Practical Distributism: Looking at the Community Reinvestment Act

Those of us who have argued for alternatives to individualistic capitalism and the bureaucratic welfare state are often told that we are good at pointing out problems but come up short on solutions — it’s a charge distributists hear often. Nevertheless, Pope Benedict XVI’s latest encyclical, Caritas in Veritate,challenges us to overcome the “market-plus-State” model, arguing that “when both the logic of the market and the logic of the State come to an agreement that each will continue to exercise a monopoly over its respective area of influence, in the long term much is lost . . . .”

But there is a policy in place that takes up the pope’s challenge — one with a distributist angle that not only helped lessen the severity of the sub-prime mortgage meltdown, but could also serve as a model for the development of businesses that — following the suggestions of Rerum Novarum, Quadragesimo Anno, Mater et Magistra, Laborem Exercens, and Caritas in Veritate — include more workers in the ownership and management of business. I am talking about the unfairly maligned Community Reinvestment Act (CRA).
The CRA was passed by Congress in 1977 to encourage banks to lend to low-income and minority neighborhoods and to prevent “redlining,” or discrimination against those groups. Contrary to common assumptions made about the act, all banks following CRA guidelines were federally mandated to practice safe and sound lending practices that were also profitable.
Hence, the truth about the CRA and the rhetoric surrounding it are two very different things. On the basis of ideological predispositions alone, a number of commentators immediately sought to blame the CRA to varying degrees for the sub-prime crisis as it unfolded last fall. The CRA regulations, it was claimed, encouraged lenders to make unsafe, risky loans to low-income clients in order to meet government quotas. While it is possible that CRA incentives might have been abused during recent years, the truth is that the CRA, since its inception in 1977, has insisted on safe, sound, and profitable lending practices.
Evidence has shown that, instead of deepening the sub-prime crisis, the CRA actually helped to lessen its impact in areas where banks regulated by CRA guidelines were more heavily concentrated. Randall S. Kroszner, then governor of the Federal Reserve Board of San Francisco, presented the findings of the board’s analysis in December of last year:
Only 6 percent of all the higher-priced loans were extended by CRA-covered lenders to lower-income borrowers or neighborhoods in their CRA assessment areas, the local geographies that are the primary focus for CRA evaluation purposes. This result undermines the assertion by critics of the potential for a substantial role for the CRA in the sub-prime crisis.
As for the role the CRA played in lessening the impact of the crisis, a study conducted by the law firm of Traiger & Hinckley concluded the following:
The sub-prime crisis, and related spike in foreclosures might have negatively impacted even more borrowers and neighborhoods. Compared to other lends in their assessment areas, CRA banks were less likely to make a high cost loan, [and] charged less for the high cost loans that were made . . . . [M]oreover, branch availability is a key element of CRA compliance, and foreclosure rates were lower in metropolitan areas with proportionately greater numbers of bank branches.
What the analysis finds is that local bank branches dedicated to serving their communities were far less likely to play fast and loose with their customers’ money than independent lenders and mortgage brokers, who were the primary culprits in repackaging and selling bad loans to bigger lenders. Toxic debt was not created, in other words, by the CRA. Rather, Federal Reserve Chairman Ben Bernanke testified to Congress that it was virtual anarchy in lending practices that bears much of the blame:
When an originator sells a mortgage and its servicing rights, depending on the terms of the sale, much or all of the risks are passed on to the loan purchaser. Thus, originators who sell loans may have less incentive to undertake careful underwriting than if they kept the loans. Moreover, for some originators, fees tied to loan volume made loan sales a higher priority than loan quality. This misalignment of incentives, together with strong investor demand for securities with high yields, contributed to the weakening of underwriting standards.
We can learn a valuable lesson from this episode: Institutions that derive their profit from the service of the community as opposed to raw self-interest are less likely to engage in the sort of behavior that will lead headlong into catastrophe.
Meanwhile, the CRA itself could be merged with the Employee Ownership Act (EOA) into a policy that would foster the development of business models that fulfill the requirements of Catholic social teaching and meet the needs of struggling American workers and families. Each focuses on one necessary ingredient but is missing the other: The CRA creates incentives to lend to low-income borrowers and enable them to acquire property for themselves; the EOA creates tax incentives to establish firms that are owned in varying degrees by workers.
A guidepost for a federal policy that would integrate these two approaches might be sought out in the lending priorities established by the U.S. Federation of Workers Cooperatives. Priority could be given to those applicants who seek to establish employee-owned firms in economically depressed regions such as Michigan, or who would seek to boost employment in urban or rural areas where unemployment has been particularly steep. Like the local credit unions and CRA-regulated lenders that served their communities while making a profit, such firms would be provided with incentives to meet certain community goals. Firms that make a notable contribution to the economic and social health of their communities will in turn have easier access to credit and government resources for further expansion, while preserving the basic model of ownership and control.

Pope Benedict reminded us in Caritas in Veritate that the principles of subsidiarity and solidarity need one another — and that they have the potential for harm when one is exaggerated at the expense of the other. Subsidiarity means that social functions ought to be performed at the lowest possible level, but it also presupposes that those functions can be performed at that level. Throughout this country (and certainly throughout the world), there are many areas as yet incapable of ideal levels of self-sufficiency. It is in such areas that the state has a positive role to play — not through bureaucratic management but rather through the establishment of guidelines and incentives for capital to find its way into businesses that explicitly aim to serve their communities.

 

Joe Hargrave

By

Joe Hargrave is an adjunct professor of political science at Rio Salado Community College in Tempe, Arizona.

  • Matt Talbot

    Both lending and employee ownership are keys to this, I think: the measures you describe would “walk the talk” of “empowerment.”

    I imagine this could be an easy sell to an administration headed by a guy who used to be a community organizer.[smiley=think]

  • Joe Marier

    1. Just because the government mandates something like sound lending standards doesn’t mean that the mandates are enforced.

    2. From what I’ve read, I don’t think the problem with the CRA were from the Carter-era law so much as they were from the Clinton-era strengthening of the enforcement mechanisms in Gramm-Leach-Bliley, so that’s a point in your favor.

    3. The interesting thing about subprime was that it was created to to make loans to underserved communities, but the looser standards were then exploited by real estate speculators. The hard part is figuring out how to do one without the other.

  • I am not Spartacus

    Joe H. will all due respect, Steve Sailer, and others, have scores of articles exposing the ugly reality of The CRA.

    Here is just one example.

    http://vdare.com/Sailer/090201_meltdown.htm

  • I am not Spartacus

    The original lobbyists for the CRA were the hardcore leftists who supported the Carter administration and were often rewarded for their support with government grants and programs like the CRA that they benefited from. These included various “neighborhood organizations,” as they like to call themselves, such as “ACORN” (Association of Community Organizations for Reform Now). These organizations claim that over $1 trillion in CRA loans have been made, although no one seems to know the magnitude with much certainty. A U.S. Senate Banking Committee staffer told me about ten years ago that at least $100 billion in such loans had been made in the first twenty years of the Act.
    So-called “community groups” like ACORN benefit themselves from the CRA through a process that sounds like legalized extortion. The CRA is enforced by four federal government bureaucracies: the Fed, the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation. The law is set up so that any bank merger, branch expansion, or new branch creation can be postponed or prohibited by any of these four bureaucracies if a CRA “protest” is issued by a “community group.” This can cost banks great sums of money, and the “community groups” understand this perfectly well. It is their leverage. They use this leverage to get the banks to give them millions of dollars as well as promising to make a certain amount of bad loans in their communities.
    A man named Bruce Marks became quite notorious during the last decade for pressuring banks to earmark literally billions of dollars to his organization, the “Neighborhood Assistance Corporation of America.” He once boasted to the New York Times that he had “won” loan commitments totaling $3.8 billion from Bank of America, First Union Corporation, and the Fleet Financial Group. And that is just one “community group” operating in one city

  • Joe H

    Thanks for your comment and link.

    I just want to note a couple of things:

    1) The article you link to pretty much agrees with what I wrote here; that the ideological or “partisan” attacks made against the CRA weren’t accurate at all.

    2) It doesn’t say anything at all about the CRA prior to the Clintonian deregulation of the banks.

    I think the case that the CRA helped lessen the impact of the sub-prime crisis is convincing. Of course it is always possible that unscrupulous elements – like these “community activists” took advantage of the policy. Corporate criminals take advantage of the free market too. We can’t do away with institutions because they can be abused – we’d have none left if we did.

  • Austin

    There is nothing wrong with Capitalism, provided it is practiced with honesty. Over the past 10-15 years, a lot of executives started to bend and then break the rules. They got away with stealing from their own companies, they got away with deceiving customers, shareholders and employees. The SEC and other agencies charged with keeping these people honest were either asleep on the job or actually in on the con.

    Both the GOP and Democrats in the White House and Congress were in bed with these crooks. Honesty will not solve all of our economic problems, however, without it, we cannot go forward. Investors must be able to trust those who they invest with. Without honesty and trust, we will never recover.

  • reality’s slave

    I find it rather ironic that the only ones arguing for distributism/quasi-socialism are those who have no skin in the game, the philosophically inclinded non-business owners who do nothing but talk about the problems with the current system, but have not a single entrapreneural bone in their body in which to begin helping change the current culture/system towards that which they favor. Stop talking about it and do something! Start a business using the principles you advocate, then you’ll actually have some credibility on which to stand!

  • Jasmine

    “the philosophically inclinded non-business owners who do nothing but talk about the problems with the current system, but have not a single entrapreneural bone in their body…”

    You just described Joe Hargrave, the President, and most members of Congress. We have so many economic illiterates with hands on the switches that we are likely to see American business utterly destroyed. Capitalism is the solution, not the problem. Capitalism has given not just the U.S. but the world its higher standard of living and quality of life.

    It’s disgusting to see how many of these Robin Hoods out there think it’s moral to steal from working people to give to non-working people. All people need to live within their means while working hard to improve their own means. And for the truly poor there should be welfare. But sadly, there are so many able-bodied Americans sitting around collecting welfare checks that it’s absolutely shocking. Taking money from those who work to give to those who refuse to work is unjust. And it has become epidemic in the U.S.A.

  • I am not Spartacus

    Joe H. You must have read different articles than those I posted. Sailer is not within a galactic distance of agreeing with you and DiLorenzo is even further afield.

    The point is the CRA was constructed, in part, as as a scam. It was created to “address” a non-existent institutionalised racism and those who created it knew that.

    The reason banks weren’t loaning to folks was not because of their race but because they had no collateral or track record of paying back other loans.

    Liberals are always running-around creating unrealistic and unsound programs supposedly to redress some aspect of institutionalised racism but CRA is just another doing-poorly do-gooder program that ended-up costing all of us and when those responsible for the debacle tell me it wasn’t their fault I think I can be excused for doubting them.

    (When have any Feds EVER accepted blame when their hare-brained schemes blew-up and end-up wrecking the economy?)

    There is a lot of historical evidence that Church and Local Credit Unions can perform, far more effectively, the tasks the CRA is putatively performing.

    What the Banksters have done in the field of economics is akin to what Professional Social Workers did to local Church Charities (See, Marvin Olasky’s, “The Tragedy of American Comnpassion”).

    The idea that CRA is compatible with Catholic Social Doctrine is beyond me. To me, it is the antithesis of Catholic Social Doctrine.

  • Administrator

    A note to some of the commenters: If you want to expose the “Robin Hoods,” then please do so by responding to Joe’s arguments instead of resorting to the easy ad hominem. These are controversial issues, and we know that people feel strongly about them, but let’s stick to the substance and leave personalities out. Disagreements between faithful Catholics should be notably unlike the shout-fests we see in the secular world.

    Thank you in advance.

  • Robert Brennan

    The first “Federation of Worker’s Cooperative” on American soil was the Plymouth colony and they almost all died of starvation because of it. They quickly switched to a private property and reward for labor model which, as I recall, worked quite nicely.

    A collectivist template is no more representative of Catholic social teaching than a free market capitalist one is an anathema to it.

    The greatest good to the greatest number of people has been a free market model. Henry Ford, no paragon of Christian virtue paid his workers well, because he knew if he paid them well, they would have enough money to buy a Model T. And that, regardless of Henry Ford’s personal motivation is closer to what Pope Leo envisioned…

    If our faith teaches us anything it is that we are free agents. Free will is a wonderful thing, but it must be tempered with christian seasonings like charity. Men have been trying to figure out some kind of mechanism that will impose equity and a level playing ground for centuries. I will take a pass, thank you very much, on the misery and bleakness of socialism and take my chances with the free market which, if you look at the charitable giving statistics in the 1980s, wasn’t half bad for people who needed a hand.

    Just as we are free to embrace the Lord or reject Him, we must also be free to determine our earthly course and to put our labor and our talents to use as we see fit to the greater good of the family of God.

  • I am not Spartacus

    The CRA was constructed upon liberal ideological pillars and, once constructed, the Community Activists, such as Acorn, came rolling-up to Mau-Mau the White Banking Flack-Catchers filing suit after ideological class action suit on behalf of putative black victims and guess who made-off (rhymes with Madoff) with nearly all the dough? Acorn and their lawyer, Barack.

    Now, imagine you are a white banker and you have America’s First Black President and Janet Reno is over at Justice flogging the dead horse of institutionalised racism and you have ACORN and Barack hot on your tail in corrupt Chi-Town.

    Are ya going fight expecting Justice or are ya gonna cut your loses and pay the Community Organising Creeps?

    ++++++++++++ begin quotes +++++++++++++++++++++++

    Case Name

    Buycks-Roberson v. Citibank Fed. Sav. Bank Fair Housing/Lending/Insurance

    Docket / Court 94 C 4094 ( N.D. Ill. ) FH-IL-0011

    State/Territory Illinois

    Case Summary

    Plaintiffs filed their class action lawsuit on July 6, 1994, alleging that Citibank had engaged in redlining practices in the Chicago metropolitan area in violation of the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691; the Fair Housing Act, 42 U.S.C. 3601-3619; the Thirteenth Amendment to the U.S. Constitution; and 42 U.S.C. 1981, 1982. Plaintiffs alleged that the Defendant-bank rejected loan applications of minority applicants while approving loan applications filed by white applicants with similar financial characteristics and credit histories. Plaintiffs sought injunctiverelief, actual damages, and punitive damages.

    U.S. District Court Judge Ruben Castillo certified the Plaintiffs

  • Joe H

    Robert,

    Thanks for your comment.

    There is a pretty big difference between distributism and communism. The distinction is as old as Aristotle, who heavily criticized Plato’s community of property and possessions and defended private property – but private property “shared among friends”, and distributed to the poor in order to give them a hand up instead of a hand out. It is out of an appreciation for the benefits of private property versus state or communal property that distributists wish to see more in ownership of it.

    Hence, the examples we look to are not communist experiments, but real life examples of enterprises that are privately owned by workers and are competitive in a marketplace; the two conditions for a business enterprise I should think conservatives would hold. Aside from enterprises such as the Mondragon, there are also the 10,000 + ESOPs in the United States, a growing number of which are majority owned by workers with full voting rights. These firms make money, compete in the market, and enable everyone to partake in the profits of production.

    These ideas have a long history of Papal support, from Pope Leo XIII down to our current Pope Benedict XVI. For more details, please visit my blog and see the page (on the left hand side) “Redistribution of Wealth: A Catholic Perspective”. You will, I hope, appreciate that it has nothing in common with the secular leftist perspective.

    Respectfully,

    Joe H

  • Jim

    Joe H.,

    Thanks for this interesting article. I can’t say that I’m well read on this issue though I general second the gut reaction of some of these commentors. I hope you continue to write thought provoking article in a distributist mold. I’m trying to learn more about that philosophy…in between, hide-and-seek, starting my own business, and keeping my job.

  • Ted Seeber

    There is nothing wrong with Capitalism, provided it is practiced with honesty.

    Yep. But given the rewards for activity matrix, being dishonest will get you a hell of a lot more in Capitalism than being honest will. Due to that disordered reward system, I can’t find a time in all of history that Capitalism was practiced with honesty. Can you?

  • Ted Seeber

    I find it rather ironic that the only ones arguing for distributism/quasi-socialism are those who have no skin in the game, the philosophically inclinded non-business owners who do nothing but talk about the problems with the current system, but have not a single entrapreneural bone in their body in which to begin helping change the current culture/system towards that which they favor. Stop talking about it and do something! Start a business using the principles you advocate, then you’ll actually have some credibility on which to stand!

    I own just such a business. It does a whopping $1500 worth of sales a year. It is completely “out competed” by the lying worthless fraudsters in the same industry. I make sure to keep it rather small though, but still some of my best friends and family would rather go to “Geek Squad” for their high tech needs, than my little computer consulting business.

    The rewards for committing fraud- in this case, making sure the customer thinks they have to buy a “new” whatever, rather than attempting to make the current hardware work for the customer – are just too large. Same with any other industry. Until fraud is completely eliminated from the market place and the punishment for fraud is life in solitary confinement, we will continue to see the slide away from morality and towards a criminal marketplace.

  • Ted Seeber

    We have so many economic illiterates with hands on the switches that we are likely to see American business utterly destroyed. Capitalism is the solution, not the problem. Capitalism has given not just the U.S. but the world its higher standard of living and quality of life.

    Does that include the 18,000 people killed in 2002 because the free market refused to do business with them?

    Does that include the 1 million babies killed in the womb last year because their parents thought they couldn’t “afford” to have children?

    Does that include the 35 million Americans now on food stamps because their work doesn’t pay enough or they are totally unemployed and have lost all assets?

    Exactly how is this a higher standard of living and quality of life?

    It’s disgusting to see how many of these Robin Hoods out there think it’s moral to steal from working people to give to non-working people.

    That isn’t what us Robin Hoods are saying. What we are saying is that it is utterly immoral to steal from working people to give to non-working people. Like the Stock Market does when it takes the profit from hard working producers and gives it to lazy good-for-nothing bankers and traders.

    All people need to live within their means while working hard to improve their own means. And for the truly poor there should be welfare. But sadly, there are so many able-bodied Americans sitting around collecting welfare checks that it’s absolutely shocking. Taking money from those who work to give to those who refuse to work is unjust. And it has become epidemic in the U.S.A.

    I’m more shocked by the number of able-bodied Americans sitting around taking dividend checks, than the number of able-bodied Americans sitting around taking welfare checks.

    Under distributism, neither is necessary, luckily. Keep the markets small, and the number of capitalists large, and there will be plenty of work to go around. It’s only when the number of capitalists are small, and the market is a monopoly, that we get into trouble.

  • Ted Seeber
  • Ted Seeber

    The first “Federation of Worker’s Cooperative” on American soil was the Plymouth colony and they almost all died of starvation because of it. They quickly switched to a private property and reward for labor model which, as I recall, worked quite nicely.

    I’d love it if we could return to that; get rid of this parasite of a financial class that Joe H. claims ruined the CRA and Clintonian deregulation (I’m also a distributist, but I kind of disagree- the error came long before either of these in allowing the fraud of fractional reserve banking to begin with, ending the ban on usury).

    A collectivist template is no more representative of Catholic social teaching than a free market capitalist one is an anathema to it.

    Both are anathema to me, for they violate subsidarity. I personally think the best thing we could do at this point is end central banking and finance, and turn money production over to individual metropolitian chambers of commerce rather than have it at the federal level.

    The greatest good to the greatest number of people has been a free market model. Henry Ford, no paragon of Christian virtue paid his workers well, because he knew if he paid them well, they would have enough money to buy a Model T. And that, regardless of Henry Ford’s personal motivation is closer to what Pope Leo envisioned…

    Certainly closer than Stalin’s vision in the same period of taking 100% of the produce from the Ukraine, and turning feast into famine. But when Henry was doing this he has ONE factory only. I suggest at least part of the reason for his personal motivation, was personal relationship with his workers.

    If our faith teaches us anything it is that we are free agents. Free will is a wonderful thing, but it must be tempered with christian seasonings like charity. Men have been trying to figure out some kind of mechanism that will impose equity and a level playing ground for centuries. I will take a pass, thank you very much, on the misery and bleakness of socialism and take my chances with the free market which, if you look at the charitable giving statistics in the 1980s, wasn’t half bad for people who needed a hand.

    As long as you cut out the richest, of course, and ignore the fact that homelessness increased by several percentage points in the 1980s, 1990s, and the first decade of this century. The charity isn’t quite up to the task of *actually* reordering society- and today you’ve got a 1/10 chance of ending up on food stamps thanks to the “free market”.

    Just as we are free to embrace the Lord or reject Him, we must also be free to determine our earthly course and to put our labor and our talents to use as we see fit to the greater good of the family of God.

    I’m not sure I want to be free to reject the Lord, and I’m not sure I’m competent to determine my earthly course. And when I look at the parasite on the bubble of the market, the financial class, they seem even less able to use their labor and talents for anything other than personal enrichment.

  • Ted Seeber

    And this is the man a majority of Catholics voted for, presumably because they found Common Ground with him.

    I didn’t. I voted for Chuck Baldwin, as the ONLY Seamless Garment of Life Candidate in the race.

    I apparently take the Seamless Garment teaching differently than most- I won’t vote for a candidate who does’t support it, even if that means I need to withdraw my vote from the race.

    Sad to say, Barak proved me correct with his very first cabinet appointment, Larry Summers.

  • Ted Seeber

    It is out of an appreciation for the benefits of private property versus state or communal property that distributists wish to see more in ownership of it.

    Hence, the examples we look to are not communist experiments, but real life examples of enterprises that are privately owned by workers and are competitive in a marketplace; the two conditions for a business enterprise I should think conservatives would hold.

    Actually, one I look to, the Aurora Colony of Oregon, was both- a commune organized as a co-op between several families, that lasted nearly 100 years in this “Capitalist” economy.

    Of course, they were a bunch of Protestants who took their lead from a Catholic Saint (St. Benedict), but still, they were quite successful- the only reason the commune was disbanded was they had a rule about not letting new families buy in, and the last family died out in 1974, leaving the entire property of the commune to the city of Aurora, Oregon to use as a museum, as it still is to this day.

    It is the success of the Aurora colony that I point to in saying that good Apostolic Communism does work- when limited to less than 500 citizens.

    And I feel the same about good Catholic Capitalism- distributism- it ought to work as long as it is kept small, to within two degrees of friendship between producer and consumer, who may in the next transaction likely switch roles.

  • I am not Spartacus

    Mr. Seeber. Kudos. I do not understand how a Catholic could justify voting for the Moral Monster, Barack.

    In voting for him they did get change. A change in their Christian Character and that is evidenced by the reality few, if any, who have stepped forward to apologise for voting for him to say nothing about by the realtively few, if any, who have publicly opposed him and his deadly pro-abortion policies.

    Those with an integral Christian Character are willing to admit they have made mistakes and they apologise for those errors and they try and set right the mayhem they have helped introduce into The Body of Christ and the Body Politic.

    But, because a vote changes you and your Christian Character more than the govt, it takes heroic humility to publicly admit your mistake and to oppose the man you voted for.

    That is why there are so few (I can’t think of one, frankly) examples of Christian Catholics who have come forward to Confess they had been duped by Barack and why even fewer (again, are their any?) have gone public to oppose his deadly pro-abortion policies.

    It is much more common for those whose vote resulted in their Christian Character becoming corrupted to talk about achieving Common Ground.

  • D.B.

    The fact of the matter is, we are competing against rival nations…say what you want about Bismarckian politics, THAT is the order of this flawed world. Distributism on a massive scale would cripple us in a world economy that scorns such ideals. Are you willing to sacrifice the standing of the United States in the world? Some of you perhaps are…and while as Christians we are taught to shun the world, how would allowing our enemies to stomp us into the ground further the cause of the Church in America? Which would be the greater evil?

  • Ted Seeber

    Mr. Seeber. Kudos. I do not understand how a Catholic could justify voting for the Moral Monster, Barack.

    I couldn’t see voting for either John McCain or Barak- both had moral issues I couldn’t square with my conscience.

    In voting for him they did get change. A change in their Christian Character and that is evidenced by the reality few, if any, who have stepped forward to apologise for voting for him to say nothing about by the realtively few, if any, who have publicly opposed him and his deadly pro-abortion policies.

    I’ve opposed his pro-abortion policies when they have been real (I have my doubts that the Capps Amendment went as far as conservative commentators claimed). But I also can’t bring myself to justify the other side to oppose him, not knowing what I know.

    Those with an integral Christian Character are willing to admit they have made mistakes and they apologise for those errors and they try and set right the mayhem they have helped introduce into The Body of Christ and the Body Politic.

    Would that the supporters of torture would do the same!

    But, because a vote changes you and your Christian Character more than the govt, it takes heroic humility to publicly admit your mistake and to oppose the man you voted for.

    True enough. I wonder when those who voted for Bush will realize that their vote was equally anti-life?

    That is why there are so few (I can’t think of one, frankly) examples of Christian Catholics who have come forward to Confess they had been duped by Barack and why even fewer (again, are their any?) have gone public to oppose his deadly pro-abortion policies.

    Probably as many as have come forward who voted for Bush, to decry his pro-torture policies.

    It is much more common for those whose vote resulted in their Christian Character becoming corrupted to talk about achieving Common Ground.

    I’d love to hear this from EITHER side, frankly. I can’t name a single politician who is in keeping with Church teaching who isn’t either a Protestant Pastor or so marginalized as to never actually get anywhere (Alan Keyes?)

  • Ted Seeber

    The fact of the matter is, we are competing against rival nations…say what you want about Bismarckian politics, THAT is the order of this flawed world.

    It isn’t necessarily an order that we as consumers have to accept however- I in fact try to reject it as much as possible, choosing instead to use proximity to my house, rather than price, as my primary decision maker in who I purchase from. But it’s getting harder and harder to get that information in this flawed world.

    Distributism on a massive scale would cripple us in a world economy that scorns such ideals.

    So what, as long as our close neighbors are employed and producing?

    Are you willing to sacrifice the standing of the United States in the world?

    That has already been sacrificed by the greed of the bankers in September 2008, the only question left is what we will do when inflation from propping up the fraud makes imports unobtainable. That’s where distributionism has it’s answer: local production.

    Some of you perhaps are…and while as Christians we are taught to shun the world, how would allowing our enemies to stomp us into the ground further the cause of the Church in America? Which would be the greater evil?

    Attempting to engage an enemy of 2 billion workers willing to work for $.30/hr, it seems to me would be the greater evil. In any wage deflationary spiral, China and India win hands down.

    But if instead, we went with local production at a living wage, and simply *stopped* this nonsense of importing and exporting (there isn’t a single product we couldn’t make right here in the United States) then we’d have full employment and a high standard of living.

    At least, until the rest of the world caught up. With our help, giving a hand up, that might take as little as 50 years. Without our help, or worse yet, with our wage slavery for cheap imports, it may take two or three centuries.

  • Robert Brennan

    I appreciate the time and thought Ted S. put in my original post and we could probably go on and on and on about the economic successes or in his opinion deficiencies of the 1980s and the longest sustained economic growth this country has ever seen…But we won’t…I will comment on his last comment of not wanting to be “free to reject the Lord”

    If Adam and Eve’s “NO” to God didn’t exist, then Joseph and Mary’s “YES” would have no meaning. God wants us to say YES but he won’t force us…I thought that was the point of the whole salvation thing…It’s been won for us by Jesus on the cross, those gates are wide open…But we still need to walk through them…End of sermon and God bless Ronaldus Maximus!!

  • Miki Tracy

    So, in other words, what all of you are saying is that following the mandates of the Gospel and the Social teaching of the Church….that’s all just a good idea in an ideal world, right???? [smiley=laugh]

    May I remind all you Distributist nay-sayers that Christ was a Distributist during His “ministry” and that y’all (and me) are going to be judged according to how you andswer this calling….Matthew 25 and all that….

    As if anyone actually “owns” anything. Everything you have is gift….EVERYTHING. Sheesh, no wonder the Church is such a joke to Americans at large.

  • Miki Tracy
  • Sarah L

    I’ve long been interested in distributism and am glad to see that others don’t consider it merely, as Miki Tracy pointed out, a good idea for an ideal world.” I also like Ted Seeber’s comments, particularly in response to a commenter who suggested that distributism, widely practiced, would ruin our country–and our country’s standing in the world.

    Thank you, Ted Seeber & Miki Tracy for your helpful and insightful comments–and to others who see more than a pipe dream in distributism. Thank you, Joe Hargrave, for the excellent article, which has given me something to chew on for the rest of the day. smilies/smiley.gif God bless you all!

  • D.B.

    “It isn’t necessarily an order that we as consumers have to accept however- I in fact try to reject it as much as possible, choosing instead to use proximity to my house, rather than price, as my primary decision maker in who I purchase from. But it’s getting harder and harder to get that information in this flawed world.”

    It is the order of this world…you don’t have to like it, and you can do what you can to make it better, but the fact is…THAT is how things are. Don’t misunderstand, I am not for predatory capitalism…the outsourcing of America jobs is a travesty, and an utter violation of Burkean principles…there is nothing conservative at all about letting traditional communities die to make more money. HOWEVER…the importing and exporting of goods, international trade is older than the Church…and there is nothing wrong with that. If the French make a better product than we do…than people are going to buy French…simple as that.

    “So what, as long as our close neighbors are employed and producing?”

    -This statement betrays a borderline dangerous naivete about geo-political and economic realities….you speak of the world as it SHOULD BE….I see the world AS IT IS. And as it is, our neighbors will not embrace Distributism, and should we attempt such an experiment our economic rivals will destroy us financially…because we cannot just “pull out” of the global economy…that is lunacy. You think people in America are hungry and poor now? Just wait until the idealists and utopian empty heads have free reign.

    “That has already been sacrificed by the greed of the bankers in September 2008, the only question left is what we will do when inflation from propping up the fraud makes imports unobtainable. That’s where distributionism has it’s answer: local production.”

    The United States is still one of the largest markets in the world. Our standing in the world economy is certainly damaged, but we are still a world power.

    “Attempting to engage an enemy of 2 billion workers willing to work for $.30/hr, it seems to me would be the greater evil. In any wage deflationary spiral, China and India win hands down.

    But if instead, we went with local production at a living wage, and simply *stopped* this nonsense of importing and exporting (there isn’t a single product we couldn’t make right here in the United States) then we’d have full employment and a high standard of living.

    At least, until the rest of the world caught up. With our help, giving a hand up, that might take as little as 50 years. Without our help, or worse yet, with our wage slavery for cheap imports, it may take two or three centuries”

    We’re not going to fix the world, Mr. Seeber. They are going to do their own thing, because they are not utopians but engagers in realpolitik…they are concerned with their own interests, and if it is in their interest that they undercut our currency by manipulation or engage in trade wars or keep their workers working cheap to hurt us, than they will do so. World Politics is a nasty chess game…we abdicate and another power, one less well meaning will take our place…will that further the cause of Church Teaching?

  • Joe H

    “But if instead, we went with local production at a living wage, and simply *stopped* this nonsense of importing and exporting (there isn’t a single product we couldn’t make right here in the United States) then we’d have full employment and a high standard of living.”

    And here of course is where profits and other values will clash and collide. Libertarians, I imagine, will argue that this will make everything more expensive; American workers cost more than Asian workers, they have a higher standard of living and higher living costs. Those extra costs will be passed onto the consumer, so they might argue, in higher prices.

    This is the problem that has haunted localist, distributist programs for years – can their products remain competitive on a world market? I think if we had an international regime such as the one proposed by Pope Benedict in Caritas in Veritate, “with real teeth”, it would be possible – through the strict enforcement of fair trade laws, and through support for legitimate (i.e. non-Marxist) labor movements throughout the globe. When third world wages go up, the prospects for production at home become brighter.

  • D.B.

    Exactly my point….it will NEVER HAPPEN. Too much self interest for this to occur. The world is a nasty place, and while the common worker in those countries may not be against America per se, their ruling classes certainly see us as competitors and rivals. Geo-politics is a chess game, as I said before. We’re not going to fix the world. I don’t chalk every anti-American statement up to “Envy of us”, HOWEVER there are many nations who want our position in the world of power and influence…and would take it from us in an instant if given the chance.

  • Joe H

    My point is not that it will “never happen”, only that certain conditions must be met – conditions I do not believe are politically impossible. Certainly Catholics are obliged, to what extent they are able to do so, to support the legitimate claims of workers. If this were done consistently, if it were not as easy to simply take unfair advantage of third world labor, then Distributism would work even better than it has – and it HAS worked.

    The issue here is getting it to work on a wider scale, not whether or not it can work at all.

  • D.B.

    My point is not that it will “never happen”, only that certain conditions must be met – conditions I do not believe are politically impossible. Certainly Catholics are obliged, to what extent they are able to do so, to support the legitimate claims of workers. If this were done consistently, if it were not as easy to simply take unfair advantage of third world labor, then Distributism would work even better than it has – and it HAS worked.

    The issue here is getting it to work on a wider scale, not whether or not it can work at all.

    It won’t work on a wider scale, Joe. Why? The same reason why Communism doesn’t work…it requires a level of virtue that the human race does not possess…at least on a large enough scale to matter. This isn’t Cynicism….this is the reality of The Fall. I don’t advocate doing nothing, but I don’t kid myself about Humanity…those who want to do the right thing are almost always a minority. Human Avarice will throw a monkey wrench in any such scheme, which is why it would require totalitarian methods to enact it on a wide scale. I for one would oppose tooth and nail any such measures.

  • Joe H

    With that sort of reasoning, we may as well not have government at all.

    The state, private property, production, trade, labor: each of these categories has a proper place in a moral economy in the social doctrine of the Catholic Church. A sort of fatalism that roots itself in man’s sinful nature would not only contradict the Church’s social teaching, but its moral teaching as well. Why even try to be good? Then we slip into Calvinism, into the division of humanity into two permanent and fixed camps of the saved and the damned. Sainthood becomes a pious fantasy.

    Between utopianism and fatalism stands the Church’s call to resist evil and do good to the best of our ability in all areas of life, including the economic, political and social. Distributism does not require coercion, moreover – the Employee Ownership Act I referenced is only one example of legislation that would provide positive incentives to do the morally right thing with property and ownership.

  • D.B.

    …and a great thing, but man is a wretched and flawed creature…who would otherwise warrant damnation if it were not for the mercy of God….virtue and vice all in one package. I would definitely support legislation that would make it easier for subsidiary to exist…and to keep communities whole…HOWEVER…I don’t kid myself to the ways of the heathen world, and the adverse consequences that would result should we attempt this folly on a massive and concerted scale. You see, the idea of reverting to the pre-World War I “quiet and withdrawn” Republic is a fantasy….one that has deluded Libertarians just as equally. The point of no return has already been reached, and this global economy is the inevitable result of centuries of economic and political policy. Should we accept evil? NO…but I for one am suspicious of “Wealth Distribution” schemes, which may have laudable goals but would otherwise be usurped, as has been the case in the past…REPEATEDLY. Large owners are not going to voluntarily “redistribute” their property….some might, and God bless them…but most won’t….what would you do then? What if I wish to be free of the responsibility of property and pursue the arts? Would I be free to sell my property to who I wish, or would I have to give it to the “Community”? PRACTICAL APPLICATION of this idea….I’m not interested in fanciful quotes from Chesterton or selective quotations of Papal Encyclicals…I want Application…how would this come about, what would be the role of State and Federal…How could this plan be reconciled to the US Constitution? What if someone wants to opt out?

  • Mark

    Joe, a few weeks ago when I introduced you to the concept of businesses being 50% employee owned once they are large enough to be traded publicly, I in NO way meant an Employee Ownership Act… I didn’t even know that existed. The reason I brought it up is because I believe it would be beneficial to everyone involved and therefore an effective system. Why must you take it to a the level of a Federal Law? How about some incentives like 50% income tax reduction for management and 0% corporate tax for the first five years?

    Happy Labor Day America and what better gift could we ask for than the resignation of the foul-mouthed, racist, anti-American Communist Van Jones?!?

  • Joe H

    Mark,

    With due respect, you did not “introduce me” to this idea, nor does my mention of the EOA have the slightest thing to do with whatever we may have discussed. The “federal law” proposed is nothing but an incentive plan – it mandates absolutely nothing.

    D.B.,

    Why would you assume that you must be forced to participate? What have I ever said to indicate such a thing? Application is precisely what I have spoken of here; I don’t know what more you want. The idea is to provide incentives for people to voluntarily participate in distributist programs – no one has ever advocated, spoken of, or even implied the use of force.

  • Mark

    Quote(10) nice!

    July 07th, 2009 | 7:28pm
    Since the ego competes and the spirit cooperates, I believe that the concept of unions has become passe’. The idea that the people signing your paycheck should be viewed as adversaries is ridiculous. For this reason (among many) I believe that American businesses would be far better off eliminating unions once a company is large enough to be publicly traded and having those companies be 50% employee owned.

    Let’s end the tug-of-war and start pulling on the same end of the rope.

  • reality’s slave

    Ted, I find your opinions very thought provoking. Since you are engaging in the world of business, I thought you might enjoy two books that have had a dramatic effect on my own life and business. “The 4-Hour Work Week” by Timothy Ferriss; and “Purple Cow” by Seth Godin. Good luck!

  • D.B.

    Incentive as in a Tax break….or Incentive as in if you don’t do it this way, you will be penalized through Taxes, Fees, or whatever else have you. My point Joe is that your ideas will be adopted by a minority…most people will not embrace Distributism…Human Avarice will guarantee its failure on a global scale.

    That doesn’t mean that Distributist inspired legislation can’t be beneficial…it absolutely can….but as far as a whole pill embracing of this particular ism….no way.

  • Bill McKenna/ Rhode Island
  • Bill McKenna/ Rhode Island

    Has anyone read of The Share Economy by Martin Weitzman. I think that is a proposal that is consistent with Catholic Social Teaching.

    I think the liberatarian and statist approaches are both incapatible with Catholic Social Teaching.

    God bless

    Bill

  • Ted Seeber

    I appreciate the time and thought Ted S. put in my original post and we could probably go on and on and on about the economic successes or in his opinion deficiencies of the 1980s and the longest sustained economic growth this country has ever seen…But we won’t…I will comment on his last comment of not wanting to be “free to reject the Lord”

    If Adam and Eve’s “NO” to God didn’t exist, then Joseph and Mary’s “YES” would have no meaning. God wants us to say YES but he won’t force us…I thought that was the point of the whole salvation thing…It’s been won for us by Jesus on the cross, those gates are wide open…But we still need to walk through them…End of sermon and God bless Ronaldus Maximus!!

    God won’t force us. But that doesn’t mean we can’t warn each other- and it also doesn’t mean we should let the man who commits a sin against the entire community do it a second time.

    Forgiveness is eternal- but the effects of the sin are temporal, and should be treated as such. I see no reason for the Death Penalty, but I also see no reason why the Bernie Madoffs and JP Morgans of this world shouldn’t be welded into a small box with food and sewage holes and left to the mercy of God.

  • Ted Seeber

    It is the order of this world…you don’t have to like it, and you can do what you can to make it better, but the fact is…THAT is how things are. Don’t misunderstand, I am not for predatory capitalism…the outsourcing of America jobs is a travesty, and an utter violation of Burkean principles…there is nothing conservative at all about letting traditional communities die to make more money. HOWEVER…the importing and exporting of goods, international trade is older than the Church…and there is nothing wrong with that. If the French make a better product than we do…than people are going to buy French…simple as that.

    What does it profit a man to gain the whole world if his neighbor starves? The entire purpose of the Church is to create the Kingdom of God on Earth, not to go with practices that are “older than the church” just because they’ve been done a long time.

    I suggest that the invention of the Internet contains an answer though- why ship French goods halfway around the world, when you can ship the plans for those goods to make in local factories?

    “So what, as long as our close neighbors are employed and producing?”

    -This statement betrays a borderline dangerous naivete about geo-political and economic realities….you speak of the world as it SHOULD BE….I see the world AS IT IS. And as it is, our neighbors will not embrace Distributism, and should we attempt such an experiment our economic rivals will destroy us financially…because we cannot just “pull out” of the global economy…that is lunacy. You think people in America are hungry and poor now? Just wait until the idealists and utopian empty heads have free reign.

    Why do you think we can’t just “pull out” of the global economy? Do you think, perhaps, we don’t have enough resources to make America self-sufficient (when we’re already producing enough food to rot in our warehouses)? Do you think we don’t have enough military might to police our 7000 miles of border? What, specifically, is your complaint?

    Yes, I’m being idealist- but if we don’t reach for our ideals, we will never obtain them. I want an America that is *self-sufficient* first, then only participates in trade out of our surplus and out of love for the rest of the world. If the rest of the world can’t do that- then as far as I’m concerned, we don’t need to trade with them. If they can’t trade on OUR rules, we don’t need to trade at all.

    The United States is still one of the largest markets in the world. Our standing in the world economy is certainly damaged, but we are still a world power.

    Only until China dumps all of it’s dollars and refuses to accept payment in dollars. Which has already started.

    We’re not going to fix the world, Mr. Seeber. They are going to do their own thing, because they are not utopians but engagers in realpolitik…they are concerned with their own interests, and if it is in their interest that they undercut our currency by manipulation or engage in trade wars or keep their workers working cheap to hurt us, than they will do so. World Politics is a nasty chess game…we abdicate and another power, one less well meaning will take our place…will that further the cause of Church Teaching?

    If they will not live up to our ideals, then sadly what we should do is simply NOT PLAY THE GAME. Church Teaching says we must not cooperate with evil- ever. And so we simply should not cooperate with evil. Let them play their nasty Chess Game, let them have all the power, as long as we can protect our borders and feed our people, the rest of the world can go hang.

  • Ted Seeber

    “But if instead, we went with local production at a living wage, and simply *stopped* this nonsense of importing and exporting (there isn’t a single product we couldn’t make right here in the United States) then we’d have full employment and a high standard of living.”

    And here of course is where profits and other values will clash and collide. Libertarians, I imagine, will argue that this will make everything more expensive; American workers cost more than Asian workers, they have a higher standard of living and higher living costs. Those extra costs will be passed onto the consumer, so they might argue, in higher prices.

    And I suggest, under the concept of Fair Price- that paying any less than those higher prices is *leading the consumer into sin*.

    This is the problem that has haunted localist, distributist programs for years – can their products remain competitive on a world market? I think if we had an international regime such as the one proposed by Pope Benedict in Caritas in Veritate, “with real teeth”, it would be possible – through the strict enforcement of fair trade laws, and through support for legitimate (i.e. non-Marxist) labor movements throughout the globe. When third world wages go up, the prospects for production at home become brighter.

    Agreed, but I don’t see any way to have truly fair trade laws as long as price is the only indicator. I have advocated before a tax on shipping to enforce subsidarity; but in truth the only thing that will make third world wages go up is gifts of infrastructure and time *without* trade.

  • Ted Seeber

    …and a great thing, but man is a wretched and flawed creature…who would otherwise warrant damnation if it were not for the mercy of God….virtue and vice all in one package. I would definitely support legislation that would make it easier for subsidiary to exist…and to keep communities whole…HOWEVER…I don’t kid myself to the ways of the heathen world, and the adverse consequences that would result should we attempt this folly on a massive and concerted scale. You see, the idea of reverting to the pre-World War I “quiet and withdrawn” Republic is a fantasy….one that has deluded Libertarians just as equally. The point of no return has already been reached, and this global economy is the inevitable result of centuries of economic and political policy.

    Correct. Thus we should simply refuse to be a part of it, whenever and wherever possible.

    Should we accept evil? NO…but I for one am suspicious of “Wealth Distribution” schemes, which may have laudable goals but would otherwise be usurped, as has been the case in the past…REPEATEDLY. Large owners are not going to voluntarily “redistribute” their property….some might, and God bless them…but most won’t….what would you do then?

    Stop doing business with the ones who won’t. Refuse to buy from them, refuse to sell to them, and they soon won’t be “large owners” at all.

    What if I wish to be free of the responsibility of property and pursue the arts? Would I be free to sell my property to who I wish, or would I have to give it to the “Community”?

    Under distributism, you’d sell your property back to the master of the guild, and you’d apprentice yourself to an artist.

    PRACTICAL APPLICATION of this idea….I’m not interested in fanciful quotes from Chesterton or selective quotations of Papal Encyclicals…I want Application…how would this come about, what would be the role of State and Federal…How could this plan be reconciled to the US Constitution?

    It can’t. It would require a new amendment, one that replaces the Congressional oversight of interstate commerce and Article I Section 10 with a right of states, cities, and counties to make their own trade treaties and print their own money.

    What if someone wants to opt out?

    Then they move to a city that has trade treaties more in keeping with their sin.

  • Ted Seeber

    It won’t work on a wider scale, Joe. Why? The same reason why Communism doesn’t work…it requires a level of virtue that the human race does not possess…at least on a large enough scale to matter. This isn’t Cynicism….this is the reality of The Fall. I don’t advocate doing nothing, but I don’t kid myself about Humanity…those who want to do the right thing are almost always a minority. Human Avarice will throw a monkey wrench in any such scheme, which is why it would require totalitarian methods to enact it on a wide scale. I for one would oppose tooth and nail any such measures.

    I agree to some extent. More than 1000 citizens in a community (two degrees of separation of friendship) and distributism becomes impossible.

    But what you fail to see is that capitalism and communism *also* fail at this level. As soon as you have anonymous transactions, greed throws a wrench in such a scheme.

    Distributism’s answer is, well, fine then, keep communities small and don’t let them grow into sin.

  • Ted Seeber

    Ted, I find your opinions very thought provoking. Since you are engaging in the world of business, I thought you might enjoy two books that have had a dramatic effect on my own life and business. “The 4-Hour Work Week” by Timothy Ferriss; and “Purple Cow” by Seth Godin. Good luck!

    I consider most of those schemes to be horribly exploitive of third world labor- I’d rather work 80 hour workweeks and know it was my OWN labor that I was presenting, than to outsource myself. That’s also why I refuse to “grow” my business by more than just word of mouth.

  • Ted Seeber

    Incentive as in a Tax break….or Incentive as in if you don’t do it this way, you will be penalized through Taxes, Fees, or whatever else have you. My point Joe is that your ideas will be adopted by a minority…most people will not embrace Distributism…Human Avarice will guarantee its failure on a global scale.

    And so what if it does? At least we aren’t customers of the global race to the bottom of the wage scale anymore. At least our neighbors will have jobs, if we refuse imports.

    Funny, last night I saw distributism begin to work it’s way into the environmentalist movement. Bill Nye, on his science show, pointed out that to get a ton of Washington Apples to Paris, France it costs 5 tons of CO2.

    Now imagine what the cost of that apple would be, if the cost of releasing CO2 into the atmosphere was the same per weight as the apple.

    He then mentioned that even though New York State produces enough apples to *completely* feed demand in NYC, 40% of the apples sold in NYC come from 3000 miles away on the West Coast.

    And that’s just *internal* to the United States.

    That doesn’t mean that Distributist inspired legislation can’t be beneficial…it absolutely can….but as far as a whole pill embracing of this particular ism….no way.

    So maybe we as Catholics, should just stop buying the lie.

  • Ted Seeber

    Incentive as in a Tax break….or Incentive as in if you don’t do it this way, you will be penalized through Taxes, Fees, or whatever else have you.

    How about, incentive as in if you don’t do it, you’ll be left to sell your goods on the black market and pay smuggler’s prices for shipping?

  • Ted Seeber

    The fact of the matter is, we are competing against rival nations…say what you want about Bismarckian politics, THAT is the order of this flawed world. Distributism on a massive scale would cripple us in a world economy that scorns such ideals. Are you willing to sacrifice the standing of the United States in the world? Some of you perhaps are…and while as Christians we are taught to shun the world, how would allowing our enemies to stomp us into the ground further the cause of the Church in America? Which would be the greater evil?

    Nobody says we have to play their game. It is possible, given modern robotics, to make any border an impenetrable killing zone without deploying a single soldier.

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