Christian Democracy is dedicated to St. Joseph the Worker. The icon of St. Joseph the Worker is by Daniel Nichols.

Child Poverty and the Economic Recovery

August 30, 2015

At the height of the financial crisis, 18 percent of U.S. children lived in poverty, as defined by federal guidelines. That figure is shockingly high for the wealthiest country in the world. Today, however, well into the so-called economic “recovery,” fully 22 percent of American children live in poverty, an increase of 3 million, according to this year’s edition of the Kid’s Count Data Book,[1] an annual report of the Annie E. Casey Foundation. This is just one more piece of data that reveals the recovery as a fiction of the establishment elite and demonstrates that capitalism is failing to meet the most basic needs of the people, even of children.

The number of American kids now living in poverty, even as defined by inadequate federal standards, is 16.1 million. On top of that, 14 percent of US children lived in high-poverty neighborhoods as of 2013, a 3-percent increase since the period 2006 to 2010. As the report authors note, “high-poverty neighborhoods are much more likely than moderate and upper-income communities to have high rates of crime and violence, unemployment and other problems.”[2] And “at the same time, the steady increase in children growing up in high-poverty neighborhoods is troubling. The gulf continues to widen between children growing up in strong, economically secure families that are embedded in thriving communities and children who are not. . . . large numbers of children of all racial and ethnic groups are facing economic conditions that can impede long-term success."[3]
These numbers are averages, of course. Let us look briefly at some specifics. Perhaps surprisingly, given its status as a world economic powerhouse, California had the highest child poverty rate among U.S. states at 27 percent. (This shows the notion that there is some sort of connection in a capitalist society between economic output and the well-being of the citizenry is absurd.) The Deep South remains a center of child poverty and poverty in general, while the position of children in the Midwest is worsening. In Detroit, a victim of globalization and decades of treasonous betrayal by outsourcing American capitalist owners, fully 59 percent of children live in poverty, while an astonishing 81 percent live in high-poverty neighborhoods. The situation becomes even worse in light of the well-known fact that, as the Kids Count authors write, “at a minimum, families need an income of at least twice the federal poverty level to cover basic expenses.”[4]  When this more accurate measure is considered, almost half of American children are victims of poverty.

These appalling figures are not accidental. They are a predictable feature of an economic system oriented toward individual accumulation and based upon only a few in the society owning the means of production while everyone else must sell their labor to them in return for what they need to survive. The master rarely cares for the slave, or even for the children of the slave. Using their superior position economically and politically, the ruling class naturally works to accumulate more and more, and so gains an ever more secure grip on power. We see this in the skyrocketing rates of inequality, the imposition of devastating austerity on working people worldwide, the attacks on worker’s rights in the name of global competition, and the destruction of jobs and living standards as the capitalists insatiably seek profits at the expense of ordinary people and families.

Nor is the deteriorating position of the most vulnerable in society a temporary phenomenon, it seems. Financial pundits, other spokesmen for the financial elite, point to low unemployment as a sure sign that we really are in a recovery and so should expect to see improvement in areas like child poverty. But we are now several years into this supposed recovery, and it is clear that the recovery has amounted to no more than a recovery of the asset values of the 1 percent. As Patrick McCarthy, president of the Annie E. Casey Foundation said, “Although we are several years past the end of the recession, millions of families still have not benefited from the economic recovery. While we’ve seen an increase in employment in recent years, many of these jobs are low-wage and cannot support even basic family expenses.”[5]

Nor does the real economy (as opposed to the Ponzi-scheme “economy” of inflated stock prices and corporate profits) seem poised to start delivering results for working families. All of this might strike us as more obvious if our news were not brought to us every night by millionaires and corporations.

But the fact is that decades of experience with a social-democratic system of ameliorated capitalism beginning with FDR has shown itself wholly incapable of giving us an economy that does what it is designed to do—to meet human needs and allow for the integral development of each and every member of our society. Not one person should have to experience the degradations of poverty in the richest country in the world, but at the very least this should be true of children. The moral state of this country challenges us all to think about what a workable alternative would look like. 

Doran Hunter

Roman Catholicism and Health Care as a Moral Issue

August 27, 2015

Once, as I was driving to work, a man shot me a dirty look while speeding past me. Presumably, this was in response to my bumper sticker that read, “Health care is a moral issue.” I had learned to expect such disapproving glares from time to time. On one occasion, a driver mouthed the words, “You’re wrong” as he angrily drove past me. I thought to myself, “Now, what did that do for him? Did he expect that his thought-provoking two words would prompt a 180 degree shift in my thinking?” Of course, being the child that I am, I then said to myself, “Oh no you di’int!” and pressed the gas. Having caught up with him, I responded with an equally persuasive, “No, I’m right!”

Although I am accustomed to such hostile responses to my “radical leftist” propaganda, what surprised me about this particular encounter was the fact that the driver’s own bumper sticker indicated that he was Roman Catholic. “But doesn't the Catholic Church acknowledge the moral relevance of health care?” I asked myself. After a cursory review of Catholic social teaching throughout the past century, I feel like I can confidently answer in the affirmative.

For instance, Pope Pius XI noted the need to protect rights he considered “sacred”, including – alongside others – the right to health. Similarly, Pope John XXIII expressed support for social and economic rights which pertain “…to the necessities of life [and] health care,” to name but two areas. In specific reference to workers, Pope John Paul II believed that “the expenses involved in health care, especially in the case of accidents at work, demand that medical assistance…be easily available for workers, and that as far as possible it should be cheap or even free of charge."

Now, what exactly is a “moral issue”? I define it as an issue concerning beliefs about how something should or should not be. Regarding health care, it is clear that the pontiffs referenced in this brief review of Catholic social thought acknowledge that people should have access to health care (indeed, health care is explicitly described as the object of a sacred right). Thus, the fact that many millions of Americans are without adequate health care should, from a Catholic perspective, be morally troubling. In other words, no Catholic should be scandalized by my old bumper sticker.

I don’t doubt for a second that there are many Catholics in the U.S. who agree with this claim. Yet it appears equally obvious that many don’t. For better or worse, such prominent issues as abortion have led many Catholics to abandon the Democratic Party and join the GOP. I fear that many among them have jettisoned other Catholic teachings in the process. Yet regardless of one’s party affiliation, and however much I commend the Catholic Church for its pro-life stance, I hope that all Catholics will come to press politicians to adopt platforms that are consistently Catholic.

Amir Azarvan

Amir Azarvan is an assistant professor of political science at Georgia Gwinnett College.  He is the editor of a forthcoming book entitled Re-Introducing Christianity: An Eastern Apologia for a Western Audience (Wipf & Stock), as well as the editor-in-chief of Contemporary Faith Magazine.

This article previously appeared on the author's blog Amirica.

A Social Capitalist looks at American Inequality: Robert Putnam’s Our Kids

August 25, 2015

Harvard professor Robert Putnam didn’t create the term “social capital,” but through his influential writings over the past couple of decades he has become the most well-known proponent of how members of society bloom or wilt in relation to their involvement (or lack thereof) in voluntary associations, civic participation, and other non-work, non-family, organizations. The networks that communities create allow for local governance, shared values, and ability to define and work toward common aspirations.

Putnam’s first major work, Making Democracy Work (1994), looked at data from the Italian government’s move to regionalize some functions of administration beginning in the 1970s. Putnam and his co-author made the case that districts which had longer standing traditions of membership in associations – such as fraternal, civic, religious, and recreational – were performing more effectively because citizens had already created stronger local bonds that led to more trust and cooperation in governmental affairs.

Photo by Thomastheo 
Putnam expanded on this research with what became his clarion call in 2000 – Bowling Alone. Putnam used the example of the decline of membership in bowling clubs in America beginning in the later 1960s, and then in free-fall in the 1970s, as a metaphor for the overall decline in civic participation and common social underpinnings in the U.S. that had previously kept communities more tightly-knit. In addition to lower participation in bowling leagues, Putnam weaved an impressive, albeit it sad, wealth of data to show that Americans were also attending church less and less, not joining fraternal organizations, spending less time with neighbors, and that families were not eating as many communal meals. With Americans less connected to family, neighbors, or other members of their community, Putnam’s research showed that the resulting social isolation began to reflect a less empathetic society.

Bowling Alone quickly became a rallying cry for various community activists to consider new ideas to re-invent or save American social capital and civic engagement. Putnam followed up with a sequel of sorts called Better Together which gave a more hopeful note about subsequent attempts around the country to rebuild community. More recently, Putnam returned to the topic of religion in American Grace which analyzed the ability of faith groups to galvanize and sustain communities, but also their role in exclusivity within the public square as opposed to inclusiveness. With Our Kids, Putnam sounds a warning not simply about rising income inequality in American society but, perhaps more troubling, a widening of the gap in opportunities to move up the economic ladder. Putnam’s method in Our Kids is to contrast the prospects and social supports of himself and his fellow members of the 1959 graduating class of the high school in the small-town Middle-America hometown of Port Clinton, Ohio, with the young adults of the same town today.

Since the United States took shape without a pre-existing social order, and seemed to offer a limitless frontier with cheap land and a frequently booming economy with the continual arrival of bright, and brash newcomers, Americans have generally believed that if you work hard, play by the rules, and get the education or training you need, success is achievable – perhaps inevitable – no matter someone’s background. Although the 20th century dawned with high levels of income inequality, as well as gaping chasms of social inequality for women and racial and religious minorities, in the period from about 1910 to around 1970 incomes became about as equalized as they ever have in the United States. Some of the major events of that era, such as two world wars and a major economic depression, contributed to the levelling of society psychologically as well as economically. (Our Kids, p. 33) Putnam notes, however, referencing the work of Douglas Massey, that in the period from 1945-1975 “under structural arrangements implemented during the New Deal, poverty rates steadily fell, median incomes consistently rose, and inequality progressively dropped, as a rising economic tide lifted all boats.”

"What after bowling alone?", by Erik Pevernagie, Oil on canvas
Most interesting about this period is that the top 20% of Americans by income increased their earnings approximately 2 ½ percent per year, but the bottom 20% of citizens raised their salaries by about 3 percent per year. Putnam and his classmates in Ohio were part of this seemingly egalitarian era, and his stories and interviews with his fellow students show a marked community spirit and social solidarity summed up by the fact that when townspeople referred to “our kids” in conversation they nearly always meant the kids who resided in town, not their own sons and daughters. (p. 3) Putnam reports that on balance the members of his high school class went on to better livelihoods than their parents experienced (and many of whom had themselves never attended college, or perhaps even finished high school).

Putnam uses his hometown as a bellwether because Port Clinton happens to be representative of overall American demographics of that era, as well as of today. Like many American towns at the time, he came of age when class divisions economically and educationally were narrowing, neighborhoods had a fair socio-economic mix of families, and due to membership in social organizations like churches, sports leagues, and fraternal groups, there were relatively few barriers for interacting through friendship and marriage across class lines.

“Don”, one of Putnam’s classmates, was from a poor but close-knit family. His father worked the equivalent of two full-time jobs, while Don’s mother was a homemaker. The family lacked an automobile or TV at a time when 80% of American households had these goods. Don finished in the top quarter of the class of ’59 and also was the star quarterback of the school’s football team. Although his parents were unfamiliar with higher education, the minister of his church assisted him with an introduction to a college he later attended, and advised him about financial aid. Don graduated from college, and later went to seminary himself. He had a long career as a member of the clergy, married, and had a daughter.

Living only four blocks away from Don was another classmate “Frank”. Frank’s family was wealthy, but he was raised to downplay his social status, mixed with others in his neighborhood, and was required to work during summer vacations while attending high school.

Port Clinton had only two black students in its graduating class that year. While their families did experience occasional racism, and were of very modest means, “Jesse” and “Cheryl” both went on to college with local support and attained advanced degrees. Jesse even defeated a certain Bob Putnam to win the contest for president of the student council while attending the high school. Both of them went into educational careers.

Putnam sums up the experience for many of his fellow graduates by stating that they grew up in two-parent households, in houses that – however plain – were owned by the parents, and lived in neighborhoods in which most people knew each other by name. (p. 7) Port Clinton, like many other communities in the late 1950s and early 1960s offered good, steady jobs at factories, manufacturers, and (locally) mines. Many workers were protected by union benefits, which, in turn, allowed them to make contributions to economic development and the ability to eventually afford “big ticket” items like cars, housing, washing machines and so on that kept families secure. Putnam relates that the conversations he’s had with former classmates suggest that, while they now realize that their “material” conditions might have been lacking in some cases (“we were poor, but didn’t know it”), the intangibles of community engagement, economic security, stable families, intact neighborhoods, and civic and organizational attachments, leads Putnam to suggest that “they were rich, but didn’t know it.” (p. 9)

A good portion of Our Kids looks at how rising income inequality since about the early-to-mid 1970s to the current time has erased the gains of much of the 20th century. Now, in Port Clinton and many other communities, families are fragile, the children that the “Class of ‘59” had aren’t doing as well as their parents, civic engagement is low, and economically secure jobs are few and far between for many Americans. But that’s not the case for all Americans. The families that resemble Frank’s in Port Clinton (and elsewhere) have increasingly separated themselves by developing suburbs, and using the growth of the automotive highway system and a reliance on cars to retain good school districts, parks, privacy, and malls and shopping centers to put space between their kids and the growing ranks of the have-nots.

Port Clinton’s declining fortunes within about a single generation are stark. Putnam mentions that as “late as the 1970s, real wages locally were slightly above the national average…By 2012 the average worker in Ottawa County (Port Clinton is the county seat) had not had a raise for nearly half a century, and is now paid 16% less in inflation-adjusted dollars than his or her grandfather (or grandmother) in the early 1970s.” (p. 20) The loss in economic fortunes is an integral part of the decline in community down to the smallest and most critical of social units – the family. Putnam notes that between 1970 and 2010 in Ottawa County, single-parent households doubled (10% to 20%), divorce rates quintupled, unwed births went from less than 1 in 5 to nearly 2 in 5. In Port Clinton itself, in just a twelve-year span (1978-1990), unwed births went from 9% to about 40%. This fragility and rapid decline of the family is mirrored in the rate of child poverty going from a similar rate of less than 10% to nearly 40% by 2013 (p. 21). 

Port Clinton is a bellwether statistically and culturally for trends in the larger American society. A study by the Federal Reserve Bank looked at one notable aspect of the gap of widening inequality. During the years of 1989-2013, the net worth of U.S. households headed by people with a college education had risen 47% but those headed by folks who had a high school degree or less had actually declined by 17% during those years. [1]

The appealing lakeshore area of Port Clinton is something of a microcosm of the growing class split. In the time since Putnam and some of his classmates have moved from town, it has developed into a place with attractive housing and neighborhoods. The child poverty rate in the Census tract that covers the lakeshore is approximately 1%. The Census tract that begins across the road has a rate of 51%. 

It should be no surprise that people tend to associate with, form friendships among, and marry other people who are like them. As inequality grows, citizens are increasingly likely to live in neighborhoods, attend schools, have careers, and spend their free time in less mixed company than during the middle decades of the 20th century.

Photo by Mike Sharp
The affluence of the “baby boom” generation ushered in an era of individualism that questioned traditions and also brought attention to a variety of social movements. When Americans do marry today, then, there are fewer barriers to interreligious, interracial, and even same sex unions but there has been a lessening of marriage between different economic classes (p. 40). The implication of this clustering of citizens among class lines means that the network of neighbors, role models, and family that “our kids” come into contact with and learn from are increasingly from the same background. 

These formal and informal connections can end up reinforcing the kind of opportunities - or the lack thereof – in important life choices such as career, education, and how one handles personal and family responsibilities. As the gap widens on the margins – growth in the super rich and a rise in who sits at the bottom – it may no longer be enough to expect to succeed from the traditional American mantra of “work hard, get ahead.”

The interviews the book contains with young adults around the country show that the biggest predictor of family dysfunction and poverty is related to class. We meet, for instance “Desmond” and “Elijah,” who are both African-American and from Atlanta. But that’s where their similarities appear to end. Desmond and his married parents lived in a mixed-racial middle-class neighborhood. We learn that his mother and father ferried him to music and sports practices, kept tabs on his grades at school, and made sure he went on to college. At the time we are introduced to Desmond he had begun an internship with the U.S. Centers for Disease Control & Prevention. Elijah, meanwhile, had grown up amidst mostly uninvolved parents, and a revolving door of subsequent ne’er-do-well boyfriends of his mother. Lacking good role models and direction he did not do well at school, spent much of his time trying to care for younger siblings, and had been involved in the juvenile justice system for committing an arson. The interviewers make it clear that Elijah has tried to turn his life around and has been getting active in his church, but he currently has only a grocery job and admits that the violence he grew up around has made him “love beating up somebody and making they nose bleed and just hurting them.” (p. 108)

Photo by LeeG7144
In some academic and liberal circles, religious affiliation and church attendance has tended to be seen as comprised of folks who are from poor or less educated households, which might explain their solace in traditions and faiths that a secular society increasingly sees as backward. But while some might not see the benefits of being active in a religious group, this aspect of American society is also becoming stratified by class – and perhaps not in the way critics might think.

The reality is that middle-class and affluent Americans attend church more regularly than their less well-off brethren and sisters, not the other way around. Putnam suggests, as he frequently notes in Bowling Alone and later books, that church membership is an indicator of how well-socialized and engaged one is with their larger community. Citing research in social science field, he relates that religious involvement by youth – usually because involved parents bring them to a place of worship frequently – do better in school on average than their non-attending peers, and are much more likely to attend college later (p. 224). Youth who attend church also report better relationships with parents, tend to be involved in other non-curricular activities, and are less likely to be involved with risky behaviors (i.e. substance abuse, shoplifting, and corrective actions at school).

Looking just at white Americans (although blacks of all social classes generally have higher participation in a church than their fellow Caucasian citizens), during the time of the Evangelical Protestant boom of the 1970s and 80s, college-educated adults stayed relatively the same in terms of weekly attendance at a place of worship (from about 30% to 27%). Non-college adults, on the other hand, curtailed their weekly worship from a similar 30% - 32% down to only 20% - 22%. (p. 225) Whatever mainstream society’s attitudes are toward religion and the tenets that various faiths espouse, it is clear that income gaps are leading some Americans toward the intrinsic benefits church involvement appears to have while others are not benefiting from it – and the separation is growing.

Photo by LeeG7144
Putnam has had experience consulting with a number of recent Presidents (Clinton, George W. Bush, and Obama) and other heads of state, but, interestingly, does not offer particularly strident political solutions or seek to shame upper-class Americans. Perhaps he prefers to let his research and analysis do the talking and for politicians to develop remedies based on his work. Maybe his humble Midwestern upbringing described throughout the book suggests modesty. But his last chapter, “What Is to Be Done?”(p. 247 – p. 261), is where he does make public policy suggestions, and where reviewers, therefore, may pick the most bones with him.

Putnam might not be comfortable on a soap box, but the widening gap in not just income but the lack of opportunity to move up the ladder greatly concerns him. He likens the situation to the debate on how to address climate change. He believes we must act now before the situation becomes graver. Putnam recommends making more early-childhood investments in poorer communities, expanding the Earned Income Tax Credit, protecting the funding of anti-poverty programs, better means of providing day care, funding programs that reduce criminal recidivism, and reducing incarceration for non-violent offenses along with more creativity in sentencing.

Putnam also looks at a variety of school reform strands that may show promise. Funding and expanding career and vocational programs could establish a base for non-college educated students and young adults to begin closing the income gap. Expanded access to community college is also discussed.

In his review of Our Kids in The Wall Street Journal, W. Bradford Wilcox, of the National Marriage Project at University of Virginia, agrees with much of Putnam’s analysis, but believes that he does not place enough emphasis on the fact that federal government policy cannot “substitute for homes with two devoted parents and communities replete with PTO moms and soccer dads.” [2] Wilcox’s argument is a familiar one advanced by social traditionalists that the government has encouraged dependency on programs that are instead better solved by lower levels of society like families and charitable groups.

Photo by LeeG7144 
From a different perspective, Jason DeCarle, assessing the book in The New York Times, believes that Putnam might not be concerned enough that as we increasingly become a society of have-a-lots and have-nothings that our democratic institutions are at stake. DeCarle also suggests, as do some other liberal commentators, that perhaps Putnam waxes a little too nostalgic about the society of 1959 in which a number of Americans weren’t able to thrive outside the shadows, however well-adjusted the overall picture looked. [3]
Writing in the London paper The Guardian, Nona Willis Aronowitz also seems concerned that Putnam isn’t advocating for more structural changes in American society. She credits, as do some other commentators, Putnam’s colleague Jennifer Silva, who led many of the interviews contained in Our Kids. Silva also has an excellent book that preceded her collaboration with Putnam called Coming Up Short that profiled the challenges and struggles for working-class millennials in Lowell, Massachusetts and Richmond, Virginia. [4] There may be a feeling that Silva can better voice and provide more context on this issue than the 74-year-old Putnam. Aronowitz seems to miss Putnam’s greatest contribution to the social science literature regarding social capital by actually advocating for community-based solutions. [5]
I believe that Putnam hits the right notes by believing that there is a role for government to play in supplementing, if not replacing, the role that is now not being achieved by civil society and private charity alone. Conversely, social traditions, such as church membership and community engagement, are necessary, even vital, as the glue that keeps communities together. These cannot be replaced by individual action and autonomy. A combination of civic virtue and public investment through judicious allocation of tax dollars are needed to address the gaps that “our kids” – all of the kids – confront, so that they will all, one day, have the opportunities to experience the “American Dream”.

Kirk G. Morrison

Kirk Morrison is chairman of the National Committee of the American Solidarity Party.

It's Time to Take Acton

August 21, 2015

The Acton Institute [1] isn’t even trying to hide its disdain for the message of Pope Francis anymore. Even though it can boast that its president and co-founder is a Catholic priest [2], the “free-market” think tank [3] [4] is now posting on its web site articles that are openly critical of the Holy Father’s call for social and economic justice. One such article is “Show Me the Way to Poverty [5],” by Dylan Pahman, a research fellow for the Acton Institute.

Mr. Pahman takes issue with a speech the pope gave last month [6] at the World Meeting of Popular Movements in Santa Cruz, Bolivia, which was organized in collaboration with the Pontifical Council for Justice and Peace and the Pontifical Academy of Social Sciences, wherein he called for a “globalization of hope, a hope which springs up from peoples and takes root among the poor,” which “must replace the globalization of exclusion and indifference!” Mr. Pahman objects that the pope’s “own solutions to the problems of the poor are difficult to differentiate from the same protectionist populism that has kept so many in poverty in Latin America for so long.”

This objection to “protectionist populism” reflects the common belief among advocates of so-called “free trade” “that history is on their side. After all, the defenders of free trade ask, isn’t free trade how all the world’s developed countries have become rich? What are some developing countries thinking, they wonder, when they refuse to adopt such a tried and tested recipe for economic development?” [7] 

But as University of Cambridge economist Ha-Joon Chang points out, the actual history of capitalism yields a different picture. The truth is that “when they were developing countries themselves, virtually all of today’s developed countries did not practice free trade (and laissez-faire industrial policy as its domestic counterpart). Rather, they promoted their national industries through tariffs, subsidies, and other measures. Particularly notable is the fact that the gap between ‘real’ and ‘imagined’ histories of trade policy is the greatest in relation to Britain and the United States, which are conventionally believed to have reached the top of the world’s economic hierarchy by adopting free trade when other countries were stuck with outdated mercantilist policies. These two countries were, in fact, often the pioneers and frequently the most ardent users of interventionist trade and industrial policy measures in their early stages of development.”

The history of the United States in this regard is particularly instructive. On December 5, 1791, the first U.S. treasury secretary, Alexander Hamilton, presented his Report on Manufactures [8] to the House of Representatives, wherein he argued for the development of manufacturing in the new nation. His recommendations would sound strange to those of us accustomed to hearing free trade advocated as the only sound way to prosperity. Specifically, those recommendations were: (1) protective duties on manufactured goods that could compete with domestic manufactures; (2) prohibitions on the import of manufactured goods also produced in the United States, provided there was sufficient domestic competition for the goods in question; (3) in rare cases, prohibiting the export of materials used in manufacturing to lessen their demand and keep their prices low; (4) subsidies to manufacturing concerns; (5) premiums in a small number of cases “to reward some particular excellence or superiority,” or “some extraordinary exertion or skill” in manufacturing; (6) exemption of some materials used in manufacturing from the imposition of duties; (7) imposing duties on the import of certain materials, for specific reasons, such as the existence of an abundant supply domestically; (8) extension of the same benefits to those who make improvements on inventions as to the inventors themselves; (9) inspection regulations to improve and maintain the quality of manufactured goods; (10) the introduction of bills of exchange which would be made negotiable throughout the United States, and (11) facilitation of the transport of commodities by means of infrastructure improvements. Certainly, Alexander Hamilton was no proponent of free trade.

While Congress did not adopt Hamilton’s idea of subsidies, it did adopt most of his proposal for tariffs. [9] The tariffs themselves were actually moderate. Hamilton didn’t want the tariffs to be so high that it would adversely impact the revenue to be derived from them. Thus, certain protectionist interests switched their allegiance from Hamilton’s Federalists to Jefferson’s Republicans. It seems that free trade ideology was in short supply during the first years of our republic.

Hamilton’s program “was developed in the next generation by Henry Clay, under the name of ‘the American System,’ and implemented under Clay’s disciple and admirer Abraham Lincoln and his successors during the period between the 1860s and the 1940s, when the US became the planet’s leading manufacturing economy behind a high wall of tariffs.” [10] “Henry Clay’s ‘American System,’ devised in the burst of nationalism that followed the War of 1812, remains one of the most historically significant examples of a government-sponsored program to harmonize and balance the nation's agriculture, commerce, and industry. This ‘System’ consisted of three mutually reenforcing parts: a tariff to protect and promote American industry; a national bank to foster commerce; and federal subsidies for roads, canals, and other ‘internal improvements’ to develop profitable markets for agriculture. Funds for these subsidies would be obtained from tariffs and sales of public lands. Clay argued that a vigorously maintained system of sectional economic interdependence would eliminate the chance of renewed subservience to the free-trade, laissez-faire ‘British System.’” [11]

That free-trade British System came into being only when Britain’s international edge in technology allowed it. [12] Still, even with its technological lead, Britain had “policies of industrial promotion until the mid-nineteenth century,” and “had very high tariffs on manufacturing products even as late as the 1820s, some two generations after the start of its Industrial Revolution.” It “was only after 1860 that most tariffs were abolished.” But this policy couldn’t last for long. Its era of free trade came to an end “when Britain finally acknowledged that it had lost its manufacturing eminence and re-introduced tariffs on a large scale in 1932.”

The history of the United States is similar. As Ha-Joon Chang tells us, “It was only after the Second World War, with its industrial supremacy unchallenged, that the U.S. liberalized its trade (although not as unequivocally as Britain did in the mid-nineteenth century) and started championing the cause of free trade….”

But why would a country champion the cause of free trade, when it is clear that it achieved its industrial ascendancy by other means? Dr. Chang quotes the nineteenth century German economist Friedrich List for the answer:

“‘It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him. In this lies the secret of the cosmopolitical doctrine of Adam Smith, and of the cosmopolitical tendencies of his great contemporary William Pitt, and of all his successors in the British Government administrations.

“‘Any nation which by means of protective duties and restrictions on navigation has raised her manufacturing power and her navigation to such a degree of development that no other nation can sustain free competition with her, can do nothing wiser than to throw away these ladders of her greatness, to preach to other nations the benefits of free trade, and to declare in penitent tones that she has hitherto wandered in the paths of error, and has now for the first time succeeded in discovering the truth.’”   

Of course, instead of hand-wringing about the error of previous protectionist policies, it is, perhaps, even more effective to simply engage in revisionist history, and claim that American economic success was born of a free trade policy from the beginning. The maxim of too many nowadays is: if the truth doesn’t support your case, lie.

Now if protectionist policies so successfully furthered industrial development in the United States and Britain, it stands to reason that similar policies would prove useful to developing countries today. Unfortunately, this doesn’t appear to be the view of the International Monetary Fund (IMF) and the World Bank, which often condition their loans on rapid market liberalization. [13]

When Stephen Byers was the leader of the United Kingdom delegation to the 1999 World Trade Organization ministerial conference in Seattle, he “was convinced that the expansion of world trade had the potential to bring major benefits to developing countries and would be one of the key means by which world poverty would be tackled.” In order to achieve this he “believed that developing countries would need to embrace trade liberalisation. This would mean opening up their own domestic markets to international competition. The thinking behind this approach being that the discipline of the market would resolve problems of underperformance, a strong economy would emerge and that, as a result, the poor would benefit.”

Mr. Byers now believes “that this approach is wrong and misguided,” having since “had the opportunity to see at first hand the consequences of trade policy.” His experience has led him to conclude “that full trade liberalisation is not the way forward. A different approach is needed: one which recognises the importance of managing trade with the objective of achieving development goals.”

When it comes to developing countries, free trade tends not to work very well. Mr. Byers provides some examples:

“Taiwan and South Korea are often held out as being good illustrations of the benefits of trade liberalisation. In fact, they built their international trading strength on the foundations of government subsidies and heavy investment in infrastructure and skills development while being protected from competition by overseas firms.

“In more recent years, those countries which have been able to reduce levels of poverty by increasing economic growth - like China, Vietnam, India and Mozambique - have all had high levels of intervention as part of an overall policy of strengthening domestic sectors.”

“On the other hand, there are an increasing number of countries in which full-scale trade liberalisation has been applied and then failed to deliver economic growth while allowing domestic markets to be dominated by imports. This often has devastating effects.

“Zambia and Ghana are both examples of countries in which the opening up of markets has led to sudden falls in rates of growth with sectors being unable to compete with foreign goods. Even in those countries that have experienced overall economic growth as a result of trade liberalisation, poverty has not necessarily been reduced.

“In Mexico during the first half of the 1990s there was economic growth, yet the number of people living below the poverty line increased by 14 million in the 10 years from the mid-1980s. This was due to the fact that the benefits of a more open market all went to the large commercial operators, with the small concerns being squeezed out.

“The evidence shows that the benefits that would flow from increased international trade will not materialise if markets are simply left alone. When this happens, liberalisation is used by the rich and powerful international players to make quick gains from short-term investments.”

Pope Francis in his speech to the World Meeting of Popular Movements spelled out what is really causing so many in Latin America to remain in poverty:

Photo by Casa Rosada
“The new colonialism takes on different faces. At times it appears as the anonymous influence of mammon: corporations, loan agencies, certain ‘free trade’ treaties, and the imposition of measures of ‘austerity’ which always tighten the belt of workers and the poor. The bishops of Latin America denounce this with utter clarity in the Aparecida Document, stating that ‘financial institutions and transnational companies are becoming stronger to the point that local economies are subordinated, especially weakening the local states, which seem ever more powerless to carry out development projects in the service of their populations’.”

The free trade dogma which is so ardently advocated by the Acton Institute, has proven ineffectual in dealing with poverty in the developing world. Indeed, given the history of how first-world countries, like the United States, rose to economic prominence, it is difficult to see how the strategy cannot be viewed as, on the part of some, a cynical attempt to kick away the ladder as described by Friedrich List.  

But Dylan Pahman will have none of this. He insists that business, “credit, trade, and fiscal responsibility are marks of healthy economies, not the problem, popular as it may be to denounce them.” Regardless of how popular it may or may not be to denounce these things, it is clear that Mr. Pahman is missing the point. The problem lies in the fact that financial institutions and transnational companies subordinate local economies to the prejudice of local populations. Credit and trade may be a sign of healthy first world economies, but they are of no assistance to developing economies to the extent they remain the agents of the first world.

Mr. Pahman’s false equivalence between austerity and fiscal responsibility is also remarkable. Austerity in a developing economy simply isn’t fiscally responsible. The fact is, austerity is already being imposed by the IMF and World Bank on third world countries with deleterious effects. As Anup Shah, who writes at the Global Issues site [14] points out:

“Many developing nations are in debt and poverty partly due to the policies of international institutions such as the International Monetary Fund (IMF) and the World Bank.

“Their programs have been heavily criticized for many years for resulting in poverty. In addition, for developing or third world countries, there has been an increased dependency on the richer nations. This is despite the IMF and World Bank’s claim that they will reduce poverty.

“Following an ideology known as neoliberalism, and spearheaded by these and other institutions known as the ‘Washington Consensus’ (for being based in Washington D.C.), Structural Adjustment Policies (SAPs) have been imposed to ensure debt repayment and economic restructuring. But the way it has happened has required poor countries to reduce spending on things like health, education and development, while debt repayment and other economic policies have been made the priority. In effect, the IMF and World Bank have demanded that poor nations lower the standard of living of their people.”

Even in developed countries austerity can have unintended consequences if improperly applied. Adam Posen, president of the Peterson Institute for International Economics, writes about austerity measures imposed to rectify the banking crisis in the euro zone:

“Austerity in Europe, however, didn't just address the wrong problem – it also worsened the problem it was meant to address, government debt. When you raise taxes or cut government spending, it is meant to close the gap between revenues and expenditures. But a national government isn't the same as a household. When it cuts spending or raises taxes it also cuts growth of the economy, which right away increases spending (on things like unemployment insurance) and decreases revenues (because people have lower income and pay less taxes). The net impact on deficits between these two effects depends on the situation.

“As some of us predicted, the euro area crisis was exactly the wrong situation for austerity to produce lower deficits. In a recession, the impact on growth of austerity is much bigger than in normal times; ditto for when a country's banks are damaged. And when your neighbors cut back at the same time as you do, the growth effect gets reinforced, especially if you trade with them a lot (which the euro area members do). Throw in the fact that the European Central Bank didn't loosen credit enough to offset the fiscal contraction, unlike the Federal Reserve, and you have a recipe for austerity producing increased public debt.

“And that is precisely what has happened. So the euro area governments are right to back off on austerity, to keep both their public- and private-sector debts from rising. They need a new approach to their problems.” [15]

Austerity makes recessionary conditions worse in places like the United States or Europe, and they hinder development and exacerbate poverty in third world countries. Mr. Pahman’s apparent belief that austerity is simply the equivalent of fiscal responsibility is astounding.

Mr. Pahman must be credited with the confidence he has in is views, so it must be wondered why he feels the need to sink to bearing false witness against Pope Francis. He actually says that “more important than the plight of the poor, to His Holiness, is the plight of trees, water, and lower animals,” and refers to this alleged conviction as “moral confusion”.

One struggles to find the part of the Pontiff’s address to the World Meeting of Popular Movements where he articulates such a belief, but the closest is this one:

“The third task, perhaps the most important facing us today, is to defend Mother Earth.

“Our common home is being pillaged, laid waste and harmed with impunity. Cowardice in defending it is a grave sin. We see with growing disappointment how one international summit after another takes place without any significant result. There exists a clear, definite and pressing ethical imperative to implement what has not yet been done. We cannot allow certain interests – interests which are global but not universal – to take over, to dominate states and international organizations, and to continue destroying creation. People and their movements are called to cry out, to mobilize and to demand – peacefully, but firmly – that appropriate and urgently-needed measures be taken. I ask you, in the name of God, to defend Mother Earth. I have duly addressed this issue in my Encyclical Letter Laudato Si’.”

Now no one can give that portion of the Holy Father’s speech a fair reading and come away with the idea that “the plight of trees, water, and lower animals,” is more important to the Pontiff than the plight of the poor, Mr. Pahman’s puerile interpretation notwithstanding. Indeed, environmental destruction is a critically important aspect of the plight of the poor. The poor cannot raise themselves from their condition if their environment is destroyed.

Mr. Pahman makes a comparison between the ranking of countries on the United Nation’s Human Development Index (HDI) [16] and their ranking on the Heritage Foundation’s Index of Economic Freedom [17], and points out that “of the top 20 countries on the most recent HDI ranking, 18 also rank as ‘free’ or ‘mostly free’ on the most recent Heritage Index of Economic Freedom.” That may seem impressive, but there is an inherent ambiguity in the Heritage Foundation’s index. As Stefan Karlsson, of the Mises Institute no less, points out:

“Clearly there is a great difference between the degree of economic freedom in the traditional capitalist bastion of Hong Kong and in Stalinist North Korea. But beyond such clear-cut cases how do we determine which countries are the most free and the least free?

“This is not an easy question because often it is not as clear as the comparison between Hong Kong and North Korea, where Hong Kong is arguably much freer in all aspects. Often it is the case that one country is freer in one aspect while being less free in another.” [18]

It thus appears that economic freedom, as such, is not easily susceptible of the quantification attempted by the Heritage Foundation. In this light the correlation that has been constructed takes on an artificial ambience.

What’s more, it has already been seen how free trade policies are favored by countries who have reached a certain level of development. One supposes that the United States would have scored lower on the Heritage Foundation’s index in the days when the American system of economics was operative. But that was the period when the United States became the leading manufacturing country in the world. That fact undermines any notion that economic freedom as understood by the Heritage Institute has any causal relationship to a nation’s prosperity. Instead, as has already been discussed, it appears that free trade policies emerge as nations become prosperous. It is, therefore, not surprising that there is some correlation between HDI rankings and those of the Heritage Foundation’s index, but it is for the opposite reason that Mr. Pahman claims.

Mr. Pahman objects that Pope Francis is speaking outside of his competence. He says that it “is one thing to call attention to the moral roots of economic problems; it is another to pass judgment upon which prudential policies are the best means to moral ends.” Pope Francis, he says, should follow the example of Saint Pope John Paul II, who, he says, spoke more favorably of a “free economy” (apparently that was within his competence, since he spoke more “cautiously”). But Saint Pope John Paul II didn’t offer the aid and comfort to the Acton Institute that Mr. Pahman hopes for.

In the encyclical Centesimus Annus, in a part only partially quoted by Mr. Pahman, Saint John Paul II said this:

“Returning now to the initial question: can it perhaps be said that, after the failure of Communism, capitalism is the victorious social system, and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? Is this the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress?

“The answer is obviously complex. If by ‘capitalism’ is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a ‘business economy’, ‘market economy’ or simply ‘free economy’. But if by ‘capitalism’ is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative.

“The Marxist solution has failed, but the realities of marginalization and exploitation remain in the world, especially the Third World, as does the reality of human alienation, especially in the more advanced countries. Against these phenomena the Church strongly raises her voice. Vast multitudes are still living in conditions of great material and moral poverty. The collapse of the Communist system in so many countries certainly removes an obstacle to facing these problems in an appropriate and realistic way, but it is not enough to bring about their solution. Indeed, there is a risk that a radical capitalistic ideology could spread which refuses even to consider these problems, in the a priori belief that any attempt to solve them is doomed to failure, and which blindly entrusts their solution to the free development of market forces.” [19]

Mr. Pahman misrepresents the “affirmative” answer Saint Pope John Paul II as unqualified, even if made “cautiously,” and ignores the Pontiff’s concerns about the marginalization and exploitation that remains in the world, particularly in the third world. It is interesting that the Pontiff used the term “free economy” to distinguish what he has in mind from “capitalism,” whereas Mr. Pahman confounds the terms. But what Saint Pope John Paul II had in mind was “a society of free work, of enterprise and of participation,” a society “not directed against the market, but” which “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.”

It is true that Saint John Paul II said that 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 he went on to say that “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.”

It is a mockery to insist that there are resources available to developing countries when they cannot purchase them. The market works only when the parties to exchanges are in relatively equal positions. This is not the case where the IMF and the World Bank can impose draconian terms in connection with loans. This is not the case where the resources of developing countries can be exploited to the profit of transnational corporations, all the while denying them the means to develop their own economies. Partisans of free trade, like the Acton Institute, deny these obvious realities.

One aspect of Mr. Pahman’s article represents a positive development. His attack on Pope Francis should make it clear that there is little affinity between Catholic Social Teaching and the positions of the Acton Institute. Due to the presence of a Catholic priest at the helm of the organization, some have been confused on that point. There should be no confusion now.

Jack Quirk

Burying Corruption Under Layers

August 13, 2015

The corruption of American democracy has become a well-known and undeniable truth about the state of affairs in the United States. Americans have intuitively perceived for some time that moneyed interests have a disproportionate influence on government policy, and that intuition has now has empirical support as reported in a 2014 article by Martin Gilens and Benjamin I. Page, who have found “that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.” [1] Of course, “if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened.”

The remedies that have been proposed for this state of affairs have included publicly financed elections. As tempting as that proposal may be, it suffers from two shortcomings.

The first is that, even if contributions to campaigns were eliminated, it would probably be impossible to reign in political speech in favor of candidates by persons not associated with campaigns without running afoul of the First Amendment to the U.S. Constitution, even if such persons were wealthy or well-financed. Much has been said in recent times about not permitting corporations to engage in any sort of political speech, but any provision like that could easily be circumvented by wealthy individuals pooling their funds for political purposes outside of a corporate structure.

The second shortcoming is that representatives, especially on the federal level, represent too large a constituency to make most citizen voices audible. For this reason, the more prominent members of society would retain a level of advantage in getting their views heard by representatives, simply because of their visibility and prestige.

Public financing of campaigns is probably the most democratic proposal extant using existing governmental structures. But given these flaws in the proposal, and assuming that maximizing democracy is the goal, it appears that structural reform of some kind will be necessary.

According to Fred Foldvary, who is on the economics faculty of San Jose State University, the “basic problem is the way we elect our representatives. Our system is mass democracy: a large mass of voters elect a Congressman or Senator, or the President. The voters don't know the candidate personally, so the candidate relies on advertising in the media to project a favorable image. This costs money, and the special interests are happy to contribute the funds.” [2] But since “the key problem is mass democracy, the only remedy is to change it to small-group democracy,” whereby every election would “take place in a small group,” which “would eliminate the need for mass media, and therefore the need for mass campaign funds, and thus the opportunity for special interests to buy out the election.”

The method would be something called “multi-level voting.” Cities and counties would be divided into small neighborhood districts. Each district would elect a council. These council members would elect one of themselves to a higher level council “made up of a dozen neighborhood districts.” This next level of councils would, in turn, “elect members to the next higher level, and this” would continue “on up to the representatives to the city council, state legislatures and Congress.”

Astute Bible students will notice a similarity between this plan and the one suggested to Moses by his father-in-law, where he told him to set over the Israelites “officers over thousands, hundreds, fifties, and tens,” so that Moses would not be overburdened. (Exodus 18:13-26) There is, after all, much wisdom to be found in Scripture.

Jack Quirk 

Biblical quotations are from The Catholic Edition of the Revised Standard Version of the Bible, copyright 1965, 1966 by the Division of Christian Education of the National Council of the Churches of Christ in the United States of America. Used by permission. All rights reserved.