“Applying lessons in a political economy,” The Colorado Springs Business Journal, November 7-13, 2014, 23.

LESSONS IN POLITICAL ECONOMY

As the latest mid-term election results are digested, and as we prepare for the onslaught of the 2016 elections, perhaps thinking about political economy is a more fruitful exercise than separating the two domains of our lives, the economy and politics.

The idea that the economy has nothing to do with politics is untenable, even in the ideal market capitalism of Adam Smith: who takes care of executing and enforcing contracts? Who ensures fairness of exchange?

There is an easy, somewhat cynical and definitely real way of thinking about the overlap of the economy and politics: the rich buying elections (through media advertisement). This has become especially true since Citizens United v Federal Election Commission (2010).

But there is a sober way of combining the two: the political and legal domains provide the conditions for markets—the economy—to thrive. Without the rule of law, markets become outrageously inefficient (and costly, if you have to hire the mob) if not outright dysfunctional (when no one can be trusted).

So, political economy encompasses the legal and political frameworks that reinforce the fairness of markets, the safety of exchanges, providing agencies and courts to make markets as efficient and inexpensive as possible.

Incidentally, this view isn’t limited to leftists who argue for market-socialism, but has been fully understood by the heroes of Milton Friedman and his Chicago School, namely, the Austrian School of Economics.

Two recent incidents reinforce this long-held belief. The first has to do with the newly appointed chairwoman of the Federal Reserve, Janet Yellen. While monitoring interest and unemployment rates, the flow of the money supply and the strength of the dollar, she reflected publicly about the hazards of inequality.

To be sure, chairwoman Yellen is concerned about economic and not political inequality; she cares less about the systematic disenfranchisement of voters in states like Texas and much more about income and wealth inequality.

As far as her comments can be interpreted, she’s channeling the view that financial inequality (of income and wealth) leads to reduced overall national demand (for goods and services) and therefore hampers economic growth.

Gone are the Reagan days of trickle-down economics, the theory that the very rich are supposed to spend so much that eventually the very poor will benefit as well. Likewise, the view that lowering taxes for expanded expenditure of the overall economy has been empirically discarded.

So, it’s reasonable to ask an economics question—is inequality undermining growth?—without having a moral question necessarily being asked as well (Pope Francis has taken care of raising the moral alarm bells).

But the economic question cannot be answered without changing policies associated with minimum-wages and closing tax loopholes for the corporate elite. All these, then, are political hot issues. Economics without politics is barren, and politics without economic consideration absurd.

The second case is less ideological but more frightening: the threat of the Ebola epidemic. Here we have political hot-button issues related to the balance that should be stricken between public health policies and individual privacy rights.

Should we quarantine those suspected of having been in the proximity of those infected by the Ebola virus? Should they be isolated from the general population? Where? When? For how long? Is this a state or federal policy?

How does this public health issue become an economic nightmare as well? Simply put, when a federal agency, like the Centers for Disease Control, wants to dictate a policy that affects private businesses, also known as hospitals. Where does one jurisdiction begin and the other ends?

Must private hospitals treat Ebola victims even if they have no insurance whatsoever or when the costs of treatment can never be recouped (even partially) by private or federal insurance agencies? Not every hospital takes all cases, and not every hospital has expensive and specialized units for rare disease: it’s not cost-effective.

But when it comes to public health, should economic questions even enter the equation? While the Affordable Care Act has been debated endlessly on ideological grounds, not much was heard from the private insurance companies that are the main beneficiaries from the Obama Administration’s largesse: the larger the pool of insured, the lower the risk; the lower the risk with additional premiums, the greater the profit.

Once again, the ideological debate cannot remain exclusively in the political domain, where candidates for political office can raise the issues without really dealing with them. For those wanting to blame Obama personally or his entire administration for the Ebola cases that were discovered on US soil, they should remember that health care remains a market-driven enterprise with federal mandates.

If we had universal health care like other industrialized nations across the globe, then of course the government has the power (and therefore the responsibility) to monitor and control the spread of an epidemic. But until we are more consistent in the application of our ideological differences, we cannot expect much progress.

Thinking of political economy as an interwoven set of ideas and practices that require a delicate balancing act between economic and political interests is the only way forward. With this in mind, we should expect piecemeal engineering, fine-tuning of policies that ensure the balance between the well-being of the nation as a whole and individual privacy.

Raphael Sassower is professor of philosophy at UCCS. He can be reached at rsassower@gmail.com See previous articles at sassower.blogspot.com

“Pope’s views against idolatry…and more,” The Colorado Springs Business Journal, January 3 – 9, 2014, 17.

Against Idolatry

 We recall the image of Jesus entering the temple in Jerusalem, driving out the merchants and overturning the tables of the money changers. This was a stern reminder to separate the holy from the mundane.

Likewise, we recall the image of a golden calf molten in the absence of Moses on Mount Sinai. Were precious metals more seductive to the impatient Israelites than an invisible power?

But we probably have forgotten the work of Liberation Theology in Latin America (1950s-1960s), where Catholic teachings were used to fight economic, political, and social inequalities. This movement wasn’t condoned by Rome, but had widespread support from local Bishops who tended to their oppressed flocks.

We also haven’t made much of the US Bishops’ Pastoral Letter(s) on the Economy (1970s and 1986) that railed against economic inequalities and the departure from Christian principles of brotherly love and helping the poor.

Economic reality, we have been led to believe, isn’t dictated from above—God or the Treasury Secretary—but moves naturally in the cycles of the “invisible hand”. So invisible, in fact, that any crisis is explicable after the fact in terms of “market forces” or the “laws of supply and demand.” Human agency is absent.

The recent “Apostolic Exhortation” by Pope Francis focuses on human agency in our economic system. Perhaps it’s because of his experiences in Argentina, perhaps it’s because his theological interpretation of a moral life here and now is intertwined with the economy.

To be sure, this is a Catholic view steeped in two-thousand years of tradition; it is also one that saw the fortunes of the Mother Church depend on wars and wealth accumulation. Being the single largest denomination of any religion on earth, the significance of the “exhortation” is global. The action, though, should be local.

Mindful that he speaks as the Vicar of Christ, Pope Francis deliberately fuses theological concerns of evangelism with economic reality: “The great danger in today’s world, pervaded as it is by consumerism, is the desolation and anguish born of a complacent yet covetous heart, the feverish pursuit of frivolous pleasures, and a blunted conscience.” This situation, for him, means that “there is no longer room for others, no place for the poor.”

The Pope describes our economy as one of “exclusion and inequality.” But his description becomes more critical when he says: “Such an economy kills.” It’s not an economy that hurts or overlooks, benefits some at the expense of others; it kills. Referring to news-media, he asks: “How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?”

When the stock-market index hovers around 16,000, why do commentators even bother to claim the Dow is “up” or “down” when it moves a few points in either direction? The percentage change is so negligible that the very reporting seems hubris. Do greed and fear consume our daily lives? Do these numbers help to reassure us?

Reminding us that the poor are excluded from our midst, he continues: “Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless.” Have you heard this assessment lately at your church? Are there more important theological issues?

For the Pope, as for some critics of hyper-capitalism, the economy is part of his theological message: its principles either follow or undermine moral principles. If market exchange of goods and services is exclusively defined in monetary terms, moral hazards are bound to appear. If economic transactions are justified by their potential benefits—the end justifies the means—what happens in the meantime? Will “trickle-down economics” indeed reach the poor?

The Pope answers: "Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power." In fact, “the excluded are still waiting.”

The “tyranny” of the current system and the “culture of prosperity” are harmful, according to the Pope. “We have created new idols,” he continues, and we continue to worship them. There is “idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose.” Should we continue to live like this?

Whether one is Catholic or not, as Christmas is celebrated and New Year resolutions are being made, it behooves us to think of Pope Francis’ words: “I exhort you to generous solidarity and to the return of economics and finance to an ethical approach which favors human beings.”

Raphael Sassower is professor of philosophy at UCCS. He can be reached at rsassower@gmail.com See previous articles at sassower.blogspot.com