Monday, January 31, 2011

The Great Stagnation

Here is a good article by Tyler Cowen, an economist at George Mason University, who offers a potential explanation for our median income slowdown since the 1970s that I often talk about in my income inequality posts.

I agree that a big problem we have now is that people keep trying to live beyond their means (for example, by taking out more and more loans to buy bigger and bigger houses without the income to do so). Then the government feels pressure to spend in order to keep the economy growing. Maybe we aren't growing because we lack the technological advances necessary to do so and maybe we will have to deal with that fact by living within our means and not expecting a (much) higher standard of living than our parents.

For more on the topic:
Median-itis by Tyler Cowen
Econlog Reponse
Krugman's Kitchen

Preferential Option for the Poor(est)

A major theme in Catholic Social Teaching is the preferential option the poor. In its simplest this means giving of one's time, talent, and treasure to those with the greatest and most basic human needs. Usually this means the hungry, homeless, and ill members of our society. Most often people picture the citizens of Africa, Central America, or Southeast Asia. One can certainly find the hungry, homeless, and ill prevalent in these places, but our Bishops remind us constantly that the poorest, most defenseless members of our society are also in our own society. They are the unborn:
Abortion and euthanasia have become preeminent threats to human dignity because they directly attack life itself, the most fundamental human good and the condition for all others. They are committed against those who are weakest and most defenseless, those who are genuinely "the poorest of the poor." -- U.S. Bishops, Living the Gospel of Life

Our desire to help the poor should culminate in the eradication of abortion and euthanasia from our society. None of the poor should be neglected, but the poorest must come first. Any violation against the most primary right to life must command our attention before all other violations.

This means more than policy changes. We must reach out to our neighbors and establish relationships with each other. The poor must be given proper care and just means of subsistence to not feel as though abortion is the only option. The greatest contributor to abortion, sexual immorality, must be fought with charity, education, and justice.
Laws which authorize and promote abortion and euthanasia are therefore radically opposed not only to the good of the individual but also to the common good; as such they are completely lacking in authentic juridical validity. Disregard for the right to life, precisely because it leads to the killing of the person whom society exists to serve, is what most directly conflicts with the possibility of achieving the common good. Consequently, a civil law authorizing abortion or euthanasia ceases by that very fact to be a true, morally binding civil law." -- John Paul II, The Gospel of Life, emphasis added

Thursday, January 27, 2011

Republicans and Healthcare

I believe this to be a good post from Vox Nova, a Catholic blog. It is not official Church teaching, but it is certainly something to consider.

What's wrong with Republican healthcare plans?

Questions about the Dollar and Debt

A reader asked after reading "Paul Ryan and Bankruptcy":

1) What would happen to the dollar if other countries stopped using it as "the global reserve currency"? and...

2) What would happen if China decided to stop buying our debt (treasury securities)?

Okay, so I am studying to be an economist with (eventually and hopefully) an expertise in Catholic Social Teaching. I am at a school that specializes in Heterodox (outside of the mainstream) economics and most especially its money theory.

Their theory of money, however, isn't as much a theory as much as it is a description of the way that money functions. Don't just take my word for it, read for yourself.

It springs from the Chartalism of Knapp, Innes, Lerner, Minsky, and more recently Wray, Kelton, and Mosler. It has become known as Modern Money Theory even though it’s not a theory at all. It is also more appropriately called Functional Finance.

It is not without criticisms, but I urge you to tackle the issue for yourself to see what you think and remember to not just think according to tradition. Don't get caught in the trap of continuing on old adages from the gold standard or comparing our monetary system to Europe because they are not the same. This "theory" only applies to nations who are sovereign in their own currency. That is they control the power to create it, destroy it, and demand it in taxes. Part of the disconnect with the mainstream is because they fall into these traps.

So to answer the questions as best I can:

1) If all the nations dropped the dollar as their reserve currency in favor of another, say the Chinese "Yuan," what would happen? As of right now, some countries use the US dollar as their official currency, some peg their currency to the dollar, and the rest float or peg to another currency. Those that peg to ours or use ours have no control over their currency. They rely on their ability to obtain US dollars by selling us their goods or exchanging another currency in an international exchange market. Other countries hold dollars in order to buy American goods, have them in reserve to exchange for other currencies, or may decide to hold dollars as a store of wealth in times of uncertainty. Note that holding dollars means having an account at the Federal Reserve Bank of the United States. All of their dollars are "stored" in a computer balance sheet at the bank. They don't actually hold the paper currency.

If these countries, for whatever reason but let’s say because of our deficits, decide to abandon the dollar they would flood the international market with the dollar. They would try to exchange it for their own currencies or another currency, say the Yuan, which would cause the price of the dollar to drop relative to other currencies. What does that mean? All else equal, US goods are now cheaper relative to other nations' goods than they were. The large trade imbalance would move back toward equilibrium and may even cause an export boom. That is, imports would drop and exports would rise. This also means inflation of the dollar domestically. Our savings and our debt would decrease in value, all else equal.

Is it really a concern? I would say not in the foreseeable future and here's why: The U.S. is a major buyer of these countries' goods, especially China. If they dumped our dollars, they would hurt their own economies where it mattered most: their exporting sectors. Most nations WANT dollars because that means they are selling goods to the US which means more income and jobs at home. China especially. The world is largely tied to the success of the United States economy. Developing nations bounced back much more quickly from the most recent recession because they didn't put themselves in the same financial mess that we did.

2) I think a question to ask first is, why do we sell securities in the first place?

The United States never has nor doesn't have any dollars. It is all a matter of book keeping at the Federal Reserve Bank. When it spends, its own balance sheet is deducted from and a business's is added onto. They change the numbers on a computer. They same goes for paying with cash or check, they just change numbers at the Federal Reserve Bank, we all have an account there. When the government taxes us it takes away our money from the account. Taxes deduct our spending power, government spending adds to it. So deficits are a matter of adding spending power to our economy.

So what about treasury securities, or bonds? A U.S. Treasury security is a savings account at the Federal Reserve bank. Dollars from your checking account are deducted and added to the government's account. At a later date, the government sends back the money plus interest. So, essentially, buying securities is transferring money from checking accounts to savings accounts.

So the foreign nations who buy our debt are simply taking the dollars they make selling us goods and buy securities with them transferring their dollar holdings from checking to saving in order to earn interest.

Remember, the US doesn't tax to raise revenue because it doesn't have or not have any money. Taxes simply take away our purchasing power. They regulate the value of the dollar and the purchasing power of the individuals in our economy. Securities are sold for the same reason. They deduct our purchasing power for a time so that the government can spend without over-inflating the economy. Interest payments are simply the transfer of savings to checking accounts. They "inflate" the economy, assuming it’s subsequently spent. Lack of spending deflates the economy.

So China can either keep the dollars they receive from selling us their goods in checking accounts or buy securities and earn interest on them. If they don't but the securities (our debt) then they don't earn interest. They might also choose to buy things with them but can only buy things for sale in US Dollars.

At the moment, inflation is not something to worry about. Rather, deflation is a much greater concern, as is the really high unemployment rate. Spending is what is needed. That does not mean it has to come from the government. Choosing the right size of government is independent of this "theory". As a nation, we should decide how much government we want in terms of defense, infrastructure, education, social assistance, etc. and then tax so that spending is enough to buy our output. Taxes should adjust in times of recession and growth, not government spending.

I hope this answers your questions. Please check out these vital resources for understanding how our nation's sovereign fiat monetary system works!!:

Warren Mosler's Seven Deadly Innocent Frauds
L. Randall Wray's Understanding Modern Money

Don't be fooled! We cannot go bankrupt! and we are not like European nations or even individual households! Too high deficits make their impact in inflation and exchange rates, which reduces the price of our goods relative to other nations' goods which boosts our economy's exports.

UPDATE: If you read this from the WSJ blog and think Modern Money is wrong, the key is that Congress voluntarily set a debt limit and can only voluntarily default on its debt. With control over its own currency it would be absolutely absurd to do such a thing.

Wednesday, January 26, 2011

The Pope on the Catholic blogosphere

Pope Benedict XVI told the blogosphere and online users on Monday to adopt a more "Christian-style presence" online.

Here is a nice quote from the Pope:

"There exists a Christian way of communication which is honest and open, responsible and respectful of others," he wrote. "To proclaim the Gospel through the new media means not only to insert expressly religious content into different media platforms, but also to witness consistently, in one's own digital profile and in the way one communicates choices, preference and judgments that are fully consistent with the Gospel."

The full article can be found here.

Paul Ryan and Bankruptcy

Paul Ryan delivered the Republican response to President Obama's State of the Union speech last night. In it he called for drastic cuts in government deficits.

He also condemned Obama's healthcare policy with this exact phrase:

"Health care spending is driving the explosive growth of our debt. And the President’s law is accelerating our country toward bankruptcy."

Later he compared the U.S. to Greece and Ireland, two European nations who have recently made austerity measures because of debt-related currency crises. Here are his exact words:

"Just take a look at what’s happening to Greece, Ireland, the United Kingdom and other nations in Europe. They didn’t act soon enough; and now their governments have been forced to impose painful austerity measures: large benefit cuts to seniors and huge tax increases on everybody."

"Their day of reckoning has arrived. Ours is around the corner. That is why we must act now."

Whether you are in agreement with Ryan and the Republicans ideologically or not, The United States CANNOT go bankrupt and is NOT LIKE Ireland or Greece.

The U.S. controls its own currency, it is completely sovereign in its currency, the dollar. We issue debt securities by choice! not because we have to! The U.S. can print money or, more accurately, change numbers in bank accounts to pay back any debt it may have accrued to you, me, a business, or even China! NO amount of debt or deficits can cause the US to go bankrupt. (Again read Myths about the Deficit for the consequences of deficits.)

How are we not like Ireland or Greece? They do not have control over their own currencies. They voluntarily gave it up to join the EU. The European central bank now controls their currencies. Ireland and Greece CAN go bankrupt because they can't change numbers in bank accounts to pay back debt. They must issue debt securities to obtain more Euros.

So whether you are for or against higher deficits or more government spending, remember: the U.S. cannot go bankrupt and is not like European nations who voluntarily gave up their currency sovereignty.

Monday, January 24, 2011

Two excellent posts from Vox Nova

On loving others, including enemies:

"The only word for love is everybody’s name..."

On the proper role of subsidiarity as a means to achieving the common good:

"The Abuse that comes from Subsidiarity Alone"

Stimulus and State Budgets

A big problem with federal stimulus spending is its inefficiency. It is terribly slow in being spent and is often spent in unhelpful ways (such as unnecessary, unproductive jobs or construction projects that are less helpful than education, police, and fire department spending). Note: This is certainly debatable, the main point is that government spending is often less effective and efficient than private spending because of incentives and bureaucracy.

But consumers (the "private" sector) won't spend, mainly because they don't have jobs and are deleveraging, or paying down the debts they incurred in the build up to 2008. So in order to push the downward cycle the other way, the government has to spend and create jobs.

State governments are currently up against the wall with their budgets. They don't have the flexibility with deficits that the federal level has because they don't have control over the currency. So why not give the money to the States? They will certainly spend it more quickly and efficiently. It will likely go to needed areas to prevent cuts and not to add additional spending. This will enable policemen, teachers, firefighters, and other government workers to keep their jobs and prevent a rise in crime rate or a drop in education quality which further depress our economy.

From a Catholic Social Teaching perspective, this would be an excellent application of the "subsidiary function." The Federal government would allow the lower institution to do its job by providing it with the necessary funds. Once tax revenues kick back up, then the Federal government can pull out its funding and the States can resume independent financial operations. There is no federal take over or increase in big government. Stimulus funds will do what they should, prop up the economy until the private sector can lead the charge again.

For more read "The Real Job Killers? State Budget Crises"

For those concerned about deficits read:
Myths about the Deficit, Part 1
Myths about the Deficit, Part 2
Seven Deadly Innocent Frauds
Keep the Deficit, Ditch the Doves

Friday, January 21, 2011

Human Rights

Here is a list of Church endorsed human rights given by John Paul II in his "Address to the 34th General Assembly of the United Nations" given back in 1979.

1) the right to life, liberty and security of the person;
2) the right to food, clothing, housing, sufficient health care, rest, and leisure;
3) the right to freedom of expression, education and culture;
4) the right to freedom of thought, conscience and religion;
5) the right to manifest one’s religion either individually or in community, in public or in private;
6) the right to choose a state of life, to found a family and to enjoy all conditions necessary for family life;
7) the right to property and work, to adequate working conditions and a just wage;
8) the right of assembly and association;
9) the right to freedom of movement, to internal and external migration;
10) the right to nationality and residence;
11) the right to political participation and
12) the right to participate in the free choice of the political system of the people to which one belongs


The Pope on Health Care

This piece is from Kevin Clarke, a writer for U.S. Catholic. It is an article on the Pope's comments on health care and the Tea Party movement that many Catholics have followed. It may also be an opinion piece, because it is laden with "opinion-like" comments, but I'll let you interpret as you like.

[UPDATE: The comments come from the 25th International Conference of the Pontifical Council for Health Care Ministry at the Vatican Nov. 18-19. Here is a more official story.]

Wednesday, January 19, 2011

Spending Cut Difficulties

"GOP Spending Cuts would affect millions of people"

Reason for continued high unemployment?

"Is Decline in worker's power behind slow job growth?"

President Obama on Regulation

This is a well written piece from our President that I think both sides can get behind.

For two centuries, America's free market has not only been the source of dazzling ideas and path-breaking products, it has also been the greatest force for prosperity the world has ever known. That vibrant entrepreneurialism is the key to our continued global leadership and the success of our people.

But throughout our history, one of the reasons the free market has worked is that we have sought the proper balance. We have preserved freedom of commerce while applying those rules and regulations necessary to protect the public against threats to our health and safety and to safeguard people and businesses from abuse.

From child labor laws to the Clean Air Act to our most recent strictures against hidden fees and penalties by credit card companies, we have, from time to time, embraced common sense rules of the road that strengthen our country without unduly interfering with the pursuit of progress and the growth of our economy.

Sometimes, those rules have gotten out of balance, placing unreasonable burdens on business—burdens that have stifled innovation and have had a chilling effect on growth and jobs. At other times, we have failed to meet our basic responsibility to protect the public interest, leading to disastrous consequences. Such was the case in the run-up to the financial crisis from which we are still recovering. There, a lack of proper oversight and transparency nearly led to the collapse of the financial markets and a full-scale Depression.

Over the past two years, the goal of my administration has been to strike the right balance. And today, I am signing an executive order that makes clear that this is the operating principle of our government.

This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive. It's a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades.

Where necessary, we won't shy away from addressing obvious gaps: new safety rules for infant formula; procedures to stop preventable infections in hospitals; efforts to target chronic violators of workplace safety laws. But we are also making it our mission to root out regulations that conflict, that are not worth the cost, or that are just plain dumb.

For instance, the FDA has long considered saccharin, the artificial sweetener, safe for people to consume. Yet for years, the EPA made companies treat saccharin like other dangerous chemicals. Well, if it goes in your coffee, it is not hazardous waste. The EPA wisely eliminated this rule last month.

But creating a 21st-century regulatory system is about more than which rules to add and which rules to subtract. As the executive order I am signing makes clear, we are seeking more affordable, less intrusive means to achieve the same ends—giving careful consideration to benefits and costs. This means writing rules with more input from experts, businesses and ordinary citizens. It means using disclosure as a tool to inform consumers of their choices, rather than restricting those choices. And it means making sure the government does more of its work online, just like companies are doing.

We're also getting rid of absurd and unnecessary paperwork requirements that waste time and money. We're looking at the system as a whole to make sure we avoid excessive, inconsistent and redundant regulation. And finally, today I am directing federal agencies to do more to account for—and reduce—the burdens regulations may place on small businesses. Small firms drive growth and create most new jobs in this country. We need to make sure nothing stands in their way.

One important example of this overall approach is the fuel-economy standards for cars and trucks. When I took office, the country faced years of litigation and confusion because of conflicting rules set by Congress, federal regulators and states.

The EPA and the Department of Transportation worked with auto makers, labor unions, states like California, and environmental advocates this past spring to turn a tangle of rules into one aggressive new standard. It was a victory for car companies that wanted regulatory certainty; for consumers who will pay less at the pump; for our security, as we save 1.8 billion barrels of oil; and for the environment as we reduce pollution. Another example: Tomorrow the FDA will lay out a new effort to improve the process for approving medical devices, to keep patients safer while getting innovative and life-saving products to market faster.

Despite a lot of heated rhetoric, our efforts over the past two years to modernize our regulations have led to smarter—and in some cases tougher—rules to protect our health, safety and environment. Yet according to current estimates of their economic impact, the benefits of these regulations exceed their costs by billions of dollars.
This is the lesson of our history: Our economy is not a zero-sum game. Regulations do have costs; often, as a country, we have to make tough decisions about whether those costs are necessary. But what is clear is that we can strike the right balance. We can make our economy stronger and more competitive, while meeting our fundamental responsibilities to one another.

--President Obama

Tuesday, January 18, 2011

Why GDP?

Economists often use GDP or Gross Domestic Product to evaluate the economy's wellness. It is a measure of the output(in terms of goods--cars, houses, furniture, etc.-- and services--haircuts, oil changes, etc.) of the nation or area being evaluated.

Economic wellness is often an indication of the overall well-being of a nation or area. So GDP is a rough measure of overall well-being, but is certainly very limited. For example, the income obtained from the output produced may be going only to a select few individuals creating a highly stratified society where the top live well but the bottom do not. GDP may be doing well, but it isn't spread out over the entire population. In these instances, it is not even enough to look at GDP per capita because it is not equitably shared.

Over the past few decades there has been an increase in perceived economic wellness and standard of living because of the increases in indicators like GDP. But wages for the bottom half of our population haven't grown at all in over 30 years. All the gains made in income have gone to the top.

Change in real hourly wages for Men from 1973-2004

Number in poverty and poverty rate 1959-2009

True economic and social progress cannot occur without equitable and fair distribution of wealth. Until that happens, GDP doesn't matter.

From the Compendium of the Social Doctrine of the Church:

The economic well-being of a country is not measured exclusively by the quantity of goods it produces but also by taking into account the manner in which they are produced and the level of equity in the distribution of income, which should allow everyone access to what is necessary for their personal development and perfection. An equitable distribution of income is to be sought on the basis of criteria not merely of commutative justice but also of social justice that is, considering, beyond the objective value of the work rendered, the human dignity of the subjects who perform it.

Authentic economic well-being is pursued also by means of suitable social policies for the redistribution of income which, taking general conditions into account, look at merit as well as at the need of each citizen.

Monday, January 17, 2011

State Intervention and Individual Freedom

The proper role of government from Mater et Magistra:

And in this work of directing, stimulating, co-ordinating, supplying and integrating, its guiding principle must be the "principle of subsidiary function" formulated by Pius XI in Quadragesimo Anno. "This is a fundamental principle of social philosophy, unshaken and unchangeable. . . Just as it is wrong to withdraw from the individual and commit to a community what private enterprise and industry can accomplish, so too it is an injustice, a grave evil and a disturbance of right order, for a larger and higher association to arrogate to itself functions which can be performed efficiently by smaller and lower societies. Of its very nature the true aim of all social activity should be to help members of the social body, but never to destroy or absorb them."

The present advance in scientific knowledge and productive technology clearly puts it within the power of the public authority to a much greater degree than ever before to reduce imbalances which may exist between different branches of the economy or between different regions within the same country or even between the different peoples of the world. It also puts into the hands of public authority a greater means for limiting fluctuations in the economy and for providing effective measures to prevent the recurrence of mass unemployment. Hence the insistent demands on those in authority—since they are responsible for the common good—to increase the degree and scope of their activities in the economic sphere, and to devise ways and means and set the necessary machinery in motion for the attainment of this end.

But however extensive and far-reaching the influence of the State on the economy may be, it must never be exerted to the extent of depriving the individual citizen of his freedom of action. It must rather augment his freedom while effectively guaranteeing the protection of his essential personal rights. Among these is a man's right and duty to be primarily responsible for his own upkeep and that of his family. Hence every economic system must permit and facilitate the free development of productive activity.

Moreover, as history itself testifies with ever-increasing clarity, there can be no such thing as a well-ordered and prosperous society unless individual citizens and the State co-operate in the economy. Both sides must work together in harmony, and their respective efforts must be proportioned to the needs of the common good in the prevailing circumstances and conditions of human life.

Experience has shown that where personal initiative is lacking, political tyranny ensues and, in addition, economic stagnation in the production of a wide range of consumer goods and of services of the material and spiritual order—those, namely, which are in a great measure dependent upon the exercise and stimulus of individual creative talent.

Where, on the other hand, the good offices of the State are lacking or deficient, incurable disorder ensues: in particular, the unscrupulous exploitation of the weak by the strong. For men of this stamp are always in evidence, and, like cockle among the wheat, thrive in every land.

--John XXIII

Saturday, January 15, 2011


Immigration remains a contested issue in our political debate, even though it has largely taken a backseat to the economy and healthcare, and is one that I think deserves more attention.

Conservatives remain staunchly against immigration calling for greater security and enforcement at the borders, deportation of illegal immigrants, and tighter restrictions on legal immigrants. Democrats generally fight for immigrants' rights, greater numbers of legal immigrants, and even amnesty to illegal immigrants already living and working within the nation.

As is usually the case, both sides have good arguments and bad ones. Republicans often cite the dangers of lax security at the borders and the costs of providing for illegal immigrants. Democrats instead argue for amnesty because of the economic support they bring, and also for keeping families together.

I am currently assisting on a project that is researching the economic impact of illegal immigrants in Missouri and Kansas. We hope to find the net impact of added income and consumption effects as well as added health and education cost effects.

But what's really important in the immigration debate? As always the protection of all human dignity is of the utmost importance. Most immigrants migrate in order to provide for their families. Some are looking for a better place to live free from oppression. Some simply wish to be reunited with their family. Deportation does not safeguard their human dignity. Separating families does not safeguard their dignity. Denying them access to food, shelter, a job, necessary health care, and education no matter their legality does not safeguard their dignity.

Here are excerpts from the doctrine of Catholic Social Teaching on the matter:

In dealing with the family the Supreme Pontiff affirmed that the private ownership of material goods has a great part to play in promoting the welfare of family life. It "secures for the father of a family the healthy liberty he needs in order to fulfill the duties assigned him by the Creator regarding the physical, spiritual and religious welfare of the family." It is in this that the right of families to migrate is rooted. And so Our Predecessor, in speaking of migration, admonished both parties involved, namely the country of departure and the country receiving the newcomers, to seek always "to eliminate as far as possible all obstacles to the birth and growth of real confidence" between the nations. In this way both will contribute to, and share in, the increased welfare of man and the progress of culture. --John XXIII, Mater et Magistra

Again, every human being has the right to freedom of movement and of residence within the confines of his own State. When there are just reasons in favor of it, he must be permitted to emigrate to other countries and take up residence there.(22) The fact that he is a citizen of a particular State does not deprive him of membership in the human family, nor of citizenship in that universal society, the common, world-wide fellowship of men. -- John XXIII, Pacem in Terris

When workers come from another country or district and contribute to the economic advancement of a nation or region by their labor, all discrimination as regards wages and working conditions must be carefully avoided. All the people, moreover, above all the public authorities, must treat them not as mere tools of production but as persons, and must help them to bring their families to live with them and to provide themselves with a decent dwelling; they must also see to it that these workers are incorporated into the social life of the country or region that receives them. Employment opportunities, however, should be created in their own areas as far as possible. -- Paul VI, Gaudium et Spes

It should be added that certain kinds of demands often call for a response which is not simply material but which is capable of perceiving the deeper human need. One thinks of the condition of refugees, immigrants, the elderly, the sick, and all those in circumstances which call for assistance, such as drug abusers: all these people can be helped effectively only by those who offer them genuine fraternal support, in addition to the necessary care. -- John Paul II, Centesimus Annus

Another aspect of integral human development that is worthy of attention is the phenomenon of migration. This is a striking phenomenon because of the sheer numbers of people involved, the social, economic, political, cultural and religious problems it raises, and the dramatic challenges it poses to nations and the international community. We can say that we are facing a social phenomenon of epoch-making proportions that requires bold, forward-looking policies of international cooperation if it is to be handled effectively. Such policies should set out from close collaboration between the migrants' countries of origin and their countries of destination; it should be accompanied by adequate international norms able to coordinate different legislative systems with a view to safeguarding the needs and rights of individual migrants and their families, and at the same time, those of the host countries.

No country can be expected to address today's problems of migration by itself. We are all witnesses of the burden of suffering, the dislocation and the aspirations that accompany the flow of migrants. The phenomenon, as everyone knows, is difficult to manage; but there is no doubt that foreign workers, despite any difficulties concerning integration, make a significant contribution to the economic development of the host country through their labour, besides that which they make to their country of origin through the money they send home. Obviously, these labourers cannot be considered as a commodity or a mere workforce. They must not, therefore, be treated like any other factor of production. Every migrant is a human person who, as such, possesses fundamental, inalienable rights that must be respected by everyone and in every circumstance. -- Pope Benedict XVI, Caritas in Veritate

Fixing immigration policy is no easy task, but it shouldn't be so difficult to reach out to and embrace our fellow man no matter their citizenship status. It is something we all can do.

[emphasis added by me]

Thursday, January 13, 2011

Economics and Morality

Many, in fact most, economists believe that economics, or more specifically the market, is not a morality play. It is simply a place where buyers and sellers exchange commodities. Yet, our actions within the market are moral actions that have consequences for us and for our neighbors. The market itself may not be good or evil, but the players that create the market are acting morally or immorally. For example, you may say that the market for prostitution is not immoral, but the action of buying and selling prostitution is immoral, therefore making the very existence of such a market immoral.

Catholic Social Teaching tells us that our economic actions are moral actions. All our actions should be ordered to our final end, God. They are not, as some argue, outside of moral judgment. Buying nice things for oneself while ignoring the hunger of your neighbor is under the scope of moral judgment. The question you have to ask yourself is: Is what I am buying and selling helping me and my neighbors to attain our final end?

Pope Pius XI on the matter:

Even though economics and moral science employs each its own principles in its own sphere, it is, nevertheless, an error to say that the economic and moral orders are so distinct from and alien to each other that the former depends in no way on the latter. Certainly the laws of economics, as they are termed, being based on the very nature of material things and on the capacities of the human body and mind, determine the limits of what productive human effort cannot, and of what it can attain in the economic field and by what means. Yet it is reason itself that clearly shows, on the basis of the individual and social nature of things and of men, the purpose which God ordained for all economic life.

If we faithfully observe [moral] law, then it will follow that the particular purposes, both individual and social, that are sought in the economic field will fall in their proper place in the universal order of purposes, and we, in ascending through them, as it were by steps, shall attain the final end of all things, that is God, to Himself and to us, the supreme inexhaustible Good.

--Quadragesimo Anno, Pope Pius XI, 1931

Eliminationist Rhetoric

A well-known economist and democrat, Paul Krugman, recently wrote an op-ed for the NY Times citing the increase in eliminationist rhetoric over the past few years. His main point was that politicians and the media should be careful about what metaphors they choose to use when talking about the opponent.

Some think that the recent shooting in Arizona is a product of this eliminationist rhetoric. The gunman was clearly not well mentally which I'm sure contributed greatly to this act of violence, but it was also clear that the act was charged with political idealism. His "ideals" were certainly crazy but they led to his attack on a politician who didn't share those same views.

I commented on this topic (found here and here) not long ago calling for a turning away from 'ad hominem' attacks on political opponents because of the division and alienation that they cause. Eventually, they can also cause acts of violence if the persons that hear it lack moral restraint or mental wherewithal to understand that they are mere metaphors.

Unlike Krugman, I don't think that either side is more guilty of this rhetoric than the other. It certainly appears that Republicans use it more often in the current state of things because they are on the outside looking in from a control of Congress and the Presidency standpoint. Both sides are guilty of using violent metaphors, calling each other evil, and condemning each other to hell. None of it is helpful. Most of it causes alienation. All of it is potentially dangerous because it may cause more violent attacks such as the one in Arizona.

I agree with Greg Mankiw, another famous economist who commented on Krugman's piece, that the act of violence should be condemned and not the metaphors, but Mankiw should realize that we are responsible for the things that we do and say and if that causes others to act irresponsibly shouldn't we restrain ourselves and think twice about what we're doing and saying?

If you want to make a difference, and want to persuade people to your point of view, reach out to them, engage them in conversations, use reason, and let them know that they are always your brother or sister no matter what their sins or opinions may be.

Tuesday, January 11, 2011

Sanctifying our Work

A reflection from In Conversation with God by Francis Fernandez

It is in the midst of our work, of our ordinary occupations, that Jesus invites us to follow him, so as to make him the center of our very existence and serve him in the task of evangelizing the world.

He chooses us where we are, and leaves us - the majority of Christians, lay people, - just where we were: in our family, in our own job, in the cultural or sports association that we belong that in the very environment in which we are found we should love Him and make Him known through family ties, through relationships at work and among friends.

We must ask ourselves whether we are consistent with what it means to turn our work into a vehicle for growing in friendship with Jesus Christ, through developing our human and supernatural virtues in it.

In order to sanctify ourselves through our housework, in the office, the lecture room, driving a tractor, cleaning up a mess, or preparing dinner...our work has to be like that of the Christ.

We must fix all our attention on the Son of God made Man as he works, and ask ourselves very often, what would Jesus do in my place? How would he do my work?

All of this means working with a spirit of service towards our neighbors, with order, serenity, and intensity of concentration.

No Christian can ever think that although his work is apparently of little importance - as some might imply with their contemptuous or supercilious attitude to it - he can do it in any old way. God sees the work, and it has an importance that we cannot even suspect.

You asked what you could offer the Lord. I don't have to think twice about the answer; offer the same things as before, but do them better, finishing them off with a loving touch that will lead you to think more about him and less about yourself. -- St. J. Escriva, Furrow, 295