Archive for the ‘Economics’ Category

Must See: Wealth Inequality in America

March 8, 2013
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George Weigel Misrepresents Europe’s Social Welfare Systems

April 18, 2012

George Weigel, writing in The National Review Online, warns of an impending loss of “free and voluntary associations” in the U.S. if the Obama Administration’s HHS “contraceptive mandate” is allowed to stand.

Will the robust networks of free and voluntary associations that Alexis de Tocqueville admired as the sinews and musculature of American democracy continue to flourish? Or will the United States increasingly resemble Western Europe, where the associational instinct (and, with it, civil society) has atrophied under the heavy weight of the European nanny state?

Weigel would like us to be afraid—very afraid—of going down the path that Europe has followed, and he would like us to believe that HHS mandate will certainly take us there.

But his grim characterization of Western Europe does not correspond to reality, and Obamacare is much to be desired if it promises outcomes like those achieved by European societies.

Neo-conservatives would be all too happy to link Europe’s current ills to its sometimes generous social security nets. But their linkage can’t be verified in any stats that I have found. Europe’s fiscal problems were brought on by a multiplicity of factors, including excessive lending by German banks—with resulting high levels of sovereign debt (in a few countries)—trade imbalances, monetary policy constraints built into the flawed design of the eurozone, loss of confidence, and the refusal of the European Central Bank to apply Keynesian remedies.

No correlation has been found between social welfare programs and sovereign debt issues. For example, the UK’s public debt over the past 20 years has ranged from 50% to about 90% of GDP, while that of the U.S. has ranged from 70% to 100% of GDP. France, which has very strong social welfare programs, has had a mostly lower level of debt than the U.S. Japan also has strong social welfare and its debt levels are about the highest in the world (around 200% of GDP). This does not mean that Japan’s debt was “caused” by its social welfare programs, however. Look at Canada, northern Europe, and Spain: their debt levels are about the same as ours.

Greece got into trouble because there was massive wealth disparity there, like what we are now seeing in the U.S., and the wealthiest individuals and corporations were not paying taxes (also happening here). That is the recipe for disaster, not social welfare programs.

Europe’s problems were exacerbated by the inability and sometimes the refusal of the eurozone members to implement Keynesian measures like stimulus (from the government) and quantitative easing (from the European Central Bank.)

All this information is freely available to anyone who wants to spend a few minutes researching it. Nobel Prize winning economist Paul Krugman has provided an outstanding play-by-play analysis of the crisis in his weekly NYT column.

Some additional information that is perhaps more pertinent to Weigel’s remarks about Europe is to be found in the Happy Planet Index (HPI, from the New Economics Foundation), and the Human Development Index (HDI), which ranks countries by their standards of living and quality of life. There are four HDI rankings: very high, high, medium, and low. The U.S., Japan, Canada, Argentina, Australia, New Zealand, and Europe are all ranked “very high.” Of course, these are all countries with robust social welfare systems in place, except the U.S., where about 50 million people are uninsured. Countries without social support systems rank much lower than those with such systems. You can check this out by googling “Human Development Index.”

U.S. Rep. Paul Ryan’s Budget Proposal: Catholic Subsidiarity or Social Darwinism?

April 14, 2012

U.S. Rep. Paul Ryan, Chairman of the House Budget Committee

Gil Bailie of The Cornerstone Forum (Facebook page) prompts the following discussion by posting a link to an article from The California Catholic Daily of 4/12/12. The article, entitled “Subsidiarity is Really Federalism,” includes an interview in which U.S. Rep. Paul Ryan, Chairman of the House Budget Committee, explains how his Catholic faith guided him in drafting his 2012 Budget proposal. Raph Martin is the first to respond:

Raph Martin He hasn’t studied his Catholic faith well enough!!! What he proposes is the contrary of the Church’s social teachings which is always concerned about the needs of the poor and needy. I would suggest he do a serious reading of Pope Paul VI’s encyclical On The Development of Peoples (Populorum Progression). What had at one time been viewed as the “third world” is now on the home front!

The Cornerstone Forum Thanks Raph. The goal of lifting the poor out of poverty and empowering them to live productive lives is one that is shared by serious liberals and conservatives. The issue on which they disagree is how best to do that. The results to date of the efforts of recent decades doesn’t constitute an indisputable case for the liberal approach. A full debate on these things, sans the stereotypes, is long overdue. Thanks again. My best.

Doughlas Remy Paul Ryan and other Catholic free-market fundamentalists have seized on the word “subsidiarity,” from Catholic social teaching, to further their own aim of transferring even more wealth to the one percent. This is not the kind of “wealth redistribution” that Jesus had in mind when he counseled the rich man to give all that he had to the poor. (Ryan must have got it backwards somehow.) And it is not what Pope Benedict XVI had in mind when he addressed the issue of poverty in his 2009 encyclical (“Charity in Truth”) and later through the Pontifical Council’s document of October 2011 (“Toward Reform in the International Financial and Monetary System in the Context of Global Public Authority”).

Jesuit Thomas Reese described the 2011 document as “closer to the view of Occupy Wall Street than [to that of] anyone in the U.S. Congress.” Meanwhile, right-wing neoliberal Catholics Nicholas Hahn and George Weigel actually railed against Vatican document, questioning its authority and calling it “incompetent babble.”

The idea of “subsidiarity” doesn’t call for a dismantling of government services for the poor. It only claims that nothing should be done by higher authorities that could be done at lower levels of participation. There is certainly some wisdom in this idea, but the question in our era of globalization and macro-economics is how efficiently and effectively can local charities address the problems of poverty, hunger, and homelessness? And if they can address these problems, why aren’t they doing so? And should government programs be dismantled before local charities have proven themselves?

The Vatican document is very critical of neoliberalism (or market fundamentalism), as espoused by Paul Ryan, Weigel, Hahn, and others. It supports government regulation as a means of controlling greed.

Over 90 percent of government assistance for lower-income people consists of Social Security, Medicare, Medicaid nursing-home care for seniors, school lunches, Head Start, preschool programs, environmental and financial regulations, Pell grants, and mortgage guarantees.

These are all losers in Paul Ryan’s budget. And who are the winners?

The winners are the dogs of greed and militarism. Ryan’s budget includes tax cuts for the wealthiest Americans and for corporations, cuts Medicare and Medicaid spending, and does little to get military spending under control.

We know what the Vatican would think of Paul Ryan’s budget. And there can be little doubt about what Jesus would think.

Yes, it’s time for a conversation about this.

Ayn Rand

George Dunn Is this the same Paul Ryan who has publicly expressed his admiration for Ayn Rand and her gospel of selfishness? Do you share Ryan’s admiration for this avowed foe of Christianity?

Doughlas Remy @George: Thanks for bring this up. It’s dynamite. The Ryan-Rand connection totally overshadows the Ryan-Jesus connection in every way. Jesus was obviously NOT an important part of Ryan’s moral development.

He says, “The reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand.” [um…not Jesus?]

For anyone not familiar with Rand, one of her central tenets is that financially successful people are inherently superior and that government should not redistribute any of their wealth to the poor, who are, I guess, inherently inferior. Jesus, of course, constantly exhorts his followers to aid the poor.

As one measure of how important Rand is to Ryan, he requires his staffers to read her novel “Atlas Shrugged.”

I read it myself many years ago and always thought of it as the antithesis of Jesus’s Sermon on the Mount.

Any thoughts, Gil?

Doughlas Remy I highly recommend the following article from The New Republic: “Ayn Rand and the Invincible Cult of Selfishness on the American Right.”

Raph Martin The 1%ers, it seems to me, don’t have a clue about people struggling to exist without food, shelter, a job, health care, survival, and basic ordinary needs. Add to their tampering with ecology and the rape of the earth for oil, natural gas, water rights in addition to its ongoing pollution by groups that only see dollar signs as a measure of progress and turn away from the basic needs of the billions of poor people living on this planet. Where’s the vision for a sustainable environment and society? Cutting expenditures to and from the needy poor as Ryan proposes we do- while mouthing Catholic social justice ethics under the rubric of “subsidiarity” shows how far he is from Jesus’ radical vision to “love one another.” Catholics need to be wary of the Paul Ryans of our society who align themselves with power politics, militarists, and the corporate world and then try to silence their critics-yes, even by quoting scripture and claiming Catholic theologians on their side. (Ayn Rand resurrected?) Let’s take a lesson from history: Many German Catholics, rather than critique their bishops when Hitler came to power, followed the lead of their bishops who didn’t see Nazism as a challenge to the Church. They chose to “save their souls” rather than “lose them” and showed Catholicism as aligned with the state rather than the gospel. It seems to me that once again Jesus’ message got lost in the transition.

Brian Graham I see no way to reconcile Ryan’s peculiarly self-serving views with Pope Benedict’s magnificent call to a profound cultural renewal based on charity, holistic understanding and “a new humanistic synthesis” in his encyclical Caritas in Veritate. I trust linking this article was meant to facilitate a robust discussion about the relationship between Catholic faith and politics, rather than an endorsement of this particular point of view. To me, Ryan’s comments suggest he has not given serious consideration to the Encyclical at all. He vainly attempts to build a Catholic argument to support his political views, but one has to completely overlook the encyclicals in order to get there. No thanks.

Doughlas Remy Religious leaders have slammed Ryan for using his Catholic faith to justify cutting programs that help the poor:

It’s the height of hypocrisy for Rep. Ryan to claim that his approach to the budget is shaped by Catholic teaching and values,” said Fr. John Baumann, S.J., founder of PICO National Network. […] “A central moral measure of any budget proposal is how it affects “the least of these” (Matthew 25). The needs of those who are hungry and homeless, without work or in poverty should come first.”

Read the full article here.

The Cornerstone Forum Ayn Rand? If only we could adjudicate the question of how to help those who cannot help themselves by critiquing a third-rate, crackpot, Libertarian novelist who has been read by a tiny fraction of one percent of our fellow citizens, even if one of these was Paul Ryan. Have you read Ayn Rand? Neither have I, for the same reasons you and hundreds of millions of others haven’t. How much more convenient it must be to go on and on about Ayn Rand than to face the realities with which Paul Ryan has been grappling for the last few years. Who wants to take a long hard look at the actual effect on the poor of the liberal programs designed to help them or the tsunami of debt that will soon bankrupt those programs? Ryan, to his credit, has tried to address these issues.

My point was – and is – that Paul Ryan has introduced into our political vocabulary arguably the most salient word in the lexicon of Catholic social teaching, and that this should be celebrated. To have an argument about what subsidiarity is and how it should work is a huge step in the right direction. I’m all for that argument, even though I have no special contribution to make to it. But to jump at the chance to pillory the man who is trying to incorporate the concept of subsidiarity into our political discourse because of his taste in literature hardly helps. The more we can argue about subsidiarity, the better.

The question – not the theological question, of course, which is a bigger question, but the public policy question – is how to empower those who stuck in poverty to become economically productive members of the middle class? When it comes to that challenge, getting one’s knickers all twisted about Ayn Rand is as useless as anything I can imagine. I haven’t read Paul Ryan’s budget proposals; I haven’t time to do so; it’s not what I’m called to do, but he’s actually trying to address some problems that won’t go away, and all he is getting for his efforts is carping from those who find it easier to criticize his proposals than to come up ones of their own.

“Subsidiarity respects personal dignity by recognizing in the person a subject who is always capable of giving something to others,” Benedict XVI wrote in Caritas in Veritate. “By considering reciprocity as the heart of what it is to be a human being, subsidiarity is the most effective antidote against any form of all-encompassing welfare state.” The pope insisted in that same encyclical that the effort to help the poor “is always designed to achieve their emancipation, because it fosters freedom and participation through assumption of responsibility.”

Here, then, are a few more terms we need: emancipation, freedom, participation and responsibility. My wife volunteers at a center for the homeless. When she hands someone in need a meal or clothes, both she and they recognize that an act of generosity has taken place, and both she and they feel grateful for having been present when it did. The principle of subsidiarity insists that not every exchange can take place on so personal a level, but that efforts should be made to have them take place at the most intimate and local level possible.

In my opinion, moreover, and in light of the manifest inadequacy and unsustainability of current entitlement programs, those whose responsibility it is to help the poor need to address things like the actual statistics about the effect on the poor of public policies which – despite the good intentions of their advocates – incentivize the disintegration of the family – from which flows almost all the intractable social, moral, economic, and political problems of our society. We need to take a long, hard look at the social science data on the correlation between second or third generation welfare dependency and high school drop out rates, substance abuse, delinquency, criminality, out of wedlock births, the paucity of employable skills, and so on. Most of the kneejerk reaction to real efforts to do something that both works and that our currently bankrupt society can actually afford seems to assume that there is nothing wrong with the status quo that can’t be fixed by throwing more money at it – someone else’s money. Tragically, that is not so. It has failed many of those it was intended to help, and if nothing is done to change their plight, they will suffer further degradation when the money runs out, as it soon will. Serious adults are trying to find a better approach. It’s not as if the looming collapse of the European social welfare state isn’t providing a glimpse of where things are headed if we fail to find more workable solutions.

All this is just a little PS. Greetings to any who might want to keep at it, but I’m finished.

George Dunn Ryan’s affiliation with the Ayn Rand cult is merely a matter of his “taste in literature”? Would you regard it as equally trivial if he expressed the same deep admiration for Friedrich Nietzsche or credited Nietzsche as the inspiration for his entry into politics? Surely Rand’s rabid hatred for the Christian virtues exceeds anything found in Nietzsche, whose critique of Christianity was nuanced and qualified. Don’t you see that? Oh, that’s right. You haven’t read her! Well, as someone who has, I can assure you that her philosophy is vile in ways that must turn the stomach of anyone who loves the gospel. Read her yourself, Gil, and see what I mean. Then think about the fact that her “philosophy” is the real inspiration for the economic programs you so naively laud.

(more…)

White House Wasn’t Aware Top Economists Had Predicted our Current Crisis

December 9, 2011

White House Press Secretary Jay Carney

White House Press Secretary Jay Carney’s assertion today that no major economists in early 2009 predicted how bad the recession would be is breathtaking:

There was not a single mainstream, Wall Street, academic economist who knew at the time in January 2009, just how deep the economic hole was that we were in.

Even I, a Liberal Arts graduate with absolutely no background in economics nor any experience in government, knew that such predictions were being made. In fact, I was acutely aware of them. I read the New York Times, where Nobel Laureate and Harvard Economics Professor Paul Krugman has been beating the drums about this for years. How could Obama’s administration have ignored the warnings from other top economists like Joseph Stiglitz, also a Nobel Laureate and professor at Columbia University!

Here is a partial list of major economists who have been predicting our current crisis for years:

  • Paul Krugman, Nobel Laureate, Professor at Harvard University
  • Joseph Stiglitz, Nobel Laureate, Professor at Columbia University
  • Nouriel Roubini, Economist, Professor at NYU
  • Douglas Elmendorf, director of the Congressional Budget Office
  • Martin Feldstein, Harvard Professor and former economic advisor to President Ronald Reagan
  • Marc Faber, investment analyst
  • James Galbraith, former executive director of the Joint Economic Committee
  • Mark Zandi, Chief Economist at Moody’s Analytics
  • Dean Baker, Co-Director of the Center for Economic Policy and Research
  • Robert Reich, former Labor Secretary under President Clinton
  • Approximately 80 economists interviewed for a January 2009 survey conducted by the National Association for Business Economics

Has the White House been so captive to trickle-down ideologues that it could not see outside their bubble all these years? Jay Carney—or the President himself—may have some explaining to do.

Understanding the Euro Crisis

November 14, 2011

Economist Paul Krugman makes sense of events unfolding in the Eurozone.

Update 12/2/11 (“Killing the Euro,” New York Times) here.