My father had a polite expression for people he saw who were probably drunk. He’d say, “That guy has a package.” I wonder if this is related to the fact that in some states liquor stores are called “package stores.” Be that as it may, I was inspired to write this article to make a point. All analogies limp at some point, but this one limps less than many others. 

President-elect Obama announced today that as soon as he takes office he will submit a “stimulus package.” To most of the news media (maybe all) this is a good thing. I am sure that Stephen Moore of the Wall Street Journal for one would not agree, but he would be a rare exception. After all, both candidates pledged in the last election “to get the economy moving again,” thus revealing their ignorance of economics. It is here that the “package” analogy comes in.

When a person saves money, that money came from his producing a good or service that some other people wanted. Those other people took their discretionary funds and purchased the good or service. Those discretionary funds came from their production of some good and/or service that others wanted, and so forth. The money saved in a bank or in the purchase of corporate bonds or stocks goes to finance new projects, thus creating new wealth in the forging of those new products and services that people are willing to pay for. The economist Jean-Baptiste Say told us of this: the funds generated making all the goods and services in society will eventually be used to buy up those very goods and services. This came to be called Say’s Law. This doesn’t mean that there will never be any economic downturns. Entrepreneurs make errors and outside factors, like OPEC, complicate things. But the current crisis, as I have written before, was mostly government-caused, originated by the expansion of the money supply, and then by pressuring banks to lend to unqualified persons for the purchase of homes. This expansion of the money supply came from “whole cloth.” The Federal Reserve merely “creates money” by a bookkeeping entry made in the account of a bank that sells government securities to the Fed at a premium. There is no creation of actual wealth, as wealth comes from the increase of real production of new goods and services. 

The economist who was the hit of the town since the 1930s, John Maynard Keynes, rejected Say’s law. He believed that savings took money out of the economy. I asked one of my economics professors if he thought that Keynes was tempted to say this because people were putting their money in mattresses at the time, because they did not trust banks. He told me that that was probably the case. But we can see that this is not the case today. People do use banks and other investment tools, and their money is put back into the economy in order to buy capital goods, which then make new things which people want and buy.

But Keynes is alive and well in the politician’s and media’s mind, even though most of the economics profession saw in the 1970s, with stagflation, that Keynes was wrong, something that this writer knew as a college freshman in 1966. Keynes believed that an economic downturn was caused by people spending less on goods and services than the companies planned to sell. The result was a recession. He did not believe that wages and prices would adjust to accommodate the lack of purchasing, as all classical and Austrian economists believe, and that thus the only remedy was an injection of government funds without a concomitant rise of taxes—i.e., deficit spending. This, of course, would be on top of what we do now. This is exactly Obama’s “stimulus package.”

Let us see why this stimulus package is similar to the package of one who has had too much to drink. Always look at the microeconomic foundations of any macroeconomic idea. The economy is founded on the actions of individuals, whether acting separately or in firms. A government stimulus package is called “fiscal policy” as opposed to “monetary policy,” which is an injection of money into the banks by the Federal Reserve Bank. In fiscal policy, the government undertakes projects in society that the society doesn’t necessarily need or want, but which employ people. William F. Buckley, Jr., said facetiously that fiscal policy was like the government paying people to throw stones into the ocean, and then paying other people to retrieve them. Prior to his election, president-elect Clinton wanted to build a federal swimming pool in Los Angeles, financed by deficit spending. President-elect Obama’s plan will have many, many similar projects in it so that billions will be injected into the economy, thus adding to the deficit, but, and here’s the big point, without any increase of productivity. This means that this injection of money is not real wealth. However, people will begin to spend more. This will put pressure on the consumption side of the economy. Without any increase of production to produce the extra wealth, this will push prices up, as things become scarcer. The same thing happened recently with the housing market. The artificial injection of money into the economy by the Fed caused an artificial building boom, pushing up prices of land, supplies, and labor, until housing became too expensive for people to buy, and then the builders were stuck not only with houses they already built but cannot sell, but with contracts for materials and labor that they cannot now use. When a person has their first or second drink of the evening, they feel good, happy; they get more sociable. As they have more, the “stimulus package” of liquor gets them to do more and more things they would not ordinarily do, because their view of their milieu is artificially stimulated by the alcohol. Here is where they put a lampshade on their head and dance on the table, an action which will result in their falling off, thus making a fool of themselves, and getting kicked out of the party. 

Now let’s take the case of the bakery that used to be in my neighborhood elevated train stop in New York. As you came down the stairs, you could smell the baked goods, and, no doubt, this aroma got hungry workers to buy goodies on their way home. Now, with extra money in the pockets of the persons coming off the train, the bakery begins to sell more baked goods (and people plump up nicely). The baker does not know the reason for this; he only knows that he is moving more stock. To keep up with the increased demand, he hires more workers, buys a new machine, contacts his suppliers for more sugar, flour, etc. But to stimulate demand without a concomitant increase of actual wealth through production is to put stress on the current, non-expanding system. 

This forces prices up—first of suppliers. To compensate with the increased price of supplies, the baker raises the price of his baked goods. So does everybody else. Now the consumers are paying higher prices for everything, and they realize that this increase in money in society merely forced prices up, thus making it more expensive to live, and thus eating up any extra cash they might have. So they reduce their spending to pre-stimulus package levels. The bakery loses sales, has to let the extra help go, has to sell the new machine, which is now a used machine, so it cannot recoup the full price paid, and has to reduce the supply orders it recently made. This is the economic hangover which occurs after the binge of the stimulus “package.” Gee, the analogy does work, but, now that I think about it, the partygoer did not intentionally drink too much. He was drinking the punch that he was told was not alcoholic, but all the while the government was spiking it. By the time he realized it, he had a “package.” 

Please, Mr. Obama, don’t spike the economic punch. The market can have its own fun at this party.
Listen to me being interviewed on the Drew Mariani Show on Relevant Radio, November 21, 2008.  The topic is on the issue of the auto industry's request for a bailout.  It's 22 minutes in length.

To download onto your computer, right click on the audio player and save it.
I cannot tell you how many times Catholics have used “the common good” as an excuse for more government involvement in peoples’ lives and the installing of socialistic, “spread the wealth” programs. This version of the common good is the foundation for some people’s idea of distributive justice, but actually it is based on the “Robin Hood fallacy” of robbing from the rich and giving to the poor. 

How did I come to this conclusion? I did so merely by reading Aristotle and St. Thomas. Both of those great thinkers say that government must rule for the common good, but both of them oppose “common good” to the “particular” or “private” good. This means, as Aristotle writes, that any law must be good for not a ruler alone, or his cronies, or even the majority, but for the state as a whole. To use the analogy Plato makes in the Statesman, a physician gives a medicine to a sick person even if the sick person finds it distasteful. When he leaves the scene, he leaves behind a prescription containing his instructions. The instructions are not for his good, or the family’s benefit, but for the health of the sick person. BUT . . . nowhere in Aristotle or St. Thomas does it say that the common good is the exclusive or even main province of the government. They merely give a negative prohibition that the state cannot make laws which are good for only one segment of society. 

The Church, as opposed to some Catholic writers, recognizes this. The Church holds to the principle of subsidiarity, originally enunciated by Leo XIII and actually named as such by Pius XI. Firstly, this principle states that nothing should be done by a higher level of society that can be done by a lower level. This means that, say, in my profession, the professor in the classroom is presumed to be doing his job unless some serious problem arises. His department chairman is not to be breathing down his neck and nitpicking his work. Certainly, the chairman’s boss, the dean, has no business butting into the professor’s work. If a problem arises, and the dean hears about it, he should ask the chairman to investigate it and take care of it, assuming the chairman has not done so already, which is an unlikely assumption. Secondly, the principle of subsidiarity says that nothing should be done by a government agency that can be done by a private agency. This means that government is a last resort, when all private possibilities are exhausted and the problem is a serious violation of justice or something that only a government can resolve, like an invasion. 

Take a look at how Vatican II defines the common good: “The common good of society consists in the sum total of those conditions of social life which enable men to achieve a fuller measure of perfection with greater ease. It consists especially in safeguarding the rights and duties of the human person.” The fact that the Church does not have a list of specific positive programs here is that it is clearly stressing the notion that the common good is a “habitat” in which the human person can flourish. The onus is on the person to do the flourishing, with the assistance of the spontaneous institutions arising in a free society which are there for that purpose. On the other side of the coin, the onus is also on the individual to make sure that his fellows have that environment to flourish, with the government as a last resort remedy for that which individuals and social groups cannot do to provide that habitat. 

Therefore, we can conclude with Bertrand de Jouvenel that a healthy society has many social organizations, and that the role of these groups should not be usurped by government. If government participates in this usurpation, it is rejecting the human person’s duty and ability to help himself and his brothers and sisters. Remember what we wrote about John Paul II and personal responsibility? (Maybe you should review it). Personal responsibility is founded on self-governance and self-governance leads to self-determination. Surely, self-governance of a social being like man leads him to take responsibility for the success of ourselves and of our fellows who cannot succeed by themselves, but it should never substitute for the action of the persons themselves. Neither should government. Nor should the citizens demand that government take over the responsibility for themselves or their fellows, except when they CANNOT succeed in doing so. Not only does this have dire consequences, which are not part of this essay, but—and this is the most important reason—it violates the person’s dignity.
The Catholic News Agency reported an exchange of letters between Catholic and pro-life Law Professor Douglas Kmiec of Pepperdine University and Archbishop Chaput of Denver. In a speech, the Archbishop chided Kmiec and other pro-Obama Catholics for producing confusion among the faithful by supporting the radically pro-abortion Obama. By doing this, the Archbishop said, among other things, that these Catholics are confusing the “natural priorities of Catholic social teaching, undermining the progress pro-lifers have made, and provided an excuse for some Catholics to abandon the abortion issue instead of fighting within their parties and at the ballot box to protect the unborn.” 

Kmiec responded in a letter made public that “the Archbishop’s approach to the abortion issue ‘will lead many in parishes around the country to neglect what they can do to build up the culture of life through the promotion of the social gospel in its fullest sense’” (emphasis added). 

The key to Professor Kmiec’s view is seen in the emphasized words above, the social gospel. One can see his point. He is saying that the culture of life is broader than abortion, which is very true, and is very obvious. What he fails to see is that the killing of the unborn human person is the most serious and barbaric aspect of the decline of the culture of life. The term “social gospel” is generally never used by the Church. The reason for this is that traditionally the expression was used by those who saw Christ as a kind of divine social worker, and the only really purpose of the Church was to help the poor and downtrodden. This is a total twisting of the mission of the Catholic Church, unfortunately bought into by many Catholics today, thanks to the number of priests who received their training in the 1960s and ’70s. 

The primary mission of the Catholic Church is to produce sanctity in people so that they can be admitted into the indescribable loving relationship with God that we call the beatific vision. St. James tells us that faith without works is dead, so Catholics show their love of God by showing love of their brothers and sisters in Christ. As Mother Teresa said, “Christ comes to us in distressing disguises.” God told St. Catherine of Siena that He owns the whole world, so that the faithful can not give Him anything, but our neighbor was given to us so that we could do for him what we would want to do for God. This is why Jesus said that what you do for the least of His brethren, you did for Him. 

But while these two things, love of God and neighbor, go hand in hand, a clear moral and common sense principle is that the most serious problems have priority. The legal and systematic killing of innocent unborn children has a higher priority than that of taking care of the poor, which in the United States are not that poor compared to many parts of the world, seeing that the number of people living below the poverty line had drastically declined over the past two years, and government and private charities provide assistance to almost anyone who needs it. This is not to mention that over 90% of Americans have televisions, once considered a luxury item. 

Anyway, who says that the government actually helps the poor in a meaningful way? Jesus did not say that anyone who gets the government to help one of these little ones does it to Me. He clearly said it is our personal responsibility. Pope Pius XII bemoaned the fact that the modern welfare state does not give personal aid to the poor as a private charity would. The government has “caseworkers” who take no personal interest in the people whose records they review. Private charities have trained social workers, who not only take a personal interest in the people they assist, but help them in other areas: moral, budgeting, psychological, etc., very much in the tradition of St. Vincent de Paul. 

I have written elsewhere that this thinking that the government is the main vehicle to help the poor has derailed many Catholics into the party of abortion, and that this should create a moral dilemma for them, but apparently not in the case of Professor Kmiec. 

While it is true that we all must work to produce a culture of life in every area, to neglect, or encourage the killing of the unborn is a grave evil. It is almost like saying that we should vote for Mussolini so that the trains can run on time. It is important that the trains run time, but hardly as important as basic human freedom. So, to come full circle, it is important to help the poor, but not to encourage the death of the innocent in the process. 
This title sounds like I am going to write about money. Well, I am, but not directly. It doesn’t say “principals.” 

A theologian colleague of mine a while ago gave me these words of wisdom: “You can never effectively oppose an interest with a principle.” The truth of this statement is verified by the basics of both economics and political philosophy, and the subject of this entry is the recent election. 

Why, when there are so many moral problems with Catholics voting for Obama, most seriously his outright support of all forms of abortion, but even his questionable dedication to fighting terrorism, did so many Catholics vote for him? The answer is in the economy. Economics teaches that people make decisions based on their values, but their values are constantly shifting. It would be more accurate to say that their decisions are based on their values “at the moment.” This is why they say not to go to the food store when you are hungry. A person who does this will buy things that they will never eat at home, but which looked good at the time of hunger, or they will buy fattening food which they will consume on the way home and not have room for an actual dinner. 

In this election, the state of the economy suddenly took center stage. But there is a difference between how economists approach the problem (see my entry on the subject) and the way the ordinary American approaches it. The economist analyzes it from principle; the ordinary American, and you can’t blame them for this, analyzes it from the position of their economic security. If your income and therefore your duty to your family might be in jeopardy, principle can go by the boards. Here is where interest trumps principle. I do not believe that most Americans are socialists or statists in principle, but when their income is in jeopardy, they will vote this way. When the media and politicians hyped this economic situation (some conservative pundits were clearly angry, one in particular because his stocks went down in value), they made it seem as though the world was ending. This was very similar to the Y2K situation where some were saying that we would be in the dark and the cold when not a light bulb went out around the world. According to these people, and some actually said it, this would be like the Great Depression. Just last night some bozo on TV was saying that there is no money to lend even with the stimulus package. Companies are using the money to “fix their balance sheets,” whatever they mean by that, and give CEOs more big bonuses. This person said that even ordinary people cannot get loans. This becomes interesting when my bank had an ad on the radio today saying, “Come in, we have millions to lend!” What a great way to sell newspapers or get viewers: ratchet the effects of a situation so that every one reads about it or watches the news show because they want to see if they are going to be in the poor house next week! 

Bertrand de Jouvenel, the famous French political and economic philosopher, has some great insights into this process. He saw exactly how this operated in the years leading up to World War II. While the crises at the time, such as the German hyper-inflation and the world-wide depression, were greater than anything we have now, at least in the West, there are parallels. Jouvenel argues that what he calls “social insecurity” leads to statism. When the population is afraid, they will sacrifice principle to call for protection from the slings and arrows of social forces that might disrupt their lives. The problem with this is that they are then stuck with the statism forever! Government never gives up a power once given to it. The mechanism behind this, according to Jouvenel, is this: for the state to protect you from a perceived problem, you must give something in return—power. That’s exactly what Americans did in this election. You can verify this by looking at how government has grown since the beginning of World War II. We had that war, the Korean War, the Cold War, the War on Poverty, etc. 

This is the first election in which I heard the accusation of socialism widely used in public political discourse since the 1972 election campaign between Nixon and George McGovern. McGovern wanted to guarantee everyone a certain annual income, and also, as I recall, send everyone in the country a check for $1,000 right off the bat. ($1,000 had more purchasing power in 1972 than now.) This was called socialism by many, and Nixon wound up winning in a landslide. 

Here we had a similar situation, but in this case, the people had deteriorated significantly since 1972, and went for the socialist solution. And Catholics, to their disgrace and despite the very vocal campaign carried out by the bishops about the sanctity of human life and the vote, tended toward the pro-abortion Obama! Bill Clinton was right. He is reported to say, in response to his beating George H. W. Bush, “It’s the economy, stupid!” And now we have sold our birthright for a mess of pottage. 

You might want to look at two websites related to this: