God Bless

Many of our bishops, it seems, favor Brian’s interpretations
http://catholickey.blogspot.com/2009/09/osv-reports-on-bishops-subsidiarity-and.html
on personal authority (subjectivism, if you will, persons get to decide when and how to spend their scarce resources on maintaining health and wellbeing of their individual loved ones, since they are closest to knowing the facts about value of the means to do just that, using their natural reason and second nature skills of prudential judgment). Defense of liberty demands a modicum of solidarity on that point, no?

Herein lies our conundrum — which comes first solidarity or subsidiarity? Well metaphysically one cannot separate the two IMHO (Tell The Right Story Right as Mr Gamble aptly put it some days ago elsewhere on the Porch). And under what conditions does authoritarianism (coercive collectivism, moral hazard) damage the social fabric that solidarity and subsidiarity are unrecognizable as such, for they cease to function as such? Can one speak of a “just” social contract where those who will be obliged to fulfil the terms of such juridical instruments cannot possiblly give their consent, for they are as yet unborn? The Social Security scam perpetrated on our members of our grandchildren’s generation can hardly be called “just” and those amongst us who advocate any additional deficit public spending (even with the best of good intentions) must examine their consciences on selling a square circle to the rest of us, on the impecunious deceit upon which they would build a utopian “security” (today’s Mass readings warn us of he who would build a tower, or go to war ill-prepared ignoring foreseeable shortfalls…) the Problem of Unnatural Connaturality aka bad habits that damage human wellbeing.

http://maritain.nd.edu/jmc/ti04/budz.htm

(H/T Against the Grain blog)

Social cooperation is not a bad habit, for without others upon which to exercise our efforts how would we attain meaningful feedback on which were fruitful exertions and which were indolent induey lgences? Socialism is a bad habit, for one can never know what is fruitful when indolence is esteemed as its equal and fiscal policy coerces its adherents to dictate terms of reciprocity, Such authoritarianism empties the term “value” or “merit” of any true moral meaning – such sentimentality ends in the gas chambers, I believe is how W F Buckley characterized that school of thought.

Now markets are a well-suited means for social cooperation and not a bad habit. Reciprocity in exchange ought demand solidarity amongst participating parties — money ought not be debased — and subsidiarity between strata responsible for the commonwealth’s flourishing — central planning may not usurp the capabilities of more decentralized entrepreneurial undertakings. It is not meet and just to subject ourselves to the unnatural connaturality of our current political economy of a rapacious Federal Leviathan. How can citizens apprehend the nature of a commonwealth if the very operation of that public creature expropriates the accumulated resources IN SECRET and then EXPATRIATES them (encumbering us with creditors in China for God’s sake)? How is a citizen to weigh the moral comport of his conduct if he has no means of knowing the value/price of the opportunity costs he is faced with? Infantilizing the citizenry stunts society’s ability to sustain itself in liberty, and the Nation becomes vulnerable to despotic ideologies or simply withers in a self-wrought demographic winter. It goes against the grain of ‘commonwealth’, in other words, to socialize welfare centrally. The fortunes of the citizenry must be “ingrained” from infancy by private means, personal parental attention first and foremost, followed by voluntary formation in the faculties as perceived individually be the person so gifted, in a localized reciprocity that enriches the economy in their community. The Austrian school teaches that his “unit” of natural law replicates in a Mandlebrot-like fashion to all areas of trade and social intercourse, that capital can be applied at the most discrete level of production or at the most complex. The greatest return on that capital can be anticipated when an entrepreneur combines as many discrete levels as feasible into as complex an undertaking as the market will support — advanced societies have greater economic strength because accumulated resources (higher education, increased life expectancy, nest-egg savings) have been invested up a lengthy business feeding-chain, whereby capital partners can allocate scarce resources most prodigiously using the price signal. Vulnerable agrarian-dependant societies have weaker economies because the feeding chain is much abbreviated: capital has fewer opportunities to be invested longterm and market prices are subject to the vagaries of natural forces (maximum yields are tied to sun/rainfall).
SO FAR SO GOOD.
But what happens when the prices upon which either economy (strong advanced or weak developing) are not transparent – when the money substitutes used for legal tender are manipulated IN SECRET and OFF BALANCE SHEET?
This is where we are today. The Austrian position (as opposed to the “Trust Us We’re in Charge” statist Keynsianism) is more able to secure social Justice for developing countries, for trade is more likely to achieve a just price when the fiduciary media they exchange is HARD currency (GOLD or other metallic standard) and not subject to the political manipulations of the marshmallow currencies favored by global mercantilists.

The metaphysics is complicated, for sure, but Plato and Aristotle ought aid us rather than alienate us in thrashing through the moral heft of public policy so long as we are able to affirm the moral agent is the individual first, not the State.

Anarchy is a problem. Hoppe’s choice of terms, private government, are a bit better. Government is as small as required, competing, and voluntary.

Look at Somalia. No functioning government since the late 80s. Yet, the tribes still function quite well. Anarchy doesn’t mean the lack of all social structure.

“As far as the predicive powers of Austrianism, I can’t remember a time when they weren’t predicting a meltdown; they have all the accuracy of a stopped watch, right twice a day.”

The Austrians claim that the underlying assumptions and structure of our economy is flawed. They don’t make any claim as to know when it will collapse, just that it can’t go on forever. Belloc made a similar claim about Capitalism leading to the Servile State. Why not attack him too? He never said when it would. Hayek said it was in the 30s for Germany.

Those who say that Mises’s epistemology is like Thomas’s either haven’t read Mises, or haven’t read Thomas, or haven’t read either. Thomas was a metaphysical realist, and Mises a metaphysical idealist; he claims an objectivity (which is not Thomist) when he wants to, but confines the human person in the chains of impenetrable subjectivism. It is just warmed over Benthamism, but not nearly as good. Indeed, it was just over the knowledge problem that Mises accused Hayek of being a socialist. The only rationality I can discern in all this is that “socialist” is a term meaning “to disagree with Ludwig or Clare.”

The canard about the School of Salamanca being “Austrian” is pure nonsense, steming from Schumpeter’s misreading or “common estimation.” The Scholastics favored legal prices and rejected utility pricing as a violation of the 7th commandment.

As a mere technical matter, you cannot be both for no gov’t and for subsidiarity; you must choose one or the other. Subsidiarity requires a hierarchy of authorities, not the absence of authority and hierarchy.

As far as the predicive powers of Austrianism, I can’t remember a time when they weren’t predicting a meltdown; they have all the accuracy of a stopped watch, right twice a day.

John bolsters Ovidiu Hurduzeu re: ‘homo oeconimicus’ “a rational economics (a branch of humane science) with an incorrect view of humans.” but they BOTH are off target in aiming their diatribes at Mises or the Austrians. Wikipedia reminds us that Austrians do not favor such a redutionist view of man but rather critique Adam Smith’s labor theory of value (based in Mills’s erroneous epistemology),
“many of the Austrian School criticise Homo economicus as an actor with too great of an understanding of macroeconomics and economic forecasting in his decision making.”
indeed Acton published his requiem penned by Edward J. O’Boyle, Ph.D. of the Mayo Research Institute (original behind a firewall, but a pdf copy kindly provided by the author here: http://www.mayoresearch.org/files/REQUIEM.pdf )

Austrians (so-baptized by Christendom’s Holy Roman Emperor as the ‘eastern’ marches of his Empire) embrace Thomism on the “knowledge problem” as JD, Esq. aptly nails it on personhood and entrepreneurial creative subjectivity vs static efficiency of central planning, see Jesus Huerta de Soto in Salamanca here on dynamic efficiency that admits of a pneumatology in line with ‘veni creator spiritus’ (which the Anglo-Saxon model of mercantilism does not, denying man’s free will and all that, but let’s stick with economics as “means” shall we, and not sink into bigotry as path to a divine end as John would have us all do):

http://juandemariana.org/video/4159/jesus/huerta/soto/400/years/

Indeed John may need to find himself a matador’s cape to defend his Statist economic model against this bullish Spaniard’s justice via dynamic efficiency – following the trail blazed by Mises (and those who came before, Menger was not the first to defend licitness of subjective prices, a Roman Catholic scholar in Salamanca predated him by more than two decades) he posits an epistemology of human action that traces ethics and economics back to a human unit (the family’s hearth as the heart of moral formation) not the state as the arbiter in any “civilization” worth the moniker. For those who like their heroes morally rigorous (to use a Christian vocabulary, one might say sacrificially devoted to truth) Mises is admirable in his integrity, after escaping Hitler’s Dritte Reich with not much more than the clothes on his back, he had to re-pen his magnum opus from scratch, from memory, as his manuscript had been destroyed with everything else in his academic department when it was suppressed by the Nazis.

The Bruce Smith’s anthropology certainly evokes original sin (aren’t we all “imploders”) but his intellect is also darkened gleaning a pearl of great price but mistakenly attributing swinishness to Austrians as libertarians: “imploders were aided and abetted by the ignorant economics of the long serving, libertarian leaning Fed chairman, Alan Greenspan, who used and allowed debt and credit expansion to the point of implosion in order to maintain demand. There was no understanding of the necessity to maintain real wage growth to do this” Greenspan is no longer libertarian leaning, nor has he been for a long time, the time he spent at the Fed reeducated him according to Catholic Lord Acton’s “Power corrupts, absolute power absolutely” maxim. Let’s stick to what is REAL (ie true) shall we? Central banking as arbiter of value is not REAL in any sense of the term, it is totally a tryanny of relativism: “disproportion” enters in not via capital but via FIAT legal tender laws. In case you weren’t aware, the currency manipulators aren’t all in China Bruce! Do you know how much of the TARP money was extended to foreign central banks? NO, none of of us know – ITS SECRET. And Bernanke thinks he has a constitutional right to keep his loans to foreign banks SECRET. AUDIT THE FED and you may find a few surprises about how the gummint has betrayed its people for quite some time, all the talk of “common good” not withstanding.

While I chuckle at Casey Khan’s tongue in cheek sarcasm, my intent is not to wound the corporate body of we fellow wayfarers, so let me second Western Confucian’s brokering a truce: “Distributivists and Austrians waste a lot of ink (or bits or bytes or whatever) anathematizing each other.”
Not everything in the liberal tradition is freemasonry, John! The enlightenment certainly took Europe on a vast and futile detour, but the fidelity to traditional (scholastic, not Eastern hesychasm) heritage you seek to promote can be found within the ranks of the Austrians, if you could but just overcome your blind hatred for anything non-Northern European (Belloc et al being Normans, its not an exclusive AngloSaxon club of course, their monarchs ruled as far South as Sicily bequeathing their Viking mercantilist traits of pillage and plunder to the culture on a grand scale, ’nuff said).

P.S. there is common ground to be found in defending the Church’s Social Teaching on subsidiariy, may I recommend Hoppe’s writings on time preference to Mr Medialle (starting with “Time Preference, Government, and the Process of De-Civilization – From Monarchy to Democracy” Journal des Economistes et des Etudes Humaines, Vol.5, 2, 1994) “desires are ordered by the virtues” is an axiom no? Prove it in history with out resource to individual self-interest (conscience, contrition, and responsibility for one’s eternal soul being so very “individual” as to be suspect, no?) The Austrians DID PREDICT the meltdown, John, using the conclusions they can arrive at by simple arithemetic and logic of non-contradiction: a demand-deposit can either “belong” or “not-belong” it cannot be “fractionally-reserved” even if it is “FDIC insured” Just because the Americn-chosen form of banking is technically licit doesn’t make it economically valid! Its toxic, as we are finding out. Just because abortion is legal doesn’t make it a virtue, nor oblige me to support the idea of a STATE that cannibalizes one citizen to provide health care to another!

P.P.S. may I offer a second work of mercy, that of correction?
(in acknowledging my debt of justice to my Creator, I bore John’s wrong patiently all the while penning my post, & y’all have done another in reading thus far, chuckle): Bruce Smith, you conflate advocates for central banking cannibalism, Friedman, with its detractors, Mises and Hayek. Please rectify your vincible ingnorance, its a sin against the seventh commandment (false testimony).

Soros is telling us that we need to be exceedingly wary of self-fulfilling dogmatic belief systems that become dead husks hiding the true state of affairs. For example, the belief system that Federal, or central government, is useless as opposed to needing reform, lead this nation to the edge of financial chaos because its alternative market fundamentalism generated a stripping back of government regulation. The logic had become if government is bad then so must government regulation and by the way instead of government we have efficient market hypothesis which means the market always knows what’s right. Well this isn’t so says Soros. Greenspan’s “irrational exuberance” remark was completely wrong. The profiteers were absolutely rational to ride the upward curve of a bubble to make money but irrational to think that investing to inflate bubbles actually benefited the overall economy!

Also I never really understood why Ronald Reagan was campaigning for President on the basis that the words you don’t want to hear are “I’m from the government and I’m here to help.” Why if he believed this did he want to become part of government and why did he allow government deficits to grow under his watch. You can bet that if the Financial Crash had occurred under his Presidency he would be bailing-out Wall Street just like George W. Bush and re-working his script to say “I’m from the government and I’m here to help but ya gotta pay it back y’know.” It seems to me that the supposedly libertarian and market fundamentalist Reagan believed all this guff without thinking too much about its implications. Reagan only had to look at the Federal budget to ask himself why if government was so awful was it in the business of having to supplement so many individual’s incomes for subsistence and health care. And the follow on question, why is capitalism’s income delivery so awful that it can’t keep individuals out of the clutches of government relief programs? And a supplementary question, why if government is so useless do capitalists spend so much money on campaign contributions and lobbyists? All these questions tumble out but as Soros implies human beings are often irrational in their thinking and avoid the rational by taking refuge in reflexivities which often when it comes to political issues mask those issues. The task for FPR contributors I believe is to be a lot more wary of “isms” in the light of Soros’s philosophy and in truly independent spirit determine the appropriate forum and vehicle for resolving the appropriate issue.

mission accomplished?

I’m not sure your statistics are that useful. Of course areas with a good economy have both more employment and higher wages. Similarly places with a lousy economy have low employment and low wages. That doesn’t mean that an increase in the minimum wage won’t hurt a bad economy.

A state with a relatively high minimum wage will have low unemployment. However, that doesn’t mean that increasing a minimum wage in other states won’t have negative effects. If you have a state where the lowest wages are over $7.00 an hour moving the minimum wage as high as $7.00 will impact nobody. In fact, there will be no political resistance to moving the minimum wage that high will be minimal. An increase in the minimum wage in that circumstance is very politically feasible. Yet, very few benefit because they were making the new minimum wage before the local legislature even put the increase on the agenda. Furthermore, the expected effect on employment will not occur, because nobody’s wages were increased. We can all fawn over these states with low unemployment and a high minimum wage, but it won’t do us any good. None of this has anything to say about increasing the minimum wage in a economically poor state or the country overall.

Has any empirical study actually isolated the relationship between minimum wage and employment? Is it possible that the relationship theory gives it is true but that they are both effected by another unidentified factor? I really doubt that.

To sum it all up: statistics are deceiving and correlation does not imply causation.

As for the minimum wage, the relationship between minimum wages and decreased employment is economic dogma, placed beyond any possible questioning. Yet, in 100 years of minimum wage legislation, both in the U.S. and abroad, there is not one single shred of empirical evidence to back up the claim. The claim about such a relationship is an empirical claim; one should be able to observe it in the real world. Yet, the opposite seems to hold.

Standard theory holds that lower wages lead to higher employment and higher labor participation rates. Yet the opposite seems to hold in practice, and hold in every single case: low wage states have high unemployment and low labor participation rates; high wage states have the opposite. The near universal experience runs counter to the theory. Yet actual experience is NEVER allowed to interfere or even impinge on theory. This is the sure sign of a dogma rather than a science.

The empirical evidence better relates to high wage differentials having an impact on employment; that is, where there are vast differences between high and low earners, there is also high unemployment and lower labor participation rates; where the wage curve is flatter there is lower unemployment and higher labor participation rates. Again, experience here runs totally counter to the standard theory.

http://www.ft.com/cms/668e074a-bf24-11de-a696-00144feab49a.html?_i_referralObject=10929613&fromSearch=n

I’d agree that having one without the other in your economic proposals is an error.

However, would you agree that a question like “does a minimum wage lead to higher unemployment?” is a positive statement. If Satan himself implemented those laws it wouldn’t matter for the question we’re asking.

Now, the really interesting and useful stuff are the normative questions that follow, but, these are ideas of individuals operating using a methodology. It’s not the methodology’s fault that some of them come to bad conclusions.

Any methodology directed towards positive questions should arrive at the same answer if it is describing reality and that is the real test. (if we are to believe that economics is describing something real)Not at “methodology A is less Catholic than methodology B.”

At this point, I don’t know. I’m trying to read all the Austrian stuff I can get ahold of, but right now, I can’t see how I can say that their way is worse than any other way. It seems to lead to the same basic laws of economics. It makes for some very interesting discussion with Austrians.

http://www.ineteconomics.org/

Are you implying that the Austrians like Soros?

http://news.xinhuanet.com/english/2009-10/28/content_12343842.htm