Tuesday, November 16, 2021

Part I

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Matters Economic Are Matters Moral: Inflation Rises to Highest Rate In 31 Years — But Why Is This Such A Major Moral Issue?

We often point out that matters economic are matters moral. There is an ethical and moral dimension to economics that is inescapable. In one sense, there are few disciplines or human activities that are more laden with moral issues than economics. And thus, economic headlines come with big worldview challenges. Consider the headline that greeted us over the weekend, telling us that the inflation rate in the United States has now reached a 31-year high of 6.2%. Now, that’s huge news. It rocked the financial markets, it rocked the stock markets. And for that matter, it has rattled a lot of Americans.

But there are others including, no doubt, many listeners to The Briefing who do not hear the word inflation with the degree of fear that would be true of older Americans, those who lived through the ’70s, in particular, into the ’80s who lived through not only inflation but stagflation and what became defined as a series of inflationary spirals. As I said, this is a huge moral issue. But we’re going to have to explain why. First of all, let’s just define inflation. That’s one of the words that economists use. And even over the last several years, the big headline news has been very low inflation for a long, relatively unprecedented period of time. And you’ve had the Federal Reserve Bank and others concerned with monetary policy, congratulating themselves for controlling inflation.

But inflation is now basically out of control. But we’re defining it. Inflation can be defined in this way. It means your money is worth less. Inflation can be defined as the decline in the value of currency. You have $1, that dollar is worth a certain amount today, inflation means it is actually worth less tomorrow. And you can understand how devastating that can be to personal savings, how devastating that can be to the lives of individuals and families. But inflation can also be defined as just too much debt and too much money loose in the economy. Now, that becomes especially important when you understand that the current administration intends to continue to flood the economy with trillions of dollars, of additional money and also additional debt.

And what we’re looking at is what in the 1970s, government feared was an intractable, insoluble problem. There were real fears in the West during the 1970s that permanent rates of high inflation might be unavoidable. But that came with what was called stagflation. And you say, “Why is all this important?” Well, stagflation was the contradiction of what the economists had promised. They had promised that you could have periods of low employment and you could have periods of high inflation, but not at the same time. But as it turned out, very high levels of unemployment and high levels of inflation came together on both sides of the Atlantic during the 1970s. People were paying interest rates for home mortgages in the double digits.

Thus, many families simply couldn’t afford conventional home mortgages. And furthermore, the value of their investment in their home was decreased, atrophied by rising inflation. Now, you say, “Well, if prices are rising, then the price of the house also rises.” Yes, that’s true. But if you’re living in it and you’re having to pay the mortgage on it, that might turn out to be a very bad deal for your family. In any event, inflation is a form of robbery. Now, morally speaking, that’s quite a claim, but it’s true. Inflation takes from you, even as you accepted this dollar bill as worth a certain amount and yet if it is worth less tomorrow, worth less than that the day after, well, you have effectively been taxed on the very dollar that you hold. Multiply that when it comes to your savings account, your investments, your bank account, you can understand just how devastating inflation can be.

Furthermore, the economic masters of the contemporary world have done just about everything within their control to keep inflation low. Which means, at this point, you really can’t have the Federal Reserve cut rates much because those rates have been cut so much already. What the government could do, what central banks can do, what the financial masters can do to slow down inflation has largely been done. And this, again, points to the dangers of now flooding the economy with even more dollars, massive amounts of suspending. Now, oddly enough, the Biden administration has announced that it thinks its way out of the inflation is spending more money, flooding the economy with even more cash.

Now, you can understand how this works by just going to your local supermarket. Butter costs more, milk costs more. Go to the gas station, gas costs more. California, just in recent days, has achieved its highest rate per gallon of fuel cost ever. What happens when you pump a lot more money into the economy? Well, the prices continue to go up. It’s simply a matter of supply and demand. And right now, one of the things we need to recognize is that a certain amount of very low inflations baked into the economy, we understand that. We expect that our houses will appreciate in value, we expect that there will be a return on our investments, but it needs to be measured. If that inflationary rate goes up, your gain will be eaten up by inflation.

You could look at it another way. Say you have a thousand dollars. You’re going to hold that thousand dollars in a certain kind of investment. Well, let’s say that, all of a sudden, inflation means that you have a rise in the rate of your return, the investments, all of a sudden, bringing a very high rate of return. You’re very pleased with that until you understand that the dollars themselves are worth a lot less. And remember, you’re working the economy at both ends. You’re trying to save on the one hand, but you’ve got to buy groceries and fuel with the other hand. You have to pay tuition, you have to pay for books, you have to pay for the necessities of life, you have to buy a house. And all of those costs are going up as well.

Wages, you say, are going up in an inflationary spiral. That’s true. Wages go up. But the effective value of that wage could well go down. You can be guaranteed that politicians of a certain age who’ve lived through inflationary spirals, understand just how angry the citizenry can become when inflation is effectively counted in, when it’s experienced in real life. The New York Times on Thursday of last week ran a headline, “Inflation Surges Putting More Heat on Washington.” The subhead, “October paces fastest in three decades, dashing hopes prices would ease.” Speaking to the nation in open comments about the experience of inflation and the fears of American citizens, President Biden promised that inflation rates would fall. As The New York Times reported in another headline, “As Biden Pledges Dip in Inflation, Question is When.”

The subhead in that article, “Debate by economists.” In other words, no one really knows. The president, in this case, has made a pledge, but that pledge is undercut by his political ambitions in order to satisfy the resurgent left in his party to push for forward with this massive amount of increased social spending. We’re talking about increased spending of trillions of dollars. Now, if you think prices again are high right now, just imagine if there are trillions of new dollars in the economy competing for the same goods and services. A couple of arguments here are important. One is that the COVID-19 pandemic, the economic shutdown and all the rest, the disruption in the supply chain, all those things mean that a certain amount of increased inflation was automatic. It was unavoidable. That’s no one’s fault.

But the current administration is very much responsible for its response to this picture. And a measured response, a responsible response, would be to try to put limits on increased spending, not to put the accelerator to the floor in a reckless increase. Yesterday’s print edition of USA Today included a front page headline, “Inflation Will Ease Biden Team Asserts.” The subhead, “White House says answer is finish the job on COVID.” Well, as I said, honesty demands that we stipulate that a certain amount of inflation was going to come in the aftermath of COVID. There just too many people who want too many things at the same time. Supply and demand means those prices are going to go up. But this administration is responding with a continuation of its continual spending increases.

Just remember that just after taking office, President Biden pushed through yet another massive trillion-dollar spending plan that he build as a stimulus for the economy. Well, Mr. President, the economy is stimulated. The response is inflation, and you still want to pour additional trillions of dollars into this very hot economy, too hot in the sense of inflation. The Wall Street Journal, of course, is the most authoritative financial newspaper and source of financial commentary in the United States. And a couple of angles that are identified by the journal include an editorial statement that appeared over the weekend with the headline, “The Inflation Revenue Dividend.” It turns out the state and local governments are now flushed with money.

Because all of these transactions, the very process and pattern of inflation, means that the state and local governments are receiving more money. And that leads to something else that was counterintuitive. Many of these states and local governments were crying out that they were going to be crushed by the economic shutdown. But as it turned out, many of those same states ended up with more money brought in by taxation rather than less. As the editors point out, “Progressive states with higher tax rates are especially flush. State and local tax revenue in New York, which raised taxes on high earners this spring, is running 13.3 billion, that is 21.3% higher for the current fiscal year that began in April over the same period in 2019.”

The editors then point out, “Mind you, 2019 was a very good year for state coffers.” But just keep this truth in mind. Even in many of these states where the state coffers, the state treasuries are prospering, the reality is that the citizens in those states may not be, certainly not for long. But yesterday’s print edition of The Journal also had a front page article that will help you to understand what is going on at your local department store, what’s going on when you buy groceries, what’s going on when you buy gas. Kristin Broughton and Theo Francis report, “Companies are paying higher wages, spending more for materials and absorbing record freight costs, pushing up economic inflation gauges. They are also reporting some of their best profitability in years.”

The next paragraph’s very interesting, “Executives are seizing a once in a generation opportunity to raise prices to match, and in some cases, outpace their own higher expenses after decades of grinding down costs and price.” So, that tells you something about the moral dimension of an inflationary spiral. Some businesses calculate that they can get ahead of that spiral, factoring in not only new costs, but new opportunities for profit. That has something to do with the bicycle you’re trying to buy for someone this Christmas as well.

Part II

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Biden Signs Infrastructure Bill Into Law In Hopes Of Transforming the Nation — And His Legacy

But next, we just need to comment on the photo op held at the White House yesterday as President Biden signed what he continues to define as the bipartisan infrastructure bill.

It was bipartisan, that’s not false, but it’s overwhelmingly Democratic. And the Republicans in both the Senate and the House who voted for the infrastructure bill may well pay a political price, or at least, especially those in the House who actually helped to take the bill over the line. President Biden was beaming, of course, this is a big political achievement, if nothing else, he avoided a massive politic disaster if he could not get this through. But remember, the president had pledged the left wing of his own party that he would put his presidency on the line to make certain that that massive, even larger social spending bill is approved in the very same time period as this infrastructure bill. And the president knows he’s going to have to do it without a single Republican vote in either the House or the Senate.

That’s especially tricky for the president in the Senate because he doesn’t yet have 50 Democratic senators ready to vote in the process known as reconciliation to go forward with that massive social spending. And at least one of them, West Virginia Democratic Senator Joe Manchin, has made very clear that he takes inflation seriously. He certainly has a memory of what inflation can do to an economy and to his own state there in West Virginia, to his own neighbors.

Part III

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Theology At The Glasgow Climate Change Summit: It Shows Up Everywhere You Look

But next we shift back to Glasgow, Scotland, the United Nations Climate Summit is finally over there. It had to be extended in order to reach some form of agreement. Now, as we stipulate, we need to make clear, there is a real problem. Just about everyone acknowledges now, there is a real problem.

Climate change is real. The degree to which it is a significant threat to humanity, that might be debatable. The extent to which humans have caused it and continued to exacerbate it, that’s also debatable. But in general, you look at Liberals and Conservatives coming to a consensus that climate change is a serious issue, Christians understand we have a stewardship responsibility. But still, it is not clear that we should take any particular option in order to try to achieve what these governments together have set as a goal of limiting the increase in what’s defined as climate to 1.5 degrees Celsius. The estimates are that the agreements that were reached in Glasgow are more likely to hit something like 2.5 degrees rather than 1.5.

But again, the issue is that if there were an easy answer to this, we would take it. There isn’t an easy answer. And even much of what’s hypothesized, isn’t it all clear as you look to the future, and yet we simply have to come back to the fact that a moral equation always turns out to be in something like this, a cost benefit analysis. There are certain steps that we can take, no doubt, there are certain steps that we should take. But what you see is a highly politicized context largely driven by the left, in which case, you have the left actually favoring certain kinds of industries and favoring certain kind of theories because it will increase their political power. We’re looking at a very interesting, very confusing situation. And yet, the bottom line is, not much happened in Glasgow. What was predicted, not much what happened in Glasgow. No surprise.

And that’s because, here’s something else, we simply need to understand in the realism of trying to understand the world, these nations cumulatively and in particular, singularly, are not going to take actions they believe will be particularly injurious to them. And as I’ve mentioned, there’s another moral imperative here. When you think about the good to the modern age, you think about refrigeration, you think about drugs, you think about medical treatments, you think about the institutions of everything from higher education to a consumer economy, you think about just the ability to feed one’s family and keep one’s house warm, or for that matter, cool by air-conditioning, which in many parts of the world is not yet commonly available and at risk to human life, you understand that all those things are going to take energy.

And many people in the world who rightly desire those things and earnestly are working for those things in emerging economies, they are not about to say, “Well, never mind. Due to climate change, I’m going to let my children shiver it night.” And there’s something else for us to consider. And here again, you have a Christian understanding of the way human beings in a fallen world work. You put those political leaders in the room, well, they’re talking about long-range plans. Now, here’s something we simply need to understand as a matter of human realism. And the Christian doctrine of sin helps to explain this. The long run is a very long period indeed.

John Maynard Keynes, the economist who famously, basically transformed economics in the Western world in the 20th century, and I would say negatively so, who wanted governments to become welfare states with massive amounts spending, when he was asked where that would eventually drive the economy in the future, he said, “Well, in the future, we’ll all be dead.” In other words, we take what’s politically expedient now, we’ll let future generations take care of themselves. Now, here’s the issue. All these politicians, political and government leaders were in the rooms, they were in the discussions or at least they were present politically, if not physically, but the reality is, virtually none of them will be in office when many of the decisions that were made will take place.

That’s to say, talk is cheap in the present when you’re promising about the future. It’s easy, of course, to look at the hypocrisy of the entire event with all these people flying on private jets with massive ecological impact in order to go to a meeting which is all about preventing damaging ecological impact. You look at all the young people, Greta Thunberg and others, getting so much media attention, but they didn’t walk there. Now, so far as I’m concerned, they had every right to be there, they had every right to the free expression of their concerns. But let’s be clear, many of them have an ultimate concern which is more about a leftist reorganization of society than it is even about the immediate issues of technology, science, census, climate, when it comes to the issue of climate change.

One last thought before we leave the Glasgow Climate Change Summit. Notice the fact that the basic understanding that human beings are a blight upon the planet continues in many of the public statements in much of press analysis in just the general moral context of so many people who are making so much of climate change in such a way that it appears that human beings ought never to have existed. And that is turning the biblical worldview on its head. And maybe for many, that was the point. But next, a particular argument emerged in the context of the Glasgow United Nations Climate Change Summit. It had to do with the phrase loss and damage. Well, what’s that? Well, it’s the new language used by so many to demand reparations. Reparations are effectively moneys that would be owed because of the need for repair, reparations.

It would be the demand of justice, it is argued, that rich nations that have spent so many decades involved in heavy industry and in other activities that have fueled what’s argued to be climate change. The argument is that those governments should shift massive wealth to less developed economies, and in particular, to nations that may be both weak economically and directly threatened by the effects of climate change. And again, everything looks good in theory until you begin to try to argue how such a policy would actually be put in place. And here’s something to note, even most of those on the left, even most of those who have bought into the idea of reparations, now defined as loss and damages, they actually walked away or, as we said, flew away from Glasgow without giving any real attention to the issue.

We’ll get to that later they say. Put that on the list of later.

Part IV

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The Harry Potter Movies Celebrates 20 Year Anniversary — the Power of Story and a Window into Two Decades of Moral Change

But finally, this week marks the 20th anniversary of the Harry Potter movie series. The first of those films, Harry Potter and the Sorcerer’s Stone, was released 20 years ago. And, of course, the famous movies came out after the famous books by J. K. Rowling, books that simply captured the public imagination in a way that no book series had for quite a long time. Christians understood that there were issues here, of course, with witchcraft and sorcery. But the stories were enchanting and maybe that’s a particularly strategic word. The fact is that millions upon millions of children and many of their parents actually read the novels.

And one of the interesting things that took place at that time was that even as children were said to be reading less and less, all of a sudden, many children were found noses deep into a book they sometimes got in trouble for not putting down when commanded to do so. The reality is that human beings, this is very interesting, were made to read. God gave us the equipment to read, He gave us the ability to read. And once human beings developed that linguistic gift God gave us in the way that was translated into a written word, written language, written text, human beings got to writing and got to reading. And, of course, this becomes so crucial to the biblical worldview because has revealed himself to us in an inscripturated, a written textual verbal revelation.

There’s a lot to consider as you reflect upon the 20th anniversary, not of the books, but of the film series. There were eight films, two spinoffs, and several of those films became international blockbusters that broke theater records. Some of them are now recognized to be better than others. Harry Potter and the Sorcerer’s Stone is now sometimes routinely dismissed as having kiddie-like special effects, but it was still watched, it was still watched by millions, it still broke records, and it established the movie series as a huge win for Hollywood, a huge win for the film industry on both sides of the Atlantic. It also continued to make J. K. Rowling a household name and one of the very few authors to make over a billion dollars on one literary franchise.

But as we’re thinking about signs of the time, 20 years ago, J. K. Rowling was primarily known as a blockbuster author of what was primarily a children’s series. Now, she is more famous in Great Britain for being on the wrong side of history, for being a feminist who affirms what you might call gay rights, but does not believe that individuals born male can actually become girls or women or vice versa. And for that, she is now routinely dismissed and the efforts of a cancel culture to silence her continue. J. K. Rowling is difficult to silence simply because there are so many multiple millions of copies of her books and also, the films made from her books out there in popular culture. But it tells you how much our culture has changed in 20 years.

1. K. Rowling can go from being recognized as a member of the left and a supporter of the gay rights movement, to being a feminist on the wrong side of history for failing to recognize that those who are born biologically male can, by their own self declaration, be now considered women too. One final thought as time slips away, as you’re thinking about the Harry Potter series, recognize that in one sense, what J. K. Rowling was trying to do was to offer a very minimal, largely superficial, still merely literary form of what J. R. R. Tolkien had done in the Lord of the Rings cycle and what C. S. Lewis and other authors had done with a far richer worldview in decades past.

The stakes were much higher when it comes to the metanarratives of Tolkien and Lewis, the stakes are much lower when it comes to Rowling even if the sales were higher. Here’s the thing. The Lord of the Rings and The Chronicles of Narnia are almost surely to be remembered long after Harry Potter is forgotten.