Greg: Another Try

Jack,

I'm going to give this another try.  I think you're right that I didn't address the points you were making as directly as I could have.  In my defense, it was very late and my brain was throwing fits that I was trying to make it write to you that evening.  Nevertheless, I do think much of what I had to say is relevant, if perhaps tangential.  For example, the statistics that I shared with you about how only 7% of those on welfare have stayed there chronically speaks to how "efficient" and "effective" welfare actually is -- presumably it is doing what it is supposed to do (i.e. provide people with a temporary safety net until they can get back on their feet).  It also presents evidence against your claim, "When poor people come to depend on government support, they sometimes set up multi-generational behavior patterns and forget what it might be to be a productive, self-supporting person."  If my professor's data is correct, that is a far smaller problem than you make it out to be.  But, you say, that is not the heart of your argument.  Fair enough.  Let's address your argument.

The core of what you are saying seems to be:  welfare is inefficient.  It would be more efficient for the poor to be cared for by the private sector.  To quote you again, you say, "I think history shows that the private means would address poverty more efficiently and effectively. (and permanently!)"  Now that's a fascinating statement to me.  If that statement were true, then why do we in America have such an obscene level of poverty in our nation?  This is the most unregulated and least taxed free market in the developed world. I've included a cart below that illustrates how low our taxes really are in the U.S. when compared to the GDP.

Corporate tax rates are also comparatively low in the U.S. (especially once you consider all the loopholes that are available.  See examples here:  <http://money.usnews.com/money/retirement/slideshows/top-10-corporate-tax-breaks>).  And yet in this nation that so values the unregulated market, what do we find?  Massive unemployment, severe poverty, homelessness, sick children left without insurance, and the like.  One would also expect, according to libertarian theory (and I believe what you are arguing for), that an unregulated economy like ours would witness wealthy philanthropists, profitable corporations, and the private sector freely utilizing their funds to eliminate poverty, but that is very far from the reality on the ground.  (I do not mean to dismiss the incredible generosity of some wealthy philanthropists.  My point is that what is given does not meet the level of need.)

And this is a nice segue into another of your points.  You mention how the work of my former church in the inner city illustrates the effectiveness of voluntary poverty alleviation efforts, even without lots of funding.  Well, you're certainly right about that -- we had almost no funding!  Know why?  Because the wealthier Christian businesswomen and men that I pleaded with to help save our little preschool -- the one that we had to close -- simply couldn't allocate the resources for it.  Their cash was tied up in capital used to grow their businesses.  Because, as you know, to compete in today's marketplace you gotta keep spending money to make money.  (I've never been quite sure about this: when does a business have enough?  When do corporations get to a place where they are content with their current level of profit?)

Were we effective in what we did with little to no money?  Yes, we were.  We were extraordinarily efficient with the money that we had -- and I know that you love efficiency.  However, we simply lacked the resources to make a large-scale difference.  We couldn't provide housing, clothes, jobs, food, health care, legal advice, psychological services, low-interest loans, utility assistance, transportation, education… we were, after all, a church of 70 people.  The only way to provide those vital services would be to tap into a massive source of income.  

Let me illustrate with one story from my time as pastor.  And this is just one story among hundreds.  One Monday morning in food pantry, a middle aged woman came to me to ask if we provided financial assistance with paying for medication.  I told her sadly that we could not afford to do that.  I told her that our little church channelled its limited funds into the food pantry that had brought her there that morning.  She was understanding and did not make me feel guilty in the least, but she did start to cry.  I asked her what was going on and she told me a bit of her story.  She had been a working woman up until the recession that hit in the fall of 2008 (thanks to the greed of unregulated banks -- but that's for another email, isn't it?).  When she lost her job, she also lost her health insurance (because, you see, in this country we have this funny system where your health insurance is tied to your job.  Weird, isn't it?).  And yet she had recently been diagnosed with a terminal illness.  My memory is foggy here and I cannot recall exactly what she had, but I think it was cancer.  The illness was treatable, but she could not afford the treatments and medication.  She did not quality for medicaid because her income had been too high on the year (since she had until recently had a decent job).  And so she was stuck.  Here was a medicine that she could take that would literally save her life, but she didn't have the money to buy it.  She had spent weeks on end going from one charitable organization to another -- even to some based in hospitals -- begging for the funds to purchase the treatment she needed, but to no avail.  When I asked her, out of curiosity, how much money we were talking about, she gave me a figure that was larger than our annual church budget -- and that amount was what she needed monthly!  What could I do?  I prayed for her and told her I would continue to pray that she would find the help she needed.  But after she left I became angry.  Here I live in the richest nation that has ever existed in the history of the world and yet we had in our midst a woman in her late forties who was dying from a treatable illness for lack of funds.  No one was there for her, but my little church.  And our little church simply could not meet that need.  It was far too big, and we were far too small.  If that woman is to live, there has to be funding from somewhere.  And that somewhere wasn't coming from the private sector (or from the public sector, for that matter, but that's because we don't have universal healthcare here).  I share that story simply to illustrate the constant struggle that workers in the inner city face:  vast human need and a paucity of resources to meet that need.  

Just imagine what we could do if we did have resources!  Imagine what a First Church could do if, instead of having an annual budget of $65,000, it had the annual budget of, say, a Greenville Free Methodist Church (I often dreamed of this).  The sad thing is, there isn't that much interest out there in finding out what would happen (and, believe me, it isn't for lack of trying to drum up interest).  So if even Christians -- Christians! -- are unwilling to make radical financial sacrifices to alleviate the poverty that exists right in their own backyard (and within their own little denomination), then how can we expect that the general populace will voluntarily pony up the cash to eliminate poverty in the world as we know it?  No, my doctrine of original sin teaches me that we as humans are not prone to generosity, but to selfishness.  And while some wait around for people to open their wallets voluntarily and out of free will, others starve.  The free market has simply not met the demand.

And so I judge a progressive tax which coerces money from the hands of those who benefit greatly from this system to be worth it if it feeds those starving people and pays for their life-saving medication.  Call it the lesser of two evils.  Prying taxes away from people is less evil than watching people starve.  Of course, I wish we didn't live in a world where that was necessary.  I wish we lived in a world where the rich really did live by the principle "live simply so that others may simply live," but we don't.  Heck, I wish even Free Methodists lived by Wesley's dictum to "gain all you can, save all you can, and give all you can," but we don't.  Today Christians (to say nothing of non-believers) build for themselves huge mansions with swimming pools and three-car garages while others on earth sleep on the streets.  It shouldn't be this way, but it is.

I'm being too verbose.  So let me sum up for the sake of clarity lest you conclude that I've not addressed your points.

Your claim:  The private sector is more efficient than the public at eliminating poverty.  Or, in your words, "People operating voluntarily, alone or in company with others, Christians as well as others, have demonstrated both great generosity and efficiency in helping the poor."

My claim:  Yes, but those of us in the private sector who commit our lives to doing just that do not have the resources necessary to carry out the task.  If we wait for "voluntary" giving, it doesn't come -- at least not in the amount needed to meet the demand.  Therefore, even if the government is less efficient, at least the job gets done, or partly done.  It's better as a poor person to have some inefficient help than to have no help.

Your claim:  The free market, by creating incentives to work and by rewarding innovation, will lift people out of poverty.

My claim:  But that isn't happening in America's inner cities.  Sure there are the occasional rags-to-riches stories but, it simply isn't happening on a grand scale.  In this nation -- the freest market in the developed world -- we still see masses of the poor who try to climb out of poverty and cannot.  There needs to be a modified free market, a "free market plus" so to speak, since the free market alone isn't doing the job.

I realize I have not addressed everything, but I hope I have at least addressed some of what you write.  I appreciate your patience and willingness to carry on this dialog because, as you can see, I care about these things a lot.

Blessings,

Greg

Jack: Try Again

Hi Greg--

You are correct that some people, not all of them conservatives, have at times stereotyped the poor based on the derelict behavior of a few.  However, we could point out that some relief programs, by their very structure, do encourage that kind of dereliction.  But that's not where my arguments have centered.  If you lump me in with these anonymous "conservatives" who do this stereotyping, doesn't that open you also up to the charge of stereotyping us conservatives based on the careless comments of a few?

Could you indulge me by re-reading my last note to you, attached below--where I listed your questions (and got your approval of the list) and then dealt with each one? I think that I gave a good explanation about why "government programs aimed at poverty alleviation actually make matters worse."  I didn't dwell on the reduction of incentives--though it's a reality--nor did I suggest that the poor are just chiselers, nursing on the public breast.  I emphasized--go read it and see--that the problem is that when the government funds these programs, it diverts--by force--resources that otherwise could be used to address poverty by private means.  And I think history shows that the private means would address poverty more efficiently and effectively. (and permanently!)

You actually supported that latter point (without acknowledging it) in your description of the fine things you've done to help set up programs to help the poor.  With (I presume) very limited resources, you managed to buy clothes for a job interviewee; advocate for a library branch and public transit systems (neither of which is a government anti-poverty program); spread the word about job openings; help maintain a food pantry; help set up (or was it your co-worker?) a program to educate poor people on how to dress and act in applying for and getting a job; and distribute a list of employers willing to hire felons.  

Greg, consider how modest was the dollar investment in your efforts, even including a portion of whatever salary you were drawing.  Then imagine how little a government agency would accomplish, pursuing those same goals, if limited to such a small amount of money to spend.  The government agency would require a far larger budget; and I suspect would do a much poorer job of establishing one-on-one relationships with the people being helped.  By having you do it, fewer resources were diverted from other good things.  It wasn't free; but it was very efficient.  When government does things, it is also not free; but it is less efficient.  Now imagine a world in which the government ceased to tax or borrow resources out of the economy for poverty programs, so that taxpayers had more left over to fund the efforts of people like you.  

Of course, then people could pick and choose which charitable efforts to fund; and one that starts looking wasteful gets cut off almost immediately in favor of others that the donors are more satisfied with.  None of this can happen easily with a government program.  They turn into embedded fiefdoms, using their shortfalls of performance to justify more funding--the very opposite of the fate of private charities (and businesses) when they perform poorly.

Again, I'd appreciate your reviewing what I wrote last time; I think some of your comments really may have been directed toward another correspondent.  I offered numerous points, with some thought, that I thought you would appreciate.  And I'll look forward to your differentiating between taxation and theft. (I'm not saying you can't do it; I'm just interested in how you will do it.)

Jack

Greg: "The Poor are Just Lazy" and Other Devilish Lies

“So wickedly, devilishly false is that common objection, ‘They are poor, only because they are idle’.” - John Wesley, 1753

Jack,

There is so much to address here.  I feel like we are juggling a dozen topics all at once. Part of the reason I take so long in replying is because it always seems like such a daunting task to write on this wide set of issues.  So, for the sake of clarity and to keep this exercise more enjoyable for myself, I will respond to only one or two of your points right now.  Perhaps we can cycle back around to some of the other ones at a later time.

In this post, I want to state why I disagree with your contention that government programs aimed at poverty alleviation actually make matters worse.  First of all, conservatives just love to point to the worst abuses of the welfare system, medicare, etc. in order to justify their opposition to providing a just and robust safety net for those in need.  To be sure, you can find examples of those who abuse the system -- plenty of them.  But is this as widespread as you and many others claim?  I do not believe that it is.  Not long ago one of my research professors investigated the welfare system and found that, at the time of his study, of those currently on welfare, 70% had been on it for less than two years.  Another 20% or so had been on it less than five years.  And only 7% of those on welfare could be considered "chronic abusers" of the system.  To hear some conservatives talk, you'd think the inverse of these figures would be true.

The fact is that the majority of those Americans who are caught in poverty genuinely desire to work and would prefer to have a job as opposed to receiving a handout.  My own experience as a pastor and community organizer in the inner city for four years confirmed this fact for me.  Far from the picture that many paint of the poor as lazy couch potatoes who would prefer to draw a free paycheck instead of doing an honest day's work (and there ARE those people, but they are a very small minority -- 7% is about right according to my own encounters with hundreds of people), most are eager to work and are even willing to do menial tasks or hard labor -- tasks that I would personally hate to do -- for a minimum wage paycheck if it were available to them.  In fact, whenever I announced a job opening at our weekly food pantry, I would have people lining up to ask me about how they could apply.  One time one of my co-workers announced a free class would be offered to help people acquire basic employment skills such as learning how to dress for an interview, what businesses look for and expect from their employees, etc. and we literally had to keep going back to make more copies of the flyer we had created because the demand was so great.  And when I managed to acquire a database of business in the area that hired felons, I ran out of copies of the list on a weekly basis.  No matter what the talking heads may say about the poor, no one will convince me that they are a mass of leeches on society unwilling to lift a finger to help themselves.  Instead, a whole host of factors contribute to chronic unemployment in the inner city.  Allow me to offer just a few scenarios/factors from real life:

- Teens (and adults) who want to get a job but literally have nothing presentable to wear to an interview.  I knew a teenage girl whose mother would sell her daughter's clothes for drugs.  The girl kept wanting to apply for a job, but every time we'd buy her a set of clothes for the interview, they would be gone by the next morning.

- Being geographically located in an economic desert in which jobs are simply unavailable.  And being unable to find transportation every day to the suburbs or downtown where businesses are actually hiring.  Public transit is the best option for most of in this situation, but even coming up with bus fare on a daily basis can be very difficult for the unemployed.  And it doesn't help when local politicians keep cutting funding for public transit.

- Inadequate access to computers and the internet for the purposes of finding job listings and submitting applications.  Some have called this the "technology gap."  Middle and upper class families take for granted the tools they have in their own homes for research and communication.  Job hunting is immensely more difficult when you have no internet, no computer, no phone, and sometimes no electricity at home.  (This is one reason I fought so hard to keep our local public library branch open in our neighborhood.  Our Republican mayor wanted to shut it down -- along with five other branches in inner city neighborhoods -- but together we raised such a fuss that he had to back down.  Interesting that he didn't propose shutting any libraries down in the wealthy suburbs.  If you're interested in this, here's a link for you: NUVO article )

- Lack of basic social skills make employers less likely to hire people who speak with improper grammar, who are unfamiliar with protocols of etiquette that middle class folks learn by osmosis, who struggle with issues of literacy, etc.  Not to mention racial discrimination which is still a very serious issue even in 2013.

- If the only job you qualify for is manual or physical labor (and it usually is if you're a high school drop-out), then what do you do if you deal with chronic pain?  Or if you've been restricted from lifting anything over 10 lbs by your doctor?  This automatically eliminates you from a huge percentage of the jobs available in your area.

- Young adult males who can make ten to twenty times as much money selling drugs on the corner than competing for that one position that just opened up at the Dollar General down the street.  Capitalists are right about this:  human beings are rational and will do what they need to do to survive.

- Felons who are immediately disqualified from 95% of employment opportunities before the interview even begins.

- The woman whose husband has abandoned her with three children that she alone must care for and who somehow must find a way to job hunt and hold down a full-time position that will actually be profitable after deducting the costs of childcare.

- Middle aged workers whose parents require constant medical care and attention and who cannot afford the expense of a nursing home or elderly living facility.

These are only a few examples of the obstacles that the poor face when seeking employment (and I'm sorry they are so roughly written -- I'm typing this all very quickly because otherwise it won't get done).  Of course, the government is not the answer to all of these problems.  No one is saying that.  But some of these issues can either be exacerbated or alleviated according to how as a society we choose to address them.  

I submit to you that the "invisible hand" does very little to rectify much of what I've listed above.  Guided purely by self-interest and the pursuit of profit, a business owner will simply not choose to locate her business where the threat of break-ins is constant, where the workforce is uneducated, where the base of consumers have little to no disposable income, where real estate prices are in free fall, where the broken down infrastructure makes "importing" and "exporting" supplies through the economic desert a hassle, and so on.  If businesses are to be located in the inner city in order to provide jobs for the urban poor, the business owner must be motivated by more than the bottom line.  They must see it as their mission.  (There are examples of this being done in our country -- often by Christians -- and I applaud those efforts.  But they are far too few.)  The invisible hand does not provide that sense of mission.

Meanwhile the government can actually address some of the issues in productive ways.  We can provide cheap (or free!) public transportation.  We can maintain a robust and well-funded system of public libraries in order to lessen the technology gap.  We can ensure that the poor have basic healthcare so that a freak accident like a broken arm doesn't cause a family to go bankrupt.  We can fund our schools and pay our teachers adequately so that every child in our nation can learn to read and excel academically.  We can provide funds for counselors, psychiatrists, and social workers who want to address the complexities of poverty on an individual level and bring healing to damaged minds.  We can fund summer lunch programs in the park so that children don't have to go hungry three months each year.  We can provide re-entry programs for rehabilitated felons seeking to enter the workforce.  We can provide programs like Jobs for Life that equip unskilled workers with basic tools to make themselves more employable.  I could go on and on and on.  But here's the thing:  doing these things costs money.  Money isn't the ultimate solution, but it is an important part of the equation.  And the question I am asking is this:  As the richest nation that has ever existed in the history of the world, can we find enough money to make sure that our poor are given ample opportunity to work themselves up and out of poverty?  Will we collective address on a system-wide level the systemic causes of poverty in our nation?  And when people do hit hard times due to loss of a job or major medical issues, will we provide a safety net to catch them when they fall and see them through until they can get back up on their feet?  I believe we can.  And as a Christian I believe that we have a moral obligation to see that it gets done.  

Next time I write, I want to address this frequent claim by libertarians and conservatives that taxes are theft.  But I think I should wrap up this post for now.  I'm enjoying this dialog so let's keep it up. My replies may be somewhat infrequent in coming months due to how busy my Ph D work is keeping me, but I will reply eventually.

Be Well,

Greg

Jack: Government's the Problem, Not the Solution

So here we go:

1.  "What's the better solution (to the problem of poverty)?"  also "I just hear them taking cheap shots at our nation's efforts (pitiful as they may be) to actually DO something about the issues people are facing."  which asks, Why not support these efforts, even if they are inefficient?

You've essentially conceded that government does almost anything less efficiently than private entrepreneurs in a free market.  But their intentions are good, even if relatively ineffectual, right?  However consider this:  What if, beyond being ineffectual, those government programs, in many or most cases, actually increase the difficulties faced by the poor?  If the programs not only fail, but make the problems worse, then we'd want to stop them even if we had nothing else in mind.  This is mostly in response to the second part of this question.  Good intentions don't guarantee good results.  

I'm referring partly to the destruction of incentives to learn how to produce.  When poor people come to depend on government support, they sometimes set up multi-generational behavior patterns and forget what it might be to be a productive, self-supporting person.  But also I'm referring to the waste of resources involved in most government relief programs.  Those resources had to be diverted (by force!) from uses that may have helped the poor more.  Such uses would include the creation of industries that would have employed these people in ways that rewarded their productivity and self-improvement.  And another use would be the donation of these resources to private relief agencies.  Finally, there is the unfair competition, faced by indigenous startup businesses, when our government shows up with free goods to distribute, stifling the fledgling businesses.

So back to the first part of the question:  What's the better solution to the problem of poverty?  A good general answer is to (1) teach people to produce things that other people want, so they have something to trade; and (2) establish Rule of Law and property rights, so that such entrepreneurs can keep what they produce, or what they trade it for; and also keep the property they create for productive purposes.  If these can be expropriated/taxed away/stolen, then they have no incentive to produce in the first place. People are very creative when they can keep what they make.

2.  "Can you point me to a conservative solution to poverty that provides an answer not only for individuals, but that also addresses larger systemic causes of poverty?"

Certainly, and at two levels.  First, humans tend to truck, barter, specialize, and serve each other's needs if they know they can keep what they make.  Because of this fact, the "conservative solution," which is freedom and property rights, tends "like an invisible hand" to guide and entice people into activities that relieve poverty.  Really, this is the only thing that has ever solved the problem.  But it does not necessarily make them aware that they are doing this.  They think they are helping themselves; but really they are helping each other.  (The two, of course, are not contradictory.) And this is large-scale, addressing what you called "systemic" poverty.  The Systemic poverty occurs where, try as they might, people cannot break out--because of crony capitalism, government brigandry, or the psychological imprisonment of a welfare system that keeps them just above subsistence without their doing anything.  (Consider what we've done to Native Americans--we couldn't have crippled them more if it had been our sole intention.)

But I know you want a conservative solution that involves actual intentions to help people, entirely aside from making a profit doing it, and focusing on people who currently are at the lowest level of productivity and can't yet bring much to the marketplace.  For that I could go back to many entrepreneurial efforts over the last several centuries in which business people intentionally located their businesses near poor people in order to hire them.  It was good for both sides, since the business owner got low priced labor and the new workers got the best pay they'd ever had.  They're both exploiting each other; but for some reason only the employer is accused of "exploitation."

In addition, let me refer you to povertycure.org, a newer organization founded by Christians for the purpose of conquering poverty in developing nations.  They engage in business education as well as small-scale equipping and funding, like the "micro-lending" agencies started by mission organizations and other not-for-profits.  I've seen them at work in the Philippines, and many people are prospering and flourishing.

3.  What do we/I/you mean by "we" or by "society"?

I'm fine with the idea that individuals can and should do things together.  They may identify as a community, or a village, or a church, or even a society.  But none of these necessarily imply the use of force, which Christ never authorized.  I'm fighting back against this common assumption that government is the best, or even the only way a group of people can combine their efforts to accomplish something.  In a free country (which is what a free market amounts to) people can combine and coalesce whenever it helps them do what they want to do.  One way they do it, of course, is simply to hire each other to allow specialization in tasks--this is why we have companies.  If the market is free, then these companies survive and thrive only so long as they are an optimal way to produce a product or service efficiently.  If they become slack and wasteful, competition overtakes them and they decompose.  Then their participants are free to combine in new ways.

4.  Whose job is it to alleviate povery--government or the church?

Well, it's the job of people.  When Christians get together they call themselves the church, which neither increases nor decreases their moral obligation to care for the poor.  The Church may find ways to do it that are more efficient than the aggregate efforts of individuals--such as the micro-lending mission organizations I mentioned.  As far as Coercion--which is what government is--this is none of the business, at least, of our national government, since as far as I know there's nothing in the US Constitution that charges them with doing it.  Some of the States may have such duties built into their constitutions, which just means they'll inevitably have to cope with the burden of an interfering, wasteful government entity getting in the way of the poor and of those who might otherwise help them.

5.  Can "the free market alone address, or has it ever addressed, many of the the social and economic ills that our nation currently faces?"  Also, if "we" don't collectively take action, will a problem remain unaddressed that will eventually destroy not only the poor, but everyone."  [slight paraphrase of your words]

I hope I addressed the second part under #2 above.  But I would argue that in our nation's history, the "free market alone" is the ONLY thing that has addressed economic ills, starting in earlier centuries when those ills were far worse than they are today.  How else can we account for the reduction in suffering, the increase in opportunities, and the huge increase in life expectancy that have taken place here?

As far as social ills, the free market has, where allowed to function, addressed many of them.  If you look at the most current ones, you can trace them directly to government's efforts to use force to reshape society.  A partial list:  exploding illegitimacy, welfare dependency, urban crime, expanding prison populations, STDs, the near-sacred status of the crime of abortion, family dissolution.  So much of this has grown over the past 40 years, following the "War on Poverty" by the federal government.  I wonder sometimes, who has hurt our society more--LBJ or Hugh Hefner?

6.  What do I think about FDR's New Deal?  Don't "most historians" agree that it did help?

At the time of the Depression, FDR got credit for trying to "do something."  And many historians have continued to credit him with helping is to survive, and perhaps overcome, that event.  However, economists see it otherwise.  Much of the Depression was the result of government interference, making a normal recession into a deepening, recurring condition that really didn't heal until the late 1940s.  The Federal Reserve kept doing things with our money supply that pushed us backward every time we seemed to be making progress.  And Congress imposed tariffs and taxes that crippled whole industries.

And FDR pushed through the Minimum Wage, to please his Union supporters.  Unemployment immediately jumped among lower-skilled people, as it has done after every increase our Union-pleasing politicians have foisted on us.  Today the rate among Black teens who want jobs is over 40%.  Only a few brilliant companies, such as McDonald's and Wal-mart have devised systems that can use those with low skills to achieve a productivity level that is greater than the minimum wage.  This is why Unions provide all the energy to attack these companies.

7. What about God's mandate to care for the poor?

I think I addressed this above, and also in earlier letters.  I acknowledge this mandate, and I do lend my efforts and resources to obey it.  But I don't concede that we need to have a fumbling, wasteful, coercive government coercing people to contribute.  This always leads to filthy politics, as those wanting to protect their resources maneuver to avoid being taxed, while those who will benefit maneuver to get the largest share possible.

People operating voluntarily, alone or in company with others, Christians as well as others, have demonstrated both great generosity and efficiency in helping the poor.  The more disposable income we earn--and the more our government "allows" us to keep--the more we give.  To fail to see this is to overlook most of the successful charitable movements of the past century or two.

But in addition, people simply trying to trade with each other, focusing their generosity only on those closest to them, have done even more to help the poor to overcome their plight.  If you want to ask about Africa, Asia, Latin America, look at all their governments have done to prevent their peaceably producing and trading and accumulating.  As RR said, government's the problem, not the solution.  I suppose we could also point out that of all the murders perpetrated in the last century, the great majority of the victims were killed by their own governments!

Jack

Greg: Ain't Somethin' Better than Nothin'?

  
Hi Jack,

You're right that I am deliberately seeking out your opinion.  I have always respected not only your intellect, but also your Christian faith. And since, as Christians, we have come to such radically different conclusions on matters of economics and politics, I'm eager to learn why.  Hopefully, our exchanges will also be helpful for those who read the blog.

You have brought up an argument that my father brought up in some of our discussions recently and it is a very common one: private industry does a more efficient job than government at almost any economic task.  It is better at making cars, it is better at meeting consumer demands, it is better at customer service, it is better at determining the worth of wages, and so on.  To some extent, I agree with you.  In fact, I find it very hard to argue that government is efficient.  And I have no interest in defending the waste, corruption, and general unprofessionalism of many government agencies.  As one who depended upon Medicaid for my healthcare during my years as a pastor, I can assure you that as I waited in three-hour lines merely to make an appointment, I was muttering angry words about government inefficiency.  Nevertheless, as unhappy as I was with the unprofessionalism and inefficiency, I was thankful to have healthcare.  I certainly couldn't afford to buy it on my own with the salary I was pulling in. Which leads me to my question for you this time around…

It's very easy to beat up on various government programs for their many flaws.  Social security is insolvent.  Medicare is easily abused and wasteful.  Welfare promotes generations of dependency.  And on and on the stream of criticism goes, providing endless hours of material for the pundits at Fox News.  But what I want to know (and, more importantly, what those trapped in poverty want to know) is what's the better solution?  It is very easy to deconstruct, but very difficult to construct.  Any kid playing with blocks will tell you that.  The swift kick of a younger sibling can topple hours of work.  And perhaps I'm just missing it, but I don't hear a lot of conservatives out there proposing answers to the problems of systemic poverty.  I just hear them taking cheap shots at our nation's efforts (pitiful as they may be) to actually DO something about the issues people are facing.  Can you point me to a conservative solution to poverty that provides an answer not only for individuals, but that also addresses larger systemic causes of poverty?  

Perhaps what we are butting up against here is our view of society.  You rightly brought this up a few weeks ago when you asked what I meant by "we."  To bring a bit of theology into the conversation, as I read the Scriptures I see a heavy emphasis placed on the value of the community.  In fact, according to some Old Testament prophets, God judges the morality of any given nation by how it treats its poor.  There is a strong value attached to the common good with particular concern for immigrants, widows, the poor, and other marginalized groups.  So when I hear Margaret Thatcher claim that there is no such thing as society, I must stand up and object.  We are more than a mass of isolated individuals.  Scripture teaches us that we are connected to one another and "when one part of the body suffers, the rest of the body suffers with it."  

I often hear the argument made from many conservatives that alleviation of poverty is not the job of the government, but of the church.  If that is your belief, please indicate so in your next email because that idea alone is worth its own letter.  But I won't speculate as to your own conclusions about how to alleviate poverty.

So to sum up, you seem to have a great deal of confidence in the ability of the free market to answer its own problems.  And to a large extent I agree with you.  If people demand shoes, the free market generates shoes to meet the demand.  And I do think that history has shown that capitalism is excellent a generating wealth.  But we part ways here: I do not think that the free market alone ever has or ever will address many of the social and economic ills that our nation currently faces.  We must instead collectively take action against a problem that, if left unaddressed, will eventually destroy not only the poor, but everyone. Systemic problems require systemic solutions.

By the way, what is your opinion of FDR's New Deal?  It seems to me that it did not solve the problem of the Great Depression entirely, but most historians agree that it did help people more than hurt them.  And that's all I'm arguing for here:  something that helps those who suffer most.

- Greg

Jack: The Self-Correcting Market

Hi Greg--

I must compliment you on the quality of your challenges.  As far as I know, you just took the one humble econ course--which I got sick and couldn't even complete for you--and yet you're asking really good questions.  They mostly seem to come from one school of thought; but here you are seeking an alternate viewpoint to see if my iron can sharpen yours.

You ask:  "Is it possible for free markets to truly remain free without at least a minimal amount of regulation?"  Your word "minimal" seems to be where we would have to explore; how much is that minimum?  I'm arguing for something like a system of laws applying to all, and forbidding anyone from interfering with another's life, liberty, or property.  This would apply also to government, except where necessary to protect these rights.  So the government can GOVERN [Think of a gas engine's governor, preventing it from generating more power than it should] but REGULATING is another story.  

A government has no special wisdom or insight about the efficient operation of a productive business.  People in government do not have the same interest or intimate knowledge of a business's function; so it makes no sense that government can improve what a business does in serving its customers or owners.  But that's not the heart of your question.

You want to use government to restrain a business from using its very efficiency to exploit its customers and workers, to their disadvantage, due to its bargaining power and freedom to do as it chooses.  To do that, you want to limit or dictate the terms of business contracts, including labor, and reduce the bargaining power of firms that acquire too much of it.  Generally, I don't see the need for that, and in fact find it, in most cases, counter-productive or even destructive.

Here's a historical example:  the trust-busting you referred to.  In the latter 19th century there were indeed some powerful monopolies.  But for the most part they did not get that way by stealing or defrauding.  They did it by competing very efficiently, slashing the costs of energy, transport, and communication.  In the cases where they achieved impenetrable monopoly, however, they did it by using government influence.  Government, posing as "regulators," used force to violate the rights of new competitors by keeping them out--often with limited licensing rules or requirements for high-priced procedures that kept them out.  This did of course allow the monopolies to keep their prices and profits higher, for a longer time, before competitors inevitably broke through.  The railroads tried to keep the trucking industry out, but ultimately couldn't.  More recently phone companies tried also to use government to keep competition at bay, but that system of competition-killing also broke down.  Market pressure erodes monopolies, but more slowly if the government helps defend them.

But note:  When the Sherman Act was passed in 1895, the motivation was not to serve consumers.  They had already been served by these big-efficient companies as they cut prices to take over markets.  No, the support came from smaller businesses that were unable to produce as efficiently; so they pressured their representatives to break up the big companies and reduce their big-scale efficiency.  Better overall if the government could have remained out of it altogether, except as referee. But you can only get government to stay out if you have a carefully-written constitution.

Now, what would we do without OSHA, and the FDA, and others?  Can consumers find any protection, outside of government, from dangerously sloppy services?  Well, yes.  For example, when you moved:  How did you know that the vehicles you used were safe and clean?  When you stay in a motel, how do you know they gave you fresh sheets?  When you stop for some fast food, how do you know the kitchen was cleaned that day?  You can't expect government inspectors to hang out at all those businesses and supervise them.  No, instead you rely on their own self-interest.  They benefit from a good reputation--it adds to their profits!  Consumers are not ignorant; they learn and they talk to each other.  Also they seek out information.  Same with workers.  If a business cuts corners in ways that harm customers or workers, they'll have a harder time making contracts with them; and they'll get very publicly sued.  Henry Ford didn't get rich selling lemons, or by injuring his workers.

Other regulations you cite have in many cases resulted in harm to the very people they ostensibly were supposed to help.  For example, minimum wage laws prohibit work contracts that pay less than a certain amount.  This of course means that any worker whose productivity level falls below that can't have a job.  So unemployment increases among young, unskilled workers, especially among minorities.  These aren't the people who pushed for the laws, though; that came from labor unions who gain a partial monopoly in the labor market, eliminating competition from young, unskilled minorities.  Child labor laws:  parents in general don't want their kids to have to go to work; they'd rather have them in school or on a playground.  But in societies where child labor is common, those are not the true alternatives to child labor.  If you forbid child labor for a family that poor, the alternative is either prostitution or the most dangerous kind of unsanitary agriculture work.

I first ran across these discussions many years ago when I read Milton Friedman's "Capitalism and Freedom," and was astounded.  After that I had to reconsider my very-"liberal" position, and eventually I had the privilege of formally studying economics.

Surprisingly enough, I even came across a strong argument, a few years back, against the prohibition of payday-loan companies.  Since these loans are voluntary, you have to look at the alternatives that await the customers if the payday loan companies are closed or hamstrung.  They get their power shut off, and have to pay big penalties to get hooked up again.  This situation is the typical motivation for getting these loans--much more common than covering drug and gambling losses..

I'm out of time now, so let me send this to you.  If I've omitted some of your favorite points, bring them up and I'll try to address them on the next go-round.

Best wishes,

Jack

Greg: The Sin of Usury, or Why Credit Card Companies Are Evil

Hi again Jack,

We are finally fully moved in here in Evanston.  Courtney put the last box away last night.  So I'm happy to have the time and energy renew our conversation.

I found it very insightful for you to point out that one of my examples of a dysfunctional society is actually due to the fact that "a free market has been eliminated."  You state this about my argument concerning the collapsed building in Bangladesh and other similar tragedies that befall poor laborers who work in nations with no or very minimal labor laws.  So perhaps I can ask a similar follow-up question:  Is it possible for free markets to truly remain free without at least a minimal amount of regulation?  Labor laws protect the rights of workers to be able to use their mental and physical abilities to attain the full worth of what they create.  Trust-busting and anti-monolopy laws improve competition driving down prices for the consumer and reducing the practice of price gouging.  OSHA makes sure that the hamburger I buy at Joe's Sandwich Shop doesn't kill me.  Financial regulators ensure that large banks don't cook the books so that our nation is led into a terrible recession (2008).  I could cite many others laws and regulations such as the minimum wage, child labor laws, worker safety protections, etc.  Do you see where I'm going?  If you agree that the conditions I have describes are actually examples of free markets malfunctioning, then do you also accept proposals for regulations of the free market to ensure its viability?  If so, you will sound very close to my own position (and the position of more left-leaning economists like Paul Kruegman and his "Conscience of a Liberal," among others).  You have suggested the necessity of a "constitution" to safeguard against the natural tendency of the strong to oppress the weak, but I suggest that we must go beyond a mere constitution and be proactive about addressing social problems as they arise.  Or perhaps I'm misunderstanding the meaning of how you are using "constitution."

I have been thinking recently about a business practice ubiquitous in the inner city which I always found particularly angering -- the practices of loan sharks.  On almost every street corner you find places that will give you cash today for a "small fee" and provided that you sign over your paycheck to them later.  (I'm referring to businesses like "Check N to Cash," for example).  Now the medieval Christians as well as the long Judeo-Christian tradition dating back to Moses has always condemned this practice and termed it the sin of "usury."  Interestingly, the church has largely fallen silent on the issue (in fact, in the 32 years of my life, I have never once heard a sermon on the subject of usury).  I interpret this as one way in which the church has accommodated to (and capitulated to) the American capitalist ethos.  In short, do you find it morally reprehensible for businesses to take advantage of the poor who desperately need cash right away for basic necessities like food, healthcare, water, shelter, and clothing?  I do.  Do you agree with the vast majority of the Christian and Jewish tradition (and I believe Muslim as well) that usury is a sin?  I would suggest that the Christian Church must actively oppose such systematic abuses of power since they keep the poor in poverty and, in fact, exacerbate their plight.  You could apply this to credit card companies and their 39% interest rates as well.  For this reason, I applaud the Obama administration, for example, for setting restrictions on credit card companies for the fees and interest rates that they are allowed to charge.  I once met a man (a janitor and maintenance worker at Greenville College, actually) who foolishly racked up thousands of dollars of debt on his credit cards shortly after graduating from high school.  He told me that he was just about to pay off the last of his debt, but as a 35 year old man it had taken him over twelve years to do so.  I suppose the conservative might say that this man deserved to basically work as an indentured servant (let's call a spade a spade here) for over a decade since he made such rash decisions.  I, however, don't take that line.  I find fault in a credit card system and a society that allows such an injustice to take place legally.

To boil down this post (and I realize I'm only touching on a fraction of what we have been discussing), I'll state things this way:  You claim that there are three ways to get money (creating it, stealing it, or receiving it as a gift).  I believe that many businesses in our nation such as the loan sharks, pawn shops (some of which are attached to liquor stores so that you can go right in, sell your stuff, and come out with your whiskey all at once), and banks/credit card companies are actually STEALING rather than creating wealth.  What say you, good sir?  Ought Big Brother step in and meddle with the lassie-faire free market to prevent such theft?  I vote yes.

Yours,

Greg