Sunday, 29 November 2015 03:45

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 V & V, a web site of the Center for Vision & Values.

Reflections on the Deepwater Horizon Disaster

The explosion that sank British Petroleum's Deepwater Horizon oil-drilling vessel/platform in the Gulf of Mexico in April was an unmitigated disaster. The accident killed 11 workers and has caused massive environmental damage, the full extent of which may not become known for months or years.

Here are some thoughts on this horrible event:

1) The deaths of 11 workers drilling for oil -- less than three weeks after the deaths of 29 West Virginia coal miners -- serve as a vivid reminder of the dangers faced by those who toil to supply the raw energy upon which our society depends. Most of us take for granted these vital contributors to our economic life. As one who never knew his father due to an oil-field accident long ago, I tend to view these folks as unrecognized heroes. Thank you to all who are doing this essential, dangerous work; may God comfort all who have lost loved ones in this endeavor.

2) The technologies that have been developed to extract fossil fuels from the earth are engineering marvels. Some drilling vessels in the Gulf are nearly the size of World War II-era aircraft carriers. There have been over 14,000 wells drilled in at least 700 feet of water with a superb overall safety record, including no oil spills in the Gulf despite the merciless battering inflicted by Hurricane Katrina. (Whether drilling these wells is safe enough to be permitted is a separate question that will be revisited below.) Drilling for oil in oceans five miles deep, into deposits where the temperature can reach 900 degrees and the pressure 20,000 pounds per square inch, is a colossal engineering achievement.

3) We must never forget the power of nature. Humans have devised myriad ways of fending off nature's destructive power, but there will always be times when nature will simply overpower and overwhelm our best efforts. The explosive force that erupted through the ocean floor and destroyed Deepwater Horizon is one emphatic reminder of that awesome might.

4) Was the disaster avoidable? This is the key question. It is very tempting to jump to conclusions, but first we need more fact-finding.

There have been reports that workers saw considerable physical evidence that key parts of the built-in safety mechanisms on Deepwater Horizon had disintegrated. A preliminary congressional memo containing admissions of "mistakes" by BP reinforces the impression that the disaster might have resulted from a faulty decision-making process. If so, then this horrible tragedy will enter business-school literature as perhaps the definitive case of a dysfunctional managerial chain-of-command.

One of the oldest lessons in the book is to avoid being penny-wise and pound-foolish. How tragic and foolish it would be if it turns out that a decision was made to ignore a safety shutdown that would have cost millions, thereby resulting in an accident that surely will cost BP and related corporations billions.

There has been an unconfirmed report that government regulators gave Deepwater Horizon a pass. If so, why?

5) Finally, should we stop drilling for hydrocarbons in such deep waters? The central problem we deal with in environmental economics is whether the costs of an activity outweigh the benefits or vice versa. It isn't always possible to accurately tabulate costs and benefits, but without a doubt, the environmental and human costs of the Deepwater Horizon disaster are gargantuan.

I certainly can't say whether deep-sea oil development should continue. With 20 percent of the oil consumed in the United States coming from the Gulf of Mexico, a complete cessation of drilling there appears to be out of the question. Certainly, though, there will be a re-examination of where drilling will be allowed.

Many people are asking why there is drilling in such deep waters. This is a complex issue with multiple factors to consider, but ironically, environmentalists may be partly responsible.

For decades, environmentalists have striven to thwart the development of domestic supplies of energy. They have blocked oil exploration and development in vast tracts of Alaska, the Rocky Mountain states, and the outer continental shelf under relatively shallow waters along our coasts. Furthermore, environmentalists succeeded in preventing increased usage of another energy source that is economically competitive and ecologically and operationally the safest energy source readily and abundantly available to us -- namely, nuclear energy.

If these sources of energy had not been choked off in the name of environmental protection, would energy companies be currently drilling as many higher-cost wells in deep water? Is it not possible that zealous environmentalists have unwittingly driven energy companies to drill for oil in places where perhaps they have no business drilling? Should environmentalists rethink their positions and make their peace with sources of energy that pose less of a threat to the environment than deep-water drilling?

These are important questions for environmentalists, policymakers, and indeed, all of us, to consider.

Christian Charity: Social Justice and the Good Samaritan

Charity -- a loving spirit concretely expressed in unselfish good deeds to one's fellow man -- is a primary Christian duty. Nobody who has read the New Testament can come to any other conclusion.

In his parable of the Good Samaritan (Luke 10:30-37), Jesus explains what it means to love one's neighbor as oneself. When the Samaritan happened to encounter a man who had been badly hurt by robbers, he compassionately ministered to the man's needs. This was in stark contrast to two other men who already had seen the wounded man and left without helping him. The vivid contrast was made even more stark by the fact that the merciful man was a Samaritan, whom Jesus' own people, the Jews, despised as religious inferiors, while the heartless men who ignored the victim's plight -- a priest and a Levite -- came from the ranks of the religious elite.

The Good Samaritan gave what he could to help the wounded man. He first took care of him himself, and then, when his own pre-existing commitments necessitated his departure, he paid an innkeeper to nurse the man back to health.

In this famous parable, Jesus illustrated, with exquisite (and typical) brevity and simplicity, the two forms of Christian charity: first, assistance provided personally and directly to another; second, rendering assistance indirectly by donating one's own property to those who have the time and skills to tend to those in need, in lieu of our own hands-on assistance.

As a thought experiment, let's imagine the story of the Good Samaritan taking a different twist. Let's suppose that the Samaritan, upon spotting the badly wounded man, also sees a rich man walking by. Let us then suppose that the Samaritan is a big, powerful man who intimidates the rich man into handing over enough money to pay for the wounded man's care. The man in need would still receive the help that he so desperately needs, but would the Samaritan still touch our heart, and would he have acted selflessly? Would we remember him as a paragon of Christian virtue and charity?

Jesus had not demanded that the Samaritan take money from strangers on the street by threat of force. That wouldn't feel right, would it?

The obvious difference, of course, is that in Jesus' parable, the Samaritan acts voluntarily -- out of the goodness of his own heart -- whereas in my hypothetical, counterfeit version, the Samaritan engages in an ersatz pseudo-charity by forcing someone else to pay for the good deed that the Samaritan wants to be performed. Is it true charity to be generous with other people's money?

This is the murky moral territory onto which many Christians stray in the name of "social justice" or the social gospel. The desire to help those in need is laudable, but the means often employed by advocates of "social justice" are not.

Many Christians commit a fundamental error when they call for government to redistribute wealth to the poor, the sick, the needy. Government necessarily introduces the additional factor of compulsion into the equation, as government employs organized force.

If we wouldn't justify an individual collecting funds for the poor by threatening passersby, then how do we justify government using the threat of fines or imprisonment to extract property from some to give it to others? In the words of Thomas Jefferson:

It is strangely absurd [to suppose] that a million human beings, collected together, are not under the same moral laws that bind (or liberate) each of them separately.

This isn't to say that no collective action should be taken to minister to the poor. Indeed, many churches and various private-sector charities are doing praiseworthy work for those in need, and they merit our financial support. The common factor, though, in these nongovernmental organizations is that participation is voluntary. Nobody compels you to belong to a certain church or contribute to a specific charitable organization. It is your prerogative and choice.

By all means, be charitable. But don't mix charity with compulsion. Jesus never did.

Tragedy in Amish Country: Living Levi's Example

I first met Levi almost 20 years ago. He was about 12. We had just purchased our land from his parents, Jake and Nancy. Being old-order Amish, Jake and Nancy needed a ride to the attorney's office, so we drove them and new-born Chris, their youngest, to finalize the transaction. Thus began a very special friendship between two families.

Every Christmas Eve, our little family of three and Jake and Nancy's larger family (five children at the beginning, but more recently including four daughters-in-law, one son-in-law, and 13 grandchildren) gather for Christmas fellowship.

Levi is the second of Jake and Nancy's five children. Friendly, kind, very bright, soft-spoken, strong and gentle, he has always been a gem. I can still picture, during that first year of friendship, Levi sitting next to my daughter on a couch in Jake and Nancy's house. Karin, who was about 15, was holding a book or magazine. Levi leaned over to get a better look, resting his head on Karin's shoulder. It was a completely unselfconscious moment for both of them, just two pure and innocent youngsters sharing the joy of a story. Nancy remarked, "I know we don't have photographs, but I'd love to have a photo of that."

Levi was an avid reader. I shared dozens of the books that I had read as a young teenager with him and his siblings.

About ten years ago, we attended the wedding dinner celebrating Levi's marriage to Katie. We were two of five "English" (that's the word the Amish use for all of us who aren't Amish) packed in among 200 or 300 Amish.

Katie was a perfect match for Levi, a veritable angel of sweetness and quiet steadiness. A couple of years later, they welcomed Sally into the world. Of all of Jake and Nancy's 13 grandchildren, it was Sally who bonded most closely with our family. The highlight of her year was to draw pictures to give us at our Christmas Eve gathering and to help my Eileen in the kitchen. Like her Aunt Lizzie before her, she was enthralled by the "miracle" of the "baked Alaska" going into the hot oven and the ice cream not melting.

Five years later (about three years ago) little Anna joined the family. The four of them lived their version of the American dream, keeping to the simple Amish life, placing worship of God and love of their families above all else. It was idyllic.

Two weeks ago, Jake and Nancy were over for dessert. Eileen told Nancy that she would be going over to visit her buddy, Sally, on the following Monday. It wasn't to be.

On that Saturday, May 8, the unthinkable happened. Levi went fishing with his brother Gideon, one of those simple enjoyments that always remain special to these unspoiled people. It was a miserable day, cold, windy, and rainy. At home, Katie went to light a fire. Somehow the can of kerosene ignited. Katie, Sally, and Anna all quickly succumbed.

The next day was visitation. It was at Levi's next-door neighbor's house. I have never seen such gloom and grief in my life. Dozens of Amish were quietly and tearfully sitting on rows of benches -- men in one group, women in the other, as is their custom.

I could barely recognize Levi, so transfigured were his features by sorrow. We shared a quiet, private word. Jake, his father, was sitting next to him. He couldn't speak. I just stayed by his side for a few minutes, hand gently touching him in wordless sympathy. Later a tearful Nancy softly voiced her deep faith to Eileen and me, bravely affirming, "God is in control."

I went to visit Jake and Nancy two days after the funeral. They reported that Levi was trying to buoy up everyone's spirits. The next day, I spent a half-hour with Levi, and found that to be the case. Though still trying to come to grips with this inexplicable calamity, he continues to be a loving soul, caring deeply for those around him. He has already learned the secret discovered by Job in the Bible, that the key to recovery and renewal from grievous affliction is to pray for one's friends.

A tragedy of this magnitude puts things in perspective. Why do we waste our scarce and precious time on earth with trivial concerns and petty quarrels?

One of my college classmates told me that her dad's advice on her wedding day was, "Don't sweat the small stuff." Amen. Let us all honor the gift of life by forgiving and forgetting our misunderstandings, small and great, and use our brief time on earth to do a better job of loving each other. Let us follow Levi's example.

Reservations About a Balanced Budget Amendment

Calling for a balanced budget amendment has been a staple campaign issue for conservative Republicans for years. Undeniably, our nation is beset by fearful fiscal woes. However, a balanced budget amendment isn't the answer.

Let me emphasize that I endorse a balanced budget in principle. Indeed, in my recent article, "Good Cop, Bad Cop," I wrote, "The greatest threat to our country's future is chronic overspending by the federal government." Government, like individuals, should live within its means, and because it isn't, we are bankrupting ourselves and perpetrating a great evil on our children by saddling them with a national debt that now exceeds $13 trillion.

Further, I reject the economic orthodoxy that claims that government has mystical power to spend us into prosperity by running deficits. All deficit spending can do is what an inflationary monetary policy does, namely, distort production, not produce a net increase in sustainable production.

In short, then, I believe that balancing government budgets is a virtue and that government fiscal deficits are a vice. So what objections could I possibly have to a balanced budget amendment? I have two . . . well, make that two-and-a-half.

The "half" is my skepticism about the facile notion -- so common among both conservatives and liberals -- that laws and amendments solve every problem. Not so. In practice, no law can work unless there is the will to enforce it and abide by it. Remember Public Law #95-435? Of course not. Adopted by Congress in October 1978, it was one of several laws solemnly binding Congress to a balanced budget (in that case, by 1982). Needless to say, Congress has perennially proven incapable of abiding by such laws.

Ah, but wouldn't enshrining a balanced budget in the Constitution itself accomplish the goal? I doubt it. I've already written about the way the Constitution is selectively observed. An additional reason for skepticism is that many state governments are running large deficits despite state constitutions that expressly ban deficit spending.

Let's assume, though, that human nature is transformed so that Congress would actually balance the budget if the Constitution said it must. There reside the two major problems with passing a constitutional amendment to balance the budget:

The first problem is a practical consideration. How would Congress close a deficit of $1.5 trillion? While free-market economists like yours truly would love to see federal spending cut by $1.5 trillion (actually, by more!), can you imagine the political donnybrook in Washington this would precipitate? The only way the Big Government majority in Washington would agree to a balanced budget would be to raise taxes one dollar for every dollar of spending cuts. In other words, the best we could hope for would be spending cuts of three-quarters of a trillion dollars combined with increasing tax revenues by three-quarters of a trillion dollars. Ouch! In the economy's current weak condition, increasing the tax burden by $750 billion would absolutely crush us. This "cure" would kill the patient.

The other problem with a balanced budget amendment is that it would legitimize current constitutional abuses. As it currently stands, the Constitution does not authorize most of what the federal government spends.

The Founders crafted a Constitution of limited enumerated powers of government. They clearly were of the "strict construction" school, believing that the federal government should do only what the Constitution explicitly stipulates and nothing else.

In the decades since, the "loose construction" philosophy has mangled that original intent by adopting the opposite view that the federal government can do anything that the Constitution doesn't explicitly state that it can't do -- a formula for virtually unlimited, infinitely elastic expansion of government.

If we, as a country, would strictly abide by the letter of the Constitution, federal spending would be a mere fraction of what it currently is. We wouldn't have trillion-dollar deficits and nobody would be talking about a balanced budget amendment.

Amending the Constitution requires prodigious effort. That is why it has been done fewer than 20 times since the Bill of Rights was ratified in 1791. Rather than knock ourselves out trying to amend the Constitution, let's strive to restore a correct understanding of the Constitution. We don't need to amend the Constitution as much as we need to read it, understand it, and abide by it.

The Founders have given us the only tool we need to put an end to deficit spending. Let's begin using it.

America Needs Union Competition

I agree with President Obama that we need more labor unions. However, I disagree with his approach.

Full disclosure: I have been a dues-payer to both the United Auto Workers and the National Education Association unions. My sympathies are heavily tilted toward the interests of the men and women who do the work that makes America go.

For that reason, I strongly oppose the dishonestly named "Employee Free Choice Act," which aims to deprive workers of secret ballots when voting for or against union representation. You don't benefit workers by stripping them of basic democratic protections.

Team Obama made another anti-democratic, anti-worker, pro-union move on May 10. The National Mediation Board (with an Obama appointee providing the tie-breaking vote in a 2-1 decision) overturned 75 years of established policy by ruling that aviation and railway workers can unionize without the approval of a majority of members. Now, union organizers only need to obtain a majority of votes actually cast. By manipulating who votes, as well as when, where, and how, union organizers will be able to thwart genuinely democratic decisions.

There are better ways to increase the number of labor unions. Let us revise existing labor laws to make it easier for unions to form in ways that increase the number of unions from which American workers could choose.

First, let's amend the Clayton Antitrust Act of 1914. That law was designed to prevent monopolies, but it explicitly exempted labor unions. Let's repeal that exception.

We generally agree that monopolies are bad and that competition is good. Why do we end up with the best cars, the best cell phones, the best personal computers, etc.? Simple: The relentless pressures of competition drive companies to provide more value for fewer consumer dollars. And what explains the abominable performance of many public schools, the higher death rates in the United Kingdom's nationalized healthcare system, and the lousy quality of American currency (Federal Reserve Notes having lost approximately 98 percent of their purchasing power in less than a century)? Equally simple: The lack of competition to which these government-mandated monopolies or near-monopolies are exposed. Introduce competition into these markets, and quality would improve markedly.

The same principle holds true for labor unions. If unions had to compete to represent workers' best interests, they would be more accountable and responsive to the workers whose dues they take.

For example, think of Republican teachers who may feel that the benefits they receive from their mandatory NEA dues are outweighed by the NEA's practice of spending those dues overwhelmingly in support of liberal Democratic causes. These teachers would be free to join a competing union that supports GOP initiatives, or, alternatively, a completely apolitical union.

Think of the job-security issue: Given the abject failure of the UAW and other monopolistic unions at preserving the jobs of their members, wouldn't it be fairer if workers had the option to join unions that emphasize long-term job security over higher compensation packages in the short run? Under the current system, union bosses have every incentive to pay themselves lavish compensation, even as they cannibalize the jobs of their rank and file.

If unions had to compete for members, surely there would be fewer scandals of union brass using union treasuries as personal piggy banks.

Another needed reform is to end the "union shop" principle. Americans need to be free to join or not join whatever organizations they choose. How can a person be considered free when he or she is either prohibited from joining or contributing to an organization that he admires or, conversely, compelled to join or contribute to an organization that he loathes? The right to join was protected when the Norris-LaGuardia Act of 1932 outlawed "yellow dog" contracts under which employers denied workers the right to join a union. The right not to join is violated by the Wagner Act of 1935 and Taft-Hartley Act of 1947, under which workers may be compelled to pay dues to a monopolistic union as a condition for having their job. Those acts should be amended.

In short, let's end union monopoly and forced-dues privileges, and let new unions emerge and compete to best serve their members' interests. If there had been open competition between unions over the past century, who knows what creative and effective nongovernmental solutions would have been found to address workers' concerns about pensions, healthcare, unemployment insurance, etc.?

Too many American workers have been denied the benefits of competition for far too long. Enough is enough. Let competition between labor unions begin today. Let the number of unions proliferate and let workers choose to ally themselves with whatever unions best serve their needs. *

"With respect to future debt; would it not be wise and just for that nation to declare in the constitution they are forming that neither the legislature, nor the nation itself can validly contract more debt, than they may pay within their own age . . ." --Thomas Jefferson

Read 3850 times Last modified on Sunday, 29 November 2015 09:45
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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