Tuesday, March 10, 2009

Is There A Bellocian Response For Today’s Economic Crisis?
Dear readers of The Distributist Review,

Paul Likoudis, News Editor for The Wanderer -the oldest Catholic newspaper in the United States- recently conducted an interview with yours truly regarding "Bellocian Economics," and has kindly granted us permission to reprint it here. Our thanks go to Mr. Likoudis for the opportunity. We would also like to applaud The Wanderer for their recent defense of distributism.

If you would like to subscribe to the online or hardcopy version of the newspaper, please go to The Wanderer website.

For the benefit of our readers, a Scribd version is below. Please feel free to copy the Scribd version onto your websites, however please add the following link to The Wanderer (www.thewandererpress.com).

Is There A Bellocian Response For Today’s Economic Crisis?
By PAUL LIKOUDIS

One of the signs of the times of the past two decades is a growing interest in Distributism, often de­scribed as a “third way” economic philosophy opposed to both capi­talism and socialism. It was chiefly formulated by the British historian and journalist Hilaire Belloc and is firmly grounded in Catholic social teaching, especially Pope Leo XIII’s encyclical Rerum Novarum.

Belloc never claimed he was in­venting a new system; rather he wanted to return to an economic arrangement of society that pre­vailed in Europe before the rise of post- Reformation capitalism and the big banking houses that pros­pered on the poverty of the masses and war.

With the rise of globalization and the spread of “democratic cap­italism” after the fall of the Berlin Wall, capitalism — as we all see much too clearly today — is in cri­sis. Catholics looking for a solution are looking to Belloc, his associ­ates G.K. Chesterton and Fr. Vincent McNabb, OP, and the Americans Dorothy Day and Peter Maurin, founders of the Catholic Worker Movement.

One sign of the Belloc/Distribut­ism revival is The ChesterBelloc Mandate ( www. distributist. blog spot.com), put up by a 34-year-old New Yorker, Rich Aleman. This of­fers viewers an extensive library of writings by Belloc, Chesterton, Fr. McNabb, Day, papal encyclicals, and other Church documents, and contemporary expositors of Dis­tributism such as John Sharpe, Thomas Storck, John Medaille, Jo­seph Pearce, Dr. William Fahey, among others.

“There is definitely a resurgence in interest in Belloc,” said Aleman, “which can be seen in the growing number of online web sites devot­ed to his work, the reprinting of his books, and many organizations in existence modeled on Distributist ideals. One example is the E. F. Schumacher Society, named after the German economist and Catho­lic convert, E.F. Schumacher. Their development of the Community Land Trust Model has proven itself a terrific method for restoring local farming.

“In such a scheme, the Land Trust purchases the land, while the farmer is responsible only for his home and barn; the land trust then establishes as a lease contract be­tween the farmer and the trust for 99 years, thus removing the mort­gage and tax burden from the farm­er. The benefits of this as a transi­tional solution toward agricultural restoration are multiple.

“Then there are other Distribut­ist ideas offered such as measured and small- scale technology, the creation of agricultural schools, the support for credit unions, micro­lending, and land associations tasked with relieving unemploy­ment and home ownership,” said Aleman.

There are also political ideas that reflect the Bellocian ideal, Aleman added, such as the discontent on the part of the average citizen with the narrow difference between the politicians from both major parties, or that the left and right, Aleman said, “ are fashionable political markers with no true bearing on in­dividuals. Our lawmakers are either pro-life while undermining the ma­terial necessities of the family, or pro-death and at the same time championing the legitimate rights of the workers.

“However, today the individual­ist and collectivist dichotomies of old are fading, and are replaced in­stead with a restored concern for in­dependence for the family and so­cial interdependence for the com­munity, with a proper understand­ing that our material needs are sub­ordinate to our spiritual ones. Thus, the alternative to the materialism of capitalism and socialism is a social and economic policy centered on a wealth- producing society through family and cooperative ownership.

“This last takes the form of work­er- owned businesses, where the workplace is owned by the work­ers who produce the goods and ser­vices of society, such as the Arizmendi Bakery project that started in San Francisco and is spreading across California.”

The Arizmendi Bakery takes its name from Fr. Jose Maria Arizmen­diarrieta, a Basque priest who founded Mondragón Corporation in 1943, a self-managed worker co­operative which currently makes $16 billion in a range of products, including appliances and small parts manufacturing, and has some 77,000 worker-owners.

Another example, Aleman said, is Confcooperative in Bologna, Italy, a Catholic cooperative inspired by Rerum Novarum. That and other cooperatives in the Emilia-Roma­gna region make over 40% of the region’s GDP.

A model of a renaissance in non­industrial local agriculture is Polyface Farms in Staunton, Va., a Protestant endeavor to promote lo­cal farming through their school of husbandry. People who want to learn farming are provided room and board for various terms of appren­ticeship, and upon completion of their term, these apprentices return to their own region able to apply what they learn.

In another case, there is the Cath­olic Homesteading Movement lo­cated in Oxford, N.Y., also instruct­ing in the fundamentals of living off the land. Operated by Richard Fahey and his family, day and weeklong workshops are offered on topics ranging from organic garden­ing to fruit-tree grafting.

“People are willing to listen to al­ternatives such as Belloc and Chesterton proposed due to the fi­nancial crisis we are in,” said Ale­man. “I believe the Distributists and other like-minded reformers of their time, spoke clearly to the hearts and minds of the common man, unlike anything seen before or since, and the reemergence of their work is once again popular and necessary.”

Belloc’s Economics

For Catholics who are complete­ly unaware of Distributism, and Catholic social teaching, the basic thing to understand is that Belloc took as a personal mission Pope Leo XIII’s exhortation that “ the law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners.”

Man always fully dedicates him­self to the work and land that be­long to him, as Chesterton reiterat­ed through the parable of the Good Shepherd. Today most men have been convinced to pick between thousands of careers just to work for someone else, but the Distributists recalled to memory the natural de­sire for man to work and own for himself.

Money has been transformed from a means of exchange backed by commodities produced by the economy, to property. But money in itself is unproductive, as Belloc re­minds us. Only productive proper­ty is a generator of real wealth and strength for the family and the lo­cal community. Land allows us to secure something for ourselves and is a shelter against the gap between poverty and wealth. Most of us work and save money for that purpose, so we can plant our roots and raise our families in a home, because its val­ue to us transcends what the market tells us it is worth. For Belloc, a na­tion founded on micro-property is a stable and fruitful nation.

“Belloc believed that the conse­quences of narrowing the division between ownership and work pre­sents for the family an autonomy from the consolidation of power, and wealth for the community, which man, as a corporeal being would always be partially depen­dent on. This productive property supplies the requisites for domestic autonomy, which in turn provides for a greater means toward achiev­ing the ends of life, e.g., the eternal vision, or our original purpose,” said Aleman.

“By the family and workers own­ing the means of production — the tools, equipment, etc. — needed for labor to transform raw resources into goods and services, the family and the worker could be independent from big business and big govern­ment and pursue thrift as well as en­joy a robust spiritual life. After all, the ultimate goal of the ‘restoration of property’ — the title of another Belloc book — would lead to the Christian reform of morals, just as Pope Pius XI reiterated in Quadrag­esimo Anno, through the quest for a life of virtue, instead of the dog-eat­dog world.”

Through the lens of Belloc’s anal­yses, people today can gain a bet­ter understanding of the economic, political, and social crisis this coun­try is facing.

Belloc formulated his views on the coming of the Servile State, and the need for a Distributist society from the contemporary crisis En­gland was experiencing due to over­producing as a consequence of the embrace of mass production in lieu of the small producer, Aleman ob­served.

“The problem with overproduc­tion is that it creates under- con­sumption; large- scale business needs to churn out as many goods as it can create, while consumers are unable to match the volume of pro­duction dispensed. As a result, wag­es decline as the capitalist cuts la­bor costs in order to maximize profit. This cost reduction and de­sire of the capitalist to increase his purse leads him to ship his labor overseas.

“But of course here is the conun­drum. The consumer and the em­ployee are the same people, so as costs are reduced, the worker finds himself with a declining wage, and the employer expects the same worker to consume the goods he and other capitalists produce,” Aleman explained.

The only “solution” to overpro­duction is usury. The people with the profits lend them to people with the low wages. This sustains consump­tion for a while, but is ultimately self­defeating, so the government ab­sorbs the excess production. It fails because the government cannot per­form this task as the productive base on which its taxes depend has been shipped overseas. So now we borrow money from nations that are making things to sustain consumption. But of course, that can’t go on forever. There is a limit. The results are stag­gering. Today our nation is two­thirds consumption, and one-third production.

Stagnant wages, institutionalized usury, derivatives, impersonal in­vestment, planned obsolescence, waste, and consumer debt trans­formed a nation of small businesses and small farmers into over-indul­gent consumers, pitted between cor­porations passing their liabilities to taxpayers, an obliging government protecting them from liability, and the “stimulus” of Keynesian poli­cies which inflated government in the first place.

Belloc’s solution to big govern­ment is decentralization. “Distribut­ists are decentralists who believe most functions should occur at the smallest level as possible. In a Distributist state, the role of central government addresses challenges outside the scope of locality, such as defense, or international trade, amongst other things. Local guilds and other institutions exist to re­strain the concentration of power or property, whether bureaucratic or commercial,” said Aleman.

The early movement and Belloc believed the implementation of Distributism would not come from above, but from below, in other words, not by government force but by a proselytizing popular move­ment convinced and eager to real­ize the various facets of Distributist living.

The Mandate

“What I strive to do with The ChesterBelloc Mandate,” Aleman said, “is to create a fountain of in­formation for the academic and lay­man on the subject of Distributism and Catholic social teaching. Be­sides the work of Chesterton, Belloc, and Fr. McNabb, I’ve also included some of the work of Amintore Fanfani, Fr. Heinrich Pesch, A.J. Penty, B.A. Santamaria, Hilary Pepler, Cardinal Manning, and my favorite, K.L. Kenrick.

“The first time I ever heard the word ‘ Distributism’ was on Dale Ahlquist’s (president of the Ameri­can Chesterton Society) show on EWTN about six years ago. My cu­riosity led me to an article by Thomas Storck, called ‘ What is Distributism?’ Storck’s work left a lasting impression on me, as did some of the great work of the now defunct Caelum et Terra.

“However, I found information on Distributism to be scarce and often piecemeal. Luckily, after reading the republishing of the Distributists’ work by IHS Press — another sign of the Bellocian revival underway today — I decided to consolidate as many essays and articles as I could find on the topic. Some of these ma­terials required constant trips to the library, while others I searched for in schools across the country. I want­ed to prove to the readers of the site that Distributist thought wasn’t lim­ited to the classics, but extended to other publications such as America, Blackfriars, Commonweal, Orate Fratres, etc.

“I also wanted my readers to real­ize that Distributism wasn’t a small movement in Great Britain. From the various Catholic Land associations, the 24 branches of the Distributist League, the Guild of St. Joseph and St. Dominic, and the massive con­tributions from various columnists for Chesterton’s G.K.’s Weekly, Dis­tributism permeated across the Brit­ish Isle, and in Ireland where simi­lar features of a Distributist rural economy were already in place.

“The feedback has been very pos­itive, and over the years Distribut­ism has risen rapidly amongst Cath­olics and other Christians. Online and print journals are often chatting about it on a worldwide level. As a result, I’ve added a foreign-language section dedicated to contemporary articles about Distributism I’ve found from Spain, Argentina, France, Poland, and the Czech Republic, among many others.

“But The Mandate and the re­prints on it are one-half the topic. John Medaille, author of ‘The Voca­tion of Business: Social Justice in the Workplace,’ and I collaborate at The Distributist Review (www.distributism.blogspot.com), a contem­porary online web site discussing contemporary politics and socioeco­nomic issues from a Distributist per­spective. We believe we offer sound analysis about the current crisis in the Bellocian tradition.”

www.thewandererpress.com

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Distributism, The Wave of The Future
Saturday, December 20, 2008

The Health Care System and the Guilds

There can be no question that the American health-care system has tremendous problems. We spend almost as much per capita in public funds as do the Europeans, but we do not have universal service. We spend a greater amount in private funds, yet we do not have free market in medical care. It is almost as if someone deliberately designed a system that combined the worst features of socialism and capitalism into one Rube Goldberg operation. We spend more than any other country in the world on medical services, yet the results are near third-world levels.

The debates on this issue usually take place within this framework of “free market” vs. “socialized” medicine, yet the system we have is neither and both. It cannot be a free market system because the supply of medicine and medical services are limited by licenses and patents. Milton Friedman advocated abolishing the licensing of doctors altogether. Friedman argued that medical licenses restrict the supply of doctors and thereby raise the cost. He believed that the free market would judge medical competence better than any license board, rewarding the competent doctors and punishing the incompetent.

The problem with Friedman's argument is that we have already tried that. Right into the early 20th century, doctors were unlicensed; they took perhaps one to two years at a local medical college, usually a for-profit institution run by local doctors who lectured at the college. After their course of lectures, and without ever having touched a microscope or a cadaver, they set up as doctors. The results were disastrous, as became evident in the great Spanish Influenza pandemic of 1918. After that, the move to improve education and require licenses gained public support to produce the system we have today, a system largely controlled by the American Medical Association (AMA).

Further, a free market solution depends on the availability of information and the ability to judge that information. In comparing doctors, information about them is hard come by, and even if I had such information, I would not be able to make an informed judgment. And if I am having a heart attack, I am in no position to do the comparison shopping that a free market requires.

Yet for all that, Friedman has a point. By limiting the number of doctors, we restrict the supply and raise the cost. Further, the education of a doctor is long, arduous, and expensive. New doctors are frequently burdened with huge education loans, and setting up a practice requires a huge capital investment. This forces doctors to act more like businessman than medical professionals; they have to turn a large profit just to break-even on both their costs and the amount of income forgone while they were getting their educations. And it has frequently been charged that the AMA restricts the number of “slots” in medical schools so as to further restrict supply.

I have previously dealt with the problem of licenses (see Sicko-phancy). Instead of a single license requiring many years, and hundreds of thousands of dollars, I propose a series of licenses: midwife, nurse practitioner, medical practitioner, medical doctor, medical specialist. This would vastly expand the supply of medical personnel and thereby lower the cost. However, this can only be a partial solution. Doctors, whatever their license level, still face tremendous problems with medical insurance. And likewise the public faces similar problems. The cost of medical care is so high that nearly everyone needs insurance, but the insurance companies do their best to limit the claims they will pay. And there is still the problem of who gets to grant the licenses, no matter how many levels there are. Would not the AMA exercise its influence on governmental agencies to keep the supply as low as it is today, and the price as high as possible? And how to address the problems of the high cost of medicine and medical equipment, like MRIs?

Can we take away the power from government and still have an effective medical system? Must we be mired in socialism, or should we return to the free-market chaos of the 19th century? I believe that there is a better way. I believe that the answer lies in a well-tested institution from out past, and that institution is the guild. The guilds were associations of professionals in a given field who took responsibility for the training of their members and the quality and price of their products and services. They were the sole judge of the qualifications of their members, and had the power to set both standards and prices. What I propose is that we allow medical professionals to form guilds with the power to grant various licenses. They would be the sole judge of the qualifications required, and they would set the practice standards and prices. But most importantly, the guild would stand surety for its members. That is to say, when a patient had a complaint, he would sue not the doctor but the guild. The guild would be responsible for the competence and good conduct of its members.

You might ask, “why would one doctor stand surety for another?” But in fact, this is what already happens in malpractice insurance. Insurance is merely cost averaging. If the losses go up for one doctor, the rates for every other doctor in that insurance pool goes up. But doctors have no control over who is in their insurance pool; the quack and the competent get thrown in the same insurance system, with the later required to pay for the former. In a guild system, the guild would have a strong incentive to ensure the competence of their members and monitor their practice standards; they would want to weed out the incompetent or downgrade their licenses. The guild would purchase insurance for all its members, or even provide the insurance itself, thereby removing the profit motive and lowering the cost.

Since the guild would be the sole judge of the qualifications and practices of its members, there would be a greater diversity of practical approaches. The Guild of St. Luke, for example, might favor one approach to medicine, the Galen Guild might favor another, and natural competition and practical experience would be sufficient to discover the superior approach. And while it might be difficult for the public to judge one doctor against another, it would be easier to judge the performance of one guild versus another. Further, this also provides space for “alternative medicine.” I have no way to judge whether such things as acupuncture or Chinese herbalism are medically valid. But when joined in a guild and required to stand surety for each of their members, practices which do have some value would likely thrive, even if traditional medicine does not, as yet, recognize their value. And if they have no value, it is likely that such practices would simply disappear because the insurance claims would bankrupt them. Likely the government would still have some minimal role to prevent outright quackery; they would not likely allow a Guild of Peach Pit cure-alls.

The guild would also provide a career path for its members. As it is now, student spends the better part of their youth and a great part of their future earnings in getting an MD. But with a guild with a multiple license structure, they could enter as nurse or medical practitioners, practice medicine at some level while continuing their training for higher levels. This would give them both an income stream and practical experience in their trade. It would be a kind of “apprentice” program.

In addition to insuring their doctors, the guild could offer insurance to the public. That is, they could offer to treat people for a fixed annual fee. This would give the guilds an income stream, but also a great incentive to insure that small problems do not go untreated to become big problems. In other words, such health insurance would actually be concerned with insuring health rather than denying claims. Further, the guilds could be required to devote a certain amount of their resources to free or low-cost care for the impoverished or indigent. The government might play a role here in qualifying people as eligible for such reduced-cost treatment.

The guild would be empowered to establish its own clinics, its own training and education programs, its own pharmacies, labs, administrative structures, and whatever else is necessary to medical practice. This would also make it easier for medical professionals to enter practice without worrying about setting up the business and administration that consumes so much of doctor's time today.
Of course, the complete solution to the problem cannot be found without breaking the monopoly power of prescription drugs and medical equipment. I have already outlined an approach to this in the aforementioned Sicko-phancy. But I believe that the guilds can also play an important role here, especially in the testing new drugs and negotiating prices. Drug companies would no longer have an incentive to “bribe” doctors to prescribe their patent medicines, since it would be the guild and not the individual doctor who establishes standards for medicines and judges their effectiveness. The collective judgment of the guild is likely to be superior to the individual judgment of any given doctor, especially when that individual judgment is influenced by “gifts” from the drug companies, as it is now.

Now, I will not pretend to my long-suffering readers that I am an expert in medical economics. I welcome any critiques or refinements that those more qualified than I am can offer on these matters.

But I will assert that there are some principles which hold no matter what the system, one of these being that the incentives will dictate the outcomes. And the current incentives—for doctors, insurance companies, the AMA, and others—are all wrong and cannot be repaired in the current system. Every solution now on the table in the public debate will likely only make the problems worse.

What I will assert is that sometimes our best future is in our long past; that methods that have been tried and worked, but for some reason were abandoned, can be re-worked to answer current conditions. I believe that it is the essence of both the progressive and the traditional to find what has worked, and to adapt it to the present moment.
Posted by John Médaill
Tuesday, December 16, 2008

Sometimes Low Prices...Sometimes

Times being what they are, Christmastide has become a bargain hunt as people seek to stretch their hard-won and limited gift-giving dollars. In such circumstances, the image of the Wal-Mart “happy face” bouncing around the store and knocking down prices is particularly appealing. After all, shopping, even in good times, is about trying to get a good bargain. However, one might might ask if the prices are really all that low. They are indeed perceived to be low, but perception and reality are not always the same things. There is in fact a whole science devoted to creating the perception of low prices without having to deliver the reality.

One way to create this impression is the use of “signposts” and “blinds.” Signposts are items like milk and light-bulbs for which the average shopper is likely to know the going price. These products are often sold by the “big-box” stores below their cost. This accomplishes two things: it creates an impression that the whole store contains bargains and it puts pressure on independent retailers and helps to drive them out of business.

But signposts are only 5% of the merchandise. The rest are “blinds,” goods for which the shopper is likely to have only a vague notion of the market price. For the blinds, the buyer is likely to judge the price by the signposts and assume there is a bargain when in fact there is not. This is only one of the techniques used to divorce appearance from reality. These techniques are detailed in Stacy Mitchell's Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America's Independent Businesses.

The High Cost of Low Prices
Ms. Mitchell challenges the Wal-Mart swindle on grounds other than prices. These stores involve a high cost to our economy, to our communities, to the environment, and to the very fabric of out democracy. By concentrating retailing power in a handful of mega-corporations, we have created monopsonies. Monopsonies are just like monopolies, except that is applies to “one-buyer” rather than “one seller.” Most of those who produce products for the retail market are dependent on getting shelf-space at Wal-Mart, Costco, Lowe's, Office-Max and similar mega-retailers. This gives enormous negotiating power to the big-box stores. In fact, the discussions between the producers and these mega-retailers cannot be called “negotiations” in any real sense of that term; the power is all on one side. Hence, the big-box stores dictate to the producers; they dictate where their goods will be made, how they will be made, what price they will carry, what costs of retailing the producer will bear, and many other things besides, things that would never happen in a real negotiation, where the power between the sides was roughly equal.

The thing that the retailers most demand is that the producers off-shore their production. Wal-Mart and others maintain a list of Chinese and other foreign manufacturers that the producers are encouraged, or even required, to use. These stores have been a big force in the destruction of American manufacturing.

They have also been a big force in the destruction of American business. The stores destroy local commerce, built on a dense network of independent businesses. These businesses are part and parcel of their local communities; they participate in civic affairs, they support local projects, they buy the ads in local papers, they support the high-school football team, and enrich community life in hundreds of ways.

What About the “Free” Market

Despite all these problems, one might counter that this is simply the way capitalism works, and that no one can complain because some people have found a better business model for retailing. Alas, this argument fails on two grounds: one, the creation of monopsonies is counter to the free market, and; two, the big-box retailers are creatures of government subsidies. Concerning the first point, all free market theory depends on the “vast number of firms” assumption, the idea that no firm is powerful enough to affect prices; production (and retailing) is spread over so many firms that each one is a price-taker rather than a price-maker. But clearly, the big-box stores are price-makers, and thereby make a mockery of any coherent free-market theory.

But aside from that, the big-box stores are practically creatures of government power. Ms. Mitchell details the many subsidies they receive from cities desperate for development. These numbers are startling enough. However, the author actually ignores the bigger subsidies that these firms receive from the federal government and even foreign governments. Indeed, the big-boxes could not exist without the “freeway” system, a system which is actually a series of subsidies from the cities to the suburbs. (See Free Markets, “Free”ways and Falling Bridges.) Further, they receive huge subsidies as a result of Chinese currency manipulation (See Subsidizing Wal-Mart.)

Bad Business

It would seem that these stores are at least good business models; that is, they grow fast and make a lot of money for the investors. However, it often turns out that what is good for an investor is bad for the economy. Any business can make a lot of money by firing its workers and outsourcing production to low-wage countries. But if every producer does this, a conundrum arises: when the business fires its workers, it also fires its customers; as G. K. Chesterton points out, these are the same people, and you cannot pay a man like a pauper and expect him to spend like a prince. Now, it may seem as if we have been doing just that for the last 30 years, for while the median wage has stagnated, families are buying more “stuff” than ever.

How do we accomplish this hat trick? By two methods. The first was to put more family members to work. More and more homes became two-income households. But even that was not enough to sustain consumption. For the last 20 years, we have made up the difference between the stagnating wage and increased consumption by the extensive use of consumer credit. In other words, we have created a plastic economy, an economy built on credit cards. But this is a house of (credit) cards, and like all such houses, it is destined to collapse. That, in fact, is what we are witnessing at this very moment.

Fighting Back

The triumph of the Big-box stores may seem inevitable, but it is not. Rather, it is destined to fail, and that quickly. Our task is to decide how we will rebuild the economy along more sane and rational lines. In the meantime, these stores can be defeated. Once communities understand their real impacts, it proves to be very easy to keep them out. Ms. Mitchell recounts how many communities have defeated the great powers, and in the meantime rebuilt there own community retailing base.

The Big Box stores really are a government-sponsored swindle, but their days are numbered because the economic model that supported them was never sound to begin with. Distributists understand instinctively that such models will not work. Now the rest of the world will learn the same lesson. I advise everybody who wants to fight the power of these stores and to rebuild out shattered economy to read Ms. Mitchell's book.
Posted by John Médaille
Sunday, November 30, 2008

Chapter XIII: The Purpose of Government

I return to Equity and Equilibrium: The Political Economy of Distributism after a two-month hiatus.

What Should the Government be Doing? Milton Friedman famously remarked that if the government were put in charge of the Sahara, there would soon be a shortage of sand. It is a remark that delighted both the libertarian and neoclassical economists. It is likely that Friedman repeated this remark at many a seminar. To do so, he had to leave his home, one built according to strict building codes and protected by the socialized services of the city police and fire departments, travel over socialized roads and freeways to a government-sponsored and -regulated airport, board an airplane after it had been thoroughly vetted by a government-supervised inspector, go to a college or university which was heavily supported by the government, and later that evening, no doubt, he discussed his witticism with friends and colleagues over dinner at a restaurant that had to meet strict government standards for cleanliness. And all of this took place under the protection of a military establishment which involves considerable expense to the government and its citizens.

It would seem, then, that the government does indeed do many things tolerably well. It may be, as Friedman claimed, that most of these services could be provided by the private market. And while that might be true, and in some cases must be true, it is equally true that while many egregious examples of inefficiency can be found, the government provides many services tolerably well and with as much efficiency as can be found in any large bureaucracy, public or private. Nevertheless, the point of Friedman's remark is still valid: What should government be doing, and at what level should it be doing it? Conservatives leave little room for government and socialists leave little room for anything else. Neither provides us with a set of principles by which we can evaluate the proper role of government.

Man is a social animal; he needs government. We are born into the little ready-made communities called “families” ruled in various ways by parents. We organize ourselves into social and political hierarchies as naturally as we breathe, and we need government to fulfill our natural ends and goals. But while government in theory may be natural, any actual government may not fulfill the natural ends and goals of man—and most don't. The modern nation-state becomes an end in itself, and the citizen a mere client. We need some set of principles by which to distinguish good government from bad, and the “all or nothing” arguments of socialists and conservatives are not really helpful Until we decide on the proper role of government, we cannot possibly talk about the proper level and kind of taxation that is required to support the government.

Associated with the question of what the government should be doing is the question of at what level the government should be doing it. During the last election campaign, Senator Joe Biden boasted that he had sponsored legislation which had placed 11,000 cops on the beat in our cities. But while his boast is likely true, it is somewhat frightening; a problem that we would normally take to our local mayor and city council is resolved at the highest level of government. Every local problem becomes a federal case, and the government farthest from the actual situation becomes the guarantor of the cop on the beat, the teacher in the classroom, and every other aspect of our social lives that is normally resolved by local action.

“Starving the Beast”

The question of the proper role and level of government has become a difficult one because each new government expenditure creates a constituency ready to fight for the expansion of the role of government and especially for the expansion of their particular subsidy. Thus addressing the question at a practical level involves battling a thousand constituencies each with a hundred lobbyists and millions in campaign contributions or promises of lucrative jobs when the legislator retires from public work. These special interests easily combine to defeat any serious attempt at budget and government reform.

Recognizing this problem, the Reagan administration abandoned the question of the proper role of government and opted for a strategy of “starving the beast,” that is, cutting taxes and thereby cutting off the air supply to big government. The resulting super-deficits would force a confrontation over the issue of government spending. Alas, the strategy did not work. The “beast's” diet was merely changed from cash to credit, and it turns out that credit is easier to spend than cash. The government did not shrink, but grew, and grew at an alarming rate. The budget deficit tripled under Reagan-Bush XLI (from $700 million to $2.1 trillion), more than doubled again under Clinton (to over $5 trillion), and more than doubled again under Bush (to nearly $11 trillion). What is really troublesome about the deficit, however, is not the absolute number itself, but the size of the interest payments, which now amount to about half-a-trillion dollars each year. This works out to about $1,500 per person, or $6,000 for a family of four. This means that the first $6,000 of each family's taxes goes to financing the past, with nothing for the present or the future. Sooner or later, the past must overwhelm the present and foreclose the future. Then the beast will indeed be starved, but so will the rest of us. Financing the present by mortgaging the future is not only bad economics, it is bad morals; we pay for our profligacy by burdening our children, thereby reversing the natural order of family and national life.

But the Reagan administration had another reason for their “starve the beast” strategy: they really had no philosophy of governance. They only knew that they wanted “less government,” but they were not quite clear on what that meant in practice. By and large, they were followers of Friedrich Hayek, the Austrian economist. The Austrians limit the role of government to “protecting property,” but they are vague as to what that actually means. Indeed, they are vague about what “property” means, since this is a term that has had many definitions over the course of the centuries. Nor could they give clear reasons why this should be the only function of government; after all, if everything is to be privatized, why not privatize this function as well, and leave property to those who can protect it from their own resources? Hayek himself equivocated on the issue of government, allowing that it could provide basic incomes and health care, handle externalities of the market, and other functions as well. In the end, Hayek ended up refusing the question of the proper role of government and hence could give no clear guidance to his acolytes in the Reagan administration. In practice, Austrian economics proved to be a faster road to socialism than the socialists themselves could build, but it was mainly a socialism for the rich. Since it is a woefully incomplete theory, its unintended consequences overwhelm its theoretical bases with the result that Austrian theory leads to socialist practice, which is exactly the result that Hilaire Belloc predicted for such theories in his book, The Servile State.
Until we answer the question about government, we cannot answer the question about taxes; unless we know what the government ought to do, we cannot know how much it ought to cost or how to fund it. And we cannot know what it ought to do without first knowing what purpose government has and upon what principles it rests.

The Purpose of Government

Human beings are not self-sufficient as individuals. We are born naked against the elements and helpless in ourselves; we are dependent from the beginning on others, and apart from them we would not last our first day on earth. This dependency continues throughout our lives, since none of us can or should acquire all the skills necessary to grow our own food, make our own shoes, provide our own education, etc. We are by nature social beings and thrive only in community. The purpose of government is to provide the conditions under which all the other communities that make up the social fabric can flourish. And first and foremost among these other communities is the primary community of the family, the one that first calls us into being through an act of love and gives us the gifts that will form us. Not only the material gifts of food, clothing and shelter, but the gifts of language, of culture, of our first experience of love and belonging and most importantly, the gift of a name, a name that ties us to family but is uniquely ours, the name that lets us know that we are both part of something and unique beings.

At once we note that we are at odds with the modern political and economic theories, which are built on the individual as the prime social and economic unit. But this is not correct because the individual, apart from the social order, is not capable of providing for himself. Indeed, the individual is not even capable of reproducing himself. The individual flourishes in and through the community. This is not to denigrate the value of the individual person, since the purpose of the family is to allow the person to flourish; it is to note that persons only exist in and through communities, first and foremost the community of the family.

Therefore, we can judge the success or failure of government by noting the strength of the family units that make up the society. If they are barely surviving and chronically in debt, if mothers are forced to work by economic conditions and unable to attend to the education of their children, if families seem to be temporary and chronically subject to dissolution, if the children have only limited educational opportunities, if they are more concerned with the getting (and destruction) of more things for their happiness, then we may say that the family is materially, morally, and spiritually weak. Alas, these are the conditions that describe too many American families today, and the failure of the family leads to failures in the economic, political, and social orders, failures which have no solution apart from repairing our damaged families.

Starting with the family, we can go on to assess the health of larger communities, not only governmental ones like cities and states, but those communities of work and social life in which we find ourselves and through which we contribute to the common good and to our own development.
In order to flourish, all of these communities require certain things. They require a material base by way of access to productive property which they can own or share; they require training and education; they require relatively free markets; they require a culture of liberty in which they can grow; they require a certain set of shared values if they are to share a common cultural space; they require certain infrastructures such as roads, a money system, courts, etc. Some of these things are or can be directly supplied by the government and others are merely influenced by its decisions. But all the decisions of government must be based on a recognition of their effect on these communities. Government is not, of course, solely responsible for the flourishing of these communities (that would be socialism or paternalism), but it is often responsible for their failure. In order to assure that the government is acting on behalf of these communities, there are certain bedrock principles that must be followed, no matter what the form of government.

The Principles of Government

It seems today as if government is no more than a competition among special interests each fighting for a share of the public purse and a list of privileges from public law. Along with this we note a centralizing tendency that transcends party rhetoric and leads to an ever-growing central government, which displaces all lower units of government and even private association. And, of course, such competition for power must favor the powerful. This self-aggrandizing tendency of government mirrors a similar cult of bigness in the commercial realm. Companies grow “too big to fail,” and hence can act with impunity, knowing that no matter how foolish their actions, they can always have recourse to the public purse; they can rely on economic blackmail: “If we fail, everything fails; bail us or be damned!” And they get their way with the public purse. As I write this, the government is committing trillions to private bailouts, a perfect socialism for the rich necessary to save everybody else. But this is not the first time this has happened; indeed, it is a chronic condition of corporate capitalism. There have been about 19 bailouts in the last 100 years, making them fairly predictable events. The bailouts get bigger as the corporations and the government grow in size.

Yet bailouts have never reached the size and scale of today's crises, and it is likely that the system will not work and must be reformed, probably after a complete collapse. A reform of the system will require an understanding of the proper principles of government. And these principles are the exact opposite of the practice of modern government. Against the the clash of special interests, we assert The Principle of The Common Good; against the centralizing tendency, we assert The Principle of Subsidiarity; against the tendency to favor the rich and powerful, we assert The Principle of Solidarity.
The Common Good

The idea of the common good would seem self-evident, but in fact most modern political and economic thought is based on the priority of private and personal goods. “Greed is good” has become an implicit assumption of our political and economic lives. This idea was first advanced in 1714 in Bernard de Mandeville's The Fable of the Bees, which was subtitled Private Vices, Publick Benefits. Mandeville offered us the paradox that private vice was the key to public virtue, that the water of private interest could be transformed into the wine of the common good. But this view is far too mystical. It is based on the view that the common good is no more than a summation of individual and particular goods, and that there is no transcendent good which unites us all.

But clearly, this is not true. The individual good of a father, for example, could run counter to the good of his family. The father who spends the bulk of his earnings on himself and his own pleasures and leaves little for the feeding of his family and nothing for the education of his children indulges a private good at the expense of the common good of the family. It is only by realizing himself in and through the family that his good and the good of the family can be united. And this is the key to realizing the common good: we must develop the sense that our particular goods are bound up with the common good. We cannot truly be successful at the expense of our neighbors; their success and ours are connected.

The great difficulty of recognizing the common good is that we are all members of the community mostly through participation in particular communities, each of which makes a partial contribution to the common good. That is, we participate in the over-all community in and through our participation in, say, the arts community, the business community, the educational community, etc. The end of each of these communities is partial and private, in the sense of the Latin term, privatus, which connotes a lack of something, a privation. The tendency of private communities is to let their partial and private ends dominate over the contribution they make to the public and general good. But the common good cannot flourish unless we recognize that our particular communities depend on, and are ultimately successful through, the success of the whole community. This takes a constant recognition of the wider community and a constant effort of the will to limit our demands on the community only to what is necessary for, and proportional to, our contributions to that wider community.

Subsidiarity

As members of vast, modern nation-states, especially those governed by the principles of pure individualism, we cannot help but see ourselves as mere infinitesimal cogs in a vast machine over which we have very little control, save for annual, semi-annual, or quadrennial plebiscites in which we get to choose “leaders” from a very limited list. Indeed, due to the miracle of national television, the government official most remote from us, the President, is a daily presence in our living room, while the person who might be our neighbor, the local mayor or city councilman, remains a stranger whose very name we cannot recall. In other words, we have stood the natural order of government and social life on its head, with the most remote becoming more important than the local.

In opposition to this centralizing tendency, solidarity implies a “bottom-up” view of society. It starts with the family as the basic unit of society. All economic, social, and political activity is built around the family and serves its needs. But because no family is self-sufficient, families in turn require economic and social contexts, including government. Higher social formations have a right to interfere in the affairs of lower organizations, including the family, but this is only a limited right; such interventions can only be used to correct egregious failures, and may last only for as long as necessary to correct the failure. Some problems, of course, don’t go away, such as unemployment: as long as the economic system is unable to offer all persons meaningful employment, then society must provide other means for their dignified subsistence. But this must be clearly seen as a defect of the system, in the same way that the need for a police force or an army is really a defect arising from original sin. From the viewpoint of subsidiarity, society is highly “textured”; instead of a simple system of an “individual/government” relationship, there should be a rich collection of levels within society, each with its own realm of competence and authority. At present, government has absorbed functions which used to belong to the Church or other authorities such as the guilds. Marriage, education, charity, and commercial regulations had been guided by other bodies, even if their decisions were enforced by the state. The all-powerful, centralized state has displaced all of these other and (I contend) more natural authorities. Other authorities, even the family itself, exist only by the sufferance of the central administration.

According to the principle of subsidiarity, the higher-level organization can only justify its existence by the necessary support it gives to lower-level one. Assuming that most functions of political, social, and economic life can be adequately handled at the local level, the higher levels are therefore the least important, and their importance diminishes the higher up they are. This does not mean that they they have no meaningful authority, nor any right to intervene. For example, we know that African-Americans would not enjoy full citizenship in America were it not for forceful interventions by the central government. But even this intervention is instructive, since it involves a community that extends beyond any local jurisdiction, and was clearly oppressed in many jurisdictions, indeed, perhaps in most or even in all, at least to some degree. And since the oppression was egregious, it was clearly the right and duty of the central government to act, even in disregard of local rights. Nevertheless, such interventions should be made only on clear necessity, only as much as necessary, and only for as long as necessary. In general, local organizations should be free to develop in their own way and with their own resources.

One important point that needs to be made about subsidiarity is that not only should control be as local as possible, but funding as well. If the funding for governmental programs comes from afar without directly impacting local resources, it appears to be “free” money, which always distorts the decision-making process. If someone else pays, we can never have enough; when the money comes from our own resources, we tend to spend it as conservatively as we can. This does not preclude higher authorities from making contributions to local programs, but such contributions must be related to the common good, and it does the local authority no good to become dependent on the remote power. This is, as we shall see, one of the most important principles in government funding and taxation.

Solidarity

Solidarity is complimentary with subsidiarity. Subsidiarity provides the vertical dimension of life, while solidarity provides the horizontal dimension; subsidiarity is a connection between elements of society viewed as a hierarchy, while solidarity provides the connections between the elements viewed as if they were on the same level. Solidarity connects us with the common good and impels us, in the name of Christian charity, to act for the good of all. There can be no vision of the common good unless there is solidarity between all the elements of society.

Of particular importance to solidarity is the preferential option for the poor. When we act in solidarity, we act for the good of all. The preferential option for the poor serves as a practical test of whether we are acting for all, or just for some. Under the preferential option, we always examine the effects of any action on the poorest of our neighbors; if it is not good for them, it breaks solidarity. Since we are all inclined to opportunism and rationalization, solidarity, particularly when it forces us to look at our actions from the standpoint of the poor, helps in ensure the common good.

If what we have said so far is correct, then we have provided a purpose for government and the principles of government, and with these tools we can examine our actually existing government to see how well it conforms to purpose and principle, and ask what can be done to change it.
Posted by John Médaille
Wednesday, November 26, 2008

Remembrance of Things Past

Conservatism is, in large part, about memory; you cannot conserve values if you do not remember them, if you do not remember the time when values where embedded into active and functioning social systems. There are powerful weapons turned against memory these days, including ideologies of “creative destruction” whose main function is to constantly destroy the past and the values associated with the past. But when we destroy the past, we also destroy the future, and that is a process that is becoming painfully apparent today. Politically, both the right and the left have become ideologies of destruction; the right for commercial reasons and the left for cultural (or “multi-cultural”) reasons.
But without remembering our past, we cannot rebuild our future. The memory of the past comes not so much from histories and essays; the main tools of memory were song and story. Today our stories are more likely to be about science fiction, about a future that never arrives, and our songs are not anything we actually sing. Indeed, we don't even share our songs, but listen to them plugged into a tiny box, where no one else can even here them.

R. R. Reno of First Things has brought to our attention some songs that do recover the past, that are worth singing and worth sharing. They are from the English group, Show of Hands. Writes Reno:
The background for the song is the post-Thatcher boom in England that has transformed social patterns. Whatever was left of nineteenth-century industrial society has been swept away. Global agricultural markets have changed farming. The explosive growth of wealth, almost entirely focused in London, has created a large class of the well-to-do. The end result for a great deal of southern England: failing village economies now sustained by money infused by London weekenders, many of whom have bought charming cottages as second homes.

Our free-market friends like to remind us that this is all part of the process of creative destruction. And anyway, aren’t those country folks making their own decisions to sell out and pocket the cash? All good and well, but Show of Hands sings of a different, existential truth: “Redbrick cottage where I was born / Is the empty shell of a holiday home. / Most of year there’s no one there. / The village is dead and they don’t care.” The kitchens have been redone tastefully, but the village empties during the week.

If “Country Life” gives you a Chestertonian tingle, then strap on your seat belt and click over to “Roots.” This song crashes onto the shore of contemporary multiculturalism like a Cornish storm surge.
The major premise of “Roots” is simple: “Without our stories or our songs / How will we know where we come from?” The minor premise is implied: England now encourages cultural forgetfulness rather than memory. The conclusion: an urgent imperative of cultural renewal that gives this song extraordinary emotional power.

Like last year's hit, Dégénération from the French Canadian group Mes Aïeux, these songs remind of us where we came from and what we have lost. And until we recover our past, we cannot rebuild our future.

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Posted by John Médaille
Saturday, October 25, 2008

The RINO Party

When Colin Powell endorsed Barrack Obama, Rush Limbaugh had a convenient explanation, shouted into the microphone: “It was all about race.” Of course, the whole point of a program like Rush's is to provide his listeners with sound bites so that they won't have to think; thinking is hard and it is simply more efficient to farm the task out to people like Limbaugh. It's a division of labor sort of thing. But others proposed another explanation, namely that Powell was a Republican In Name Only (RINO) and so his endorsement was hardly a surprise.

The RINO argument, though more coherent, breaks down in the face of the slew of defections from the entire spectrum of the Republican Party. Christopher Buckley, Ken Adelman, Christopher Hitchens, Scott McClellan, Bill Ruckelshaus, William Weld, Lilibet Hagel (wife of Senator Chuck Hagel), Jeffrey Hart, C.C. Goldwater, and a host of other life-long Republicans have switched sides, calling the RINO argument into question. Even Bruce Bartlett has called for conservatives to “reach out to Obama.”
Only part of the problem can be laid at the feet of the McCain-Palin ticket. True, McCain continues the Cheney-Bush policies of replacing taxes with borrowing, expanding the federal government and especially the powers of the executive (the so-called “unitary executive” theory), foreign adventurism, and a slew of other policies that cannot be reconciled with the traditional Republican stance. Even on social issues, McCain is unreliable. As Tom Piatak points out in Chonicles Magazine:
Even on abortion, McCain is unreliable. On February 3, The Washington Post reported McCain's statement that 'it's not the social issues [that] I care about.' And on August 19, 1999, McCain told The San Francisco Chronicle, ' ertainly in the short term, or even the long term, I would not support the repeal of Roe v. Wade which would then force X number of women in America to undergo illegal and dangerous operations.' I the same interview, McCain stated he would not have a 'litmus test' for judicial nominees. McCain's former senate colleague, Rick Santorum, an indefatigable champion of the unborn, has stated that McCain did his best behind the scenes to prevent pro-life legislation from coming to a vote on the floor. Robert Novak has reported that McCain has described Justice Samuel Alito as 'too conservative.' Novak has also reminded his readers that, back when Vermont Republican Jim Jeffords became an independent and began to caucus with the Democrats, McCain was in negotiations with the Senate Democr