August 31, 2011

The Eminently Real Free Market (XXX): Sketchy Stories (18): “Bono the Capitalist Exploiter”

Two oldies but goodies from 2006, germane to an assessment of the topic of the preceding post, are Professor Art Carden’s  “Why Wal-Mart Matters” and Paul Kirklin’s “The Ultimate Pro-Wal-Mart Article,” both of which originally appeared on mises.org.
Since Mr. Ferrara likes examples of actual capitalist practice and the gritty details thereof, we’d like to bring to your attention one from the world of well-intentioned but economically ignorant celebrity, courtesy of Loyola University Professor Thomas J. DiLorenzo and economics student Vedran Vuk. It also originally appeared on mises.org.

Bono the Capitalist Exploiter
Bono and his wife, Ali Hewson, have been traveling the globe endorsing their new clothing line, Edun. This clothing line promises to create Fair Trade–like principles which respect the workers who make the clothes and pass on the workers’ story.
As Ali Hewson says with an interjection from Bono, “It’s making people aware of the story of clothes . . . do you really want to put on something that’s made — with despair.”[1]
Bono promises to have decent working conditions and to abstain from employing child labor.
According to the factory manager in Lesotho, Thabang Kholumo, the wages paid are 600 rand (currently $87.68) a month. This is a little over 50 cents an hour assuming a 40-hour work week.
Surely these are twice that of other factories in the area? Not so. The country of Lesotho has minimum-wage laws by profession. According to a report highlighting current labor market conditions in Lesotho on the Global Policy Network website,[2] the minimum wage for trained sewing machine operators is 650 maloti ($94.80) a month.[3]
Unless there were specific fluctuations in the currency price at the time of Thabang Kholumo’s information, Bono would have been paying below the minimum wage allotted for textile workers. In any event, he doesn’t seem to be paying more than the required minimum.
Contrary to the ethos that Bono has been promoting, this is not a bad thing. To put a floor on wages is to enforce two conditions that would be unfortunate for workers: first, it means that the least skilled cannot be employed because their productive contribution to the firm falls beneath the minimum; second, it means that few people in general can be employed, which denies opportunities to people.
This further does not explain the fractional share of profits that workers receive. Thabang Kholumo reveals that 125 female employees make 3,000 items a day. These items retail for $50-$300! A pair of Edun jeans will cost you a pricey $275. You can do the math for yourself. One pair of jeans $275 and one month of work $87.68 in Bono’s “sweatshop.”
According to Bono’s mistaken economic theories, he is no champion of the poor in his own factory. These wages are incompatible with the message Bono and Ali are trying to portray. Bono speaks about creating a new business model that can be emulated by other companies. In fact, he is doing what others are doing and have done for a very long time, and it is good for everyone.
Bono also boasts of not employing child labor. Well of course you wouldn’t use child labor Bono, because Lesotho has minimum-age-for-employment laws setting the working age in the industrial sector at 15.
Further, the Labor Code sets regulations on working conditions. According to the US Department of State’s 2004 Country Report on Human Rights Practices, the working conditions are not that onerous. They say, “The Labor Code requires employers to provide adequate light, ventilation, and sanitary facilities for employees and to install and maintain machinery in a manner to minimize risk of injury; employers generally followed these regulations.” Further, “labor inspectors generally conducted unannounced inspections in factories four times a year.”
Bono is simply following Lesotho laws, but no more. Big deal. But there is not much difference between Bono’s “sweatshops” and others. The only thing revolutionary about Bono’s business plan is not the way workers are treated but the way in which they are cleverly marketed to the public.
Edun’s website says:
In 1980 Africa had a 6% share of world trade. By 2002 this had dropped to just 2% despite the fact that Africa has 12% of the world’s population.
If Africa could regain just an additional 1% share of global trade, it would earn $70 billion more in exports each year - more than three times what the region currently receives in international assistance. If in addition, all countries in East Asia, South Asia and Latin America were each to increase their share of world exports by 1%, the resulting gains in income could lift 128 million people out of poverty.
Freer trade would certainly be a tremendous benefit to Africa. What is forgotten, however, is that free trade is exactly what leftist anti-sweatshop activists like Bono are against!
The truth is that Bono is doing something admirable just like Nike has been for a long time. Any factory that opens in an area with low employment benefits the population. Competition for labor eventually lifts wages as we have seen in Industrial Revolution Europe, South Korea, Taiwan, and many other places during many other times.
Capital investment and competition for labor by American multinational corporations has for decades caused wages and living standards to rise in underdeveloped countries like Lesotho. Indeed, the mere fact that people seek such jobs is proof that they believe that their living standard will improve by doing so.
Bono may be paying below-minimum wages today, but that will not last as the productivity of his employees improves. One thing that would speed up this process is even more foreign “sweatshop” investment, which would stimulate competition for Lesotho’s labor force even more. Countries like Lesotho need more sweatshops, not fewer. Perhaps Bono can persuade some of his multimillionaire entertainment industry friends to invest with him.
To say that Bono’s factory is something special would not be truthful. The Edun clothing line is doing well, and is employing hundreds of people. That’s great. It’s called capitalism.

1 Vogue [USA]
3 According to Wikipedia, “The loti (pl. maloti) is the currency of the Kingdom of Lesotho. . . . It is pegged to the South African rand on a 1:1 basis through the Common Monetary Area, and both are accepted as legal tender within Lesotho.”

August 29, 2011

The Eminently Real Free Market (XXIX): Sketchy Stories (17): Save Money, Live Better, Just Do It, Right Here, Right Now: Non-Vulgar Thoughts on Working for Wages for Transnational Corporations

There are only three factors of production—always land and labor, sometimes also capital—and each factor earns an income. Its income is a function of its contribution to the product. The greater the contribution of a given factor, the greater the income accruing to it. Only capital can enhance the productivity, and hence the income, of the other two factors.
And so, as even common sense should suggest, what a worker can command in wages is determined by what he offers the employer. If the latter misestimates too high or too low, his enterprise becomes unprofitable or another employer bids his labor away from him. Either way he is soon out of business.
Wages, the rent-price of labor, rise with labor productivity. Labor productivity in general is not increased by workers’ working “harder” or “smarter,” but by capital investment. Wages are not, therefore, a function of either worker need or employer greed, to borrow George Reisman’s assonant couplet.
* * *
Having discussed chattel slavery, we now turn to labor conditions in the Third World—or at least to Mr. Ferrara’s description thereof in all its melodramatic bluster and irresponsibility:
Even today, in Third World countries such as China, Bangadesh and Indonesia, Wal-Mart, K-Mart, Nike and other corporate giants have been caught employing either slave labor or wage-slaves through a vast, plausibly deniable network of thousands of subcontractors and suppliers.  And, thanks to the government-sponsored creation of “free-trade zones” in Central America by the United States Agency for International Development (USAID), giant American corporations can set up shop in tax-free havens (not available to small domestic competitors) where masses of impoverished people churn out products for American retail in return for near-starvation wages. (21-22)
We observe that Mr. Ferrara uses “slave” (and its cognates), if not equivocally, then at least imprecisely enough so that it is difficult to know what corporate entity he’s charging with what offense. Are, for example, Wal-Mart’s employees like China’s prison labor? If not, what purpose does juxtaposing them serve if not a propagandistic one? (And unless “Third World” is a euphemism for “non-white,” which we doubt is Mr. Ferrara’s intended sense, it is hard to see how China may still be sensibly referred to as a “Third World country.”)
Mr. Ferrara shows no curiosity about whether those “masses of impoverished people” welcome the opportunity to avoid actual (not merely near) starvation by “churning out” those products (to be bought mostly by workers whose standard of living is as high as it is due to past capital investment). Relative to their pre-investment condition, the prospects of investment and their attendant employment opportunities are attractive to them. They demonstrate that by flocking to these factories as soon as they are opened.
As we will see later in TCATL when Mr. Ferrara explicitly defends the “just wage,”* he implicitly holds that there is a “zone of indeterminacy” for wages. If that were so, then suasion, moral or criminal, can be brought to bear on the interested parties as they settle on a point along that zone.
That is, according to Mr. Ferrara’s claim, Wal-Mart, K-Mart, Nike, etc., could pay higher wages without putting at risk their operations—and the livelihoods of the impoverished people that depend on them. But he never spells this out and certainly never justifies anything like such a claim. It’s all assertion all the time. Above the level of barter, the zone of indeterminacy is vanishingly narrow, and the hire-price of labor tends to be set already at the high end, in which case the only way to go is down.**
Mr. Ferrara’s sketchy history—excuse me, historical sketch distilled from his well-stocked library of material—is supported by equally sketchy references:
The use of slaves or virtual slaves by Wal-Mart and other transnational corporations, acting through a complex web of subcontractors and sub-sub contractors (thus permitting plausible deniability by upper management) has been documented beyond serious dispute. See, e.g., “A Wal-Mart Christmas: Brought to You from a Sweatshop in China,” National Labor Committee Report (2007). (329 n. 30)
What is beyond serious dispute is that the NGO formerly known as the National Labor Committee in Support of Human and Worker Rights, now the Institute for Global Labour and Human Rights, is a propaganda arm of the international labor union movement, whose well-documented history of tender solicitude for the rights of human impediments to its goals does not merit Mr. Ferrara’s concern. That Institute is as objective about wage determination as Greenpeace is about global warming.
Mr. Ferrara announced that TCATL will not treat economic theory (except to ridicule Austrian economics before readers who know even less about it than he does). He thus avoids, or evades, committing himself to any theory of wage determination that we can examine. Such details are beneath his notice. He is content, apparently, to give the impression that wages are a function mostly of employer bad will and employee pressure.
If he believes that market forces have anything to do with wage determination, he doesn’t say. It would be interesting to see where he lines up on the spectrum between pure market determination of wages as held by Austrians and pure exploitation theory as held by orthodox Marxists.
Every good, whether consisting of land, labor (human energy), or capital, has a rent or per-unit price. Since slavery is intrinsically inconsistent with free markets (because inconsistent with the self-ownership of laborers), labor cannot be bought on such markets, as is land or capital goods, but rather only rented.  
A wage is the rent or unit-price of labor. You may buy a plot of land from Smith, its owner, or rent its use from Smith. Smith himself, however, you may only hire; you may not buy Smith.
And no textile firm in El Salvador bought Rosa Martinez! She is the Salvadoran sewing machine operator exploited in Mr. Ferrara’s second-hand propaganda, who works for thirty-three cents an hour (down, we’re told, from fifty-seven cents). She is not a slave of any company operating in El Salvador, and it is offensive to the world’s actual slaves to suggest that she is.
Mr. Ferrara copped his emotionally charged example—which comes from an ad in a textile industry journal—from John Médaille’s The Vocation of Business: Social Justice in the Marketplace (Continuum, 2007), p. 252. Mr. Ferrara then reproduces his Foreword writer’s analysis:
[Rosa] lives in absolute poverty; her meager earnings provide little excess over subsistence to support the local economy, and the plant contributes nothing either to taxes or to import replacing abilities. (22)
Continuing his gloss on Mr. Médaille’s putative textbook example of global corporatist slavery, Mr. Ferrara notes that at “one ‘free-trade’ zone’ garment factory the daily output was valued at $30,000, while the labor cost came to $180. (22)
Ignoring Mr. Ferrara’s tiresome, smarmy reference to “free trade” in scare-quotes, we ask for the meaning of his implicit comparison between output valuation and cost about which he writes with such confidence. Where does he get his data?
And, more importantly, who is Rosa Martinez? What were her circumstances before that international textile company invested in her country? Did they not improve them? Does Mr. Ferrara even regard that as a relevant question?
Would it be better if the managed-trade agencies of various governments (e.g., USAID) were not involved, yea, never existed? Absolutely. But under these actual circumstances, which are beyond the control of either her employer or Sra. Martinez, did these two parties not make a deal that benefited both of them?
Mr. Ferrara insinuates that wages could be, say, doubled to $360 with no perceptible degradation of the lifestyles of the alleged fat-cats who own the factory, whose greed is alleged to be the only impediment to that modicum of improvement in their workers’ lives.
Such nice workerist propaganda. But where is the analysis? What are the margins that must be assiduously observed if there is to be a factory for Rosa Martinez to work in?
Silence. You’re supposed to feel where Mr. Ferrara is coming from.
Ah, but we’ve been taken for a ride. Mr. Ferrara quotes Mr. Médaille, but what is his source? A case study from, say, the Harvard Business School or anything else equally authoritative?
No. So sorry.
Courtesy of Mr. Médaille’s own propaganda (The Vocation of Business), Mr. Ferrara’s borrowed the material for his “historical sketch” from a 1995 video, Zoned for Slavery: The Child behind the Label. Who produced this agitprop?
Why, the National Labor Committee, now Institute, of whose propaganda output Mr. Ferrara already made us aware. It’s right there in Mr. Médaille’s 18th reference note on page 343. You can even watch it here.
More exposure of Mr. Ferrara's splendid sources presently.

To Be Continued

* By a “just wage” Mr. Ferrara does not mean the rate of hire that the hirer and the prospective hired non-coercively agree to, regardless of whether the latter has no other opportunity for employment unless he relocates. (For Mr. Ferrara, having no such opportunity disqualifies the agreement as free.) Mr. Ferrara means a wage that in justice he must be paid—and then he will add this odd proviso—if the employer can afford to. We have never heard of a requirement of justice, whether pertaining to positive or negative rights, being subject to such a condition, e.g., “I will repay my debt to you . . . if I can afford to” or, “I will not mug you . . . unless I cannot afford not to.” To offer wiggle-room is the prerogative of mercy, not of justice. What Mr. Ferrara fails to see is that if any employer is now paying what Mr. Ferrara deems a “just” or “living” wage, it is because he cannot afford not to if he wishes to stay in business.
** “It is curious that many writers move smoothly through rigorous price analysis until they come to wage rates, when suddenly they lay heavy stress on indeterminacy, the huge zones within which price makes no difference,” allegedly, to the employment of a given factor of production. Murray N. Rothbard, Man, Economy & State with Power & Market, Chapter 10, “Monopoly and Competition,” Section 4, B, 1.

August 22, 2011

The Eminently Real Free Market (XXVIII): Sketchy Stories (16): If This Is Infallibility, What Does Fallibility Look Like?

Before commenting (in a near-future post) on Mr. Ferrara’s en passant, stage-setting reference to Wal-Mart, we would like to round out our recent remarks on the Catholic Church and slavery. They pertain to our strategy on this site.
The ownership of one human being by another violates the law of nature and of nature’s God. Such is the teaching of Pope Leo XIII in In Plurimus. Unfortunately for a certain view of the Church’s ordinary magisterium, that teaching is inconsistent with that of many, if not most, of Leo’s predecessors.
Of course, Jesus did not explicitly condemn slavery any more than he did the Roman Empire. Had He and His followers engaged in a frontal assault on the empire and its slavery, He and they would have been in violation of His prudential advice to be as wise as serpents and as harmless as doves (Matt. 10:16).
Yet, the Gospel intends the abolition of slavery in all its forms, and independently of whether its subjective and objective conditions slavery have been fulfilled. Even if chattel slavery is but an institutional reflection of slavery to sin—that is, it presupposes the slaver’s shutting out the true light given to everyone coming into the world (John 1:9)—there is no justification for an exclusively “spiritual” reading of Jesus’ inaugural sermon (Luke 4:18). He announced the liberation of captives, and not just of the men-stealers (ανδραποδισταις) mentioned in 1 Tim. 1:10.
The spiritual dimension is not sealed off from the physical or the interpersonal. How we treat one another is a reliable indicator of our spiritual state, which is not knowable solely by reflection and contemplation (if at all that way [Jer. 17:9]). Even if for most of the Church’s history it was all but impossible for Christians to have formulated abolitionism as a goal—because of, say, the hardness of their hearts (as Christ explains the Mosaic legal countenancing of divorce [Matt. 19:8])— they ought always to have done so. Christians ideally ought never to have acquiesced in that institution.
Slavery itself, not just the desire to enslave, has no place in the Kingdom of God, which came with Christ’s earthly ministry. Slavery may have been the “business-as-usual” norm under the Kingdom of Satan, but Christ announced the end of that Kingdom and the establishment of His own. Slowly but surely the Gates of Hell are being bent back by the active force of the preaching of the Gospel. The Kingdom of Satan has been invaded, and its strong man hog-tied and looted (Matt. 12:26-29). Eventually the implications of the Kingdom for the institution of slavery sunk in. And some “got” it sooner than others and acted in concert to implement their insight.
Father Maxwell assured his readers that “if for over 1,400 years the Church’s fallible ordinary magisterium was mistaken in its interpretation of the natural moral law concerning the institution of slavery, this in no way impugns the infallibility of the Church. For in no case were the criteria met for a statement of the magisterium on slavery to be infallible.” (Maxwell, Slavery and the Catholic Church, 13)
If we may not fairly test Church infallibility in light of the mistaken, i.e., false, character of the fourteen-century-long common teaching on slavery, just because certain technical criteria were not met, perhaps we may be permitted to wonder what purpose the notion of infallibility serves. Surely slavery was not a matter of prudence or custom, but rather one of faith and morals, touching as it does the dignity of created image-bearers.
For fourteen centuries, popes and bishops accepted slavery as an institution and as a just criminal penalty. They did so either explicitly or—insofar that there is no record of episcopal or papal dissent—implicitly. It does, however, call into question the “point” of a claim of infallibility when the office claiming it can fail so spectacularly. If falsus in uno, falsus in omnibus, does not apply, we may at least be within our cognitive rights to have reservations about the truth-value of other proclamations of that office. The “just wage,” for instance.
Thus we foreshadow our approach to Mr. Ferrara’s defense of empirical “Catholic Social Teaching.”

August 18, 2011

Interlude: “Moving toward a Free Market but Never Getting There”: Laurence Vance on John Médaille’s Distributist Manifesto

A few months ago Dr. Laurence Vance*, prolific evangelical and free market writer and Mises Institute Adjunct Scholar, reviewed a book by John Médaille, Mr. Ferrara’s distributist colleague, whose foreword graces TCATL (where he suggests that rationalism has something to do with rationalizing). Since we need another break, we hope our regular visitors will find this review, posted with Dr. Vance’s knowledge and approval, both informative and germane to this site’s purpose. 
* * * 
Moving toward a Free Market but Never Getting There
Laurence M. Vance

John C. Médaille, Toward a Truly Free Market: A Distributist Perspective on the Role of Government, Taxes, Health Care, Deficits, and More, ISI Books, 2010, vi + 282 pp.

Although John Médaille has worked in management at large corporations, he doesn’t like large corporations. He also doesn’t care much for the Federal Reserve, government bailouts, socialism, Keynesianism, centralization, and what passes for capitalism nowadays. But, he likewise disdains advertising, gold, landlords, high executive salaries, Austrian economics, individualism, and what he deems usury.
The author has not divided his 19 short chapters into three parts, but such a rough division can be made. The first six chapters serve as an introduction to distributism, economics, the economy, supply and demand, equilibrium, exchange, economic justice, and the supposed failures of capitalism. The next five chapters include three that amplify Polanyi on the “fictitious” commodities of money, labor, and land, followed by two more on property and labor. The last section of the book, chapters 12–19, directly relates to the book’s subtitle.
The book is an admirable defense of distributism that far exceeds anything written by G.K. Chesterton or Hilaire Belloc. But a defense of distributism should not be confused with a defense of the free market. Although some of Médaille’s proposals move toward a free market, they never get there.
The book begins well, with the author’s assertion that economics is not a physical science like physics, astronomy, or chemistry. This is a theme he returns to throughout the book. However, the book ends poorly, with the author advocating property redistribution, price controls, fiat money, a national bank (albeit with no Fed), and managed trade. In between he mischaracterizes capitalism; misrepresents Austrian economics; blames the gold standard for instability and “chronic deflation”; and promotes public education, agricultural subsidies, government stimulus spending, government price fixing, and wage-setting courts.
And Médaille believes distributism is “a true ‘free market’ system”?
The essence of capitalism is the private ownership of production, as opposed to the public ownership of production under socialism. Médaille scores some good points against what we would call corporatism, state capitalism, or crony capitalism. But to Médaille, capitalism is capitalism is capitalism. Therefore,
·         Capitalism and the free market are incompatible.
·         Capitalism cannot function without government interference.
·         Capitalism requires socialism for its very stability.
·         Capitalism relies on an expanded state to balance aggregate supply and demand.
·         Capitalism always ends up relying on government power and money to rescue it from its own idealistic excesses.
Even laissez-faire capitalism has “been weighed in the balance of history and found wanting.”
The only Austrian economist that Médaille interacts with is Friedrich Hayek. Neither Mises, nor Rothbard, nor any modern Austrian economist is mentioned in the book. Médaille correctly points out that Hayek “equivocated on the issue of government.” But then he incorrectly states that “by and large” those in the Reagan administration were “followers” of Hayek. This would be news to the most prominent Austrian economist during the Reagan administration, Murray Rothbard, who wrote a blistering critique of Reaganomics and Reagan’s use of libertarian rhetoric in contrast to his practice of statist policies. Medaille’s remark that “Austrian theory leads to socialist practice” is one of the most ludicrous statements in the book.
Most unsatisfactory is Médaille’s discussion of money — and not simply because he says on one page, “Inflation simply means that prices are rising, while deflation means that they are falling,” but says on the next page, “In order to prevent rapid changes in the value of the money, that is, inflation or deflation” (pp. 76–77, emphasis added).
Médaille also revives the medieval concept of usury, but with a new twist. He distinguishes between “lending for investment” and “usury.” Investment is “giving money to firms and entrepreneurs in order to expand production and increase the wealth of society.” Usury is “lending money at interest to increase consumption.” Usurious interest payments “merely constitute a transfer of wealth.” Does this mean that no one should get a loan to purchase a car, boat, or house? Médaille doesn’t say. He calls for the elimination of usury, but likewise doesn’t say how this should be brought about.
There are some gems in the book, however. Médaille disdains patents and medical licensing, while instead preferring manufacturing licenses and medical guilds. He wants to abolish the Fed, scale back the military, and cut the federal budget by 50 percent. The best part of the book might be its critique of the flat tax and the FairTax.
However, although Médaille feels that “we do not need the current oppressive and intrusive tax structure that we have today” if the federal budget were to be cut in half, he would retain a form of the corporate tax; impose a tax penalty for high CEO salaries; tax externalities “to force companies to internalize all of their costs”; and institute a Georgist land tax, collected on the local level but “divided in a fixed proportion among local, state, and federal authorities.” He doesn’t say what would become of Social Security and Medicare taxes.
Médaille maintains that “distributism needs Georgism to maintain itself.” This brings up one of the main themes in the book: “wealth without work.” He uses this phrase so much that the book’s subtitle would more accurately be “A Distributist Perspective on Wealth without Work.”
According to Médaille, the economy is rewarding sloth if it is rewarding the creation of wealth “not based on some productive endeavor.” Wealth without work “is the primary source of both economic inefficiency and economic injustice.” It is landlords that get wealth without work when they collect rent, because “when ownership and use are separated, a class that has claims to wealth without work is created.” The “Georgist ‘tax’ simply appropriates the income of the rentier or landlord, the person who lives off other people’s work.” This land tax “works best where ownership is well divided and property not concentrated into large estates or tracts, in other words, in a distributist state.”
The largest landowner in the United States is the federal government. If Médaille is so concerned about the equitable distribution of land, then why doesn’t he call for the federal government to sell or otherwise divest itself of all its land holdings? There can, of course, never be an equal distribution of property — not as long as every second there are people that die and people that are born.
The other main theme in the book is the just wage. The just wage “unites and includes” the reform paths of the Georgists, who “would reclaim the values of land that are produced by the community and redistribute them to the community that produced them”; the institutionalists, who “would ensure that the worker gets a just proportion of what he produces”; and the monetary reformers, who “would eliminate usury, that is, fortunes that are based not on producing any useful goods or services.”
So, how much is a “just wage”? According to Médaille, the “just wage represents people taking out of the system in consumption no more than they put in by production.” So, again I ask, how much is a “just wage”? Médaille explains his vagueness:
The reader will note that I have not stated a number for the just wage. This is because the just wage is not really a number at all. Rather, it is a standard of judgment. It is impossible to give a generalized number for the just wage because it will vary from place to place, time to time, and culture to culture. Further, even in any specific setting, there are just too many jobs, companies, and specifics to set a number on the just wage. Nor should we set a specific number.
He goes on to say that the “just wage” is fulfilled if it meets four conditions:
·         That working families, as a rule, appear to live in the dignity appropriate for that society.
·         That they can do so without putting wives and children to work.
·        That they have some security against periods of enforced unemployment, such as sickness, layoffs, and old age.
·         That these conditions are accomplished without undue reliance on welfare payments and usury.
Okay then, who decides if a wage is just? Médaille doesn’t precisely say. Indeed, “it may be difficult to give precision to any of these factors.” He does say it is “certainly possible to make reasonable judgments and set reasonable standards,” but, again, we are never told who gets to make these judgments and set these standards. He definitely favors labor, since he believes that “labor, not capital, is the true source of all economic values.”
Throughout Toward a Truly Free Market, Médaille seems to imply that it is always preferable for a man to own property rather than rent it, and to operate his own business rather than to work for someone else.
One gets the impression from reading this book that Médaille would like to see the government expropriate all the land in the United States, raze everything on it, and build a coast-to-coast Levittown with two-story houses, so that every family in the United States could live upstairs and operate a business downstairs, with a small garden in the backyard so that no food has to be wastefully transported across the country.
There are probably hundreds of people in New York City who make more than you, John Médaille, and I put together, but work for someone else and rent an apartment. Are they being treated inequitably or unjustly?
The easiest way to move toward a truly free market is to remove the government’s grip on it. It is the government’s taxes, regulations, and subsidies that make the market unfree, not usury, wealth without work, the inequitable distribution of land, and the lack of a just wage. Médaille may want to right these perceived wrongs, but doing so will not move us toward a truly free market.
* * *
[The following is taken from VancePublications.com]

*Laurence M. Vance is an author, a publisher, a lecturer, a freelance writer, the editor of the Classic Reprints series, and the director of the Francis Wayland Institute. He holds degrees in history, theology, accounting, and economics. The author of nineteen books, he has contributed over three hundred articles and book reviews to both secular and religious periodicals. Vance’s writings have appeared in a diverse group of publications including the Ancient Baptist Journal, Bible Editions & Versions, Campaign for Liberty, LewRockwell.com, the Independent Review, the Free Market, Liberty, Chronicles, the Journal of Libertarian Studies, the Journal of the Grace Evangelical Society, the Review of Biblical LiteratureFreedom Daily, and the New American. His writing interests include economics, taxation, politics, government spending and corruption, theology, English Bible history, Greek grammar, and the folly of war. He is a regular columnist and blogger for LewRockwell.com. Vance is a member of the Society of Biblical Literature, the Grace Evangelical Society, and the International Society of Bible Collectors, and is an adjunct scholar of the Ludwig von Mises Institute.

August 17, 2011

The Eminently Real Free Market (XXVII): Sketchy Stories (15): Slavery, Real and Bogus: the Propagandistic Manipulation of Symbols

Our current focus on the Jesuits’ corporate involvement in slavery in colonial America complements our posting for March 14 concerning  slavery inspired and authorized by decree of European royalty:
Mr. Ferrara excoriates . . . the revolutionary expropriation of ecclesiastical property in France, but not the absolutist state of Louis XIV who reserved to Roman Catholics the privilege of owning human beings in France’s colonies, provided the slaves were baptized and their families not broken up. His Royal Highness was only acquiescing in then-current Catholic Social Teaching which, thank God, contrary to Mr. Ferrara, can change.
While the Sun King (r. 1643-1715) was basking in his reflected glory, Pope Urban VIII (r. 1623-1644) was in the market for 40 galley slaves to be bought for his personal squadron of bonavoglie (rowers). Following suit, his successor, who took the unintentionally ironic name of Innocent X (r. 1644-1655), ordered 100, as did his successor to the Throne of Peter, Alexander VII (r. 1655-1667).*
It is also worth noting that papal solicitude for the natives of the Americas vis-à-vis the Spanish empire's demand for slave labor did not officially extend to Africans until 1839 during the reign of Gregory XVI (1831-1846). Even at that late date, however, His Holiness was maintaining a distinction between "just" and "unjust" acquisition of slaves.
How is this dirty laundry germane to TCATL and our serial response thereto? In this way: by anticipating Mr. Ferrara’s defense of what he means by “Catholic Social Teaching” and its putative moral authority, we are following his own foreshadowing of his later argument.
In the third historical “sketch,” currently under review, Mr. Ferrara does not explain what he means by “wage slaves.” (The reader is free, however, to form an emotionally charged impression from his heart-rending illustrations.) He nevertheless employs that term in a way that (a) fails to illuminate the true condition of employees in global corporations and (b) trades on the emotional charge that rightly attaches to the enormity of genuine slavery.
As “wage slavery” is a staple of socialist, even Marxist, propaganda,** a Catholic should have strong reasons for parroting such lingo. Mr. Ferrara offers none, yet irresponsibly plants this malignant seed in his reader’s mind. We are merely uprooting that seed. When he returns to that ground, we will not only repeat but also elaborate upon our counter-argument.
There is an additional strategic reason for our rummaging through the Church’s moral dumpster: papal apologiae for slavery discredits in advance any simple appeal to encyclicals on behalf of empirical Catholic Social Teaching.
Rerum Novarum*** is deafeningly silent on the long-standing casuistic distinction between owning a person (magisterially long forbidden) and owning his labor (once magisterially permitted), a distinction that once gave slavery canonical “wiggle room.”
Given the ordinary magisterium’s track record on this issue, however, no papal condemnation of slavery per se—whether implicit as in Rerum Novarum (1891) or explicit as in Veritatis Splendor (1993)suffices to command assent. We need something besides a pope’s ipse dixit. (Again, “No more slavery, starting . . . now!,” simply will not do.) We need, for instance, to ponder the meaning of Jesus’ inaugural sermon, recorded in Luke 4, and draw conclusions that it took 18 centuries for theologians to draw.
Mr. Ferrara, our unsung Doctor of the Church, may wish that the concurrence of seven consecutive (historically recent) popes is all that’s needed theologically, that a modern “social” encyclical is to be received by Catholics virtually as Holy Writ, but wishing doesn’t make things so.
And, by the way, that goes for Ubi Arcano no less than for Rerum Novarum: one cannot establish the juridical sufficiency of a papal encyclical by citing a papal encyclical, as Mr. Ferrara apparently thinks. (327 n. 4) More on this in due course, but we hope that this exposure of circular reason will go a long way for most readers!
To Be Continued

* For citation of contemporary documents supporting these claims, see John F. Maxwell, Slavery and the Catholic Church: A History of Catholic Teaching concerning the Moral Legitimacy of the Institution of Slavery (London: Barry Rose Publishers, 1975), 76-77.
** As there is a kind of “Gresham’s Law” of language whereby bad words tend to drive good words out of circulation, it is worth noting that one consequence of this linguistic corruption (which we charitably assume is unintended) is the occlusion from consciousness of instances of genuine slavery which, since it is the opposite of working for a wage, then needs a new name. And so when a union activist, for example, targets “wage slavery” for elimination, he or she trivializes the plight of upwards of 27 million people who would gladly trade places with wage-earners. 19th century abolitionists repudiated this identification, notably former slave Frederick Douglass, who delighted in his first wage-paying job, and William Lloyd Garrison, who explicitly regarded it as involving an “abuse of language.” It does not bode well for our times that such things need to be spelled out, or for our Church in particular that educated Catholic laymen are among those responsible for the currency of such a template of mental laziness.
*** We happily note that Leo XIII’s statement in Rerum Novarum, paragraph 3, that “a small number of very rich men have been able to lay upon the teeming masses of the laboring poor a yoke little better than that of slavery itself,” while walking right up to the line of abusing language, does not cross it. If a condition is “little better than slavery,” then it’s not slavery, not even “wage slavery.”

August 16, 2011

The Eminently Real Free Market (XXVI): Sketchy Stories (14): Slavery—Lock(e), Stock, and Jesuit, with a Note on the “Subsidy of History”

Mr. Ferrara observes that we have reached “only” page 16 of TCATL after fifty posts and six months. (We’re actually up to page 21, thank you very much.) For our part we observe that it has taken him that long to figure out something of what we are doing here and to share his discernment with his readers. He writes:
As Mr. Flood explains, it is not that he is trying to belabor a point. Oh no. Rather, he is seeking to “discredit the rhetorical performance of a propagandist.” Once I am discredited (so the plan goes) no one will pay any attention to the book’s actual subject: an exposé of the atrocious moral, philosophical and theological errors of the libertarian cult to which Woods and Flood belong and which Woods is relentlessly promoting as “eminently congenial to the Catholic mind.” (Woods, The Church and the Market, p. 217).
The part he got right concerns the relationship between the exposure of the propagandistic character of a writer’s treatment of evidence and the suspicion that such exposure will naturally arouse in a reader’s mind regarding the writer’s approach to the “actual subject.” After all, falsus in uno, falsus in omnibus. (In Mr. Ferrara’s case we need to modify the Roman principle to falsus in multis, . . . .)
We are not, however, exposing a series of false uno’s so that we might evade the alleged force of the rest of his omnibus of error. Just as the kinds of errors exposed in the Introduction and Chapter 1 prepared us for the kinds we found in Chapter 2, which we then criticized, so each of the fractured fairy tales we have so far encountered in Part 1 creates an expectation that the same quality of discourse will pervade Part 2, but we intend to fulfill the expectation.
On the contrary, we very much want our readers to “pay attention to” his uncharitable distortions of “the actual subject.” That’s how “the plan goes.”
Friends and foes of our enterprise must acknowledge that TCATL does not begin with a discussion of usury, or the just wage, or the epistemic weight of papal encyclicals, etc. No, several dozen pages of rhetorical misdirection, as we characterize them, set the mood. We simply cannot jump into Chapter 3 without saying something about Chapter 1 and 2. And there has been so much to say.
And so we approach the third of Mr. Ferrara’s historical “sketches,” none of which were necessary, in our view, for a critical examination of Austro-libertarianism. For his rhetorical purposes, however, all of them were necessary: bad things happened in history in the name of “capitalism,” and he wants to associate those things with us.
Although he may find it “hilarious” that we are paying so much attention to his ipsissima verba, it should be hard even for him not to discern in what we are doing a modicum of respect. Mr. Ferrara took the time to write something, to adduce alleged example after alleged example of Austrian enormity, to cite, and to quote, and to name names. And we are taking all of that with utmost seriousness. That, however, entails his being made to take responsibility not only for the “what” but also the “how” of his exercise. Reckless disregard of the standards of controversy exacts a price not only in the coin of one’s reputation, but also in that of one’s cause. This blog is all about determining the price of such carelessness.
* * *
Now, what has the foregoing to do with whether John Locke was an investor in the slave trade? If the words “actual subject of his book” have meaning, however, the question Mr. Ferrara needs to answer concerns any connection John Locke’s ethical lapse (or hypocrisy or intellectual schizophrenia) has with the philosophical and theological errors that Austro-libertarians allegedly commit. There is no such connection that we can make out, except that it creates the kind of psychologically negative impression on which Mr. Ferrara’s rhetorical performance trades. To be blunt: that Locke owned slaves has no logical bearing on the evaluation of his argument for self-ownership. (On which more in due course.)
Mr. Ferrara touches the highly charged subject of slavery in the context of defending the “Catholic Church's Teaching on Man, Economy and State” (TCATL’s subtitle), and Her spokesmen have, taught a number of contradictory things about slavery, especially the kind Locke invested in. (Not Wal-Mart “wage slavery.) We find it disingenuous in the extreme that Mr. Ferrara mentions slavery in an apologia for empirical “Catholic Social Teaching” without having noticed in this book (not in a future column for The Distributist Review) the six-hundred pound gorilla squatting in his parlor.
We walk through the forensic door he has opened, not to hold our ancestors in the Faith up to shame—we shudder to think of the probability of our acquiescence in the enormity of slavery had we been in their shoes, having neither the insight to discern nor the courage to follow the Gospel’s abolitionist logic, which other Christian bodies were apparently more attuned to. We do it solely to undermine (in advance of our examination of) Mr. Ferrara’s criterion of “Catholic Social Teaching.” For that criterion, if applied to slavery, either counsels an embrace of that institution as ordained by God or implies a self-discrediting ethical and historical relativism. (“No more slavery, starting . . . now!”)
Not to mitigate his offense, John Locke was an absentee slave-holder, while the Jesuits of Georgetown and Baltimore “got their hands dirty,” so to speak, overseeing around 300 slaves (some estimates put it at 500) on six plantations at any one time. Having interviewed scholars involved in the “Jesuit Plantation Project” of Georgetown University’s American Studies Department, Kathryn Brand, writes:
Compared to other plantation owners in the area, when it came to slavery, “The Jesuits were no better or worse,” according to [University Dean Hubert] Cloke. Many of the slaves had been gifts from wealthy Catholic families to sustain the Church. The abolition of slavery was not an issue in the area until the early nineteenth century, when Georgetown’s Jesuits became deeply divided over the issue of slavery. “But they were not conflicted in the way you would want,” Cloke said. “They were conflicted over what to do about the threat of abolitionists.”  “The Jesuits’ Slaves,” The Georgetown Voice (“Georgetown’s Blog of Record”), February 8, 2007.
Perhaps Mr. Ferrara regards “the way you would want” as presumptuous on Dean Cloke’s part, evidence of submission to the liberal Zeitgeist which Catholics admirably resisted longer than anyone else. In any case, by the 1680s (after the supply of indentured servants dried up), the Society of Jesus in Maryland “relied upon a fully developed slave system,” and American Catholics generally regarded “abolitionism” as a cussword of Protestant heretics. Father Maxwell wrote:
Already in 1836 the propaganda of Christian anti-slavery movement had achieved considerable force in North American and Europe, and at this date the lay editor of a Catholic journal considers that the Christian abolitionists should be regarded as a sect since they differ from all other Christians in believing that slave-holding is a sin against God. 
John F. Maxwell, Slavery and the Catholic Church: A History of Catholic Teaching concerning the Moral Legitimacy of the Institution of Slavery (London: Barry Rose Publishers, 1975), 110. The lay editor was B. J. Webb of Catholic Advocate, in a piece published April 2, 1836.
The older generation of Jesuits had long made their peace with the surrounding non-Catholic society’s acceptance of slavery. Prefect-Apostolic (i.e., Bishop) John Carroll (1735-1815), for example, was kind to his slave (he also had a free servant) and generous to him in his will, but was no abolitionist. Emancipation would come gradually, and only at the initiative of slaveowners, if he had his way.
A year after Carroll died, John Hughes (1797-1864), the future first Archbishop of New York, arrived in the United States with his father, settling first in Chambersburg, Pennsylvania. Desperately in need of work, John superintended a garden for the Reverend John DuBois, future founder of Mount St. Mary’s University in Emmitsburg, about fifty miles from Baltimore, in exchange for room, board, and an opportunity to enroll in St. Mary’s College, which he at last was qualified to do in 1820. (A friend of Father DuBois, Saint Elizabeth Ann Seton, who had established Catholic communities in Emmitsburg, was young John’s “booster.”) Hassard, Hughes’ biographer, tells us that his “force of laborers consisted chiefly of two negroes, Timothy and Peter, well-known characters, who are still remembered by old students of the Mountain [i.e., Catoctin Mountains],” but omits to indicate the legal status of these chaps. In Hughes’ own hand we find an odd moral distinction between the one sold into slavery and his or her offspring born into it. Having entertained the scenario of slavers purchasing human beings from enemies who almost certainly would have butchered them, Hughes raises what he calls the “terrific part of the question”:
. . . not only the individuals brought to the American continent or islands are themselves to be slaves, but their  posterity, in like manner, for all time to come. This is the only terrific feature about American slavery. And yet it is not alien from the condition of mankind in general. Original sin has entailed upon the human race its consequences for time and eternity. And yet the men who are living now had no part in the commission of original sin.**
This view of slavery expressed here is, of course, that of the recently cited contemporaneous Instruction of the Holy Office, promulgated under the authority of Pio Nono, who initiated “Dagger John’s” rise through the American hierarchy.
The younger generation of Jesuits, though cordially anti-abolitionist, wanted to divest themselves of their holdings in this unseemly business as soon as possible, at least for economic reasons. Never did they entertain the notion that persons who ought never to have been considered property should simply be manumitted, let alone compensated. No, they thought, rather prosaically, that the money could be invested better, and elsewhere. In Catholic education up north, for instance.
Although by the mid 1830s, the plantations were beginning to turn higher profits, this did not placate the younger Jesuits, because the estates were still not seen as sufficient to support the mission. These new Jesuits had no moral quandaries selling their slaves downriver; they felt their investments should be moved to urban centers such as New York or Philadelphia. So, in 1838, at a time when the plantations were at their most profitable, the Jesuits decided to sell their slaves to Louisiana’s ex-governor, Henry Johnson, whose son was a Georgetown student. [Brand, “The Jesuit Slaves,” op. cit. It was not uncommon to see a Georgetown University student in those days accompanied by his slave.]
Now, they weren’t a cold, heartless bunch. Not at all.
Before the sale, the mission drafted “Conditions for Sale,” a set of guidelines to protect their former slaves. They determined that the slaves could only be sold to a plantation, rather than families, “so that the purchasers may not separate them indiscriminately and sell them.” In what reads like a bill of rights, the slaves were promised to be kept with their families, and those with family on other plantations were to be sold to those plantations. Those who were too old or sick to be sold were to be provided for “as justice and charity demands.” Finally, the slaves were guaranteed the right to practice religion. The document also made a demand of the Maryland Jesuits, likely an addition from the new school of Jesuits. The sale’s profit was not to pay off debts or purchases, but “must be invested as Capital which fructifies,” specifically educational centers in New York and Philadelphia. [Ibid.***]
Well, guess where those funds wound up:
[Georgetown Plantation Project Professor Edward] Curran believes that some of the older Jesuits listed their slaves on the inventory, but warned them of the sale so that they could hide in the woods when the officials came to transport them. Curran explained, “The 1840 census shows a surprisingly large number of younger slaves still on certain plantations, which supports the tradition that some slaves hid themselves then returned to the plantations once the provincial had left.”
With the sale [in 1838], the Jesuits of Maryland made $115,000**** and ended their history as a large slaveholding institution. The money from the sale was, as stipulated, invested in Xavier High School in New York and St. Joseph’s in Philadelphia. Some of the funds also went to finance Fordham University, completed in 1842 . . . . “Much of the funding for these schools came from the ignoble sales,” [Dean] Cloke said.
Talk about “the subsidy of history,” which we discussed last June: Tony Flood’s high school and Chris Ferrara’s alma mater (which was also that to several of Flood’s uncles) were seeded with profits from the sale of human beings, who should have been simply manumitted. 
Well, that’s our opinion. What’s Mr. Ferrara’s?
To Be Continued

* John Rose Green Hassard, Life of the Most Reverend John Hughes, D.D., First Archbishop of New York. With Extracts from His Correspondence. D. Appleton and Company, 1866, p. 24. Accessible via Google Books. There is an interesting case of a Maryland slave named Peter, whom we cannot identify as one half of young John Hughes’ labor force, but whose situation reveals something of the educated Catholic mentality regarding slavery. Historian Thomas Murphy, himself a Jesuit, writes:
On May 5, 1801, when the [Corporation of] RCC [Roman Catholic Clergy] convened at Newtown [MD], there was concern about the plans of a Father Brasuis to free a slave named Peter. The corporation informed Brasuis that such a step would harm “that sublimation, which ought to be preserved among the other slaves.” Therefore, they advised that Peter be required to purchase his own freedom by providing security equal to the amount for which he might otherwise have been sold. The clergy felt that if Peter managed to fulfill these conditions, he would thereby demonstrate that he had earned freedom . . . rather than received it as a right. . . .
. . . the priests showed a conviction that if Peter could manage to purchase his liberty, he would thereby witness to the remaining slaves that freedom had its patient price. Hopefully, his example then would guard against slave revolts and the temptation to believe that freedom could be claimed on demand.
Jesuit Slaveholding in Maryland, 1717-1838. New York, Routledge, 2001, 75.
** Hassard, op. cit, p. 426. Emphasis added.—A.F. This is from an unsigned article in his diocesan journal in 1862. Father Maxwell commented on this passage: “Emancipation was held to be desirable because of the existence of recognized abuses in the slave-system, not because of any intrinsic injustice in the system itself; but such emancipation should be gradual. Abolitionism without compensation of the slave-masters was condemned as an unjust denial of property-rights.” Slavery and the Catholic Church, op. cit., 114.
*** Brand notes the irony of the situation: “. . . all Jesuits recognized certain basic rights for the slaves. A report from the time demanded adequate fixed rations, half of Saturday to themselves, and the promotion of morality and the administration of the sacraments. However, the report also states that for other slaves, “chastisement should not be inflicted in the house, where the priests live.” In other words, it was acceptable for priests to whip the slaves, just not in the priests’ quarters. Similarly, the document stated that pregnant women should not be whipped.”
**** The purchasing power of $115,000 in 1838 is roughly that of $2,780,000 in 2010.