Indispensable Economics Principles…and Interest

Nov 7, 2008

This title sounds like I am going to write about money. Well, I am, but not directly. It doesn’t say “principals.”

 

A theologian colleague of mine a while ago gave me these words of wisdom: “You can never effectively oppose an interest with a principle.” The truth of this statement is verified by the basics of both economics and political philosophy, and the subject of this entry - the recent election.

 

Why, when there are so many moral problems with Catholics voting for Obama, most seriously his outright support of all forms of abortion, but even his questionable dedication to fighting terrorism, did so many Catholics vote for him? The answer is in the economy. Economics teaches that people make decisions based on their values, but their values are constantly shifting. It would be more accurate to say that their decisions are based on their values “at the moment.” This is why they say not to go to the food store when you are hungry. A person who does this will buy things that they will never eat at home, but which looked good at the time of hunger, or they will buy fattening food which they will consume on the way home and not have room for an actual dinner.

 

In this election, the state of the economy suddenly took center stage. But there is a difference between how economists approach the problem (see my entry on the subject) and the way the ordinary American approaches it. The economist analyzes it from principle; the ordinary American, and you can’t blame them for this, analyzes it from the position of their economic security. If your income and therefore your duty to your family might be in jeopardy, principle can go by the boards. Here is where interest trumps principle. I do not believe that most Americans are socialists or statists in principle, but when their income is in jeopardy, they will vote this way. When the media and politicians hyped this economic situation (some conservative pundits were clearly angry, one in particular because his stocks went down in value), they made it seem as though the world was ending. This was very similar to the Y2K situation where some were saying that we would be in the dark and the cold when not a light bulb went out around the world. According to these people, and some actually said it, this would be like the Great Depression. Just last night some bozo on TV was saying that there is no money to lend even with the stimulus package. Companies are using the money to “fix their balance sheets,” whatever they mean by that, and give CEOs more big bonuses. This person said that even ordinary people cannot get loans. This becomes interesting when my bank had an ad on the radio today saying, “Come in, we have millions to lend!” What a great way to sell newspapers or get viewers: ratchet the effects of a situation so that every one reads about it or watches the news show because they want to see if they are going to be in the poor house next week!

 

Bertrand de Jouvenel, the famous French political and economic philosopher, has some great insights into this process. He saw exactly how this operated in the years leading up to World War II. While the crises at the time, such as the German hyper-inflation and the world-wide depression, were greater than anything we have now, at least in the West, there are parallels. Jouvenel argues that what he calls “social insecurity” leads to statism. When the population is afraid, they will sacrifice principle to call for protection from the slings and arrows of social forces that might disrupt their lives. The problem with this is that they are then stuck with the statism forever! Government never gives up a power once given to it. The mechanism behind this, according to Jouvenel, is this: for the state to protect you from a perceived problem, you must give something in return—power. That’s exactly what Americans did in this election. You can verify this by looking at how government has grown since the beginning of World War II. We had that war, the Korean War, the Cold War, the War on Poverty, etc.

 

This is the first election in which I heard the accusation of socialism widely used in public political discourse since the 1972 election campaign between Nixon and George McGovern. McGovern wanted to guarantee everyone a certain annual income, and also, as I recall, send everyone in the country a check for $1,000 right off the bat. ($1,000 had more purchasing power in 1972 than now.) This was called socialism by many, and Nixon wound up winning in a landslide.

 

Here we had a similar situation, but in this case, the people had deteriorated significantly since 1972, and went for the socialist solution. And Catholics, to their disgrace and despite the very vocal campaign carried out by the bishops about the sanctity of human life and the vote, tended toward the pro-abortion Obama! Bill Clinton was right. He is reported to say, in response to his beating George H. W. Bush, “It’s the economy, stupid!” And now we have sold our birthright for a mess of pottage.

 

You might want to look at two websites related to this:

 

1. http://www.reaganaction.com

 

2. http://catholicpublius.blogspot.com

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