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Consumer Choice and Society

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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Those who like to celebrate the contemporary capitalist economy frequently do so in terms of choice. Some are quite open that it is consumer choice that excites them, the ability to pick and choose among an immense variety of products, according to one’s whims and desires. Others, more conscious of the shallowness implicit in reducing man to simply a consumer of goods, are wont to point out that even though our society itself may be preoccupied with material possessions, we ourselves as individuals are free to occupy ourselves with better things, with cultural or spiritual goods, for example.  While of course this is true, one might wonder why so few people seem to manifest much interest in these latter types of goods. But perhaps the real problem here is the attempt to reduce human choice solely to the individual level. It is true, of course, that individuals do have the freedom to choose. Our wills were created by God to desire goods, but we have the freedom to choose among goods, to choose appropriately or not, to make choices that do not interfere with the attainment of our eternal salvation, or that make this more difficult or even impossible to attain. This does not mean, of course, that we must always choose the highest goods; rather, as the collect for the Third Sunday after Pentecost in the traditional Roman rite puts it, in such a balanced way, that “we may make use of [transeamus] temporal goods so as not to loose eternal goods.”

But there is much more to say here than simply to exhort one another to make good choices. For we exist not merely as individual choice-making consumers – even when our choices might be of the most laudable kind – but as members of society, and as such, invariably influenced by that greater social whole. In his 1991 encyclical Centesimus Annus, St. John Paul II offered a penetrating discussion of the connection between individual choice and the society or culture around us. He wrote (in section 36)

The manner in which new needs arise and are defined is always marked by a more or less appropriate concept of the human person and of the person’s true good. A given culture reveals its overall understanding of life through the choices it makes in production and consumption. It is here that the phenomenon of consumerism arises. In singling out new needs and new means to meet them, one must be guided by a comprehensive picture of the person which respects all the dimensions of his being and which subordinates his material and instinctive dimensions to his interior and spiritual ones. If, on the contrary, a direct appeal is made to human instincts…then consumer attitudes and lifestyles can be created which are objectively improper and often damaging to the person’s physical and spiritual health. Of itself, an economic system does not possess criteria for correctly distinguishing new and higher forms of satisfying human needs from artificial new needs which hinder the formation of a mature personality. Thus a great deal of educational and cultural work is urgently needed, including the education of consumers in the responsible use of their power of choice, the formation of a strong sense of responsibility among producers and among people in the mass media in particular, as well as the necessary intervention by public authorities.

Here John Paul makes clear the connection between individual choice and the concept or picture of human good which a culture projects. Consumerism is not simply bad choices made by consuming individuals, for these bad choices do not occur in a vacuum. They presuppose the fundamental things that a society values, what it produces and what it teaches about human needs and goods. John Paul notes four matters that require attention, “the education of consumers in the responsible use of their power of choice, the formation of a strong sense of responsibility among producers and among people in the mass media in particular, as well as the necessary intervention by public authorities.” For now, let us focus on just one of these, “the formation of a strong sense of responsibility…among people in the mass media.”

Here advertising immediately comes to mind, and it is surely one of the most potent methods of teaching that any society makes use of. Advertising rarely teaches by precept, but more subtly creates illusions as to what is a good or satisfying or exciting life, and what products are necessary to share in such a life. It is not simply the promotion of a particular product, rather it is generally the promotion of “artificial new needs which hinder the formation of a mature personality,” for the sake of convincing the public to buy new products or new kinds of products.

It is true that the ability of advertising to influence consumer choice is not unlimited. There have been notable instances of marketing failures because of consumer resistance. But I do not think that anyone looking honestly at our economy today could fail to see that for the most part it is characterized by “artificial new needs which hinder the formation of a mature personality,” which convince people that happiness is to be found in the possession of more gadgets or of some particular gadget.

However, it is not simply by advertising that the mass media influence culture and public opinion. The media as a whole present an image of “consumer attitudes and lifestyles” that, more often than not, “are objectively improper and often damaging to the person’s physical and spiritual health.” They do this by the contents of their shows, certainly, but equally as much by the very images they offer, of apparently successful and happy people, and even by the news items they focus on and the way they analyze news events.

In response to this John Paul rightly highlights the need for “educational and cultural work,” the formation of a strong public recognition of man’s true good and, on the other hand, awareness of those false goods which directly appeal to human instincts and fail to subordinate our “material and instinctive dimensions to [our] interior and spiritual ones.” In this connection both the Church and educational institutions at all levels can play an important part. But he also notes “the formation of a strong sense of responsibility among producers…, as well as the necessary intervention by public authorities.” Here we can ask if the very structure of economic life can contribute to the correct formation or to the deformation of our understanding of the human person. In considering this, if we recall the definition of capitalism offered by Pope Pius XI in his 1931 encyclical Quadragesimo Anno, as “that economic system in which were provided by different people the capital and labor jointly needed for production” (sect. 100), we might begin to see why a society’s ordering of its economy has profound implications for its cultural, intellectual and spiritual health.

Under capitalism, when separation of ownership and work is the norm, there exists a class of persons, the owners of capital, for whom the economy is not so much a way of supplying mankind with truly necessary and useful products, with real means of satisfying genuine human needs, as it is of making and selling anything that people can be persuaded to buy, of working to create “artificial new needs” in order to promote sales of their products. Hilaire Belloc explained this in a striking passage.

But wealth obtained indirectly as profit out of other men’s work, or by process of exchange, becomes a thing abstracted from the process of production. As the interest of a man in things diminishes, his interest in abstract wealth – money – increases. The man who makes a table or grows a crop makes the success of the crop or the table a test of excellence. The intermediary who buys and sells the crop or the table is not concerned with the goodness of table or crop, but with the profit he makes between their purchase and sale. In a productive society the superiority of the things produced is the measure of success: in a Commercial society the amount of wealth accumulated by the dealer is the measure of success. [1]

The small producer is intimately connected with his product, and generally has some interest or pride in workmanship beyond simply how much money he can make. But necessarily those who are one or more steps removed from the productive process will tend to look at their product as simply something to be sold, and sold not necessarily because it is necessary or useful, but because advertising can persuade people to buy it. Under capitalism, “the formation of a strong sense of responsibility among producers” will be unusual, because the cultural climate will focus on “the amount of wealth accumulated,” not on the inherent quality of the product or service.

St. John Paul notes also “the necessary intervention by public authorities.” In many people’s minds, this raises the specter of a Soviet-style command economy. But this is a groundless fear. Any type of economy requires a legal system to support it. Capitalism, as much as any other, both shapes the legal environment and depends upon it for structure and support. For example, were it not for the unprecedented powers and rights given to corporations by courts and legislatures since the second half of the 19th century, advanced capitalism could hardly exist. None of this was inevitable, however, but rather the result of corporate influence over government and the general cultural attitudes endemic to a commercial or consumer society.

But a legal system could also work in favor of a distributist economy, an economy characterized, as much as is feasible, by a joining of ownership and work, private ownership for the most part, but private ownership of such a kind that producers are generally interested in more than how much money they can make. “The man who makes a table or grows a crop makes the success of the crop or the table a test of excellence.” Of course he needs and expects to make a sufficient return on his work to support himself and his family, but the ever-present connection with real work and real products tends in the opposite direction from the capitalist separation of ownership and work. Moreover, we should note that ownership in a distributist economy need not be individual proprietorships, but can be employee cooperatives. Such cooperatives will generally be necessary for production which requires large-scale machinery or large capital investment.

Of course, due to our First Parents fall into sin, distributist owners will also be affected by greed, by a temptation to cut corners, and so on. This is part of the human condition. But there is a huge difference between a system which facilitates greed, which promotes a desire to cut corners and defraud customers, and a system that does not encourage such evils. Capitalism promotes sin, distributism does not.

Right now the power of capitalists, particularly as embodied in corporations, is overwhelming. For the most part, distributism must manifest itself in nooks and crannies of the economy. We should seek these out and help them to grow. But there is another thing we can do: we can refuse to allow the culture of capitalism of colonize our minds. We can reject “new needs and new means to meet them” which are not “guided by a comprehensive picture of the person which respects all the dimensions of his being and which subordinates his material and instinctive dimensions to his interior and spiritual ones.” We can distinguish in our own thought and life “new and higher forms of satisfying human needs from artificial new needs which hinder the formation of a mature personality.” We can thus carry out, in our own minds, in our own families and among our own friends and acquaintances, some of the necessary “educational and cultural work” that John Paul calls for. In short, we can take small steps to break down the oppressive ideology of consumerism which surrounds us and live in the freedom of that truth which can set us free.

Notes:
[1] An Essay on the Nature of Contemporary England (New York: Sheed & Ward, 1937) p. 67.

Practical Distributisim: The Cost of Comparative Advantage

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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The advocates of Free Trade deals between countries frequently cite the fact that more products are made available at a lower cost to consumers as proof that their idea makes economic sense. Their explanation of how this works rests on the idea of Comparative Advantage,[1] the idea that one country can produce a good at a lower opportunity cost than other countries. Based on this idea, if the industries in one country focus on those products where they have the lowest opportunity cost, and import products where they don’t, this provides an abundance of lower priced goods for everyone. For the advocates of Free Trade, price [2] appears to be the ultimate test of what is economically good. They scoff at opponents and critics of Free Trade as if their criticisms of it are completely without merit. Even some economists who have dared to question Free Trade, still try to uphold Comparative Advantage as a reasonable idea.[3] The reality is that the Free Trade ideology ultimately rests on Comparative Advantage. Therefore, it is prudent to examine the criticisms of it to see if they do, in fact, merit consideration. I believe that history has proven that they do.

The United States of America used to have a much more robust manufacturing industry. Critics will immediately respond that there is actually a growing manufacturing base in the U.S.,[4] but let me explain what I mean. It is true that certain types of manufacturing are growing in the U.S. However, these are not the same types of manufacturing jobs as in the past. Historically, U.S. manufacturing employed all levels of workers. High skilled and high educated workers developed and designed products, but our manufacturing industries also employed the low to average educated who worked on the assembly lines and did those aspects of manufacturing work that did not require higher levels of education. Over the last thirty to forty years, we have increased the jobs requiring high levels of education and outsourced jobs for those with an average education.

“The mantra that we’ve lost good-paying jobs to China is exactly wrong,” said Michael Hicks, an economics professor at Ball State University who has studied manufacturing in Indiana. “We’ve lost the bad-paying jobs to China and gained good-paying jobs.”[5]

These “bad paying” jobs supported large numbers of middle class families across the country. The “good paying” jobs were precisely ones that those displaced by this shift were unqualified to get. Essentially, the U.S. manufacturing industry has said that, unless you can get a degree in science or engineering, don’t bother applying to them for a job. The callous disregard of this large, middle class group of workers has caused economic and political tremors in the U.S. in recent years. Why were these hard working people turned out by their employers? The reason is Comparative Advantage. Our largest manufacturing employers are focusing only on those areas with the “lowest opportunity cost” to them. This is done without regard to what happens to their fellow citizens, and then they wonder why U.S. citizens don’t have much loyalty to domestic products.

Industrial heavy hitters who were able to develop and grow during an age of protectionist tariffs, now demand Free Trade on the basis of Comparative Advantage. Tariffs used to provide jobs in the U.S. as foreign manufacturers would open factories in the U.S. to avoid paying them.[6] As the threat of tariffs disappeared, so did the jobs.

… “industries where the threat of tariff hikes declines the most experience greater employment loss due to suppressed job creation, exaggerated job destruction and a substitution away from low-skill workers.”[7]

However, this issue goes beyond assembly line jobs. Comparative Advantage, and its necessary Free Trade deals have spread across all aspects of production in every country that has adopted this economic ideology. What happens, though, when the foreign supply lines are threatened? We have already written about how natural and economic disasters in other countries have impacted the availability of products of supposedly “American” manufacturers. The truth is that this is not as rare an occurrence as some may believe. It is easy to forget, though, when these amount to not much more than an inconvenience or an annoyance to us. For example, past flooding in China has resulted in shortages of computer parts for U.S. computer manufacturers. Because these types of events ended up being a temporary annoyance where people had to wait extra time for these parts, few seemed to really consider the greater implications of such a dependence. The fact that our supply chains have not significantly changed in the decades since those incidents shows that those who had enough foresight to raise an alarm were not taken seriously.

The reality is that the same warnings given about too much dependence on foreign manufacturer of critical technology apply to other critical areas. The same warnings have been raised about this type of dependence for things like medicines.[8] It does seem that a lot of these articles focus specifically on the dependence of Western countries on China. There are two reasons for this.

The first and most obvious reason is that China has become the biggest manufacturer of critical computer technology and medical supplies in the world. European and North American companies have outsourced the manufacture of these critical needs to China; a process that has been enabled by the cooperation of their governments. This is despite the fact that China is widely recognized by these governments as consistently violating basic human rights and having sub-standard working conditions that would not be accepted in their own countries, and these supposedly capitalist companies are moving their production to a socialist country. Some advocates of Free Trade say that China has moved to a more “corporatist” form of business model that is (by implication?) more compatible with capitalism. The reality is that corporatism is a socialist economic model that was adopted by the Fascist and Nazi regimes as part of their socialist economic plans.

However, the warnings against this type of dependence was ignored and, with the unfortunate outbreak of the COVID-19 virus, we are once again having to deal with the reality of this issue. The realities in this case are the same. There are both annoyances as our supplies of non-critical products are delayed.[9] There are also more serious consequences as this circumstance has raised the possibility of critical drugs and medical supplies might also be at risk.[10]

However, let’s consider another serious implication of what Comparative Advantage has done to us. It appears that even some of the manufacturing requiring high skilled and highly educated workers have also been outsourced. We seem to forget just how much of our society has become dependent on computer technology. This goes beyond our government offices, our communications networks, and the systems that run our economic industry. The advanced weapons systems used by the defense forces of Western countries are also completely dependent on this technology.

Even though our economic powerhouses have viewed China as an “economic partner” for several decades, I find it hard to believe that the military and intelligence departments of Western countries look at China as much of a partner. However, those departments rely on computer technology made by the companies that do. As a result, our most advanced weapons and defense systems, as well as our communications networks,[11] are all dependent on advanced computer parts made by a potential adversary.  Is this a real threat?

In 2011, it was reported that the “Government Accountability Office found that counterfeit routers with high failure rates had been sold to the Navy, and that counterfeit microprocessors had been purchased by the U.S. Air Force for use on F-15 flight control computers.”[12] A “scientist at Cambridge University in the United Kingdom claims to have developed a software program proving that China — and anyone else — can, and is, installing cyber backdoors on some of the world’s most secure, ‘military grade’ microchips.”[13]

You might think that this is a lot to blame on an idea like Comparative Advantage, but then you have to answer the question of why we no longer make these computer components for ourselves. The U.S. used computers designed and built in the U.S. to put men on the moon. This was not that long ago. Today our most advanced communications and defense systems are dependent on technology we might design, but no longer make. The same is true for medicines and medical supplies. We use computer components without even thinking about it, in our phones, in our cars, and in our home entertainment systems, and these components are all made by a foreign power that is philosophically opposed to the ideas that founded our societies. How did we get to such a place? We got there because our largest industries, and their partners in government, are believers in the theory of Comparative Advantage and have worked together to implement Free Trade agreements to make that theory a reality.

Notes:
[1] https://www.economicshelp.org/blog/glossary/comparative-advantage/

[2] https://practicaldistributism.blogspot.com/2015/08/price.html

[3]  https://economistsview.typepad.com/timduy/2010/07/why-is-the-american-jobs-machine-broken.html

[4] https://www.theatlantic.com/business/archive/2017/01/america-is-still-making-things/512282/

[5] Ibid.

[6] https://www.cnbc.com/2015/02/05/the-rise-of-made-by-china-in-america.html

[7] Pierce, Justin R. and Schott, Peter K. “The Surprisingly Swift Decline of U.S. Manufacturing Employment”. National Bureau of Economic Research, American Economic Review, Vol 106(7), Dec. 2012, Revised Jan. 2014
https://www.nber.org/papers/w18655.pdf

[8] https://www.americanthinker.com/articles/2019/01/exposing_the_risks_of_americas_dependence_on_china_for_medicine.html

[9] https://financemarkethouse.com/2020/02/18/apple-admits-the-coronavirus-will-cause-a-global-iphone-shortage/

https://abcnews.go.com/Business/coronavirus-outbreak-puts-chill-us-businesses-apple-starbucks/story?id=68639376

https://www.just-auto.com/hot-issues/coronavirus-hits-the-auto-industry_id636.aspx

[10] https://www.wired.com/story/the-coronavirus-is-a-threat-to-the-global-drug-supply/

https://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/coronavirus-pandemic-threatens-to-cut-pharmaceutical-industrys-lifeline/articleshow/73753415.cms

[11] https://www.cnet.com/news/chinese-spy-chip-reportedly-found-in-server-at-major-us-telecom/

https://www.theguardian.com/technology/2018/oct/04/china-planted-chips-on-apple-and-amazon-servers-report-claims

https://www.bloomberg.com/news/features/2018-10-04/the-big-hack-how-china-used-a-tiny-chip-to-infiltrate-america-s-top-companies

[12] http://www.allgov.com/news/us-and-the-world/counterfeit-computer-chips-from-china-compromised-us-military-equipment?news=843552

[13] https://www.military.com/defensetech/2012/05/30/smoking-gun-proof-that-military-chips-from-china-are-infected

https://www.youtube.com/watch?v=wk5oLLdTkq0

Title photograph by Thorsten Lindner.

The Homeless

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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The issue of the homeless in society is starting to get more attention in the news in the United States. Unfortunately, I suspect that this is only because of the upcoming presidential election. It would be unfair to say that this issue gets no attention at other times, but it does seem to me that the level of attention has increased as a topic of interest for our federal elections. While any public attention to this issue is welcome – it is a real issue that needs to be addressed – it does seem that the form of attention and the ways of addressing it leave a lot to be desired. I think this is true from both a general perspective as well as a specifically distributist one.

Homelessness appears to be on the rise in the United States. While there always has been, and undoubtedly always will be (Mark 14:7) homeless among us, the number of people living on the streets does appear to have increased a great deal in recent years. It is possible that, with some cities declaring themselves to be “sanctuaries” for the homeless, some of them have managed to migrate to those urban centers. To the extent that this is true, it could be said that the number of homeless has not increased as much as the concentration in urban centers has. Why is this issue relevant to distributism? Because this social issue touches both on the economic and the political life of communities throughout the country and around the world.

From a distributist perspective, homelessness, like most things, should be handled on as local a basis as practically possible. Our current political and tax structure may limit this, but that can and should change. Religious and other private organizations should be the front line in providing hands-on assistance as much as possible. Locally run government assistance programs should be established for what these other organizations are not able to handle. From the distributist perspective, the fact that an issue is wide-spread does not mean that higher levels of government become the primary actors in addressing it. Therefore, distributism doesn’t prohibit higher levels of government from offering assistance to the local providers of helping those in need, but they must not be allowed to usurp the role of the local organizations and government in directly addressing the issue. Therefore, even though homelessness is an issue throughout our society, and addressing it may require assistance from state or federal government, this assistance does not include setting policy for, or direct management of, assistance to those in need when more local organizations can do this.

We cannot ignore the concerns of those in the community who are not homeless. Many of them would willingly help the homeless, but also need to have their own concerns related to this issue addressed. These people would have the most motivation to help the homeless for both altruistic and personal reasons. Altruistic because they can see those in need and want to assist them. Personal because they are being negatively impacted when the homeless block sidewalks and doorways, and defecate and urinate in public parks, on the sidewalks, and in the doorways. Customers are driven away, businesses suffer or close, which means that these people have less money available to help those in need. Eventually, they will move away, taking their businesses with them, which means that there are fewer people to support the programs to help the homeless.

Another aspect where our society seems to be failing to address the issue of homelessness is that those (in government) who have taken charge of addressing it don’t seem interested in identifying the various aspects to the problem. A “one size fits all” simple solution will not successfully address the issue because there are different reasons that people are homeless. You can’t simply say, “we’ll provide housing” to solve the problem if the problem goes beyond the simple availability of housing – and it does. While this is certainly a simplification, I believe we can identify at least four broad categories of homelessness which will clearly show that one solution will not be able to succeed in addressing the problem.

The first category, and maybe the largest, are those who are addicted to drugs. Some people will argue that these people are voluntarily homeless because they voluntarily started taking drugs, however we know that the drugs being used by the homeless alter mental processes and are so strongly addicting that they truly need outside assistance to break the drug use cycle. Therefore, I cannot agree that these people can truly be categorized as voluntarily homeless. Being under the influence of mind-altering drugs while out in public presents a public danger. Therefore the local government has an obligation to protect its society from those who fit in this category. There are programs out there which have been successful in assisting those in this situation to get off these drugs, and we should promote those programs implemented according to distributist principles as much as possible.

The second category are those who have some kind of mental illness or condition. Some might try to group these people with those addicted to drugs, but I disagree (although there may be some overlap of the two). Where those who are addicted to drugs are in their condition because they take drugs they should not, some of those who are mentally ill are homeless because they don’t take the drugs they should. Some don’t take the drugs they need because their addiction still controls them, and others because they could not afford to get the drugs they needed. Additionally, there are those with mental illnesses for which there is no effective treatment.

In both of the cases above, leaving these people out on the street without “harassing” them is not an act of compassion, and it certainly doesn’t help them or the community negatively impacted by them. If we are committed to helping them, we must provide and support the institutions and programs which takes them from the street and into programs to help them and keep them off the street. These people are not only in need, but are suffering in a way that goes beyond their ability to help themselves.

The third category of homeless are those who are “down on their luck.” They are the ones whose jobs have been eliminated or outsourced to other areas. They do not have the means to get the training they need to change careers or to move to where the jobs are. Programs to assist these people to get training, to live while they get it, to help them get jobs, and to get to where the jobs are, need to exist. I am including in this category those who desire to work to support themselves and their families.

I believe there is broad support for helping those who fall into these three categories, even if that support is for different reasons. These are people who are in true need of help. I believe both a personal and a social responsibility exists to help them (Matt 25:34-46), and by doing so to help the overall community.  This would serve the common good, that is the good of the individual and also the good of the community as a whole.

The fourth category of homeless, which I believe is a small minority of the homeless, are those who are truly voluntarily homeless. Those who have chosen this as their own way of life separate from the community, but also simultaneously within it. I do believe we need to remain open to a certain degree with these people and not disrupt them unnecessarily. However, if they are living within a community, and taking advantage of the public goods of the community without actually being a part of the community or contributing to it, they are effectively stealing resources from those in need and from the community they refuse to join. If they are capable of supporting themselves but choose not to, then the social obligation to them is less than it is to the other categories. They should still be treated with human decency, but that doesn’t mean we have to support them in their chosen life style or blithely accept them disrupting the community, especially when doing so would use resources intended to help those in real need. We must treat them with justice, but justice is equally owed to the society at large.

I have listed four broad categories, and I believe that each of them could be divided into sub-categories. It is an unfortunate reality of our time that neither of the major political parties, and the various economic philosophies, seem to be willing to truly address homelessness in the various ways it needs to be addressed. I believe that part of the reason for this is that they all approach it from either a highly centralized or extremely individualistic perspective. Both of these perspectives tend toward over-generalization in order to win the broadest level of support. The distributist movement looks at this situation from the local perspective. If the homeless in a particular community are those down on their luck, they can focus their efforts of assistance to address that problem. Another community where the majority of homeless are addicted to drugs can focus on that.

This is why distributists accept the idea of subsidiarity. The local community knows its problems better than more centralized and distant governments. They are in the best position to address the problems, even if they need assistance to accomplish what needs to be done.

References:

Seattle is Dying

 

What They All Get Wrong About Tariffs

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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When President Trump chose to impose tariffs on China, there were various reactions. Some economic schools praised him because they believe tariffs will improve the American job market in those industries currently heavily outsourced to Chinese labor. Free market libertarians, typically representing the Austrian school of economics, berated him because they believe tariffs are terrible and hurt the American economy. However, Trump said he was doing this as an economic sanction because China was stealing US intellectual property.

Let’s start with where President Trump is wrong. He is using the tariff as a means of economic sanction – to punish another country. This is generally being characterized as a form of “trade war,” which is not an unreasonable conclusion. The reason he is wrong, however, is because we have been living under the doctrine of free trade long enough that China can economically hurt us just as much as we can economically hurt them. You can only impose a punishment from a position of power, and we don’t seem to have one. China is where our corporations produce our computers, cell phones, network infrastructure components, and many other things on which we have come to depend for our daily lives. It wasn’t that long ago that flooding in a region of China cause a world-wide shortage of computer disk drives. China can retaliate quickly and effectively against any form of economic sanction we may want to impose. A concrete example of this type of economic, and therefore political, dependence is the United Kingdom’s departure from the European Union. One of the issues they have to address is potential interruptions in their food distribution. The UK has the resources to provide this for itself, but they have spent decades allowing themselves to become dependent on foreign countries for basic necessities. This is now being used as an argument against becoming politically independent from the EU.

Those praising the tariffs as a means to improve American job opportunities are wrong because Trump’s stated reason for imposing the tariff is not to bolster American jobs or American industries. It was a punishment for stealing intellectual property from American companies. Our situation is very different than when our economic might was building during the industrial revolution. As a nation, we desired greater economic power, but we were already economically independent for the majority of our daily needs and wants. We used an aggressive tariff system to not only protect our fledgling industries, but to open foreign markets to our strong industries.

Others, including those who believe in the Austrian School of economics, criticized these tariffs on the grounds that tariffs are bad for economics. For example, political commentator Ben Shapiro has stated on numerous occasions that tariffs are bad for the economy. He describes them as a tax on everyone for the benefit of the few. Are tariffs ever allowed according to his view? According to Shapiro, they should only be used for national security reasons or “in the name of liberty.”

“As JFK put it, ‘We will bear any burden in the name of liberty,’ and, I’m sorry, but getting slightly more expensive goods from China in the name of liberty doesn’t seem like all that much of a burden to bear to help the people of Hong Kong, who are flying the American flag while they are protesting for their freedom.”

– Ben Shapiro, Practicality vs. Morality?

So, we can use tariffs as a tool for political change in a foreign power, but not to protect national industries and jobs. While other capitalists disagree with this view, the implications of this position are astounding when you consider that we are dealing with a socialist dictatorship.

Socialism is an Economic Good for Capitalists

This is a tacit admission that, except when national security concerns apply, or when we want to help influence some form of political change in the name of liberty, socialism is an economic good for capitalism. Is this a ridiculous assertion? Consider the following points.

  • The capitalist justification for free trade is that we can take advantage of lower labor and production costs in foreign countries. However, when you include socialist regimes in this, you are saying that a socialist workforce is more economically competitive than a capitalist one. Socialism is fine (for them), as long as it lowers ourcosts.
  • Labor costs are lower in other countries when they have a lower standard of living or worse working conditions and wages than we do. When you include socialist regimes, it means that we accept the fact that some Chinese workers are practically slave labor, and some factories that produce products for American companies have such bad conditions that they had to have anti-suicide campaigns and put up nets between the company barracks in which the workers live to catch those who try to jump to their deaths.
  • Capitalists proclaim with pride that we are a service and information provider for the world. This is the idea of “comparative advantage,” where different national economies will specialize in what they do best. Many denounce the idea that we should remain competitive in manufacturing, either traditional or new, or declare that we cannot do so. What about those workers in our own manufacturing industries? Well, they need to get themselves retrained to participate in those areas where we have a comparative advantage. In other words, the reason we outsource the production of our most advanced consumer computers and electronics is because a totalitarian socialist regime like China is simply better at it than our capitalist society – and that must be good for us because there is no need for us to improve in those areas.

These positions can only be explained by a view that considers the so-called global economy to be the primary and most important economy, followed by the national economy. Other capitalists may consider the national economy to be primary and the global economy secondary but, for those of the former view, socialism is treated as an economic good for capitalist markets.

In the end, President Trump backed down on the tariffs in hopes that it would keep our prices reduced through the Christmas shopping season. Does this not show that we have become economically dependent on foreign countries, including China?

What can Chinese President, Xi Jinping, say about this? If I were him, I would be using this as propaganda to the Chinese people, that it proves socialism is superior to capitalism, that capitalist production cannot compete with socialist production, and that people who live under capitalism are not able or willing to do the work necessary to produce what they want because they are too lazy and greedy, which is why they depend on socialist workers.

Socialism is not an Economic Good for Distributists!

While trade is generally good, distributism’s emphasis on supporting the local economy means that it should not be at the expense of economic independence. One of the foundational ideas behind distributism is that the more economically dependent you are, the more politically unfree you are. This applies to the national economy just as much as it does to the local economy. The views of capitalists seem to be divided between those who consider the global economy as primary and those who consider the national economy as primary. They don’t seem to give local economies much consideration. Distributists consider the local economy as primary. If the country is filled with a lot of strong and stable local economies, then the national economy will be strong and stable.

When considering trade policy, a nation should look to maintain a level which won’t cause too much economic turmoil for its people if trade gets interrupted. It should also not be the cause of the demise of your own producers. Some capitalists will declare that you are just forcing your own people to accept inferior products or to endure higher prices. They are ignoring the fact that many of their country’s top competitors in international markets initially grew under the protection of tariffs against foreign competition. Markets are different from country to country.

The labor market in the United States is different than the labor market in communist China. Why do any of our capitalists seem to insist that making these two labor markets compete against each other constitutes “free trade?” Are the wages comparable? Are the working conditions comparable? Are worker rights comparable? All of these can influence the cost of labor, and a tariff can be used to actually make them comparable.

Material costs and rents in the United States are different than those in communist China. Even when you factor in the competitive advantage given to many of our large corporations from government subsidies and preferential legislation, does it even come close to the level of government support of a socialist regime like China? No, the competitive advantage seem to be mainly against smaller competitors in our own country, which is why so many of our large corporations outsource production to China and other foreign countries. Tariffs can be used to protect our companies from this.

If a country is lacking development in a particular industry that impacts its economic independence, it cannot compete against those foreign companies that have already developed. A tariff on a particular industry will allow that industry to grow and develop within its own market.

Distributism would rather see as many people as possible engaged in productive work in small independent businesses supporting their local economy. We do not advocating leaving them at the mercy of corporate interests that drain local economies and leave people dependent on government assistance. We do not advocate corporate interests that consider it better to have workers in a socialist regime produce the products we need than our own people.

References:

Why Trump’s tariffs on China are a big deal; CNN Business
https://money.cnn.com/2018/03/21/news/economy/trump-trade-china-intellectual-property-301/index.html

Leaked Document Shows Potential Food & Fuel Shortage after No-Deal Brexit; Subverse News
https://www.youtube.com/watch?v=1MqO9wQjKno

Trump’s 45% tariff on Chinese goods is perfectly calculated; Los Angeles Times Op-Ed
https://www.latimes.com/opinion/op-ed/la-oe-navarro-trump-trade-china-tariffs-20160721-snap-story.html

Yes, Ben Shapiro is Still Wrong on Tariffs. Here’s Why; American Greatness
https://amgreatness.com/2018/03/19/yes-ben-shapiro-is-still-wrong-on-tariffs-heres-why/

The Second Cold War; Ben Shapiro, Ep. 833 (starting @ 40:00)
https://www.youtube.com/watch?v=pe_ySUG4Pco

Practicality vs. Moral Character?; Ben Shapiro, Ep. 839 (starting at 8:45)
https://www.youtube.com/watch?v=3NGdtBTnH0

Trade Trucers Push President Trump to Back Off on China Tariffs; Breitbarthttps://www.breitbart.com/economy/2018/11/29/morechinatrucetalk/

Capitalists Against the Free Market

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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If you listen to the apologists of capitalism, there is one thing they consistently argue for when they rail against things like socialism or even distributism; the Free Market. They say that they believe that the Market should determine what products and services succeed and fail without artificial support or suppression from the government. Customers should be free to decide what products and services they want to buy and it is up to the producers and service providers to convince consumers to choose theirs instead of others. It is interesting to note those cases where they not only fail to support this idea, but actively work against it.

In order for consumers to be able to make a decision that truly represents the action of a free market, the consumer must have the right to know certain things about the products and service providers between which they are choosing. For example, it has generally been recognized that consumers have the right to know the ingredients of food. This is not just for reasons of health, but for other reasons as well. Vegetarians and vegans have the right as consumers to know whether or not the food they are purchasing contains meat or other animal products. This allows them to make a truly free market choice. Consumers also have the right to know who makes a product because, if they think the producer is unscrupulous, they need to have the ability to choose a competitor’s product. If they are prevented from doing this by allowing the producer to be hidden, then the consumer is prevented from making a free market decision they actively want to make.
An important aspect of this consumer choice is that the consumer’s reason does not have to be deemed “reasonable” by others. If you choose not to buy from a particular provider because they support things which you oppose on moral grounds, it doesn’t matter if those things you oppose have nothing to do with the product in question. In a truly free market, you would have the right to refuse to do business with any provider for whatever reason you want. In a truly free market, the consumer would have the right to know what he needs to know to make a truly free decision, and providers should therefore be required to provide this information and prevented from taking steps to hide it. It is the burden of providers to convince consumers to purchase their products and to do so in an open and honest way. If they fail to convince, then their failure is a result of the “invisible hand” of the free market.
In my state, Washington, there was a movement to require the labeling of products containing GMO ingredients. There are various reasons why people are making their free economic choice to not purchase products with patented genetically modified organisms, and these people were asking that their right to make that free market decision be honored by requiring that products containing these ingredients be labeled so that consumers would know what they are buying. What is truly interesting in regard to this article are the arguments I heard made by avowed capitalists against this. The capitalist pundits almost uniformly opposed the legislation on various grounds. The two main arguments made by these capitalists involved the impact to prices and the irrationality of those who opposed GMO products.

They claimed that the cost of changing the labeling would be prohibitively high and the cost of food would skyrocket as a result. There are two points which easily disprove this claim. First, companies change their labels quite frequently when it serves their purpose. They change pictures and rearrange things, they add special sections about offers. If these label changes don’t cause prices to skyrocket, then requiring the labels for future packages to indicate the presence of GMO ingredients won’t either. Second, the requirement has been made in several other countries and their prices didn’t skyrocket. Those who pointed this out were often treated with disdain by these capitalists.

The argument that those who oppose GMO products were doing so irrationally was typically in the form of saying they didn’t understand the science behind the GMO process. However, that isn’t a valid reason to oppose consumer information because the burden is on the producer to convince them to want to buy their products. If a group of consumers decides they would never purchase those products, that is still a free market decision even if the reasons for their choice are incorrect. We should expect avowed capitalists to support the right of consumers to make that decision even if they disagree with the decision itself.

While supporters of the legislation did voice their reasons for not wanting to choose GMO products, their argument about the legislation itself was essentially that they wanted the right to make their free market decision, and they couldn’t effectively do so if these ingredients were allowed to be hidden from them in the marketplace.
Since we know that the labeling requirement would not actually cause prices to skyrocket, what then is the real reason to refuse to indicate that a product contains GMO ingredients? An obvious answer is the loss of sales. In a free market with informed consumers, some of them will freely choose, for whatever reason, not to purchase products that contain GMO ingredients. In terms of free market capitalist economics, that is not only they way things work, but the way they should work. For a producer to refuse or oppose labeling that would inform the consumer about these ingredients is nothing less than deliberately working against free market values; hiding information you know the consumers want in order to effectively trick them into purchasing a product you know they don’t want. This is duplicitous at best.
Why then did so many capitalist who claim to advocate the free market vociferously oppose consumers being allowed to make informed free market decisions? They didn’t even seem to realize that they were opposing a position that essentially said, “let the free market decide the fate of GMO products in the marketplace.” In essence, they were opposing the free market itself.

An Economics of Justice & Charity

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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The Church has always concerned itself with issues of justice in society, and popes have taught extensively on the topic since the late 1800s. Unfortunately, many Catholics in our day are not aware of this teaching, or only consider it in regard to things like helping the poor. Helping the poor is a very important aspect of it, but the scope of the Church’s teaching on matters of social justice go much further. Any aspect of social life which involves questions of ethics or morality fall within the scope of this teaching. Thomas Storck’snew book, An Economics of Justice & Charity, is a guide that shows how the Church’s teaching is very clear, has never changed, and definitely applies to areas of social life like economics.
In this new book published by Angelico Press, readers of Practical Distributism and The Distributist Review will encounter some ground already covered by Mr. Storck. However, he has expanded this coverage and included more material for consideration. Especially important for the Catholic reader, and others who wish to understand the Church’s teaching on social justice, are the sections covering claims, sometimes made by Catholics, that the Church’s teaching has somehow changed since the Second Vatican Council, particularly with the encyclical of St. John Paul II, Centesimus Annus. Quoting those who claim that the Church’s teaching has changed, or that the Church has now wholeheartedly endorsed capitalism, Mr. Storck handily refutes those claims.
Another topic of interest to our readers is that of usury. On this topic, Mr. Storck clearly shows that, while the Church’s position on certain financial considerations may seem to indicate a change of teaching, the Church still condemns usury today as she always has. Through his examination of these financial considerations, Mr. Storck shows that the Church always sides with justice and maintains her teaching clear and unchanged without presenting an impossible burden for those of us who live in a world with a financial system that stands opposed to her teaching. However, he also points out that there are different financial options available to us. If we sincerely believe our Faith and strive to live by the teachings Christ has passed down to us through His Church, we need to choose options which are most consistent with those teachings whenever possible.
I wholeheartedly recommend An Economics of Justice & Charity. Consider this book for your own library and for those with whom you would like to share this important aspect of the Church’s teaching. Changing society is a slow and gradual process that must begin with getting people to consider alternatives to the status quo. This book can be a valuable tool in that most important work. Consider heading over to the Angelico Press web site to order a copy.

Self-sufficiency and economic freedom

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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Hilaire Belloc’s Essay on the Restoration of Property is a remarkably well-written book.  Put aside the question of whether Belloc is right or wrong about any of his contentions: the book is thoroughly lucid.  It’s also organic—you really can’t dip into it at random, you need to get ahold of the ideas as a whole.  This feature of the book, I think, leads to confusion among critics.  Well, there’s also the fact that despite its lucidity, the book covers far more territory than it could exhaustively treat, so there are some ideas that aren’t fully fleshed out.  One of those ideas, at least in my experience, is economic freedom.  It’s one of the central notions of the book, and one of the most fundamental principles upon which Distributism stands, and I’ve had a difficult time coming to grips with it.

It seems to me others have, too, including some prominent opponents of Distributism.  In particular, there seems to be a tendency to conflate economic freedom and self-sufficience.  This has serious consequences.

As I say, the book is an organic whole, so I can’t just pick up ‘economic freedom’ on its own.  I need to back up a little.  Belloc begins with the Production of Wealth.  This is, as he puts it, the transformation of man’s environment from a state that is less useful to a state that is more useful.  ‘Wealth,’ here, doesn’t mean large sacks of cash (at least, not generally).  It means all the things we need to have in order to live conformably to our nature: things like food and drink and clothes and shelter.

The transformation of our environment—the Production of Wealth—occurs only through the use of the Means of Production:

The wealth can only come into existence through the manipulating of natural forces by certain instruments; and there must also be an existing store of food and clothing and housing and the rest of it [e.g. clothing and fuel: or, in other words, wealth] so that human beings may carry on during the process of production.  These stores of wealth, these instruments and these natural forces are the Means of Production.

Note that last sentence carefully.  The means of production include such things as food and clothing, tools (“certain instruments”), and the natural forces with which we work.  It follows immediately that “whoever controls the means of production controls the supply of wealth.”  It also follows immediately that if the family does not control the means of production, then it will not be economically free.  That is: economic freedom requires control over the means of production.  Without control over the means of production, you are economically dependent upon others.  If you are economically free, you are not economically dependent upon others.  But of course this all comes in degrees.  To attain ideal economic freedom, one must attain full control over all the means of production required for the production of the sorts of wealth called for by one’s life.

Now, a quick review of that last paragraph brings to light why it’s so easy to confuse economic freedom with self-sufficiency.  But hold on to that for a minute.  First, we need to get clear on this notion of ideal economic freedom.  It’s not what you think.

The ideal, Belloc says, is inhuman.  In other words, do not read Belloc’s use of the term ‘ideal’ as meaning “a goal to be strived for even though we are sure to fall short,” or as “that which would be most appropriate for us, should we, per impossibile, attain it.”  That is definitely not the way to take it.  He uses the term in the sense of being an idealization, which is to say, a falsification.  Man is a social animal.  He is not made for the kind of isolation implied in such an ideal.  Again—and this can’t be stressed enough—ideal economic freedom is not a desideratum.  It must come with limitations.

So Belloc posits two restraints upon economic freedom.  First, there is the Difference of Occupation: some will mainly raise grain, some will mainly mill grain, some will mainly make millstones, some will mainly fix grain planting equipment, etc.  Second, there is the Principle of Unity, namely, the State, which helps maintain justice and order internally, and helps arrange for defense against aggression from without.  The resulting dually-limited economic freedom “satisfies the nature of man.”  So these limitations are not unfortunate constraints that bar our way to Utopia.  There is no Utopia—the “ideal” is eschewed from the outset as not proper to our nature.

What is to be pursued is not an inhuman ideal, but rather the wide distribution of control over the means of production, which is to say, private property.  And the family must control the means of production, or else it will not be economically free.  One can, of course, reject economic freedom as a goal (and Belloc deals with some arguments intended to do that).  But if one accepts economic freedom as a goal, then it is hard to see how Belloc’s conclusions to this point can be gainsaid.

At any rate, my task for today is not to argue in defense of economic freedom.  It is, rather, to clarify the relation between economic freedom and self-sufficiency.  I’ll take an old article from Thomas Woods as an example of the confusion of those two notions, and of its consequences for understanding Distributism.  But let’s start with the distinction.

I doubt there’s an authoritative account of exactly what self-sufficiency is, so let’s just make it easy on ourselves and go straight to Wikipedia.

Self-sufficiency (also called self-containment) is the state of not requiring any aid, support, or interaction for survival; it is a type of personal or collective autonomy…  Self-sufficiency is a type of sustainable living in which nothing is consumed other than what is produced by the self-sufficient individuals.

Obviously there’s an ideal form of self-sufficiency, just as there’s an ideal form of economic freedom, and I suspect that the ideal of self-sufficiency is equally unattainable and undesirable.  So self-sufficiency comes in degrees like economic freedom.  But are they the same thing?

If so, then any increase in the one is an increase in the other, and the having of a large amount of the one entails the having a large amount of the other (and vice versa).  But that’s not how the relationship between the two really works.

Imagine a person who buys a small farm on the outskirts of a major city.  The value of the property is, say, one million dollars.  The farmer desires to be self-sufficient.  He wants to raise all of his food and fiber and fuel.  So he manages, over the course of some years, to grow large amounts of cotton and wool (and, correspondingly, mutton and lamb and even some sheep’s milk), along with maintaining a wood lot for firewood and a large garden, together with a laying flock and fruit trees and brambles and so forth.  The farm allows the farmer to become remarkably self-sufficient.

Does that mean the farmer is remarkably economically free?  Well, no, not necessarily.  Suppose the farmer, in addition to his farm work, holds a fulltime job as a high school science teacher.  His extreme degree of self-sufficiency is a pretty good thing, because the mortgage payment on the farm eats up virtually his whole income.  If he should lose his job, he would within a very short time lose his farm.  The truth is that he does not own the means of production, and hence he is not economically free.  (Objection: he’s not really self-sufficient, because his farm depends upon inputs from outside the system: namely, money.  Reply: first, even if it were granted that he’s not perfectly self-sufficient, nevertheless, if the term ‘self-sufficient’ has any meaning at all, it can be applied to this person.  For comparison, just think of the high school science teacher who produces none of his own food, fuel, fiber, etc.  That person is not at all self-sufficient, but the farmer teacher is far more self-sufficient.  But second, the objection equivocates on self-sufficiency, essentially by conflating self-sufficiency with economic freedom, or in other words it begs the question here.  That it doesn’t justifiably do so can be shown by considering the distinction between economic freedom and self-sufficiency from the opposite direction…a task to which I now turn.)

Looking at the question from the opposite direction, we can easily imagine someone who has inherited a large plumbing firm, and is able to live on the income from that firm, but who does exactly zero productive labor.  Economically free, but not at all self-sufficient.

In short, self-sufficiency and economic freedom are quite distinct.  That’s not to say they’re wholly disconnected.  Other things equal, the more self-sufficient you are, the more economically free you are.  (I do not think the entailment runs in the other direction, as the latter example above shows.)  But the point is that if you don’t carefully distinguish between the two concepts, you’ll start making mistakes about them.  Now I turn, as promised, to Woods.  Forgive the long quotation: I need it all here so you can see what I mean about making mistakes.  Note the way that economic freedom and self-sufficiency—together with in/dependence and security (I’ll put the terms in bold in order to obnoxiously belabor the point)—get mixed together in what follows:

For Belloc, then, the great advantage of distributism is that it gives the household a significant measure of independence. A new introduction to his Essay on the Restoration of Property describes his view of “economic freedom” as something that “comes from the possession of sufficient productive property, such that a man need not depend upon his employer for a wage, but has rather to depend upon himself and his land, craft, tools, and trade for his sustenance.”  Belloc acknowledges in passing that of course anyone selling to others is in some way dependenton those others, thereby conceding that risk and uncertainty are unavoidable aspects of life rather than unique to a system of economic freedom. If the price and quality of his goods do not remain sufficiently competitive, he is surely bound to lose business. However, Belloc points out, the family can nevertheless live on its own, even if buyers refuse to purchase its surplus goods. They can live on what they themselves produce. At heart, then, Belloc’s promise of security amounts to the distributist family’s ability in the last resort to retreat altogether from the division of labor and live in a condition of self-sufficiency.

I take it I don’t need to spend too much time pointing out that Woods is attributing to Belloc the ideal version of economic freedom, rather than the desirable or real one that Belloc actually defends.  If Belloc’s “promise of security” comes down to saying, hey, at least you can live altogether in isolation—which is to say, in an undesirable and unnatural state—then it’s not much of a promise.

I would have thought the point was obvious enough: if I’m entirely dependent on my employer for all my wealth, then I am not economically free.  At any moment, my employer could elect to end my employment.  If, on the other hand, I own the means of production (not simply a farm, but a plumbing business or a bakery or a law office) then while of course I am “dependent” on my customers or clients (just exactly as my employer is dependent upon his customers or clients—there’s no difference there), I am not alsodependent on my employer.  A whole layer of dependence has been removed.  In no case am I wholly secure in this world: just for one example, a terrible economic crash can hurt an independent plumber just as badly as it can hurt an employee of a large plumbing firm.  (Although I suspect that even here there is nuance.  An employee of a suffering plumbing firm may simply be let go, and wind up with no income at all.  [Leaving aside unemployment benefits or what have you, which of course Belloc is strongly opposed to.]  But an independent plumber, while his business may be seriously cut back, will likely retain some income, through doing a few jobs here and there.  Leave this aside.)  Notice that economic freedom as such has absolutely nothing to do with retreating to the hills and becoming wholly self-sufficient.  It has to do with owning the means of production!  Now to see how this confusion continues to undermine Woods’s attempts to deal with Belloc, let me continue the long quotation:

Yet the advantages of the division of labor are so clear that relatively few people have found Belloc’s proposal attractive enough to have actually attempted to adopt it. Practically anyone in the United States today who possesses the requisite knowledge and modest capital can acquire farmland and chase after the kind of self-sufficiency Belloc advocated. Producing their own necessities and in possession of the means of production, so to speak, such a family would be utterly independent of employers or anyone else. They would probably also enjoy a standard of living so depressed and intolerable as to throw the rationality of the entire enterprise into question. This certain outcome probably accounts for why the overwhelming majority of people choose to take their chances within the division of labor, balancing the risks from which this earthly life is never entirely secure against the unparalleled wealth and comfort they can enjoy by not retreating into semi-autarky.

So the upshot, says Woods, is: people don’t want “economic freedom”!  It’s miserable.

But is this at all reasonable?  Take the second sentence in the above quotation: “Practically anyone in the US today who possesses the requisite knowledge and modest capital can acquire farmland and chase after the kind of self-sufficiency that Belloc advocated.”  We’ve already seen that Belloc does not advocate that kind of self-sufficiency.  But note how confused Woods is regarding what economic freedom really requires.  What kind of modest capital does Woods think is required to own one’s own farmland and the tools required to farm it self-sufficiently?  You’re not economically free, as we saw above, if the bank owns your farm.  Woods is casually tossing out the idea that “practically anyone” could go ahead and become “economically free” by buying a farm and successfully living off it, because he’s confusing self-sufficiency with economic freedom.  (Ignore the fact that Woods seems to underestimate—egregiously underestimate—the amount of knowledge that would be required to become self-sufficient anyway.)

Worse, once again, the “utter independence” that Woods talks about is entirely inconsistent with Belloc’s actual desires.  It would be unnatural.  It’s not the way for humans to live.  It’s no good.

Of course, the notion that Belloc is somehow against the division of labor is clearly false, too.  As we saw above, Difference of Occupation is one of the two principal limitations on ideal economic freedom.  It’s part of the natural human way.  It’s not an evil to be shunned, but a good to be preserved.

Last, there’s a kind of strange confusion in the whole construction of the case.  Woods sets the thing up by imagining a bad situation for the Distributist family—one wherein a family can’t sell any of its goods, and hence retreats to its own devices.  Then he compares that to a good outcome in a capitalist economy.  Namely, one from which we can view the “self-sufficient” family’s lifestyle as depressed and intolerable.  So, not from the standpoint of an unemployed mill worker who is at the end of his rope, unemployment benefits over, no jobs in sight, no idea what to do next.  But from the standpoint of the happy-go-lucky, fully employed, financially flush, free person.  But if we’re comparing a failure of the Distributist economy—one where the family in question literally can’t find anyone to trade with!—then shouldn’t we compare it to a failure of the capitalist economy?  That is, to that unemployed mill worker?  What would one prefer?  To be the unemployed mill worker, wholly dependent for his sustenance on an employer who no longer needs him, and so has turned him out?  Or to be the self-sufficient though lonely and isolated and indeed impoverished farm family that nevertheless has plenty to eat, has a place to sleep, and has them securely?  I’d have to go with the latter.

But my point, again, isn’t to try to argue for the desirability of Bellocian economic freedom, simply to try to explain how it differs from self-sufficiency.  Both are good, understood properly, but they’re not the same thing.

Is Private Property an Evil?

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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Roque Dalton, the Salvadoran Marxist poet and journalist (died 1975), wrote a poem, called in Spanish “Acta,” rendered in English as “Act,” which is a powerful indictment of economic injustice. The poem runs in part (as translated by Jack Hirschman):

In the name of those washing others’ clothes
(and cleansing others’ filth from the whiteness)
In the name of those living on others’ land
(the houses and factories and shops
streets, cities and towns
rivers lakes volcanoes and mountains
always belong to others
and that’s why the cops and the guards are there
guarding them against us)
In the name of those who have nothing but
hunger exploitation disease
a thirst for justice and water
persecutions and condemnations
loneliness abandonment oppression and death
I accuse private property
of depriving us of everything.

It is easy to understand why someone contemplating the immense discrepancy between the mansions of the rich and the hovels of the poor would consider private property itself as at the root of these injustices. “Capital,” as Pope Pius XI wrote, “was long able to appropriate to itself excessive advantages. It claimed all the products and profits and left to the laborer the barest minimum necessary to repair his strength and to ensure the continuation of his class” (Quadragesimo Anno, no. 54). And such an unjust distribution of wealth persists in many places in the world – or even grows worse. In the United States, where a relatively more fair distribution of wealth and income was achieved in the 1950s and 60s, since the late 70s the percentage of income obtained by the richest 10% or even 1% has increased dramatically. As the same pontiff wrote, “not every kind of distribution of wealth and property among men is such that it can satisfactorily, still less adequately, attain the end intended by God…” (ibid., no. 57).

If the institution of private property exists for a purpose, “the end intended by God,” then unjust concentrations of property on the part of the rich violate justice, harm the common good, distort the political process, and, in truth, are a powerful near occasion of sin to the wealthy themselves. But what remedy should we seek for this situation? To abolish private property? To “accuse private property of depriving us of everything”? That would be a bit like arguing that since some people have too many clothes and others not enough, we should abolish the private possession of clothing. No, there is a better way.

Distributists seek a more equitable distribution of property, not, as some of our critics appear to think, an absolutely equal distribution, which is neither desirable nor attainable. But a relatively more equal distribution, one that helps rather than hinders the purposes of property. For surely the purpose of private property is to facilitate the orderly fulfillment of the economic needs of the human race, not the amassing of wealth beyond anyone’s reasonable needs. Private property must be subordinate to the common good of society, and our laws ought to favor the division of property and its acquisition by the poor.

Some of the ways that a more fair distribution of property could be achieved were sketched by Hilaire Belloc in his 1936 book, The Restoration of Property, and depending on circumstances, these methods are still valid. Another method important today is to equalize the economic power between those who wash others’ clothes and cook others’ meals and collect others’ garbage, on the one hand, and on the other, those who control or hire them, those Pope Leo XIII characterized as “the party which holds the power because it holds the wealth; which has in its grasp all labor and all trade; which manipulates for its own benefit and its own purposes all the sources of supply, and which is powerfully represented in the councils of the State itself” (Rerum Novarum, no. 47).

Defenders of the economic status quo like to imagine that economic outcomes, such as vastly unequal distributions of wealth and income, are simply dictates of the so-called laws of economics. But this is not the case. It is not primarily such economic laws that have given some people control of wealth and labor and trade. Economic laws, which are reflections of certain more or less constant tendencies or proclivities of human beings, are real, certainly, but they always operate within a legal and a cultural framework, they are subject to manipulation by those who hold power, and rarely are they the most important factor at play in any given economic result. Those who wash clothes and clean hotel rooms generally work hard, but their hard work does not bring them riches, even after a lifetime of working. Why? Because they hold no economic power. Those who have economic power, their employers, essentially hold all the cards in determining wages. They are “the party which holds the power because it holds the wealth [and]…which manipulates for its own benefit and its own purposes all the sources of supply….” Pope Leo was well aware that power was one of the chief determinants of economic outcomes. That is why labor organization is such an important means for achieving something like equity in economic bargaining power as a means toward achieving a more just distribution of property, and why Leo lamented, at the beginning of Rerum Novarum, the destruction of the “ancient workmen’s Guilds” (no. 3). The claim that labor distorts market processes misses the point, because any market always operates under some rules. Rules against force and fraud, for example, are no more natural or less arbitrary than are rules giving a voice to organized labor. The economy is not a self-existent entity that serves its own ends in isolation. It is part of the social order and must be subjected to the common good of the social order.

While the injustices that all too often are associated with private property are real and are to be deplored and eliminated, the remedy is not to abolish private ownership. If private property were abolished “the working man himself would be among the first to suffer” wrote Leo XIII in Rerum Novarum (no. 4). It is not private property that is the enemy of justice or of the common good. It is the inequitable distribution of that property. Against such a distribution Catholic social doctrine proposes remedies, and distributists seek means to make these remedies more specific and to apply them to current conditions.

Of course, this is not to say that absolutely everything must be privately owned. Pope Pius XI justified state ownership in the following words. “For it is rightly contended that certain forms of property must be reserved to the State, since they carry with them an opportunity of domination too great to be left to private individuals without injury to the community at large” (Quadragesimo Anno, no. 114). Even more to the point is ownership by cooperative groups, such as worker-owned companies. In the Middle Ages most manorial farmland was cooperatively worked and was not the individual property of its cultivator. In fact, there have been many different systems of private property. To quote Pius XI once more:

History proves that the right of ownership, like other elements of social life, is not absolutely rigid, and this doctrine We Ourselves have given utterance to on a previous occasion in the following terms: “How varied are the forms which the right of property has assumed! First, a primitive form in use among untutored and backward peoples, which still exists in certain localities even in our own day; then, that of the patriarchal age; later came various tyrannical types (We use the word in its classical meaning); finally the feudal and monarchic systems down to the varieties of more recent times.” (ibid., no. 49)

Let us not confuse Enlightenment notions of absolute ownership, such as can be found in John Locke, with Catholic teaching on private property. The seventh commandment is not a bulwark for the Lockean social order.

No one, no Catholic especially, should be unmoved by the cry against injustice that Roque Dalton makes. But let us not jettison what is good in order to guard against the abuse of that good. Private ownership, yes; injustice, no. Let that be our motto and cry against oppression.

You can find this article here.

Selling Out: The Perils of Capitalist Small Business

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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Not too long ago it was announced that Wicked Weed Brewing in Asheville, North Carolina, which had been a craft brewery, was being sold to Anheuser-Busch, the gigantic beer corporation. The founders of Wicked Weed announced optimistically that

Partnering with Anheuser-Busch means great distribution opportunities, more resources, and connections to other breweries…. More opportunities for Wicked Weed means bringing craft beer to more people….

It is of course hardly uncommon for a small business in the United States to be bought out by a large corporation. If a small business has a successful or unique product, it seems to some that its natural destiny is to be absorbed by some existing large company, and that this is somehow according to the laws of nature. But although it is very understandable why in a capitalist economy small owners would want to sell out to a big firm, this is a sad effect of capitalism, not some natural law.

As is so often the case with an Internet article, the comments that readers posted illustrate some interesting facets of popular thinking. And in this case they also bring to light some of the difficulties that naturally adhere to small business in a capitalist economy. (Comments have disappeared from the website, but are paraphrased as originally posted.)

In the first place, one of the commenters noted that craft beers are made by people concerned more for the product than for profits. In contrast to this, however, others not only defended the Wicked Weed owners, but defended the principle that selling out to a large company was simply what should be expected. One reader stated that it sounds as if the owners believed in the American dream. Why are people upset about that, he asked. Maybe because they’re too lazy to think of something themselves and market it.

Still other commenters offered other kinds of defenses of the founders of Wicked Weed. One noted that the owners deserve to obtain financial security, and along the same lines, someone pointed out that for most people the goal of having a business is selling out to a larger company after years of back breaking 80 hour weeks. And still another stated the undoubted fact that it’s difficult to resist when a major company offers to buy you out and make you very very rich.

Now what are some things a distributist can say in reply? First of all, the commenter who spoke of craft brewers as people who cared more for their product than for profits showed a correct understanding of what mankind’s economic motivations should be. Although profit rightly understood is a necessity for a business of any size, nevertheless brewers, bakers, and other craftsmen ought to have more interest in their product and their craft than simply viewing it as a means to make money. The money or profit should, in a sense, be a by-product of their work, not its goal. A passage from Hilaire Belloc that I’ve quoted elsewhere more than once expresses this very well.

But wealth obtained indirectly as profit out of other men’s work, or by process of exchange, becomes a thing abstracted from the process of production. As the interest of a man in things diminishes, his interest in abstract wealth – money – increases. The man who makes a table or grows a crop makes the success of the crop or the table a test of excellence. The intermediary who buys and sells the crop or the table is not concerned with the goodness of table or crop, but with the profit he makes between their purchase and sale. In a productive society the superiority of the things produced is the measure of success: in a Commercial society the amount of wealth accumulated by the dealer is the measure of success. [1]

One suspects that the owners of Anheuser-Busch, that is, the stockholders, don’t care over much about product quality provided that the accustomed revenues continue. For them it is not a passion to provide good beer, but merely a smart investment, perhaps recommended by their broker as an up and coming stock. The difference in outlook between a craftsman, enthusiastic about his product, and a stockholder perusing brokerage house statements illustrates this immense difference very well.

Let us go on to the other readers who posted comments. The reader who defended selling out to Anheuser-Busch on the grounds that this was a fulfillment of the American dream is a good example of someone who has completely absorbed the capitalist understanding of economic activity. For him economics is not about supplying the needs of mankind with a good product while at the same time earning a sufficient income for oneself and one’s family. Instead economic activity is about becoming rich. The product takes second place, indeed, at times the product becomes totally irrelevant, as in the case of someone who makes a fortune by various kinds of financial manipulations entirely devoid of any connection with a real product.

But the other defenders of the Wicked Weed founders have a point. Financial security as well as relief from 80 hour weeks are both legitimate and reasonable desires and goals. Unfortunately under capitalism selling out to a larger entity that probably will have little intrinsic interest in your product is often the only way to achieve such security and relief. But with distributism this is not so. If we accept the basic view of distributism that the economy exists because God has created human beings so that we need external goods and have the capacity to provide them for ourselves, we can begin to grasp that there is something wrong with an economic system in which insecurity, especially for the little guy, is inherent, and which in turn leads to back breaking 80 hour workweeks.

Brewers are meant to supply a real need for the human race, good beer. Of course they must also earn enough profit that they can support themselves and their families. But there is no reason why supplying our need for beer must necessitate either insecurity or 80 hour workweeks. The brewers in any particular locale are not by nature enemies of each other, not even rivals, rather they are cooperators in supplying a need. The medieval distributist urban economy perfected the institution of the craft guilds so that those working in the same trade to supply a public need, such as beer or bread, would cooperate in fulfilling that need. The guilds sought by their regulations and by fostering an atmosphere of spiritual and fraternal unity to prevent any one producer from seeking a larger market share than he reasonably needed or trying to put his brother craftsman out of business. Therefore none would labor under such fear of financial insecurity that he would be impelled to work 80 hour weeks. The guilds, of course, did limit the number of brewers according to the reasonable needs of a locality. They did regulate and restrain competition. But they did this in the interest both of themselves and the public. The brewers needed a reasonable guarantee of stable work, the public a sufficient supply of good beer at a fair price. The guilds aimed to accomplish both, by institutionalizing the natural, God-given equilibrium between human needs and the human capacity to supply those needs.

Now the common capitalist response to this is to claim that, whatever ill effects excessive competition might have, in the long run it guarantees better beer to the consumer. Only when brewers fiercely compete and the better ones win out, will the public be assured of good beer. But does experience support such a notion? It is free competition that has led to behemoths like Anheuser-Busch and to the corporate beer which it purveys. I readily grant that guilds are not free of temptations to abuse their status, to settle into a mediocre routine, but, due to the Fall of our first parents, there is no human institution which is free of the possibility of corruption. If a guild becomes corrupt that is because of the unfortunate corruption of fallen human nature, it is not due to anything lacking in the guild principle itself.

If beer drinkers think that it is craft brewers who offer good tasting beer, and that it is the corporate breweries who offer something less than that, then the question is how to preserve the small brewers without subjecting their owners to 80 hour workweeks and a constant fear of going out of business. The guild system of distributism does exactly that, while the unrestricted competition of capitalism subjects small brewers to the same forces that led to the consolidation of breweries in the first place. If mankind’s economic activity is meant both to supply our genuine needs and provide a means of supporting ourselves in a reasonable and human manner, then distributism offers a way of doing that, while capitalism does not. If our dream is to become rich, then we have misunderstood both the purpose of economic activity and why we are placed on the earth in the first place. It is not to become rich but rather to live well so that we can attain to a better life afterwards.

Notes:
1: An Essay on the Nature of Contemporary England (New York :  Sheed & Ward, 1937), p. 67.

You can find the original publication on Practical Distributism here.

Subsidiarity vs. Single Payer

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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In his article, “Subsidiarity and the Single Payer,” Jack Quirk argues that a Single Payer system for health care services is consistent with the principles of subsidiarity and Catholic Social Teaching. He concludes his article by stating that the “principle of subsidiarity cannot legitimately be used to argue against a single-payer healthcare system. … Those who argue against it will need to avail themselves of something outside of Catholic social teaching for support.” His argument seems to depend on two points which I think are incorrect. The first is that the question of subsidiarity “does not turn on jurisdiction, but on competence. Subsidiarity is not federalism.” The second is the fact that some health care services are very expensive, and the fact that health insurers in the United States lack the power to contain those costs, means that the highest level of government has the right and responsibility, according to the principles of subsidiarity, to step in to assist paying for all health care services. This response is an explanation of why I believe he is wrong on both points.
When Mr. Quirk says subsidiarity does not “turn on competence,” it isn’t clear if he means the term in the sense of “ability.” However, it is clear that he is proposing competence as opposed to jurisdiction, and he seems to equate jurisdiction with federalism in his article. Subsidiarity is based on human nature and the natural and moral laws. This is what determines who has the natural role for given responsibilities, and those who have a role have a natural jurisdiction, which we could also call competence, to fulfill it. Following the principles of subsidiarity, we understand that the higher orders of society have the function and responsibility to provide assistance (subsidium) to the lower orders when needed. This is why the state has no right to usurp a parent’s role in educating children, but does have the right to assist (but not to compel) parents with the education of their children. The Church teaches that “it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do.” [1] One can use subsidiarity to determine what roles are proper to the different levels of society. In other words, competence in the sense sense of Catholic Social Teaching is not incompatible with jurisdiction, and we can discuss jurisdiction and authority without resorting to, or resulting in, federalism.
The initiative, freedom and responsibility
of lower orders of society must not be supplanted.
“Subsidiarity, understood in the positive sense as economic, institutional or juridical assistance offered to lesser social entities, entails a corresponding series of negative implications that require the State to refrain from anything that would de facto restrict the existential space of the smaller essential cells of society. Their initiative, freedom and responsibility must not be supplanted.” [2] Just because a condition is common across the country does not make it the responsibility of the federal government. If the assistance can be rendered community by community by more local social institutions or governments, then the federal government would be violating the principle of subsidiarity if it took over the role of rendering that assistance. The federal government could only justify stepping in where those more local institutions didn’t already exist or lacked the resources to address the issue. “In light of the principle of subsidiarity, however, this institutional substitution must not continue any longer than is absolutely necessary, since justification for such intervention is found only in the exceptional nature of the situation.” [3] In other words, part of that assistance would be to help establish the more local institution and help it to arrange acquiring the necessary resources on its own so that the assistance being given will become unnecessary. In addition, the principle of subsidiarity means that the federal government cannot step in where the more local institutions exist and have the ability to deal with the issue at the local level.

Many people assume that only the federal government can afford to adequately assist those in need. This is simply not true. If the taxes to provide this assistance were collected by the state rather than the federal government, then the state could render the assistance. If they were collected by county government rather than the state, then counties could render the assistance. If the principle of subsidiarity were really being applied, then the tax structure would be distributed so that higher levels of government would not need to step in except where the need went beyond the more local governments.

In regard to the supposed inability of health insurers to contain the costs of health care, in what way does this justify implementing a single payer system? It is arguable that the payment structure imposed by those insurers (and the government) have contributed to the overall increase of costs. Insurance companies make money from people paying premiums. Therefore, it is beneficial for them if the costs of even relatively inexpensive health services remain high enough to make the overwhelming majority of people rely on insurance to pay for all health care.

An absent or insufficient recognition of 
private initiative – in economic matters also – and the failure to recognize its public function, contribute to the undermining of the principle of subsidiarity …” [4]
Our current model of providing and paying for health care is not the only possible one. To take just one example, subscription based medical providers have proven to make general and preventive care very affordable for the average family. For poor families who cannot afford the subscription, the costs are low enough that religious and other more local organizations or government can render the assistance of paying for their subscriptions. If we implemented this type of system as a standard, medical insurance would only be needed for emergencies and long term conditions and for particularly expensive procedures. This would lower the overall costs of insurance making it more affordable for families and making local institutions more capable of assisting those who cannot afford insurance. Subscription based medical services is only one of many ways that the means of acquiring health care services and lowering their costs could be addressed.
Single Payer is proposed as a permanent solution established at the highest level of government to render assistance that could be rendered by more local social institutions and governments if we only had the will to give those more local institutions and governments the ability to perform their roles. It is not limited to assisting with only those health care costs which are prohibitively high or only those people who cannot afford other means to pay for health care. In the name of “assistance” it usurps the responsibilities of the family and more local institutions and absorbs their natural roles into the highest level of government. It might be true that assistance from the federal government will be needed during the process of implementing better access to health care and transitioning the role of government support to more local levels. However, as a permanently instituted system, Single Payer is clearly a violation of the principle of subsidiarity and Catholic Social Teaching.

Continued in Part 2
Notes:
[1] USCCB/LEV, Compendium of the Social Doctrine of the Church, 2011 [Kindle edition], Section 186
[2] Ibid. Emphasis in the original
[3] USCCB/LEV, Compendium of the Social Doctrine of the Church, 2011 [Kindle edition], Section 187
[4] Ibid.

You can find the original publications here.

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