Does God Endorse Fraud?

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As a semi-regular reader of the "God’s Politics" blog run by Jim Wallis, I have seen firsthand that the so-called "Red Letter Christians" really are little more than the counterparts of the "Red State Fascists" (in Lew Rockwell’s terms) that provided the evangelical Greek Chorus to the lawless policies of the Bush administration. Instead of endorsing war, economic fraudulence, and government theft, as did the Evangelical Right, these members of the Evangelical Left are endorsing, well…, war, economic fraudulence, and government theft.

The latest installment of this Obama worship (Who says that "Red Letter Christians" favor separation of church and state?) comes from Ronald Sider, who is best known for his statist polemic against capitalism, Rich Christians in an Age of Hunger, first published in 1977. (Sider called for the near-complete destruction of the industrial society, claiming that getting rid of automobiles and "heavy industry," as well as the implementation of socialist central planning, would lead to less hunger and would lead to a flourishing of recreation, the arts, medical care and the like. [p. 238 of the 1977 edition])

Sider’s latest contribution is a recent GP post entitled "What President Obama’s Budget Means for Poor People." He declares:

If a budget is a moral document, what should be said about the president’s proposed budget for 2010? I focus here on what this budget proposal says about justice for poorer Americans.

A little history is essential. The U.S. economy has grown enormously since the end of World War II. But there is a huge difference in how that growing wealth was distributed in the period from 1945—1980 and from 1981 to the present. In the first period, increasing wealth was widely shared and inequality dropped. In more recent decades, the economy continued to grow but most of the benefits went to the richest 20 percent.

In 1980, the richest 1 percent of Americans received 10 percent of all U.S. income. By 2006, that number had jumped to 22.1 percent.

What happened to the rest of us? From 1979—2005, the bottom 20 percent experienced a miniscule growth of pre-tax (inflation-adjusted) income of just 1 percent over all those 26 years. For the second-lowest 20 percent, income grew only 10 percent; for the middle 20 percent, it grew only 15 percent. Even those in the next-to-the-top 20 percent only received 23 percent more income after 26 years. But the top 20 percent saw their income jump 75 percent. And the richest 1 percent received a whopping 201 percent increase.

What President Obama’s new budget seeks to do is to reverse this historic trend and provide more income and opportunity for the people at the bottom.

Much has been written about so-called income inequality and I won’t revisit that subject, but the idea that this budget is going to make poor people better off, especially in the long run, is a howler. Just as Sider seems to believe that making it more difficult to grow — and transport — food will reduce world hunger, he seems also to believe that massive tax increases, unprecedented deficit spending and undermining all aspects of production somehow are going to translate to a better society.

However, even that is not the nature of the outright fraudulence that Sider ignores. He writes:

The size of the deficit is also of major concern. A large part of the present federal debt is because of President Bush’s invasion of Iraq and his tax cuts for the rich.

Here is the problem, and it is two-fold. First, Obama does not seem to be reluctant to continue to push "Bush’s war," and his latest plans are for a new "surge" in Afghanistan, also a budget-buster. There seems to be no real introspection about the presence of American troops all over the world. Yes, Obama inherited these wars, but nonetheless I don’t see him doing anything but continuing them as though Bush never had left office.

The second problem is that it was not just the wealthiest taxpayers who saw their rates cut. Bush’s tax cuts also lowered the bottom rate from 15 to 10 percent, which in percentage terms was even a larger reduction than the cutting of the top rate from 39.6 percent to 33 percent. Whether or not it was the right thing to do, nonetheless the notion that lower top rates of taxation "harm the poor" is dealt with through examination of the results, not just populist rhetoric.

Elsewhere, Sider acknowledges that long-term deficits are harmful in that they push debt upon our "grandchildren," but then he declares: "Large deficits during a bad recession are wise." In other words, God is a Keynesian.

But I wish to deal with the borrowing/revenue side even more. Much of the current and future deficits will be dealt with by borrowing from domestic and foreign lenders, and we can be sure that the way the U.S. Government will pay back those debts is by a combination of even more borrowing and depreciation of the U.S. Dollar. In other words, the U.S. Government will be repudiating its debt even while it piles up more debt.

This is fraud. There is no other way to put it, for the government is making promises that it is good for its debts while it uses financial trickery to welsh on those same debts. Yet, here we have on "God’s Politics" that such action is perfectly moral because some of that money is going to certain people politically favored by Wallis and Sider.

Thus, as long as there are enough transfer payments in the budget (including an increase in the minimum wage, which will put many poor people out of work) that meet with Sider’s approval, then the fraudulence of running multi-trillion dollar deficits is OK.

So, there you have it. God approves of fraud. You heard it from Ronald Sider, who writes and speaks for God.

April 27, 2009

William L. Anderson, Ph.D. [send him mail], teaches economics at Frostburg State University in Maryland, and is an adjunct scholar of the Ludwig von Mises Institute. He also is a consultant with American Economic Services.

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