Dr. William Luckey's Blog of Catholic Truths on Economics

Guidance on Economics, its importance for Catholics, its importance to civilizations, and what are its objective truths. It might sound boring...but boy, we are all affected by it.

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The Wise and Powerful Obama Knows the Cost of Government-Run Medical Care!

The Congressional Budget Office has given us an estimate of how much it will cost to insure one-third of all the uninsured medical patients in the United States by something like 2012, and it will cost a certain bazillions of dollars, which Obama is now saying will not expand the deficit, while also having promised in his campaign that he will not raise taxes of anyone who makes below $250,000. There is nothing in the media but talk about how he can possibly do this without taxing, and the fact that this ginormous amount of money will cover only one-third of those allegedly needing coverage.
 
Believe it or not, all this is beside the point! Why? Cost to the good or service provider and price to the consumer are decided at the point of exchange. Let’s look at a simple example. I like bananas. If I go to the supermarket and see bananas which are so green they look like St. Patrick’s Day bananas, I won’t buy them, because they might rot before they ripen, and in the summer, they may get fruit flies. The price does not even get consideration. But if they are getting yellow, I will look at the price. If they are already ripened, they had better be selling cheap, because I know that the store cannot keep them much longer, because they will begin to rot and the stock must be moved. If they are too ripe, I will probably avoid buying more than one or two, because I will not be able to eat them in time, again, regardless of the price.
 
Now look at medical procedures. Most medical insurance plans have a co-pay. This means that when you go for treatment, you must foot part of the cost of that procedure. Why? This prevents people from going to the doctor for minor problems that one could fix with things one finds in one’s medicine cabinet. Minor scrapes, bruises from sliding in at third, typical common colds, etc., no normal person wants to shell out money for a physician to tell them to go home and put ice on it, or stay in bed and drink plenty of liquids. The higher the co-pay, the less frequent the visits, and the more serious the complaints for patients to be willing to spend on doctor’s office visits. Just as in the bananas example, even though the provider seems to “set” the price, the consumer has the choice of paying it or not, by not buying the bananas or not going to the doctor’s. Of course, necessity changes things. If I promised a relative I would make banana bread, the fact that I might not like the bananas for sale might not make a difference. I will buy them regardless of price or condition, up to a point. It is the same with a doctor’s visit. If I get something with weird symptoms, or excessive pain, or suffer a more than ordinary trauma, I will seek help, regardless of cost, depending of the desperateness of the situation.
 
This brings us to the wise and powerful Obama and his cohorts in the Congress and the CBO. How is it possible for someone, anyone, to predict the future cost/price of medical care? One can’t. Since cost/price is decided at the point of exchange, the wise and powerful Obama would have to be present at every transaction, and update the cost figures at every moment. He would also have to predict events, such as car accidents, diseases, etc., which no one can predict, or we would avoid them. The only thing we have is current trends, which are only past history and may not continue at all. Remember that British Prime Minister Neville Chamberlain, in 1938, after meeting with Adolf Hitler and signing an agreement with him, never predicted the things that Hitler would do just a year after that document was signed. How can someone predict what people will do about conditions this observer knows nothing about in people he has never met? Only the free market can do that, because the market adjusts to these transactions on a minute-by-minute basis, and there are billions of transactions every minute.
 
This explains why, in all countries having socialist medical programs, the costs are going off the charts, the number of doctors are declining and health care is now being rationed. This is what is coming to the United States.

Government “Health Care”

Almost all the talk in the news today is about health care reform in the United States. I think that we should examine the true status of this “health care” situation.
 
Firstly, the proper term for what is being discussed is “medical care,” not health care. Health care is the responsibility of each and every person according to his ability to influence events that affect his or her health. This would include eating good foods, getting enough sleep, trying to stay away from dangerous situations if possible, and so forth. But when even doing these things do not work to preserve one’s health, one seeks out medical professionals to aid in returning to health, if possible. So we are really speaking about medical care, not health care.
 
Next, the medical care system in the United States is the best in the world. We have the best-trained physicians, nurses and technicians in the world, and we have the most up-to-date medical equipment.
 
Thirdly, we have the best medical financing system in the world. We have many medical insurance companies, including one that will insure you for $10 per day, which advertises on television. Our emergency rooms are required by law to take anyone who comes in, and our ambulances are required to take anyone who wants to go. This includes people who have colds, flu, a “boo-boo,” regardless of their ability to pay, and the cost for this is foisted on the paying patients of the hospital, unknown to them. The hospital is not required to cure the nonpaying patient who is seriously ill or injured, but must get them at least to where they are stabilized.
 
Fourthly, physicians and hospitals are willing to take payments. 
 
Fifthly, there is Medicare and Medicaid for the poor.
 
What then is the problem? The question is raised by the current administration as to what to do with those who do not have health insurance. According to CNN, there are 86.7 million people who did not have health insurance in 2008. But reading further on, we find that this was not a constant number. Many people lost their health insurance because they were between jobs. Many young people, whose likelihood of illness is very remote, put off getting health insurance because they see it as a waste of money. Rich people tend to be self-insured. The poor, as stated above, have Medicaid and the elderly Medicare. So there is really no accurate data on the gaps in the current system, and therefore the much-touted need for “reform” may be based on a false premise, panicking good natured Americans into visualizing people dying right and left from minor and treatable illnesses.
 
Another problem is that many people do not take care of their own health. It is a commonplace that Americans are too fat and get too little exercise. Whose fault is that? Many lower class people are diagnosed with high blood pressure. A bottle of blood pressure pills costs about $6.00 per month. Just about everyone can afford this; the problem is, some people are notoriously bad at taking this medication, which must be taken every day regardless of how one feels. So young, virile people come into emergency rooms with irreversible kidney failure, because they did not follow the doctor’s instructions, and now they require dialysis for the rest of their life. Chronic alcoholics and smokers, etc., eventually come down with incurable diseases. All of this ratchets up the cost of medical care, and it is the fault of the patients themselves. Are those who take care of their health and pay for their own medical insurance supposed to pay for these people?
 
This week, both the president and his press secretary stated that there were countries where the people were completely satisfied with a “single payer” (i.e., socialist, government-run) medical system. When the press secretary was asked to name one, he could not. But a study by the Cato Institute has some very interesting data. Patients having to wait for more than four months for non-emergency surgery: Britain, 36%; Canada, 27 %; New Zealand, 26%; Australia, 23%; the United States, 5%. The elderly evaluate their health care way better in the UK than in either Canada or the United States. During a 12-month period, in Ontario, 71 patients died waiting for coronary bypass surgery. The United States also has the lowest hospital stay period compared to the other western socialist countries. Prostate cancer mortality rates among those diagnosed with the disease: UK, 57%; France, 49%; Germany, 44%; Australia, 35%; New Zealand 30%; Canada, 25%; and the United States, only 19%. Remember, this is under the current systems, which, in the US, is a free-market system, but in all the aforementioned other countries is a socialist system. (See http://www.cato.org/pubs/pas/pa532.pdf.) Do these other systems sound like ones where people are completely satisfied?
 
Lastly, there is the question as to whether the new government system will shut out private medical coverage. The Heritage Foundation stated that currently 170 million Americans have insurance coverage. Under the new system, 119 million could lose their coverage. Why? The competing government service will be cheaper than the private coverage, because the costs will mostly be paid with taxes. Companies, due to cost savings, will be strongly influenced to enter the government system. Since most of us have medical insurance through our jobs, we will have the public-run system foisted on us through our companies. Hence we will lose our private coverage, and hence our choices in medical care, and the efficiency with which the private system operates, as seen in the Cato Institute study discussed above. This, also, will force out of business many private companies, which, I argue, is the ultimate goal of the current administration.
 
During the recent presidential campaign, candidate Obama said that he would propose a system that would allow regular citizens to have the same health care system that members of Congress had. Congress members have a private system. Why not just open that plan to membership from anyone or any company who wants to join? Because his original statement was baloney, intended to get people to vote for him, since that plan sounded reasonable. The ultimate goal was socialism, which is why the deception. 
 
By the way, we have not said anything about costs. Perhaps next time.

A LETTER EXPRESSING MUCH OF WHAT IS WRONG WITH OUR COUNTRY

Glenn Beck: The Letter

Audio Available:     

June 17, 2009 - 10:36 ET

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Sign the petition: An open letter to our nation's leadership
GLENN: I got a letter from a woman in Arizona. She writes an open letter to our nation's leadership: I'm a home grown American citizen, 53, registered Democrat all my life. Before the last presidential election I registered as a Republican because I no longer felt the Democratic Party represents my views or works to pursue issues important to me. Now I no longer feel the Republican Party represents my views or works to pursue issues important to me. The fact is I no longer feel any political party or representative in Washington represents my views or works to pursue the issues important to me. There must be someone. Please tell me who you are. Please stand up and tell me that you are there and that you're willing to fight for our Constitution as it was written. Please stand up now. You might ask yourself what my views and issues are that I would horribly feel so disenfranchised by both major political parties. What kind of nut job am I? Will you please tell me?

 

Well, these are briefly my views and issues for which I seek representation:

One, illegal immigration. I want you to stop coddling illegal immigrants and secure our borders. Close the underground tunnels. Stop the violence and the trafficking in drugs and people. No amnesty, not again. Been there, done that, no resolution. P.S., I'm not a racist. This isn't to be confused with legal immigration.

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Two, the TARP bill, I want it repealed and I want no further funding supplied to it. We told you no, but you did it anyway. I want the remaining unfunded 95% repealed. Freeze, repeal.

Three: Czars, I want the circumvention of our checks and balances stopped immediately. Fire the czars. No more czars. Government officials answer to the process, not to the president. Stop trampling on our Constitution and honor it.

Four, cap and trade. The debate on global warming is not over. There is more to say.

Five, universal healthcare. I will not be rushed into another expensive decision. Don't you dare try to pass this in the middle of the night and then go on break. Slow down!

Six, growing government control. I want states rights and sovereignty fully restored. I want less government in my life, not more. Shrink it down. Mind your own business. You have enough to take care of with your real obligations. Why don't you start there.

Seven, ACORN. I do not want ACORN and its affiliates in charge of our 2010 census. I want them investigated. I also do not want mandatory escrow fees contributed to them every time on every real estate deal that closes. Stop the funding to ACORN and its affiliates pending impartial audits and investigations. I do not trust them with taking the census over with our taxpayer money. I don't trust them with our taxpayer money. Face up to the allegations against them and get it resolved before taxpayers get any more involved with them. If it walks like a duck and talks like a duck, hello. Stop protecting your political buddies. You work for us, the people. Investigate.

Eight, redistribution of wealth. No, no, no. I work for my money. It is mine. I have always worked for people with more money than I have because they gave me jobs. That is the only redistribution of wealth that I will support. I never got a job from a poor person. Why do you want me to hate my employers? Why ?? what do you have against shareholders making a profit?

Nine, charitable contributions. Although I never got a job from a poor person, I have helped many in need. Charity belongs in our local communities, where we know our needs best and can use our local talent and our local resources. Butt out, please. We want to do it ourselves.

Ten, corporate bailouts. Knock it off. Sink or swim like the rest of us. If there are hard times ahead, we'll be better off just getting into it and letting the strong survive. Quick and painful. Have you ever ripped off a Band?Aid? We will pull together. Great things happen in America under great hardship. Give us the chance to innovate. We cannot disappoint you more than you have disappointed us.

Eleven, transparency and accountability. How about it? No, really, how about it? Let's have it. Let's say we give the buzzwords a rest and have some straight honest talk. Please try ?? please stop manipulating and trying to appease me with clever wording. I am not the idiot you obviously take me for. Stop sneaking around and meeting in back rooms making deals with your friends. It will only be a prelude to your criminal investigation. Stop hiding things from me.

Twelve, unprecedented quick spending. Stop it now.

Take a breath. Listen to the people. Let's just slow down and get some input from some nonpoliticians on the subject. Stop making everything an emergency. Stop speed reading our bills into law. I am not an activist. I am not a community organizer. Nor am I a terrorist, a militant or a violent person. I am a parent and a grandparent. I work. I'm busy. I'm busy. I am busy, and I am tired. I thought we elected competent people to take care of the business of government so that we could work, raise our families, pay our bills, have a little recreation, complain about taxes, endure our hardships, pursue our personal goals, cut our lawn, wash our cars on the weekends and be responsible contributing members of society and teach our children to be the same all while living in the home of the free and land of the brave.

I entrusted you with upholding the Constitution. I believed in the checks and balances to keep from getting far off course. What happened? You are very far off course. Do you really think I find humor in the hiring of a speed reader to unintelligently ramble all through a bill that you signed into law without knowing what it contained? I do not. It is a mockery of the responsibility I have entrusted to you. It is a slap in the face. I am not laughing at your arrogance. Why is it that I feel as if you would not trust me to make a single decision about my own life and how I would live it but you should expect that I should trust you with the debt that you have laid on all of us and our children. We did not want the TARP bill. We said no. We would repeal it if we could. I am sure that we still cannot. There is such urgency and recklessness in all of the recent spending.

From my perspective, it seems that all of you have gone insane. I also know that I am far from alone in these feelings. Do you honestly feel that your current pursuits have merit to patriotic Americans? We want it to stop. We want to put the brakes on everything that is being rushed by us and forced upon us. We want our voice back. You have forced us to put our lives on hold to straighten out the mess that you are making. We will have to give up our vacations, our time spent with our children, any relaxation time we may have had and money we cannot afford to spend on you to bring our concerns to Washington. Our president often knows all the right buzzword is unsustainable. Well, no kidding. How many tens of thousands of dollars did the focus group cost to come up with that word? We don't want your overpriced words. Stop treating us like we're morons.

We want all of you to stop focusing on your reelection and do the job we want done, not the job you want done or the job your party wants done. You work for us and at this rate I guarantee you not for long because we are coming. We will be heard and we will be represented. You think we're so busy with our lives that we will never come for you? We are the formerly silent majority, all of us who quietly work , pay taxes, obey the law, vote, save money, keep our noses to the grindstone and we are now looking up at you. You have awakened us, the patriotic spirit so strong and so powerful that it had been sleeping too long. You have pushed us too far. Our numbers are great. They may surprise you. For every one of us who will be there, there will be hundreds more that could not come. Unlike you, we have their trust. We will represent them honestly, rest assured. They will be at the polls on voting day to usher you out of office. We have cancelled vacations. We will use our last few dollars saved. We will find the representation among us and a grassroots campaign will flourish. We didn't ask for this fight. But the gloves are coming off. We do not come in violence, but we are angry. You will represent us or you will be replaced with someone who will. There are candidates among us when hewill rise like a Phoenix from the ashes that you have made of our constitution.

Democrat, Republican, independent, libertarian. Understand this. We don't care. Political parties are meaningless to us. Patriotic Americans are willing to do right by us and our Constitution and that is all that matters to us now. We are going to fire all of you who abuse power and seek more. It is not your power. It is ours and we want it back. We entrusted you with it and you abused it. You are dishonorable. You are dishonest. As Americans we are ashamed of you. You have brought shame to us. If you are not representing the wants and needs of your constituency loudly and consistently, in spite of the objections of your party, you will be fired. Did you hear? We no longer care about your political parties. You need to be loyal to us, not to them. Because we will get you fired and they will not save you. If you do or can represent me, my issues, my views, please stand up. Make your identity known. You need to make some noise about it. Speak up. I need to know who you are. If you do not speak up, you will be herded out with the rest of the sheep and we will replace the whole damn congress if need be one by one. We are coming. Are we coming for you? Who do you represent? What do you represent? Listen. Because we are coming. We the people are coming.


Requirements for a Supreme Court Justice

There has been a lot of discussion about President Obama’s nomination of Judge Sotomayor to the Supreme Court of the United States. There has been much persnickety analysis of a few remarks she made at a conference, and one or two decisions she made, including the fact that her decisions as a Court of Appeals judge have been overturned more often than not by the Supreme Court itself. The big question is whether she will stick to the law or be an activist judge, which means that she will want to make law and public policy from the bench. 
 
The reader may ask, “What does this have to do with economics?” The answer is, a lot. The economic system never operates in a vacuum, but is part of a three-legged stool, the other two legs of which are a religious-moral system and a legal system. These three legs of the stool operate together to form the character of any country.  Since we are discussing law, let us take an example of the economy of a country trying to operate a free-market economic system, but where the courts are corrupt. There will always be disputes in business. People understand agreements in different ways, interpret contracts, especially the more complex ones, differently, and, of course, some people are downright dishonest. Instead of taking matters into one’s own hands, business people take the matters in dispute to an impartial court for a decision. But if the courts are corrupt, it means that they will decide for the one who bribes them, or the one with the political connections, or in favor of friends and relatives, rather than according to the law. This corruption limits the amount of risk that the business operator is willing to take, because, if something goes wrong, there is no sure legal remedy. Countries with this type of court system tend to live in primitive economic conditions for that reason.
 
Any country that to expects to have a prosperous economy needs citizens who respect the rule of law, and courts that will adjudicate disputes according to that law. Judges who legislate from the bench, that is, who decide not according to the law but according to what they would like to see, destroy the confidence in the courts needed to operate business successfully, not to mention the penal law system. 
 
But do not take my word for it. The great Constitutional scholar (a non-lawyer, I might add, and don’t get me started on lawyers’ ignorance of the Constitution) Dr. George Carey of Georgetown University wrote an article many years ago, bringing us back to the intent of the framers of the Constitution regarding Article III of the Constitution, the judicial article. All legal decisions must take into account right off the bat the intentions of those who wrote the article or statute in question. The words of the article or statute cannot be understood reliably by using the words themselves, because words are susceptible to a variety of meanings. Therefore, any legal scholar or judge who is competent goes to what the authors of the law intended to accomplish by the law in question. In interpreting the Constitution of the United States, there is a hierarchy to be used in ascertaining the meaning of any section. After the words themselves, there come the debates in Constitutional Convention, and after that, the most thorough, authoritative explanation of the document, the series of newspaper articles written by three of the Founding Fathers, called The Federalist, written under the pseudonym “Publius,” the intention of which was to explain the provisions of the new Constitution to those who had objections. Dr. Carey points out that in discussing the ability of the Supreme Court to overturn statutes, liberals never refer to the preeminent Federalist on the subject—Federalist 78. Why is this? 
 
First of all, Publius tells us, we must understand that the Constitution is “fundamental law.” This means that it is foundational. The Constitution is an official expression of the will of the whole people, hence it begins, “We, the People of the United States . . . .” Statutes, law passed by legislatures, while binding, are the will of the representatives of “We, the People of the United States . . . .” In a conflict of laws between a statute and the Constitution, the Constitution must prevail. The Constitution itself does not speak of the ability of the Supreme Court to overturn statutes, but Federalist 78 tells us that limitations of the power of the legislative branch “can be preserved in practice no other way than through the medium of courts of justice, whose duty it must be to declare all acts contrary to the manifest tenor of the Constitution void” (my emphasis). The word “manifest” means “evident to the senses,” and “tenor” means an exact copy. In this case it means the literal words of the document (Black’s Law Dictionary). Publius notes that in order for the Court to declare a statute unconstitutional, there must be an “irreconcilable variance” between the two.
 
Publius goes on to say that “The courts must declare the sense of the law; and if they should be disposed to exercise will instead of judgment, the consequence would equally be the substitution of their pleasure to that of the legislative body” (emphasis in the original).
 
How does one keep the courts from doing just what Publius says that they should not do? He continues: “To avoid an arbitrary discretion in the courts, it is indispensable that they should be bound down by strict rules and precedents which served to define and point out their duty in every particular case that becomes before them” (my emphasis). In other words, these strict rules and precedents, coupled with the clearly spelled out functions of the Supreme Court Publius noted above, should make the judicial the “least dangerous branch.” In terms that the layman can more easily understand, perhaps, the “trappings” of the court, i.e., the judicial robes, the wigs (in England), the wood-paneled courtrooms, the respect that the judges are shown—all of these tend to make the judges, if you will, “high priests” of the law, designated to protect the law, not to substitute their own will for either the Law (the will of the people) or legislation (the will of the legislators). But this is just what judicial activism is—a substitution of the will of the judge for that of the people as expressed in the Constitution, or the will of their representatives as expressed in legislation. If there is no irreconcilable variance between the fundamental law and the statute, then the Court has no business changing anything. If the judge disagrees with a policy of the legislature, the place to discuss that is in the legislature, not the Court. If the judge does not like a provision of the Constitution, the way to change that is through the amendment process, which is spelled out clearly in Article V.
 
Of course, this assumes that the judges believe that the manifest tenor of the Constitution IS fundamental law with the meaning the Founders intended it, and not their version of it. If a judge thinks that the Constitution is a “living document,” he or she clearly intends to insert his or her meaning of it (his or her will) into their interpretation of it. You have to wonder what these judges learned in law school. This is why I always wondered if lawyers were the best candidates for judgeships. Law schools generally train you only in case law. “The law is what the Supreme Court says it is,” was a famous statement by a judge, which shows that basically the last case, even if deviating from the Founders’ intent, is the meaning of the Constitution. However, good graduate schools of political science teach law too; the difference is that the Ph.D.s from those schools are not practitioners, but are much better read than most lawyers, meaning that they generally have actually read the original documents related to the founding, as well as studied English law, from which much of our law derives. I remember that at a pro-life conference, a paper was given by a very good pro-life Federal prosecutor, but he was challenged by a famous legal scholar, Walter Berns, who had a Ph.D. in Political Science with a concentration in law. The question was about the trend of the court cases in the life questions. Dr. Berns made a fool out of the prosecutor; not only did he have better Constitutional theory, showing great erudition, but even outdid the prosecutor on the case law. (Oh, you got me started.)
 
So, I ask the sitting judges and the senators who are to discuss the confirmation of Judge Sotomayor, what standards will you use to judge her qualifications: those of the Founding Fathers as seen in Federalist 78, or some other standards?   

Notre Dame, Obama and Economics

I am sure that readers of this blog are familiar with the recent episode relating to the supposed Catholic university of Notre Dame inviting President Obama, the most pro-abortion president in history, to be the commencement speaker and receive an honorary Doctor of Laws degree. 
 
There are a number of things to be said about all of this. For example, the argument was made that we have to hear the other side of the story. Can anybody really say that any Notre Dame students have not heard the various arguments both for and against abortion in at least one course in their academic career? If so, Notre Dame is really running a kindergarten under false pretenses. Even I got both sides of the arguments at the Catholic university I attended, and abortion was not even legal yet. Secondly, the academic freedom argument says that in a university setting, professors have the right to express various aspects of a subject, or else academic discourse will be hampered. There are a number of problems with this argument, but the one that is relevant here is that academic freedom applies to classroom instruction, not to public speeches, especially by politicians, which, by their very nature, are open to discussion in the public forum; in fact open to public disputation, which is exactly what the protesters were doing at the university.
 
It is this latter situation which lends itself to an economic analysis. Giving the president of Notre Dame some credit, it probably was the board of trustees which invited president Obama to the campus, never thinking that that decision would be the source of such controversy. By and large, Catholic universities run by religious orders have given up control of their institutions by putting mostly laypersons on the board, most of whom are there because of the large amounts of money they can contribute and get their friends to contribute. But this means that, assuming the invitation to  President Obama was not Father Jenkins’ idea, Father Jenkins is faced with the following dilemma: waffle in justifying the invitation, which he personally opposes and was outvoted on, or resign. He obviously did not quit, so he had to waffle; he had to try to fit the invitation of the radically pro-abortion Obama into the clearly stated principles of the university. This could only be done by using the above stated arguments.
 
There are then two economic sides to this situation. President pinnochi-obama said the he wants to cut down on the number of abortions, and in that he agrees with Notre Dame. But does he? It is simple supply-demand and price. Obama is in favor of funding abortion, both here and abroad. Giving government money to abortion clinics allows them to charge less for abortion. If the price goes down, the demand goes up. Therefore the policies of Obama will actually increase abortions. The fact that the remaining crowd at Notre Dame were wildly enthusiastic of his speech tells me that either the so-called Catholic Notre Dame is not doing its job of teaching in accord with the Catholic faith AND natural law, and/or the people there were stupid. In either case, it leads me back to the kindergarten analogy I mentioned above. 
 
Next, there is the old expression that there is no such thing as bad publicity. We are in economic hard times. The Notre Dame website recognizes this, but says it will not freeze pay, let people go or freeze spending. Nevertheless, the possibility that prospective numbers of applicants will decline might be worrisome to the administration. Now, what Catholic institution was the subject of lengthy discussions, articles and coverage in the media recently? Only one—Notre Dame University. It got more free publicity in the past few weeks than even its football team can get for it. And who will be attracted to Notre Dame as a result of this free publicity? Pro-abortion, pro-Obama fans, both Catholic and non-Catholic. Considering the audience at graduation, both the graduates and their guests, this is not surprising. On the other hand, my employer, Christendom College, had Father Pavone and Dr. Jude Dougherty, both famous orthodox Catholics and foes of abortion. My undergraduate alma mater, St. John’s University in New York, run by the Vincentian Fathers, had Immaculee Ilibagiza, a Catholic Rwandan genocide survivor, who has been on EWTN. Neither Christendom nor St. John’s got any free, big national publicity from these speakers and degree recipients, even though they got some in certain circles. But if you wanted a real Catholic education based on who got honorary degrees, which would you pick: Notre Dame? Or would you pick Christendom and St. John’s? All those who believe that Notre Dame is the pre-eminent Catholic University in the United States need to think this out again. So Notre Dame waters down its commitment to our Faith, yet cries all the way to the bank. The rest of us must earn our money the old-fashioned way—we earn it—by pleasing God.

Keynes: Alive and Well in Conservative Circles

I have never listened to the Glenn Beck radio show, but I have enjoyed watching his television show, first on CNN Headline News, and, more recently, on Fox News Channel. I also agree with almost everything he says on that show, and I am impressed with his guests, especially, but not exclusively, the economists. However, today he blew it!
 
Glenn has been recommending the book Animal Spirits by two economists, Robert J. Shiller and George Akerlof. Now, Glenn has been complaining for months, ever since the original bailout during the Bush administration, about excessive government spending, and has been properly championing the idea that the free market can get us out of this economic mess. Since the Obama administration took over, Glenn has also ratcheted up his criticism of government spending, and the Federal Reserve’s printing of money, which economists call creation of credit ex nihilo, i.e., out of nothing.
 
So, what is with Animal Spirits? In the interest of full disclosure, I have not read the book, but now I do not have to. Shiller and Akerlof were on the Glenn Beck television program today. In his book The General Theory of Employment, Interest and Money (1936, p. 161), Keynes tells us that almost all of our economic activities are not a result of studying a situation, and estimating the probabilities of success or failure, but merely “animal spirits,” by which he means “a spontaneous urge to action rather than to inaction.” This is akin to what former Federal Reserve Chairman Greenspan called “irrational exuberance.” According to what Shiller and Akerlof said on the show, our current economic problems are caused exactly by these animal spirits, which make people make business decisions based on emotional factors such as “confidence” or “trust.” In addition to this, according to them, the only remedy to this “animal spirits” situation is, wait for it . . . fiscal policy (i.e., government deficit spending) and monetary policy (i.e., creation of credit ex nihlo by the Federal Reserve).
 
What nonsense! To make things worse, Glenn Beck, who has been complaining for months about government deficit spending and the Federal Reserve’s printing of money, thought that this was a great idea and a great book, recommending it to all his viewers.
 
The truth is that economics is a science and we know exactly what has caused the economic crisis we are in—government deficit spending and creation of credit ex nihilo by the Federal Reserve. (I have written about this in other articles in this blog.) These activities send false signals to entrepreneurs and other business people regarding prices and costs, and they make bad decisions. The fact that Freddie and Fannie were in the government’s pocket made things even worse, as well as the Community Reinvestment Act, which threatened banks with penalties if they did not lend to minority potential borrowers even if they were unqualified.  
 
This whole scenario was predicted long ago by Ludwig von Mises in his Theory of Money and Credit, which was originally published in German in 1912, and also, more recently by Jesus Huerta de Soto, in Money, Bank Credit and Economic Cycles, originally published in Spanish in 1998, long before the current crisis erupted. It is a shock that Glenn Beck, a fierce opponent of government tampering with the economy, has now become the Dr. Frankenstein of the resuscitation of Keynes!

Even by Government Standards, This Is ‘Real Money’

This week, President Obama submitted his budget to Congress. The budget called for 3.6 trillion dollars in government spending; that’s $3,600,000,000,000. He was proud of his work because, he said, he cut $17 billion dollars in government programs, which he said is “real money.” Now, to you and me, $17 billion is a lot of money; but to the Federal budget, it is a real drop in the bucket. Obama’s cuts in programs are ½ of 1% of this budget, or, .005 of the budget. Put another way, the total spending in the Obama budget is $11,613 for every man, woman and child in the United States. The cuts in programs comes to $54.84 for every man, woman and child in the United States. To put this is real terms that everyone can understand, even a Congressman, the spending in government programs is less than one year’s tuition, room and board at Christendom College. The alleged savings of $54.84 will not buy even ONE standard micro-macroeconomics textbook, the price of which usually runs over $100.

Suppose we couple this with the FULL national debt. The national debt clock says that the regular national debt is $11.3 trillion dollars. The unfunded mandates from Social Security, Medicare and other entitlements, coupled with the official national debt, add up to more than $55 trillion dollars—CURRENTLY. How much of the $3.6 trillion dollars will the Federal Government be able to fund with taxes? The national debt after the 2010 fiscal year is expected to be over $12 trillion dollars (see http://www.federalbudget.com). The chart at the above site seems to show that the increase in the budget deficit will be more than $1 trillion dollars. For the sake of argument, let us assume a conservative $1 trillion increase in the national debt (ignoring an increase in entitlements). This will be an increase of $3,226 for every man, woman and child in the United States.

The current interest on the national debt, that is, the tax money we spend to holders of United States government bonds, many of which are held by China, to fund the government accumulated deficits, is $412 billion per year, and climbing. So the interest on the national debt part of the budget alone is $1,329 for every man, woman and child in the United States.

Josef Stalin said that the death of one man is a tragedy; the death of millions is a statistic. Of course, we are not speaking about death here, but do you really think that these numbers are merely statistics? Someone will have to pay for these debts. Every year the interest on the profligate spending of the Federal Government, which, by the way, you the voters, many of whom are Catholic, approve, grows. Suppose the interest you had to pay on your house and/or car grew in this way. How many extra jobs would you have to get to keep up with the payments? When you had no more time to work, then what? Would your whole family have to work, even the little kids? Would you be able to leave your wife and kids any inheritance? How much would you be able to give to charity?

If these trends continue, the ordinary people will have very little money to live beyond a very low standard. This will not happen necessarily in this generation, but what about your children and grandchildren? We are mortgaging their future so that we can be taken care of by a paternalistic government which is more than willing to exchange votes in the short term to ravage the wealth of the nation like a plague of locusts. Where is the outrage? Where even is the common sense? Where did our morality go, that we can stick our progeny with our debts?

“What Do You Want on Your Tombstone?”

This line from an old pizza commercial brings up an exercise in one of my management courses when studying for my MBA. What you had to do is think for a while about what you would like your epitaph to say about you. I never thought about it this way. Another way to put this exercise is to ask, “What kind of a person are you? How do you want people to remember you?”

The Catholic Church focuses a lot on sin, and rightly so. Catholics examine their consciences, or should examine their consciences, frequently. But much of what is contained in a list of sins to be checked against our thoughts and actions leaves a lot under the radar. Pope John Paul II has contributed, along with some phenomenologists such as Max Scheler and St. Teresa Benedicta of the Cross (Edith Stein), to examining personhood, and there are many Catholics who may or may not be sinners according to the list in the books, of which I cannot judge, but they fall short in their personhood.

The reason for this is that we generally see personhood as a static concept. We say that the unborn baby is a person, and so it is. But it is in an undeveloped stage. The personhood requires development, and the development of personhood requires that we open our hearts to others, that we have empathy, that we see ourselves as the image of the persons of the Blessed Trinity, who are known to us as complete self-giving. In short, personhood is the gift of ourselves to others.

Unfortunately in my experience, I have run into many Catholics, some of whom have professed themselves to be exemplary, who have been very short on personhood. They are self-centered, arrogant, intellectual bullies, unable to empathize, paranoid and uncaring. These folks have persecuted me and others seemingly for no other reason than that it makes them feel superior.

These things not only have spiritual consequences but economic as well. The reason that we were asked to perform this exercise in a management class is so we can examine how we treat others. Being mean and hard on others is not just plain anti-personhood for the actor himself, but it is discouraging to employees, customers, suppliers. Surgeons are notoriously compatible with this non-person model, and I wonder how many medical students have decided not to specialize in surgery due to the arrogance of those who are supposed to teach and guide them. Mean teachers, and we all have probably had experience with this, discourage academic performance. And how many mean confessors have dissuaded penitents from returning to confession. I have been mistreated by many priests, nuns and lay Catholics so that it is a miracle that I still have my Faith. (My wife says that we cannot take it out on Jesus for the faults of his followers.)

Interestingly enough, the people who do these things may not even really know that they do them, because they never truly examined their personhood—that is, how much empathy do they have, how much self-gift are they. Ultimately, John Paul says, man is meant to give and receive love, and real love is not the “love” that is mean “for the beloved’s own good.” Love is the self-giving that we see in the Trinity. It requires humility, kindness, empathy, long-suffering, “living with” another.

Take the case of entrepreneurs. The myth about them is that they do what they do for money. The truth is that they never do what they do for money, and if someone does entrepreneurial activity just for the money, they will fail. Entrepreneurs take risks, raise money, usually from relatives and friends, and work their fingers to the proverbial bone with virtually no return for years, for the thing in itself; because society needs it; because it will make man’s work easier; because it needs to be done. This is true self-giving. They could be much more comfortable at a desk job, pushing papers, working 9 to 5, but instead, they go through all of this so that our lives will be better. This does not mean that they are perfect in their interpersonal relations, but if they do not have a well-developed personhood, their task will be much harder, because no one will want to work with them.

So let us all examine ourselves from the viewpoint of the epitaph. How do you want to be remembered? “Here lies Fred—a mean, backstabbing, selfish, overbearing, arrogant, inhuman creep.” Or, “Here lies Fred—the most kind, generous, self-giving, hard-working, caring person one could ever meet.” The choice is yours.

Self-Interest and the Founding Fathers

There is a new-ish theory going around conservative and Catholic circles, and it was expressed by two recent thinkers who spoke at our college this month. The theory goes like this:
1.     Thomas Hobbes (1588–1679) had a terrible view of man. Without the benefit of civil society, human beings would be cutthroat beings, “seeking power after power, a search which endeth only in death.” Therefore they need a dictator to keep them in line.
2.     John Locke (1632–1704) had the same view of man, only slightly moderated. The whole purpose of government was, similar to that in Hobbes’ thought, to protect man’s ability to do what he likes signified by the protection of life, liberty and property.
3.     Our Founding Fathers were Lockeans, which means that they were modified Hobbesians— only concerned with people doing whatever they wanted.
4.     Our current problems stem from the Hobbesian nature of our government.
 
I objected to these thoughts as a person who has a Jesuit Ph.D. in political philosophy, and who studied under some famous political philosophy scholars. Both of these speakers did not address my objections, but merely repeated what they originally said, as if I did not hear them the first time. They took no trouble to refute anything I said.
 
I believe that this new theory is, first of all, false. Secondly, the theory is dangerous, because it spurs hatred for our government as originally intended, not just the way it has been deformed. Thirdly, it gives fuel to those Catholic monarchists and others who hate this government in the first place.
 
So, my refutation:
 
            1. Those who hold this theory are basically correct about what Thomas Hobbes thought about human nature. However, one thing I learned from my Jesuit professors was teleology, which has always been a Thomistic principle. Teleology means that to understand the nature of anything, one must understand its end or goal. That will tell you what it is. For instance, a baseball bat may be used for many things—propping open a door, bashing someone over the head, but its nature is to “bat” baseballs. Thomas Hobbes wrote his book Leviathan to justify the dictatorial, Divine right rule of Charles II.
 
2. What about John Locke? Locke has no such view of human nature. A close
reading of John Locke’s Second Treatise on Civil Government shows that, first of all, civil society is already in existence. He distinguishes the private civil society, which the people already set up and which, with the market, is sui generis (self-generating) and exists due to the natural propensity of people to better their lives in every sense of the term, and the government, which the civil society sets up to protect this bettering of lives, and which comes under his heading of ‘life, liberty and landed estate.” Note, Locke does not use the word “property” in this trilogy. This is because these three things are all your property. All three are under your care, custody and control, to use the terms of tort law. You as a human being have the responsibility properly to use these to the end of human flourishing. “Life,” obviously because I cannot flourish if I am dead; “liberty,” if I cannot use my free will, my life is not worth much in terms of flourishing; and “landed estate,” because in the agricultural society of Locke’s day, one might starve if one’s land were taken away. The purpose of any government is to protect this human flourishing. If government does not, you can set up a new one.
 
It should be noted that Locke’s Second Treatise has a teleology of its own. He was trying to justify the removal of James II of England and the replacement of him with William of Orange. The treatise is decidedly NOT a treatise on how people should live their lives. It is not a treatise on morality or on human nature per se. If fact, a close reading of Locke shows that he takes human nature as we experience it.
 
It is also necessary to see the Second Treatise in the light of the First Treatise. The First Treatise on Civil Government was meant to refute the argument from Scripture that all kings were essentially descended from Adam, which was made by James I’s court theologian, Sir Robert Filmer. Since God made Adam the ruler of creation, Filmer said, absolute monarchy was the only form of legitimate rule. Locke, using Scripture, effectively refuted Filmer. Therefore, it is easy to see that the Second Treatise is continuing the argument, “If absolute, Divine right monarchy is not the proper form of government, what is?” This has nothing to do with Hobbes. In fact, look at this quote from the early Father of the Church, St. Isidore of Seville, often quoted by St. Thomas:
 
Law should be honesta (respectable, worthy), just, possible, according to nature, conformed to the customs of the country, suitable to place and time, necessary, useful, clear, also not to contain anything which by its obscurity might lead to wariness; it should be devised for the common good of all the citizens, and not for the interests only of some individual.
 
And who would make the decision, assuming the beginning of a new state? The pre-existing civil society. This conforms to St. Robert Bellarmine’s thought, when he says that although government comes from God, the authority of God is given to the civil society, which decides what form the government should take and who should exercise the authority, since the whole society cannot actually exercise it. How is Locke different from this genre of Catholic thought?
 
3. Was Jefferson a Lockean, that is, a modified Hobbesian? Persons holding this
theory take the popular myth that the words of the Declaration, “Life, Liberty and the Pursuit of Happiness,” are the same as “life, liberty and property.” But there is no proof that Jefferson had this in mind. Firstly, these were common terms used in the colonies—life, liberty and property, that is. Secondly, there is no proof that Jefferson was a Lockean. In a great study by the famous Jesuit scholar, Father Joseph Costanzo, it is demonstrated that Jefferson frequently spoke out of both sides of his mouth on many subjects. Father Costanzo attributes this to ignorance of these matters by Jefferson, whose education was mostly in science, and was neither a political philosopher nor a theologian. Thirdly, as the book by Kendall and Carey, The Basic Symbols of the American Political Tradition, definitively demonstrates, the teleology of the Declaration is to prove that the PEOPLE who are now Americans should be free from another PEOPLE, the British. Hence, the American people, as a mature people, are, and should be, free to live and pursue happiness, the path to which is never exactly the same for all peoples—see St. Isidore’s quotation above. Oddly enough, to demonstrate his case that the Declaration is the source of the moral decline of this country, one of the speakers placed the words “. . . any old happiness” after the word “happiness” in the Declaration. But the Declaration does not say that, nor does its teleology nor its context imply that in the least.
 
4. Scholars in political philosophy generally admit that the Founders of this
country knew that the keeping of this government required a virtuous people. But where do they get this virtue?—from the already existing civil society, which includes parents, schools, for those lucky to go to one, and from the mainline denominations, all of which teach the Ten Commandments. In his Farewell Address, George Washington said exactly that. A good government required virtue, and he said we should not be fooled into thinking that this is possible without “revealed religion.” 
 
5. Last point: Was Locke justifying a “do whatever you want” ethics? Take this
point from his Second Treatise. Thinking obviously of the virgin territory of the new world, he said that if one roped off a piece of land that no one ever owned, one had to farm it. Unused land deprived others of the necessary fruits of the earth, and others could take it away if they were going to farm it.  He also said that one was not allowed to accumulate food, because hoarding also deprived the needy of necessary food. He disliked money, because he said money was just another way of hoarding. Now I don’t agree with his economics, but you cannot doubt that he cared for the well-being of others and encourages sharing. That’s not Hobbes.
 
            6. The argument that our society has become corrupt because its founding principles were defective is a post hoc, ergo propter hoc (after this, therefore because of this) fallacy. There are a myriad of reasons that can reasonably be given for the decline of our culture.  One big one is the defective philosophies that come over from Europe and are taught in our secular universities; then there is the decline of the Church; the actual deviation of the courts from our founding principles; the removal of prayer and moral teaching from the schools; the advance of the liberal media elite and their political favorites. The founders are way too removed from this current crisis to blame for it, even it the argument was true, which it patently is not.
 
This entry has already gotten too long, but I think that people ought to read more closely prior to tearing things down.

It’s Beyond Economics Now

This past week, President Obama forced the CEO of General Motors to resign. The real significance of this may be lost on most people. Some might say, “Well, if General Motors is not doing well, the CEO should be replaced.” The major difficulty with this is that this is a special power of the GM Board of Directors, not the President of the United States. Effectively, this makes President Obama the Board of Directors of General Motors, and any other company he wants to control, and makes the Board a mere figurehead. Slowly but surely, this is moving us to a fascist form of government. In fascism, the companies still exist, but the government tells them what to do. This was similar to Mercantilism, which was the predominant economic system in Europe from about the 1600s until 1800, more or less. Mercantilism was the system of economics that Adam Smith wrote against in his famous An Inquiry into the Nature and Causes of the Wealth of Nations, which most people shorten to the cryptic Wealth of Nations. Smith was trying to show that government control of business impoverishes nations. Instead, he posited “a system of natural liberty,” which allowed people to follow their natural pursuits, take on the risk of doing so, and allow the market, that is, the countless decisions of people, to decide the outcome. It was the realization of the truth that Smith expressed in his work that subsequently brought prosperity to countless nations.

Now we are returning to the old system, under a new guise. Secretary of the Treasury Timothy Geithner recently asked Congress to grant him unprecedented power to shut down any company that, in his opinion, is dangerous to the overall economy. Note that there are no specifics to this power—it would be at his discretion. For those who have read my blog entries “The Economics of Politics,” you can see that all of this is a grab for what politicians live for—power, and power alone. Politics attracts those kinds of people. When asked by a Congresswoman where in the Constitution he went to get justification for this type of power, Geithner expressed incoherent babbling. It did not seem ever to cross his mind that he needed Constitutional justification for such an assumption of power. Again, this is typical of fascism. A crisis is, if not created, then hyped, panic flamed up, and people in this panic are willing to trade their freedom for security. Only too late will they realize that the situation was not as bad as the self-interested government officials portrayed it. The power will have been granted, and only a miracle will pry it away from the hands of the government. Once taken, government almost always keeps a power.

Getting back to General Motors, its problems go all the way back to government-imposed protective tariffs, which are a remnant of Mercantilism. Corporations seek to be protected from foreign competition so they do not have to work to keep up. The government, bowing to pressure and false economic theories, puts tariffs and quotas on imports to raise their prices higher than those of the domestic product; in this case, cars. The car makers then can do whatever they want because consumers face a choice of either us or nothing. In the 1970s, when we began allowing imports, the American car companies were caught, and almost went out of business. They finally got their act together when a new wave of government regulation on cars was imposed, thus raising the cost of domestic cars. To boot, the latest situation is that the Federal government is dictating to the car companies what types of cars to make, all in an effort to be “green.” The problem is that the market does not want these cars, so the company is forced to spend millions on cars they cannot sell. Then the government says, “Oh, it would be terrible if the companies failed; so many would be put out of work. So we have to bail them out again, and since we are ponying up the money, we now have a controlling interest in them, we can call the shots, we can tell the company what to produce, we can fire the executives, and when the company comes in with a loss, we blame the company again, bail them out again . . . .” And the circle continues. Remember, this government is the same one that has brought us the Post Office, the Department of Motor Vehicles and the public school system. All those who believe that the government can bring us out of a recession should remember that it was the government that caused it in the first place. Remember the housing bubble?

What a racket!

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Anthony Buono is the founder of Ave Maria Singles
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