October 29, 2008

It’s the Stupid Economy

So the market shot up yesterday after a week or so of jagged decline. Why? The key word seems to be “confidence” — a very subjective thing upon which to pin ones hopes and dreams and pension fund. This only reaffirms my belief that The Economy is not a controllable machine like a well-designed steam engine, but a wild animal that can be poked and prodded with sticks or occasionally tempted by a carrot, but which most of the time does what it pleases. What rough beast slouches towards Wall Street? I think the 50s sci-fi Blob is probably as accurate a picture of The Economy as any.

For The Economy is far from a single unified entity, but a chaotic system built up, sad to say, from the very worst in human nature: primarily greed and fear. These primitive emotions are not limited to Wall Street, but are well established on Main Street too; they find a place in every home and heart.

Which brings me to John McCain’s beef with Barack Obama’s “redistribution of wealth” proposal, correctly (to a small extent) but disingenuously identified as “socialism.” Needless to say — or maybe not, since McCain has been surprisingly successful in his wool-over-the-eyes manoeuver — our economic system has been based on a redistribution of wealth model since the days we first introduced progressive income taxation, in which those with more give more proportionately. From an ethical position, Obama recognizes that generosity is a good thing, but that it can’t be counted on in a pinch. Those who have will for the most part, if left to themselves, try to keep what they have. It doesn’t trickle down, either; it stays in the deep pockets of those with custom-designed trousers, or it goes overseas, funneled off to places where workers are eager for whatever scraps fall from our abundantly provisioned tables, and are willing to work for less in places where that less is worth more than it would be here. Obama is calling on those with more to sacrifice a bit more, and includes himself in that category. This seems to be an ethical thing to do.

McCain, on the other hand, is not going to redistribute wealth, he claims he is going to create wealth. The problem is, I doubt universal wealth can be created, even if that is McCain’s real intention. If Obama is peddling socialism, McCain is peddling the snake-oil of a shadow version of communism, in which everyone will be happy and wealthy (but is really just more of the “let the rich keep their money to create jobs so everyone will benefit.”) It won’t work in part for the non-trickling reason cited above. But there is something more serious at work, which brings me back to my initial point.

Haller’s Theory of Universal Slight Dissatisfaction (one of my two Economic Theories) is that a state of pure equilibrium in which everyone is wealthy is impossible. It is even impossible to have a non-trivial society where everyone is satisfied. This is because of human nature, and the role that fear and greed and self-interest play in it. (Some might note the connection with Original Sin.) People for the most part want more than they have — and are only content when they have more than they need. Yet the wealth that exists, the Gross Value of Everything, is finite, though it can grow (it usually inflates more than actually growing). The end result is that the best you can do (if your value system would consider it “best”) is to have a society in which everyone had slightly less than they wanted. People might agree to this out of commitment to a cause: the East Germans prided themselves on their commitment to the solidarity of suffering, as did the early church (communism being a common notion for them both) but it is hard to see it catching on universally. Even these experiments by ideologically committed folks proved unsustainable. Entropy rules, though islands of order (in this context, read wealth) can arise in certain circumstances. But no-how, no-way, is it possible to have a sufficiently large society in which everyone is “wealthy” — for the very definition of wealth itself will slip away beyond your grasp even as you reach after it.

So McCain’s proposal is the same old tired promise of Rumpelstiltskin: give me your child and I’ll spin straw into gold. His proposal is, in every sense of the word, mean.

I pray this nation will have the good sense to reject McCain’s fairy tale magic, and empty promise. The next generation will indeed pay dearly if we fall prey to the seductive promise that wealth can be universal, and cost no one anything. Rather let us ask more of those who have more, and redistribute the wealth that actually exists. That, we know, can work. And it does have the imprimatur of the Gospel in its favor.

Tobias Haller BSG


Unknown said...

"...since the days we first introduced regressive income taxation, in which those with more give more proportionately...."

Isn't that progressive taxation? I thought regressive taxation was where those with less wealth receive the greater tax burden, such as with sales taxes.


Tobias Stanislas Haller BSG said...

Oops. Quite right. I've fixed the erring word.

Fran said...

Can you hear the clapping coming from Albany?

Oh so well put Tobias, so well put.

I think your theory is spot on. I see it at work in my own life these very days.

Tom Sramek, Jr. said...

I've often thought that a good response to the accusation that the Democrats are "tax and spend" is that the Republicans are "borrow and spend." At least Democrats tax current taxpayers, Republicans seem to want to tax our children and grandchildren....

BTW, I'm a moderate Republican.

Fr Craig said...

T - my contention is that fear (bred through evolution as self-preservation instinct) IS original sin. We cannot love the other as our self because of this. Thus, in short, Jesus is truly the New Humanity because he was obedient to the Father, even to and through the fear of death and death itself. In Jesus' resurrection, death (the root of all fear) is destroyed which makes it at least possible to begin to sin less - as we learn to trust God as Jesus did. Only as we lose our fears can we begin to truly love others.
Good column, and absolutely correct.

Tobias Stanislas Haller BSG said...

Thanks Tom. I have some real sympathy with the "classical Republican" model, in that I am a "government minimalist" -- seeing the primary role of good government in bringing order to the civic structure. The cooption of the GOP by social (rather than fiscal) conservatism has led it into paradoxical waters. Perhaps this election cycle will be the cleansing that is periodically needed. The Democrats have had similar experiences over time.

Craig, thanks for this. I expanded a good bit on this notion of Original Sin in my earlier series on the Golden Rule. I do think this is the root of our dilemma, and our need for government, hopefully by the Holy Spirit as much as the civic form!

Lionel Deimel said...

Tom is right on in his analysis of the Republican position, which I usually characterize as “don’t tax and spend” (i.e., spend and don’t tax—my formulation can be parsed wrongly). Carried to its logical conclusion, the McCain position is something like this: Don’t tax the rich, since they create wealth. Government does need money to run, however, so tax the poor and middle class, since they are not creating wealth. (In fact, we all create wealth through work.)

In reality, the Republicans want you to think that we can lower taxes indefinitely—in Alaska, taxes are even negative—and create more and more wealth. All we produce this way, however, is a Hobbesian “state of nature,” certainly not the Kingdom of God.

Anonymous said...


And I have never received a satisfactory exegesis of Luke 14:33:

"So also, if you are not prepared to leave all your possessions behind, you cannot be my disciples."

What is absolutely missing in today's controversies is what used to be called simply "the common good", and that, in turn, collapsed with the victory of individualism over community -- in religion, economics, art, literature, government, and health care. And that began with Constantine when religion became identified with the state, and political considerations superseded religious ones.

Anonymous said...

Mad priest quotes a study as follows:


When it comes to helping those in need, Republicans differ from Democrats - irrespective of their religious inclination - according to researchers at University of Missouri. The researchers found that while Democrats, whether religious or not, did help others in need, unlike both religious and non-religious Republicans, who gave preference to financial success.

I don't think there are many truly moderate Republicans left--the responsible, pay-your-own-way, small-government and miind-your-own-business ones. I was one, briefly, until they were subsumed in the Reagan years by neocons and theocrats.


Ecgbert said...

Good post.

I don't think there are many truly moderate Republicans left--the responsible, pay-your-own-way, small-government and mind-your-own-business ones.

The nominal Republican who deserves to be president.

June Butler said...

During the debate between Sarah Palin and Joe Biden, when Gwen Ifill asked Biden why the plan to tax folks earning over $250,000 per year wasn't class warfare, Biden responded, "Well Gwen, where I come from, it's called fairness, just simple fairness."

That's about right. And I don't care if it is class warfare. Call it whatever you like. It's the right thing to do.