertarians are fundamentally wrong on a point of Catholic social teaching, and their errors, as Storck I think rightly points out, are rooted in the assumption that if libertarian philosophical assumptions collapse, "then logically Fr. Sirico's entire enterprise will fall." What I submit here is that it is not logically necessary that libertarianism as a whole has nothing important to say to Catholics because of its deeper philosophical errors. Furthermore, a distributist-libertarian alliance is an idea that is long overdue for serious consideration.

My intention is not to belittle philosophical disputes. But as something of a pragmatist myself, I have come to see that in many cases they serve to merely obstruct or obscure truths that are applicable to the social problem at hand, but which lie outside of the conflict of the contending philosophies. Additionally, not enough work is done to root out those areas of the contending philosophies that actually do overlap. Thus I submit two propositions: 1) that the philosophical dispute between libertarianism, CST, and distributism has obscured practical ways in which Catholics of different philosophical persuasions might collaborate, and 2) that the philosophical dispute itself does not need to end in the total destruction of one of the contending philosophies.

Read the rest here.

Support Torture or the Baby Gets It!

2010-01-26T15:23:00.005-06:00

Mark Shea has some interesting things to say about the election of Scott Brown and the Pro-Life movement over at InsideCatholic.com. Mark expresses some doubts I have about the leadership and direction of the movement. His conclusion:

So it's come to this: the Big Thinkers of the Thing that Used to be Conservatism at NRO are commending Massachusetts voters for not being held "hostage to extremists who would rather lose than support a pro-choice candidate" while simultaneously concluding that the takeaway message from Brown's victory is "Waterboarding wins."

Translation: Elect pro-aborts -- as long as they're also pro-torture.

Incredibly, the election of a man who posed nude and supports torture and the damnable Roe is gushed over as a pro-life victory by multiple pro-life talking heads, while the buzz on Drudge and other "conservative" sites on the day he is elected to the Senate is about the feasibility of packing the guy off to the White House. And all just in time for Roe v. Wade Day!

"Scott Brown for President: Support Torture or the Baby Gets It!" Has a nice ring, don't you think?

King Pyrrhus, pray for us. If the pro-life movement has many more such victories, it will be undone.

Welcome to the Plutocracy

2010-01-23T12:18:00.000-06:00

Conservatives have long believed that the power of the courts to “legislate from the bench” was a great and anti-democratic evil which could only be remedied by strict interpretation of the Constitution combined with sensitivity to the “original intent” of the founders and deference to the legislative branch. And they had good reason to believe this, since it is unlikely that the founders would have approved of many pieces of court legislation. Abortion, for example, could not be part of the original intent, and the same is true for many other bits of judicial legislation. Indeed, many prominent features of American life are, for better or worse, not products of our democracy but of our judicial system.

Alas, when conservatives themselves gain control of the court, it seems they are no better at exercising judicial restraint than are their liberal counterparts. Indeed, the “conservative court” has on several occasions completely changed the political landscape of the United States. This happened, for example, in Bush v. Gore, when the election was decided by five members of the court. And it happened again this last Thursday in Citizens United v. Federal Election Commission.

The case concerns a movie entitled “Hilary” (as in “Clinton”) put out by a non-profit corporation, “Citizens United,” whose president is Floyd Brown, a long time political activist who is credited, among other dubious achievements, with the Willie Horton ads. "When we're through,” Brown remarked, “people are going to think that Willie Horton is Michael Dukakis's nephew." Brown came up with a clever way around the campaign finance laws which banned political ads from corporations or unions 30 days prior to an election. He would run ads for the movie, and since he was just advertising a movie, it wasn't political advertising at all. Never mind that the movie, and the ads, were derogatory at best. The Federal Election Committee refused to go along with the ruse, and CU sued.

All CU wanted was for the court to bless their end-run around the campaign laws. Corporate contributions were not an issue in the case, and not part of the relief that plaintiffs were seeking. But for some unknown reasons, the court decided to re-hear the case on grounds that had nothing to do with the plaintiffs plea. The rehearing was peculiar, not only in widening the grounds of the case beyond the issues that were placed before it, but in ordering the rehearing for September 9^th, a full month before the court's session normally began. This seems to indicate some undue haste in deciding so pivotal an issue. One is tempted to think that the majority wanted this issue decided in time to dismantle the current laws in advance of the coming congressional elections. One is permitted to ask here whether the court's agenda is judicial or political.

In ruling on the issues presented to it, the court upheld the FEC against CU. But on the issues that were no part of the original case, they voluntarily threw out restrictions against corporate funding of campaigns, restrictions that date back to 1907 and have been upheld by every court since then, in test after test. They have, at a stroke, undone 100 years of legislation and judicial precedent. This is not evolution, but revolution, and a revolution predicated on some very peculiar grounds.

The majority of the court treated this as a “free speech” case. Yet, this is somewhat perplexing. As far as I know, CEOs have always had the right to say whatever they liked, to support whatever candidate they wanted, to go to whatever rallies they wished, and to write letters to the editor whenever they felt the need. That is, they enjoyed all the rights of free speech that every other citizen has. As far as I can recall, there are very few corporate executives in prison for expressing their opinions. The court, however, was not interested in the rights of the executives, but in the rights of the corporations as “legal persons” endowed with all the rights of natural persons. This is a rather peculiar doctrine that originated in another example of legislating from the bench, Santa Clara County v. Southern Pacific (1886), which granted “personhood” to corporations. This rule was a complete overturning not only of the court's previous rulings, but of the long history of corporation law dating back to the Middle Ages.

The Founding Fathers of our Republic were very suspicious of corporations, since the royally-chartered companies had been used as instruments of oppression against the colonies. The Navigation Acts, for example, gave them exclusive shipping rights to the colonies, much to the detriment of American entrepreneurs. And it was East India Company tea that the colonists used to color the waters of Boston harbor in the original tea party. For a jurisprudence that pretends to be interested in “original intent,” the colonial attitude towards corporate power cannot be overlooked.

Corporations prior to Santa Clara were creatures of the state that had no “rights” save those that were granted by their charters, charters that always excluded their participation in politics. Santa Clara extended the protections of the 14^th Amendment (no state shall “deprive any person of life, liberty, or property, without due process of law”) to the corporations. The Amendment was originally designed to protect the freed slaves, but since Santa Clara it has been used mainly as a tool to protect big business.

The new ruling allows corporate executives to use the company treasury, the money that rightly belongs to the investors and the workers, to influence political contests. Since corporate executives command resources measured in the trillions of dollars, this means that there will be an inexhaustible source of funds with which to command the political powers. But this money is supposed to be invested to increase the profits of the corporation. And it will be. Politics are treated like any other investment and expected to get a return, a return in the form of subsidies and favorable tax treatment. And as David Brooks noted, corporations also want rules which protect them from smaller and more nimble competitors. As the Independent Business Alliance noted in its amicus brief,

[P]recisely because a corporation enjoys significant state-created economic advantages designed for the narrow purpose of furthering wealth-accumulation, corporate participation in candidate campaigns promotes market entrenchment and corrupts the political marketplace in a fundamentally undemocratic manner.

Somewhat ironically, the ruling may actually lower the cost of political participation for the corporations. The mere threat of spending an unlimited amount of money in any politician's district may be sufficient to obtain compliance. Blackmail is all that is necessary to ensure the docility of the legislative and executive branches. As of last Thursday, the corporations are formally in charge of the government of the United States, and all of its constituent political subdivisions. But corporations are not capable of running a country, save for running it into the ground. Indeed, they can barely run their own enterprises without support from the public purse. With this ruling, the line between the corporate treasury and the public purse—already stretched very thin—will completely dissolve. America will be formally a plutocracy and substantially a kleptocracy.

Yet for all that, there is some justification for the court's attack on the campaign finance laws. Indeed, they are only recognizing what is practically an already established fact. Money will always find its way to power, and where there are large concentrations of wealth, they will come to own the political powers; they will become the state. The current miserable situation in campaign financing is the result of the last abysmal reform, with attempted to correct the problems of the previous reform, and so on back to the Tillman Act of 1907.

So what's to be done? Well, if you can't beat 'em, join 'em. Recognize the reality that power follows property, as Daniel Webster noted. Allow the corporations to give as much as they like. However require that all donations to any cause or candidate be instantly posted on the group's website, which any one may examine. At least we would know the truth of the situation, and while the truth in this case may not set us free, it will at least let us know where we stand.

But we can go further in this truth-telling to include truth-in-labeling. Each congressman will be required to wear those NASCAR suits which prominently display the names of the corporate sponsors. So the typical congressthing might have Big Pharma on his chest and Exxon on his ass, with the big banks running up and down his arms. Each politician would be required to begin and end each speech with the statement “This message brought to you by ...” and list the names of his three top contributors. And each bill will be required to bear the logos of its corporate sponsors. This won't make politics any more democratic, but it will make it a lot more fun. And a lot more honest. We can dispense with the fictions of “liberal” and “conservative” and go directly to the real issues: “I favor the big banks” or “I favor the manufacturers,” and such like.

With the Citizens United ruling, the court revealed the depth of its contempt for judicial restraint, original intent, and deference to the legislature. The ruling is nothing short of a coup, a fundamental change in the structure of the America polity. It will work not only to the defeat of democracy, but to the destruction of what's left of the small businessman. From this day forward, no one will hold office who does not have the approval of the corporations, no small business will exist save by their sufferance.

But it will not last. Greed consumes everything, until it finally consumes itself. The bankruptcy of this country is already far advanced, and the process will be accelerated by making it an open kleptocracy. So, welcome to the plutocracy; enjoy while it lasts, which will not be long.

The Devil and Pat Robertson

2010-01-19T17:05:00.001-06:00

The Devil writes Pat Robertson a letter about Haiti. Thanks to Patrick Madrid for the tip.

Book Review: The Flying Inn by G.K. Chesterton

2010-01-17T08:05:00.002-06:00

Perhaps prophetical more so than prosaic (and not at all in the sense Chesterton intended it) the Flying Inn is one of those books which should rank among the classics. Certain works on similar subject matter become quickly dated, while this work through its immortal prose, and brilliant poetry shall remain a classic because it could be something happening today.

The Flying Inn is a story of Patrick Dalroy, an Irish Navy captain who fought the Turks on behalf of various Greek Islands, and then returned to England after the English brokered a peace deal with a Turks. What he discovers is that Lord Ivywood, the same English diplomat who brokered the deal with the Turks, is now enforcing prohibition throughout England. When Dalroy meets Mr. Humphrey Pump, the owner of the pub “The Old Ship”, Lord Ivywood is in the process of closing it down. After listening closely to the law, Dalroy discovers that in order to ease the transition to an alcohol free England, an Englishman may still walk into any building which has a pub sign outside and purchase an alcoholic drink. Wasting no time, Dalroy grabs the sign for the Old Ship, along with a cask of Rum, a cask of Cheddar, and heads for the hills with Pump.

The tale brings us through the adventures of Dalroy and Pump who mysteriously appear with their Inn sign and are out again before the authorities can do anything about it (if they will at all). The perplexed Ivywood, who has employed a Turkish man who once preached on the street corners with other local buffoons on their soapbox as his prophet of the new prohibitionist religion, continues his course not only to remake England, but to remake man in spite of the “Flying Inn”, until this Inn shows up at his door step. At last, Ivywood sets the climax in order to change the law which brings about the thrilling conclusion, which follows logically, but almost seems to be of a different book.

Chesterton is perhaps one of few authors who can combine a flowing prose with verse and song on the scale to which he employs it, coining such memorable verses as the perfect vegetarian and the song of Quoodle. More importantly, while the book is about England altering her law and culture to mollify Islamic tradition and practice, the book is not about the Islamification of Europe which some may take it to be. It is actually about the work of modernism in culture, and how the concepts of modernism evolve continually, so that man too evolves (that is in terms of culture). This is expressed perfectly by Ivywood towards the end:

[Mr. Crooke] “Do you think you made the world, that you should make it over again so easily?”

“The world was made badly”, said Ivywood, with a terrible note in his voice, “and I will make it over again.”

This last statement of his sums up so powerfully the motivation for all his movements throughout the book, for his fascination with Islam is not about Islam itself, it is about creating a new man. His forcing prohibition and embracing Eastern philosophies has little to do with the Eastern philosophies and religion itself, but everything to do with rejecting the spiritual and cultural patrimony of the Christian tradition in England. Ivywood is the archetypal modernist, who does not embrace Islam because he believes in it, he does not even truly embrace it per se, he sees it as a catylist, or more correctly, an antithesis in Hegelian logic, to the thesis which is that of the Western tradition which the modernist despises, and this will produce the synthesis, a new order, and a new man.

Chesteron through Dalroy, makes a commentary on it:

“Do you know, Hump, I think modern people have somehow got their minds all wrong about human life. They seem to expect what Nature has never promised; and then try to ruin all that nature has really given. At all those atheist chapels of Ivywood’s they’re always talking of Peace, Perfect Peace, and Utter Peace, and Universal Joy and souls that beat as one. But they don’t look any more cheerful than anyone else; and the next thing they do is to start smashing a thousand good jokes and good stores and good songs and good friendships by pulling down ‘The Old Ship’. Now it seems to me that this is asking for too much and getting too little. I don’t know whether God means a man to have happiness in that All in All and Utterly Utter sense of happiness.” (Pg. 65-66)

The book as a whole leads us through many avenues, with strong distributist overtones, and many humorous anecdotes which make the book very readable. Most importantly, it serves as a warning, and proves Chesterton prophetic. I doubt he would have imagined a real Islamic takeover of Europe, which is what we are looking at presently. However, the warning to modernity has become true in exactly that form, when you break from your tradition, lay waste to the roots of what makes your culture true, what you have is something hollow, something which will collapse, or else be conquered. Thus Dalroy at the close of the book enumerates the stages of empire:

“The destiny of empire is in four acts: Victory over barbarians. Employment of barbarians. Alliance with barbarians. Conquest by barbarians. That is the great destiny of Empire.” Not only is this the destiny of the once great British Empire, it is the destiny of the American Empire as well. The only way to avert it is by recovering the Western tradition.

The Politics of Ingratitude

2010-01-16T21:28:00.004-06:00

Revised, 1/17

Pope Benedict, in his recent encyclical, spoke of the Principle of Gratuitousness in the economy, a principle that strikes both economist and businessman alike as paradoxical at best, and nonsense at worst. I have in other places written on this principle, but here I would like to address its opposite: the politics of ingratitude.

I think a good starting place for such a discussion is the signs that were carried in the Tea Party Protests, “No Socialized Medicine—Hands Off Medicare.” Now, we could pass this off as mere ignorance and it is hardly news that some people are confused about the nature of socialism and about just what Medicare is. However, I heard the eminent Catholic intellectual, Michael Novak, say exactly the same thing last April in a public debate. Novak stated his opposition to socialized medicine and affirmed his support for Medicare, stating that he could not afford the medicines for his wife without it. Mr. Novak is, I suspect, well compensated by the American Enterprise Institute for his services. Still, I am willing to believe his claim that he needed public help to defray his private expenses. But I am perplexed by his apparent claim that his age alone justifies this subsidy. Surely he must know that there are folks younger than he is whose wives and children need similar help, and several of them might not make as much as he does. When the leaders speak nonsense, you can hardly blame the followers for repeating it.

This attitude of “socialism for me and capitalism for thee” is widespread. I am a member of the Real Estate profession, and I reckon that 99.79% of my colleagues are ardent believers in the “free market.” They also demand that the government support the housing market. Indeed, few markets are as government-dependent as is the housing market, and Realtors divide their free time into complaining about government interference and demanding more government support. I have never given a dime to the Realtor's PAC, because I have never seen it take a single action in the public interest. But the sad fact of the matter is that we live in a Republic of PACs, and in our form of “democracy,” one must pay to play. Recently, our PAC and its allies not only got the $8,000 tax subsidy for first time buyers passed—and then extended—we got a new subsidy of $6,500 for “move-up” buyers, based on the principle, I suppose, that bigger is always better, and getting someone else to pay for bigger is best of all.

This attitude is, I believe, most characteristic of my generation. I was born in 1947, the year that the Full Employment Act was passed, the law that enshrines Keynesianism as the official policy of the United States Government and the Federal Reserve System. Indeed, the bill only recognized what had already been a fact since 1933: the government had taken responsibility for the management of the economy. I am not a Keynesian, but I am grateful for those who were. The plain fact of the matter is that the only workable capitalism is Keynesian capitalism. Capitalism before the war was a hit and miss affair, with the misses almost as frequent as the hits. The economy was in recession 40% of the time; calamity was normal.

My parent's generation survived the Great War and the “Great Misery,” as the French Canadians call the depression. They wanted their children to escape these evils. And we did. Indeed, there was never in our history—and possibly not in the history of the world—such a long period of peace combined with so great a prosperity. True, we had some wars, but they were remote. And since the Vietnam war, we have delegated a small part of the population to fight them and have nominated our grandchildren to pay for them. We display yellow ribbons to show our “support” of the troops, but would scream blue-bloody murder if we are taxed to pay them. Nothing, not even war, should interfere with our relentless pursuit of “more.”

Here is the great secret of my generation: What our parents gave us as a gift we have received as an entitlement. No one is grateful for an entitlement. Indeed, everyone is resentful that it is not larger. Worse, we are resentful of everybody else's entitlements because they compete with our own. Politics became a matter of getting as large a share of the pie as you can, while giving as little as you can get away with. We ended up resentful on both sides: we are resentful about how little we get (no matter how much it is) and resentful about how much we have to pay (no matter how little it is).

Which brings us back to Michael Novak and the tea-baggers. Government medical care for all must inevitably involve some cutbacks in Medicare for the retired. And that is not acceptable. We've got ours, and we will not share. No way. No how. The opponents of socialism are too busy protecting their own entitlements to even see them as socialism. It makes for a politics of pressure groups, a Republic of the PACs. There can be no common good, only goods spread around to a particular coalition, with costs spread to losers, if possible, or better yet, to the next generations; after all, what have they done for us lately?

Keynesianism feeds this politics of ingratitude; it is its economic component. It is not that it is a bad economic theory. It is a very good one, at least in the context of capitalism. Since the essence of capitalism is the gathering of large piles of capital, it depends on depressing wages. Hence, it always has difficulty in reliably generating enough purchasing power to clear the markets. Somewhere it needs a big spender, and government is the only force capable of fulfilling this role. But its failures are both political and moral. Keynes wanted the government to freely borrow and spend in bad times, and than tax and repay the loans in good times. But the building up of debts is politically easier than tearing them down, and Republicans especially have been more than willing to adopt the first part, but not the second. Hence, we have the paradox that the most “conservative” governments are also the most Keynesian, applying the stimulus of debt even when it was not needed.

The moral failures are even more telling. Keynes recognized, as most economists did not, that the economy was dependent upon distributive justice. But Keynes refused to confront the failure of justice within economics itself. Instead, he made it a political question, he made it into re-distributive justice. The economy would operate under the capitalist rules and produce its imbalances, which the political authorities would then tax and re-distribute. In this way, he saved capitalism from—and for—the capitalists.

Take a program like Social Security. Now it is obvious that the young must support the old; this is but the natural law. In ages past, old age security meant either having a lot of money or having a lot of children. And since few people had money, most people had children, if they could. But the resources of the family were shared, which encouraged a sense of gratitude between the generations. But with the Social Security and Medicares systems, the relationship between the generations is mediated by the government, and the pension becomes an entitlement. One can argue the economics either way, but the social consequences are devastating. It is no longer necessary to have children to ensure one's security in old age, so long as other people are doing so. In fact, the winners in the social security lottery are those who had no children, and so spared themselves the trouble and expense, but rely on others to have children to pay the taxes that are necessary to support them.

Things will come to a head pretty quickly. In 2011, the first wave of the baby boom will hit 66, full Social Security retirement and Medicare age. But there is no money in the system to pay these pensions, only IOUs than can only be redeemed by raising taxes, or by yet more borrowing. Will there be enough of an economy to tax? Will there be enough borrowing capacity to finance it? I doubt it.

My generation has always been about resentment. In the 60's, it was resentment of the war, which actually had some basis, but also of “old people” in general. “Never trust anyone over 35,” was a popular slogan, one which we validated by becoming untrustworthy when we reached that age. Or at least becoming Republicans, which is much the same thing. Ronald Reagan learned to play the politics of ingratitude better than most, telling those who were taxed the least that they were taxed the most, and promising to tax them not at all. And it would all be financed by reducing “waste, fraud, and abuse”; no actual government programs would have to end, no possible constituency would be embarrassed or deprived. Government grew, revenues shrank, and we proved, at least to the sharp mind of Dick Cheney, that “deficits don't matter.”

But they do. And more than the fiscal deficits, the moral deficits matter, and we have burned through all our capital in both areas. Keynesianism will fall because capitalism will fall; the fates of both are bound up with each other. But the men of my generation should at least have the honesty to lament its passing, to recognize the gifts we have been given, and to realize, too late perhaps, that the only way to keep a gift is to pass it on. We failed to pass on the gift to our children—indeed we had few children to pass it to—and so we will lose it all. Ingratitude is like that.

The economy certainly depends on a rational market rooted in fair exchanges. But while this is a necessary condition, it is not a sufficient one. Beneath the exchanges there must be a spirit of the gift, an on-going lagniappe, something over and above the exchange. Of course, the government has a role in all this, and in certain cases it must intervene. But such interventions cannot replace the normal human relationships upon which a healthy society is built. Keynes, with the best of intentions and the most logical of proofs, corrupts these relationships; the “conservatives” adaptations of Keynes both corrupts his theory and removes any effective opposition.

Tom Brokaw called my parent's generation “The Greatest.” I don't know if that is true, but I think I know which generation gets the title of the worst. We cultivated resentment and passed it on to our children. Only this time, they will have real cause for resentment, and real debts to resent.

The Real Unemployment Numbers: December, 2009

2010-01-12T14:02:00.002-06:00

Donald Vreeland puts these numbers together each month at http://explode.freeshell.org/econ_discus_num.html

Total Employable: 236.924 million

Total Idle: 99.132 million

Percentage Idle to Total Employable: 41.8% (actually not working — not 10.0% unemployment rate!)

Total Searching for Work ("Unemployed"): 15.267 million

Total Working: 137.792 million

Total Part Time Workers: 27.529 million.

Total Working Full Time: 110.263 million

Total Not Working Full Time: 126.661 million

Potential Percentage Increase in Full Time Workers: 114.9%

Percentage Total Full Time Worker to Population: 35.75% (They are supporting 308.466 million Americans! About one worker supports three Americans and two aren’t working full time!)

Percentage Working to Total Population: 44.67% (One person supports more than two Americans, and one isn’t working!)

Percentage "Unemployed" to Total Idle: 15.40% (Less than 1/6 of the idle!)

Percentage Working Full Time to Total Work Force: 46.54%

Percentage Working to Total Employable: 58.2

Percentage Working Part Time to Working Full Time: 24.97%

www.bls.gov

Strongbow Bankers

2010-01-06T09:49:00.002-06:00

I can't imagine any American company running an ad like this, but Strongbow (a British hard cider, if I'm not mistaken) runs this add (and a tip of the hat to Bruce Smith for finding this):

The Lost Decade

2010-01-05T09:35:00.003-06:00

Here's some interesting numbers. According to the Bureau of Labor Statistics, in October of 1999 there were 109,487,000 non-farm, private-sector jobs in the United States. 10 years later, there were 108, 401,000, a loss of 1,086,000. The US population grew by 34,573,000 in the same period.

This decade was largely counted as a period of "growth." And for a lucky few, it was. These are the few who control the economy, or what's left of it. For the rest, not so much. Indeed, we would have to add 10,000,000 jobs just to get back to where we were in December of 2007, when the Great Recession began. Where are all the jobs going to come from? Beats me. The Obama administration is pinning its hopes on the "green" economy, but even if that is the next boom, why wouldn't these jobs be outsourced just as all the others were?

Americans can compete with foreign workers, if the playing field is leveled. Indeed, Americans are the most productive workers in the world, or close to it. But we cannot compete with currency manipulations, slave labor, disregard for even minimal environmental or health standards, etc. Without abandoning the whole "free" trade ideology, an ideology peculiarly divorced from any actual reality, we cannot revive the economy. There are other things that need to be done, but without this nothing can be done.

The Judge Recants

2010-01-02T09:45:00.001-06:00

Karl Polyani noted that “Laissez-faire was planned; planning was not.” Planning was always an ad hoc response to the failures of capitalism and never constituted a single, rational response, but always a piecemeal attempt to correct the failures. Over time, a vast bureaucracy grows up, ever focused on the past failures, and unable to anticipate the next failure. Further, the bureaucracy itself is always under constant thrreat and its powers weakened over time, or co-opted by the very people they are supposed to watch. But at the point of failure, those who were most insistent that the government stay out of the market are the very ones who must insist that they government get back in.

A recent illustration of this principle is a book published last year by Judge Richard Posner. Posner is a Federal Appeals Court judge and has been the most articulate advocate of laissez-faire from the federal bench. He described himself as a libertarian to Reason Magazine, and is a co-blogger with Gary Becker, the Chicago-School economist who is a winner of the pseudo-Nobel prize in economics.

The title of the book will come as a shock to some, but not to others who are familiar with the historical process. The title is A Failure of Capitalism: The Crisis of '08 and the Descent into Depression. One does not actually need to read the book to grasp its significance; everything you need to know—the title and the author—is on the first page. Part of that significance is the use of the indefinite article, “a” failure rather then “the” failure. That is to say, just a minor glitch and not a substantial and recurring feature of capitalism.

As to the book itslef, it is a workman-like appreciation of the crash, similar to many others. But it does have some curious lapses. Throughout the book, the Judge talks of the banks “lending out their deposits,” which means he has not adequately diagnosed the problem. In one sentence late in the book, and in that sentence alone, he concedes that the banks do not lend deposits, but create money by lending it. That is, it is the banks, not the government, that creates money, which the government (and everybody else) must then borrow and pay a tribute to the banks.

The Judge does not hesitate to use the D-word in describing the current situation. But despite that, his “solutions” are tepid indeed. He urges everybody to be “pragmatic” (without of course defining that term) and endorses the combination of monetary and fiscal policies that the administration has been following, only more so. In other words, he wants us to follow Friedman and Keynes simultaneously. Hence, the book is merely an interesting artifact, an illustration of a recurring theme in capitalism, the same theme noted by Belloc and Polanyi: when the crunches come (and they come all the time) the capitalist looks to the government to bail him out.

But Is He More Popular Than the Beatles?

2009-12-31T09:51:00.003-06:00

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!

The Economic Stork

2009-12-29T14:42:00.000-06:00

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.

Distributism and the Entrepreneur

2009-12-26T19:24:00.002-06:00

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.