Monday, January 23, 2012

Preferential Option for the Poor(est)

A few weeks ago I went to a presentation at a group called the "Community of Reason" held on Sunday afternoons at UMKC. The main presenter was a 'pastor' (not sure of her credentials, i.e., which denomination) from St. Louis who ran a pro-abortion, or from their point of view a pro-women's rights, clinic that offered support to pregnant women considering abortion but concerned about their faith. I went to get an idea of what 'the other side' thought about abortion. In particular, I wanted to see what they thought about human rights and just when they thought human life began. I don't feel I got a clear answer from the group, but they felt attacked when I brought it up peacefully and told me that we pro-lifers frame the issue as a human rights/human nature issue and that they don't see it that way. I believe their main concern was for women's reproductive 'rights' and the abuse of women by men who take away her 'right to choose'. They also were concerned about legal rights and legal issues from a practicality standpoint (e.g. if a fetus has rights then can we prosecute women who drink alcohol or even accidentally 'mistreat' the womb somehow).

I think the biggest thing I took away from the presentation was how attacked she (the pastor) felt she and other women were by pro-lifers. She felt the pro-life community were verbally attacking women considering abortion through staged protests of Planned Parenthood. That the pro-life community was engaged in terrorism or warfare.

I don't believe these sort of actions are true of all pro-lifers, but it is something we should be conscious of. Conversions of heart or mind will not happen if we make those we wish to convert an enemy and treat them as such. Abortion is a very emotionally-charged subject, but we need to remember that charity will prevail. Ostracizing or alienating the other side in whatever the debate may be over is never an effective means of conversion.

The preferential option for the poor is a main principle of Catholic Social teaching which is based on Jesus's teaching in the Gospel of Matthew 25:31-46: '...whatever you did for one of these least brothers of mine, you did for me.’

The poorest in our society are those without the basic necessities of a good life, material and immaterial, and though we usually think of the homeless and hungry in Africa, we must not forget the unloved more locally, including the unborn.

I wrote this piece last year after the March for Life:

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.

Friday, January 20, 2012

Blood in the Streets

What Europe is doing to its own people is insane and senseless and its all completely unnecessary.

When the EU nations formed a currency union they gave up the right to be the issuer of their own currency. They thought it would unify Europe (not a bad motive) and provide for a strong currency and robust economy. What they did was send themselves back to the gold standard days leading up to the Great Depression, by greatly restricting their fiscal and monetary policy options by foregoing their right to issue their own currency.

They made themselves like Kansas or Missouri. They couldn't issue 'Marks' (Germany) or 'Drachmas' (Greece) anymore, they had to collect Euros, either by taxing their people or borrowing them from banks.

When the crisis hit, overall spending dropped which then reduced tax revenues. Greece could no longer meets its obligations, it had to borrow. Interest rates on bonds went up making borrowing more costly. With very high interest rates Greece couldn't raise the funds through borrowing to meet its obligations and if it tries to raise more tax revenue it will only further the downward spiral by reducing spending even more. The only option left is to abandon the Euro.

However, the European Central Bank (controlled largely by Germany and France) has been stepping in to 'write the check', that is, lend funds at really low interest rates to Greece so it can meet its obligations, but with the stipulation that Greece 'balance its budget' or move to austerity. For some reason, they don't realize that doing so only contracts the economy further. This cycle has been going on for some time now and its leaving a most horrifying scenario for Greece and other nations on the Euro such as Italy, Portugal, Ireland, and Spain: "Children abandoned by Greek parents as cuts also sees country running out of medicine".

I did not coin this phrase, and can't remember where I heard it, but Greece and these other nations are heading for a 'Blood in the Streets' scenario so long as the ECB keeps writing the check but insisting on austerity. Things will get worse until the people revolt violently.

The U.S. will end up like Greece if we try to balance the budget. We will not end up like Greece if we spend more than we take it, because our government is the issuer of the currency. It is not a household or a state or member of the EU or nation on a gold standard which are users of currency. The message should be clear, but many are confounding it because they misunderstand the nature of 'modern money' (money without fixed exchange rates or gold standards).

If you hear that the U.S. must not spend beyond its means just like a household can't spend beyond its means, ask yourself, "just how exactly is the government like a household?".

Monday, January 16, 2012


I have argued for a Job Guarantee (or Employer of Last Resort) program here on this blog in the past and one of the arguments against such a program is finding useful jobs that aren't just "make-work" jobs (digging ditches is generally the example used). One of my professors who specializes in Economic History and the History of Economic Thought (yes they are different) recently wrote a post on the Works Progress Administration (WPA), a government funded program to employ the unemployed during the Great Depression. You can read the full post here.

Here are some highlights:
In the current debates surrounding various job guarantee programs (in association with the Chartalist or Modern Money perspectives), it might prove helpful to review some aspects of the Works Progress Administration (renamed in 1939 as Work Projects Administration). While the WPA was not a “job guarantee” program, it nevertheless points to a number of issues that are under current discussion, including those of the nature of the projects undertaken, impact on the larger economy, concerns surrounding bureaucratic impediments, etc.

Roosevelt was not a progressive. He ran on a balanced budget platform, and initially attempted to fulfill his campaign promise of reducing the federal budget by slashing military spending from $752 million in 1932 to $531 million in 1934, including a 40% reduction in spending for veteran’s benefits which eliminated the pensions of half-a-million veterans and widows and reduced the benefits for those remaining on the rolls. As well, federal spending on research and education was slashed and salaries of federal employees were reduced. Such programs were reversed after 1935. And one might recall that Roosevelt attempted to return to a balanced budget program in 1937, just as the economy appeared to be slowly recovering. The result was a renewed depression that began in the fall of that year and ran through 1938.

Thus, the Roosevelt Administration was forced into progressive activism because of massive—and organized—popular discontent based mainly in working class and small farmer organizations.

The WPA was one of several programs developed to respond to this supposed threat. Initially, the Roosevelt Administration authorized the Federal Emergency Administration of Public Works in 1933 (renamed in 1939 as the Public Works Administration). The PWA allocated over $6 billion to private firms that actually undertook the large scale projects ordered by government. Dams, including Grand Coulee, hospitals, bridges (the Triborough Bridge and Lincoln Tunnel in New York City), etc.

The WPA was not intended as a “full employment” program. Only one household member could be employed under the program (it was usually males), though one does find female heads of households so employed. It should also be noted that state and local governments were required to contribute 10-30% of the costs of the various projects undertaken. Over its life, total spending on WPA projects amounted to about $13.4 billion, roughly 2% of GDP over those years.

And what were those projects? Was this simply a “make work” program that made little difference in the long run? Or, was the WPA integral to the larger economy and its contributions socially useful? A truncated tally follows:

560,000 miles of roads built or improved
20,000 miles of water mains, sewers constructed
417 dams built
325 firehouses built; 2384 renovated
5,000 schools constructed or renovated
143 new hospitals, 1,700 improved
2,000 stadiums, grandstands built
500 landing fields; 1,800 runways (including participation in the construction of LaGuardia Airport, NYC)
State and municipal parks, including the foundation of the extensive California state park system.
100 million trees planted
6,000 miles of fire and forest trails created
Libraries were built. These were especially directed toward poor and rural communities.
Zoo buildings constructed

In addition to the above, one should note the WPA’s contribution to the cultural life of the country. Under the direction of Hallie Flanagan, the Federal Theatre Project mounted 1,200 productions including 300 new plays. Audiences were estimated at 25 million in forty states, many of whom had never before seen a play. As well, WPA programs included Federal Music, Federal Arts, and Federal Writers’ Projects. This latter program produced the most notable “Slave Narrative Collection,” consisting of 10,000 pages of interviews with former slaves, a continuing treasure-trove for researchers. Last, let us not forget the famous murals that were produced by artists hired by the WPA. These dot the country from post offices (though these were mainly funded by the Treasury Department through a grant from the government) to college buildings, to government buildings. Included in this array were those painted by Diego Rivera for the City College of San Francisco, Anton Refregier in the Rincon Annex Post Office, San Francisco, and Thomas Hart Benton in the Missouri State Capitol rotunda.

I think that we could accomplish many useful projects just like the WPA was able to do with a similar program today and I most certainly think it would be better than the waste of resources that comes from unemployment and un-utilized capital goods.

We aren't subject to the economy, it is subject to us

I wrote this piece recently for a radio program on the public radio station in Kansas City. My main point is that the economy is something we can make into what we want it to be, but that requires us to think about what we want our economy to look like and then to do something about it. For example, if you want a more just income distribution, then what exactly do you think our income distribution should look like? who should redistribute it? and how should they do it? We aren't stuck with what we got; we don't have to live with falling wages, increasing income inequality, or 9% unemployment; we can do something about it.

Here's what I wrote:
Nearly all of the economists you see on TV and who hold all the advisory positions in government come from the Neoclassical tradition, a tradition that thinks economics is a science like physics or chemistry. These economists construct models and test them using data to determine ahistorical laws or tendencies in the economy. They often test numerous models going through each one of them until they finally find one that best fits the data and will make as many assumptions as needed for their mathematical models to work nicely even if that model doesn’t make any sense.

Many of you have probably heard of the law of supply and the law of demand which supposedly work together to set an equilibrium price at which point the market is efficient (the point at which there is no surplus or shortage). These laws of supply and demand are regarded much the same as the law of gravity, something that is always working, has more or less always existed, and that we cannot do anything about.

Because these economists treat economics like physics, they believe that the laws of supply and demand acting in this way will bring about the socially optimal outcome. Workers will be paid according to how hard they work or how much value they create, there won’t be any unemployment unless it is because those workers simply won’t work for a lower wage, and consumers and businesses will bring about the good for everyone with self-serving actions because the market coordinates economic activity in such a way to produce the best outcome. To make these bold statements, they require that markets are perfectly competitive and that human persons are perfectly rational, and by rational they mean self-serving maximizers of utility. They insist that this is free of values, that it is simply how persons behave and how the economy works and that if we tried to do anything about it, we would just make it worse.

Yet, these economists ignore or simply disregard the fact that economics is not a science like physics or chemistry, but is a social science concerned with what ought to be or with what is best for society. Economics is a social science studying the choices of persons and institutions regarding economic phenomena (such as the production, consumption, and distribution of goods and services). Because the subjects of the science of economics are human persons who are social and whose decisions are moral, the content of economics is inherently social and inherently moral. No explanation of economic phenomena can be totally free of value statements. For example, to say that the economy will work best if we just leave it alone is a moral statement often supporting those who have power in the market, like corporations and banks.

Furthermore, economics cannot be completely separated from other social sciences, such as psychology, sociology, politics, history, anthropology, and philosophy. Yet, economists from the neoclassical tradition largely ignore the findings from these sciences. For example, they largely disregard the findings in psychology and sociology about human behavior, particularly group behavior, and instead insist that we act rationally and selfishly so as to maximize utility. Greg Mankiw, a well-known professor of economics at Harvard and an economic advisor under the Bush administration, once said that it would be irrational for bank managers or owners not to commit fraud or loot their own banks to make more money. This sort of sociopathic person who acts in total disregard for others is taken as the model for how all people act and is often used as a justification for behavior that serves the pockets of the wealthy.

The point is that we are not subject to the so called laws of the economy nor are we stuck with the economic outcomes we are experiencing today. The economy is subject to us, we are not subject to it like we are subject to the law of gravity. We can manipulate it and change it to fit our desirable social outcomes. If we are unhappy with 9% unemployment, terrible and growing income inequality, a 15% poverty rate, corporations dominating government, and banks being bailed out while people lose their homes then we can and should do something to change that. That is what is so admirable about the Occupy movement. They have gathered for a cause recognizing that a good society is much better than this and are demanding change from our political leaders, and I urge you to do the same.

Back in Action

Sorry for the long hiatus. I hope to be back in action with regular posting for a while. I hope you all had a wonderful Christmas and have had a great start to your new year. Thanks for reading!