The Lesson We Never Seem to Learn

A good part of our current economic doldrums stems from the lesson that we seem never able to learn, until it is too late. And then, having ruefully learned the lesson at great cost, each generation fails to pass it on to the next, which is then doomed to have to learn it at great cost all over again.

This lesson is not arcane, or abstruse, or difficult to grasp in any way. In fact, I can state it in just nine words:

The more government grows, the worse the economy becomes.

The latest discovery of this truth is announced in a wide-ranging study of 108 countries over the years 1970-2008 conducted by the very geniuses who brought to you the most humongous central government bureaucracy the world has seen to date: the Europeans ( in particular, the staff of the European Central Bank, in Frankfurt, Germany). To save you the trouble of plowing through all their mathematical jargon, here is a choice excerpt from the report's conclusion:

This paper adds to the literature in providing evidence on the issue of whether “too much” government is good or bad for economic progress and macroeconomic performance, particularly when associated with differentiated levels of (underlying) institutional quality and alternative political regimes. . . .

Our results allow us to draw several conclusions regarding the effects on economic growth of the size of the government: i) there is a significant negative effect of the size of government on growth . . . iii) government consumption is consistently detrimental to output growth irrespective of the country sample considered (OECD, emerging and developing countries) . . . .

One does not need all the fancy technical jargon and applied mathematics to understand why the Eurocrats found what they found. Common sense tells us that because government produces no economic goods on its own, but instead derives its ability to function entirely by pulling money from the rest of the country's economy, there has to be a limit on its size for that economy still to be able to grow while supporting the government.

Too little government, of course, results in anarchy and the law of "might makes right" -- not a conducive atmosphere for economic investment and growth. Just as certainly, however, too much government diverts too many resources from the productive economy, and so stifles growth. This relationship between the level of government and the corresponding level of economic activity is expressed in what is called the Rahn curve.

As I say, this is not a difficult lesson to grasp. So why do we have to keep on learning it again and again, over and over, with each new generation? Our grandparents learned it under the Presidents from Harding to Franklin D. Roosevelt; our parents learned it under the Presidents from Eisenhower to Nixon, and now we are learning it under the Presidents from Reagan to Obama.

The cycle starts when a President takes office who reduces government spending and/or cuts taxes from what has gone before. The economy springs to life, and the country enjoys prosperity. But government also thrives on prosperity, and politicians cannot keep from using the increased revenues to institute new social and economic programs, which soon burgeon into more and more government. This continues until the sheer size of government begins to take its toll on the economy, which fades into a recession, and eventually, if the destructive growth of government is not halted, a depression.

In a depression, the government allocates most of the resources, because there is no investment due to the uncertain future, and no savings, since there are few jobs and everyone needs cash. By stepping in to provide handouts and public (non-productive) jobs, government actually hinders the functioning of the markets, and distorts economic reality. It also destroys individual incentive, since who needs to find work when one can simply cash an unemployment check instead?

The modern American welfare state came into full flower with the so-called "New Deal." But it is a myth to think that the welfare state originated with Franklin D. Roosevelt -- it actually started in Europe, in Bismarck's Germany, before it came to America via President Woodrow Wilson and his energetic young social engineer, by the name of Herbert Hoover. The latter learned how to organize massive deliveries of food and essentials, first to war victims, then to Belgians, Central Europeans, and Bolsheviks. At first the relief was private and humanitarian, but Wilson appointed Hoover the head of the U. S. Food Administration, and the bureaucratization of welfare soon followed.

Later, during his own term as President, Hoover tried to employ the same massive means to alleviate the sufferings of the jobless, at the outset of the Great Depression. FDR simply took up Hoover's policies where the latter left off. Take a few minutes to watch the following video, which lays out the actual statistics -- and please pay special attention to the numbers during the administration of President Harding (1921-1923), who succeeded President Wilson, toward the end:

In the video, there is a quote from FDR's Secretary of the Treasury, Henry Morgenthau, which could just as easily today have come from Secretary Geithner, or earlier from Secretary Paulsen:

We have tried spending money. We are spending more than we have ever spent before and it does not work. . . . We have never made good on our promises [on employment]. . . I say after eight years of this Administration we have just as much unemployment as when we started . . . and an enormous debt to boot!

The difficulty is that as the cycle repeats itself in each new generation, the welfare state becomes larger with each iteration, and becomes harder and harder to eliminate, even in times of prosperity. This phenomenon is partly tied to our ever-increasing population with each new generation; there are more and more people who become welfare state beneficiaries (or, in less charitable language, who "go on the dole").

FDR's Social Security is still with us, and in the seventy-odd years since its inauguration has mutated from a system in which there was one beneficiary for every 160 workers (a ratio of 159.4 to 1, in 1940) to one in which the ratio has now, for the first time ever, gone to less than three to one in 2010. The decreasing ratio, of course, is unsustainable -- because the percentage of pay withheld from each current worker is inadequate, even at a three-to-one ratio, to provide benefits for just one retiree. As the current Baby Boomer generation reaches retirement age, the ratio will drop even more. The system will eventually face bankruptcy unless people are required to work longer before receiving benefits, or workers pay still more in payroll taxes, or have their retirement benefits reduced, or some combination of all three is put into place.

Even if the system can be "fixed" before it goes bankrupt, however, one has to ask: what is the point of a scheme which forces current workers to support retired ones, in the expectation that when they retire, the people working then will support them? What does such a scheme do to individual incentives to save for retirement? A welfare state simply gets people hooked on more and more welfare, as is graphically illustrated by these two drawings (click each to enlarge):

As economist Robert J. Samuelson points out, the welfare state as a phenomenon of the late nineteenth and the full twentieth century is now facing its inevitable end, due to the impossibility of a government's supporting many more people than those who pay the taxes that support the government. He writes:

To flourish, the welfare state requires favorable economics and demographics: rapid economic growth to pay for social benefits; and young populations to support the old. Both economics and demographics have moved adversely. . . .

The modern welfare state has reached a historic reckoning. As a political institution, it hasn't adapted to change. Politics and economics are at loggerheads. Vast populations in Europe and America expect promised benefits and, understandably, resent any hint that they will be cut. Elected politicians respond accordingly.

But the resulting inertia poses an economic threat, one already realized in Europe. As deficits or taxes rise, the risk is that economic instability will increase, growth will fall, or both. Paying promised benefits becomes harder. Or austerity becomes unavoidable.

The paradox is that the welfare state, designed to improve security and dampen social conflict, now looms as an engine for insecurity, conflict and disappointment.

As I said at the outset, this is not rocket science, but common sense. It is also something that was once ingrained in our national character, when citizens instinctively saw something wrong with government taking on the role of rescuer of last resort. Indeed, as long ago as the 1880's, President Grover Cleveland summed up the national resistance to government-provided aid by pointing out that it was a slippery slope, and difficult to place limits upon once the practice became routine. Vetoing a Congressional bill to provide financial relief to drought-stricken Texas farmers, he asked the simple rhetorical question: "If the Government supports the people, who will support the Government?"

Lately, it has become common to point out the sins of conservative presidents, such as Ronald Reagan and George W. Bush, whose administrations saw huge increases in government debt and spending even as they lowered tax rates to generate more economic activity in the private sector. This was the welfare state continuing its incessant encroachment on individual incentives, with the public sector expanding steadily along with the economy. The recipe worked for a time, during prosperity; but in a recession or depression, the choke of the welfare state becomes a veritable death grip. And under President Obama, look how rapidly the numbers have deteriorated.

The cure for this cancer is not a mystery. After the Wilson administration ended in paralysis and failure, as noted in the video above (with the Gross National Product plunging 24%, from $91.5 billion in 1920 to $69.6 billion in 1921), a President with a solid middle-class upbringing, and small-town values (but unfortunately all too trusting of his friends and allies), turned the economy around by the simple tack of reducing government's slice of the economy. Warren Harding cut federal spending from $6.3 billion in 1920 to $3.2 billion by 1922. Taxes were reduced, and the number of unemployed was cut by more than half.

But that was just the beginning. On Harding's sudden death from a heart attack in 1923, Calvin Coolidge succeeded him, and his policies led to the "roaring Twenties." His budget going out of office was smaller than Harding's, even though the country had grown considerably in the meantime. He cut tax rates five times, and his eye on spending was just as sharp with his own White House budget as it was with the country's. The economy boomed, the stock market soared -- and then came Black Tuesday in October 1929.

The stock market crash, however, was not Coolidge's fault. If any fault is to be assigned to the government, it would have to be placed upon the newly created Federal Reserve Bank, which failed to curb leveraged speculation as the market boomed, and then withheld any cash infusion to the banking system after the crash itself. Eventually this led to widespread failures, and an ensuing panic as people tried to pull all their money out of banks at once. By then FDR was in charge, and he unfortunately did not have Coolidge's sense of thrift and limited government.

The rest is history. We are once more at a great crossroads. Whether this nation can wean itself from the welfare spigot of Franklin Roosevelt, and revert to the sensible values of Warren Harding and Calvin Coolidge, is the fundamental question of the day. The future of our own grandchildren will depend on the choice we make in 2012.

Sophistry in the Guise of Punditry

In the course of complaining about his old bugaboo, the former Archbishop of Nigeria, Jim Naughton lets fly an assertion that discloses all one needs to know about why the Church's activists will never be able to meet on common ground with its traditionalists (bold emphasis is mine):

Old bigots never die . . .

. . . they just keep running their mouths.

It will come as a shock to no one that Archbishop Peter Akinola, retired primate of the Church of Nigeria, supports a bill currently under consideration in that country that would criminalize same-sex marriage . . .

It can't be said often enough, that most of the members of the Anglican Church in North America left the Episcopal Church because they could not abide its teachings on same-sex relationships, and chose to join a movement led by Akinola, whose opinions on such matters were apparently more to their liking. Anti-gay bigotry is deep in ACNA's bones, and no amount of obfuscation from its apologists who would have you believe that their dispute with the Episcopal Church is all about scriptural interpretation can camouflage that fact. "Scriptural authority" is to the debate over sexuality as "states' rights" was to the debate over slavery.

Oh my, oh my. I could not at first believe my eyes, but yes -- that is what Jim Naughton wrote, and published for all to read on the Internet. "'Scriptural authority' is to the debate over sexuality as 'states' rights' was to the debate over slavery."

Here are some of the most obvious points in rebuttal -- which fairly cry out for expression -- but which merely scratch the surface of all that could -- and should -- be said in response to such monumental ignorance.

• "States' rights", Mr. Naughton, had nothing to do with the issue of whether this country should go forward upon an economic foundation where some men were legally permitted to enslave others.
• The States of these United States had no more political power to authorize slavery within their borders (as opposed to absorbing it without question, thereby "grandfathering" it into their political structure) than Egypt had to keep the Jews in bondage.
• Your statement first and foremost exhibits a profound confusion about what is a "right", which properly speaking, in a legal sense, entails a corresponding obligation upon the liberty of others to do as they like -- a "duty" on their part, if you will, to "recognize" my "right."
• For example, you have a legal duty not to hinder or obstruct my right to vote. And the several States have an obligation to protect my right to vote against your attempt to hinder or obstruct it. That is what it means to have a "right."
• But to authorize the legal ownership of one human being by another is to create no legal "right" to own slaves at all, since it is meaningless, under our system of government, to talk of "ownership" of any fellow being made in God's image. The laws about slaves were inherited from the colonial governments, and were carried into Southern society after the Revolution. Eventually, both the British and American governments came to realize that slavery could never be legitimized by any political authority.
• The "States' rights" of which you speak, Mr. Naughton, were claimed by those who denied the right of the national government to interfere in local affairs, regardless of their nature.
• First and foremost, the concept of "States' rights" had to do with the right of States to secede from the Union, in order to prevent -- if that was the only way possible -- the national government from "interfering" in their local affairs.
• Secondarily, "States' rights" was a rallying cry by which to resist the authority of Congress to pass legislation binding upon the States. Certain southern States, led by John C. Calhoun, claimed the power to "nullify" acts of Congress within their borders, notwithstanding the Supremacy Clause in the Constitution.
• "Ownership" of human beings by other human beings, however, was never a "right" that could be "reserved" to the people under the Tenth Amendment, because its very assertion negated another right indisputably reserved to the people, namely the right to "life, liberty, and the pursuit of happiness."
• Those rights were not, as the Declaration of Independence acknowledged, "reserved to the people" by the people themselves, in forming a national government, but were rather pre-existing and unalienable rights conferred by the Creator upon all men equally, by virtue of their birth.
• As an unalienable and natural right, the right to one's liberty could not be signed away in the course of any political process, no matter how democratic. As any neutral observer was forced to conclude (in agreement with William Wilberforce), the status of slavehood was never the result of a contractual bargain, but rather the product of subjugation by kidnapping and force.
• It followed, from the concept of natural rights, that slavery was incompatible with the Declaration of Independence, and could not lawfully be imposed, or recognized, as a legitimate status upon any human being. The Supreme Court's Dred Scott v. Sandford decision to the contrary was repudiated, and it stands today as a monument to colossal judicial arrogance.

The authority of Scripture within the Church is thus a parallel, not to the rights secured to the States by the Tenth Amendment, but rather to the natural rights of all humans recognized, and expressed, in the Declaration of Independence. The point is that neither -- the natural rights so acknowledged, nor the authority of Scripture -- can be surrendered, nullified, compromised, or taken away, by any earthly authority whatsoever. They are God-given, and thus are not for man to interfere with, dabble in, or temporize in any way, shape or form.

Your nonsensical claim, Mr. Naughton, purporting to equate "States' rights" with "the authority of Scripture," thus gets the truth exactly backward. States have "rights" only insofar as the people have granted them in the first place -- there are no "natural" rights of States, which are not created in God's image, after all. The people themselves are the source of all rights which may be granted to the several States.

But the people also, as we have just seen, possess certain rights which are unalienable: which is to say, they may not be granted, sold, or bartered away in exchange for anything else whatsoever.

Likewise the authority of Scripture inheres in Scripture itself, as the Word of God, and may not be compromised, bargained away, minimized or contradicted in any way, shape or form whatsoever.

You thus play a very foolish game, Mr. Naughton, when you try to equate "States' rights" with "the authority of Scripture." Your parallel attempts to match that which comes from God alone to that which comes from mere man. As such, it confuses categories which are fundamental. Hence your analogy is no "parallel" at all, but a desperate attempt to reduce that which is divine to a level of human control, and thus subject to human manipulation.

Man is no more the final arbiter of what Scripture commands than were Southern politicians the final authority on what the Declaration of Independence meant, in saying that "all men are created equal." A terrible war had to be fought to establish that simple truth, Mr. Naughton, and your lame attempt at analogy insults the very ideals that were vindicated in that horrendous sacrifice.

A Welcome Call for an Advent Respite

I have not, until this point, chosen to devote any posts to the ongoing developments with the Anglican Mission in America (AMiA). Although it is certainly a topic within the purview of this blog, I have preferred to wait until more facts are known before adopting a stance on what is happening.

That much having been said, I think it is fair to say that all Christians, everywhere, can uniformly deplore the manner in which this scenario has played out, given the Internet and its ability to spread news at the speed of light, as well as the reactions to that news. The Internet, because of its very immediacy, tends to magnify the significance of individual personalities, and at the same time, to make it thus more difficult to view the entire forest instead of the individual trees (or should I call them "personali-trees"?).

It is thus with great relief that I noted this letter addressed to all the participants in AMiA's ongoing evolution. It is written by the Rev. Alan Hawkins, Network Leader of the Apostles Mission Network, the body of churches and missions which are remaining under the jurisdiction of the Anglican Province of Rwanda (PEAR, to use its French-language initials). And yes, it is ironic that this body, which did not come to the forefront until just a week or so ago, could rely upon the Internet to establish its immediate purpose and presence, in order to reassure those congregations and clergy who were wondering what would happen, that there would indeed be an ongoing entity under the jurisdiction of PEAR with which they could continue their affiliation, if they so choose. As such, it is under the episcopal oversight of the Rt. Revs. Thad Barnum and Terrell Glenn -- the two bishops who have not resigned from the Rwandan House of Bishops, and who have been asked by the latter body to assume supervisorial responsibility for all of the parishes and missions who choose to remain under the Province of Rwanda's jurisdiction:

Dec. 10th, 2011

To whom it may concern:

We are deeply saddened and dismayed by the recent turn of events that have brought pain and separation between the Province of Rwanda and the Anglican Mission in the Americas. We are also deeply grieved by the subsequent "Internet" eruptions and email trails that have contributed to further damage in our witness before believers and non-believers alike.

On December 9th, 2011, the House of Bishops of the Anglican Province of Rwanda (PEAR) appointed Bishop Terrell Glenn, Jr., of Charlotte, NC and Bishop Thad Barnum of Fairfield, CT to oversee the care and shepherding of all clergy who are canonically resident in PEAR and affiliated with the Anglican Mission in the Americas. Bishops Glenn and Barnum hope to work on behalf of PEAR and with the leadership of The Anglican Mission in the Americas in assisting clergy and congregations with their present and future canonical residencies.

To that end, we are requesting an 'Advent Respite' while leaders representing those clergy and congregations concerned can honorably and honestly work through their respective issues. We respectfully ask members of the different media sites and those who 'blog' to observe this respite as well. We recognize this situation has raised numerous questions, especially those of canonical status and future affiliations. We believe these situations will be addressed and questions will be answered "in a manner worthy of the gospel" of Jesus Christ. We also know that, in God's time, there will be an opportunity to bear witness a positive and a Christ-honoring resolution to this painful situation.

In addition, we request of all clergy and congregations in PEAR, that all recruiting, posturing, and gathering for allegiance to one side or another in these matters cease immediately. In place of these, we commit to join everyone in fervent prayer to our Lord that His reconciling love would prevail in our hearts and that His grace would abound as we seek a way forward that blesses Him and brings glory to His Name.

Humbly submitted,

The Rev. Alan Hawkins

Network Leader, Apostles Mission Network

I heartily join in the declared "Advent respite", and wish the many good Christians affected by these events a grace-full and Holy Spirit-led Advent, in which they can mutually, and respectfully, grant each other the space within which to discern the roles to which Our Most Merciful Saviour is calling them within the body of His one holy, catholic and apostolic Church.

To quote again my favorite prayer (now relegated, alas, to the back of the 1979 Prayer Book):

O God, the creator and preserver of all mankind, we humbly
beseech thee for all sorts and conditions of men; that thou
wouldest be pleased to make thy ways known unto them, thy
saving health unto all nations. More especially we pray for
thy holy Church universal; that it may be so guided and
governed by thy good Spirit, that all who profess and call
themselves Christians may be led into the way of truth, and
hold the faith in unity of spirit, in the bond of peace, and in
righteousness of life. Finally, we commend to thy fatherly
goodness all those who are in any ways afflicted or distressed,
in mind, body, or estate; [especially those for whom our prayers
are desired]; that it may please thee to comfort and relieve
them according to their several necessities, giving them patience under their sufferings, and a happy issue out of all their afflictions. And this we beg for Jesus Christ's sake. Amen.