Photo above: The Hertford Bridge in Oxford, England. Used by Permission. © Tom Ley 01302 782837

Thursday, December 24, 2009

Socialist Bread and Capitalist Bread by Dr. Douglas O. Walker

In a recently published article, Kevin A. Hassett points out that the groves of academe are filled with Marxists and have been so politicized and so disconnected from the rest of society that ordinary citizens no longer trust anything that emanates from our universities.

One can add to this the fall of the Soviet Union discredited state Socialism in the eyes of most people and there is a widespread belief that government is an ineffectual instrument for addressing the country's mounting problems.

In this situation, questioning of the role of government and reliance on it would seem to be in order.

Yet we live in an age when the hatred of Capitalism and love of Socialism is so transparent that many people cannot even see it. Nowhere is this more obvious than in the idea that just because the government provides something, it is seen as somehow fairer and superior to the efforts of the private sector, even if it is an inferior product and providing it collectively bankrupts everybody. As Schumpeter put it, "Socialist bread may well taste sweeter to them [the intellectuals] than capitalist bread simply because it is socialist bread, and it would do so even if they found mice in it."

There are plenty of mice in the health care bill but it matters not. Mice and all, the Left will support it and yell for more. And they will see health care as only the beginning of a banquet where they can set the menu and order the cooks about and the waiters to and fro. When the meal delivered is found to be sour, they will blame everyone but themselves.

One should not think that the trend toward a dirigisme society pushed by the Democrats is simply a matter of ideology, although that is its emanating force. There is also the fact that so much of the economy is effectively “socialized” already, and nothing is as severe an impediment to clear thinking on moral and political issues than the self-interest of the status quo and the rebarbative complexity of making your own way in a difficult world. It is so much easier to let the government worry about meeting our needs and then complain when it things are not as great as one would like.

As Schumpeter predicted, the attack on Capitalism and the Law would come from academia and the wider intellectual class. He believed Capitalism creates the productivity on which a modern economy is based and on which all aspects of a modern society feed, especially the intellectual class. Where would Harvard be without its endowment? But people, especially intellectuals, do not understand the hidden intricacies interwoven into the extensive division of labor upon which their prosperity rests and they become hostile to the very social order which created them and sustains them. Intellectuals increasingly attack Capitalism and the “creative destruction” function of Schumpeter’s hero, the entrepreneur, and as they do so the entire system weakens and declines, intellectuals included.

Yes, there is rot in academia. And in the Congress and the other corridors of political power. And in the business community. But not at Regent.

Our Faith in the Creator trumps their reliance on Man and Jean Jacques Rousseau and Karl Marx.

For as Christians, thankfully our hope and joy do not depend upon who is up and who is down in academe, or Capitol Hill, or the White House, or Wall Street.

Christ’s bread is sweetest of all and our eyes are on it. 1 Peter 1: 3-4.

May it always remain that way.

Monday, December 14, 2009

Casting Stones and the Public Interest by Dr. Gary E. Roberts

One of the great political divides of our time is the intense, polarizing and often rancorous debate over the proper size, role and scope of government. This debate occurs between and within those on all sides of the political spectrum. Irrespective of one’s opinion on this issue, there are three principles that those of good faith and reasoned intellect can agree upon. First, an efficient and effective government is essential, but a healthy society requires a limit to the size and scope of government to protect civil liberties and rights, encourage reasonable self reliance and initiative, and reduce unhealthy dependence on governmental support. Second, business is the primary engine of wealth creation, but regulation on the size and scope of the private sector is necessary to resist the formation of destructive monopolies, protect public health and safety and promote consumer interests. Third, our national and global problems in such areas as poverty, global security, health care, the environment, education, and job creation are too large and complex for any one sector.

Effective governance requires a collaborative approach to the many intractable policy problems given limitations to knowledge, power, resources and the requisite moral and legal authority. Hence, both liberals and conservatives are placed in a reluctant but often overlooked position of agreement regarding the need for a vital and active nonprofit sector to provide services and forms of support that government and business are unable or unwilling to provide. From the Salvation Army, the Red Cross, and Habitat for Humanity to community museums and symphony orchestras, nonprofits address a range of human needs from the most basic to the sublime.

However, society’s overall level of support for the nonprofit sector fails to match the rhetoric from both sides of the political equation. New York Times Op-Ed columnist Nicholas Kristof summarized data on this issue from a book by Matthew Bishop (“Philanthrocapitalism”) indicating that Americans give a paltry 1.67% of our GNP to charitable causes. According to a recent study by the Barna group, the median value donated to all nonprofits in 2007 per adult (churches, faith-based nonprofits and secular nonprofits) was $400 with an average of $1,308. Kristof cited additional data from a book by Arthur Brooks (“Who Really Cares”) indicating that conservatives, consistent to their core beliefs of smaller government, support nonprofits at higher levels than liberals (approximately 30%) more. However, given the small absolute dollar value base, this advantage is a Pyrrhic victory at best.

Even among the 7% of population that identifies themselves as evangelical Christians, a pillar of the conservative movement, Barna found that only 24% tithe (give 10% of their income to charitable causes) with an overall average yearly giving level of $4,260. When all categories of Christians are included, the average drops precipitously to $1,426. The tithing figure for the entire population of the United States is even more depressing at 5%. A further parsing of the statistics by the Center for Philanthropy at Indiana University found that only 30% ($58 billion) of the total $252 billion of all charitable giving in 2005 was directed at helping the poor. Even among the $ 101.1 billion contributed to churches, about 80% of the giving is directed at “bricks and mortar” capital spending and internal budget support.

The cold reality is just as there is "market failure" in terms of the private sector there is corresponding "generosity failure" in regards to our support of nonprofit organizations. Hence, no group across the political spectrum can “cast stones” and externalize blame or responsibility for failing to support the nonprofit sector. Most Americans are blessed with a generous standard of living, and we choose how to spend the 70 percent of our income after the government removes its 30 percent share. The majority of Americans could live more simply and forgo what many of us now define as necessities which are in reality luxuries or desires, not legitimate needs. It is our free will choice to purchase larger houses, to live a hectic lifestyle that demands two or three cars, and to define the purchase of electronics and the latest computer equipment as essential. This lifestyle contributes to proliferate spending and excessive debt levels and to more than one form of bankruptcy.

The American dream of consumerism and materialism has contributed to a living nightmare for many and is contrary to the example of all the major faith traditions. One solution is to regain our compassion and develop a heartfelt empathy for the many unmet needs that contribute to endemic human suffering throughout our great country and the world. Please forgive me for pontificating, but even in the face of our current economic troubles the majority of Americans are still employed and the level of need is greater than ever. Take the path less well traveled whatever your political persuasion and become part of the solution to relieving human suffering and improving the quality of life for all citizens by increasing your giving to the worthy nonprofit of your choice.

RSG World Economic Brief for November 2009

The World Economic Brief for November focuses on three key developments that have taken place in the world economy in recent months:
  • Significant changes are taking place in the pattern of foreign purchases of U.S. government and corporate assets, with the previous rapid pace of foreign accumulation of U.S. assets declining dramatically at the summer’s end. This is in response to an increase in private saving in the U.S. as households and business rebuild their balance sheets.

  • There are signs that the world economy is starting to recover from the deepest contraction of the post-World War II period. An increasing number of countries are reporting positive growth since the second quarter of 2009. International trade and commodity prices have also strengthened in recent months. The global recovery, however, is seen as fragile, and financial conditions across the world remain in a state of distress. Forecasts for countries and regions are given in the Brief.

  • Prices on world oil markets have stopped their recent rise and may have begun to fall again. Some of the recent rise was attributable to financial transactions unrelated to oil fundamentals rather than supply and demand considerations in this key market, which may be unfavorable at this time to high oil prices.

RSG U.S. Economic Brief for November 2009

The U.S. Economic Brief for November looks at conditions, trends and policy developments now under discussion in the country:

  • Employment trends continue to be a key focus of attention and the Brief reviews the unemployment situation in Virginia and the country. It points out that Virginia is doing better than the rest of the country. It also mentions the difficulty Bank of America is having finding a new CEO.

  • A look at the recent performance of the U.S. economy points to a major crisis in the financial sector and a rapid deterioration in the real economy that may have finally reached a bottom. But major difficulties now describe the economy in terms of high unemployment, unprecedented fiscal imbalances, and continued financial problems that will be difficult to overcome and weigh on the prospects for growth in the foreseeable future.

  • Energy policy has been mentioned as a main focus of Congress’s attention early next year. The Brief looks at the Cap-and-Trade Bill currently before the U.S. Senate and lists the arguments in favor and opposed to this legislation. It also asks some questions intended to provoke thought about how the policies being recommended work and what their effect on the economy, energy markets and emissions of greenhouse gases might be if this legislation were to be enacted.

Thursday, December 3, 2009

Poverty Progress, Poverty Persevering and Poverty Surmounted by God's Grace by Dr. Douglas O. Walker

The Census Bureau recently released updated data relating to living conditions in the United States detailed by households classified by age, sex, race and income level. Included are tables relating to the stock of household consumer durables in 2005 for poor families that can be compared with similar data for previous years.

When taken together with statistics relating to cash and non-cash income, the data on household living conditions present a picture of a long-term improvement in the level of living of some of the poorest segments of the U.S. population. According to the latest data, the consumer wealth position of many poor families has improved markedly in recent decades, with the percentage of poor households with washing machines, clothes dryers, dishwashers and other consumer durables rising significantly over the course of the past two decades. Almost half of all poor families now have cell phones and more than 70 per cent have one or more cars.

While the overall poverty rate based on cash income has at times risen during downturns in the economy, there has nonetheless been a longer-term downward drift in the percentage of American families living below the official poverty line, especially among the elderly. This overall improvement does not even consider the effects of the significant expansion in non-cash income maintenance programs not included when assessing poverty status, such as food stamps, housing benefits and health care subsidies. These have contributed significantly to raising the level of resources available to the poor. In longer-term perspective, broad trends in cash income, non-cash benefits and household consumer wealth would indicate that the real income of the poor has risen significantly in recent decades.

All this does not mean the problem of poverty has gone away or is going away. Far too many Americans continue to live in poverty and efforts to reduce it must continue. It must also be recognized that many remaining groups that suffer from poverty and its consequences, such as the elderly, the disabled, and the mentally ill, represent core segments of the population where poverty is not going to be reduced simply by an improved economic environment, a lower unemployment rate, or traditional government programs intended to improve job skills and prepare people for the workplace. It will take special efforts over a very long period of time to reduce the level of poverty in core poverty groups, especially greater efforts by non-governmental organizations such as churches and charities. To this end, each of us should focus more on what we can do to lift others and encourage churches and charities to expand their work of service to people who by their very circumstances cannot work themselves out of poverty and require special help tailored to their individual circumstances.

As Christmas approaches we should pause and give thanks that we live in this country at this time in history and recognize that our bounty comes not from our own hands but from the grace of the God, who placed us here where the little we do is multiplied by His Hand through the efforts of others and the inheritance we received from our forefathers. Had we lived even a century ago in the same place and worked twice as hard as we do today, we would nonetheless live below the poverty line we now use to identify the very poor. Were we living today in one of the least developed countries and worked three times as hard as we do each day, we would nonetheless barely survive with little in the way of food and shelter and clothing and nothing in the way of opportunities, health care and the other services we take for granted. Our efforts, taken alone, count for nothing.

The Bible tells us that it is not of our works that we are saved (Eph. 2: 8-9). It is equally true that it is not by our works that we are materially blessed. It is always His incomprehensible grace that defines this life and the life to come, and we should be grateful and give thanks to He Who gave us life, placed us in the here and now, and blessed us with all we have (Act 17: 26).

Wednesday, December 2, 2009

The Road to Fiscal Ruin by Dr. Douglas O. Walker

Both the New York Times and the Wall Street Journal have recently published articles about the burgeoning level of government debt and the escalating deficit that adds to its weight.

The Federal government ran a deficit of $1.4 trillion in fiscal year 2009 and spending continues to far outpace revenues this fiscal year, adding greatly to a mounting national debt that now stands at more than $12 trillion.

Worse, rather than dealing with the recession that now grips the nation or the looming explosion in Social Security and Medicare benefits now on the horizon, the Administration and Congress have chosen to aggravate the country's problems by pushing for an expensive new health care entitlement which will add greatly to the country's fiscal woes. They seem completely oblivious to the fiscal nightmare they are creating.

As noted in the Times, one reason for their blindness may be that much of the recently acquired debt was financed at abnormally low interest rates brought about by the recession. These low rates made the acquisition of new debt and refinancing of old seem tolerable, at least for the moment.

However, as is always inevitable, this will soon change. The Treasury now faces what could be a significant rise in interest rates at a time when it has an immediate need for new borrowing as well as re-financing the huge debt it previously issued. According to the Times article, the Treasury estimates $1.6 trillion of the government's marketable debt is coming due in the next few months.

Added to this, as stressed in the Journal, is the need to fund higher costs associated with rising Social Security, Medicare and Medicaid expenses.

The credit demand of the Federal government seems insatiable. It raises questions about whether its huge deficits can be financed without markedly worsening the prospects for a recovery.

China and Germany as well as other countries are increasingly worried about this country's financial position and have been warning about the deteriorating state of U.S. finances. I for one am glad they are expressing their concern.

But given the way the Administration and Congress are conducting U.S. economic policy, I wonder if anyone in the U.S. government is equally concerned.