Belloc: How Status Protects Labor

In his classic 1937 work The Crisis of Civilization, Hilaire Belloc convincing argues that the rejection of the Catholic Church at the time of the Protestant Revolt is directly responsible for the social and economic troubles of modernity. According to Belloc, the most pressing economic problem is that the vast majority of people are wage-earners to a small owner class who have a disproportionate control of the means of production. This situation Belloc calls 'Proletarianism.' While modern wage-earners have political rights, full economic freedom eludes them because they are too dependent upon those who pay their wages. Unlike the Communists who assert that private ownership of property is the fundamental evil, Belloc states the problem is not that capital is owned and utilized by so few, but that so many are proletarian wage-earners.

Agricultural Reform

I don't know how many of you are Distributists; I consider myself in the Distributist camp, although I can't say I fully agree with the whole Distributist program, not so much because I have positive disagreements as because what I have read on Distributism is somewhat scant.

Of course, not knowing what I am writing about has never stopped me from writing about it. Case in point: my new article up at The Distributist Review on five practical ways to reform agriculture in this country for the following three ends:

(1) Restoring agricultural production to its pride of place in the economy

(2) Weaning Americans off of cheap, foreign produce

(3) Enabling Americans to enter the agricultural vocation with greater ease

Basically, I just wrote on what I thought was common sense and found out it was Distributism. Anyhow, if you are a Distributist or are interested in things economical, check out my article here.

Legal Tender & Sound Money

Congressman Ron Paul (R-Texas), perhaps the only person in Washington I actually have a positive admiration for, has recently introduced a new monetary bill that those Catholics of the Distributist persuasion might find very interesting. On December 9th he proposed the Free Competition in Currency Act, which would repeal the legal tender laws on the books in the United States, allowing citizens of the United States to accept other mediums of exchange besides the United States dollar, thereby giving people the power to reject the dollar in favor of other currencies if the dollar proves to be too weak.

Paul put this bill before Congress once before, in December 2007, but has again reintroduced it as part of his on-going efforts to promote "sound money" in the United States (has anybody read his new book, End the Fed, by the way?). The bill has just be reintroduced; Sessions of Congress last two years, and at the end of each session all proposed bills and resolutions that haven't passed are cleared from the books, which means they have to be reintroduced again if a Rep wants to pursue them. You can read the full text of the bill here; it is only one page, which is a very nice change of pace compared to some other bills we've seen coming out of Washington lately.

Legal tender laws mean that a government compels its citizens by law to accept a certain currency as the medium of exchange in all transactions. In the United States, our legal tender is the United States dollar, which must be accepted as a valid currency for all debts public and private. If you owe somebody money, whether the gas station clerk or your mortgage company, they must accept payment in United States dollars (there are a few exceptions - see here).

We take this as a given in the United States today, but it was not always so, and the rise in "legal tender" laws corresponds directly to the degree that paper currency is accepted in place of precious metals. If we look back to the Middle Ages, currency was always in coin; and since the coin derived its value not from which kingdom minted it but from the content of precious metal it held, one silver coin from Byzantium was just as good as a silver coin of equal weight and content from Florence or England. Thus it was that an Spanish merchant doing business in Calais, France might use Greek numismata for exchange, or the King of England might have his treasury in Italian florins or Dutch guilders. These coins would circulate freely around the local and national economies, as all were equally recognized as currency because of their gold or silver content.

This multiplicity of currencies left the merchant free to reject debased or worthless currencies. It was not unknown in the Middle Ages (and the ancient world) for rulers to shave their coins or debase them with other less valuable metals. So long as other currencies were circulating around in addition to these debased coins, merchants had a choice to accept or not accept the debased "official" coinage, since there were always alternate mediums of exchange to turn to.

The problem begins when governments begin to turn to paper money as an alternative to precious metals, of which there is only a limited supply (and hence, precious metals can't be relied upon to fund enormously expensive and wasteful imperialist ventures). In America this grew out of the Civil War and the need for the federal government to find some means of financing the enormous costs of shouldering the war. This prompted Lincoln to enact the Legal Tender Act of 1862, which replaced the gold-backed Greenbacks with a note backed only by treasury securities; i.e., a fiat currency not backed by anything.

Why would merchants or anyone in business accept a currency not backed by anything, especially when there was still gold and silver going around? The easy answer is that they won't, which is why they had to be compelled to by the arm of the government in the Legal Tender Act of 1862, which guaranteed that creditors would have to take the bills. In his speech introducing the Free Competition in Currency Act, Congressman Paul said:

Historically, legal tender laws have been used by governments to force their citizens to accept debased and devalued currency. Gresham’s Law describes this phenomenon, which can be summed up in one phrase: bad money drives out good money. An emperor, a king, or a dictator might mint coins with half an ounce of gold and force merchants, under pain of death, to accept them as though they contained one ounce of gold. Each ounce of the king’s gold could now be minted into two coins instead of one, so the king now had twice as much “money” to spend on building castles and raising armies...

This was certainly what happened during the Civil War when Americans were forced to accept first Greenbacks and then Legal Tender notes as currency. After the war, some wanted the legal tender system to be permanent; others argued it was only a necessity of the war and should be stopped. The constitutionality of the United States government printing paper money was challenged and in 1870 Hepburn v. Griswold, the Supreme Court ruled that parts of the Legal Tender Act violated the Constitution. As debates over paper money raged, concurrent with the silver controversy going on at the time, the Court eventually overturned the 1871 ruling and declared the printing of paper money and the establishment of a national currency Constitutional in Juilliard v. Greenman (1884). From thereon out, silver and gold were incrementally removed from circulation, culminating in the 1933 ban on private ownership of gold.

Examples of the "Greenback" Demand Notes printed by Lincoln during the Civil War

Of course, since 1913 we have been on the Federal Reserve note, which is backed by absolutely nothing, which is plainly admitted on the website of the United States Dept. of Treasury:

Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything (source).

Since the currency is not backed by anything, its stability depends solely on the soundness of the American economy, which is linked to the soundness of the government's fiscal policies. When the economy is good and the government policies are friendly to the economic system, then the currency will be strong and the legal tender system tends to work pretty well. However, the real problems arise when the economy takes a dump and the currency goes with it - then people find themselves having to pay debts incurred when the economy was strong with a currency that is weak. This is inflation, a lowering of the purchasing power of the currency as seen in a rise in prices.

This problem is exacerbated when the government itself adds to the inflationary pressures by printing and circulating an extraordinary amount of fiat currency not linked to any real economic growth. At our current state, the American currency is being propped up only by the name and reputation of the United States government; if Egypt or Mexico or Peru or Pakistan tried running up a $14 trillion debt financed by fiat printing, their economies would crumble overnight, as did that of Zimbabwe (see here). Only America's longevity, historically strong economy and (presumed) financial stability are able to keep the value of the dollar up. But the world is starting to call these factors into question, and the dollar is weakening rapidly. If the world ever loses confidence in the American government, the inflationary pressures we have unleashed by printing so much money will catch up with us and we could experience hyperinflation.

Inflation is a uniquely modern problem, at least in its swiftness and degree. Sure there was overall inflation in prices in Europe from 1500 to 1600, but it was gradual and relative to a real supply of specie in European economies coupled with a real increase in the costs of maintaining armies, navies, etc. in the 16th century. But the Middle Ages saw nothing like the inflation of Germany in 1923, or that of Yugoslavia in the 1994, Hungary in 1946 (with a monthly inflation rate of 4.19 x 10 to the 16th power % and prices doubling ever 15 hours) or Zimbabwe in 2008. Those types of crises require a fiat paper currency forced in place by legal tender laws.

Those whose sole source of wealth is in legal tender suffer the hardest blow when inflation hits because they witness the devaluation of their money as it loses its purchasing power. What would we all do if, say in the next year or two, the American economy fails to pick up, US debt spirals out of control as the government attempts more failed stimulus spending into the tens of trillions and foreign markets and countries lose confidence in the US government? What will we do if our currency becomes worthless and inflates at an alarming rate?

But what if there were other legal tender besides the dollar? What if citizens had a right to choose between differing forms of currency, either different currencies altogether or different types of American currency, some perhaps minted privately? What if, when the dollar really begins to tank, there were other alternatives, so that if people came to your store trying to spend their crappy dollars (which you know could devalue again rapidly in a hyperinflationary economy), you were free to reject them in favor of "sound money"? If sound money was allowed to compete with worthless money, the sound money would be preferred every time and the worthless money would be witheld from circulation. This would strengthen the economy, since consumers would not be tied to the worthless legal tender. Ron Paul states:

In the absence of legal tender laws, Gresham’s Law no longer holds. If people are free to reject debased currency, and instead demand sound money, sound money will gradually return to use in society. Merchants would have been free to reject the king’s coin and accept only coins containing full metal weight.

Obviously Paul is referring to a currency in metal competing with a paper currency; his bill also calls for a return to private minting. Since the value of metallic currency was in the metal content itself, there was no reason why private mints could not exist alongside the US government mint in striking these coins - an oz. of silver was an oz. of silver regardless of who minted it.

I can't see any reason why a Distributist shouldn't be open to this concept of having other currencies coexisting alongside our official currency. This was, after all, how most economies in the Middle Ages and the ancient world flourished, which of course were generally much more stable than ours. It would certainly put more power back into the hands of the people and promote localism if certain precious metal coins were struck by regional mints. Yet most Distributist stuff I have read seems to presuppose a single, legal tender currency and focuses mainly on how to manage the currency we have in an equitable and responsible manner. I am not really a Distributist - I am more of a semi-Distributist because I like the ideals of Distributism but have reservations about how it would be implemented, though perhaps these reservations are more due to ignorance than to any positive disagreement.

I am also not in favor of a currency solely tied to the gold standard, either, because inasmuch as there is a limited amount of gold it can be manipulated by hoarding it or flooding the market with it. But I do feel that a mixture of paper currency coupled with precious metals would be ideal, and that the paper currency needs to be tied to growth and value in the real economy, not called up out of nothing.

I am sure Congressman Paul's bill will not pass, just like his Audit the Fed bill will probably be doomed to failure as well (though I pray this is not the case). But it is interesting to think about - for those of you who know more about economics than me, what about this concept of other, perhaps privately issued, currencies circulating around in competition with the dollar?

How much are you taxed?

For several months now I have kept a very detailed, itemized account of every penny my family spends in attempt to reign in our spending to the most frugal level possible. I have a spreadsheet file of every single expenditure down to the cents, with everything placed into one of fifteen categories. I thought it would be interesting, given the present waste of tax-payer money going on, to take these records, plus information from my pay stubs, mortgage statements and other forms to find out exactly how much I pay in taxes every year and to where it goes. Here's the breakdown:

Taxes Paid Yearly

Property Tax = $2870

Income Tax, Social Security, Medicaid, etc. = $4800

License Plate Renewal = $90

Gas Tax (in Michigan, $0.62 per gallon - see here for your state's rate) = $892

Taxes on my phone bill = $240

Sales Tax (6% in Michigan) = $1322

Ten cent bottle deposit on bottled/canned drinks = $54

Total Amount of Taxes I Pay in a Single Year =

$10, 268

This amount represents almost 32% of my income. Granted, I get most of the income tax back, but that still leaves about $5800 per year in taxes I don't get back, or close to 18% of my income. When people talk about how much they pay in taxes, they are often only referring to the income tax. But if you were to add up every type of tax you pay, as I have above, what would your total be? And more importantly, do you think it is a just amount? Is it just that one in the second to lowest tax bracket, like myself, has to give away over one third of my earnings in taxes?

I know the government has the right to collect taxes, but if someone in the lower brackets, like myself, ends up giving over 32%, what does someone in the middle brackets whose income tax alone in 25% pay when you factor in sales tax, property, gas, etc.?

Just a thought...

Colonial Economics

Two days ago I was flipping through a rather interesting book which contained a chronicle of all the recorded cases brought before the courts of colonial Massachussetts during the 17th century, from around 1620 to 1688. It was extraordinarly fascinating to see the type of things people were accused of back then, as well as the actions taken by the magistrates to correct them.

An interesting example is from December, 1640, when the court recorded the following case:

"A wicked fellow, given up to bestiality, fearing to be taken by the hand of justice, fled to Long Island, and there was drowned. He had confessed to some that he was so given up that abomination that he never saw any beast go before him that he lusted after it."

Looks like vice, even of the most detestable kind, was certainly not absent in Puritan America. But the record that really got my attention had to do with colonial economics. However we may dislike Puritan religious views, we cannot deny that they endeavored to be a moral people and to insist that standards of morality and decency be enforced in private as well as public relationships.

This is interesting when we come to the discussion of capitalism and the "American way" of doing economics. In Caritas in Veritate, Pope Benedict warned western nations that economics was not a morally neutral field, and that standards of charity and morality must guide the economic activities of a nation just as they should guide private interactions among persons.

The Puritans, for all their faults, understood this and made it part of their economic law. Look at this case that came before the magistracy in Boston on November 9, 1639. I'm quoting it in full [my comments and emphases]:

"At a general court held at Boston, great complaint was made of the oppression used in the county of the sale of foreign commodities; and Mr. Robert Keayne, who kept a shop in Boston, was notoriously above others observed and complained of; and, being convented, he was charged with many particulars; in some, for taking above six-pence in the shilling profit; in some above eight-pence; and, in some small things, above two for one; and being hereof convicted, (as appears by the records) he was fined £200....After the court had censured him, the church of Boston called him also into question, where (as before he had done in the court) he did, with tears, acknowledge and bewail his covetous and corrupt heart, yet making some excuse for many of the particulars, which were charged upon him, as partly by pretence of ignorance of the true price of some wares [the Puritans believed that a just price was that which was nearest to the "true price"; i.e., the price of production - they did not believe that the just price was whatever one could get for the product], and chiefly by being misled by some false principles...These things gave occasion by Mr. Cotton, in his public exercise the lecture next lecture day, to lay open the error of such false principles, and to give some rules of direction in the case. [watch - here comes the Puritan "syllabus of errors" on economics - very interesting]

Some false principles were these [read "the following opinions are condemned"]:

1. That a man might sell as dear as he can, and buy as cheap as he can.

2. If a man lose by casualty of sea, etc., in some of his commodities, he may raise the price of the rest.

3. That he may sell as he bought, though he paid too dear, etc., and though the commodity be fallen, etc.

4. That, as a man may take advantage of his own skill or ability, so he may of another's ignorance or necessity.

5. Where one gives time for payment, he is to take like recompense of one as another.

The rules for trading were these [here's what the Puritans were obliged to abide by in their economic transactions]:

1. A man may not sell above the current price, i.e., such a price as is usual in the time and place, and as another (who knows the worth of the commodity) would give for it, if he had occasion to use it; as that is called current money, which every man will take, etc.

2. When a man loseth his commodity for want of skill, etc., he must look at it as his own fault or cross, and therefore must not lay it upon another. [i.e., the business cannot "pass on" the cost to the consumer]

3. Where a man loseth by casualty of sea, or, etc. it is a loss cast upon himself by Providence, he may not ease himself of it by casting it upon another; for so a man should seem to provide against all providences, etc., that he should never lose; but where there is a scarcity of the commodity, there men may raise their price; for now it is a hand of God upon the commodity and not the person.

4. A man may not ask any more for his commodity than the selling price; as Ephron to Abraham (Gen. 23), the land is worth thus much.

The cause being debated by the church, some were earnest to have him excommunicated; but the most thought an admonition would be sufficient...In the end, the church consented to an admonition." [interesting - they thought this an ecclesiastical matter that could have possibly merited excommunication]

Well, we are not Puritans but Catholics, and wha does this have to do with us? I am not asserting that these rules should be applied to us today and that is not my purpose in citing them. The point of citing these Puritan decrees from 1639 is to tell us something about the "traditional American way" of doing business.Those fiscal conservatives who insist that a complete laissez faire capitalism without any sort of restrictions is the traditional, American way are off base. Clearly, the earliest American traditions supported the idea of economics being responsible to morality and exercised immense political and social pressure to see to it that businesses did not take advantage of their consumers.

Especially interesting to me is the very first of the condemned principles, "That a man might sell as dear as he can, and buy as cheap as he can." This is the cornerstone of American business, and one who does this suceessfully is called a good businessman! It is here the very first principle condemned by the Puritan church of Boston.

Second, two of the condemned propositions and two of the rules speak about the immorality of a business passing the cost on to the consumer. The idea that "If a man lose by casualty of sea, etc., in some of his commodities, he may raise the price of the rest" is condemned, as is the notion that "a man may sell as he bought, though he paid too dear, etc., and though the commodity be fallen, etc." This is exactly how our gas prices work - the price at the pump is determined not by how much that particular gasoline costs when it was refined but by how much the price for crude may fluctuate, where the gas station adjusts its price accordingly in an attempt to make back immediately what it anticipates losing when they have to buy more oil at an inflated price. This is why the price at the pump changes immediately, even though the gasoline in the tanks has already been bought and is in the ground. In general, these Puritan standards seem to bar any possibility of businesses "passing on" their losses to the consumer, telling them they simply have to accept it "as his own fault or cross." But again, the essence of American business is passing on losses to others.

My point in all this is to make the simple historical observation that laissez faire economics was not the traditional American way. Traditional, localized American economics was held morally accountable to the community, who had no qualms in dictating what were and were not unjust business practices and censuring them by the power of the courts or even excommunication.

Mortgage Woes

This week my next door neighbor told me that he had lost his house. This surprised me, because he is a plumber and had given me the impression that he was making very good money. He was always talking about how he made $178 for forty minutes of work or how he just got a $9000 contract and stuff like that. The whole time I have lived by him (2 1/2 years) I thought he was doing fine. Upon inquiring more, I found that the reason for his foreclosure was not that he lacked work, but that the companies he did work for refused to pay him. He had $60,000 in uncollected invoices that were out there and the companies that owed it simply were not paying him. This is a common problem for people who work in conrtracting - performing a service and then having to pester to collect - I am told that it is not uncommon to have $100,000 of invoices out and only be able to collect on $30,000 worth of them. I suppose it's part of the business. But now that times are bad, it is even worse.

I would like to point out something about my neighbor's unfortunate situation. Liberals have been blaming the mortgage crisis on "predatory lending" and making it sound like the people who are losing their homes are victims who were swindled into mortgages they couldn't pay down the line. This may be true for some people, but it certainly wasn't the case for my neighbor. Not everybody who gets a hard lot is some kind of victim, especially not the kind of victim where we can easily point a finger at somebody and accuse them of doing it to us. But liberals only tend to see things in terms of one group of people oppressing another, and so it at least makes some kind of internal logical sense that this crisis could be blamed on predatory lending. But my neighbor had a regular mortgage and wasn't prey to anything like that.

On the other hand, conservatives tend to accuse the people who are losing their homes of living beyond their means; thinking that everybody going into foreclosure was trying to live high on the heap and had expensive homes, vacation properties, extra bathrooms they didn't need, needless luxuries and things of that nature. While the liberals try to arouse sympathy in us for all the people losing their homes, the conservative emphasis on the irresponsibility of persons who took out mortgages that were too big for them is a way to try to say that the people who are losing their homes somehow deserve it. Again, this may be true for some, but it is not the case with my neighbor. He did not get into a 5 year ARM in order to squirm into a house that was way out of his class, nor was he trying in anyway to live beyond his means and mortgage a massive luxury house he couldn't afford; his home is modest, like mine. He wasn't greedy, nor was he taken advantage of.

Both sides seem to be trying to find someone to blame for everything, but the fact is, sometimes stuff just happens that is nobody's fault. My neighbor didn't get into an irresponsible mortgage, nor did the mortgage company try to cheat him. Through factors beyond his control (the companies he does jobs for losing their business), his income has dried up and has forced him out. That's just the way it is, and we don't always need to be trying to find out who caused it. It's just a fact of life that sometimes we win and sometimes we lose, only modern man doesn't have the spine to acknowledge this. For us, if things don't go our way, we have to find somebody to blame.

The fact is, nothing is secure in this world. As I was driving home tonight thinking about friends I had lost in the past several years, I reminded myself that God is in control. There is no guarantee on anything. No guarantee that I will live to see tomorrow. No guarantee that God will not strike dead both of my daughters before they reach maturity, leaving me bereaved and alone. No guarantee that I will not fall victim to some disease or accident that could leave me crippled or maimed. These are seriously the kind of things I remind myself of daily. There is certainly no surety that I will keep my house, whether I have a good mortgage or not.

There is, however, one certainty: that whatever comes from God's hand is for the betterment of my soul, even if it means suffering. And this is perhaps where Catholics depart from some of our Protestant brethren - for many external suffering is something from the devil that is to be tolerated but ultimatey rejected. For Catholics, suffering is an opportunity to see the hand of God at work, who wills at times that we should suffer in a variety of ways in order to conform us to the image of His Son, so that in a mystical way, as St. Paul tells us, we may "make up what is lacking in the sufferings of Christ" (Col. 1:24). Following in the footsteps of the Master to become more like Him.

The world and all things in it are transitory, and when things go bad, the best thing is probably not to start wondering about who's fault it is and who you can pin it on, but to seek to glorify God in and through it and recognize that we have no abiding homeland here. At least my neighbor seems to have taken this approach to it: while not a practicing Christian, he seems to have just thrown up his hands and said, "That's the way it goes sometimes." He is not embittered by the experience, but is simply seeking to restart somewhere else without any chip on his shoulder or feeling that anybody "owes" him anything (well, perhaps except the companies who owe him $60,000 in unpaid invoices).

Please pray for him and for all persons who are in danger of losing their homes, for whatever reason.

Ratzinger's 1985 "Prophecy"

Given the collapse of the markets over the past several months, it is no wonder that the press should have seized upon an article present by Cardinal Ratzinger in 1985 for the symposium in Rome, Church and Economy. However, the media is indulging in gross sensationalism by saying that Ratzinger had a "prophecy" that the capitalist markets would collapse (see here and here). If you read the article, Ratzinger quite rationally expounded the connection between the morality of a culture and their economic systems and said that as capitalism viewed itself as an amoral system, it had a fundamental error in its presuppositions, for morality cannot be divorced from economic activity. In fact, Ratzinger suggested that morality is essential for a healthy market: "the market rules function only when a moral consensus exists and sustains them." Towards the end of the paper, in the last paragraph as a matter of fact, he states quite plainly that failure to respect and take heed of this intimate connection between morality and economics can lead to abuses that will cause the system to "implode."

First off, this is not anything close to a "prophecy." A prophecy, in the way the Church understands it, is a revelation from God about something to come. This is nothing like a prophecy. It's just a case of an intelligent thinker laying out, in cause and effect terms, what will happen to a market that refuses to acknowledge the moral dimension of man. I would say a more accurate term would be that the pope made a prediction or an educated guess, but not a prophecy.

Why am I so caught up about the word "prophecy?" Well, a prophecy implies that the thing that has come to pass is something that no one could have predicted otherwise. If I say, I have a "prophecy" that the Detroit Lions will lose a football game, people will laugh at me and say, "That's no prophecy; that's just common sense!" But if I say something outlandish, like "I prophesy that on such-and-such a day, two centuries from now, a meteor will strike the earth in a specific place, and then in fact it does, then my prophecy seems more likely to belong to the supernatural realm for the very reason that the event came out of nowhere and was difficult, if not impossible, to predict without supernatural aid.

Then by calling the Pope's prediction of the collapse of capitalist markets a "prophecy" the media is essentially saying, "God must have showed this fact to the Pope, because there's no way any of us could have foreseen that our system would ever collapse!" Do you see the subtlety? There is such an implicit faith in the soundness of our economic system, that nobody could imagine the ensuing collapse. And when one man does mention a possible collapse in a very scholarly, rational argument, are any of his points or reasons taken seriously? Does anybody look at the system and wonder whether or not the then-Cardinal Ratzinger may have understood something about economics? No -- it is simply written off as "he had a prophecy."

Now, I know they aren't really asserting that this was a vision from God or something. Most of the media outlets simply have used the word in their headlines to grab people's attention, but still they have to understand that words have meanings and ideas associated with them, and that when we choose to say Pope Had a Prophecy of Market Collapse, when what we really mean is Pope Presented an Article on Weaknesses in the Capitalist System, then we are really being disingenuous. Even the voice is wrong: to say the Pope "had" a prophecy to say something in the passive voice about something that happened to the Pope, while the reality is that the Pope presented (active voice) a paper he wrote. It is simply a sneaky way to attempt to maintain the appearance of health to our financial system, so much so that anyone who foresaw its demise must have "had a prophecy," because no one else could have foretold it any other way!

That's all I have time for right now, but I want to revisit this article in a few days, because it says some very interesting things about the connection between morality and economy, and it talks about some shortfalls of central economies and market economies.

In your face OPEC!

Saudi Prince Waleed Bin Talal's diamond studded car ($4.8 million), which he charges $2,500 just to touch.

Well, I hope nobody will fault me for turning much of my gaze towards political and economic matters in the past few weeks: there is just so much to comment upon! Ideally, this blog would be all about specifically Catholic related stuff, like liturgy and theology. I have noticed, however, with regards to the Church that it seems like it is only in the Catholic Church that we are seeing genuine good news. Isn't that interesting? When the economy was booming and the United States was sitting pretty on the top of the heap for the past two and half decades, the state in the Church was abysmal. Now the Church is finally making some progress towards true reform and true restoration, and it is against the backdrop of a collapsing economy and the possible loss of the US's worldpower status. Is there some kind of spiritual law that the Church will always prosper when the secular civilization fails? Perhaps. Look at the rise of the Church around the time of the Fall of Rome.

But I digress. I am so tickled pink that gas is coming down (though it is still at least 50% too expensive in my estimation), and I am even more delighted that the criminal band of robbers and cheats known as OPEC is running around like a chicken with its head cut off over the astronomical "drop" in oil prices recently. Check out this article, which describes how they are having "emergency" meetings to try to curb the price drop. It is laughable indeed!

When did gas falling below $3.50 become an emergency? I have been recording in my journal over the past few months the price of gas at various intervals, and I notice that where I live, it was $3.53 in June of this year. OPEC wasn't complaining about low prices then. Why not? Because, of course, the price was on the rise. OPEC is saying that they are concerned about the price of oil falling with regards to wishing to "stabilize" the oil markets. Where were their calls for "stabilization" when it was going up five dollars per barrel per day? They don't care about stablizing the market. Here's what is really going on:

The cost just to pump the oil out of the ground is about $6.00 per barrel. Factoring in some other cost for shipping and production, most of what OPEC gets paid is profit. Starting around late 2002, when the average price of gas first rose above $2.00, the OPEC nations started making tremendous profits, which only got bigger as the decade wore on. They have taken in staggering amounts of money: $1.9 trillion dollars of oil profit in the six gulf states, with an annual surplus of up to $300 billion every year (source). Wallowing in wealth, they have begun to live the high lifestyle, as is evident by the extraordinary developments in cities such as Dubai.

But they made the same fatal flaw as many in the housing market: assuming that prices would always be going up. Now that they are dropping, they realize that they may no longer be able to afford to maintain the type of culture they are creating and are thus scrambling to keep the price of oil inflated so as to keep their wealth. Think back to 1999. I was nineteen then, and working at a gas station. I remember the price being $0.88 that winter. It was wonderful. If you look at this graph, it shows how low prices once were; January and February 1999 were the lowpoints, when gas on average was $0.96 per gallon. It theoretically could get that low again. But the profit of the Saudis was so low during that period (the 1990's is remembered with loathing in Saudi Arabia as a time of terrible profit-loss) that they are determined to never let it happen again.

Thus, OPEC is doing all in their power to stop the oil prices from going any further down. They want to keep enjoying the fabulous wealth they have gotten in the past six years. But some say that there is no stopping the drop. I say, "In your face, OPEC!" It's about time you felt what it was like to get it stuck to you! I am very pleased fuel prices are going down. I am happy that they are dropping. When will I be satisfied? Well, when it gets below $3.00, then I'll get excited, but I won't stop complaining until it goes back down below $2.00, and even then I'll still probably whine that it should be closet to $1.29.

Some say we'll never see those prices again, and the days of good, cheap oil are over. Maybe so. But either way, I hope we can all get into renewable energy, if for nothing else just so we can get off of Saudi oil, drive their prices into the ground and watch that theiving country reel back to the dark ages.

Bail out is a joke

Well, the bail out passed. Drat! I wrote my congressman twice in protest ( I don't know whether or not he voted for it). After all that has happened, how could we be so foolish as to let our government rush through another piece of legislation of such monumental importance and cost as this so quickly? The scare tactics were disgusting: Harry Reid saying he "knew of another big insurance company" about to go under if the bill didn't get passed, but wouldn't tell us who it was. After everybody is sufficiently frightened, he then renounes his comment and says that what he really meant is that he's not aware of any companies about to go under (source). But of course, the damage is already done. Give me a break!

First, we don't even know if this will work. The hole could be bigger than we know, and there is no guarantee that this bail out will help anything. It might be like trying to stop up a toilet with a pebble-and that's exactly what our economy is, a big stinking toilet going down.

Not to mention the $150 billion of extra earmarks they threw into it! How about article 503, which stipulates a tax break on wooden arrows made in the state of Oregon, deisgned to save the Oregon based Rose City Archery, Inc. 39 cents per dollar on every arrow they make! (source) If that is not an earmark or a pork barrel addition, I don't know what is. Mr. Maverick McCain swore he would veto any earmarks that came across his desk, and yet here he is voting for a bill that has $150 billion worth of them! It is so revolting.

So, we are back to the stupid status-quo. Everybody is worred about housing prices "plummeting" as if it is some disaster. I guess it is a disaster to those who foolishly bought homes that were grossly inflated in price. But guess what: homes were way overpriced and (in my opinion) are still overpriced! I'm glad house prices are plummeting, because it will make it more affordable to people to become homeowners. Prices have been way overblown for over a decade. They are only now starting to get where they need to be. Everything is too expensive, and this bailout (if it works) is designed to bring us back to the same stupid place we were before.

Well, perhaps it won't work. Perhaps it will fail miserably and we'll all be begging in a few years. Whatever (sorry for the pessimism).

Towards the New Dystopia

This post is meant to be read in correlation with brother Athanasius' most recent post on the financial crisis in Wall Street, which you can read here. First, let get a few things out in the open: I cannot say that I am a Distributist, not because I do not believe it is a practical system, but because I simply have not read that much about it. I like what I have heard, and I think that if Chesterton and Belloc were so trustworthy in other areas, then they are probably worth listening to in economics as well. I'd like to read more about it. Economically, I am like so many others: anti-socialist, disgusted with capitalism, looking for that ideal via media. At heart I guess you could say I am part feudalist, part Jeffersonian agrarian-republican, part 1890's populist, and part distributist.

Now that you know where I am coming from, let me also say that I don't understand a lot about modern economics. I have read a lot on economy, but the modern maze of financial terms and realities on Wall Street confuses the heck out of me, as it does to many! I heard an interview recently in which one professional financial analyst confessed that even many in the financial business are confused about what a lot of these things are. Why should something so important be so freakin' difficult to understand or make sense of?

At any rate, I do not want to comment on the economic aspect of the crisis because I confess I am too ignorant about it. However, just because I am ignorant of the specifics does not mean that I (or anyone for that matter) does not know when something is fishy, or when someone is being cheated. However, I would like to talk about where we will wind up as a result of this crisis, which Athanasius hinted at in his article.

I for one am shocked that the analysts keep saying that "nobody saw this coming." That's bunk! I saw this coming at least as early as 2000. True, I did not foresee the way it would fall out, but one thing was always self-evident from taking even a cursory look at our financial system: it was and is unsustainable. That's what I knew in my gut. I came to this conclusion based on several factors:

(1) There was too much debt.

(2) Everything was too expensive, especially home prices, which were almost prohibitive to someone not choosing to put their wife into the workforce.

(3) Too much was purchased from overseas.

(4) Too much labor (and thus capital) was exported and outsourced.

(5) The economy was driven not by necessities by by luxury items.

It does not take a genius to see that such a system cannot perpetuate itself for ever. At the time, I believed (and still believe) that the system would eventually crash and that (as Athanasius said) slavery and the abolition of the middle class would be the result. Influenced by historical studies, I conceived this slavery in terms of a new feudalism. Let me explain.

In the feudal system, serf did work for a lord and were granted protection and a space to live in exchange for working on the lord's land and turning over a good amount of the crop to him. The serf never owned his own land and had little rights against his lord (though most of the time the system worked out tolerably well). I imagined that in the age to come, because of massive debt, the middle class would shrink to a point where home ownership became the exclusive domain of the rich. We would still have all our houses, but we would no longer own them (not like we own them now anyway). But instead of paying off a mortgage, we would be just renting perpetually. Instead of renting from a lord, we would rent from some faceless corporation or management company. There would be the rich and the renters, and that'd be it. I still think this a highly likely scenario.

It is interesting how everybody has a universal pessimism for the future. The Victorian ideas of progress are dead in the dust. Everybody universally believes that the future will just get worse and worse for us until the End, but we differ in what ways we imagine this dystopia. I personally have always wondered what type of world the age to come after the fall of our system would be, and I think I always hovered between two-options:

1) A repressive, ultra-authoritarian, surveillance society as described by Orwell in 1984, in which technology is put to use to dull our pleasures and make us slaves in the truest sense.

2) An excessively recreation-luxury focused society in which pop-culture is the only culture and technology is put to use to bury us in an ocean of pleasurable distractions, as described by Huxley in Brave New World.

While I used to greatly fear scenario 1 (and such a nightmare is always possible), I'd have to say that the way culture is moving, the Brave New World dystopia seems a lot more plausible, and a lot sooner than I previously thought. If we are to lose our freedom, it will be in such a way that our slavery is more desirable than true freedom. We will have so many iPods, Google applications, mind-altering substances and Netflix to choose from that nothing else will be of real concern to us, and we will gradually lose our individuality and gel into one stupid blob of ignorance.

This situation cannot prevail ultimately: the Church will always exist, dissent (the good kind) will always exist, and men will always be there with the courage to think freely. One disheartening thing about modernity is the way it crushes the individual, the way it makes us all feel so helpless against "forces" (i.e., results of evil choices) beyond our control. This is what is so romantic about the Middle Ages or the classical age: back then, you knew who your enemy was, and if he was threatening you, you could arm up, face him in combat and hurl a spear at him. How I wish to God that the answer was as simple as facing our corrupt financial system and hurling a spear at it with the fury of Achilles.

I think we are done. What do I mean by done? I mean done. Done as Rome was in 476. Done as Athens was after the Athenian defeat in Sicily. Done as Israel was when Nebuchadnezzar came knocking. At least done insofar as the present form of our society is concerned. Why did it have to happen during my life? Part of me is happy (as Athanasius says, "the anarchist in me"), but it is not pleasing to pay so much for gas, watch food prices go up, wonder whether or not I'll be able to get a student loan next semester, and meanwhile have nothing in my savings: not because I blow my money on junk, God knows I don't! But because just the cost of paying my mortgage, bills and gas alone is 99% of my income.

Get ready for the new dark ages, the coming brave new world. Better get some food stored, get your weapons loaded and head for the hills!