"Angels can fly because they take themselves lightly." – G. K. Chesterton

Posts tagged ‘economics’

I Really Hate Economics

My first post on the hatred of economics was here.  My feelings towards economics have not mellowed in the two months since I wrote that.  I believe that the word “hate” is badly overused these days.  There are many things that I dislike but do not hate.  I do not hate my Congressman, Eric Cantor.  I do not hate dogs that bark in the middle of the night.  But I hate economics.  I despise it.

Right now our politicians are having a debate on the federal budget.  The United States is spending some trillions more than it is taking in.  Everyone agrees this is true, everyone knows that it’s projected to remain true, everyone agrees there are dire financial consequences if the government does not change course.  The Democrats want to change course with some minor tax hikes on the rich and some cuts in spending.  The Republicans want only cuts in spending.  If they can’t reach an agreement, horrible consequences will erupt on August 2, give or take a few days.  All the political action for the past year or so has been building up to this moment.  This is the big thing.

What most folks aren’t thinking about is the fact that this moment didn’t have to happen.  It was not very long ago–eleven years back, to be precise–that the federal budget looked great.  We had a balanced budget.  That meant no annual deficit at all. The government was taking in more money than it was spending.  Projections from the Congressional Budget Office–that’s the committee in Congress whose job is to project this sort of stuff–assured us that we were looking at smooth financial sailing for years to come.  Two trillion in surpluses was forecast.  It was sunshine and rainbows and roses.  What more could you ask?

Fast forward eleven years and here we are on the verge of financial catastrophe.  What went wrong during those eleven years?  This article tries to break down the disaster.  One way to break it down is by presidential administrations.  The government racked up 7 trillion in new debt under Bush and almost 2 trillion under Obama thus far.

Alternately, we could break it down by where the money went.  The wars in Iraq and Afghanistan cost 1.3 trillion and counting.  (And that’s not including the amount we’ll spend taking care of wounded veterans for the next eighty years.)  The Bush Administration’s tax cuts reduced federal revenue by 1.7 trillion dollars.  The Medicare Prescription Drug Bill cost us 272 billion dollars, while the stimulus package in March of 2009 wrapped up another 719 billion.

Various other little things cost various other amounts.  The bottom line, however, is that when you add it all up, it doesn’t bring you anywhere close to a explanation for all the missing money.  So where did the rest of it go?

The answer is that much of the money never existed in the first place.  That is to say, much of what the CBO projected eleven years ago never actually came true.  For one thing, there projections were based on the assumption that the economy would continue doing well.  It didn’t.  We hit a medium-sized recession in 2001 and a major recession in 2008.  Because of these, tax revenues were vastly lower than expected, and much of the projected wealth simply vanished.

Of course we can now say that the CBO should have known better.  They should have planned for recessions.  They should have been aware of the risks.  We all know the saying: “Hindsight is always 20/20.”  But while we quote that constantly, we should be aware that foresight is not always 20/20.  Foresight is highly variable, depending on the people who are foreseeing.

In the Book of Genesis, Joseph advises Pharoah to store up grain during seven fat years so as to be prepared for the seven lean years to follow.  One may question the wisdom of setting national agricultural policy based on dream interpretation–I don’t think anyone would want to do so today.  But one cannot question the wisdom of preparing in case of disaster.  As we see in Genesis, the Jewish people were aware of this almost four thousand years ago.

Yet here we are today and we’ve totally forgotten about that.  Our wise masters in Congress, on Wall Street, and in economics departments around the country can’t be bothered with the wisdom that’s endured for thousands of years.  They think they know better.  They think that their models, statistics, economic projections, and so forth can cope with any possibility, so there’s no need to be prepared.  The preparations are supposedly all included in the modeling and the projections, thus eliminating any need to think about them separately.

Yet, in reality, things fail to work out as the projections say they should.  And that’s another one of the many reasons why I really hate economics.

Who is G. K. Chesterton? (Part 5)

(Continued from part 1, part 2, part 3, and part 4)

Parts 3 and 4 were all about Chesterton’s religion.  As we’ve said, it’s vital to understand that because Chesterton’s Christianity determined everything else that he believed.  We also mentioned common sense; Chesterton used common sense to determine which religion to follow.  Having done that, he then used common sense to interpret Christianity.

To begin with, Chesterton liked poor people.  He phrased it most commonly as support for “the common man”, the ordinary, hard-working folks who make up most of the population.  He did not do this based on an abstract notion of equality, but rather his position flowed from his religion.

“Carlyle said that men were mostly fools. Christianity, with a surer and more relevant realism, said that they were all fools. This doctrine is sometimes called the doctrine of original sin. It may also be described as the doctrine of equality among men.

Like so many Chesterton quotes, this one carries so much wit that one can easily miss the wisdom.  Christian belief in original sin simply means that nobody is perfect, and if nobody is perfect then there’s no basis for elevating one ruler or a small group of elites over everybody.  The common man has flaws–unlike Tolstoy, Chesterton did not naively  belief that farmers and other ordinary folk were immune to alcoholism, boorishness, or other vices–but by and large, the common man can be trusted to control himself, to maintain good traditions and folk wisdom, and to be kind to others.

If he liked the poor, he also disliked the rich and powerful.  He issued many famous epithets again them:

It is terrible to contemplate how few politicians are hanged.

The rich have been the scum of the earth in every nation.

Quotes like that might suggest an overdoes of vitriol, particularly to those not familiar with Chesterton’s sense of humor.  But, once again, his views were grounded in Christian belief.

I know that the most modern manufacture has been really occupied in trying to produce an abnormally large needle. I know that the most recent biologists have been chiefly anxious to discover a very small camel. But if we diminish the camel to his smallest, or open the eye of the needle to its largest —if, in short, we assume the words of Christ to have meant the very least that they could mean, His words must at the very least mean this—that rich men are not very likely to be morally trustworthy.The whole case for Christianity is that a man who is dependent upon the luxuries of this life is a corrupt man, spiritually corrupt, politically corrupt, financially corrupt. There is one thing that Christ and all the Christian saints have said with a sort of savage monotony. They have said simply that to be rich is to be in peculiar danger of moral wreck.

If we judge all things on earth by secular, worldly standards, then we have no choice but to crown those who have the most of something worldly, whether it be money, fame, power, or something else.  Christianity suggests an otherworldly standard that looks down on the worldly ones, and thus gives even the poor a grounds for criticizing the powerful.  From this Chesterton got a firm grounding for analyzing and judging society and anything in it.

Coming first and looming largest on Chesterton’s enemies list were wealthy corporate barons.  He once referred to

a most monstrous and mythical superstition of Adam Smith;
a theological theory that providence had so made the world that men
might be happy through their selfishness; or, in other words,
that God would overrule everything for good, if only men could
succeed in being sufficiently bad.

The results were plainly visible.  In Chesterton’s time, millions of people were forced into dreary and dangerous factory jobs; crammed into unsafe, overcrowded factories; overworked; underpaid; exploited; and denied even as much freedom and dignity as the poor of earlier centuries have received.  Chesterton knew this was wrong.  That was common sense at work as well.

Early in his life, Chesterton had been a socialist, seeing in government seizure of property the solution to the woes of the industrial revolution.  There were many such groups running around England in the early twentieth century, though they never grew powerful enough to seriously challenge the power structure.  Soon, however, Chesterton realized the danger of having the government control all property.  It would not actually restore freedom to the working poor, but would simply substitute one ruling elite for another.  By his 30’s, when he began writing his most famous works, Chesterton had fully rejected socialist ideas.

In its place he put a new economic theory called “distributism”.  He did not invent it, as some believe, but he did a great deal to popularize it.  The concept at the heart of distributism is private property.  Capitalism gives private property to a select few and socialism gives it to none, but distributism would allow all, including the poor, to own houses, as well as farms and shops if they so desired.  Chesterton argued that no one could truly be free without property, because they’d always be dependent on some powerful institution for food, shelter, and other needs.  In addition, he believed in the ‘good fences make good neighbors’ concept.  A family that owned its own home had the ability to do as it pleased within the confines of that home.  Once eliminate property and push people together in public and their freedom is greatly reduced.

For the truth is, that to the moderately poor the home is the only place of liberty. It is the only spot on the earth where a man can alter arrangements suddenly, make an experiment or indulge in a whim. Everywhere else he goes he must accept the strict rules of the shop, inn, club, or museum that he happens to enter. He can eat his meals on the floor in his own house if he likes. I often do it myself; it gives a curious, childish, poetic, picnic feeling. There would be considerable trouble if I tried to do it in an A.B.C. tea-shop. A man can wear a dressing gown and slippers in his house; while I am sure that this would not be permitted at the Savoy, though I never actually tested the point. If you go to a restaurant you must drink some of the wines on the wine list, all of them if you insist, but certainly some of them. But if you have a house and garden you can try to make hollyhock tea or convolvulus wine if you like. For a plain, hard-working man the home is not the one tame place in the world of adventure. It is the one wild place in the world of rules and set tasks. The home is the one place where he can put the carpet on the ceiling or the slates on the floor if he wants to.

In the century since Chesterton wrote this, both big business and big government have grown much bigger, in England and America and any nearly other country you care to name.  Moreover, they do so not as enemies, which is what many commentators want you to think, but as two fused parts of a single machine, working to suck money and power into itself.  Chesterton predicted this as well.  He understood that distributism, unlike capitalism or communism, could never be imposed from on high.  The people would have to choose it.  Although we have not chosen it en masse, there has been some movement towards appreciating smallness and individuality in the past generation.  A small slice of our culture is reorienting itself around the family farm and the family business, and Chesterton would certainly smile to see it.


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