Christian Vote Matrix

If you want to decide who to vote for as a Christian mathematically:

1. Go through the list and decide between Obama and Romney on that issue.
2. If one issue is more important to you than another, double or triple that vote.
3. Add up the totals.  That's who to vote for.

I did this in a half hour this morning, so obviously it can be improved... I've tried to word things in fresh ways, rather than using the catch phrases of the respective parties.

1. Moral Issues: Do you think that the federal government should enforce and implement Christian values that are specifically Christian (e.g., no gay marriage)?  If yes, one vote for Romney.  If no, one vote for Obama.
2. Moral Issues: Do you think that the government should be involved in helping those who currently do not have the means to take care of themselves (e.g., those in poverty, certain elderly)?  If yes, one vote for Obama.  If no, one vote for Romney.
3. Moral Issues: Do you think that monetary wealth is the same as personal property and thus that taxing is stealing if such monies are not used to benefit you personally without your permission (one vote Romney) or do you think that economic systems channel monetary wealth in different ways depending on how they are structured and thus that it is appropriate to distribute monies more evenly throughout the system (one vote Obama)?
4. Economy: Do you think that austerity measures and low taxes are more likely to grow the economy and thus help more people (one vote Romney) or stimulus and selective taxes (one vote Obama)?
5. Foreign Policy: Do you think Obama or Romney is more likely to facilitate greater long term peace in the world?
6. Foreign Policy: Do you think an Obama or Romney administration is more likely to see people come to Christ around the world in the long run?
7. Education: Do you think that the overall educational system in America will improve more under Obama or Romney?  Part of this equation is whether you think that the overall education situation will improve more if opportunities for private education are increased (Romney) or whether more attention needs to go to the public school system (Obama).
6. Judges: Do you think that Supreme Court judges need to be appointed who will eventually vote that Roe vs. Wade was inappropriate because the federal government was intruding on an issue that is more properly an issue for the States to decide (vote Romney) or do you think judges need to be appointed who will continue federal priority over the positions of individual states on these sorts of issues (vote Obama)?
7. Immigration: Do you think that law-abiding individuals (apart from their illegal status) who have lived in the US for decades, especially Latinas/os, should be given an opportunity to become legal?  If yes, one vote Obama.  If no, one vote Romney.
8. Abortion: Do you think that the law should do everything within its power to discourage abortion, including requiring intensely physical examinations (then one vote Romney) or do you think it is better to focus on preventing pregnancies and promoting adoption among those who might otherwise have an abortion (then one vote Obama).

Addendum: I have tried to word these in a way that, no matter which way you went, you could be expressing Christian values in your choice.  Here's the most important question of all for pastors out there: Would Christians who go both ways on the choices above feel comfortable in your church this Fall?  If not, are we not harming the church?

Which tax cuts?

The payroll tax cut benefits the majority of people, especially the middle class.  The tax cuts that were the big issue in the supercommittee were the ones primarily for those who make millions.  If a person opposes one in the name of not raising taxes, doesn't a person have to oppose the other for the same reason?

It's legitimate to oppose raising one and not the other for economic reasons (and this argument has been used for not raising on both ends of the wealth spectrum).  You might think one or the other cut benefits the economy more.  But if your argument is not raising taxes, then there's something else driving your position, something you're not owning up to.

The Middle Majority

I feel confident I could come up with a budget deal that most Americans would vote for... just not one that either Democrats or Republicans in Congress would vote for... or that anyone who could get elected to Congress from either party would be able to vote for and survive.  I wish there were a third party for the middle majority, who are neither Occupants nor Tea Partiers.

Merkel's bailouts...

Two headlines caught my eye today in one German newspaper: "Hopefully, they know what they are doing" and "The Germans are becoming fewer and fewer."  I think I mentioned about a month ago that because Germans don't have much more than one child a couple, their share of Germany is in decline.  I don't think I ever posted a reflection on American immigration by way of Germany's issues, but I've found being here helpful in conceptualizing similar issues in America.

The main talk of the town, of course, is the German Chancellor's (Angela Merkel) attempt to hold the Euro and EU together by forgiving a substantial portion of Greece's debt.  Greece is hopeless financially, but the sense of the EU's leadership is that it will be less catastrophic on Europe's banks to write off some of their debt than it would be to let Greece fail.  In return, economic problem states in the EU like Greece will have to become more capitalistic.

I was reminded of the GM, Chrysler bail-outs in America--of course much less problematic.  They've paid their money back.  The US taxpayer lost nothing in the end.  In return, 1000s of people kept their jobs, countless companies (even beyond GM and Chrysler) stayed in business, and the US economy was spared the domino failure effect their failure would have caused. It seems to me like it was a good thing.

We'll see what happens here, where there will be no pay back, and there is always the fear that no amount of money could save the situation.

My Recommendation to the House ;-)

Time to cut bait.  Everybody has all their talking points for the next election.  Everyone knows what will fly and what won't.  So here's the deal.

1. Take the proposal of the "gang of six" in the Senate, as bi-partisan as it's going to get.
2. Take out the revenue parts that won't pass the House.
3. Pass it and raise the debt ceiling.

Next...

Debt Ceiling not about new debt...

It's frustrating to me that, apparently, 70% of Americans don't understand what the debt ceiling is about.  It is emphatically NOT about allowing ourselves to go into further debt.  It is not about spending more.  It is about allowing us to spend the money we have already "spent."  In other words, it's a question of whether or not we are going to pay what we already owe.  Those who oppose raising the debt ceiling are saying they want us not to send out the social security checks in August or pay our soldiers in August or pay the banks we've borrowed from in August.

The amount of debt America owes will not change one way or another either way.  Republicans and Democrats are trying to leverage this issue because everyone knows it has to happen.

FOX: "Bailout clipped taxpayers for $25 Billion"...

If you can't see, I'm smiling.  This FOX news article is about the fact that the current estimate for what the TARP bailout will cost the American people in the end is $25 billion.  The initial payout was $700 billion and the current final tally is half a previous estimate that was itself considered overly optimistic.

So what I'm smiling at is FOX's begrudging wording of the news in the worse way possible.  The news is that Bush/Obama's bailouts saved the economy and quickly stabilized the world economy for way, way less than anyone hoped.  The news is that Bush and Obama's decision was the right one and that FOX and the Tea Party were wrong on this one.

But I will take the faint praise of the FOX article anyway: "The bailout fund, known as the Troubled Asset Relief Program, became hugely unpopular with the public and in Congress. Advocates and even some critics, however, credit it for stabilizing the financial sector in the wake of Wall Street's meltdown in 2008."  Read between the lines: even economists who oppose the TARP bailout recognize that it stabilized the financial sector. 

The anger of the American people, at least on this particular subject, was misplaced, based on ignorance, and fanned by conservative rabble rousers who were wrong, at least on this one.

The Highest Tax Cuts

I'm too busy to write something this morning, so I'll just pose a question.  In most cases (except when the state has some resource that pays for everything--oil, for example), taxes seem necessary to run a country.  A country like ours is based on a social contract.  The people establish government to "provide for the common defense, promote the general welfare, and secure the blessings of liberty." 

So our taxes support the police and the army, provide "general welfare" works like education, social security, and potentially health care, etc.  These structures reflect the fact that no one in a country of this sort has absolute rights, including rights to property.  The goal is to maximize individual rights and common benefit at the same time, in some maximized give and take.  We all surrender some of our rights for the benefit we receive by not having to protect ourselves and potentially for having fall back networks for such a time as we cannot take care of ourselves.  I believe a good deal of the current furor either has lost sight of these aspects of the Enlightenment context in which the Constitution was formed or never knew it.

So the question of going back to the previous tax rate on those earning over $250,000 a year reduces to one question and one question only.  It is not a question of morality.  After all, it's the way the rate was 10 years ago and no doubt better than what the rate was under Reagan.  Definitely better than the rate under Nixon. 

The question as far as I can see it is a purely economic one.  Yes, reinstating this tax level will generate much needed money for the economy with incredible deficits.  But given free market dynamics, does it economically do the economy better to keep this money flowing in the hands of such individuals?  I really don't know.  This is the key question I don't hear anyone discussing.

So I am posing an economic question today, not a moral one.  Which course would be better for the economy--raising the money through taxes or keeping that money flowing in the hands of such individuals?

Economics and Morality

Just some quick musings for a change of pace early in the morning.

1. The original intent of capitalism's inventors, Adam Smith and Jeremy Bentham, was to level the playing field.  The goal was that the pleasure of the coal miner counted as much as the pleasure of the king.  Capitalism was birthed in ultilitarianism, the greatest pleasure for the greatest number, where everyone's pleasure counted the same,  The philosophical background of capitalism is thus egalitarian with the goal of maximizing the happiness of society.

2. To that end, the laissez-faire, free enterprise system built on the premise that people can look out for their own interests.  If everyone does, then merchants will not charge more than they can get away with and consumers will buy as cheaply as they can.  The ideal result is thus the greatest good for the greatest number.

3. John Stuart Mill already recognized some complications to the theory.  For example, people do not always act in their own interest.  Also, we can question whether all pleasures should count the same.  Our take away is that consumers need to be informed and, in various ways, protected, for the system to work as Adam Smith intended.

4. By the mid-1800s, the Industrial Revolution began to reveal even more complications to the system, captured aptly in some of the European revolutions of 1848 and then later in the Bloody Revolution of 1917 in Russia.  While history has soundly rejected Karl Marx's own Hegelian predictions and suggestions, his critiques of capitalism are harder to deny. 

Capitalism empowered certain individuals on such a scale that the "little man" could not possibly compete.  What average or even above average individual has the capacity to compete with Wal-Mart?  Factories ran over the little man and could replace him or her in an instant.  If she gets sick, if the management is tyrannical or pays pitifully, most individuals are powerless--the very individuals capitalism was meant to empower.  The reality is that people get stuck, don't know where else to go, don't know what to do.  The late 1800s and early 1900 (think, The Jungle, The Grapes of Wrath) revealed nothing like Adam Smith or Jeremy Bentham's dream.

5. So unbridled capitalism of the late 1800s simply recreated the divide between haves and have nots in a different way.  Protections price gouging laws and anti-trust laws are meant to keep the system in balance so that free market principles can actually work.  Consumer protections do the same.  The goal of capitalism was not to reward those in a position of advantage or greater know how to be able to get rich.  The goal was to create a system where everyone could thrive.

6. History has vindicated Hayek's economic approach over Keynes', one that radically deregulates, does not fix prices or pump money from the government into the system.  Perhaps it is true that a Hayek approach after the Great Depression would have ended the Depression sooner, as opposed to F.D.R's more Keynesian approach.

7. However, here is where morality and the underlying philosophy of capitalism comes into play.  When Milton Friedman and others went to Chile, yes, their Hayekian principles got the economy under control.  But what a painful year to get there!  The same for Eastern Europe. 

The bottom line is this.  Utilitarianism is a macro-system.  It does not take the individual into mind.  It's goal is for, say, 90/100 people to be as happy as possible.  But in the process, it allows for the immense unhappiness of the other 10.  This is the brilliance of the Bill of Rights and a "universal ethical egoist" system over a purely utilitarian system.  It is simply unacceptable from a moral perspective for 10 people to starve to death while on a fast track to make the world a better place for the other 90.

So we have to take into consideration whether anyone starved to death in that really bad Chilean year.  And the situation in Russia after Jeffery Sachs Hayekized it is filled with organized crime who took all the capital for themselves.

Moral Principals going forward
1. Capitalism is far from a divine right.  It is a mechanism we affirm because it is the economic system that holds the most potential to maximize happiness.  It's philosophical goals were originally not entirely different from those of Marxism or socialism--it is just effective while we can see that socialist economics are a complete failure. 

A key point is that we have to get over the labels, as if the label capitalism equals good and the label socialism equals bad.  This is ignorant and illogical.  Each idea must stand or fall on its own two feet and the overall goal of maximizing societal happiness without running over individual rights must be kept in view.

2. History has vindicated Hayek over Keynes as an economic method.  However, history has also shown that unbridled capitalism does not achieve its underlying goals either.  When all regulation and control is taken away, capitalism becomes oppressive with a very few gaining immensely and the vast majority suffering.  Protections for the consumer and worker are essential to keep such things from happening.

Theory must not be implemented merely with a view to the quickest recovery.  The lives of a societies individuals are a moral element in the equation that must be considered.  I am neither enough of a historian or an economist to say, but it is possible that FDRs policies were the more moral course of action even if they slowed down recovery from the Great Depression.

3. The implementation of economic theory must always be driven by the impetus to maximize the happiness of society at large without destroying individuals.  Again, the "fittest" do not have a divine or evolutionary right to accrue wealth at the expense of the little man.  This contradicts the founding goals of capitalism in the first place.

4. We need to make a clear distinction between my property and the system that can facilitate the accumulation of wealth.  For Christians, it is important to realize that my "net worth" today is something quite different from any biblical understanding of wage or property.  In biblical terms, property is something I inherit and a day's wage is somewhat standard throughout the world. 

There is no divine right or innate justice to market wages.  They vary according to demand and the state of the system.  In philosophical terms, we have no basis to say that the $250,000 salary of one person is more of a "possession" to that person than the $20,000 of someone else.  It is the system that has assigned a different value to each person, not necessarily the amount of work he or she has done. 

The long and short of it is that the Tea Party person does not have the same claim on every penny of that money as she might think she does.  It is not a concrete possession like a car in the driveway.  The system gave that amount for work and the system can take it away without either action being either morally right or wrong.  The moral significance of money in a capitalist system does not map directly or neatly to the moral significance of property in an agrarian one.

I don't know if I have done these ideas justice, but these are some of my musings at the turn of the twenty-first century.

Paris Agreement on Aid Effectiveness

This is now the final installment of my reflections on the Wheaton conference on "Government, Foreign Assistance, and the Mission of God in the World," cohosted by Wheaton's Center for Applied Ethics, Bread for the World, and the Micah Challenge.

Previous posts included:
1. First Look
2. Why Government should aid
3. The Bible, Christians, and Government

The Paris Agreement on Aid Effectiveness
One of the presentations was on aid effectiveness, and this declaration was mentioned. I have not read through the entire website, but the main points of the agreement seem sound, especially if a developing country sets good goals.

1. Ownership
The country receiving aid should own the development process. It should own its own goals, set its own strategies, improve its own institutions, and tackle its own corruption.

2. Alignment
Donor countries should align behind these goals and use local systems toward their accomplishment.

3. Harmonization
Donor countries coordinate, simplify procedures and share information to avoid duplication.

4. Results
Developing countries and donors shift focus to development results and results get measured.

5. Mutual Accountability
Donors and partners are accountable for development results.

Here endeth my reflections...

Bible, Christians, Government

Here's the third and maybe second to last post about the conference I attended last week at Wheaton called "Government, Foreign Assistance, and the Mission of God in the World." Previous posts include:

Basic Thrust
Why Government should aid...

The first presentation of the conference was on the biblical basis for governmental assistance. The presentation focused on Psalm 72 and Romans 13. I imagine that I wasn't the only one that found this line a little shaky. One professor from Denver Seminary used the word "tricky."

It's always tricky in my mind to apply the civil dimensions of the Old Testament to today. Governments are usually a given rather than something we can apply the Bible to. What is different about the US is that it is a democracy. Within the limits of the Constitution, we can as a people "bend the power of the United States" in certain directions, as long as they we do not violate the establishment of religion clause.

I've never found Romans 13 very helpful on these issues either. Statements in the Bible usually give a snapshot of the truth that is particularly relevant to a place and time. Romans 13 is nothing like an absolute philosophical statement on the timeless purpose of government. Governments punish wrongdoers. Yep.

But they can do much, much, more and they often do less. In fact, this was the same government that put Paul to death, reflecting the simple fact that governments more often than not fail at one of their fundamental purposes. Indeed, we cannot be completely sure that there is not an element of rhetoric in Romans 11--that Paul is giving a more idealistic picture of Rome than he himself believed, suggesting what Rome should be like rather than how it is.

Interestingly, the most helpful part of the conference for me on this score came in the last 20 minutes of the conference in a comment from Cheryl Sanders of Howard University. She mentioned the Joseph story of Genesis. When someone questioned this example, wondering if Pharaoh was really a model for government, her response was, to me, very insightful. It amounted to "Exactly." In so many words, Pharaoh embodies all the ambiguities of the people of God engaging with worldly powers.

So I propose the following model of Christian-state relationship. First and foremost, the people of God should never confuse themselves with worldly powers. Even when we are in government, even if Billy Graham were to become President of the United States, we must always distinguish the people of God, the Church, from the powers of this world.

If we take all the kings of Israel and Judah, far more were not kings after God's own heart than were. And the period of the judges was far from an operational theocracy. In short, this distinction applies even to ancient Israel, which is usually used as the model for those groups that most wish to identify church and state.

What we find in the story of Joseph and Pharaoh or Daniel and Nebuchanezzar or Nehemiah with Persia or Esther with Artaxerxes or Paul with Rome is that there is always a "dancing with the devil" dimension to any relationship between the people of God and government. God can and does use government to forward His will. God uses specific individuals at specific times and places to move governments in the right direction.

But it's often like playing with a snake. It can bite you. The relationship between people of God and worldly powers is ambiguous. It can be good. I can be bad. It is not a simple formula. It is not always Christ versus culture. It is not always Christ within culture. And this side of eternity it will never be finally transformed any more than our flesh is ever permanently removed from play. The relationship is dynamic.

I am not advocating a two kingdoms model because I am not suggesting that Christians can give up their Christian identity in their involvement with worldly powers. I am not advocating a Christ versus culture model where one withdraws from political engagement. I am advocating the attempt to intersect the kingdom of God with the kingdom of this world as much as possible to "bend" it.

Although I would not make too much of the supposed Christian foundations of America, there is a great deal of commonality between fundamental Christian values and fundamental American principles. More than most other nations in history, we have the opportunity to "bend the power of the United States" in Christian directions. As was also pointed out at the conference, here we are the government, in a sense.

But make no mistake, the US government operates on the basis of a social contract between everyone living here, which includes many non-Christians. No law or policy that is specifically Christian--and not generally beneficial--will stand the test of time. This is why the entire Christian lobby against gay marriage will eventually fail and probably is, in my suspicion, a waste of energy, an exercise in futility.

But it will also often be possible to argue for Christian goals within the language of the US Constitution. For example, it is in the best interest of the US government to alleviate poverty in those parts of the world that grow terrorists. The current problems around the world with terrorism stem more than anything else to the impoverishment of peoples. So Christians are motivated to eliminate poverty because we are following the mandates of Christ. But we can "bend the power of the United States" using an argument that achieves a similar end but using the language of national self-interest.

In the end, my mind was drawn to the Parable of the Unjust Steward in Luke 16. This parable seems filled with all the ambiguity of the relationship between the people of God and worldly power. As in all of Luke, money is viewed as something outside the kingdom of God. It is morally dubious at best. This strange parable seems to say, Be very, very sharp when dealing with the world. You are handling a dangerous thing, like a snake. Be very shrewd. Be wise as a serpent, but harmless as a dove.

Government should aid...

This is the second in a series of posts unpacking the recent conference I attended at Wheaton called Government, Foreign Assistance, and the Mission of God in the World, hosted by Bread for the World, Wheaton, and the Micah Prayer. The first post is here.

One interesting phenomenon I find is that both "conservative" and "liberal" Christian perspectives often have serious reservations about government involvement in foreign assistance, although usually for quite different reasons. Certain "conservative" Christian voices object because they not only often see it as stealing our money from us against our will but they also see government as instrinsically wasteful. Certain "liberal" Christian voices often see government aid as counterproductive and often doing more harm than good.

There were two "governmental" speakers at the conference: 1) Michael Gerson, who was Bush's speechwriter and who headed up PEPFAR (Africa AIDS initiative) and 2) Tim Ziemer, who first under the Bush administration and now under the Obama administration is the US Global Malaria Coordinator.

Gerson discussed Bush's initiative to get antiviral drugs to communities in Africa that were being decimated by AIDS. If I remember the statistics, the PEPFAR program has turned a situation around from only around 4% of Africans with AIDS being on ARV drugs to now 94%. There are, of course, some critiques of the program. For example, the emphasis was on distribution rather than establishing systems of distribution, which means the program is not self-perpetuating. I also heard some critique of the deals made with pharmaceutical companies.

In case I don't remember later, I have formulated over the course of the week a kind of "dance with the Devil" perspective on Christian-state relationships. I may post on it tomorrow in relation to certain biblical precedents.

Ziemer talked about the US led attempt to elimilate malaria from 15 countries. I guess 3000 people die a day in the world from malaria--completely unnecessary. Here the US has established systems that meet US environmental standards at the distribution of nets with incesticide, spraying, etc. Some have questions about the incecticide, but generally consider it a necessary evil.

Ziemer mentioned several elements the US government brings that small NGOs cannot:

1. level of cash
2. technical/logistical assistance
3. political influence

In short, no local church is equipped to respond effectively to the scale of a Katrina or Haitian earthquake or an Indonesian tsunami. In fact, there is actually a term "badvocacy" for a lot of what is done by well intentioned but as often as not ignorant church groups. They weren't mentioned but I thought several times of the whacko church group that was trying to smuggle orphans into the Dominican Republic.

The CEO of Food for the Hungry had just returned from Haiti and was reminded of the phrase from Judges, "Everyone did what was right in their own eyes." Although the general sentiment was that short term mission trips were generally a good thing, there was also the sense that well intentioned but culturally ignorant Americans can also do great harm. Just because you've been to another country, doesn't really mean that you've been to another country. Often such trips make generally un-self-aware people feel like they're now experts, when they culturally never really left home.

Again, in short, the church is not organized or mobilized enough to get the job done--or barely even started--on matters like AIDS or malaria.

A final word on the appropriateness of government involvement for those who think it is not in the best interest of US citizens for their money to be used in these ways. One thing that both Gerson and Ziemer mentioned is that it has been showed definitively that an overwhelming connection exists between poverty and terrorism. That is to say, it is misguided to think of terrorism as primarily an ideological issue. The evidence more demonstrates that it is economics that drive the ideology.

From what I can tell, there is near unanimous if not unanimous agreement by all experts in government and foreign policy that poverty is the number one cause of terrorism. This implies that it is massively in the public interest for the general welfare of US citizens for the government to address world poverty, especially in the Arab world.

Government, Foreign Assistance, Church

I was privileged to sit in on a conference at Wheaton these past two days called "Government, Foreign Assistance, and God's Mission in the World." A "Wheaton Declaration" will come out of it after a couple revision loops. One paragraph of the first draft looked to be a particularly good summary:

"The extraordinary power of the United States and the daily impact of the United States on the world's poor requires special vigilance on the part of American Christian citizens as to the effects of the US role and policies and assistance programs. Our goal should be to bend the power of the United States toward a maximally effective impact on the world's poor"

The relationship between churches and the government on these sorts of issues is a thorny one, in my opinion, and I am much more comfortable personally with Christian groups lobbying the government than denominations per se, especially when it comes to specific policies. Nevertheless, I may post some thoughts in relation to the conference over the next few days.

Probably the first thing that struck me was the assumption of values. I think almost everyone at the conference accepted the value of helping the poor. One early caveat was on effective assistance. There was a strong distinction made between aid and development. Aid is short term in a time of crisis (e.g., Haiti). Development is about empowering people to support themselves eventually.

But I sat there wondering whether even most American Christians are on board with the basic value that it is our duty as Christians to help those in need. Before we can ever get to the question of the government, we have to make sure Christians can see that helping those in need is a fundamental Christian value.

Commanding Heights 1

Over the last few weeks I've been slowly making my way through the superb PBS trilogy called "Commanding Heights." It's about economics in the twentieth century going through 9-11. I hope to finish the final episode in the series tonight. The first episode leads up to the rule of Keynes. The second with the Reagan/Thatcher revolution and the reign of Hayek. The third with globalization.

Very interesting. Very helpful. I may post later when I'm done with the final episode, but I found a number of things striking that I was not fully aware of. One is the extent of socialization of things in Britain and even in America until Reagan. All the more shocking because I was alive at the time and voted for Reagan my first time voting in 1984.

This gives me a little perspective. When I was in high school, still during the cold war in the early 80s, we were required in Florida actually to go through a book against communism. And of course the McCarthy trials were in the 50s against "communists" in America. The perspective is basically that those who cry socialism of Obama's health care bill have no perspective on how much more socialized we were at the very time when we were most decrying communism. It's a little like the complaints about rolling back tax breaks that were only enacted at the beginning of the Bush 2 administration.

We can certainly debate the benefit/harm of doing these sorts of things. It sure looks like history has vindicated Hayek big time on the whole. But those who cry socialism and Marxism have lost complete perspective on what America was like before deregulation in the 80s--when our rhetoric against these things was at its height!

It also seems pretty clear to me that the down side of the Freedman/Hayek approach is the potential human toll. The immediate aftermath of opening up free markets is almost always atrocious for the common person for a few years. I don't have the answers but my knee jerk thought is that it is better to have a longer recovery with less human toll than to have a quick recovery with extreme human loss.

Another thought I have is that the best role for the government in economics fits with my more general sense of the best government as one based on a social contract between the people. We agree to live together in a way that gives each individual maximal freedom while setting up certain rules so that our individual freedoms do not impinge on the freedoms of others. So each is free to practice their religion as long as that religion does not impinge on the freedoms of others. We set up the police and the justice system as a way to guard the rules of the social contract.

In economics, then, it would seem that the best role of government is not "central planning" but a policing role. We let the free market run freely as long as it does not impinge on the basic rules of the social contract. We thus set certain standards of minimum wage and prevent monopolies. We set safeguards against price gouging in instances where crisis prevents competition. The government does not own any business but it regulates them, preferably less than more, but enough to let the free market flow without running over the little man.

However, we cannot view capitalism as an end in itself. Indeed, the goal is the overall health of the society, not at all the enrichment of the most successful. A wide gap between the richest and the poorest instead shows that the system is not working as it is supposed to. The primary goal, since we are talking of a contract between all Americans, is the uplift of the whole society, not the enrichment of a few (which ironically undermines the very social contract itself on which America is founded).

Better for everyone to have more and the richest to have less, but ironically, it is the free market that can best accomplish this. Taxation ironically tends to the opposite result.

Fun stuff.

Bernanke Time's Man of the Year

Ben Bernanke is Time's Man of the Year. I'm not competent to judge the economics, but I'm good with this choice. A lot of people complained about the bail outs because they weren't fair, and they weren't.

But that wasn't the question. The question was what needed to be done for the economy to rebound, and, despite the mistakes they no doubt did make here and there, it would seem they took appropriate action... and by "they," I mean not only Bernanke, but the Bush and Obama administrations that straddled the crisis.

Good leadership involves compromise and doing what can and must be done, no matter what the ideal is or even what is most just and fair. Some is better than none, unless the some is a step back. Mr. Smith should not be in Washington. His type downs the plane in the name of ideals and a perfection that will never, ever happen in Washington or in any human institution (yes, that includes the church).

And those who cannot meet in the middle, compromise to get some rather than all of what they think is needed, are generally dangerous, especially the more important the decisions at hand. In my mind, this is part of why the British lost the Revolutionary War and why the Nazis lost WW2. My response to idealists: "Nuts."

AIG, UGH

By now everyone's heard that AIG, recipient of billions in the bailout, is paying millions in bonuses to the very department that caused its financial collapse. They're arguing that they legally have to pay them because of contracts made before their collapse... and they're arguing again that without paying these sorts of bonuses, they won't be able to retain the best.

Looks like there's little the rest of us can do but vent on this one. Even the Obama administration's hands seem tied by deals made by the Bush administration on this one. My predictable thoughts--apparently the "best and brightest" didn't do so hot these last years. I bet there are plenty of equally smart people looking for a job who'd be more than happy to take their jobs without the bonus. Frankly, I like teaching and writing, but give me two months in a room with the appropriate resources...

Of course many unlikely thoughts come to mind. Liquidate this "credit default swap" department and send all these bonus unworthy fools packing. Fire anyone who takes the bonus, etc...

The Second World Depression

I don't know that we're headed for a depression. I hope not. But it occurred to me today that they called World War I, "The Great War," until the second one came along. So would the "Great Depression" become "The First World Depression"? We'll see...

I'm a quick study. Give me a job.

I hear they're afraid that if you only pay CEO's of failed companies $500,000 a year, they won't be able to find anyone competent to run them? I'm a pretty quick study, good with higher math, IQ around 140, don't need a lot of sleep. I'd be glad to stop blogging for a while to save a company.

All of that is to say, I'm sure there are plenty of competent people out there who'd be glad to do more than give it a shot. Who knows, maybe we can send the good old boy, slick talkers off to their bidets and get someone who might actually have virtue and brains.

I Vote for Bankruptcy.

Are GM, Ford, and Chrysler serious, wanting Congress to give them everything between where the price is and $3.50 a gallon?

http://www.msnbc.msn.com/id/28020043/

The auto industry for years has resisted, as we might expect, changes for the greater good that were not immediately for their good. Now they want us to pay more than a dollar extra in taxes on gas so that they can continue business as usual? And the UAW cashes out salaries to people who aren't even working that are over double what most Christian colleges earn a year?

No way. Bankruptcy, restructuring for the greater good. People keep their jobs, business stays open, something better on the other side.

13.4 Money, Materials, and Society 1

It is with great pleasure that I jettison part of this section into the first draft stage:
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For the last two thousand years, Christians have rarely had the opportunity to decide how their goods are produced and distributed. On a small scale, groups like the Shakers (1700-1900's) or the group that settled in Oneida, New York (1800's) formed small communes where their goods were shared in common. Today, the Amish live in close community as well, although they recognize the existence of private property. But for the majority of Christian history, Christians have had little choice but to live within whatever political and economic structure they were born into.

Before the industrial revolutions of the modern age, most economies were agrarian, as in biblical times. People produced goods off the land, consumed some of them, and perhaps traded some of them with others for things they did not produce themselves. However, we should not think that everyone had their own land. In medieval times in the Western world, a king or "lord" owned the land, which was farmed by others who owned no land at all. Those who worked the land might be the slaves of those who owned the land, or they might be "serfs" of one kind or another who worked the land in return for protection, basic sustenance, or some pittance of pay.

The Industrial Revolution of the 1700's and 1800's in the Western world massively transformed the economies of everything in its wake, leading to the industrialization of the East in the twentieth century as well. Industrialization is the process of becoming a society that functions off of manufactured products rather than farm products. When we speak of developing countries in the southern hemisphere today, we are referring to countries that are only now undergoing this process of transformation.

Before the rise of industry, power in Western society lay primarily with landowners and kings, the owners of the farms produced the means of living. The powerful were the long standing aristocracies, the "best" of society who owned land. This "landed gentry" gained increasing power even as the power of kings declined.

But the 1700's and 1800's saw a shift in power to those who possessed and controlled capital, rather than just land. Capital is all the resources a person has at his or her disposal for production and exchange, including things like money, equipment, products and, of course, land. The rise of railroads and steam ships facilitated this exchange over distances previously impractical.

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It is into this world that Adam Smith (1723-1790), the "father" of capitalism, wrote his most famous piece, The Wealth of Nations. Capitalism is an economic system in which individuals and companies own capital that they use to compete against each other to make a profit off the buying and selling of goods and services. The background of Smith's economic theory was the utilitarian philosophy of Jeremy Bentham that we discussed in the previous chapter.

If you remember, the goal of utilitarianism was to make a more equitable society by basing laws on what would bring about the greatest pleasure for the greatest number. For Bentham, everyone counted the same. The pleasure of a king counted just as much as the pleasure of a child working in a coal mine. The utilitarians thus wanted to build a society where everyone's interests were taken into account.

Adam Smith formulated an economic model based on this general goal and idea. Here is a famous passage from The Wealth of Nations (I paraphrase a little to make the meaning clear). The passage is actually talking about importing goods from other countries, but we can see in it the basics of Adam Smith's economic theory.

"The annual revenue of every society is always the equivalent of what it is able to exchange from what its industry produces. It is exactly the value of its products that it can exchange. Every individual, therefore, tries to use his capital to support domestic industry, so that the amount that is produced adds up to the greatest value possible. Every individual also works so that the annual revenue of the society is as great as he can make it.

"Of course, it is not that this individual was actually intending to promote the public interest, nor does he know how much he is promoting it. When he prefers supporting domestic rather than foreign industry, he is only thinking about his own security. By making his industry produce the greatest value possible, he is only thinking of his own gain. But in this as in many other cases, he is led by an invisible hand to promote an end that was not a part of his intention.

"Nor is society always the worse because it was not his intention to benefit it. By pursuing his own interest he frequently promotes that of the society more effectively than if he really was trying to promote it" (Wealth of Nations 4.2)

Smith's basic theory is that as we each pursue our own economic interests, we will often find that, as if "led by an invisible hand," society as a whole will benefit, including the other individuals in that society. On an individual level, let's say that I have some goods that I want to sell to you, and you are interested in buying them. Let's say further that the government allows you and me to agree on the price, rather than telling me what to charge or you what to pay.

Here's what Smith says will often happen. As a seller looking out for my own interests, I will try to get as high a price for my goods from you as I can. Meanwhile, you are also looking out for your own interests and will try to pay me as little as you can. The result is that you and I will meet in the middle with a price that maximizes the benefit to both of our interests.

This sort of "de-regulated" approach to economics, where the government allows you and I to rankle over prices, is called laissez-faire capitalism, which is French for "to allow to do." Laissez-faire economics favors letting the business markets rankle over prices and rules rather than some government setting the boundaries for such things.

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Another name for this school of thought is "classical liberalism." Today, the word liberal is more often associated with opposition to capitalism, but we should remember that the word basically means "free." The free enterprise system and laissez-faire economics were thus termed "liberal" originally because they believed individuals and companies should be free to set prices and the terms of trade without government intervention. Ironically, therefore, the economic "conservatives" of today come closest in philosophy to the classical liberals of the 1700's and 1800's.

Another principle of capitalism we should mention is the law of supply and demand. This is the idea that as the supply of a certain product goes up, the price will generally go down, since people have more venues from which to get it and thus more competition between those selling it. When the price of oil goes down significantly, sometimes oil producing nations agree to decrease the amount of oil they are producing, so the price will go back up. Similarly, the United States government in the late twentieth century actually paid certain farmers not to put their grain on the market so that the price would not bottom out from two much supply.

Similarly, as the demand for something goes up, the price will generally go up. This dynamic is especially apparent in a crisis, such as when a natural disaster interrupts the normal flow of things like gas to a particular area. Sellers of things in such high demand are sometimes accused of "price gouging" or setting a price ridiculously high because there is high demand and no competition around, so that buyers of the product have little choice but to pay the exorbitant price.

These sorts of exceptional situations are where economists begin to debate how free the market should be and whether some government regulation might actually be necessary to keep the overall system functioning the way it is supposed to function. Adam Smith's laissez-faire theory was formulated when firms were small and run by individual owners, not in a global economy with industry on a massive scale.

We saw in the last chapter that, even in the early 1800's, John Stuart Mill (1806-1873) suggested some significant modifications to the utilitarian philosophy of his father and Bentham. The same was no less true of Adam Smith's economic theory. For one thing, Mill recognized that you cannot always count on people either knowing or doing what is in their best interest.

Even in the early 1800's, Mill argued that the "authorized representatives" of society would need to intervene when the interests of the buyer were jeapardized (my "translation"):

"As a general rule, the business of life is better conducted when those who have an immediate interest in it are left to make their own course... Industry is generally the best equipped to choose the path in its best interest. But can we affirm with the same universality that the consumer or person served is? ... Is the buyer always qualified to judge the commodity?

"If not, then letting competition in the market run its own course does not apply. And if it is a very important commodity in which society has much at stake, it may be preferable to have some degree of intervention, by those who are the authorized representatives of the collective interests of the state" (Principles of Political Economy).

When a person does not know what is in his or her own best interest, then certainly the basic principles of free enterprise play into the hands of the other person, who is following the principle of self-interest to get the best deal he or she can. In fact, it is--at least in the short term--in the best economic interest of a person to try to deceive or manipulate the other person if they can get away with it. Of course it may not be in the long term, for if customers come to recognize that you are a shady dealer, they will tell others and then your business will drop sharply.

In a global economy, however, where buyers and sellers do not live together, knowledge of whether you can trust the other party becomes a critical issue. Adam Smith and his compatriots could not have imagined a world where people buy things over the internet or where the seller is so far removed from the buyer. By the late 1800's, the loopholes in a purely laissez-faire approach to economics had become all too apparent to the average U.S. citizen. Government agencies such as the Interstate Commerce Commission and the Food and Drug Administration have evolved over time to ensure that industry is honest in the way it presents its products to consumers who buy them.

A second problem with Smith's economic theory that Mill addressed was the tendency of individuals to follow their habits rather than their self-interest (again, paraphrased):

"When it comes to individual property, the way products end up being distributed is the result of two determining factors: competition and custom...

"Politcal economists generally... are used to putting their entire stress on competition... and to take little account of what people are accustomed to doing...

"Because the habits of people resist competition to such a significant extent, ... even when the competition is the greatest, we can be sure that where people are content will smaller gains and find more pleasure in things other than monetary gain, competition will not allow you to calculate what they will buy... Customers are sometimes used to higher prices and they acquiesce in it" (Principles of Politcal Economy).

The basic thrust is that people don't always operate in their best economic self-interest. What this fact means is that although economics is a science, you cannot predict what the markets will actually do.

What is important to realize about these "founding fathers" of capitalism is that they really had the overall betterment of society in view. The capitalistic system was not an end in itself. It certainly was not a system set up to reward some new aristocracy of the cleverest merchants of industry, while punishing the person who wasn't adept enough to compete. It certainly was not some evolutionary scheme set up for the survival of the fittest.

Indeed, Adam Smith himself had this comment to say about how the wealth of the rich might be used to the betterment of the poor in society (my paraphrase again):

"The survival of the poor costs a society a great deal... Meanwhile, the rich spend most of their money on the luxuries and vanities of life. So it is not ridiculous to suggest that the rich might contribute to the expense that the public spend on the poor, not only in proportion to their income, but even proportionally more than their income" (Wealth of Nations).