- The Washington Times - Thursday, March 11, 2010

ANALYSIS/OPINION:

GOOD VALUE: REFLECTIONS ON MONEY, MORALITY AND AN UNCERTAIN WORLD

By Stephen Green

Atlantic Monthly Press, $25

288 pages

Reviewed by Roger Lott

Stephen Green, an ordained priest in the Church of England and chairman of the British Bankers’ Association, seeks in “Good Value” to use a history-based understanding of globalization to come to terms with the recent financial meltdown. The author ultimately describes the need for a “new world order” in which businesses “must consider value from the perspective not just of investors, but of customers, employees, suppliers, communities and - increasingly - the environment too.”

Mr. Green describes a need for a new sort of “capitalism” more compatible with the realities of an economic system in which “all sorts of institutions, large and not so large, can be too interconnected to be allowed simply to fail.” He cites Lawrence Summers, chief economic adviser to President Obama, as a “strong defender of free markets” who admits that the belief that the market is inherently self-stabilizing has been “dealt a fatal blow.” Mr. Green doesn’t understand that the belief that institutions are “too-big-to-fail” is fundamentally incompatible with capitalism, which weeds out weak businesses in a manner akin to natural selection.

Mr. Green seems to think of the modern global economy as consisting of chains whose weakest links must be preserved to prevent the whole thing from coming apart. What he forgets is that bailing out these weak links encourages the creation of more such risky “chains” of questionable strength. The worse it gets, the more bailing out the government would have to do, leading to a vicious cycle until people stop blaming the banks for failing and start blaming the government that’s encouraging them to fail despite noble intentions to the contrary. The free market does have a self-regulating mechanism. It’s just that the government isn’t letting it work.

Mr. Green insists, “We cannot go back to the 1970s, to the time before globalized capital markets: The genie is out of the bottle now.” Yet it’s not as if any fundamentally new approach is being taken to handling this crisis in the aftermath of globalization. Indeed, the stimulus packages we’ve seen are basically the New Deal all over again.

Coming out of globalization is an increased awareness of different peoples and civilizations on Earth. This has raised poignant questions for affluent peoples over what, if any, responsibilities they have toward the poverty-stricken people in the world. According to Mr. Green, “;omething is owed by the affluent. And a debt not paid makes a debtor who is guilty.”

There is nothing wrong with Mr. Green’s speaking from the perspective of a priest and impressing on people the importance of considering those with less, and indeed, this moral guidance is probably the most important thing the book has to offer. Yet Mr. Green’s proposals for changes to the economic system probably would be counterproductive to achieving his goals.

Mr. Green advocates a “green” capitalism, in which there would be a cost for emitting carbon into the air. One of the key issues, he says correctly, would be how to determine just what this cost should be. Indeed, it would be enormously difficult for the private sector, let alone the U.S. government, to come to any reasonably accurate estimate for an issue so complex and with so many supposed effects that we simply are not used to putting in terms of dollars and cents.

There are a number of difficult issues to consider. First, are humans responsible for climate change, or is any recent warming caused by natural fluctuation? According to the United Nations, the oceans and terrestrial vegetation release more than 27 times as much carbon into the atmosphere as humans do. Victoria University professors Brenda and Robert Vale say the carbon footprint of a pet dog is on average twice that of a 4.6-liter Land Cruiser driven about 6,200 miles. We ought to have some humility in considering human influence over something so gargantuan as Earth’s climate.

Second, is mild warming really a bad thing? Mr. Green himself brings up this question, pointing to research that shows societies have tended to thrive during periods of warming. A 2008 annual report by the US Department of Agriculture found that “increases [in agricultural output] likely will occur” in northern regions. The report goes on to find that the net effects on crops of increasing carbon dioxide emissions “likely will range from decreases of about 8 percent to increases of about 10 percent.”

Even if you accept that global warming is happening, that humans are responsible for it and that it’s a bad thing, it still is not obvious that trying to restrict carbon dioxide emissions is a good idea. It could end up costing many trillions of dollars to affect global temperatures by only a tiny fraction of a degree.

The increased government involvement Mr. Green advocates would inevitably lead to higher tax rates, which almost certainly would have a deleterious effect not just on overall productivity but also on charity. When the top tax rate fell from 70 percent to 28 percent under President Reagan, charitable contributions by Americans skyrocketed from $48.7 billion to $93.7 billion.

Yet Mr. Green says “responsibility cannot be discharged just by writing cheques” and scolds those who give to the poor “because it is expected and because it wins social points,” saying that it’s an “objectification of human relationships through the medium of money and exchange.” He says the giver should instead find a sense that “the debt is not just being repaid in the giving, but being forgiven.”

Mr. Green seems to advocate voluntary redistribution of wealth while insisting that those who give to others are not generous and are merely paying for the supposed sin of being wealthy. He is unappreciative of the fact that people gain wealth by providing goods or services for others and gives hardworking businesses and individuals no real incentives for doing what he wants them to do.

The proposals for action in “Good Value” are practically unviable, but if nothing else, the book is a source of inspiration and enlightenment about the good we as individuals can do for others.

Roger Lott is a writer in Pennsylvania.

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