"East Germany with a good PR company"

Sadly, conservatism in the U.S. usually gets conflated to a few silly notions mostly revolving around firearams and free market economics. However, there is a conservatism worthy of the name, one that takes its cues not from any powerful gun lobby and especially not from big multinational corporations, but a conservatism that seeks above all to conserve our humanity. To my mind, Mr. Peter Hitchens, whose brother is Christopher Hitchens, is an exemplar of what I am tempted to call "true conservatism." This kind of thinking is also articulated very well in the writings and observations of G.K. Chesterton.

In his Mail Online blog on Monday, Hitchens, being "profoundly bored by scandal" turns to writing about what he calls "small matters." He writes about how we have let ourselves become enslaved to our gadgets. His frustration with his cellular phone leads him to the observation I want to take note of, namely his "many reasons" to doubt "that 'market forces', left to themselves, will make us all free and happy." He goes on to observe that these "market forces" often seem more "like East Germany with a good PR company and more efficient distribution. East German cities used to have uniform high streets in which the same basic goods were available everywhere, or not available, in more or less identical shops. So do we, except that we have an illusion of variety. And before anyone goes on about fresh fruit and vegetables, I have been virtually unable to find a fresh Cox's Orange Pippin apple this season (a pulpy, smooth-skinned impostor which tastes as if it has been in a chiller for ten years and goes soft in a day, is offered under this name, but it is not a proper rough-skinned Cox) and only a very few decent Russets. Foreign varieties, often from the far side of the world, are sold here even during the English apple season."

Hearkening back to my post from a week ago Monday, Hitchens gives more concrete examples of his thesis, like the "razor that worked" just fine, but has now "been improved, and replaced by another one that is far more expensive and actually not as good. The marmalade that you like has been wiped off the stock list of all the (supposedly competitive) supermarket chains, and can now only be obtained by mail order via the United States, though it is made in Manchester."

His point is that we are not the driving force behind the market. Rather, the market drives us. More choice does not equal more freedom. I went to a store last week to find black shoelaces. What an enlightening experience that was! In other words, having 100 kinds of soda pop to choose from does not equal freedom. Of course, the fix is not massive governmental interference or regulation, but a recognition of the dehumanizing forces at play and the appropriate resistance this recognition calls forth.

A thought or two on the proposed federal pay freeze

As a federal civil servant I generally support the pay freeze President Obama intends to seek and that he will undoubtedly get from the Republican Congress. Assuming that we won't have a budget until the new Congress begins after the first of the year, the pay freeze, which basically results in federal employees not getting cost-of-living adjustments for the next two years, the likely result is that the proposed 1.4% COA proposed for this year will not go into effect. Of course, the proposed 2% reduction in Social Security withholding set forth today by President Obama will off-set this loss and even result in a net .6% gain. On the one hand, this relief is good because it applies to all workers, not just federal employees. Nonetheless, it seems bizarre to me to reduce the amount of money going into Social Security given its rapidly approaching insolvency.

My only trouble with the proposed freeze on federal wages is that it is a political reaction to the apparent fact that, compared to the average worker, federal employees make significantly more money. No doubt, in many cases this is true. I am on the end of federal employment that should have no difficulty dealing with the proposed freeze. So, I am perfectly willing to forgo COAs for the next few years, even until the economy turns around. However, averages are deceptive. For example if one worker makes $100,000 and another worker makes $30,000 the average salary of the two workers is $65,000. Now, say using the $65,000 average as your baseline, you propose a 2% across-the-board decrease in pay. This means $600 for the person making $30,000 and $2,000 for the person making $100,000, which is a significant bump for both, but who does it hurt more? Stated positively, who is in a better position to help, or what best serves the common good? This simply highlights my problem with the Republicans' insistence that everyone be treated "equally" when making these kinds of difficult decisions.

My point is that not all federal workers are highly paid, many make quite modest wages. So, it seems that there should be a cut-off. I would suggest that the cut-off be the computed average salary of a non-federal worker. Any federal employee making that or less should be exempt from the proposed cut. Let's also remember that federal employees will also absorb a 7.2% increase in health care premiums as a result of the ill-advised health care reform. Fighting for equity seems a golden opportunity for congressional Democrats to stand up for lower paid federal employees. As is appropriate, none of this affects members of the U.S. military. On the whole, there are 2.1 million federal workers, which is a large work force, no doubt. When you stop to consider 2.1 million civil servants, serving a country of some 360 million people, you are talking about less than 1% of total population. Of course, 2.1 million constitutes a higher percentage of the work force.

Such a move is like cutting government spending by implementing, say, a 10% across-the-board cut, which is ham-fisted, short-sighted, and inequitable. For instance, in Utah public education is already underfunded. Hence, you do not want to cut 10% from the education budget! By the same token, programs that benefit the disabled, children, and those who have serious material needs must be considered in a different light than cuts in some other areas.

Maranatha

What matters? The way we manage our lives together, part 2

While I am on the subject of what I think should matter in politics, I also oppose extending the Bush tax cuts. I agree with Pres. Obama on this and so favor extending the tax cuts for middle income people, but not for the very rich. Like many who favor such an extension, I think extending the cuts all the way up to those making $200,000 is too high. Dropping it down to somewhere around $100,000 seems more reasonable to me. It seems to me, especially given the Republican insistence on extending all the Bush-era cuts, that this is an issue the Democrats can seize upon and return, at least on one issue for one fleeting moment, to their proud roots of looking out for regular people- the kind of Democratic leaders revered in my house when I was growing up.

My reason for opposing the extension is two-fold. My first reason is the politico-philosophical reason of favoring less regressive taxation, which serves the common good and rejects such rationales as those employed today by Sen. McConnell, the Republican leader in the Senate, who insists, that “[w]e ought to treat all taxpayers the same.” Don’t get me wrong, I am not in favor of punishing people for being successful, but this is not what a fair tax policy does. Rather, it seeks the common good, which is not a mass redistribution of income, but a way of living together in a society that recognizes, at least to some extent, that I am my brother’s keeper, a society that, while recognizing the need for a social safety-net, must always safeguard against the tendency to foster dependence.

My second reason for opposing the extension of all the cuts, which the Democrats are only considering because they think doing so will do what their massive non-stimulating stimulus failed to do, namely stimulate the economy, is that giving tax cuts to the uber-rich does not have a stimulus effect, like giving cuts to middle income people does. Extending the cuts up to $200,000 a year, or $250,000 a year, would also result in the loss of $700 billion in revenue. I agree with Pres. Obama when he says it would “be unwise and unfair, particularly at a time when we're contemplating deep budget cuts that require broad sacrifice” to extend the cuts up that far. George H.W. Bush was quite correct to describe supply-side economic theory as “Voo-doo economics” while running against Ronald Reagan for the Republican nomination way back in 1980, which is not to say that a strong vibrant economy doesn’t produce more revenue at lower tax rates, it obviously does, but Arthur Laffer’s prognostications ultimately proved illusory. Besides, extending the tax cuts across-the-board, even to those making more than $200,000 per year, as the Republicans, who remain, even after the Tea Party uprising, the party of the very rich, will deprive us of revenue we’ll need to dig out of the hole we’re in, even with massive spending cuts, which are also needed.

It is in mentioning tax increases and spending cuts that complexity comes into play again. It is not either/or but both/and. The question becomes arriving at a mutually agreeable solution, which means compromise on both sides, something that implies nobody gets everything they want. Holding your breath until get everything you want, in addition to being infantile, is precisely what reduces our politics to net loss/net gain. In this era marked not only by ideology, but overly-simplistic ideology, we should all lament the collapse of the political center, those leaders capable of brokering compromise. Here in Utah the best example of this kind of leader, Sen. Bennett, was denied re-election for being, not a liberal, not even for failing to be a conservative, but for refusing to buy into the very narrow vision of politics now sweeping the country.

Maranatha

What Matters? The way we manage our lives together

There are many things we get politically worked up about. Some of these things matter, but many do not. When we can be bothered to get worked up about issues that bear on our common life together we very often eschew any level of complexity and insist on over-simplifying matters, which opens the door to rank demagoguery. As the great American cynic and realist, H.L. Mencken, once observed: “For every complex problem there is an answer that is clear, simple, and wrong.” This seems to me an apt, if very generalized, description of much of the Tea Party agenda.

It has become a political cliché this past year, given our serious fiscal woes, to insist that as a country we need comprehensive entitlement reform. I certainly number myself among those who agree with this assertion. Too often the discussion stops there, or progresses to some inane call for cancelling or dramatically curtailing all entitlements. I want to look at two programs that must be reformed if our country is to become fiscally sound: Social Security and Medicare. Regaining fiscal soundness will, of course, require more reforms than these, but Social Security and Medicare together make up the bulk of what needs to be reformed.

Dallas accountant, John Karrick, in a recent letter-to-the-editor of the New York Times, addressed both of these programs. He points out that Social Security is managed like a Ponzi scheme, the only difference being that it is considerably less sophisticated than a successful Ponzi scheme. He begins by pointing out the obviously regressive nature of both F.I.C.A. and Medicare payroll withholding. Indeed, everyone who is legally employed in the United States, no matter how little they make, pays 6.2% of their salary into Social Security. However, no F.I.C.A. is paid on salary over $106,800. He notes that all workers pay 1.45% into Medicare. Unlike Social Security, Medicare has no upper limit.

Simple arithmetic shows that U.S. workers pay 7.65%, up to $106,800, of their salary for Social Security and Medicare, which means the vast majority of workers in the U.S. pay this on their entire salaries. Nonetheless, despite the regressive nature of these mandated withholdings, there is a certain sense of fairness: you pay into Social Security and later receive Social Security (F.I.C.A. is not technically speaking a tax, but paying into an account) and the same is true of Medicare. Beyond that, your employer matches your 7.65% for a whopping total of 15.3% of what you make! Karrick is correct to point out that “[t]his amounts to a tax on employing people in the United States.”

I disagree with Karrick that we can find a better way to fund our Social Security and Medicare obligations. I am against privatizing Social Security, as are an overwhelming majority of people in the U.S., regardless of political affiliation. What is truly problematic, what we should all be much more worked up about, are these government-run Ponzi schemes. In the case of Social Security, Karrick is correct when he writes that “[t]oday’s contributions are used to pay beneficiaries who contributed yesterday, and the surplus of current contributions is ‘lent’ to the federal government and used for general spending.” It is this disastrous reality that has resulted in Social Security’s rapidly approaching insolvency. If everything that U.S. workers and employers had paid into Social Security remained in the trust fund from its establishment, Social Security would be solvent with a surplus (i.e., we could look at reducing contributions instead of ways to increase them- like upping the amount of salary one has to pay F.I.C.A. from the current $106,800). This is what Al Gore was talking about back in 2000 when he discussed his “lock box.”

Arising from my disagreement with Karrick over whether we can find better ways to fund these huge obligations is my opposition to his idea of formally melding Social Security and Medicare into general revenues, taking funds out of other taxes, most particularly the personal income tax. My reason for disagreeing is that rather than “reducing the tax burden of lower-income Americans,” as he asserts, I believe it will raise taxes on them. However, I readily concede that it would remove a disincentive to hire employees.

As Rich Rickman, writing over on Commentary’s Contentions blog (from whence I was pointed to Karrick's letter), points out, “[t]he Ponzi scheme underlying the Medicare system is even more blatant.” He points to the change made to your Medicare contribution in the truly horrible health care reform known as Obamacare: “[t]he legislation dispensed with the interim step of sending the money to the Medicare Trust Fund, to then be ‘lent’ to the general fund and spent on non-Medicare programs. Instead, the money from the new ‘contribution’ will go straight to the general fund; Medicare will not even get a government IOU to hold in ‘trust’.” Unlike Rickman, I am not bothered that the investment earnings of those making more than $200,000 per annum is now subject to the Medicare tax. It is a way of making the tax less regressive and, I believe, serves the common good by helping to shore up Medicare.

Not until we get worked enough to pay attention to details like these will we come anywhere close to making progress on these important matters that affect us all. In the meantime, we will continue to see-saw back-and-forth between the unabashed and ultimately disastrous statism of so-called progressives and the equally deleterious hyper-individualism of so-called conservatives. This is true of many issues, including immigration. In terms of Catholic social teaching it balancing solidarity with subsidiarity that fosters the common good.

Politics in the U.S. has become a net gain/net loss proposition. As it has been said of diplomacy, which is nothing except politics on an international scale- politics is the art of compromise. There are several ways to accomplish the end of reforming Social Security and Medicare, but reform them we must!

Maranatha

A thought from the road

Throughout On the Road Kerouac "distinguishes between authentic work and the things people do so they can buy more stuff." So, writes John Leland.

Sal Paradise, not only rejects upward mobility, but is intent on being downwardly mobile. For Sal, as for Kerouac, "upward mobility [is] a plot to make men do pointless things, turning them into parodies of the American Dream."

When we consider the great technological advances that have increased productivity exponentially over the past two decades, we have to consider the good with the bad. Despite our ability to be more productive, I don't know many people who work less, but I know many who work more. Besides that contradiction, as Peter Hitchens recently wrote about, these technologies certainly have a dehumanizing effect. He observed in his post Human Beings Check Out, "The thing about the attempt to automate supermarket checkouts is that it depends on us - just as internet and telephone banking, with all their problems, could not have been introduced without our willing co-operation." Just a thought as the economy still lags and nationwide unemployment persists at around 10%.

It seems an ideal time to rethink a lot of things, especially one's personal practices. In short, the reality is we need to focus less on buying stuff. After all, it was rampant consumerism, financed by consumer debt (borrowing 110% of your equity in your home to go on a cruise, buy a jet-ski, or pay down credit card debt), that got us into this mess. Prior to the meltdown, this kind of consumer spending constituted somewhere around 75% of our GDP, creating an unsustainable situtation. Hence, repeating the fundamental economic failures of the past it is not going to get us out of our current slump, let alone put on us on solid ground.

Downward mobility of a kind is just what advanced countries, who consume resources at an unprecedented pace need, as three successive popes (not including Papa Luciani) have taught. Like the other two evangelical counsels, chastity and obedience, poverty applies to Christians in every state of life. As Don Giussani taught, poverty does not mean starving on a street corner in rags, which is destitution. Rather, poverty has to do with your relationship to things; with the question, In what, or in whom, do I place my hope?, which is nothing less than how you go about achieving your deepest desire, which is to be truly happy. As such, it calls for a certain detachment.

Anyway, Leland warns in the subtitle of his book that the lessons of On the Road are not what you think. This post brings July to a close. Next month marks the 5th anniversary of the clunky and uncertain beginning of what was then known as Scott Dodge for Nobody.

The U.S. financial system needs reform now

The Washington Post reported today that the majority of people in the United States back two of the three main parts of the financial reform legislation that the Senate will vote on this week. The two major pieces people support are greater government oversight of consumer lending and, as significant; they support the creation of a fund to be paid into by companies that will cover the cost of shutting down failed institutions, which closures present a risk to the economy. Incomprehensibly, at least to me, is that when it comes to proposed reform and oversight of the buying, selling, and trading of derivatives only 43% support it, while 41% oppose it, with the remaining 16% expressing no opinion. Frankly, given that even people who buy and sell derivatives don't understand them, I am surprised that only 16% essentially did not know.

I really believe if the Obama Administration had led with this much needed reform, which really is more urgent than health care reform, the first year of his presidency would not have been such a ringing catastrophe, at least on the domestic policy front.

Fareed Zakaria, who can always be relied upon for intelligent and dispassionate commentary, also writing in the Washington Post today about the allegations made in the S.E.C.’s recent lawsuit against Goldman Sachs, leaves me feeling ambivalent, that is, both convicted and vindicated. I have to say, I feel more vindicated than convicted. I admit that my posts on Goldman Sachs have been passionate responses to an organization that I feel embodies all that is wrong with our current financial system, one that has steadfastly refused to learn those lessons, as the tidal effects of the still unfolding Greek debacle continue to be felt throughout the E.U. monetary union and beyond amply demonstrates. I would write about Lehman Brothers and Bear Stearns, too, except that, largely due to behind-the-scenes manipulations by the likes of Hammerin’ Hank Paulson and other Goldman insiders, who control the levers of governmental financial regulation and policy-making, they no longer exist. I had friends who worked on Wall Street at Bear, who predicted the collapse to me long before it happened. Things were, indeed, rotten in New Amsterdam for a long time.

Returning to Goldman Sachs, Senator Carl Levin, commenting on e-mails from senior executives at Goldman Sachs from 2007, detailed over the weekend by London's Daily Mail, including e-missives from our friend Lloyd Blankfein, pretty much hits the nail on the head: "Banks such as Goldman Sachs...bundled toxic mortgages into complex financial instruments, got the credit rating agencies to label them as AAA securities, and sold them to investors, magnifying and spreading risk throughout the financial system, and all too often betting against the instruments they sold and profiting at the expense of their clients." Now that the heat is on, as the New York Times documents, Mr. Blankfein is singing a different tune, claiming the Goldman did not bet against their investors. All I can say is "See you court" and hope the porn-loving regulators at the S.E.C. weren't swept away in on-line fantasies, or some such thing, while they should've been preparing the people's case.

As I have stated repeatedly, I am not interested in the legal aspects of the S.E.C. case against Goldman Sachs, like Zakaria, I understand that "Wall Street practices [that] seem dodgy, or unethical," are not necessarily illegal. I, too, value a "system of governance… characterized by fair play and equal justice -- even for people making $10 million bonuses." I am interested in the moral and ethical dimensions because of the huge impact of these shenanigans on the lives of all of us. I very much like that Mr. Zakaria points to Robert J. Samuelson’s argument, which amounts to stating succinctly the argument I have been making for well over a year, namely "whether or not Goldman did anything illegal, this kind of casino gambling should be more tightly controlled". I am even toying with an argument that derivative-like securities be outlawed altogether because investing should not be the same as a weekend in Vegas or Atlantic City. I say that because, like many, I work too hard to gamble my money (gambling being one bad habit I never picked up). I largely agree with the financial reform legislation now before the Senate, which, according to Sen. Shelby, the Republicans unanimously oppose.

Please don’t get me wrong, I am alright, more than alright, with a negotiated solution that is truly bi-partisan, as long as it isn’t watered down to the point where it amounts to no serious reform at all. I will admit this is where I begin to suspect that Republicans are looking out for those making $10 million bonuses more than the vast majority of their constituents who do not and who are the victims of schemes that result in this kind of profit-taking, not necessarily waving the bloody shirt, but the shirt stained with something more reminescent of the Clinton presidency, given the Grassley/Issa leak late last week.

Our current regulatory system was designed for and around what Zakaria dubs "the old Wall Street," which was characterized by "firms [that] were once partnerships in which the managers were betting with their own money and served as trusted advisers to clients. The new companies are big players in the markets and have subordinated their advisory functions." As the S.E.C. lawsuit against Goldman Sachs alleges, they now bet with your money and mine, even playing us for suckers by getting us to take the bad bet and betting against us. Their advisory function has, indeed, been subordinated on the new Wall Street and is characterized by "wildly skewed" incentives and compensation, which values "short-term profits and risk-taking" over "long-term strength." Whether we care to attend to it or not, the immorality engendered and allowed by our current system and the gross injustices committed as a result is a major moral and ethical issue of our time.

Christos Anesti

Heads Goldman wins, tails you lose (and they win)

File this under the better late than never tab- Yesterday the Security and Exchange Commission, otherwise known as the compromised regulators who were asleep at the switch, announced yesterday that they were bringing a civil suit against our old friends, who, according to their chairman, Mr. Blankfein, do God's work in the world (just ask the Greeks), Goldman Sachs. The reason for the lawsuit is that it appears (brace yourselves) that Goldman was deliberately dishonest to their own benefit and the detriment of their clients.

The S.E.C. claims that Goldman sold securities related to mortgages that were designed to make Goldman a profit and stick investors with a loss. The investment vehicle, which is apparently a Toyota with a stuck gas pedal, was called Abacus 2007-AC1. Apparently, this specific product was a derivative-like instrument based on betting for or against the housing market. Goldman started Abacus in 2007 at the behest of one John Paulson, a hedge fund manager, who went on to make one billion dollars in this scheme. According to the New York Times, Paulson made an additional $3.7 billion by betting against the housing market in 2007.

Here's the rub, while Paulson held a stake in this investment scheme, Goldman told clients that an independent manager would choose the bonds. Here's what the S.E.C. alleges, as I understand it: John Paulson chose all the bonds, selecting those he thought most likely to lose value, this is how he made his money, by betting against the market. Whereas, Goldman allegedly sold these securities to foreign banks, insurance companies, and pension funds, but these institutions would only make money if the bonds, selected based on Mr. Paulson's "bet" that they would lose value, gained value! Get it? I mean this is the kind of scheme the mafia would be proud to hatch. Of course, Goldman Sachs made a profit while their clients lost their shorts because this, according to the S.E.C., was the intent. A Goldman Sachs vice president, Fabrice Tourre, is also named in the suit as the mastermind behind this scheme.

Goldman Sachs issued not one but two statements yesterday denying they did anything illegal. Much like the big financial cheeses, who Peggy Noonan recently took to task, they don't know how it happened that they made money on an investment on which their clients lost money. As one of the first bits of wisdom my Dad imparted to me goes: Figures don't lie, but liars can figure and often do. At the end of the day, it may turn out be yet another case in which there was wrong doing, but it was not illegal. Even this possibility demonstrates the need for a serious and comprehensive overhaul of financial laws and regulations, as well as an increased focus on enforcement and compliance.

I am glad that this is a civil suit because maybe the victims can reclaim some of what they lost. I am still waiting for there to be criminal charges filed based on the many schemes that led to our current melt down. I am sure the case hinges on many intricacies of security law, but I am not interested in that because there are enough attorneys to take care of the legal matter. I care about the gross immorality of playing around with insurance companies, banks, and pension funds. These are businesses and institutions on which the rest of us rely. We pay insurance premiums, we pay into 401ks, and we have our money in the bank. I really find myself asking, where is the concern about all of this?

Perhaps this is the beginning of a determination that will result in the decision that Goldman Sachs is too big and too destructive to succeed. In the meantime, maybe Goldman Sachs can brush up on basics, like revisting the defintion of the word fiduciary, which, according to Dictionary.com, is "[a] person [inexplicably-corporations are persons under U.S. law] legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets for the benefit of the other person rather than for his or her own profits" (underlining emphasis mine).

The Economist also has a concise piece the S.E.C. lawsuit.

Christos Anesti

Goldman-Sachs and God

Lloyd Blankfein the current chairman of Goldman-Sachs, you know, the firm that specializes in making money by adding no value whatsoever, yeah, the firm implicated over the past week or so for less than above-the-board dealings with the Greek government to keep a lot of deficit spending off their books so that Greece could appear to be adhering to the mutually agreed upon European Union guidelines for countries participating in the common currency, known as the euro, stated last November that he and his firm are doing "God's work." Greece's malfeasance, aided and abetted by our friends at Goldman, has caused the common European currency to drop significantly in value and it has been learned that Goldman is working with other European governments on similar schemes. So, instead of borrowing money to cover their deficits, Greece had an off-the-books arrangement with Goldman, involving derivatives, that had the effect of misleading investors and the EU about Greece's financial health. These dealings are well explained by Beat Balzli, writing for the international edition of the German magazine Der Spiegel, which is published in English. The article is called, How Goldman Sachs Helped Greece to Mask its True Debt.

When queried about their Greek dealings, Goldman says they were only doing what Greece wanted, which caused Harry Shearer on yesterday's installment of his weekly radio program, Le Show, to accurately observe: "Yes. Goldman-Sachs has gone, ladies and gentlemen, since last November when the chairman, Lloyd Blankfein, said 'we're doing God's work,' they've gone from that to the hooker's defense: 'well they wanted it'." I think in the comprehensive reform of our finance laws, which Congress will no doubt get to once they finish with healthcare reform, there should be laws against pandering of the kind routinely engaged in by these international hustlers.

If you check out Le Show and want to listen to his take on Goldman's Greek odyssey, go to 30:52 and listen until 40:00, a section that includes Shearer's witty muscial tribute to Mr. Goldman and Mr. Sachs.

Ah, Hammerin' Hank and the boys! Matt Taibbi took their measure in his Rolling Stone article Inside The Great American Bubble Machine. These guys are the architects of what Naomi Klein, in her insightful book, The Shock Doctrine, called "diaster capitalism." Heads these guys win, tails you lose (and they win). I am not a socialist, but a capitalist. I believe in markets, which is why I am skeptical of the two bills now under consideration in Congress to reform healthcare. I believe that markets require some regulation, however. Regulation of markets, like gun laws, must be smart, that is, not only applicable and burdensome to honest, law abiding people and businesses, enforceable, and minimal.

In addition to helping to create and then benefitting from crises, Goldman Sachs thrives off a kind of crony capitialism, the kind of corruption and opacity, that keeps underdeveloped or barely developed countries, like, say, Greece, which is one of the EU's poorest countries, especially among the countries that participate in the common currency, from ever thriving economically. The only possible silver-lining to this cloud is that some are predicting that this and other situations as they come to light will lead to the break-up of the euro, which was never a really good idea. If it comes to that, Goldman Sachs will undoubtedly find a way to profit from the problem they helped to create.

Just as Bob Dylan observed that it doesn't take a weatherman to know which way the wind blows, it doesn't take a moral theologian to know that this ain't God's work, quite the contrary. If you're not convinced, I urge you to read Caritas in veritate and/or Populorum Progresso.

UPDATE: This post was published on Il Sussidiario.

Meum cum sim pulvis et cinis

Haiti is a people

While driving from work to my parish last night I listened to a story on All Things Considered about the people in Haiti who are desperately trying to find work, to be employed for wages in order to make a living. As I listened to the story I thought "Well, surely after the earthquake there is plenty of need for people to help with recovery operations, with the distribution of food, water, and setting up temporary shelters, burying the dead, etc." Beyond the immediate aftermath, there is a lot of work to be done rebuilding Port au Prince and outlying towns and villages, along with what little transportation infrastructure there is. Then I thought how the relief efforts are much like the hundreds of billions of dollars in aid that have flowed into Haiti just since the Clinton Administration, which, like so much aid given to desperately poor countries, seems to have no effect beyond enriching the corrupt elites.

I think much of what economist Dambisa Moyo set forth in her book of a few years ago, Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa, is applicable to Haiti, too. At the end of the day, we have to take the humanity of the Haitian people into account, just as we do anybody we would deign to assist in any way. While people rushing to Haiti and donating generously are, on the whole, good things, we must coordinate and distribute in such a way that we do not ignore the humanity of the people of Haiti.

What helped me to synthesize all of this today is an interview for Il Sussidiario, which appears as part of their Diary Haiti series, with Fr. Leonardo Grasso, who is a missionary priest that went from Venezuela to Haiti in the aftermath of the earthquake. When asked what he found upon his arrival in Haiti, apart from the devastation caused by the earthquake, he said "I found people who are not as they are reflected in the current news, where they are portrayed as desperate, a prey for violence, and who are looting the aid. This is not true." He says that in his daily interactions with people he does not see, nor do people complain about all the conditions reported in the media. Rather, Fr. Leonardo says that because the Haitians "are people who have suffered greatly" that "they are also capable of facing conditions which seem impossible. These people are also very religious. They are able to recognize, in the circumstances of the catastrophe, a strength that comes from a relationship with God and with others. Haitians know the difficulties that confront them and embrace them in an extremely positive way." Most importantly, he contradicts the passivity and resignation with which the people of Haiti are portrayed, insisting that they "are responding with great initiative. Into the disaster, they breathe the desire to start over." For me this means we need to be careful not to break our arms patting ourselves on the back.

Above all, Fr. Leonardo states that there is reason for great hope in the midst of this disaster. I thought his perspective surfaced something that seems to be ignored and shunted off to the side, the Haitian people themselves. Our Lady of Perpetual Help- pray for us!

Labor Day

One of the aspects of Catholic social teaching that is often ignored or disregarded is what the church teaches with regard to work and labor. Each year the United States Conference of Catholic Bishops issues a Labor Day statement. I come from very working class people. I am always amazed when people point to all the great historical figures to whom they are related. I am related to no such people, certainly not the famous Dodge brothers nor to Grenville Dodge, the Civil War general and driving force behind much railroad building. In fact, I do not think any of my grandparents, all of whom lived their entire lives in the 20th century, graduated from high school. My parents and all their siblings have high school educations, but it was not until my generation that members on both sides of my extended family went to college, even then not all of us by a long shot, let alone to graduate school. Telling my Dad I was majoring in Philosophy and History was a very difficult moment for me, not to mention for him. He is still surprised that I manage to make a living.

Despite that, everyone has been alright because of their willingness to work hard. My Dad worked for quite a few years assembling dishwashers. We did not even own a dishwasher until many years after he stopped doing that job. To make ends meet, he worked as a barber on Saturdays, having attended vocational school after he mustered out of the Navy. It was while he was attending barber school at the old Utah Technical College that he watched the news of President Kennedy's assassination while having lunch at Bill & Nada's. Over the years of our growing up, he did a lot of odd jobs on weekends and in the evenings. Even though he is retired now, he won't let me pay for lunch, supper, or even a cup of coffee.

As one might expect, this year's USCCB Labor Day message, The Value of Work; The Dignity of the Human Person, draws heavily on the Holy Father's encyclical, Caritatis in Veritate:

"As we seek to rebuild our economy, produce a better health care system, and improve the immigration system, we are presented with unique opportunities to advance the common good. Pope Benedict’s new encyclical insists that the ethical dimensions of economic life begin with protecting the life and dignity of all, respect for work and the rights of workers, and a genuine commitment to the common good. As the Holy Father points out: 'it is a good that is sought not for its own sake, but for the people who belong to the social community and who can only really and effectively pursue their good within it. To desire the common good and strive towards it is a requirement of justice and charity' (emphasis in the original, #7).

"On this Labor Day, let us remember those without work and without hope. Too often in our public discourse anger trumps wisdom, myth outweighs fact, and slogans replace solutions. We can work together and rebuild our economy on the moral principles and ethical values outlined by Pope Benedict in his new encyclical. This Labor Day, we should take a moment to pray for all workers and all those without work. We should also ask God’s help in living out the Church’s call to defend human life and dignity, to protect workers and their rights, and to stand with the poor and vulnerable in difficult economic times. In his new encyclical, Pope Benedict challenges and reassures us: 'As we contemplate the vast amount of work to be done, we are sustained by our faith that God is present alongside those who come together in his name to work for justice' (#78)."

Let's not forget everything that has happened this past year. Let's also understand in a deeper way that society requires solidarity and makes us interdependent. We all have a responsibility to towards each other. After all, wasn't it Cain who asked whether he was his brother's keeper?

"Clowns to the left of me and jokers to the right..."

I think most people, when asked straight up, would agree that everyone should have health care. Perhaps the one issue many who have health care with which they are satisfied could be more educated about is the common good, but no politician is going to do that because they're still running for student body president and promising a lunch period that's twice as long and to shorten the school year by two weeks.

It's time to move from ends to means. This means that we have to recognize that there is more than one way to achieve the desired end. Hence, it ceases to be about moral obligations and becomes about prudential judgment. Successful health care reform has to be bi-partisan, which means there has to be compromise. I'm tired of the ignorant lashing out by the right and the sanctimoniousness of the left. Therefore, I hope in his speech to the joint session of Congress the president doesn't preach a sermon, but talks about how we're going to get there and opens the way for meaningful debate on this important issue facing our country.

Writing in the opinion section of today's Wall Street Journal, Karl Rove, a man, who long-time readers know, I do not greatly admire, cited some statistics that I found very interesting. He did not indicate the sources of these numbers. However, if they are even remotely accurate, it makes what the Administration is proposing seem like overkill: "Nearly nine out of 10 Americans say they have coverage—and large majorities of them are happy with it. Of the 46 million uninsured, 9.7 million are not U.S. citizens; 17.6 million have annual incomes of more than $50,000; and 14 million already qualify for Medicaid or other programs. That leaves less than five million people truly uncovered out of a population of 307 million. Americans don't believe this problem—serious but correctable—justifies the radical shift Mr. Obama offers."

I agree with the position of the U.S. Bishops that immigrants should also have access to health care. Fifteen million people without access to health care is a problem. Of course, this brings comprehensive immigration reform back to the fore. It's time to move from generalities and slogans to public policy.

Any meaningful reform has to deal with rising cost of health care in a significant way and slow growth in cost. Throwing another trillion dollars at the problem won't resolve it. We already spend more per capita on health care than any other country. We should be able to achieve universal coverage at what are currently spending. Back in the '90s when House Republicans wanted to limit growth in Medicaid and Medicare to around 6% a year, which was about double inflation at the time, they were accused of cutting health spending!

In addition to other concerns and all discussions about death panels aside, there is plenty to be concerned about in the proposed legislation with regard to abortion. As with some methods of extracting embryonic stem cells, ends do not justify means. I appreciate very much what Cardinal O'Malley wrote in his much-admired post, about the opportunity he had to speak with President Obama at Sen. Kennedy's funeral, sharing with him "that the bishops of the Catholic Church are anxious to support a plan for universal health care, but we will not support a plan that will include a provision for abortion or could open the way to abortions in the future." His Eminence reports that President Obama "was gracious in the short time we spoke, he listened intently to what I was saying."

More writing

The first of what I hope are more articles (this one started out as a blog post) for the Italian news website, Il Sussidiario. My article is called US/ A tired line of political argumentation.

Thanks to my dear friend Sharon for facilitating publication.

A tired line of political argumentation

Am I the only one getting tired of this line of argument: Inaction is not an option, doing something is better than doing nothing, and then proceeding to enact legislation (written by Congress) that does not solve the problem on which doing nothing was not an option, but is outrageously expensive?

How about, first do no harm? We need health care reform, just like we needed an economic stimulus. However, we did not need the stimulus that was enacted. Do we need what is being offered for health care? One thing that was sold this way, but that we did not need, was Hammerin' Hank's TARP!

I am in favor of all people in the U.S. having access to quality, affordable health care. The Massachusetts model, a variation of which is what is being proposed, is failing because it did nothing to lower health care costs. The rising cost of health care, the increasing amount of GDP it is consuming, is the root of the problem. All of us need to ask what is being done on that front. The meetings the administration has held to extract promises to lower cost are mere hand-shake agreements for public opinion purposes, they are not binding.

As California, which, along with Texas on the opposite end of the political spectrum, is a laboratory for experiments in bad government, is finding out, raising taxes during a recession actually leads to declining government revenues because, in many cases, the tax increase is the straw that breaks the camel's back. So, while soaking the rich to pay for health care may appeal to the populist in all of us, raising their marginal rates higher than what the wealthy pay in places like Denmark, France, etc. will further impede economic growth and lead to a longer recession. Far from reducing the drag of health care on the economy, such a move arguably increases it.

Writing in the NY Times yesterday, Nobel Prize-winning economist Paul Krugman, in a column called Costs and Compassion, cuts to the chase: "As a practical, political matter... controlling health care costs and expanding health care access aren’t opposing alternatives — you have to do both, or neither." It is easy forget that right now the U.S. spends more per capita on health care than any other country. It seems to me the goal should be achieving universal coverage without spending one dime more than we currently spend in the aggregate. Here's a question, can we achieve universal coverage and spend less? That's a good question for the president and members of Congress.

In his Monday Times column, David Brooks offers a plausible diagnosis of what is happening politically: Liberal Suicide March. He is correct to state that any hope lies with the so-called Blue Dog Democrats. "These brave moderates are trying to restrain the fiscal explosion. But moderates inherently lack seniority (they are from swing districts). They are usually bought off by leadership at the end of the day.

"And so here we are again. Every new majority overinterprets its mandate. We’ve been here before. We’ll be here again."

One of the diplomatic failures experienced by the president himself, was when several European countries, Germany being the most prominent, refused to pass reckless stimulus legislation at his behest because they were thinking up-front about the incurred debt. At some point, those currently in power have to realize that truth of what economist Milton Friedman said when he averred that there are no free lunches. As a country, we are paying for everything on one big, collective credit card. Instead of economic stimulus to help those whose lives have been negatively impacted, those in power seem content to buy another round of drinks for their friends, leaving us to pick up the tab.

This is the 1,200th post here on Καθολικός διάκονος. This represents an average of posting everyday for more than 3 years!

More on Goldman Sachs

In his NY Times OpEd piece, published shortly after Matt Taibbi's great, if slightly hyperbolic, article in Rolling Stone, Noble Prize winning economist Paul Krugman writes this about Goldman Sachs and other playahs, lending much credibility to Taibbi's charges and arguments.

"Goldman’s role in the financialization of America was similar to that of other players, except for one thing: Goldman didn’t believe its own hype. Other banks invested heavily in the same toxic waste they were selling to the public at large. Goldman, famously, made a lot of money selling securities backed by subprime mortgages — then made a lot more money by selling mortgage-backed securities short, just before their value crashed. All of this was perfectly legal, but the net effect was that Goldman made profits by playing the rest of us for suckers."

If you don't believe that, listen to Tom Ashbrook's hour dedicated to this subject during his On Point radio program. His guests are Taibbi and Charles Ellis. If you think Taibbi is up-in-the-night, listen to how hard it is for Ellis, a consummate Wall Street insider, to defend the indefensible.

Of movies and (profit) motives

Last night, or, early this morning, my two older children went to see the first showing of the new Harry Potter movie with my son's godfather. So, this evening my youngest daughter and I are going to see The Half-Blood Prince. I have to admit to being excited about going to see this film!



While I am getting back into the swing of things, abrupt transitions will have to suffice. Therefore, I want to draw attention to an article in Rolling Stone by Matt Taibbi on the object of Hammerin' Hank Paulson's TARP- Goldman Sachs: The Great American Bubble Machine: From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression - and they're about to do it again . The timing of the article is great, given the public release of the Holy Father's Caritatis in Veritate. Also, Gabriella commented on my post announcing the encyclical's release. In her comment she quoted a Lord Griffiths, who is "a trustee of the Archbishop of Canterbury’s Lambeth Trust and Vice-Chairman of Goldman Sachs International" to the effect that it is people and regulations that need to change. There are no people who need to change more than those, like Lord Griffiths, who are involved with Goldman Sachs. Because it deals with finance and morality, I added Taibbi's article to my Church and Moral Issues bibliography of post-residency articles on morality that I am compiling to complete my post-residency assignment.

We'll all be relieved to know that, according to the NY Times, Goldman is back to profitability.

Taibbi's take includes this straightforward assessment:

"The bank's unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere — high gas prices, rising consumer credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you're losing, it's going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it's going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth — pure profit for rich individuals."

In his encyclical, Pope Benedict writes this about profit:

"Profit is useful if it serves as a means towards an end that provides a sense both of how to produce it and how to make good use of it. Once profit becomes the exclusive goal, if it is produced by improper means and without the common good as its ultimate end, it risks destroying wealth and creating poverty. The economic development that Paul VI hoped to see was meant to produce real growth, of benefit to everyone and genuinely sustainable. It is true that growth has taken place, and it continues to be a positive factor that has lifted billions of people out of misery — recently it has given many countries the possibility of becoming effective players in international politics. Yet it must be acknowledged that this same economic growth has been and continues to be weighed down by malfunctions and dramatic problems, highlighted even further by the current crisis. This presents us with choices that cannot be postponed concerning nothing less than the destiny of man, who, moreover, cannot prescind from his nature" (italics in original).

A deep diaconal bow to Eric Bugyis writing over on dotCommonweal for drawing my attention to Taibbi's piece just as my ire was building over reports of Goldman's profiteering. You can watch an interesting video with Taibbi (Tie-bee) on the RS website.

"Human greed is a form of idolatry" BXVI

Michael Sean Winters posting on America magazine's In All Things blog writes about the shape, form, and content Pope Benedict XVI's long anticipated encyclical on economic matters: Looking Ahead to Pope Benedict's Encyclical.

This post is well worth reading. I gravitated toward this quote:

"Readers familiar with the writings of Hans urs von Balthasar or with the charism of Communione e Liberazione and its founder Luigi Giussani will see their influence in the following passage: 'So what is capitalism suffering from? It is not suffering only from its excesses and from the greed and egoism of the men operating in it. It suffers from its point of departure, from its functional principle and the power that creates the system. For this reason, it is impossible to heal this illness with marginal remedies; it can be healed only by changing the point of departure.' I confess I would be surprised if this finds its way into the encyclical, but it is powerful stuff, and its gets down to the level of theological analysis that few men are capable of. Pope Benedict, however, is one of those few."

I agree, he is and I cannot wait for his judgment on what has transpired since late last summer.

A diaconal bow to Fred posting over on la nouvelle.

Stimulating an important debate

Well, we have a "stimulus" plan that has passed through the House. We can only hope that the Senate shows some restraint and eliminates everything in the bill that is not stimulus, but funding for new programs that will exist in perpetuity. A stimulus package should not be used as an end run around the normal appropriations process. The rhetoric and immediacy of getting Congress to act too quickly, without an opportunity to exercise their due diligence, is far too reminiscent of Hank Paulson's Chicken Little tactics to get the TARP passed. My hat is off to those members of the House who voted against this Trojan Horse crammed full of pork, which includes all House Republican representatives, plus 11 Democrats.

At least President Obama nixed an insane part of the stimulus, talked up so technocratically by Speaker Pelosi on ABC's This Week with George Stephanopoulos last Sunday, that would have allocated some $200 million for contraception. I particularly like Pelosi's attempt to answer the question put to her by Stephanopoulos as to how this ties into economic stimulus:

"Well, the family planning services reduce cost. They reduce cost. The states are in terrible fiscal budget crises now and part of what we do for children's health, education and some of those elements are to help the states meet their financial needs. One of those - one of the initiatives you mentioned, the contraception, will reduce costs to the states and to the federal government."

So, do the economy and the government exist for the human person, or vice-versa? It seems that for people who think like Speaker Pelosi, it is the latter. The state is not in the business of dictating whether we have children, or how many we might have. Therefore, it has no business asking us to fund $200 million for something that goes under what can only described as the Orwellian moniker "family planning services". I do credit Speaker Pelosi for not employing newspeak, but calling it contraception. I do not want to leap to dramatic conclusions, but this kind of thinking frightens me. Nonetheless, we must begin from a positive hypothesis. In Is It Possible to Live This Way?: An Unusual Approach to Christian Existence, Vol. 2 Hope, Giussani talks about going to a meeting of some women, who were also mothers, with a friend. Upon leaving the small gathering, his friend said of the women: "They have the responsibility of bringing to the world the reason that makes it worthwhile having children." Don Gius adds: "Those people are people called to cry out to the world the why of working, of living and of dying...." (pg 55). I think that a nice summary of our royal, priestly, and prophetic calling given us in Baptism and strengthened, that is, confirmed in Confirmation, that for which the Eucharist and Penance empower us.

Faith and hope are not something added on to life, that extra little something that gives us a pragmatic basis for being nice. Rather, faith shows us our destiny, the very reason for which we exist, for Whom we exist, in Whom we live, move, and have our being. Hope is the certainty about our future that arises from faith, which is faith in Jesus Christ, in his on-going and all-pervasive Presence, by the power of the Holy Spirit, which is why we pray- Veni Sancte Spiritus, veni per Mariam.

Indeed, as His Excellency, Archbishop Francisco Javier Martinez, wrote some years ago now, "the Eucharist is the only place of resistance to annihilation of the human subject." If not already, it is a state-of-affairs that we are rapidly approaching. A state not brought about by the current political regime, but a road we have been on for awhile now, the same road that led to us getting so disastrously off-course economically. It is the path of not putting first things first, of relegating first things to the margins in the sorely mistaken belief, indicative of hubris, that human beings are sufficient unto ourselves. This view of things in the secular West also explains the gap.

What sacrifice?

With talk of an eight hundred and fifty billion dollar economic stimulus package, plus the seven hundred billion dollars already allocated for Mr. Paulson's buds in the financial industry, and trillion dollar deficits for the foreseeable future, one might well ask, Where are these trillions of dollars going to come from? Including the seven hundred billion dollars already allocated for the TARP, our national debt is rapidly approaching eleven trillion dollars.

We are not simply going to print money, which would flood the world with U.S. dollars and lead to hyper-inflation, which would further tank the economies across the world, and make our currency useless. The money to fund all this deficit spending, as Peter Schiff, writing in the Wall Street Journal points out, must be borrowed from sources who actually have the cash to loan us. These sources are primarily other governments, like China, Japan, and Saudi Arabia. Each of these countries already owns hundreds of billions of dollars of U.S. debt in the form of interest-bearing Treasury notes. The yield on these notes, according to Schiff, is a "paltry 2%-3%".

In his inaugural address, President Obama spoke of sacrifice, but one might well ask, as Schiff does in his article, who is it that our president is calling on to make sacrifices? It is certainly not anybody in the United States. Schiff notes that the U.S. accounts for less than 5% of the world's population, but we "account for more than 25% of global GDP". Our current economic situation will inevitably lead to this advantage shrinking dramatically and what GDP growth we achieve will be made possible only by massive infusions of foreign financial capital, but not through the financial markets as investment. Rather, the money will flow to our economy through the U.S. government, which, in turn, will borrow it primarily from these and other countries. I have written more about the effects of this over on Cahiers.

It bears noting that the money loaned to us by these countries is money they cannot use in their own countries to provide education, adequate healthcare, transportation infrastructure, etc. When the president of the U.S. himself is forecasting trillion dollar deficits he is doing so in the expectation that these countries will continue to buy Treasury notes, let them mature, take their 2-3% interest only to put the principal and likely the interest right back into low-yielding U.S. Treasury notes. So, it seems, that the expectation is for people in other countries to sacrifice in order for us to retain our disproportionately high standard of living. In the words of Peter Schiff, "We are planning to spend as much as we like, for as long as we like, and we will let the rest of the world pick up the tab."

I readily grant that this is no different than what was being done under the previous administration, even before the meltdown late last year, but this was an administration in which the vice president went on record as believing that deficits did not matter- I'm not sure what he thought mattered. This prompts the question, How is this change? We also need to inquire about the plan to get out of the hole we are in. All I hear is the sound of more digging. It bothers me that the economic team assembled by the new president are some the same geniuses who played key roles in getting us into this current crisis. Besides, like the repeal of the Mexico City policy, this policy cannot be very helpful in our efforts designed to re-build relations with the rest of the world.

A deep diaconal bow to Paper Clippings for bringing Schiff's article to my attention.

A stark realization

I am finally able to sum up what has been going on economically and financially. The answer came to me after listening to NPR Senior New correspondent, Daniel Schoor's editorial yesterday: the privatization of gains and the socializing of losses. It is the classic heads I win, tails you lose. It is crisis capitialism. All of this is the result of Republican-enacted deregulation during the six years of a Republican administration and Republican Congress and the stewardship of Alan "I don't know if I really exist or not" Greenspan, the Ayn Rand disciple, who was left in place during the Clinton Administration, too. Add to this war profiteering and you have Bush-Cheney o' nomics. Many ships have been steered aground by so-called captains of industry. In the Navy such captains lose their ships and are asked to resign their commissions.