Does the ARRA mark the dawn of a new era of government accountability, from a government “of the people, by the people, for the people”?
President Obama seems to think so. He says as much in a video statement tied to the launch of Recovery.gov, “a website that lets you, the taxpayer, figure out where the money from the American Recovery and Reinvestment Act is going.”
The site claims that “the American Recovery and Reinvestment Act will be carried out with full transparency and accountability -- and Recovery.gov is the centerpiece of that effort.”
In his brief statement, President Obama says, “The size and scale of this plan demand unprecedented efforts to root out waste, inefficiency, and unnecessary spending.”
Call me cynical, but somehow I doubt that a package that was rushed through without time for reflection and public examination is going to ex post facto become accountable to the people.
Let’s just say that if the “transparency” of the way the TARP funds have been distributed and used is any model for what’s going to happen with ARRA, we’ll be a long way from a new era of government accountability. Recovery.gov looks a lot more like window dressing, or better yet an arranging of the deck chairs on the Titanic after the ship has already sailed. Author: firstname.lastname@example.org (Jordan J. Ballor) Item Category: Business and Society Item comments: http://blog.acton.org/archives/2683-PBR-Governmental-Accountability-and-Transparency.html#comments
One of the gravest moral issues related to the American Recovery and Reinvestment Act is the matter of dangerous deficit spending. Anybody plugged into our nation’s financial crisis is likely aware of the unsustainable spending path of not just the federal government, but individual states as well. Because many states have balanced budget amendments, they are not entitled to run deficits, so the federal government proposes bailouts, which comes at an even greater cost to taxpayers from fiscally responsible states. One can easily see how policies like these only encourages irresponsible government spending policies.
Dr. Samuel Gregg, who is the director of research at the Acton Institute, touched on this subject and a number of important topics concerning the financial crisis in his recent address “America’s Economic Crisis: Looking Back, Looking Forward.” Offering a scathing critique of Keynesian economic policies, Dr. Gregg directly addressed the moral aspect of deficit spending:
We have every reason to believe that deficit spending on the scale being contemplated is addictive and difficult to stop. Because once we see that the various ways of 'jump-starting' the economy do not spark an economic revival, we will undoubtedly be told that the stimulus was not big enough, and that more deficit spending is required. More and more capital will thus be placed in unproductive spending.
The cost of deficit spending is often passed on to future generations. In other words, we force future generations to pay for the sins of the present.
Deficit spending can imply the adoption of inflationary policies. Inflation is like cancer. It acts slowly but is deadly. It attacks the weaker parts of the body, and destroys the economic well-being of the poor, such as those on pensions or other fixed incomes. But I also think that inflationary policies are morally wrong. Why? Because when you inflate the currency, the value of people's assets is reduced. In other words, once a government introduces inflationary policies, it reduces the value of the assets that people already own. People who work hard to build up the value of their business or property suddenly find that the government has diluted the value of their asset.
In talking to my pastor about these issues a few weeks ago he reminded me of the inscription on the Liberty Bell from Leviticus, “Proclaim liberty throughout all the Land unto all the Inhabitants thereof...” My pastor also reminded me of the meaning of the verse saying, “The passage speaks about the Jubilee year when the Lord forgave people of their debts and sins and allowed for a new beginning of freedom from the slavery debt brought.” And that is a reminder of a subject Dr. Gregg also spoke so well about during his lecture, and that is the moral failings of those on Main Street and Wall Street. If we are going to see fundamental reform of spending in the nation’s capital and beyond, we need to as families and individuals have a moral aspect to our own spending and budgets. Author: email@example.com (Ray Nothstine) Item Category: Business and Society Item comments: http://blog.acton.org/archives/2678-PBR-Dangerous-Deficit-Spending.html#comments
The ARRA makes clear that we have not learned one great moral lesson: You can’t have something for nothing. Or, among economists, there’s no such thing as a free lunch.
I’m not even sure that anybody is seriously arguing that most of the items contained in this bill constitute “stimulus.” Congress can genuinely stimulate the economy in two ways: decreasing taxes and decreasing regulation. In other words, by putting fewer hindrances in the way of those who wish to produce and consume. Everything else is smoke and mirrors. Government puts money into one person’s hands only by taking it out of someone else’s; or by creating it ex nihilo, which amounts to the same thing (moralists have been condemning the debasement of currency at least since the Late Scholastics).
If the bill has any positive impact, it will be psychological, making people believe that the economy will improve and therefore generating positive economic activity. This possibility seems doubtful at this point. It appears instead that the measure’s most significant effect will be to increase the cynicism with which the American people view their government. I’m undecided yet as to whether that is a favorable development. Author: firstname.lastname@example.org (Kevin Schmiesing) Item Category: Business and Society Item comments: http://blog.acton.org/archives/2679-PBR-Something-for-Nothing.html#comments
Perhaps the most effective historical trope in pushing through the massive stimulus package on Capitol Hill has been the notion that if only the New Deal of the 1930s hadn’t had to wait more than three years for the election of FDR, the Great Depression might have been avoided.
But have you ever wondered why the Great Depression persisted for so long? Why didn’t we bounce out of it after two, three, or four years as we did from previous economic downturns? Hillsdale’s Burt Folsom suggests an answer. Whether it was paying farmers not to farm until we had to import millions of bushels of grain, or throttling job-creating enterprise by raising the highest marginal tax rate to 90 percent, the many tentacles of the New Deal stimulus package choked rather than stimulated the American economy.
The common theme of all of the New Deal’s misguided policies was to remove decision-making power and cash from the free market and move it to Washington. As Folsom goes on to note, such policies not only extended the economic downturn, they set interest groups against each other, stimulating rather than alleviating human envy: “The New Deal divided and politicized the country in tragic ways. Those who lobbied most effectively won subsidies and bailouts even if their cause was weak. Others, who had greater needs, received nothing.”
There is a cure for human envy, of course, but it lies with a civil rather than a government institution, and with a power higher than Capitol Hill. Author: email@example.com (Jonathan Witt) Item Category: Business and Society Item comments: http://blog.acton.org/archives/2677-PBR-Do-We-Need-a-New-New-Deal.html#comments
Author: firstname.lastname@example.org (Jordan J. Ballor) Item Category: Business and Society Item comments: http://blog.acton.org/archives/2676-PBR-The-American-Recovery-and-Reinvestment-Act.html#comments
One Good Thing about Term Limits Thu, 08 Jan 2009 09:26:14 -0700 I’m ambivalent about the value of term limits, but one thing that can certainly be counted in their favor is that they (at some point at least), force lawmakers to go out and try to make a living in the economic environment which they helped to shape. In Michigan, nearly half of the 110-member House of Representatives will consist of new members. Of the 46 new members, 44 are coming from seats that were open because of term limits.
And now we have reports that ex-legislators are having a tough time finding private sector jobs in the state. As the AP reports, “The task of finding new gigs will be tougher than usual for this year’s crop of term-limited lawmakers because of Michigan’s highest-in-the-nation unemployment rate, which in November reached 9.6 percent -- the highest monthly rate since March 1992.”
It’s been said that those who can’t do, teach. But sometimes those who can’t do, legislate. That’s in part an argument in favor term-limits, part-time legislatures, and something other than a system that encourages the formation of career politicians.
I recognize that serving in government is an important and even a divine calling. Still, I have a hard time finding a great deal of sympathy for those who after a break from the private sector have to face up to the real-world employment situation. You reap what you sow. Author: email@example.com (Jordan J. Ballor) Item Category: Business and Society Item comments: http://blog.acton.org/archives/2620-One-Good-Thing-about-Term-Limits.html#comments
Remember that rush to push the bailout through right before the election, when the government and the media were telling us that Congress needed to hurry up and authorize the use of more money than has been spent on the entire Iraq war? The legislation appears to be so sloppy that it allows the executive branch to distribute the funds as it pleases, without any accountability for how the funds are being spent, and without any restrictions on what sort of industry qualifies.
I guess it’s more important that the money gets spent rather than how it gets spent.
Since government is now in the business of rewarding failure (call it a “demeritocracy”), nominate those most deserving of money from the bailout in the comment boxes below. Here’s a list to get you started:
He’s right. It’s more like an inter-generational pyramid scheme, a pyramid tipped on its side...
To be sustainable, over time (T) it has to take more from more people (thus a three-dimensional pyramid rather than a two-dimensional triangle. It’s really exponential rather than multiplicative).
Social Security. In case you forgot, it still needs fixing. This Christmas, think about the rather unpleasant gift we’ll be leaving the generations that follow in the form of unsustainable and unfunded “entitlements.” Author: firstname.lastname@example.org (Jordan J. Ballor) Item Category: Business and Society Item comments: http://blog.acton.org/archives/2600-Ponnuru-on-Ponzi-and-Pyramids.html#comments
There is certainly something to this hypothesis, but there are also a couple problems.
1. Theoretically, there is some difficulty in identifying free-market conservatism with Bush-style foreign policy. Granted that there is a lot of overlap among the principal political figures, the promotion of democracy abroad (putting the most positive possible spin on the Bush agenda) does not intellectually equal promotion of free markets and trade. Certainly there are many libertarians and libertarian-leaning conservatives who have opposed much Republican foreign policy.
2. Historically, I’m not sure that Reno’s trajectory from economic stability to economic dynamism, with its implications for America’s mood, entirely holds up. It’s true that there is greater geographic and career mobility now than there was in the 1950s, but it’s not clear that it is the result of what I’ll call “negative dynamism,” for example, that people are forced to move or to switch jobs out of financial necessity. Instead, people are pursuing positive opportunities, and making decisions that approximate the following: “I would rather make $20,000 more and live a thousand miles from the community where I grew up, than stay in that community and survive on less.” I’m not claiming that such a decision is good or bad, rational or irrational, only that it’s a different sort of decision than one made by a frontiersman in the 1850s, who had to leave his family for six months and work on the railroad so as to avoid starvation. The feeling of instability, if it is indeed as widespread and decisive as Reno suggests, is more self-imposed than the product of impersonal economic forces. (All of which is a generalization intended to characterize most Americans, and not to deny that some are compelled by genuine economic necessity to one course of action or another.)
With Reno’s conclusion, however, I wholeheartedly agree:
...American conservatism must recognize the primacy of social mores over economic philosophy and foreign policy. We need to expand an old argument. A democracy depends upon citizens capable of ordered liberty. And a culture that seeks economic vitality and is committed to global leadership also requires citizens who can distinguish responsible autonomy from a life of anomic desire. We can endure the inevitable risks of marketplace and battlefield'-but only if we have some confidence about the stability of the deeper, more fundamental things of life.
Author: email@example.com (Kevin Schmiesing) Item Category: Business and Society Item comments: http://blog.acton.org/archives/2579-Seeking-Stability.html#comments
How Obama Can Lead Us to Recovery Tue, 02 Dec 2008 14:45:37 -0700 I have been part of an email correspondence group for a couple of years now which includes a number of strong public policy thinkers. One of the best is a man named Francis Cianfrocca (aka “Blackhedd”) who writes regularly at Redstate. He has been spot on with regard to the current financial crisis. I’ve read far better stuff from him in my inbox than I’ve been able to find at CNBC or Fox Business News. All of this is to say that he is plugged in to the financial community and has a strong analytical mind for making sense of it all.
Obama could sweep away a lot of this uncertainty and unreasoning fear with no more than a ten-minute news conference.
He could stand up, with the towering Paul Volcker, the sour-pussed Larry Summers and the sardonic-looking Tim Geithner standing behind him, and say the following:
"Ladies and gentlemen, I’ve consulted at length with my economic team. We’re acutely aware that our economy is facing great uncertainty. We understand that our system is a capitalistic one. We intend to do whatever it takes to get business and capital working again, for the sake of every consumer and working person in America.
We also recognize our critical responsibility to the rest of the world. As the pre-eminent economic power, it’s up to us to lead global markets back to health and prosperity.
I’m announcing the following key decisions, which we will stand by until our markets are back to normal, employment is growing, and our economy is healthy again:
All tax increases on capital, dividends, and business income are OFF THE TABLE.
All protectionist legislation, including increased tariffs and import duties, are OFF THE TABLE.
All new regulations, mandated costs and taxes on businesses, including export businesses, are OFF THE TABLE.
That is all. Thank you."
If Obama were to give this speech, you’d see explosive market rallies, and everyone would heave a big sigh of relief.
So how about it, Mr. President-elect?
Sounds like some first class “Nixon goes to China” action to me. Author: firstname.lastname@example.org (Hunter Baker) Item Category: Business and Society Item comments: http://blog.acton.org/archives/2578-How-Obama-Can-Lead-Us-to-Recovery.html#comments