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Hendrickson's View

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Hendrickson’s View

Mark W. Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from The Epoch Times, and Visionandvalues.org, a publication of Grove City College in Grove City, Pennsylvania.

Ready for Some Good News?

We are constantly bombarded with bad news. There are disasters, dangers, challenges, and woes. On the political scene, we find perpetual discord peppered with lurid denunciations and shrill condemnations. Media reports are alternately dismaying, disappointing, distressing, disgusting, or depressing. But despair not, friends: All is not lost!

Here let me serve you a heaping helping of good news: The world is more prosperous and more peaceful than it has ever been before.

To those of us who came of age in the ’60s, the two most pressing problems in the world were poverty and war. Fifty years later — Voila! — there is a lot less of those two blights on human life.

Let’s start with poverty: In the mid-1970s, there were approximately 3.5 billion people on Earth and two billion of them were poor and hungry. Forty years later, there were 7.3 billion people and 767 million in severe poverty. In less than two full generations, the proportion of severely poor humans has plummeted from five in nine to one in nine. Nothing remotely similar to this massive economic progress has ever happened before.

Look at poverty in a longer-term context: In 1820, near the dawn of the Age of Capitalism, 94 percent of people were poor. Indeed, throughout all of human history before then, only a tiny elite prospered while over 90 percent of humanity barely subsisted. At the end of World War II, there had been significant progress, but over 70 percent of the people alive were severely poor. Then look: in 1981, 44 percent of humans were severely poor; in 1990, 37 percent; 2010, 16 percent; 2013, 10.7 percent. This is an astonishing achievement.

Here let me interject a cautionary note: While we are on a trend to potentially eliminate severe poverty entirely by 2030, don’t count on that happening. Flawed humans have an amazing capacity to mess things up. Just look at Venezuela today. In 1950, Venezuela had the fourth-highest per capita GDP in the world. Today, crippled by socialist policies, Venezuela has been reduced to an economic basket case with people starving to death. (Americans enthralled by Bernie Sanders, take note.)

Now, back to the good news: More people are enjoying peace and prosperity than ever before. Poverty has receded to the degree that governments around the world abandoned socialistic policies and unleashed market forces. Billions of people gained greater freedom and opportunity to work, invest, produce, profit, and trade with each other, both domestically and internationally.

Indeed, an under-appreciated aspect of market liberalization (i.e., the freeing of economic activity from government controls) has been the increased freedom to trade across national borders. After two world wars with a trade war/depression sandwiched in between, enlightened statesmen in the 1940s (with Americans taking the lead) worked diligently to craft a more peaceful, prosperous world by lowering trade barriers and strengthening commercial ties.

The underlying economics is simple: Every time the social division of labor is expanded through the inclusion of more people in the marketplace, the greater the range of talents and products available to consumers and the more competition, specialization, efficiency, comparative advantages, and economies of scale impel producers to improve quality and lower prices. In short, more trade leads to more prosperity. And as greater international commerce demonstrates that trade increases prosperity, people realize that it is self-defeating to wage war against the very people who are supplying things we want.

The theory that trade conduces to peace has been borne out in practice. As international trade has expanded greatly since WWII, the incidence of war has plummeted. By one calculation, the number of wars was ten times greater in the century before 1950 than in the 50 years after. Harvard scholar Steven Pinker avers, “the world is less violent now than at any time in history.” Let us be grateful.

The post-WWII order — more trade, more prosperity, and more peace — is worth preserving. We should celebrate the amazing progress against the twin scourges of poverty and war, even as we continue to aim for their eventual elimination. Let us urge our leaders to remove the remaining barriers to trade. True, current trade rules are not always fair. They need to be improved, as President Trump is trying, but let’s not allow the perfect to be the enemy of the good and collapse the post-WWII order of trade and peace. Our unprecedentedly peaceful and prosperous world is a whole lot better than a world of national isolation, lower standards of living, and war.

Good News, Bad News about Divorce

First, the good news: “Millennials Are Causing the U.S. Divorce Rate to Plummet.” As reported by Ben Steverman on Bloomberg.com, Census Bureau data show that millennials’ divorce rate is so much lower than baby boomers’ divorce rate that the overall divorce rate has plunged by 18 percent from 2008 to 2016. The evidence indicates that young couples are less likely to rush into marriage and subsequently realize they had made a mistake.

Unfortunately, as encouraging as a falling divorce rate sounds on the surface, there is some bad news associated with it, too. As the Steverman report states:

“Many poor and less educated Americans are opting not to get married at all. They’re living together [and] often raising kids together [but] studies have shown these cohabiting relationships are less stable than they used to be.”

Although marriage is one of the most private institutions in a society, the state of marriage in a society has profound economic consequences. Repeated tabulations of data by social scientists shows a high correlation between being married and being prosperous. Economist Robert Whaples argues that after people get married, on average they are perceptibly more productive and earn more regardless of whether they were born prosperous or poor.

Further, Whaples shared key statistics about poverty among the married and unmarried. In 2005 (the most recent year for which he had data at the time he filmed his lecture series), the poverty rate was 7.8 percent for intact white American families and 8.2 percent for intact black American families. Combined with contemporary U.S. Census Bureau data that the poverty rate for unmarried mothers with children was 40 percent while it was only 8 percent for married couples with children, we can form two conclusions: 1) The much higher incidence of poverty or near-poverty among black Americans is not a racial gap, but a marriage gap, attributable to the much higher rate of white American families remaining intact compared to black American families. 2) In the words of policy analyst Robert Rector of the Heritage Foundation, marriage is “America’s greatest weapon against child poverty.”

Another salient point in Steverman’s report about America’s falling divorce rate was that the difference in marriage rates among the economically well-to-do and the economically marginal members of our society is “a sign of America’s widening chasm of inequality.” Yes, it is, but this trend is nothing new; on the contrary, it has been going on for decades.

The widening chasm of economic inequality to which Steverman referred is one of the central points in Charles Murray’s 2012 book Coming Apart. In it, Murray cited abundant data showing that the economic gap between affluent and economically marginal Americans has paralleled the widening gap between married and unmarried adults. Although it would be an oversimplification to assert that marital status is the single determinant of whether an American leads a prosperous life or not, it is clear that the perennial divide between the economic haves and have-nots is a divide between the married and unmarried.

The seemingly intractable persistence of a two-tier society must be frustrating the heck out of the social justice warriors and the inequality fanatics. The whole social engineering cult is besotted with the belief that it can construct a “great society” — i.e., one in which everyone shares more fully in the fruits of affluence — from the top down. The increasing incidence of unmarried Americans thwarts that egalitarian goal.

What, then, are the social planners to do? Would a federal Department of Marriage produce a larger number of happier marriages? Or should Uncle Sam ban marriage for everyone on the ground that it produces unequal economic outcomes? Even the most fervent of social planners can see what a nonstarter that is. Should married taxpayers pay a penalty to subsidize their poorer, unmarried compatriots? Would the favorite progressive prescription, “Raise taxes on rich corporations,” somehow result in more Americans marrying or help already married couples stay together? Hardly.

The marriage/wealth gap should enable everyone to see the limits of social engineering. There are certain things that the state simply cannot do. No government policy, program, or agency can mold citizens into individuals with loving hearts and the strength of character to accept responsibility and make long-term commitments.

Conservatives don’t have an easy answer for this problem either, although they reject out of hand the notion that it is up to government to “fix” the marriage problem.

That leads me to a humble suggestion for how more Americans can build a foundation for lasting marriages and the economic prosperity that generally follows. A successful marriage flourishes among individuals who are selfless enough to love others and to honor their duties. Marriage works best if the marriage partners have glimpsed the spiritual truths that it is sometimes better to give than to receive and to be of service to others instead of always prioritizing self-indulgence. Marriage is strengthened when husband and wife share the noble aspiration to live for a higher cause than just momentary whims and desires. Where are such values to be taught and inculcated? In church — maybe not in every church, but for 2,000 years, church has done much to prepare people for the demanding and fulfilling joys of marriage. Turning to the divine for guidance has blessed the lives of billions of people, including many generations of Americans. It can do the same today, if people will give it a try.

Spending More on Debt Than Defense

The financial health of the federal government has been deteriorating for decades. Unable to break free from our bipartisan addiction to deficit spending, the national debt has continued to rise relentlessly. This has brought us within sight of a grim milestone: the day when the interest that Americans have to pay on the national debt exceeds what we pay for national defense. According to The Wall Street Journal article, “U.S. on a Course to Spend More on Debt Than Defense,” we will reach that baleful milestone in only five years.

The figures are startling. In 2023, military spending is projected to be more than $700 billion. Yet in that same year the annual interest that taxpayers will pay on the national debt will be even higher.

You can argue that the federal government spends too much on defense. That is an unknowable except in retrospect, but the cost of spending too much on defense is almost certainly less than the cost of not spending enough. Whatever you think about defense spending, at least it is for present consumption. By contrast, interest on the national debt is for past consumption — over $27 trillion worth by 2023. That is how much young taxpayers will have to pay to service the debt run up by their elders.

When the enormity of this predicament dawns on stressed taxpayers, progressives assuredly will blame defense spending for our massive indebtedness. Of course, progressive opposition to defense spending has been a virtual constant for decades.

The fundamental problem with blaming Uncle Sam’s sorry fiscal state on defense is that, unlike those myriad other federal programs that have contributed to the national debt, defense spending is one of the few activities that Uncle Sam engages in that is explicitly authorized by the U.S. Constitution. For well over a century now, animated by the belief that the federal government should provide economic assistance to Americans, progressives have pushed for government to expand into areas of life never envisioned by the Founders nor authorized by amendments to the Constitution. It is no wonder that progressives attacked Justice Kavanaugh from the moment he was nominated. They fear and despise his respect for the text of the Constitution, because they want to spend more money on things not stipulated in the Constitution and less on what is stipulated in the Constitution.

Indeed, the progressive agenda of expanding government beyond its historical, constitutional confines has been hugely successful. Defense spending as a share of the federal budget has fallen from an average of 48.1 percent from 1792 to 1860 to under 25 percent today.

Defense spending no longer takes up the largest share of federal spending. In Fiscal Year 2015, Uncle Sam spent $609 billion on military programs, $1,051 billion on Medicare and health spending, and $1,275 billion on Social Security, Unemployment & Labor.

Today, military spending is only the third largest category in the federal budget. In five years, when interest payments on the national debt surpass it, military spending will be the fourth largest.

The federal government is in uncharted waters, financially speaking. Historically, the federal government incurred significant debt only in wartime and then whittled away at that debt during peacetime. In the modern era, when federal spending expanded into new areas, the national debt has swollen rather than shrunk during peacetime. The fiscal problem, then, is not due to military spending, but to other spending.

Sooner or later, something will have to give. We eventually will have to learn to live within our means. I don’t say that as a matter of opinion, but as a law of nature. It simply isn’t possible to live beyond one’s means indefinitely. The longer it takes for us to learn that lesson, the more painful the convulsions of a future debt crackup will be.

One Judge’s Role in Sabotaging the Keystone XL Pipeline Project

Last week I was chatting with a friend who asked me the current status of the Keystone XL pipeline project. This is the pipeline that would transport over 800,000 barrels per day of oil from Alberta, Canada, to Nebraska. There it would connect with existing pipelines that feed into the oil refineries in the gulf coast region.

President Barack Obama had sided with environmentalists in blocking the construction of the pipeline whereas President Donald Trump has openly supported this project, both before and after taking the oath of office. Indeed, two months into his presidency, the State Department issued the necessary permit for the pipeline to cross the U.S-Canadian border.

I don’t know if my friend and I jinxed the project, but late last week a federal judge declared that he was putting the project on hold. By taking this aggressive action, U.S. District Judge Brian M. Morris has endeared himself to “environmentalists who want to keep fossil fuels in the ground” (to use the words of The Wall Street Journal’s reporter Miguel Bustillo).

This appears to be a case of judicial usurpation of the legislative and executive branches of government. Since when are judges supposed to determine our country’s energy policies? Environmentalist activists have been blocking the Keystone XL project for a decade through a series of legal delay tactics and, for eight years, with the cooperation of the Obama administration.

Judge Morris is demanding an updated environmental review “to weigh several additional factors, including the impact of lower oil prices on the project’s viability, its related greenhouse-gas emissions, and modeling of potential oil spills it could cause.” These are three transparent pretexts that the judge has no business requiring.

The first demand the judge made is for the private business interests that want to undertake this project should consider its economic viability. Really? Does he think that the people who want to build Keystone haven’t considered its potential for profit and loss? It’s their money; if they want to risk it, who is a judge to rule that they can’t?

The very premise of this request is absurd, because it implies that human beings can somehow calculate what future market prices will be. This is the arrogance of a socialistic central planning mentality. Nobody knows the future. On the positive side, increasing the production of energy sources in politically stable North America will enhance national security. It may also help to increase the supply of oil enough to push energy prices lower to the great benefit of Americans, and particularly poorer Americans who spend a higher percentage of their income on energy than do more affluent Americans. And if the project eventually goes bankrupt, well, the taxpayer isn’t on the hook. This is a private investment with the financial risk all borne by the private sector. It isn’t the judge’s role to interfere with the private decision of how much risk people are willing to take with their own property.

As for the second reason given for blocking construction of this pipeline, why should the builders of Keystone XL have to quantify the project’s carbon dioxide emissions? Until such a requirement becomes the law of the land universally applicable to every company, this is a discriminatory action. Besides, as I’ve written elsewhere it turns out that the increased concentration of carbon dioxide in the atmosphere is significantly greening the earth while the heat-trapping capacity of this benign gas is close to maxed out.

Finally, the demand for “modeling” of potential oil spills is a red herring. Moving oil long distances through pipelines is not a new industry. Our country already is crisscrossed by thousands of miles of pipelines. Do accidents occasionally happen? Yes, but rarely. The big story is how countless barrels of fossil fuels have been transported safely day after day, year after year. It sounds like the judge suffers from a typical liberal desire, which is to live in a perfect and risk-free world. Sorry, sir, there is only perfection in heaven. To block a project because there is a small chance that something might go wrong is essentially prejudicial. It feels like the Tom Cruise movie “Minority Report,” in which the police, employing psychics, arrested people before they committed a crime. That isn’t American justice.

We have laws in place to punish malfeasance, if and when it should occur. The companies that want to build the Keystone XL pipeline face powerful economic incentives to get it right. They’ve been jumping through regulatory and legal hoops for ten years. It’s time to quit persecuting them and let them get on with it.

As President Trump stated one time when he declared his support for Keystone: America is about building. The first steps to organize the project for building the Empire State Building happened in 1929.  Construction began the following March and was finished one year and 45 days later. These obstructionist delay tactics are a disgrace to our national heritage. 

The Politics of E15

On October 9, President Donald Trump announced that he was lifting the EPA’s ban on summertime sales of E15 — a motor fuel blend consisting of 15 percent ethanol instead of the usual 10 percent. Trump’s announcement is telling. It teaches much about politics, trade policy, and the sorry state of the environmentalist movement.

That Trump’s announcement was politically motivated is obvious. The proposed new policy was announced during a campaign visit to Iowa. A crucial biennial election loomed, and Trump unveiled his plan there to give a boost to the electoral prospects of Republicans in the Corn Belt.

Such a move was politically necessary after Trump’s tariffs on Chinese imports triggered retaliatory tariffs that reduced American food exports to China and cut American farmers’ incomes. The president needed to demonstrate to farmers that he is looking out for their interests. The call for greater use of E15 — which would increase the demand for corn — was music to the ears of many voters in the Farm Belt.

This sequence of events — economically disruptive tariffs followed by a policy designed to mitigate or offset those disruptions — illustrates a profound truth about political economy. The great Austrian economist Ludwig von Mises elucidated this truth in his essay, “Middle-of-the-Road Policy Leads to Socialism.” [Stay calm; I am not suggesting that Trump wants socialism!]

Mises’s point was that government intervention into markets, however well intentioned, inevitably impacts prices and patterns of production. Intervention helps some and hurts others. Those who now have a government-induced problem, like American farmers after the imposition of tariffs, expect the government to solve that problem. But whatever government does in the attempt to offset the damage its policies caused will further distort markets. This will stimulate cries for further intervention. Thus, the tendency of intervention is to breed further intervention.

Trump’s trade policy is developing as a “two steps forward, one step back” process. (Let’s hope it doesn’t end up being one step forward for every two steps back!) Clearly, the proposal for increased usage of E15 is a government subsidy to corn growers and the ethanol industry. It moves us even farther away from Trump’s professed goal of dropping all tariffs, trade barriers, and subsidies. Realistically, given our current political alignment, zero subsidies for American agriculture is inconceivable for the foreseeable future.

I have written before about the negative economic effects of using corn-based ethanol as a motor fuel. The negative environmental impacts are significant, too. Although some green groups, such as the Sierra Club, have warned about the environmental consequences of corn-based ethanol in the past, they have remained strangely silent about Trump’s plan to increase its usage. Apparently, they are too busy trying to use the climate change issue to scare Americans into embracing socialism to challenge a policy that truly is environmentally harmful. This underscores my long-held belief that preserving a healthy environment is not the primary goal of environmentalists.

Forty percent of the American corn crop already gets burned up in our vehicles’ engines. That represents millions of acres of land that are converted from wildlife habitat to tillage. It causes the use of who-knows-how-many tons of fertilizers that unnecessarily contaminates water (e.g., red tide in Florida).

Worst of all, any government policy that hastens the pace of water consumption in the Midwest, where aquifers already are dangerously depleted, is environmentally shortsighted. If environmentalists really cared about the environment more than they want to increase government control of the economy, they would oppose corn-based fuel more vigorously than they oppose fracking. Fracking does not jeopardize our precious water supply; corn-based ethanol does.    

Remembering Soviet Dissidents and the Weaponization of Psychiatry

The New York Times obituary opened with a simple recitation of facts: “Zhores A. Medvedev, the Soviet biologist, writer and dissident who was declared insane, confined to a mental institution and stripped of his citizenship in the 1970s after attacking a Stalinist pseudoscience, died . . . in London.”

Zhores Medvedev, his twin brother Roy (still alive at 93), the physicist Andrei Sakharov, and the Nobel Prize-winning novelist Aleksandr Solzenitsyn were leading dissidents. They courageously put their lives on the line to smuggle manuscripts out of the Soviet Union. They wanted the outer world to learn the truth about the “the workers’ paradise” that so many Western intellectuals (some deluded, others having gone over to the dark side) praised.

A generation of Americans has been born since the Soviet Union, the USSR that President Ronald Reagan boldly labeled “the evil empire,” ceased to exist. They have little to no concept of how ferociously the USSR’s Communist tyranny suppressed dissent. As the Times obit of Dr. Medvedev illustrates, one Soviet technique of oppression was to declare that political dissidents were insane. They were then incarcerated in psychiatric hospitals where they were tormented and tortured. Some were used as human guinea pigs for dangerous experiments. (Shades of Hitler’s buddy, Dr. Mengele). Some even succumbed to the not-so-tender ministrations of those “hospitals.”

I recall one particular example of the disgusting abuse of human beings in Soviet psychiatric hospitals. Vladimir Bukovsky, who will turn 76 later this month, spent a dozen years being shuffled between Soviet jails, labor camps, and psychiatric hospitals. One of the “therapies” administered in a psychiatric hospital was putting a cord into his mouth, then threading it from his throat up through his nasal passages, and then drawing it out through one of his nostrils. (Maybe the cord went in the opposite direction; I’ve never been interested in memorizing torture techniques.) Alas, this Communist “treatment” did not “cure” Bukovsky of his rational (not irrational) abhorrence of tyranny and brutality.

The warped thought process that led to the perversion and weaponization of psychiatry in the Soviet Union can be traced back to Communist icon and thought leader, Karl Marx. Marx propounded a spurious doctrine known as “polylogism” to justify stifling dissent. According to Marx, different classes of people had different structures in their minds. Thus, Marx declared the bourgeoisie to be mentally defective because they were inherently unable to comprehend Marx’s (allegedly) revelatory and progressive theories. Since they were, in a sense, insane, there was no valid reason for Communists to “waste time” arguing with them. On the contrary, Communists were justified in not only ignoring or suppressing bourgeois ideas, but in liquidating the entire bourgeois class.

The practice of categorizing one’s enemies as “insane” became a ready tool of suppression in the Soviet State founded by Lenin and developed under Stalin. The USSR’s infamous secret police energetically wielded quack psychiatry as a club with which to destroy political dissidents.

The incarceration of Zhores Medvedev in psychiatric hospitals in the 1970s was a monstrous injustice. His “crime” was having exposed the bizarre pseudoscience of Lysenkoism that Stalin had embraced in the 1950s. Lysenko’s quack theories led to deadly crop failures and widespread starvation. Nevertheless, Stalin backed him by executing scientists who dared to disagree with Lysenko. Millions of innocents lost their lives because “truth” in the Soviet Union wasn’t scientific, but political.

Another vivid example of the destructive consequences of politicizing truth is related in Solzhenitsyn’s exposé of Soviet labor camps, The Gulag Archipelago. Certain Soviet officials decided to increase the steel shipped to a certain area. When the planners issued orders for trains to carry double the steel to the designated destination, conscientious engineers informed them that it couldn’t be done. They pointed out that the existing train tracks could not support such great weights. The politicians had the engineers executed as “saboteurs” for opposing “the plan.” What followed was predictable: The loads were doubled, the tracks gave out, and the designated area ended up getting less steel, not more.

This episode shows where the true insanity was in the USSR. The central planners believed that constructing their ideal country was simply a matter of will. Alas, reality doesn’t conform to the whims or will of any human being, but the arrogance of central planners remains stubbornly impervious to that inescapable facts of life. Instead, as the havoc wrought by Soviet central economic planners repeatedly demonstrated, the Communist central planners refused to abandon their insufferable self-delusion and mystical belief in the power of their own will to alter reality. This was the true insanity, compounded by the error of persecuting competent scientists like Zhores Medvedev.

Sadly, the practice of branding political opponents as “insane” is not confined to the now-defunct Soviet state. In 1981, when I was completing my master’s thesis about Solzhenitsyn, I telephoned an American college professor of history to ask whether he recalled if Solzhenitsyn had been granted honorary U.S. citizenship. (He wasn’t. President Ford didn’t want to offend the Soviet leadership.) The reply to my question was this: “Aleksandr Solzhenitsyn belongs in an insane asylum.” The virus of Marx’s polylogism is, unfortunately, alive and well in American academia.

As for Zhores Medvedev, may he now rest in peace and receive his reward for his integrity and courage.     *

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Mark Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.

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