Were Father's Manors Best?

The following exchange took place between myself and two other DBU professors on Facebook. With both professors' permission, I'm posting it here. It began with a quotation by James K.A. Smith in my status line. What do you think, is capitalism incompatible with Christianity?

"Construing our relationship to the world as one of 'consumption' is to take a good, creational reality of dependence and the need for acquisition in a direction that runs against the grain of God's universe. In sum, consumption i...s a way of relating to the resources of the world that runs counter to shalom."--James K. A. Smith

Professor Hatcher: Absolutely. What is the opposite of shalom? That's what we have.

Doctor Collins: So, what does this say about capitalism?

Hatcher: Is capitalism the opposite of shalom? I don't see the hand of God in capitalism. Eden was agrarian.

Collins: It seems to me that capitalism is based on consumption, so whatever Smith says about consumption, I think should apply to capitalism, too. I agree with you Elaine. Whether capitalism is the opposite of shalom or not, it leads in that opposite direction.

Mitchell: Capitalism is such a big, magic word, that can be scary for some and miracle-working for others. I think there is much positive to be said about free markets, the production of goods, and the creativity that goes into investing capital. However, I'm fully in agreement that in the extreme consumerist version we live in, it's hard not to kiss the devil's hand and say you're only kidding.

Hatcher: I can't even imagine how a godly, Christ-like capitalist system would operate.

Mitchell: However, I certainly don't think socialist systems have proved themselves capable of producing long-term prosperity for a people. They tend to devolve into either utopian projects and/or totalitarian collectives. What capitalism offers at its best is the ability to people to use their creativity and drive in work and production of goods. Is radical consumption the natural end of all capitalism or only the kind we've developed in the West?

Hatcher: I certainly don't consider socialist systems a viable solution! The end result is much worse than our "radical consumerism." Due to the fallen nature of humankind, radical consumption is probably the natural end of all capitalism. We just can't seem to do anything right on a large scale although individuals might practice a godly form of ... Read more capitalism on a local scale. But I don't know of any society where either capitalism or socialism has ended well for all. I say back to the land! Maybe manorialism with benevolent landlords?

Free Markets and Human Persons (John Paul II series)

Here's some of the juicer passages from the 1991 encylical Centesimus Annus. John Paul II clearly condemns the collectivism and state-ownership practiced by communism, and he also clearly praises the free market for many things, particular monetary ("solvent") matters. Yet he also decries a business model that sees the maximization of profits as its own reason for existence. He warns against the potential idolatry in the consumption of goods, and insists that business must be guided by moral and ethical concerns that profit the community of persons. The conditions of the workplace matter to Christians, he says, because they matter to proper human flourishing everywhere:

It would appear that, on the level of individual nations and of international relations, the free market is the most efficient instrument for utilizing resources and effectively responding to needs. But this is true only for those needs which are "solvent", insofar as they are endowed with purchasing power, and for those resources which are "marketable", insofar as they are capable of obtaining a satisfactory price. But there are many human needs which find no place on the market. It is a strict duty of justice and truth not to allow fundamental human needs to remain unsatisfied, and not to allow those burdened by such needs to perish. It is also necessary to help these needy people to acquire expertise, to enter the circle of exchange, and to develop their skills in order to make the best use of their capacities and resources. Even prior to the logic of a fair exchange of goods and the forms of justice appropriate to it, there exists something which is due to man because he is man, by reason of his lofty dignity. Inseparable from that required "something" is the possibility to survive and, at the same time, to make an active contribution to the common good of humanity. . . .

[I]t is right to speak of a struggle against an economic system, if the latter is understood as a method of upholding the absolute predominance of capital, the possession of the means of production and of the land, in contrast to the free and personal nature of human work. In the struggle against such a system, what is being proposed as an alternative is not the socialist system, which in fact turns out to be State capitalism, but rather a society of free work, of enterprise and of participation. Such a society is not directed against the market, but demands that the market be appropriately controlled by the forces of society and by the State, so as to guarantee that the basic needs of the whole of society are satisfied.

The Church acknowledges the legitimate role of profit as an indication that a business is functioning well. When a firm makes a profit, this means that productive factors have been properly employed and corresponding human needs have been duly satisfied. But profitability is not the only indicator of a firm's condition. It is possible for the financial accounts to be in order, and yet for the people — who make up the firm's most valuable asset — to be humiliated and their dignity offended. Besides being morally inadmissible, this will eventually have negative repercussions on the firm's economic efficiency. In fact, the purpose of a business firm is not simply to make a profit, but is to be found in its very existence as a community of persons who in various ways are endeavouring to satisfy their basic needs, and who form a particular group at the service of the whole of society. Profit is a regulator of the life of a business, but it is not the only one; other human and moral factors must also be considered which, in the long term, are at least equally important for the life of a business. . . .

It is the task of the State to provide for the defense and preservation of common goods such as the natural and human environments, which cannot be safeguarded simply by market forces. Just as in the time of primitive capitalism the State had the duty of defending the basic rights of workers, so now, with the new capitalism, the State and all of society have the duty of defending those collective goods which, among others, constitute the essential framework for the legitimate pursuit of personal goals on the part of each individual. . . .

Certainly the mechanisms of the market offer secure advantages: they help to utilize resources better; they promote the exchange of products; above all they give central place to the person's desires and preferences, which, in a contract, meet the desires and preferences of another person. Nevertheless, these mechanisms carry the risk of an "idolatry" of the market, an idolatry which ignores the existence of goods which by their nature are not and cannot be mere commodities.

Marxism criticized capitalist bourgeois societies, blaming them for the commercialization and alienation of human existence. This rebuke is of course based on a mistaken and inadequate idea of alienation, derived solely from the sphere of relationships of production and ownership, that is, giving them a materialistic foundation and moreover denying the legitimacy and positive value of market relationships even in their own sphere. Marxism thus ends up by affirming that only in a collective society can alienation be eliminated. However, the historical experience of socialist countries has sadly demonstrated that collectivism does not do away with alienation but rather increases it, adding to it a lack of basic necessities and economic inefficiency.

The historical experience of the West, for its part, shows that even if the Marxist analysis and its foundation of alienation are false, nevertheless alienation — and the loss of the authentic meaning of life — is a reality in Western societies too. This happens in consumerism, when people are ensnared in a web of false and superficial gratifications rather than being helped to experience their personhood in an authentic and concrete way. Alienation is found also in work, when it is organized so as to ensure maximum returns and profits with no concern whether the worker, through his own labour, grows or diminishes as a person, either through increased sharing in a genuinely supportive community or through increased isolation in a maze of relationships marked by destructive competitiveness and estrangement, in which he is considered only a means and not an end.

The concept of alienation needs to be led back to the Christian vision of reality, by recognizing in alienation a reversal of means and ends. When man does not recognize in himself and in others the value and grandeur of the human person, he effectively deprives himself of the possibility of benefitting from his humanity and of entering into that relationship of solidarity and communion with others for which God created him. Indeed, it is through the free gift of self that man truly finds himself. This gift is made possible by the human person's essential "capacity for transcendence". Man cannot give himself to a purely human plan for reality, to an abstract ideal or to a false utopia. As a person, he can give himself to another person or to other persons, and ultimately to God, who is the author of his being and who alone can fully accept his gift. A man is alienated if he refuses to transcend himself and to live the experience of selfgiving and of the formation of an authentic human community oriented towards his final destiny, which is God. A society is alienated if its forms of social organization, production and consumption make it more difficult to offer this gift of self and to establish this solidarity between people.

Obama's Healthcare Hail Mary

The pundits proclaimed this as the make or break speech for President Obama and his health care plan. Of course, the media issues the same dire warning in July and August. The networks know a sense of urgency or impending doom means more viewers!!

While the jury is still out regarding this latest effort, the White House must grapplw over its inability to communicate a precise, easily digestible message to voters. Of course, this problem exists because they are still not certain as to what this bill Will ultimately look like and what it will accomplish. Current efforts are truly all over the place even though the public option still creates the most buzz.

Dorothy Day's Personalism--Some Resources

Since I don't have time to summarize the way personalism was worked out by Catholic Worker activist Dorothy Day, a few links are in order:

The Catholic Worker on Day's Personalism and Distributism

The Influence of Emmanuel Mounier upon Peter Maurin and Dorothy Day

Dorothy Day's Radical Hospitality (Baylor Center for Christian Ethics)

Emmanuel Mounier and Realities of Personalism

Emmanuel Mounier's 1949 volume Personalism represents his mature thought on the ideological and political position by that name that he helped promote in France during the first half of the twentieth century. While Mounier's career as a writer and social critic had been dedicated to a criticism of bourgeois liberal society, the Second World War forced him to recognize the potential for totalitarian abuse in both communist and fascist governments. Unlike his Catholic counterpart Jacques Maritain who came to support something like Wilsonian democracy, Mounier in his remaining few years was more drawn to a socialist vision. Nonetheless, Personalism,as Mounier himself admitted, did not necessarily obligate its adherents to one political platform. Indeed, one wonders that if Mounier had lived, might he have developed a personalist critique of socialism as well?

Mounier begins his slim volume by observing how the Christian notion of the person challenged ancient Greco-Roman notions:

1. Christianity counters the classic distrust of multiplicity with a notion of God's unity working itself out in the diversity of human actions of love.
2. The human being is increasingly understood as "an indissoluble whole" rather than a conglomerate of various elements.
3. God is personal and offers a personal relationship of intimacy and participation to each person.
4. The kingdom of God is not an abstract ideal but a promise of a transformed world and a changed inner heart.
5. God created persons as free creatures to grow and mature.
6. The Incarnation brings together heaven and earth, the mystical and the physical into a complex and affirming unity.

Personalism, Mounier insisted, is not Hegelian idealism, but a recognition of the embodied nature of human beings who in transforming the material, natural world are to "liberate things as well as humanity" (12). Wisdom, in its industry, does not exploit material existence but humanizes the natural world, a world "red in tooth and claw" (to recall Tennyson) which so often seems against us. Thus, we are possessed of a "tragic optimism," even in the face of struggle and effort.

Personalism is also not individualism, which Mounier dismissed as "a system of morals, feelings, ideas, and institutions in which individuals can be organized by their mutual isolation and defense" (18). Personalism is instead fueled by the drive to "decentralize" the human self, to give of oneself, donate oneself to others. Without communication comes madness; without giving comes destruction. We become fully persons as we embrace "an economic of donation, not of compensation nor of calculation," as we give ourselves to others in self-bestowal. This also requires a stability of faithful relations with persons across time and space. We can best be faithful to those we remain with long-term.

Mounier had little patience with romanticizing a communal past of small villages, and he upheld not only the notion of human equality but human rights as that which protects and makes human freedom possible. Yet he also stressed the need for people to divest themselves of property and wealth in giving to others, thereby achieving their own personal and spiritual maturity. He imagined this affirmation of love as one requiring struggle both inwardly and outwardly, for the virtue of fortitude was absolutely necessary for personal growth.

Mournier also rejected notions of freedom either as indifference to the physical world or as pure spontaneity of action. Freedom is instead human love working its way out in responsibility. "Our liberties can be no more than opportunities offered to the spirit of freedom" (62). Freedom and personality fulfill themselves in the higher transcendence of a divine purpose: "My freedom itself comes to me as something given: its supreme moments are not those in which I exercise most will-power; they are moments rather of giving-way, or of offering myself to freedom newly encountered or to a value that I love" (66).

Still, Mounier the activist realized that political responses were inevitably compromised. He held that the political and prophetic voices must listen to each other, as well as other kinds of gestures and movements, such as those of industry and contemplation. "Nevertheless, though to 'engage' oneself is to consent to make-shift, to something impure, . . .and to accept one's limitations," he observed; "it does not sanctify one's abdication of personality to any abandonment of the values that it serves. . . . The troubled and sometimes agonized conscience caused by the impurities of our cause should keep us far from fanaticism, in a state of vigilant criticism. . . . The risks we have to run, and the partial obscurity in which we have to take decisions, put us in the state of dispossession, insecurity and hardihood which is the climate of all great action" (92-3).

Mourier held out hope that the slow death of Christendom promised a Christianity "slowly returning to it first position; renouncing government upon earth and outward appearance of sanctification to achieve the unique work of the Church, the community of Christians in Christ, mingles among all men in the secular work,--neither theocracy nor liberalism, but a return to the double rigours of transcendence and incarnation" (122).

Socialism Saves the Commerical Real Estate Market!!!

A provocative title always attracts attention!!!

As the posted article mentions, our country seems to be in the eye of the economic hurricane. Of course, the eye of a hurricane is temporary and means you will soon feel the full fury of the storm. At least this is what my friends and family (none of whom possess meteorological training) tell me. Plus, that helps illuminate my point so I am sticking with it!!

I spent some time in my pre-DBU life in the commercial real estate world. I also have many friends in the industry. It is not for the faint of heart. Additionally, the M.O. for real estate investors typically follows the Smalera's explanation to the letter. Investors acquire or develop property with maximized leverage on short term (5 year) note. Eventually, they will re-finance and take cash out of the deal which means they will be 100% levered with a bank account full of tax-free cash.

As Smalera points out, this is a great plan as long as properties continue to appreciate in value and cash flow exists to service the debt. However, what happens when tenants leave and values plunge? Who do you trust, the Flowrider or the federal government?? The author chooses the latter.


http://www.thebigmoney.com/articles/judgments/2009/04/24/next-financial-explosion?page=0,0

I was perusing a report from a Federal Reserve Conference that Jekabs and I both attended last November. The topic was the state of the economy and how the fed planned on intervening in the future. In reality, this conference played more like a horror movie convention rife with gloom and doom.

Here is a little nugget filled to the brim with a dash of gloom and a heaping tablespoon of doom:

•75-year unfunded liabilities from entitlement programs sum to $40.3T.
–Social Security $4.3T
–Medicare Part A $12.4T
–Medicare Part B $15.7T
–Medicare Part D $7.9T
–Medicare represents almost 90% of the problem. Privatizing SSN will not work-reduce deficit.

To summarize, projected revenues for Social Security and Medicare falls short of expected budget needs by $40.3 trillion over the next 75 years. Again, that figure does not represent the total amount required to fund the programs through 2084. The programs will be in the red by that amount.

So, how do we as a country close the gap? Here are two viable options. I use the term "viable" very loosely:
•Total per-capita entitlement debt of $330K –to close gap.
•Could raise indiv. Income tax rates by 85%.– (Relative to current 8.9% of GDP)
–This is a static estimate•
could cut discretionary spending by 97%.– (Relative to current 7.8% of GDP)

•could make no tax or spending changes.

Your eyes do not deceive. We would need to either raise individual income tax rates by 85% or reduce discretionary government spending by 97%.

Have a good weekend!!

Distributism--The Basics

Neither a capitalism nor a socialism, distributism was inspired by the teachings of Leo XIII in encyclicals such as Rerum Novarum and in the 1930's by Pius XI in Quadragesimo Anno. While not all distributists were Roman Catholics, the position was most often associated with Catholic thinkers and activists, such as G.K. Chesterton, Hiliare Belloc, Eric Gill, Vincent McNabb, and Dorothy Day. Its key teachings included:

1. The distribution of property across the widest possible number of people. This was thought to be maximized by small farms, independent shopkeepers, craft guilds, and so on.
2. The principle of subsidiarity, which holds that all power and action should be carried out at the lowest level of organization necessary. Big government should be strictly limited to matters of national concern. Not all distributists were anti-monarchical.
3. Centralization is the least efficient way to take care of things--"Small is beautiful." Act locally.
4. The Napoleonic division of property among all heirs is best.
5. Workers should all have disposable shares in a business.
6. House and homeland are more important values than race and empire. Family is at the center of production and social life.
7. Economic and political arrangements should maximize human freedom and its responsibilities.
8. All human beings are equal and made in the image of God. All the above follows from this truth.
9. Distributists were divided over the role of machinery in work and common life.
10. Likewise, not all distributists were agrarian in their ideals. Some were more comfortable in town life.

Back to the discussion of democracy and socialism

To hearken back to our discussion on Thursday about democracy and the role of the government - I think Frederic Bastiat's thought can be rather clarifying in this arena.

From Paul A Cleveland's The Life and Work of Frederic Bastiat: One Man's Call for Liberty:

"...Given this understanding of the proper function of the law [the purpose of government is to punish wrongdoers; that is, it is the collective use of force to protect the endowed natural rights of each individual] Bastiat explored the reasons why unconstrained democracy tended toward socialistic policies, as was the case in France during his life. He gave two reasons for this situation: greed and false philanthropy. The first reason is easy to understand. Greed is a powerful passion in the human heart. It leads people bound by its grip to participate in the act of stealing the property of others. Using the power of government to plunder one's neighbor is a very effective means of theft. When an individual is successful at gaining political power so that the collective force is used to seize his neighbor's property he no longer need fear retribution. That is, the thief no longer need worry about being punished for his crime for it has been artificially legitimized. As a result, stealing goes on with impunity. Unfortunately, this situation tends to blur people's vision of the true meaning of justice.

The second reason for the rise of democratic socialism is more subtle. It flows from the individual's desire to have compassion on others. As such, there is an abiding temptation to use the resources one voluntarily controls to lobby legislatures so as to tap into the larger means available in the public treasury. If the efforts are successful, then the individual will be able to control the flow of far more resources for his "good" cause. Ruinously though, such efforts will be at the expense of justice since it perverts the very basis and purpose of the law and allows people to seize property from others by the use of force."