Lethal Loyalties: Dulce et Decorum Est...

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.


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Light in Darkness: Mondragon and the Global Economic Meltdown

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.

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29th Annual G.K. Chesterton Conference

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”

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What's Hellman's(tm) Game?

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

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Doing God's Work at Goldman

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.”


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National Small Business Week

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)

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New book on Community Land Trusts

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.

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It's never easy...

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

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La Grande Illusion

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%.

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From Dale Ahlquist

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.

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The New "New Liturgy"?

Too funny:

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



Tip of the hat to Brennan Hartley.

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Ora Pro Nobis

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:

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Lessons from the Amish

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.

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Ford Distributist Writes His Plant Manager

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.

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Revenge of the Weeds

"“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.

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Open Books, Open Minds: The Great Game of Business

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.

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The market and the moral man


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.

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We Are All Goldman Sachs

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.


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Aristotle and Aquinas, Bank Regulators

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.


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Yes to a Plan, No to this One

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”?


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