It’s no great secret that the Vatican has never been particularly fond of the idea of free markets, but here is yet more nonsense from Benedict XVI to remind us of just that.

The BBC reports on the Pope’s New Year address:

The Roman Catholic Church leader spoke at a Mass in the Vatican, then greeted a crowd outside St Peter’s Basilica.

He deplored “hotbeds of tension and conflict caused by growing instances of inequality between rich and poor”.

Those “hotbeds” also grew out of “the prevalence of a selfish and individualistic mindset which also finds expression in an unregulated financial capitalism”, as well as “various forms of terrorism and crime”, he said.

I don’t know what is worse. The ignorance (if there’s one thing that the financial markets were not, it was unregulated; whether they were sensibly regulated is a different question), or the clear signs of a visceral loathing for “financial” capitalism and, of course, the Pope’s attempt to smear it with guilt by association with “various forms of terrorism and crime”.

Charming.

Benedict XVI · Religious Left · Roman Catholicism · Vatican

Via The Independent:

The G20 was under growing pressure to call an emergency summit on global food prices last night as the Vatican accused grain speculators of “hampering the poorest and neediest…

Yesterday the Vatican’s permanent observer at the UN in Geneva, Archbishop Silvano Tomasi, claimed “market activities” such as arbitrage [buying and selling goods to exploit price differences] and the use of derivatives trading in grain supply chains, are “hampering the poorest and the neediest”.

I don’t know what is worse: The attempt to play a populist card, or the profound ignorance of economics that the Vatican has, yet again, revealed.

Religious Left · Silvano Tomasi · Vatican

In a very friendly & gentlemanly email, Nick Schulz assures me that his post on the AEI blog was meant as a fun tweak, not a sneer.  My apologies to Nick.

After all those columns I’ve written about everyone being far too quick to take offense nowadays, perhaps I’ve inhaled a bit of the zeitgeist at last.

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Mark Krikorian and I have been singled (doubled?) out for a sneer from AEI’s Nick Schultz. Are our heads exploding (he wants to know) at the news that Mexicans lead the world in “total minutes worked, paid and unpaid, per day”?

Mark is very well able to speak for himself. My own reaction on seeing the OECD chart Nick displays was that Mexicans are getting dismally little bang for the industrious buck. After five hundred years of toiling away for 594 minutes a day they have nothing much to show but a mediocre economy propped up by oil revenues and expatriate remittances, dysfunctional politics, and wellnigh zero achievement in the cultural or
intellectual spheres.

A few minutes’ number-crunching confirms the impression. Remember how your Uncle Stan used to tell you that while working hard is good, working smart is better? OK, let’s create an Uncle Stan index. I’ll divide annual per capita GDP (from the CIA World Factbook) by the daily number of minutes worked to see how much annualized per capita GDP each minute generates. For Mexico I’m dividing $13,800 a head by 594 minutes, to get annualized $23.22 per person per minute worked in the day.

On the Uncle Stan Index (USI) Mexico ranks 27 out of 29 on the OECD list. That is to say, it’s one of the least efficient nations in the world at turning work into wealth.

Here’s the table. I’ve included a column for mean national IQ, these numbers taken from Tatu Vanhanen’s latest book. The last two columns correlate quite well:  r = 0.47.

Now, see how unfair life is. Here’s me, a poor freelance drudge, doing all this math, while Nick Schultz has a nice cushy number at AEI where apparently he is required to do nothing but strike politically-correct moral poses. Nick doesn’t even bother to source his data: I had to Google for the spreadsheet link.

I guess Uncle Stan was right …

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Lunchtime mail brought my April copy of The Dominion, “News of the Episcopal Diocese of Long Island.” The front page leader was by my local prelate, The Right Reverend Lawrence C. Provenzano, Bishop of Long Island.   Titled “Budgets, Leadership, and Public Service,” it is an angry broadside against the cutting of public services — any public services.

The approach to addressing the fiscal crisis in New Jersey and in a host of other states across the country appears to be to assault those who do the public’s work as state employees, to imply that they receive benefits and salaries that go far beyond what they deserve and that they immorally avail themselves of these benefits.

His Grace recommends that his parishioners join in a new initiative from the religious left under the slogan “What Would Jesus Cut?“  If you join in, you can get a WWJC bracelet!

Would Jesus cut Head Start — a bureaucratic extravaganza of no proven value whatever?  Would he cut foreign aid — correctly described by Peter Bauer 30-odd years ago as “The transer of money from poor people in rich countries to rich people in poor countries”?  Where would the Saviour have stood on defined-benefit vs. defined contribution pension plans?  We know what he thought of tax collectors (e.g. Matt. 18:17), but where did he stand on tax payers vs. tax eaters?

We hear so much about the Religious Right, far too little about the Religious Left and its maleficent works — it is, for example, the main motive force behind the refugee resettlement rackets.  From the Rev. Jeremiah Wright to the Right Rev. Lawrence Provenzano, what I mostly see in the pulpits are lefties. 

The pity of it is that elsewhere in The Dominion and its national-level equivalent, Episcopal Journal, I read of good and commendable works by church groups in, for example, relief for victims of the recent earthquakes in New Zealand and Japan.

Do these Christian lefties not see the contradiction between encouraging voluntary charity and demanding that ever more of the work of comforting the afflicted be transferred to government functionaries whose benefit packages are written into their state constitutions?

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Military not exempt from spending cuts: Republicans:

U.S. military programs will not necessarily be exempt from sharp spending cuts Republicans in the House of Representatives plan to put forward in coming months, incoming House Republican Leader Eric Cantor said on Tuesday.

House Republicans have previously said defense and domestic security programs would be exempt from their efforts to trim $100 billion from the U.S. budget.

But speaking on the day before his party takes control of the House, Cantor did not rule out defense cuts. “Everything is going to have to be on the table,” he told reporters.

spending

Via the Financial Times:

The slow economic strangulation of the Freemans and millions of other middle-class Americans started long before the Great Recession, which merely exacerbated the “personal recession” that ordinary Americans had been suffering for years. Dubbed “median wage stagnation” by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the multiple is above 300.
The trend has only been getting stronger. Most economists see the Great Stagnation as a structural problem – meaning it is immune to the business cycle. In the last expansion, which started in January 2002 and ended in December 2007, the median US household income dropped by $2,000 – the first ever instance where most Americans were worse off at the end of a cycle than at the start. Worse is that the long era of stagnating incomes has been accompanied by something profoundly un-American: declining income mobility.

The FT being the FT, this article (which is nevertheless well worth reading) comes with the usual leftish slant (what has CEO pay got to do with all this?), and it is striking that its author has nothing to say about the impact of mass immigration on wage rates within the US, but the Great Stagnation is, sadly, all too real – and it is unlikely to mean anything good for this country’s politics.

The Economy · The Great Stagnation

At Gene Expression I recently put up a series of posts relating to food stamps. For example, the correlates of food stamp utilization by county. I’m really skeptical of the ubiquity of food stamp usage. There are vast swaths of the United States where the majority of children benefit from food stamps. Some statistical analysis suggests that 90% of blacks at age 20 will have benefited from food stamps, while 50% of the general population will have (most of these are transient beneficiaries). But the same groups which tend to use food stamps are also subject to an “epidemic of obesity.” My data analysis shows that it’s clear on the geographical level. Where people use food stamps, there is obesity and type 2 diabetes. Regardless of what people say about “food insecurity” I think these characteristics, copious adipose tissue, and diseases of modernity which emerge due to obesity and overconsumption of sugars, strongly suggest that images of the famished simply doesn’t make sense.

But over the past month or so that I’ve investigated this topic, here’s a typical comment:

To be hungry sometimes is uncomfortable, I know this personally, I am hungry sometimes. Though for me it has to do with the fact that I don’t think that the immediate response to hunger always has to be food to satiate the pangs (I don’t like to eat past a certain hour).

What a way to trivialize other people’s hunger by insinuating that they can’t distinguish between physical hunger and psychological hunger. It’s even more important to distinguish between voluntary hunger and involuntary hunger. Those who don’t have enough to eat may not have the privilege of experiencing psychological hunger.

The italicized are my comments. The general thrust of the response is emotive, dismissive and “how dare you!” Food stamp programs are not a fiscal crisis in this country, but if the targets of this food aid have a tendency toward obesity or diabetes, we need to reassess our presuppositions. Instead of helping those in need, by and large the food stamp program may simply be an adjunct to the interests of a small number of non-profit careerists.

P.S. When I was in college I knew many students who engaged in food stamp fraud. The reality was that they didn’t need food stamps, but they knew that it was very easy to get on the program.

Food stamps

The house of the right should have many mansions, whether it’s the cathedrals of the theocons, the country clubs of the RINOs, the unadorned blocks and towers of the Randians, the revival tents of Huckabee County and… well, you get my point. There’s even a modest Arts-and-Crafts place, complete with vegetable garden, for the crunchy cons, but that doesn’t mean that I didn’t read chief crunchy Rod Dreher’s encomium to that awful speech by the Archbishop of Canterbury with a sinking feeling, particularly when I saw that Rod had written this:

It’s this religious and moral dimension to the economy [apparently that's how Rod interpreted Williams' pious leftist bromides] that so many Republicans fail to appreciate. How can you praise the “creative destruction” of markets, as Palin does, while also praising tradition and continuity, as she also does, and as Republicans do?

Where to begin? I’m all for offering a helping hand to those who find themselves on the wrong side of creative destruction (a phrase that is sometimes used too glibly – the destruction can indeed be very destructive), but taken as a whole the process is beneficial, essential and, in a way that crunchy cons should appreciate, natural.

Some of the thoughts of the great neoclassical economist Alfred Marshall (!842-1924) on this topic can be found here. You can’t get crunchier than this extract:

But here we may read a lesson from the young trees of the forest as they struggle upwards through the benumbing shade of their older rivals. Many succumb on the way, and a few only survive; those few become stronger with every year, they get a larger share of light and air with every increase of their height, and at last in their turn they tower above their neighbours, and seem as though they would grow on for ever, and for ever become stronger as they grow. But they do not. One tree will last longer in full vigour and attain a greater size than another; but sooner or later age tells on them all. Though the taller ones have a better access to light and air than their rivals, they gradually lose vitality; and one after another they give place to others, which, though of less material strength, have on their side the vigour of youth.

The alternative, of course, is stagnation and, in all likelihood, decay. I found it rather telling that Rod’s next post was another encomium, this time to Mount Athos, a doubtless beautiful, but, from the sound of it, profoundly depressing place that appears to be stuck in the archaic customs, futile contemplations and smugly timeless rhythms of a thousand years ago. To Rod, this Greek peninsula is the “Christian Tibet,” an equally telling, and distinctly questionable, compliment given the brutal and primitive nature of life under Tibet’s former theocracy (an unpleasant reality that does not, of course, justify the fact or the nature of China’s  subsequent occupation of that tragic country).

Monks · Stagnation

A few years ago Francis Fukuyama wrote Trust: The Social Virtues and The Creation of Prosperity. The short of it is that modern economies tend to be “high trust,” you can rely on more than simply your family to get by in life because institutions are transparent and laws are honored more than breached. The System works, it is not something that exists to be worked. Americans have their own spin on the System, exemplified by the Horatio Alger stories. With hard work, perseverance and a little luck anyone could make it big. In contrast in non-modern economies it is more a matter of to whom you are born and who you know. Success is the outcome not of non-zero sum wealth creation through frugality, thrift and productivity, but taking the largest slice of the zero sum pie possible through connections.

You have probably read Simon Johnson’s The Quiet Coup, where he argues that governmental institutions have now been captured by private actors in the developed world, just as they have long been in the developing world. For me the turning point in the drift toward paranoia was this summer when I listened to an interview with Charles Ellis, author of The Partnership: The Making of Goldman Sachs. What disturbed and alarmed me was Ellis’ undisguised contempt for the radio host and the callers. Granted, it is generally frustrating for intelligent people to come on these shows where they are asked to hold forth for 30 minutes and engage with dull interlocutors. But Ellis’ own attitude to the whole affair suggested an angel come down from on high, he made no effort at all, and refused to hide his lack of effort. What he thought of everyone else was clear, mortals were beneath his consideration. When he did deign to speak Ellis calmly would assert that Goldman Sachs was insured and protected no matter what happened to the economy, specifically, even if AIG collapsed. Now, to some extent public relations people will say the same thing, but there’s a particular false tone these types exhibit which gives you a clear indication that they’re being paid to say what they’re saying. Charles Ellis did not have the tone, he stated it in a calm and matter of fact manner. He contended that the banks were saving Main Street, which was the root of the problem, and that Goldman in particular was an organization of such competence and efficiency that it could weather any storm.

To some extent this is a confidence game. The financial sector deals in trust. But Ellis unnerved me with his calm, assured and superior attitude. Today we are hearing that the Treasury Secretary, Goldman alum Hank Paulson, gave his old firm a heads up on government policy. A part of me wondered listening to Ellis if he knew much more than he could say. One year ago I would not have entertained the possibility of secret cabals and conspiracies at the highest levels of government. Now I’m not as confident.

I began thinking of this as I read this post over at Marginal Revolution where Alex Tabarrok bemoans the counter-productive effect of pay caps on large corporations. What is striking is the vociferous tone of the comments which Alex has been receiving: if the readers of MR react this way it makes me highly skeptical that the public has any trust in the system at all.

economics · finance · goldman sachs