Economic future

I was asked my thoughts on this article by Neville Bennett which is his thoughts an the near economic future.

Governments will wrestle with mounting debt-servicing costs and be forced to make severe budget cuts, especially in welfare and education. High structural unemployment will endure in the West and will fall heavily on youth, the unskilled and even mature workers.

High unemployment, higher taxes, foreclosures, and very tight credit will encourage a new frugality to consumers.

The share of consumption in GDP will decline. Savings should increase but savers will find yields low, especially in the deflation prone Japan and the USA.

Bennett goes on to describe the recovery as "L" shaped, which is not a description of the shape of the graph, but shorthand for long. I agree with his assessment, though it is not clear whether he thinks we still on a downward trajectory, or are near the bottom but will be a long time rising? I suspect the former and I concur, we still have a long way to fall.

Interestingly he describes shocking behaviour of consumers, partly due to excessive credit,

More accurately, personal liabilities in 2008 [in the US] exceeded 130% of personal income.

New Zealand was worse: Household debt increased six times in dollar terms between 1990 and 2008 to a massive 160% of disposable income.

Debt servicing took 15% of disposable income. The magnitude of debt provoked few concerns until about 2008.

Banks were anxious to provide 100% mortgages, and consumers often enjoyed the “wealth effect” of rising home values and stock investments.

Consumers used their homes like an ATM: taking loans for home improvements, cars, furnishings and even holidays.

Personal savings virtually disappeared. They were about 10% of income in the 1970’s but by 2008, Kiwis spent $1.13 for every dollar earned. Americans behaved similarly.

Overall I think the article reasonable. It appears to specify what he thinks will happen, not what he thinks should. Comments on actions governments and individuals should take would improve the article.

He is likely correct about unemployment rising, and being worse for the unskilled who are frequently the youth, this will be exacerbated by the high minimum wage.

There are some areas where I disagree, or at least would clarify his comments.

I am not certain his reasoning for the rapid rise out of recession in the 1980s is correct.

The US could roar out of some recessions, like that of 1981-2, because the baby-boomers were young (many in their 20’s) and high earners with heavy spending on homes, furnishing and cars.

Consumer spending rose 7.2% in 1982. The demographics are different now with many people scrimping in retirement. Personal debt is US$124,000 per household and that takes a lot of paying off, especially as house values have plunged and stock markets been volatile.

There may be some truth to this, but one has to wonder how accurate the data is over the last 30 years. Not to mention the theory that the bursting stock market bubble was offset by the technology bubble, which was offset by the property bubble, which is the last reasonable bubble. Thus the current doesn't lack solutions, rather the compounding of the recessions of the last few decades. There may have been no true recovery, debt funded spending just hid the true situation.

Bennett mentions tax increases leading to frugality,

High unemployment, higher taxes, foreclosures, and very tight credit will encourage a new frugality to consumers.

It is not clear whether he predicts this or advocates this. I am not too certain that these things will effect a change in behaviour, profligacy being a moral problem. But higher taxes should be avoided; they will do little to address the spendthrift problem but will prolong recovery and exacerbate unemployment. Tax cuts with even greater reduction in government spending would be far better long term for employment the economy.

A minor quibble, he talks about bi-inflation

Bi-inflation. Rising prices for commodities and gold, deflation in much of the economy.

So he is using the term inflation to describe prices, whereas it strictly means monetary supply. Will the monetary supply increase (inflation) or decrease (deflation). Price changes are reflective of the amount of money in circulation all other things being equal (which they may not be). It appears that Bennett thinks there will be deflation of the monetary supply with the prices of most things decreasing but some exceptions. I think the government will try and inflate, the question is will they be able to? I hope there is deflation. Prices will go generally go down as will incomes, but not debts! Some prices may rise because of decreased or unchanged supply combined with increased demand.

Worth a read, food for thought.

Monday quote

Unless you can create the whole universe in 5 days, perhaps giving "advice" to God isn't such a good idea.

Will the UK end fractional reserve banking?

This law would go a long way towards preventing the problem of economic bubbles appearing and bursting.

“Mr Douglas Carswell (Clacton) (Con): I beg to move,

“That leave be given to bring in a Bill to prohibit banks and building societies lending on the basis of demand deposits without the permission of the account holder; and for connected purposes.

I don't hold out much hope it will pass in the United Kingdom, nor do I think the politicians of New Zealand likely to pass such a wise law. Nevertheless, the end of fractional reserve banking would stop the non-productive class extracting wealth from the productive class while they simultaneously retard economic growth.

Clayton makes an eminently sensible observation in his speech

Since the credit crunch hit us, an endless succession of economists, most of whom did not see it coming, have popped up on our TV screens to explain its causes with great authority. Most have tended to see the lack of credit as the problem, rather than as a symptom. Perhaps we should instead begin to listen to those economists who saw the credit glut that preceded the crash as the problem. The Cobden Centre, the Ludwig von Mises Institute and Huerta de Soto all grasped that the overproduction of bogus candy-floss credit before the crunch gave rise to it. It is time to take seriously their ideas on honest money and sound banking.

The Keynesian-monetarist economists might recoil in horror at the idea, because their orthodoxy holds that without these legal privileges for banks, there would be insufficient credit. They say that the oil that keeps the engine of capitalism working would dry up and the machine would grind to a halt, but that is not so. Under my Bill, credit would still exist but it would be credit backed by savings. In other words, it would be credit that could fuel an expansion in economic capacity that was commensurate with savings or deferred consumption. It would be, to use the cliché of our day, sustainable.

The politicians continue to listen to economists who did not see this coming, yet suggest a solution that costs obscene amounts of money, and the failure of the solution is already being seen. It would seem wiser to pay attention to those who predicted the collapse, especially when they are all singing a similar tune.

Monday quote

The Church is intolerant in principle because she believes; she is tolerant in practice because she loves.

The enemies of the Church are tolerant in principle because they do not believe; they are intolerant in practice because they do not love.

Reginald Garrigou-Lagrange (1877–1964)

Tutankhamen disregards US traffic authorities

Is dismissal warranted on grounds of utter cluelessness?

King Tut's chariot has arrived in New York City and has finally been unveiled. Prior to being shown this morning, the chariot was almost not allowed off its own chartered plane. The transit authorities required the chariot to get its own VIN [vehicle inspection] number. The reason for this delay was that this ancient chariot was classified as a vehicle.

Tutankhamen's mummy will not be included in the exhibit, he wasn't allowed in because he didn't have a passport.

Another source confirming this idiocy.

Monday quote

Imaginary evil is romantic and varied; real evil is gloomy, monotonous, barren, boring.

Imaginary good is boring; real good is always new, marvelous, intoxicating.

Simone Weil

Prevenient grace and freedom

An interesting conversation was carried out in the comments of a recent post which I followed with some interest. It was my most commented post thus far.

Starwind asked Robert a couple of questions (which he asked in several ways thru-out the comments)

1. If prevenient grace has enabled salvific "importances" (e.g. trust, obedience, humility, etc.) in the spirit as necessary to enable a faith response, but not sufficiently to prevent resistance and regardless the spirit resists and chooses disbelief based on non-salvific "importances", then what are those non-salvific "importances" upon which resistance was decided and why don't believers likewise sucumb to their insufficiencies and resist faith?
2. If necessary prevenient grace is regardless not sufficient, from whence comes the sufficiency that chooses faith?

Here are some initial thoughts, though I think answering by analogy is more helpful to comprehension than answering thru logical syllogisms. The questions are difficult for me to give a straightforward answer to because I think they contain assumptions that the Arminian may deny.

My understanding of prevenient grace (though I have not studied it, so perhaps my perspective on prevenient grace!) is that because of our fallen nature humans would not choose God even though they have some freedom of choice. But God is turning the hearts (will and desires) of men back to himself. While this may entail an enabling on God's behalf, I see it more as a wooing. And this is not limited to some men, God woos all men while they are alive (mostly).

Thus the focus is not on how we are able to follow God, rather will we choose to follow God. So perhaps God's prevenient grace is (logically) sufficient to be able to make God following choices it is not (logically) sufficient to become saved. Similarly working legs in a live adult are sufficient to be able to run, but a not sufficient to choose to go for a run.

Because we are talking about resisting God, I do not think the term "sufficient" helpful.

When a man chooses to follow God he is responding to God, but the salvation event comes from God, not from the man, nor does the man contribute to his salvation in any meaningful manner.

So the statement "prevenient grace has enabled salvific "importances" necessary to enable a faith response, but not sufficiently to prevent resistance" mixes 2 different concepts. It implies that God's grace is measured. It suggests that more prevenient grace would mean that man is unable to resist. I claim that grace is always able to be resisted. The nature of love, and wooing is that no amount of them can prevent resistance.

To the second part of the question, the non-salvific importances. I take this to mean things that man takes into consideration for salvation but do not indeed save him. In choosing God I think many things affect man's choice. How strongly God woos him, the examples of godly people in his life, the temptation to sin.

Our desires compete between long term pleasure and short term pleasure. Sin and righteousness. Yielding to temptation depends on degree of perceived pleasure, previous yielding, our resistance, our requests to God to help us, tiredness, knowledge of consequences, past experiences. All these feed into our decision to follow God, or not. But because men love wickedness, many choose to reject God.

So what is it specifically within our spirit that means 2 men with similar inputs choose opposite paths?

I see nothing deeper than our will. Our choice to obey righteousness or wickedness. Nothing compels us. This is part of the imago Dei in us. In the same kind of way that God can make free, non-necessary choices, so can we. God can create, or not create. And he could have created a variety of worlds, all of which are good. This freedom that exists within God he imparts to us.

Monday quote

If the Pacific Ocean were red ink, we are currently in a bathysphere in the Mariana Trench somewhere. And it was our smart guys what decided to do that, you know?

Douglas Wilson

Feelings are like horses

I found this blog post of some interest. Lizzie has 5 children, 4 of which are girls. She writes

But girls are different, and sometimes that difference can leave a person completely bewildered. When it comes to little girls and their emotions, “A”  does not necessarily cause “B.” But, when “B” is what needs to be disciplined, it can feel frustrating to have no clues as to what member of the alphabet actually caused it.

...Say it is someone else’s birthday. Say your child wants a present too. Say they start fussing about it. Imagine then that then you say, “Don’t do that. That is bad. Don’t be a fusser. Deal with it.” How did that help anyone? The child is taught that if the feeling comes over them, they have already failed. That is bad! But what am I supposed to do with it? It doesn’t just go away by itself. Little girls need help sorting out their emotions – not so that they can wallow in them, but so they can learn to control them.

Her post reminded me of similar sentiments from Dennis Prager on a source of unhappiness for women: the lack of teaching on how to control emotions. His take on the current situation

Societies and parents also always knew that it was imperative to teach girls to control their natures – in particular their predilection to be ruled by their emotions. Women who allowed their emotions to rule them not only became destructive (to members of their families first and foremost), they became unhappy women.

However, with the advent of contemporary feminism and other social trends that coincided with the rise of feminism – among them the elevation of compassion over standards, the great emphasis placed on feelings, the rejection of patriarchy and the devaluation of traditional masculine virtues (like subdued emotional expression) – female nature came to be seen as far less in need of discipline than male nature.

I am even more inclined to view Prager's thesis with merit. But the main problem in not that girls have these feelings, nor for that matter that boys are more likely to struggle with aggressive feelings; the problem comes when we deny that girls have to subdue their emotions to their wills, or if we admit this but fail to teach it. We need to acknowledge the emotion, though we can identify it as sin when it is, then encourage them to bring such feelings under the dominion of their will. They are to make sure they choose the right path regardless of what they feel like doing.

Lizzie's solution is to tell the girls that their emotions are like horses,

We tell our girls that their feelings are like horses—beautiful, spirited horses. But they are the riders. We tell them that God gave them this horse when they were born, and they will ride it their whole life. God also set us on a path on the top of a mountain together and told us to follow it. We can see for a long way—there are beautiful flowers, lakes, trees, and rainbows. (We are little girls after all!) This is how we “walk in the light as He is in the light, and have fellowship with one another.”

When our emotions act up, it is like the horse trying to jump the fence and run down into a yucky place full of spiders to get lost in the dark. A good rider knows what to do when the horse tries to bolt – you pull on the reigns! Turn the horse’s head! Get back on the path! We also tell them that God told us that if we see one of our little girls with her horse down in the mud puddle spitting at people who walk by, it is our job to haul them up, willing or unwilling, back to the path.

I think this is a useful analogy to use for girls. But whatever analogy we use, we need to realise that behaviour responding to emotion is detrimental to both the person and to others. Though allowing our will to be modelled by our emotions is the easier path in the short term, it makes life more difficult in the long term. And realise that submitting our emotions to our will can eventually modify our emotions. A broken-in horse is less likely to want to jump the fences. As Elizabeth Goudge wrote

Feeling can be compelled by action not quite as easily as action by feeling, but far more lastingly.

Does brain dysfunction cause spiritual experiences?

Barbara Hagerty investigates the conjecture that spiritual experiences originate from within the brain. She interviews someone who claims to induce spiritual experiences thru magnetic fields.

The helmet is supposed to stimulate my right temporal lobe with weak magnetic fields, and create the illusion of God in my head. Well, not God exactly, but a sensed presence, a feeling that another being is in the room.

There are several problems with religion-is-a-by-product-of-brain-disorders perspective. Not the least that Christianity is based on historical fact. The philosophical arguments for God and the evidence for the resurrection of Jesus are proof of the veracity of Christianity. But here I wish to address an error in the brain causation theory.

Interference with the brain may cause thoughts and hallucinations, through magnetic fields or direct electrical stimulation during brain surgery. This fact has absolutely no bearing on the reality of what we think and sense. This should be patently obvious and is alluded to in the article.

Does the fact that we can track spiritual feelings in our temporal lobe mean that there's nothing spiritual going on? ...Think about a man and woman who are in love,

True enough. But forget love as an analogy. Love is abstract. Choose something more concrete. (I am not saying love is not real, but its abstract quality allows people to argue that the feeling of love is real even if love itself does not exist).

Consider a tree blooming, or a dog barking, or a water slide. If we can manipulate parts of the brain so a man visually hallucinates a blossom, or hears a dog, or feels the sensation of wetness and speed; does this mean that flowers and rottweilers and theme parks do not in fact exist? Eyes, and ears, and pressure sensors in the skin produce a combination of  impulses which are transmitted along nerves and modified until they reach the cortex of the brain where we become conscious of them. So, we can bypass the sensing event but stimulate the cortex to mimic random events. How is this remotely relevant to the existence of things we otherwise perceive?

Counterfeit neither disproves the original exists, nor explains the source of the original. It shows we know how to make a copy.