Archive for August, 2010

At Catholic universities such as Notre Dame, there are many efforts to harmonize Catholic doctrine with neoclassical economic theory. However, these efforts are doomed to fail as there are four major reasons that neoclassical economic theory is subversive to Catholicism:

(1) Perfect competition throws ethics out the window. Neoclassical theory assumes perfectly competitive markets are the ideal, but in such markets, ethical considerations disappear. Imagine you are a business owner, and you want to pay your workers a living wage. If you do, other firms that pay lower wages will out-compete you, and you will go out of business.  Either you leave the market, or you chuck your ethics out the window.

(2) Property rights redefined. It’s easy to go to the Bible and find many examples of people having private property; for example, from Genesis we know that God gave man dominion over all the land and sea. But the definition of property rights from Biblical times is very different from how we understand them today. Today, owning property means that you may do with it what you wish. In Christian thought, including Aquinas’ philosophy, it was understood that all land belonged to God; humans were only stewards of what belonged to God, and so it had to be used in accordance with God’s will. Needless to say, this attitude led to a very different management of land than we have today.

(3) Unlimited Wants are Disordered. Neoclassical theory assumes that “more is always better,” and so the economic agent has unlimited desires. In econospeak, we assume that you always prefer the larger bundle. But according to Thomas Aquinas, (who is one of the 33 Doctors of the Church, meaning that Catholics must take him seriously), unlimited desires are disordered. Those who desire God will have limited desires for wealth, (and he thinks you should probably desire God).

(4) The Market Has No Telos. Religious thinkers are all about the “end purpose,” or telos. For Aquinas, the end purpose is union with God, and all of his philosophy is derived from this starting point. Neoclassical economic theory has no telos, no discussion of any end purpose. So economists value efficiency, and increasing GDP, but in neoclassical there is never any discussion of WHY. What is the purpose of having the power to purchase all this stuff? Certainly, our end purpose cannot be to make loads of money and then spend our days on the golf course.

For these reasons, I believe that Catholics/Christians need to engage critically with neoclassical economic theory. Many will respond that other schools of economic thought, such as Marxism, are also subversive to Catholicism. And yes, that is true. But it does not mean that we should settle for neoclassical theory. Instead, take up the challenge to build an economics that does reflect your principles. A wonderful example of a similar project is E. F. Schumacher’s “Buddhist Economics.”

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First of all, Tea Party, welcome to DC! Thanks for choosing the anniversary of MLK’s “I Have a Dream Speech” to celebrate your divisive version of politics on our National Mall (and even more appropriately, in front of the memorial for the President who ended slavery).

Your fearless leader, Glenn Beck, is holding this rally with the message of “Restoring Honor.” This message is well and good, ostensibly non-partisan. However, there are a few things you might want to know about Mr. Beck. Before I talk about these, I’m sure that many of you consider Martin Luther King Jr. to be at least something of a hero, as his fight for civil rights fits in with your stated goals of liberty. However, you should know that King’s speeches were not limited to his “Dream” speech- he talked about a lot more than race. In fact, his son did an excellent job explaining this in a recent op-ed:

He did, however, wholeheartedly embrace the “social gospel.” His spiritual and intellectual mentors included the great theologians of the social gospel Walter Rauschenbush and Howard Thurman. He said that any religion that is not concerned about the poor and disadvantaged, “the slums that damn them, the economic conditions that strangle them and the social conditions that cripple them[,] is a spiritually moribund religion awaiting burial.” In his “Dream” speech, my father paraphrased the prophet Amos, saying, “We will not be satisfied until justice rolls down like waters and righteousness like a mighty stream.”

The title of the 1963 demonstration, “The Great March on Washington for Jobs and Freedom,” reflected his belief that the right to sit at a lunch counter would be hollow if African Americans could not afford the meal. The need for jobs and shared economic prosperity remains as urgent and compelling as it was 47 years ago. My father’s vision would include putting millions of unemployed Americans to work, rebuilding our tattered infrastructure and reforms to reduce pollution and better care for the environment.

Ah, yes, that “other” part of King’s message. Social justice can be a polarizing concept- it forces us to realize the inequities in our society, and the vast changes needed to address them. However, as King often pointed out, and as his son reprises here, civil rights are sort of hollow without social and economic justice.

This concept of social justice brings me back to your fearless mouthpiece, Mr. Beck. Back in March, he had some harsh words for those who preach the social gospel:

I beg you, look for the words “social justice” or “economic justice” on your church Web site. If you find it, run as fast as you can. Social justice and economic justice, they are code words. Now, am I advising people to leave their church? Yes! If I’m going to Jeremiah’s Wright’s church? Yes! Leave your church. Social justice and economic justice. They are code words. If you have a priest that is pushing social justice, go find another parish. Go alert your bishop and tell them, “Excuse me are you down with this whole social justice thing?” I don’t care what the church is. If it’s my church, I’m alerting the church authorities: “Excuse me, what’s this social justice thing?” And if they say, “Yeah, we’re all in that social justice thing,” I’m in the wrong place.

Now, let’s leave aside the fact that Mr. Beck’s religion, Mormonism, values social justice and has repudiated these comments. Let’s think for a second about what “running from social justice” really means. Again, I find myself unqualified to speak, but thankfully, my pastor, Reverend Karen Brau, is more than qualified. A little context for this short sermon: that particular day in church, we had done a social justice-themed Stations of the Cross, and this included hearing testimonies of three homeless women from N Street Village, a homeless organization connected to my church- these are the women that Rev. Brau mentions toward the end of her sermon. I urge you to go listen here to a 4 minute clip (starts at the 22 minute mark). Here are the key points:

Running from social justice means running from specific things. Running from social justice means running from specific people. You take the prophetic out of religion and you’re running from Moses. You take the “walking humbly” out of religion and you’re running from Micah. You take the feeding, clothing, sheltering, radical hospitality incarnational love in action out of religion, and you’re running from Jesus.

Now, this message is obviously targetted at Christians, people who value Moses, Micah, and Jesus. However, it need not be limited to that:

You take the real life struggle of economically poor women, who have been formerly homeless, who are in recovery, out of religion, and you are running from Cheryl Barnes, Renee Mary Virginia, and Diane Curry.

So, Tea Partiers, I hope you’ll take a reflective stance when attending your rally tomorrow afternoon. I hope that you’ll be thinking of the “Dream” speech to begin with, but more than that, I hope you’ll realize what King’s vision for social justice was. I hope you’ll realize  the Christian faith that many of you confess affirms that vision, and that running from social justice is dissonant with that faith. As Rev. Brau said,

You take the social justice out of religion and it might smell sweet, but it’s spiritually stale and stuck.

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Got a New Sheriff

This must be the first time there has been a rap video made about a Senate confirmation…

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Class in American Literature

I’m not a literary expert, so I have to take this essay by Gerald Howard at face value. And, it’s an excellent essay, discussing how discussions of class used to be common in American fiction, but no longer are. Here are some excerpts:

Work—especially the sort of work that gets your hands dirty and that brands you as a member of the working class—no longer seems germane to our novelists’ apprenticeships and, not coincidentally, is no longer easy to find in the fiction they produce. Whether one finds this scarcity something to worry about or simply a fact to be noted probably says a lot about one’s class origins and prejudices.

The dignity of work and its social efficacy is one of the core tenets of our democratic creed. In the absence of inherited social privilege deriving from European feudalism, it would be the willingness to work to tame a wild continent that would define, in Hector St. John Crèvecoeur’s phrase, “the American, this new man.” Yet if all men are created equal, as our Declaration of Independence so ringingly declares, all men are equally defined by the social class they are born into and often seek to rise above—and nothing more inexorably marks one’s class as the sort of work one does. This disjunction between the gospel of equality to which we pay lip service and the reality of social distinctions that we cannot escape makes the whole subject of class in America a tense and touchy one. Simply to bring up the subject in any context, let alone a literary one, feels discomfiting, as if some taboo were being broken or doubt being cast on our most cherished ideals (or illusions) about ourselves…

In any case, these blinders are of relatively recent vintage, as the postwar economic boom and the rise of a vast middle class has made it possible, even mandatory, to view American society as homogenous, socially fluid, and largely unstratified. Charles McGrath observes, however, in that same Times series, that “in the old days, when we were more consumed by social class, we were also more honest about it. There is an un-American secret at the heart of American culture: for a long time, it was preoccupied by class.” Work and class have certainly been abiding and central preoccupations of American literature for as long as we have had writing worthy of the name…

As we’ve noted, the path to literary recognition these days runs through our most prestigious and expensive universities, and these are neither welcoming nor, increasingly, affordable places for the children of the working class. The price barriers speak for themselves, but it is the atmosphere of class privilege and a culture of secret handshake-like assumptions that may offer an even more demoralizing obstacle to the aspiring working-class writer…

I know that sounds pretty bleak when it comes to what I’ve called literary democracy. And yet the vitality and toughness of working-class life has a way of producing voices that demand to be heard. Fiction, of all the arts, is the one that has the strongest allegiance to a realistic depiction of the world as it is, however advanced the formal means by which that representation is achieved…

A literature stratified by its subject matter and its practitioners risks become a mandarin exercise, and that would be, well, unAmerican. It behooves all of us involved in the enterprise of American fiction to make sure it doesn’t happen.

Much of the essay that I left out offers a survey of use of class in fiction. It’s a really interesting and welcome change of pace, at least for this reader. The budding political economist in me wants to point out that there must be positive feedback loops between literature and our economic structures, but I think the implications of that idea are obvious enough, so I’ll leave it be.

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No room for reading

I was talking to some English PhD students today, and when the conversation turned to economics they were dismayed to learn that no one in “top” economics departments ever read Marx, much less understood any of his theories. Then I was caught off-guard when I was asked, “so what thinkers do most students in economics programs read?” The student just assumed that we must read someone. But as far as I can tell, and the answer I gave, was “none.” The training of economists in the “top” programs does not entail any reading of books.

This should not be news to anyone familiar with the current state of mainstream economics, which has become a branch of mathematics. But the English PhD students’ surprised reactions to that reality reminded me of how incredibly bizarre this current situation is. Neoclassical economists are trying to completely divorce economic theory from all ethics, philosophy, literary theory, history,  social theory, political theory, etc. But of course that is impossible, and even economists are using certainly philosophical and ethical assumptions, and their theories are historically and socially contingent. For example, we do use some form of utilitarianism, although anyone who actually bothers to read any Jeremy Bentham knows that he would be appalled at the distortion of the ideas attributed to him today.

What is scary to me is that these students of economics, who are trained not to read about anything but mathematics, are the ones who go in to government, business, policy research, and have the authority to shape policies and influence debates. No wonder our economy is in such a mess. I think requiring students of economics to read some books during their training would go a long way. Certainly, they used to. But now, the pressure to take more courses in mathematics, modeling, and statistics has relegated reading to an optional hobby for those students in graduate economics programs and finally earned the discipline the title of “dismal science.”

Update: See the thoughtful response by Maxine Udall.

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When economists talk about inequality and the current economic crisis, things tend to get weird. Discussions of possible mechanisms don’t seem to go anywhere. Empirics generally rely on time-series correlations of aggregate figures. The overriding sentiment is, “but how?”

We’ve talked a lot on this blog about the relationship between inequality and the crisis. The right answer, I think, is that the conditions that produce inequality and are reproduced with its help had a major role in the crisis. All of this, though, requires two things- first, abandoning the characterization of this crisis as a financial one; and second, a discussion of class, at which most mainstream economists’ eyes glaze over. Inequality in and of itself did not cause the crisis. However, inequality is endemic to our version of capitalism, which I think did.

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Not just rotten eggs

Robert Reich thinks the recent recall of hundreds of millions of salmonella infected eggs is just the result of some “rotten apples” in the industry.  It’s the same argument we heard after the Massey Energy mine explosion, the BP oil spill, and the Wall Street banks bringing on the financial crisis. Every week, more stories emerge of cases where companies are not looking out for their workers, customers, or their surrounding communities.

As long as thinking remains contained within this narrow  “rotten apple” framework, the systemic problem will never be addressed. Hyman Minsky looked at the financial system through a different lens, and realized that as the markets became more complex, a financial crisis became inevitable. His theory proved remarkably accurate in 2007 (although it still has not receive much attention within the economics profession). If we can also overcome the narrowing “rotten apple” thinking for non-financial markets, we might actually be able to build an economy that works for consumers, workers, and the environment.

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An Op-Ed yesterday by Stephen Budiansky in the NYT argues that the local food movement is not necessarily as green as it seems:

Studies have shown that whether it’s grown in California or Maine, or whether it’s organic or conventional, about 5,000 calories of energy go into one pound of lettuce…

It takes about a tablespoon of diesel fuel to move one pound of freight 3,000 miles by rail; that works out to about 100 calories of energy. If it goes by truck, it’s about 300 calories, still a negligible amount in the overall picture. (For those checking the calculations at home, these are “large calories,” or kilocalories, the units used for food value.) Overall, transportation accounts for about 14 percent of the total energy consumed by the American food system…

The real energy hog, it turns out, is not industrial agriculture at all, but you and me. Home preparation and storage account for 32 percent of all energy use in our food system, the largest component by far…

Agriculture, on the other hand, accounts for just 2 percent of our nation’s energy usage; that energy is mainly devoted to running farm machinery and manufacture fertilizer…

Don’t forget the astonishing fact that the total land area of American farms remains almost unchanged from a century ago, at a little under a billion acres, even though those farms now feed three times as many Americans and export more than 10 times as much as they did in 1910.

The best way to make the most of these truly precious resources of land, favorable climates and human labor is to grow lettuce, oranges, wheat, peppers, bananas, whatever, in the places where they grow best and with the most efficient technologies — and then pay the relatively tiny energy cost to get them to market, as we do with every other commodity in the economy.

Budiansky argues that there is nothing good per se about locally grown food. I really don’t know where I stand on this. I’m also unsure whether the industrial farming yields cannot be matched by best-practice organic techniques. It is certain that fertilizer and pesticides have a range of environmental costs. Either way, I think Budiansky has a point. The broader abstraction from this story is that consumers are easily fooled by green buzzwords. Redefining values on positive, reality-based terms is certainly the way forward. Anna Lappe provides some in Grist.

When we talk about our ecological food values, we’re focusing on the importance of interconnections and of the complexity of a truly sustainable food system. As agroecological farmers like to remind us, sustainable food is not just defined by the absence of chemicals — it’s about the creation of a healthy ecosystem, especially healthy, carbon-rich soils.

As for the locally-grown movement,

The answer, Kim explained, has to do with values — community values. “Our producers see themselves as responsible for the health and well-being of the consumers. And the consumers, they know the farmers and see very clearly how they’re responsible for their well-being,” he said.

I think there’s real value in people being closer to what they eat for this reason. Rather than being alienated from food that we buy in a grocery store, we can have a relationship with something that is grown in our backyard or a community garden down the street. Focusing on misleading energy-use statistics, as Budiansky rightly points out, is not the way forward. Neither, though, is dimissing the locavore movement out of hand. There are very real and meaningful values behind these shifts in consumer preferences. It’s best that they be harnessed for good and not co-opted by Monsanto and Wal-Mart.

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A friend emails our old econ listserv:

I recently found out that I am going to be teaching a high school economics course this coming year. It is only a one semester course (we meet everday for approx. 45 min) and I am suppose to follow the Texas State Standards. In Texas, the course is officially called “Economics with an Emphasis on the Free Enterprise System and Its Benefits” (Yep, that is really the title…)
My hope, however, is to provide a more well-rounded view of Economics. Yet as I sit here and plan for the year, I am have trouble determining what that would look like exactly and what resources would be appropriate for high school students. (Not sure if they are ready for Marx’s Capital just yet).

Some helpful suggestions have arisen:

THE most important lesson you can teach students is that any economic theory (whether mainstream or non-mainstream) represents a different story about the economy – what it is, how it works, etc.  Neoclassical economics has its own story, as does Marxian economics (and post-Keynesian economics…

I used a lot of cartoons and videos (esp. from The Onion) to broach controversial topics (globalization, outsourcing, structural adjustment, development, etc.)…

Here’s where my friend needs some help (he’s already planning on using The Economic Conversation as a resource):

 The one thing I could really use help on is finding articles, blogs, political cartoons or excerpts from classic texts by the major authors throughout the history of economics.

The lesson plan, so far:

Anyways, the rough plan right now as I try to meet the state standards by teaching the neoclassical curriculum and by incorporating some alternative approaches.
Unit 1 – Intro to Economics: This is where I hope to make the case for why students should be interested in Economics. The plan right now is to just hit the ground running and present the “Free Enterprise System” as one of many stories that can be told about the economy. We will analyze and critique basic assumptions, economic goals of a society, etc.
Unit 2 – Overview of Micro (Supply and Demand and all that good stuff)
Unit 3 – Overview of Macro
Unit 4 – Application of Economics to the Real World and Alternatives to Capitalism: After developing a more in-depth understanding of Capitalism, we will use this last unit to critique the assumptions of Capitalism and to again consider potential alternatives, and imbed these considerations in a real-world context

Can we crowd-source a HS Econ syllabus? I’d like to find out! Any helpful suggestions in the comments/reposting of this would be appreciated.

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New data from the department of education shows student loans at for-profit colleges are being repaid at lower than the expected rates. NPR asks,

Is the sequel to the subprime mortgage crisis a subprime education crisis?

I think this is a very fair parallel to draw, and something that we do need to keep an eye on to avoid another crisis. Although the crisis of 2007 was triggered by sub-prime mortgages, there is no reason another type of debt could not fuel another destabilization of the financial markets. It could be “toxic” consumer/credit card loans, automobile loans, or student loans that are packaged and repackaged like subprime mortgages were in the run-up to the 2oo7 collapse. Especially after the failure of the Financial Regulation bill to enact much in the way of meaningful reform, it could be only a matter of time before we have more problems. The best hope seems to be for regulation coming from the consumer protection agency, but we have yet to see exactly what that will look like.

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