Tag Archives: socialism

Investor’s eye on socialism shows why it never works

Prudent financial and investment management is crucial to the success of any corporate enterprise. Thoughtful CEOs know they must conduct their business lives with the knowledge that they stand under the watchful eye of God. In the words of Pope Benedict XVI, “Every economic decision has a moral consequence.”

Legatus has long emphasized that as business leaders, we must employ the culture of life in our organizations. We know that even among fellow Catholics, the horrors of abortion are often not taken seriously. Unfortunately, our world seems to be backsliding on abortion, the greatest evil of our time. Sadly and shamefully, today’s Democratic party is pushing acceptance of mass atrocities — some even endorsing barbaric infanticide. (God help us!) Planned Parenthood is defending that crime. Any clear-thinking person is repulsed by the idea that some newborn lives are worth less than others, since each baby is created in the image and likeness of God. I am ashamed and frustrated with ‘proabortion Catholics.’

In my new book, In God We Trust: Morally Responsible Investing, I elaborate on how odd it is that even as the U.S. economy has prospered from pro-growth policies like taxrate cuts and deregulation, there exists a rising tide of sympathy for socialism among leftist politicians and young people.

When it comes to capitalism vs. socialism, anyone with common sense knows socialism doesn’t work. Wherever it’s been tried worldwide it always hurts the ones it’s supposed to help. Socialism always increases poverty, eliminates incentives, hurts productivity, increases corruption, destroys the economy, and destroys the well-being of its citizens. It’s exasperating to hear these newly minted naïve congresswomen (and men) proposing silly policies, which if implemented, would significantly reduce prosperity for everyone. Capitalism obviously creates job opportunities and incentives, and it has lifted billions of people out of poverty. Capitalism also creates wealth and philanthropy, both of which result from private-sector success. One of my favorite quotes from President Ronald Reagan is, “Socialism can only work in two places, heaven where they don’t need it, and hell where they already have it.”

At my firm, we’re strong believers in the merits of democracy and free-market capitalism. We are also highly focused on the culture of life. Indeed, it is our mission. Schwartz Investment Counsel, Inc. manages five pro-life mutual funds, which comprise the largest family of Catholic mutual funds in the country — Ave Maria Mutual Funds. Our world-class Catholic Advisory Board, made up of individuals well known to Legatus members, have asked my team of analysts and portfolio managers to screen out from each portfolio companies that support abortion and pornography. In doing so, we invest in exceptionally well-managed companies that often have long histories of success in growing their sales, earnings, and dividends in a morally responsible way. In addition, each company must have a strong financial position and prospects for continued success. Tom Monaghan asked my firm to undertake this mission 18 years ago and since then we have has been blessed to attract 100,000+ pro-life shareholders to our mutual fund complex. We’ve grown dramatically, and today manage over $2.3 billion in assets in the Ave Maria Mutual Funds, all of which are invested in a morally responsible way, i.e., no companies supporting abortion or pornography.

The culture of life should and must be a priority for every Legate.

GEORGE P. SCHWARTZ, CFA is chairman and chief executive officer of Schwartz Investment Counsel, Inc., the investment adviser to the Ave Maria Mutual Funds. He is a member of the Ann Arbor Chapter, and author of three books including his newest, entitled In God We Trust: Morally Responsible Investing

Reforming capitalism for freedom

MICHAEL M. MILLER writes that our economy needs serious reform — business as usual is not acceptable. However, a correct diagnosis of the problem is in order before making significant changes. He also argues that the free market requires serious moral restraint — especially on the part of those with power like big businesses and government  . . . . 

Michael M. Miller

Michael M. Miller

In the wake of the financial crisis, one of the recurring themes among business and political leaders is the need to reform capitalism and create new ways to think about business and the role of profit.

The common narrative is that “business as usual” doesn’t work. We’ve tried the free market and while it made money for some, it also caused the housing boom, the financial crisis, and created a society where all that matters is making as much profit as possible. The financial crisis is calling us to come up with new models of how we should arrange the economy. There are two issues here: first, a new way of looking at business and second, the reform of the current economic system. Let me address both, beginning with business.

It’s good that business leaders are making an effort to understand that business is about more than just profit. Profit is important, of course, but as Blessed John Paul II reminded us, profit is not the main purpose of business. The main purpose is to serve human needs and wants. Profit is one of the indicators that reveals whether you are meeting those needs.

I also agree that business as usual is not enough. We’ve had some serious moral crises in business from fraudulent accounting to big banks colluding with the government to receive special bailouts. What’s more, business is not outside the requirements of morality. Most corporate social responsibility programs have a serious flaw — they are relativistic. You can’t build a culture of business ethics if there is no truth and no right and wrong. Though mainstream business leaders rarely talk about it, business has the moral and social responsibility to cultivate a healthy moral ecology. This means honesty and obeying the laws; it also means respecting families and not exploiting women to sell products.

Let’s move to the issue of reforming the economy. There is incessant talk about the need to reform capitalism, but my first question is: What do we mean by capitalism? Unfortunately, the term “capitalism” has become proxy for “that which is bad” and often becomes a substitute for the sins of greed and avarice. There’s another problem — and a more serious one. In common parlance word “capitalism” is usually identified with a free-market economy both by its detractors and defenders. But capitalism and the free market are not always the same thing. There are many different varieties of capitalism: oligarchic capitalism, corporate capitalism, crony capitalism, managerial capitalism, and free-market capitalism to name a few.

Most of the critics of capitalism lament so-called “market fundamentalism” or “unfettered markets,” but we don’t have anything of the sort. What we have in the U.S. is a type of managerial-crony capitalism where big business and big government collude to make regulations that serve their interests. When things went wrong with our managerial capitalist system, instead of assigning blame correctly we blamed this mythical free market.

Our economy does need reform, but if we are going to address a problem we have to identify it correctly. The problem is that our diagnosis is wrong. The source of the financial crisis was not “market fundamentalism” but a complex interrelationship of government regulation, lobbying by interest groups, the manipulation of interest rates and the money supply, big business and government collusion, and political and social policy all mixed in with age-old vices like greed and imprudence.

There is a tendency to think that the default position of capitalism is a free market and that regulations and government interventions are necessary to resist this return to what is called “unfettered” or “savage” capitalism. But this is a serious misconception. In practice, the free market requires serious moral restraint — especially on the part of those with power like big businesses, government and interest groups. They have to exercise restraint and virtue not to use their power to gain an unfair advantage by colluding or lobbying the government for protection. One of the most important, though often neglected, elements of authentic corporate social responsibility is for companies to help maintain and encourage a free and competitive economy that enables entrepreneurs to compete — even if this means a possible loss to their own business. Too often companies, once they become successful, look to government to undermine the free and competitive economy that they benefited from.

Free economies are like free societies. As William Allen said well, you cannot have self-government without self-governors. In the same way you cannot have a free economy without free and virtuous people. A real free and competitive market, to use Lord Acton’s line, is “the delicate fruit of a mature civilization.”

MICHAEL M. MILLER is a research fellow at the Acton Institute and director of PovertyCure, which promotes entrepreneurial solutions to poverty in the developing world.

Capitalism, socialism … or something else?

Dr. Andrew Abela writes that the Catholic Church’s teaching on economics is clear on the validity of the market economy. Find out what the Church has to say about capitalism, socialism and other economic systems. Abela draws from the forthcoming Catechism for Business to explore what the Holy Fathers have written about both socialism and capitalism over the past decades.

Dr. Andrew Abela

The current lingering economic malaise has led some to question the validity of the market economy. I will draw again from the forthcoming Catechism for Business to explore what the Church has to say about capitalism and socialism.

Let’s begin in the middle: Does Catholic teaching on economics represent some sort of middle or third way between capitalism and socialism? The answer is No. “The Church’s social doctrine is not a ‘third way’ between liberal capitalism and Marxist collectivism … it constitutes a category of its own … [as] the accurate formulation of the results of a careful reflection on the complex realities of human existence … in the light of faith and of the Church’s tradition” (Blessed John Paul II, Sollicitudo Rei Socialis, #41).

Nor does the Church recommend a particular economic model as the Catholic way for economic life. “The Church has no models to present; models that are real and truly effective can only arise within the framework of different historical situations through the efforts of all those who responsibly confront concrete problems in all their social, economic, political and cultural aspects as these interact with one another” (John Paul II, Centesimus Annus, #43).

Does socialism, then, conform with Gospel teaching? Again, the answer is No. “The illusion that a policy of mere redistribution of existing wealth can definitively resolve the problem must be set aside. In a modern economy, the value of assets is utterly dependent on the capacity to generate revenue in the present and the future. Wealth creation therefore becomes an inescapable duty, which must be kept in mind if the fight against material poverty is to be effective in the long term,” Pope Benedict XVI said in his Jan. 1, 2009, message for the World Day of Peace.

This, in part, is because “solidarity is first and foremost a sense of responsibility on the part of everyone with regard to everyone, and it cannot therefore be merely delegated to the state” (Benedict XVI, Caritas in Veritate, #38). Also, by “intervening directly and depriving society of its responsibility, the social assistance state leads to a loss of human energies and an inordinate increase of public agencies, which are dominated more by bureaucratic ways of thinking than by concern for serving their clients, and which are accompanied by an enormous increase in spending” (Centesimus Annus, #48).

And thus, “religious socialism [and] Christian socialism are contradictory terms; no one can be at the same time a good Catholic and a true socialist” (Pope Pius XI, Quadragesimo Anno, #120).

What about capitalism, then? Does it conform to Gospel teaching? The answer here, given by John Paul II in 1991 in the wake of the collapse of the Soviet Union, is carefully and beautifully nuanced. He wrote:

“If by ‘capitalism’ is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a ‘business economy,’ ‘market economy’ or simply ‘free economy.’

“But if by ‘capitalism’ is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative (Centesimus Annus, 42).

Thus a market economy conforms to Gospel values if it is set within a system of laws that ensure that it serves all of human freedom, not just economic freedom. This is because “economic freedom is only one element of human freedom. When it becomes autonomous, when man is seen more as a producer or consumer of goods than as a subject who produces and consumes in order to live, then economic freedom loses its necessary relationship to the human person and ends up by alienating and oppressing him” (Centesimus Annus, #39).

In a previous column I mentioned the new Master of Science in Business Analysis (MSBA) program at the Catholic University of America, a one-year graduate program designed to teach liberal arts students the language and tools of business (msba.cua.edu). As part of that program, I teach a course called The Spirit of Enterprise in which we read the major papal documents cited above in their entirety to give students a sound moral perspective on the economy. And employers seem to agree. I’m happy to report that all graduates who were in the job market coming out of our first year are gainfully employed — and at an average salary more than 50% higher than what they would have made a year before, prior to the program!

A charter member of Legatus’ Northern Virginia Chapter, Andrew V. Abela, Ph.D., is chairman of the Business and Economics department at the Catholic University of America.

The victory of socialism?

Michael Miller writes that we may have relegated socialism to the “dustbin of history,” but socialism never actually died. In many ways it has gained influence. The challenges of socialist thought are real. But there is hope in the resurgent resistance to the unprecedented growth of government. It’s time to rebuild a culture of ordered liberty . . .

Dr. Michael Miller

Dr. Michael Miller

The Economist marked the 20th anniversary of the fall of the Berlin Wall with the headline “So much gained, so much to lose.” As we celebrate the collapse of Communism, who would have imagined that in less than one generation we would witness a resurgence of socialism throughout Latin America and even hear the word socialist being used to describe policies in the United States.

We relegated socialism to the “dustbin of history,” but socialism never actually died. In many ways it has actually gained influence. That may sound reactionary, even McCarthyist — but only until we understand socialism the way socialists understand it.

Yes, socialist economic ideas went out of fashion, but socialism has always been more than just economics. We tend to equate socialism with Communism, Marxist revolutionaries and state ownership of industry. But socialism is a much broader vision of the person, society, equality and what it means to be free.

Karl Marx’s co-author, Friedrich Engels, saw three major obstacles to the socialist vision: “private property, religion and this present form of marriage.” Also central to socialist thought is a secular and materialist vision of the world that espouses relativism, sees everything politically, and locates genuine community in the state and not in families, churches or voluntary organizations.

The fall of Communism and two decades of globalization did not extinguish socialist hopes. The tactics changed, but the goals remained. Proponents of socialism traded in revolution for the gradualism of the Fabian socialists who encouraged use of democratic institutions to achieve socialist goals. They replaced political radicals like Lenin and Castro with the cultural Marxism of Theodore Adorno or Antonio Gramsci, who called for a “long march through the institutions” of Western culture.

This is the pedigree of Saul Alinsky, Bill Ayers and the various ’60s revolutionaries who now inhabit positions of cultural influence throughout the West. We are seeing the fruit of their efforts: Socialist visions of family, religion, art, community, commerce, and politics pervade the culture.

I’m not suggesting that Americans or Europeans live in socialist states. That would trivialize the suffering of those who lived behind the Iron Curtain. Rather, I am suggesting that socialist ideas have transformed the way many of us think about a host of important things. Ideas considered radical only 75 years ago are now considered quite normal and even respectable.

Look, for instance, at co-habitation rates and the number of people who “do not believe in marriage” or view it as a “bourgeois” institution. Directly or indirectly, they got those ideas from people like Engels and Adorno, who argued that “the institution of marriage is raised… [on] barbaric sexual oppression, which tendentially compels the man to take lifelong responsibility for someone with whom he once took pleasure in sleeping with.” The same-sex “marriage” movement and hostility to the traditional family follow Engels’ goal to destroy “this present form of marriage.”

In other realms we see increasing secularization, religion being equated with intolerance, and decreasing religious practice. Look at the common acceptance of ethical and cultural relativism and the fear of making truth claims lest one be labeled an extremist. Look at the unquestioned supremacy of the materialist and Darwinist thought that dominates the scientific community — or the political correctness that pervades language. Look at our public school system, increasingly focused on indoctrination rather than education. We joke that the universities are the last bastion of Marxism. But who do we think writes the textbooks that teach primary and high school students? The “long march through the institutions” has been more successful than its early advocates could have dreamed.

Of course it would be simplistic to blame socialism for all that ails the West. But socialism has been the principle vehicle of many of these ideas, carrying them into the mainstream.

So how is it that, after such dramatic failures, socialism continues to allure? Perhaps because — as future Pope Benedict XVI, Joseph Ratzinger, wrote — the Marxist dream of radical liberation still captures the modern imagination.

It’s a dream that will always betray because sustained liberty requires a certain moral culture: one that respects truth and conforms to it; one that recognizes the inherent dignity and spiritual nature of the person; one that respects the role of the family and encourages a rich and varied civil society; one that acknowledges that culture and religion are more important than politics; one that respects rule of law over the arbitrary rule of men and rejects utopian delusions; one that recognizes that the difference between right and wrong is not determined by majority, consensus or fashion; and, finally, one that recognizes that the ultimate source of liberty is God and not the state.

The fall of Communism in Eastern Europe was one of the great victories for human freedom. But while the East suffered untold misery, perhaps it was too easy a victory for us in the West. We were lulled into thinking that socialism had been discredited, had lost its allure — that free market economies and abundant goods were sufficient to satisfy human desires. Perhaps we should have listened more closely to those like John Paul II or Alexander Solzhenitsyn who warned us about an empty materialism, an insidious relativism and a vitiated culture.

The challenges of socialist thought are real. But there is hope. There is hope in the resurgent resistance to the unprecedented growth of government. There is hope in the millions of families who work hard and in the thousands who make sacrifices for freedom every day. As we mark the victory of freedom and the collapse of applied socialism, let us not come to a point where we look back with regret that we forfeited such a precious gift. Let us build anew a culture of ordered liberty. Let us learn from those who suffered. Let us recover the wisdom that comes from our faith and our Founders and hold fast to the fragile light of liberty.

Michael Miller is the Director of Programs at the Acton Institute for the Study of Religion and Liberty in Grand Rapids, Mich.

Bad Medicine

Catholics are concerned whether socialized medicine is compatible with the faith . . .

Legatus Magazine, October 2009

Legatus Magazine, October 2009

When Kishore Jayabalan tore a knee tendon in Rome three years ago, he went to St. Camillus – a public hospital. He waited four days to get local anesthesia in order to have minor surgery. His hospital roommate had been on a waiting list for six months to get a hip replacement. The hospital provided no towels, no nightgowns and water only with meals.

“If we were thirsty between meals, we had to send friends or family to buy bottled water outside the hospital,” said Jayabalan.

As the debate over health-care reform rages across the country, the faithful are concerned whether socialized medicine is compatible with Catholic social teaching. They’re also asking whether government-run health care is wise, given the trouble with socialized systems in Europe and Canada.

Kishore Jayabalan

Kishore Jayabalan

Jayabalan wasn’t required to pay out of pocket for his operation, but others pay a heavier price. Italian women, for example, are generally not permitted to have an epidural during childbirth (except for C-sections) no matter how much pain they are in.

The problem of socialism

For decades, U.S. bishops have advocated comprehensive reform that leads to universal health care. At the same time, Catholic teaching and tradition is wary of socialism. In fact, the entire body of Catholic social teaching over the last 150 years has warned against socialism because of its often devastating impact on private property, the role of the family and the role of organized religion.

Many papal encyclicals — including Rerum Novarum (Pope Leo XIII, 1891), Quadragesimo Annus (Pope Pius XI, 1931) and Centesimus Annus (Pope John Paul II, 1991) — warn against socialism.

“In Deus Caritas Est, Pope Benedict talks about how the state cannot provide everything,” explained Jayabalan, head of the Acton Institute’s Rome office. “The state exists to ensure justice: punishment for crime, respect for private property and the rule of law. But the state cannot — and should not — love people and provide charity. It is the private individual who must provide charity.”

Many of those individuals are Catholics with a long tradition of caring for the sick and the poor. One out of every six patients needing a hospital admission in the U.S. goes to a Catholic hospital. The Church runs 624 hospitals, 41 hospice organizations, 11 hospital systems; admits 5.5 million patients and conducts 92.7 million outpatient visits every year.

“In the New Testament, Jesus travels through the country healing the sick,” said Fr. Thomas Rosica, CEO of Salt and Light TV and former chaplain of Legatus’ Toronto Chapter. “Among the most powerful and practical parables that Jesus taught is that of the Good Samaritan. Our compassion for the suffering of our neighbors commits us to meeting their pain.”

Socialized medicine

waitingroom_webYet as noble as the desire is for socialized medicine, serious problems — rationed care, long waiting times, lack of qualified medical personnel and overspending — exist in every country with such a system.

“In Canada, there are 800,000 people on waiting lists. In the United Kingdom, there are 1.2 million people on waiting lists,” said Dr. Donald Condit, an orthopedic surgeon and policy expert for the Acton Institute.

In 2005, Canada’s Supreme Court struck down a law that prohibited people from buying private health insurance to cover procedures already offered by the public system. “Access to a waiting list is not access to health care,” the court’s ruling said. “In some cases patients die as a result of waiting lists for public health care … and many patients on non-urgent waiting lists are in pain and cannot fully enjoy any real quality of life.”

A 2006 Fraser Institute study reported that the average delay between referral and orthopedic surgery in Canada was 40.3 weeks, said Condit. In the U.S., the wait is less than four weeks.

Catholic social teaching supports the principle of subsidiarity — the tenet that nothing should be done by a larger and more complex organization which can be done as well by a smaller and simpler organization. With socialized medicine, however, government bureaucracies make decisions far removed from the doctor-patient relationship.

Research and development often lags in countries with government-run health care. Medical technology is developed because of a profit incentive, not at the behest of legislators.

“The profit motive for companies is much less under socialized medicine because the state dictates how much to charge for procedures and medicines,” said Jayabalan.

Bureaucrats in socialized medical systems run cost-benefit analyses on whether patients are worth treating. In the U.K., the National Institute for Clinical Excellence produces clinical appraisals on the cost-effectiveness of treatments — in many cases denying patients access to the latest medicines.

Universal health care

Despite the problems that riddle socialized health care systems around the world, some faithful Catholics support the principles of universal health care with the caveat that human life is respected from conception to natural death. Universal health care, however, does not necessarily have to come from the government.

Kathy Saile

Kathy Saile

“We agree that ‘no one should go broke because they get sick,’” said Kathy Saile, the U.S. bishops’ director of domestic social development. “That’s why the U.S. bishops have worked for decades for decent health care for all. The Catholic Church provides health care for millions, purchases health care, picks up the pieces of a failing health system and has a long tradition of teaching ethics in health care. Health-care reform that respects the life and dignity of all is a moral imperative and an urgent national priority.”

However, the vision for universal health care as proposed by Congress and the Obama administration may come with a high price tag. Pro-life leaders and the bishops are asking Obama to keep his word that he will not sign a health-care reform bill “if it adds one dime to the deficit now or in the future, period.”

The left-leaning secular media are skeptical and the Congressional Budget Office says the House version of the health bill (H.R. 3200) will cost $1.5 trillion over the next 10 years, and will increase the federal deficit by $239 billion between 2010-2019. If enacted, massive deficits or massive tax increases would result. This year’s federal budget deficit has already topped $1 trillion for the first time in history.

Analysts also worry about giving more control to the federal government, which already handles 34% of U.S. health care through the Veterans Administration, government workers and Medicare/Medicaid.

The Obama administration “has been found wanting in defense of human life with funding of abortion here and overseas, stem cell research and reversing the Mexico City policy,” said Condit. “And we should give them more control?”

Perhaps most troubling, critics say, is that the president is trying to push health care reform through too quickly.

“People feel like something is being pulled over their heads, and that sentiment is coming out at the town hall meetings,” said Dr. Steve White, a lung specialist and former head of the Catholic Medical Association.

“I think we have to stop the whole process and regroup,” he said. “Why the urgency? It’s extremely complex. Even the Congressional Budget Office has raised red flags. We’re in the middle of a recession. We need reform, but there are serious financial and ethical risks.”

Sabrina Arena is a Legatus Magazine staff writer.

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The public option

The Obama administration and congressional leaders are debating whether a new government-run health plan, modeled after the soon-to-be-bankrupt Medicare program, must be included in health-reform legislation.

Grace-Marie Turner

Grace-Marie Turner

“The public plan option has been a lightning rod for opposition to health reform because many people believe it is a track to a single-payer, government-run system,” Grace-Marie Turner, president of the Galen Institute, wrote in the New York Times in August. “This new government-run health insurance program would impose mandates on employers and individuals to get and pay for health coverage, drastically expand Medicaid and impose strict new federal regulation of the health insurance market.

“What the president miscalculated in putting health reform at the top of his change agenda is that the thing people cherish most about health care is security. Change scares them, as politicians across the land are suddenly seeing.”