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Ted Malloch: Defending Capitalism

Capitalism is as American as apple pie.

President Trump knows that and he embodies its very spirit.

His top economic czar, Larry Kudlow, defends the market better than almost anyone.

Capitalism is, however, under attack everywhere — from the House of Representatives to the socialists penetrating our culture, media, universities, big tech, and the economic system itself.

You could make the claim that common sense is patient and capitalism needs to be so too, if it is to succeed over the long term.

Good capitalism must succeed or we are all doomed.

In fact, if you charted all of modern history, worldwide, from 200 years ago you would graphically see that we have gone from sick & poor to healthy and rich.

There are differences of course even within societies.

But what exactly made this dramatic and remarkable result possible?

Watch this video:

In a word: capitalism (free markets) and the technological progress they have fostered.

But patience might sound at first to be antithetical to success in business.

Believe it or not, when we talk about patience in business we shoot for the same “bigger, stronger, faster” that the impatient, flash-in-the-pan businesses are shooting for.

And we’re after the same worldwide impact and influence.

We just want it for the long haul—not only this fiscal quarter.

Day trading does not an economy make.

And we want our impact to contribute to the betterment not only of the company but of every group the company touches, that includes workers.

“Patient capital” investing has an eye on long-term stability and strength.

It also bridges the gap between the efficiency and scale of market-based approaches and the social impact of pure philanthropy, which is another great American tradition rooted in generosity.

Patient capital has a high tolerance for risk, masters the long-time horizon, flexes to meet the needs of entrepreneurs, and refuses to sacrifice the needs of end customers for the sake of shareholders.

At the same time, patient capital ultimately demands accountability in the form of a healthy return—proof that the underlying enterprise can grow sustainably in the long run.

There are boom and bust cycles in any economy, and the U shape demands that companies invest in order to survive.

Common sense tells us that such investment requires patient capital, which has a longer-term horizon.

Patient capital isn’t just good for people; it’s good for profits.

There is a palpable impatience infecting much of our investment decision making today, and a corresponding decapitalization of business accompanies it.

It’s happening in every sector and across industries.

As a result, our standard of living as a nation has stagnated, despite an increase of more than 50 percent in economic output since 1970.

Real average wages have dropped until last year.

There has been an increase in productivity (in the 2 percent range), but it is not keeping pace and shows signs of leveling off.

Declining prices and swelling competition have left nothing over for wage increases in American business.

So most people who feel that their wages in real terms are not going up are right.

In recent years, equity has actually flowed out of our corporate world.

Dividend payments have moved to half of current income, up from less than a quarter only two decades ago.

U.S. firms constantly announce stock repurchases (that they probably did not buy at all).

The figures are quite astounding.

And American companies continue to relocate overseas because of taxes, transfer pricing, or holidays offered by distant regimes.

Asian and European companies, which follow systems defined by dedicated and patient capital, are outperforming U.S. businesses in general. And they invest in both tangible and intangible assets at a noticeably higher rate.

Business owners in these locales consider themselves principals rather than agents, so they seek long-term appreciation for shares, which are generally held by buyers for long periods of time.

U.S. publicly traded companies, by contrast, increasingly chase the approval of the transitory owner.

The stockholders themselves are indoctrinated to buy low and sell high—and quickly.

It’s part of the rush of “playing” the market.

In order to feed the need of the impatient stockholder, firms favor consumption and debt over earnings and capital formation—whatever will post the right numbers.

Spending a fiscal quarter investing in assets would result in a knee-jerk reaction by stockholders to the resulting short-term decline in profits.

So despite growth in many sectors, shareholders are not benefitting.

If you compare U.S. shareholder earnings over the last thirty years with those for Asian and European counterparts (and adjust for currency fluctuations and purchasing power), the U.S. shareholder has not done so well.

Europe may have a serious stagnation problem in terms of jobs and employment rigidities, but they are still building plants, training their work force, and developing new products.

As for Asian companies, they are expanding in every possible way.

Why are firms in the United States behaving differently?

There are four things to consider:

Over the last fifty years, U.S. companies have concentrated on the need to improve their return on investment and earnings per share (EPS).

This was easy to do by decreasing the size of the denominator—cut the asset size down and keep the earnings the same.

This results in an increased ROI.

Then if you buy your stock back, you further increase your earnings per share.

Like most of America, management are influenced by their own compensation, which is based on current accounting profits, or by unrestricted stock options that heighten stock price sensitivity.

Business schools have done a very good job of turning out bright people who have figured out how to do this ‘denominator magic’ and do it efficiently.

Underinvest in intangible assets, and improve return on investment.

That’s why net investment in fixed assets has fallen from twenty-five years ago.

Important intangible assets such as research, work force development, and establishing brand names, new products, new markets, and first-rate distribution systems are all underfunded.

Meanwhile, U.S. industry continues to spend on acquisitions.

Much of the “investment” in acquisitions is only a change in ownership.

It does not create anything new. Most fail.

If you build a steel mill in Arizona, for instance, you take a big hit.

The start-up costs can kill you.

Acquiring a mill, on the other hand, means smoother sailing for now—though it also means less innovation, job creation, and improvement from the ground up.

U.S. companies also demand higher hurdle rates than do their foreign competitors; we won’t invest unless we can expect a return of over 12 percent.

That’s the “cost of money” in our minds.

If you look at the ROIs of Asian, European, and U.S. companies, you will find U.S. companies outperforming the other two by about five percentage points.

But the higher hurdle rate in the United States only gives Asian and European companies a performance umbrella to work under while dissuading U.S. firms from making a whole range of important investments.

The third reason is that the real owners of U.S. business today are retirement funds.

Fifty years ago, 70 percent of stock ownership was in private hands.

Today more than 70 percent is in the hands of pension and mutual funds.

We have passed the responsibility for managing onto an agent, and this is essentially incompatible with capitalism.

Capitalism in the long run relies on people and their interaction with businesses.

When we lose that because our economy is based mostly on institutional and not individual investors, we lose core strength.

Individuals think about long-term gain.

Most of our agents trade not only quarterly but nowadays by the nanosecond.

In an ideal world, the process of capital investment in a nation would align itself with returns of private investors and those of society overall.

But our brokers are making all the decisions for us, and their goals are chiefly to keep their clients happy by fattening their portfolios.

While the U.S. capital system is still the most effective, it is not because it creates a divergence of interests between shareholders and corporations; it is in spite of that.

The U.S. capitalist system in fact impedes the flow of capital to those corporate investments with the greatest social and private payoffs over the long-term.

Finally, the current governance system of U.S. companies does not serve the companies very well.

Bankers, customers, or suppliers can’t serve as members of a company’s board of directors. But the Asians and Europeans don’t face the same laws and take full advantage of their insight.

Further, we have laws that keep shareholding in the United States fragmented rather than concentrated. The power of group influence to inform companies for the better is therefore diluted.

Management has to interpret signals from somewhere, and their views are frequently colored by the latest televised sound bite.

Corporate boards have become dominated by outside directors with no other links to the company, and they exert only a limited influence on corporate decision making anyway.

What’s more, the agent who now does the investing for us does not have a tax consequence when he makes a trade.

So pension funds will sell a company out on a whim or a rumor and will manipulate the last decimal point, any time day or night.

The rest of us have a 40 percent cost on selling stock.

In light of these challenges, how can we in the United States still practice patient capital and invest with common sense?

First, we must not fear failure in the short-term, even though stockholders may balk. This is easier said than done; we are a society that punishes failure.

But making some investments that fail is essential to a dynamic plan of learning and growth. An institutional structure that over penalizes failed investments may in fact, over time, undermine the competitive capacity of a firm.

Some investments generate no profit but rather create capabilities that benefit future development.

Certainly, a company can increase profits by cutting out certain things—such as R&D, employee training, and customer relations.

However, you would also “save” yourself the trouble of invaluable social returns such as watching candidates compete to work for you, seeing worker skills grow, and improved quality of your product and service.

You also wouldn’t have to worry about happy customers and cutting-edge breakthroughs that raise your firm’s leadership in the field.

Governance in most U.S. publicly traded companies is not for perpetuation or long-term investment and strategy.

To curtail this trend and stop decapitalization, we should tax pension funds so they have a transaction cost.

If they hold a stock for less than one year, they should be taxed at forty percent and let the rate decrease annually so that in year five, there would be no tax on trades.

Only then would pension funds look at companies that had some kind of long-term future.

This kind of proposal would have lots of advantages: it would increase government revenues, correct the tax inequity between individuals and institutions, punish short-term stock speculation strategies, and focus ownership on long-term performance.

It would also give management courage to stop playing the game of “denominator management.”

It is likely that transaction costs would also drop, because there would be less churning, thereby increasing investment in the U.S. economy.

This could improve the savings rate, increase jobs, and help to get the capital gains tax down for transactions within a family or closely held unit.

We should also relax some restrictions and allow banks to hold stock in companies and bank directors to sit on boards. They are allowed to do so in Germany and Japan.

These changes would start to align the firm with the purpose of society—and that is a profound task in front of business everywhere.

We need to invest in those intangible items— training the labor force, new distribution systems, and research and development—for the very future of business and capitalism, as well as the American worker.

If we fail to do so, we are going to end up in the near future seeing the last public company in the United States disappear.

We can’t let that happen, so shouldn’t we start defending capitalism, again!

Perspectives on Reforming the European Union

A paper for the ECR Group of the European Parliament Brussels, Belgium

by Dr. Theodore Roosevelt Malloch

This commissioned paper for the ECR Group considers perspectives on European Union reform. It starts with the Treaty of Rome and considers the basis and foundation for cooperation. It then inspects the nature and challenge of reform at this time. Using a five-force strategy it outlines where the EU is strong, weak, threatened, and where its best future opportunities lie. The paper goes on to consider how the EU is viewed from abroad and particularly in the US and the Trump administration. Considering overreach, the topic of NATO and a potential EU Army is debated. The paper ends with conclusions about reform and the future that set the stage for the 2019 elections.

* These are the personal views of the author alone and do not represent any governmental, party, or institutional affiliation.

The European conservative movement is facing a schismatic moment which the ECR can and will benefit from. Whether from ideological purity, fast results or mere fatigue with the status-quo agenda of the EPP, no European party is better placed to profit from the current climate as the ECR. It may come down to policies or attitude, but in both cases the third largest party in the European Parliament is poised to capitalize – as capitalists normally do – on the situation buffeting the old continent anew.

The ECR must provide a viable alternative to the bipartisan consensus on Europe to fully exploit the circumstances: A tired old guard facing an energetic new movement with new powers never before seen in Brussels. Juncker should have been careful what he wished for, as the power grabs from the European Commission (EC) established precedents, 1 which his amanuenses will come to regret, no matter which party ends up with the throne after the elections. The ECR must provide a viable vehicle to power for a European demos which has been disenfranchised – a message that Europeans can have the Europe they want, but only if they vote for the ECR.


Recall the bright spring day of March 25, 1957, at the Palazzo de Conservatori, on Capitoline Hill in Rome – Belgium, France, Italy, Luxembourg, the Netherlands and West Germany signed a treaty that signaled the birth of a new institution, a customs union that would become known as the common market.2

Today, every liberal democracy — from the United States to New Zealand — has cause to celebrate the achievements of the Treaty of Rome. By lowering barriers to trade and encouraging peaceful development, it set the stage for an era of expanding prosperity.


And yet now, different ideas of Europe have come into conflict.

The original idea behind the Treaty of Rome envisioned sovereign nation states interacting fluidly to create a European advantage. Other ideas deviate from it, and call for centralization of power in a Brussels full of ossified privileges – a hierarchy rather than a network.

The political reasoning that inspired the treaty was a combination of two principles: sovereignty and subsidiarity. 3

Countries that only made concessions on their sovereignty when absolutely necessary signed the treaty. These were measured, deliberate and slight additions to national entities – many of who remained intact as supranational stakeholders – not attempts to delegate competencies to all-powerful supranational institutions. With this in mind, the European common market was designed not to overreach into nations’ sovereignty.

Brussels, the first of what should have been a rotating venue for EC institutions, was conceived as a minimal force for coordination and was never supposed or intended to become the permanent capital of a new, let alone enlarged, European Union.4

As we celebrated this anniversary, this foundational document should be seen for what it was: a confederal design to encourage market-based solutions to everyday problems, particularly in trade. The tradeoff in sovereignty was minimal and had major returns.

The treaty was based on twin pillars of peace and prosperity — a well-intended and necessary mandate following the decades of war that had torn apart the continent — not an elitist mandate from on high to create a supranational entity.

Efforts to confound this peace with the prosperity brought by a lack of national customs and tariffs should be frustrated – America’s role in the security of the continent have been sublimated to the rest of the project. A true conservative option in Europe should acknowledge and celebrate the American role in perpetuating an environment in which such a trade-focused ethos could flourish. 5

Today, the bloc’s newest iteration has followed a dirigiste, centralizing impulse, rejecting the free-market, liberal, invisible handiness of its modern success as a space in which low taxes, low regulation and a general hands-off attitude from the State – national or otherwise.

Little by little, over the 1980s and 90s into the present, this impulse has reversed the basic and sound architecture of the Treaty of Rome. A liberal fundamentalism has chafed continuously against tried-and-true conservative principles in favor of statism. This process was not a democratic process and it failed ad nauseam under scrutiny – countless referenda in which citizens rejected the EU’s anonymous decision-making were frustrated for a cause none signed up for – even in 1957’s Rome.

The European Project

Nonetheless, it has continued unabated. More and more, this centralizing has exercised their will over the people, with little concern for their agreement. Suddenly, there was a single currency. Suddenly, the EU doubled its membership. Suddenly, a large managerial socialism emerged, ready for radicals to appropriate and turn to their own purposes. A supposed legitimacy – derived from the demos – was nowhere to be found.

In 2016, European regulation amounted to more than 30,000 pages — and a total of 151 kilometers of paper.6 There is little that is left untouched by Brussels nowadays. An ECR commission should and shall commit to cutting such regulation as far as possible – leaving space for healthy competition between member states, contrary to the homogenizing imperative that Brussels currently represents.

Over the last 20 plus years, the EU has failed to understand and manage major political and economic phenomena, as it pushed ahead with its plan to transform an entirely economic body into a political one. This project has found an appetite even outside the European member states – witness the gluttony with which the current European Commission attempts to impose European legislation on third countries. Such an imperialist attitude has ill-served Europe in the past and should at all costs be avoided in the future.

An ECR commission can and will recognize the sovereignty of states both inside and outside the EU – all the while keeping a cool head on matters regarding the convenience or lack thereof of an inclusion into both its common market’s marketplace and the many other sweeteners it has to offer nation-states – most of which can and will never be able to join the European community.

Brussels missed the chance to manage globalization. Instead of focusing on the strengths afforded to it by its unity it attempted to export its model. It was caught unprepared, too busy perfecting itself to compete with various types of economies. A recognition that third-country praxis will inevitably differ from the European way of life is the utmost conservative of viewpoints – foreign peoples and markets will always attempt to conserve their own praxes and systems.

First came a financial crisis – root of a hubristic expansionism among European elites. Then came an economic crisis – again, fruit of a success analogous to flying too close to the sun. Finally, came an ongoing political crisis, which can only be resolved by the regime change on offer by the ECR – a reforming impulse to preserve the best and jettison the worst. Each crisis evinced a decreasing faith in the project and left many Europeans increasingly anxious, some even agitated. 7

The European project also made the mistake of giving in to nostalgia and romanticism – a solipsistic sin that can only result in the excessive self-regard currently evidenced by Brussels. The inevitable restoration of a lost symbolic value – as societies disintegrate and the civic, religious and family bonds that have held Europeans together become unglued — cannot be resisted. Brussels’ radical atomistic individualism enforced by the State can and will not last. The defenders of tradition must prevail against the excesses of liberal fundamentalism. The ballot box never abandoned this cause.

As we celebrated the Treaty of Rome last year, some in the EU and its allies called for a return to the sanity and legitimacy of that original treaty and its vision for Europe. 8

They said that would be a necessary start to reform.

In the process, intermediary institutions, where people actually lived their lives and flourished in the past, were thrown on the proverbial ash heap of history. All the while, immigration transformed Europe’s nations and the very definition of European identity. Pillars of tradition were torn down. The impulse to rebuild the Temple will not be denied. The treaty of Rome was an important milestone, but the bloc largely disregarded its values over the next 60 years – as it continually disregarded the values of the peoples represented. Now, Europe finds itself at a crossroads: further erode the project or centralize even more.

Neither option is particularly attractive.

The British, paragons of liberty as they have been for millennia, have cut themselves loose.9 as the first ever to renounce its faith in Brussels – a radical erosion of more perfect union – it cannot but be understood as a failure of the project. The hypothesis of simply returning to individual European nation states may well be archaic and dangerous, but it is a viable option to conscientious objectors all over the world. Countries are no longer isolated – the wider liberal integrationist project made sure of that. While vulnerable to global financial powers – by definition transnational – this only serves to underline the limitations of Brussels as an enforcer.


The viable reformist alternative that respects both sovereignty and cooperation is ripe for the moment: Europe could reform by returning to the original Treaty of Rome, to a model of confederation that was as laudable decades ago as it is today. Uniting on essential matters only, such as mutual defense and a customs area would leave enough sovereignty to its member states.

What would such reform entail?

Taking a step back in order to move ahead is a well-worn common sense strategy. The European Union would do well to accept such an approach at this critical time of reflection. The thinning of the original pact of rights among an expanded number of member states can only subtract from the mission at hand.

As we have witnessed euroscepticism spread and political parties arise that reject a political Union.10 Even so, only the most radical propose to exit membership altogether. It would be wise to reform the Union into a more feasible and pragmatic state to maintain the confederation of member states at this juncture. To this end it would be wise to listen to Brussels’ critics.

How best to do this is a legitimate question.


In business strategy we talk about SWOT analysis, competitive advantage by creating and sustaining superior performance around cost leadership, differentiation and focus.

In such models the five forces that shape industry are:

1. Competitive rivalry;

2. Bargaining power of suppliers;

3. Bargaining power of customers;

4. Threat of new entrants; and,

5. Threat of substitute products or services.11

We can adjust this analytic framework and ascertain if the European Union is competitive, sustainable, and adds value, and where it might need to adjust or modify its strategy and tactics.

Reform in the EU is not a new phenomenon.

From the very beginning there were debates about the extent and nature of cooperation, about criteria for membership (long since elasticated to serve political aims) and more recently about expansion, finance and institutionalization.

The European Commission itself outlined five scenarios for its own future in a 2017 white paper.12 The five varying scenarios are in the estimate of objective observers not very objective at all. They included: 1. Carry on; 2. Nothing but the single market; 3. Those who want to do more; 4. Doing less more efficiently; and, 5. Doing much more together.

The paper was intended to shape debate and influence the 27 member states remaining in the EU after Britain’s departure.

Somber in tone the white paper admits a crisis.

Reformists should take heart: the first step to recovery is to admit there is a problem. The white paper also lists those problems as: Brexit, migration, and the euro. It is however not a neutral document and it makes its own preferences well known—a federalized more political Eurozone with stricter controls over national budgets and the creation of centralized EU bodies and duties. It noticeably did not detail any scenario, which either saw the demise of the European project or defined it in more minimalist-skeptical terms.

When it comes to cost by any measure the EU is expensive and the member states are chafing at the exorbitant fees and the large bureaucracy and duplicative systems and meeting places that have come to define Brussels-Strasbourg. With the UK departure this will leave an even bigger hole in future EU budgets – a fact unacknowledged by the proposed 2019-2026 budget, which papers over the absence of a British contribution (the second largest of the EU-28) by simply demanding more money from the other 27. No conservative should remain passive at such a nonchalant disregard for national voices in the supranational purse.

The differentiation of what thee EU does is complicated and bureaucratic. A major criticism is that the regulatory apparatus is cumbersome, costly, and ineffectual. In that sense, the focus of the EU has over time and especially since the Treaty of Rome, become more diffuse and less focused. European conservatives must strive to make it less so. It is often said the answer to every question in Brussels is simply: ‘More Europe.’ This leads to frustration on the part of many member states, dissatisfaction among citizens and a sense that the European project is sick, if not terminally ill.

Looking at it through the Porteresque framework of the five factors shaping, European Supranational institutions have little competition – if only because truly international institutions remain paralyzed by an inability to resolve the very problems Brussels purports to paper over.

It has a monopoly on its single market. Other organizations overlap with its competencies only slightly and by design of concerted diplomatic efforts by European Union members’ states in forums that include the entire planet. Some such remain smaller, regional in membership or nationally defined. The serious question the EU must resolve goes back to the principle of subsidiarity. Is Brussels taking on too much that could be better handled at a national or local level? The Conservative response is an unflinching yes. Increasingly, there appears to be an argument in this direction on a host of policies and decision-making.

The suppliers to the EU have little to no bargaining power – sucked into the maelstrom that is European regulation, most countries relent rather than negotiate. EU budgets and bureaucracy are thick and difficult to penetrate. A more competitive system would relent from enforcing European imperatives in favor of freedom for its partners.

The power of customers, in this case, European citizens, have been grossly undervalued. Both in market and political decision-making, the European consumer/voter is unparalleled in decision-making power. The notion that Brussels must impose values merits ridicule – as if Europeans could not vote with their wallets against what they despise. Past referenda have been undone – acts of unforgiving lack of faith in the European. Until recently, little direct pressure by citizens on bodies was evidenced on the bodies considered distanced from their populations. Brussels, seen as elitist, undemocratic and removed from real life, has had a reality check from the most informed voter in the world. The unwavering, unelected Commission has only stonewalled parliamentary elections all over Europe. Conservatives must change this.

While other international organizations strive for recognition, from the OECD to UNECE, none purports by definition to be supranational in nature. 13Their unresolved question remains – what to do with third countries that can never be a part of Europe – and where the line is to be drawn.

With the fourth industrial revolution underway and technological advances on every front, a centralized, ossified EU will not be able to keep pace with developments. Europe will respond either too late or not at all. The EU cannot do everything and seems to respond slowly and inadequately to crises. The EU now accounts for a smaller portion of world trade by the year – the power of the global economy and trade has shifted away from Europe and towards Asia and with a resurgent US. As Brexiteers celebrate, 95% of future global economic growth will come from outside the EU27. The Conservative approach to the European project must not just assimilate this trend, it must actively work to counteract the truth in the charge: that Europe is a stagnant market.14

The US View of the EU

Another angle on European Union reform is to ask how its foremost allies and other nations view the bloc.

The United States is preeminent in this account because it was the US that won the Second World War, saving Europe from both fascism and communism. Through the Marshall Plan, America reinvested in Europe when it was at it lowest point. The Transatlantic lens on the European Union is paramount.

Prevailing views of the United States on Europe and European integration that held sway from 1945 until 1990 significantly changed after the Cold War. They are shifting radically again – and for good reason in the Trump White House.15

The failure of the European integration project is now apparent to American eyes. Where the United States created laboratories of democracy, Europe compelled obedience to a clearly failed experiment. This is simply not something Churchill or Roosevelt would countenance. The European Union has become undemocratic – the greatest sin in American eyes – and bloated by bureaucracy and rampant anti-Americanism, another ungrateful characteristic of the hubristic mentality.

Since America has vital trade, defence, cultural and foreign policy interests in Europe, it remains in the US interest to remain engaged with Europe. The question is how?

The Trump Administration is steadily making it clear that the US is no longer interested in the old forms of European integration. In fact, it may be able to encourage a reversal of the EU’s accelerating drive to a socialist, protectionist, United States of Europe. A conservative electoral alternative must provide this option to the European demos.

This movement should be seen for what it is. It is very harmful to US business, to US investment, to US security, and is categorized by over-regulation, low growth, high unemployment, and structural rigidity as its outcome.

The US in the era of Trump is therefore definitively encouraging more bilateral trade with Europe but makes firm its opposition to a federal Europe by saying a definite ‘no’ to a single Euro government.

It appears to be time to re-evaluate key US assumptions about Europe. This means America is reappraising its entire relationship with Europe and its future union or disunion. The long held State Department view, since Dulles, has been that the best way to achieve peace in Europe is by uniting it. The Franco-German relationship was at the centre of such thinking.

The question today is what kind of Europe, and what kind of union, does the US want? What is in the US national interest looking ahead? Does what used to be called a European Economic Community necessarily equate with the evolution of a single European government?

Since the Maastricht Treaty of 1992 and all the other treaties since, does this policy make sense? Are there fundamental flaws in such a pro-integrationist logic, as detailed by the likes of the late Lord Dahrendorf and so many others like him? 16 Is the European Union in need of a total redefinition? Does it need a more far-reaching reform? The conservative knows that answering yes to the first question, all others can be taken for granted.

The US realistically also is asking: What are the dangers of a failing EU? Will European powers really go back to a 19th century paradigm defined by wars of aggression and balancing?

The US has no reason or suggestion to see the EU go out of existence. These questions too should be considered as the consequences and sequencing have wide ramification. No one wants Europe to fail or instantly disintegrate; least of all Conservatives buoyed by the Burkean imperative to preserve what are extant against the undefined possibilities of revolutionary change.

We do know that the US and the UK are different from Europe: Americans want democracy and accountability, while the EU has trod down an intrinsically undemocratic and unaccountable path. Should the US continue to promote such a damaged continental European model, alien to our American traditions? Is it not working against US interests to do so? Expecting America to buttress the European project certainly does not put America, first, as President Trump has designated. But does it need necessarily to be at loggerheads with the US?

We should be keenly aware that America has strong and long historic ties to Europe; that our religions, genealogy, traditions and kinship run deep. Despite America’s large contribution to post-war European development and democracy – not to mention costly security – anti-Americanism abounds in Europe today.

Anti-Americanism defines many of Europe’s most powerful political imperatives – acting as a counterweight against Washington’s hand. Why are the European institutions, created at Washington’s behest, so ungrateful?The answer may be European resentment of American power. This anti-Americanism is not an abstract idea in Europe, nor is it confined to leftists ‘usual suspects’. It influences all of culture and policy-making in the EU. 17

The EU also uses the cloak of antitrust activity as a way to implement its anti-US industrial policy. The list of companies affected is long and growing longer. The EU Commission seeks to regulate any case involving large foreign companies, which threaten or undermine EU business interests. Can European conservatives truly stomach a DG-COMP, which aims to restrict free enterprise so blatantly?

This is not just a cloak and dagger form of protectionism or a light non-trade set of barriers; it is more and more transparent. This mind-set, and particularly the EU’s Common Agriculture Policy, also distorts the world economy and any notion of fair trade.

The EU prefers – to the point of confiscatory subsidy – European farmers over increased trade with the US and developing countries, many of which would happily provide the average European respite from expensive consumer goods.

US interests are further undermined by the EU’s many inherent internal contradictions—social, economic, and politically which undermine US beliefs and interests.

Chief among them are the Euro, a flawed common currency.

The Euro offers little insulation from economic shocks and relies on fiscal transfers at the EU level to iron out economic imbalances. These are many. This equates to papering over cracks in the EU’s component economies. It has also, as demonstrated by former World Bank, chief economist, Joseph Stieglitz, (see: The Euro and Its Threat to Europe) 18 tilted the tables toward the benefit of Germany. Germany’s current account surplus is a huge 8 per cent of GDP, which imposes a deflationary bias on the entire Eurozone.

The basic fallacy of the neo-functionalist philosophy underlying the EU is the assumption that political integration can be achieved through economic integration. This liberal fundamentalism is a sin of mistaken assumptions, further aggravated by the forced pace of such integration.

The cure to Europe’s calamity and to its reform is genuine democracy—government by the people not by unelected bureaucrats parading as experts. The neoliberal sleight-of-hand, which drains political decisions of political considerations, is the root of this problem.

Members of the EU Commission are selected by whichever political party that happens to find itself in power during a European Parliament election. Such a fortuitous selection – many in the dying days of their national political relevance – is detached from the people and therefore intrinsically anti-European.

The EU and NATO

NATO has of course served as the centrepiece and backbone of a US – European alliance on defence, security and foreign policy.

But since the St. Malo agreement in 1998, Europe has been turning its back on the US and on NATO. It has pursued a separate defence to rival NATO and the US.19 In fact, EU defence is no longer seen in the context of NATO. European bureaucrats want their own fighting force – preferably a cheap one. Burden sharing has always been an issue for Europeans, who have abused a commitment to mutual defence by alchemically transubstantiating America’s commitment into a security guarantee. Europe is clearly free riding on US largesse. Conservatism would dictate the self-reliance inherent in a mandate to realize the dream of a Europe that can defend itself and truly aid their allies in combat.

Furthermore, the EU increasingly openly works against it’s own interests abroad. Despite championing human rights and democracy, Brussels finds itself financing and defending the worst actors in the Middle East. Continually denouncing Israel – the only democratic state in the Arab world, while seeking to buttress Iran’s imperialist appetites – not to mention other rogue states like Cuba and Venezuela, making a farce of European ideals.

The US in these first years of the Trump Administration is re-examining its historical policy toward European integration from the lens of America First. Europe’s present policy doesn’t just fail to conserve the democratic gains made in the post-war era, it is actively antidemocratic. These policies cannot be allowed to continue.

Of course, the Transatlantic Alliance must continue.

Good European-American relations are essential. But further European integration is not at all in the interest of conservatives on either side of the pond. European polities say they share the values of democracy and freedom. This yardstick should test every European policy. It is time for greater scepticism, conservatism and realism about the European Union and its hidden agenda of “ever closer union.”

Brexit gives the US an opportunity to appreciate that the EU is weak and getting weaker. Again, European conservatives are called to avoid the scenarios where the EU comes apart.

The US is not anti-European. It has a view on European integration and the European Union institutions, which should best accord with what Europeans themselves desire and choose. The US therefore needs to bolster its existing and strong relations with each of Europe’s member states—not all of which even belong fully to the EU. Short of a fully federalized, single nation-state called Europe, no country on the planet would be well served to do otherwise. It is up to the European conservatives of 2019 and beyond to decide whether their own aims are best served by bringing the federalist ideal into fruition – or to frustrate the attempt to enthral 27 separate polities into a single nation-state.

The architecture of the world is changing, 20 shifting to more reliance on sovereign nation states and away from integrated blocs or supranational entities. In the coming world the future is not what it once was. US dealings with Europe should also change, accordingly. Important now is an ethic of the nation. This is where Europe should look for answers — not to a project of further integration. The US interaction with Europe is changed. This affects how the European states will interact with each other.

One place where the EU is clearly overreaching is defence.

With the existence of NATO the allies have over the decades since WWII cared for their defense against any and all adversaries.

Yet the EU is well under way to adding another item to its ever-expanding inventory. This time around it´s a EU army. Eurocrats may argue, as they indeed typically do, that the EU has no intentions whatsoever in this direction. ´Trust me, it´s not a EU Army, it´s merely enhanced military cooperation´ is often heard Brussels code. Considering the EU´s notorious track record of federalization by stealth, we´re well advised to let the facts speak for themselves. Indeed, this may be a costly army with designer uniforms and no guns but it is an army nonetheless.

To start with, the EU ambition of going beyond simple military cooperation is neatly codified in the Lisbon Treaty. Article 42 of the Lisbon Treaty states that the common security and defence policy “shall provide the Union with an operational capacity drawing on civilian and military assets.” It further reads, “The common security and defence policy shall include the progressive framing of a common Union defence policy.” It even copies NATO´s Article 5 mutual defence clause, stating “if a Member State is the victim of armed aggression on its territory, the other Member States shall have towards it an obligation of aid and assistance by all the means in their power.”

The Euro federalist dream of having a EU army failed to gain traction, in large part thanks to longstanding UK resistance. Here as in many other instances the conservative, localist impulse of the British made itself felt to the benefit of the European Project. The UK, sensibly preferring cooperation within the NATO framework, had no appetite for paying for the EU´s outrageous plans for another army.

Enter Brexit.

What should have been a wakeup call for even the most obsessed EU federalists and generate some sincere introspection, has merely encouraged Eurocrats to federalize even further. 21

Importantly, the two main European powers left after Brexit, France and Germany, seem to fully embrace the idea of a EU army. France with its Gaullist mind-set was never that keen on US and NATO involvement in Europe in the first place. Germany is unwilling to militarize nationally, for obvious historical reasons. So where the Germans lack the will to militarize and the French lack the means, the EU army suits perfectly the ambitions of both these countries. With the British blockade removed, it´s now full steam ahead.

On 8 June 2017, the European Council decided to move ahead with the military planning and conduct capability (MPCC). On 22 June 2017, the Council launched permanent structured cooperation (PESCO). Key European politicians have been very open about these ambitions. In his ´state of the union´ speech, EU Commission President Jean Claude Juncker called for the EU to have a defence union by 2025. 22

Contrary to the EU´s narrative it will certainly not be without costs; quite the opposite. Currently the EU has already allocated €2,076 million to civilian CSDP missions for the 2014-2020 EU multi-annual framework and in addition it earmarked €1 billion annual budget for the European Defence Fund from 2020 onwards. The plans go even beyond that as the Council has agreed on commonly funded EU battle groups, previously funded by member states individually.

Speaking at Paris-Sorbonne University only last month, French President Macron unsurprisingly called for the creation of a EU defence force by 2020 and a shared defence budget.23 If it looks like a duck, and quacks like a duck, as the saying goes, then it probably is a duck. A full-fledged EU army is in the making, and Brussels is aiming to have its military apparatus backed by a joint defence budget.

While the EU is spending ever more taxpayers’ money implementing their grand schemes, including new headquarters, more bureaucrats and battle groups, they fail to pay their fair share in NATO. Far from Trump undermining the credibility of NATO it´s in fact the EU, obsessed as it is with constructing a EU army that does harm to what is the most successful military alliance the world has seen.

President Trump and his administration have made clear that they back NATO, but they do expect European members to pay their fair share of 2% of GDP, to which countries have in fact committed themselves in Wales 2014.24 Apart from the UK, Poland, Greece, Estonia and Romania, no country comes near this minimum. Hence explaining why NATO officials have time and again warned Europe to not duplicate NATO through establishing EU military infrastructures, but instead invest in men and material that the NATO Alliance so desperately needs.

As a result of Europe´s lack of commitment to NATO, the USA still amounts to almost 80% of the military spending, making much its military hardware available for its European allies. With such a powerful ally willing to cooperate there is thus no reason for the EU, other than its grand federal ambitions to reinvent the wheel. In fact, in order to merely compensate for the loss of American resources and military hardware available that would result from a European alleingang, the EU would have to invest massively, increasing its defence spending far beyond the 2% of GDP.

This is absolutely beyond Europe´s capacity, and would leave taxpayers paying a gigantic bill. If the EU continues to follow its current trajectory of isolating itself from the US and NATO, it will end up having to take care of its security alone, a burden it could not bear.

How is the EU going to cope with all the security challenges it sees lurking everywhere, including perceived threats coming from Russia and China, for example? If Europe wants to stay secure it´s pivotal to cooperate with the US (and also Great Britain), which is Europe´s most trustful and powerful ally. The most obvious, practical and cost effective way to do so is in the NATO framework, not by isolating itself with an inadequate and highly expensive new and unnecessary EU army.

The EU federalist obsession for having its own army is a dangerous fantasy. Military cooperation in the EU is an entirely different animal than NATO. NATO is not a supranational organisation aimed at federalization. It´s not meant to replace independent nations. NATO is massive and powerful, but its scope is nevertheless limited. It has a clear sense of purpose and no further ambitions, other than to guarantee peace and security.

This is in stark contrast with the EU. Where the NATO alliance is and will remain an intergovernmental organisation, EU military cooperation is part of a broader agenda that goes far beyond the mere cooperation of sovereign nations.

We all know the modus operandi of the EU when it comes to the appropriation of sovereignty at the expense of member states. The transfer of national sovereignty to Brussels always takes place on a slippery slope.

The EU army is in fact part of a greater scheme to replace independent nations and their armies’ altogether. It´s foolish, costly, and poses an existential danger to any and all nations involved.


In conclusion, conservative reform in the European Union needs to be based on a pragmatic agenda, economic and political facts, and citizen preferences, not on ideology, idealism or a fantasy dictated by Brussels elites.

What does this realistic reform look like and what might it entail?

Major reform based on Euro realism, decentralization of powers, more openness and transparency, a focus on supporting wealth creation, conservative principles, and economic growth is the place to begin.

But make no mistake there are serious obstacles to significant change in the EU. Right off and most importantly, there is no consensus. The entrenched forces are reluctant to reform and few people agree on the correct direction of change.

Some argue for more powers to the European Parliament. Others want more powers for the EU Council. Still others want to disband the Council altogether. Some want greater authority devolved back to national parliaments. There is an on-going debate about the use of EU referendums. Many would like to see the direct election of the EU president.25

What is apparent is that no one agrees.

It is also obvious that the structures of the EU make meaningful change and deep reform very difficult, if not impossible, to engineer.

This Europe of sovereign nations, based on conservative common sense cooperation and grounded in policies of subsidiarity, is necessary and possible. But it will take political courage and institutional change to bring it to fruition – not to mention electoral success.

This is the mission of the ECR: to bring a viable alternative to the European electorate in 2019.










9. Brexit: History, Reasoning and Perspectives, Editors: Ramiro Troitiño, David, Kerikmäe, Tanel, Chochia, Archil (Eds.)

10. The Rise of Euroskepticism: Europe and Its Critics, Luis Martin-Estudillo








18. The Euro: And its Threat to the Future of Europe, Joseph Stiglitz, 2016








Reduced Freedoms?

The European trajectory.

America presently faces a choice between a form of “cuddle capitalism”—what others consider creeping socialism, the therapeutic-nanny state—and a more dynamic market economy, rooted in liberty with limited government. The thesis of Samuel Gregg’s timely book is that we are embarked down the first of these paths and that America is actually becoming more and more Europeanized—to our detriment. Gregg, the Acton Institute’s director of research, analyzes this predicament through an economic lens. He is at his best exploring and refining the medium he calls “economic culture”: that is, “the value commitments, attitudes, rules, and institutions that shape and characterize economic life in a given society.”

Click here to read more.

The End of Ethics and the Way Back: Markets Degenerate Without Honesty and Trust

The Legatum Institute hosted Ted Roosevelt Malloch, Chairman and CEO of The Global Fiduciary Governance LLC, for a luncheon discussion on his new book, ‘The End of Ethics and the Way Back’.

Malloch discussed a wide range of research showing that notions of virtue and levels of trust have been eroded in our society, why this matters, and laid out the essential role the “arc of trust” plays in markets. In particular, Malloch discussed recent surveys that show how students at top level business schools don’t mind “a little bit of lying, or a little bit of stealing.” This, Malloch argues, is indicative of the wider trend that it has become acceptable to bend the rules in order to get ahead – because nearly everyone does it anyway.

Malloch referenced a 1950s book by German author Wilhelm Röpke, The Humane Economy. Röpke argued that without honesty and trust, the market will degenerate and the economy will spin out of control. Malloch builds on these arguments in his account of a way forward, and argues that we will fall further and further behind on a personal, corporate, cultural and societal level unless we restore a basic level of trust.

While his book takes a close look at “the worst of the worst cases of recent economic vice,” Malloch still thinks the glass is half full. “My book is about refilling it.”

Source: Legatum Institute

Exile Chic

Written by By THEODORE ROOSEVELT MALLOCH published in “The spectator

To Change the World: The Irony, Tragedy, and Possibility of Christianity in the Late Modern World
By James Davison Hunter
(Oxford University Pres, 368 pages, $27.95)

I don’t consider myself an exile, but I do consider myself a Christian. James Davison Hunter would say that’s impossible. According to his thesis in this wordy, challenging book, exiles are what Christians in this 21st century are called to be. He expects us to be literal Jeremiahs, living in Babylon.

I take issue with the idea that we should flee from the very civilization that we made — and I include Christians in the “we” — and the civilization that we are called to renew. The hype on Hunter’s book cover predicts this idea will “forever change the way Christians view and talk about their role in the modern world.” Putting aside for a moment the idea that anything published by Oxford is going to affect more than a small fraction of the practicing Christians in the world, I have to wonder just what the agenda is here. The book is endorsed by a former Yale divinity professor (who now works for Hunter — ahem, no conflict of interest) as well as a renowned Canadian philosopher of secularity who ran for office five times as a socialist and lost every time. A modern Jeremiah, perhaps?

James Hunter grew up a fundamentalist, attended evangelical Gordon College, became counter-cultural, and took a PhD in sociology at Rutgers. Patrons of cigar bars everywhere know to fear the zeal of the smoker who quits. Hunter now teaches at the University of Virginia, where he heads the Institute for Advanced Studies in Culture. He is perhaps best known for his controversial book of a decade ago on the “culture wars,” a term he claims to have invented.

The essays in this latest volume are old stuff that he’s collected from his contributions to various websites and on video in the form of lectures he’s delivered around the country. His uber-rant, uniting all his lesser ones, is primarily against conservative Christians, and his number-one target is not, as you might expect, some professor at Dallas Theological Seminary but the popular “born-again” author Chuck Colson. Attacking the “worldview mentality” as a form of German Idealism or Hegelianism, Hunter is knocking down a straw man. He calls many of the people he doesn’t care for “naïve” or worse, which is less than civil, and I have to wonder why — if he wants to pick this fight — he wouldn’t take on the academic giants of the Reformed perspective — Kuyper, Wolters, Walsh, et al. — rather than those without academic credentials. It’s akin to criticizing fast food for its poor recipes.

Hunter’s slanted version of church history is incomplete and highly selective, and he seems to regard the Church fathers as unlettered yahoos. Many of them were in fact Christian Platonists, and some, like Saint Paul, Hellenized Jews. He never even raises Saint Thomas’s baptism of Aristotle. Hunter has an apparent extreme dislike for evangelicals — mostly because of their tactics but also because of their values — and yet he has virtually nothing to say about Catholicism, which is still the 800-pound gorilla in the room when it comes to Christianity. His critique is entirely focused on America, which is myopic given that Christianity has more adherents in the Two-Thirds World than in the developed parts of the world today.

But all of this is a setup for Hunter’s new view of culture, which is not that new at all, but instead a rehash of Pierre Bourdieu and the anti-technological views of Jacques Ellul. Like his intellectual senior, Ellul, Hunter is proudly counter-cultural, and his Cartesian logic often takes away on one page what he offered up the page before. From his position as armchair social theorist, Hunter dismisses altogether the contributions to public life of Christians. He’s especially contemptuous of D. Michael Lindsay’s recent award-winning empirical book, Faith in the Halls of Power, even though to my knowledge Hunter has himself never worked in the political arena, run a company, or done anything outside the academy.

Hunter has no time for politics or economics. As an anti-individualist at pains to carp against the “great man” or heroic versions of history, Hunter offers instead a grand sociological narrative. He wants us to accept his post-political, narrow, negative view of power. His pacifist view of what the Bible says comes straight from the pages of neo-Anabaptism. He’s loudly anti-modern, anti-American, and anti-globalization. American civilization, he says, is “a bundle of contradictions.” And resacralization of it is not possible. Instead he calls for even more redistribution of wealth and the “koinonia” of church-based community, a new form of late modern monasticism.

This is no Allan Bloom thesis. Hunter calls for a “critique of the entire modern world.” For him pluralism is a dangerous evil (hence his earlier diatribe against the “culture wars”). He thinks American culture was never Christian — ignoring the faith of the Founders — and he believes that most Americans today are nihilistic and post-Christian. The data from recent polling suggests otherwise. The skepticism of modernity may be bewildering to him, but Hunter would be well advised to reread the classics of political thought and especially works on Gnosticism, like Voegelin’s New Science of Politics, if he wants to play political theorist.

His so-called “new political theology” leads to cultural, not political, engagement. For him politics is unfulfilling and compromised. Hunter does not care for “defenses against” culture, “relevance to” culture, or “purity from” culture. He is no Christian realist like Niebuhr. His alternative vision is rather focused on disciplining the Church. The Old Testament term Shalom, curiously, is the hallmark of his preferred engagement. And as he admits himself, his biblisistic call is “simple, even platitudinous.” He borrows the metaphor of “aliens” from other leftists, stressing the tension between history and revelation, describing a “dialectic of affinity and antithesis.” Hunter distances himself from any sort of triumphalism. He wants no City of Man and reacts against Constantinism. Institutions, though important to culture, should be leaderless and without authority. (Presumably this means they would also wither away.)

The final chapter of Hunter’s book is the most original and also the most radical. Following Hauerwas and others, he calls for “faithful presence,” the kind of human flourishing that is revealed through sacrificial love, the state where the Word becomes flesh. He employs the language of servant leadership without crediting its author, Robert Greenleaf, or Greenleaf’s many followers, who daily put it into practice. However, Hunter offers no moral philosophy or virtue ethics, only Bible verses.

In essence, Hunter’s many ponderous social theories remind me of the leading American philosopher who said, “Sociology is a bogus intellectual enterprise, hiding ideology behind the claim to be a science.” Nevertheless, Hunter does finally admit “ideas not just social forces sometimes do change history.” Or to quote Richard Weaver, ideas have consequences. This admission calls Hunter’s whole undertaking into question. Which is it? The ideas of the Church fathers, of Augustine, of Aquinas, of all the Christian precursors of the modern university are not so worthless after all? He can’t have it both ways.

But then maybe he can, because for all his apparent anti-establishment cultural leftism, Hunter is quite an elitist. One of his biggest theses is that only what happens to the center-periphery crowd — highbrow campuses and the New York Times — truly counts. But bemoaning the lack of civility in America and then starting a name-calling exercise does not exactly elevate this dialogue. Hunter is so dismissive of other theories (i.e., “Barna is just a pollster”) that he comes off as blindly arrogant. He’s apoplectic about the right, especially the Christian right (which he says peaked in 2004, without any supporting data), and yet has little to say about Catholics except when he puts down the entire natural law tradition in a single sentence in the course of attacking the late, loquacious Father Neuhaus.

In the end, Hunter has offered little that is new or terribly cogent. He’s a late modern neo-Anabaptist using the language of sociology to express his hang-ups about the exercise of power. There is no political theory, and no awareness of Christian Democracy, which has been making and remaking culture for centuries. The only political Christians he feels a need to use kid gloves with are the Evangelical left arrayed around sojourner Jim Wallis (God’s Politics).

By focusing exclusively on the Church as an institution, instead of looking at the life and identity of Christians in all their variegated vigor, Hunter fails to comprehend the complete social architecture of his subject, which ranges from committed persons to families to civic associations to schools to the state itself. His attempt to decouple the political and the public fails because it is both too cute and suffers from a lack of correspondence to reality. The Hunter thesis will surely not make the world a better place. Nor will it help Christians find a road map for living in the complex and spirited world we inhabit in AD 2010. It may actually badly confuse the secular world about the purpose and direction of faith. After all, the faithful in all the Abrahamic traditions were and are called to be all of these — prophets, priests, and kings.

The Great Wilhelm Röpke – Samuel Gregg’s indispensable study of one of the most important economists of the 20th century

Written by By THEODORE ROOSEVELT MALLOCH published in “The spectator

Wilhelm Röpke’s Political Economy by Samuel Gregg
(Edward Elgar Publishing Inc., 216 pages, $125)

Many people, particularly on this side of the Atlantic, have never heard of Wilhelm Röpke. That is a shame since he is one of the most important economists of the 20th century, a true Renaissance man, a polymath, and a father of the German “economic miracle.” He displayed unique moral courage, was often politically incorrect, and was perhaps the sharpest critic of Keynesianism. Ludwig Erhard claimed he “illegally obtained Röpke’s books… which I absorbed as the desert drinks life-giving water.”

Röpke, a full professor at the age of 24, was also the first German professor to lose his job in 1933 when the Nazis came to power. As an exile who would not cave in to Hitler and the SS, he never returned to his native land. Less well known to the English-speaking world than Hayek, Mises, or Friedman, there has been no book length treatment of his economic thinking before this, although numerous biographies exist.

We are extremely grateful then to the brilliant researcher and scholar, Samuel Gregg of the Acton Institute, for a concise, penetrating, and thorough analysis of Röpke’s contribution to intellectual life. It breaks new ground, is highly readable, and adds considerably to the economic literature. It should become mandatory reading for every student of political economy.

As the intellectual author of Germany’s post-World War II economic resurrection, Röpke is an under-appreciated thinker who informed policymaking. Gregg rightly calls him a Smithian, as he was against the unlimited power of the state. Put positively, he was much more. Röpke was an “economic humanist” of the first order. He historically showed how the Great Depression came to limit economics as a science and how collectivism is incompatible with authentic human freedom.

The purpose of Gregg’s masterful book is to provide a descriptive and critical introduction to Röpke’s understanding of political economy. This is unquestioningly an exercise in historical recovery. The focus is on four subjects that concerned Röpke up until his early death in 1966. They are: the challenge of business cycles, the unending growth of the welfare state, full employment and inflation, and international economic relations.

Röpke’s political economy was attuned to “interdependence,” where empirical analysis is not separated from normative judgment. With a profound focus on “human flourishing,” Ropke was enlightened beyond today’s narrowly trained economists and econometricians because of his scope and vast intellectual and multidisciplinary horizons. By returning modern economics to the Aristotelian realm of ethics from which it originally emerged, Röpke achieved a new synthesis. For him the market economy allowed people to exercise their “natural liberty” — rooted in the Christian realism of St. Augustine.

As part of the Austrian School, as opposed to the Historical School, Röpke can be best placed in the context of other major modern economic thinkers such as Eucken, Rustow, Böhm, and Miller-Armack. Breaking with the dirigiste past together they sought to articulate an economy rightly framed on order. For them economics was a normative social science. They discerned values beyond utility. This is a style of political economy that needs to find a revival as it is sorely lacking in today’s boring mathematized journals and small gauge discussions about trends in data.

For Röpke, as presented by Gregg, economics has unfortunately occupied a “restricted vision.” This view parallels the better-known thoughts of Hayek, who likewise warned about the scientism of economics and was an equally harsh critic of Lord Keynes and his overly ardent followers. Both witnessed what they called “the failure of intellectuals” and their near total surrender to the evils of socialism portrayed as a “road to serfdom” inhabited, if not dictated, by government bureaucrats.

With liberty constantly under attack, this timely treatment of Röpke’s “Christian Humanism” is a perfect antidote or remedy to the crisis that abounds and surrounds us on every front. It appears even in our most recent economic collapse and massive government interventions cum bailouts we are plagued with an incessant belief in what Röpke termed, “the folly of human perfectibility.” Our newly anointed political ones have an unflinching belief in the state to solve all our problems and cure all our ills. If only they knew. If only they had read Röpke.

Gregg is absolutely correct to make the connections to the Scottish Enlightenment thinking in Röpke’s opus. It is an insight worth exploring further. Röpke sought to avert welfare statism but held a conservative attachment to tradition, especially to the mediating structures of civilized life. This is critically noted by Gregg and could be amplified since the space between the Individual and the all-powerful State is where life is actually lived.

This conflict with what could be called classical liberalism and the priority of freedom in the economic realm continues today. Ordoliberalism owes a great debt to the Scottish Enlightenment. But the tension between social conservatism on one side, and economic liberalism, even in Republican politics, on the other, continues into our present era. Until it is resolved — perhaps by reemploying the likes of Röpke or his seminal ideas, we will be one handed and fail to see the full dimensions of ordered liberty. Such division also undercuts potential conservative political power — dividing it into two warring camps, of social vs. economic conservatism. A cohesive model of the social market economy offers a viable alternative.

This brilliant, analytical intellectual history will hopefully bring back interest in both Röpke and his “Humane Economy.” We would all be the beneficiaries.

The End of Ethics and A Way Back

How To Fix A Fundamentally Broken Global Financial System

Bestselling author and professor Ted Malloch calls for real financial reform to restore confidence and fairness to a broken system

From Ponzi schemes to the credit crisis to the real estate bubble, the financial industry seems to have lost its way on the road to riches. As private greed continues to undermine the public good, one might wonder what ever happened to business ethics. And how can we reform the global financial system to benefit everyone, rather than just the very lucky few? In The End of Ethics and the Way Back, the bestselling author of Doing Virtuous Business teams up with attorney and Yale University Postdoctoral Fellow, Jordan Mamorsky to examine the most recent failures of business virtue, prudence, and governance–from Bernie Madoff to Jon Corzine and MF Global–before offering a set of structural and holistic solutions for our current ethical crisis in global finance.

  • Features compelling case studies that reveal the saturation of economic vice in global finance
  • Suggests structural reforms to the global financial system that would increase confidence among consumers and encourage ethical behavior among finance professionals
  • Written by Ted Malloch, author of the bestseller Doing Virtuous Business with attorney Jordan Mamorsky
  • Ideal for financial regulators, business students and academics, and professionals in the finance industry

by Malloch, Theodore Roosevelt / Mamorsky, Jordan D.

April 2013
ca. 34.90 Euro
2013. 288 Pages, Hardcover
ISBN 978-1-118-55017-5 – John Wiley & Sons


“Embrace American Exceptionalism”

American exceptionalism is the view that the United States occupies a special role among the nations of the world in terms of its national ethos, political, economic and religious institutions, and its being built by immigrants.

The roots of the position date back to 1630 with John Winthrop’s “City Upon a Hill”, although some scholars also attribute it to a passage of Alexis de Tocqueville, who argued that the United States held a special place among nations, because it was the first working representative democracy.

Belief in American exceptionalism has long been characteristic of both conservatives and liberals. The radical Marxist, Howard Zinn however said that it is based on a myth, and that “there is a growing refusal to accept” the idea of exceptionalism both nationally and internationally. But he of course is dead wrong!

Many intellectuals, across disciplines have argued that to deny American exceptionalism is in essence to deny the heart and soul of this nation.

In essence the exceptionality of America, politically, economically, militarily, and culturally is based on these facts:
1. The Protestant American Christian belief that American progress would lead to the Millennium.
2. The American writers who linked our history to the development of liberty in Anglo Saxon England, even back to the traditions of the Teutonic tribes that conquered the Western Roman Empire.
3. Other American writers who looked to the “newness” of America, seeing the mass of “virgin land” that promised an escape from the decay that befell earlier republics.

Because America lacks a feudal tradition of landed estates with inherited nobility, it is arguably unique among nations. The Puritan Calvinists who first came to Massachusetts had a strong belief in predestination and a theology of Devine Providence that still has effects down to this day. Since God made a covenant with his ‘chosen people’, Americans are seen as of a different type. This “City on a Hill” mentality is still evidenced in American folklore, song and customs (“This land is my land, this land is your land, from the redwood forests to the gulfstream waters”). With its particular attention to immigration, America has generation after generation been a beacon to the world. The Statue of Liberty is an embodiment of that ethos. America was also created on a vast frontier where rugged and untamed conditions gave birth to the American national identity and the narrative of a continent of exceptional people—explorers and adventurers. Think of my relative, Teddy Roosevelt on winning the West!.

The economics of the American Founding was very much a Lockean affair: the protection of property rights in what was “the largest contiguous area of free trade in the world.” But you recall there were two competing views of America’s economy: a Southern Agrarian view, championed by Jefferson, and a Northern industrial or commercial view, championed by Hamilton. It is this same difference in visions that was at the economic root of the American Civil War, a war that saw the ultimate industrial and commercial view victorious.

Hamilton, as secretary of the Treasury, prevailed. He established the credit of the United States by consolidating State and National debt and paying the interest upon it and transformed it into capital by issuing certificates on it; established a national banking system; and thereby encouraged what he called “the spirit of enterprise.” Hamilton used the freedoms of the Constitution and its protections to create a capitalistic, free-market economy and ensured that the United States would “become the richest, most powerful, and freest country the world has ever known.”

The role of the government in such an economy has been well described by James Madison in Federalist # Ten:
A republic…promises the cure for which we are seeking…. the same advantage, which a republic has over a democracy in controlling the effects of faction, is enjoyed by a large over a small republic.

In order to be a fit participant in a modern republic and market society, like America, it is necessary to be a certain kind of person in a certain kind of culture. This kind of person is one who internalizes their values and makes them work: a person of virtuous character. It is no accident that Max Weber identifies none other than Benjamin Franklin as the epitome of the Protestant work ethic. Nor is it an accident that America remains the most philanthropic country in the world. Franklin was the quintessential American, an entrepreneur in every sense of the word and a proponent of both thrift as a virtue and generosity as a practice.

Finally, as the Nobel Prize winning author, V.S. Naipaul has put it, the “idea of the pursuit of happiness…is an elastic idea; it fits all men. It implies a certain kind of society, a certain kind of awakened spirit. I don’t imagine my father’s parents would have been able to understand the idea. So much is contained in it: the idea of the individual, responsibility, and choice, the life of the intellect, the idea of vocation and perfectibility and achievement. It is an immense human idea. It cannot be reduced to a fixed system. It cannot generate fanaticism. But it is known to exist; and because of that, other more rigid systems in the end blow away.” One does not impose personal autonomy, and that is the secret of America’s real and lasting power.

Human flourishing is an American moral theory, which links virtue and happiness specifying the relation between these two concepts as one of the central preoccupations of ethics. Virtue ethics today has been revived and largely on account of the American spiritual capital built up as a legacy over many centuries of eudamonic thinking and practice.

American exceptionalism is the very embodiment or the exemplar of the logic of modernity.

In Lincoln’s famous phrase, “American is the last, best hope of mankind.” And, to the extent that the logic of modernity is rooted in Judeo-Christian spiritual capital, America is unique in preserving that connection. Americans continue to identify themselves overwhelmingly with the Judeo-Christian spiritual heritage; long after it has disappeared as the cultural foundation of Western Europe. That is why most Americans subscribe to the Lockean liberty narrative not the social democratic equality narrative that now dominates Europe; it is why America can combine a secular civil association with a religious culture instead of the belief in a theocracy; it is why America celebrates autonomy instead of the Asian belief in social conformity.

Early American settlers gave voice to a specifically Anglo-Protestant identity (Yes, I am a WASP). As the Harvard scholar, Samuel Huntington has argued, American identity has had two primary components: culture and creed. The Creed is a set of universal principles articulated in our Founding documents: liberty, equality, democracy, constitutionalism, limited government, and private property. Our Culture is Anglo-Protestant, specifically dissenting Protestantism. Moreover, the Creed is itself the product of “English traditions, dissenting Protestantism, and Enlightenment ideas of the eighteenth-century settlers.”

One way of characterizing the early United States is to say that it inherited the logic of modernity and all of its institutions (the technological project [from Francis Bacon], economic freedom [from Adam Smith], political freedom [from John Locke], and legal freedom [common law]) from Great Britain. What distinguished the U.S. from England were three crucial things: (a) the lack of a feudal class structure which dominated Great Britain down into the 20th century (yes, we all love Downton Abbey but…); (b) an extensive virgin territory for applying it (The Louisiana Purchase); and, most especially, (c) the opportunity for a multitude of dissenting Protestant sects, Catholics, and Jews to engage the new world with a religious fervor largely absent from the feudalistic State Churches of Europe. It is important to remember how many of the original settlers were from dissenting Protestant sects such as the Puritans, Methodists, Baptists, and Quakers.

This early influence can be seen in the sermons preached during the American War of Independence, the Declaration of Independence, and throughout the rest of U.S. history. Here is a brief sampling.

  • In The Mayflower Compact (1620), “In the name of God, Amen….having undertaken, for the glory of God, and the advancement of the Christian faith…a voyage to plant the first colony…”
  • The Declaration of Independence asserts that “All men … are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of happiness.” The last sentence asserts “a firm reliance on divine Providence…”
  • The Liberty Bell contains a verse from the Torah: “Proclaim liberty throughout the land”
  • George Washington’s 1790 letter to the Hebrew Congregation at Newport: “May the children of the stock of Abraham who dwell in this land continue to merit and enjoy the good will of the other inhabitants – while everyone shall sit in safety under his own vine and fig tree and there shall be none to make him afraid. May the father of all mercies scatter light, and not darkness, upon our paths, and make us all in our several vocations useful here, and in His own due time and way everlastingly happy.”
  • John Adams, “Statesmen may plan and speculate for liberty, but it is Religion and Morality alone which can establish the Principles upon which Freedom can securely stand.
  • In his classic Democracy in America (1840), Tocqueville identified America’s unique religious heritage derived primarily from the Puritans, the importance of the Hebrew Bible, the transposed belief that America was a chosen nation whose founding gave Americans a sense of moral mission. Most especially, Tocqueville observed that the Biblical outlook gave America a moral dimension, which the Old World lacked. “I have said enough to put the character of Anglo-American civilization in its true light. It is the result (and this should be constantly kept in mind) of two distinct elements, which in other places have been in frequent disagreement, but which the Americans have succeeded in incorporating to some extent one with the other and combining admirably. I allude to the spirit of religion and the spirit of liberty.”
  • Lincoln’s Gettysburg Address concludes with: “We here highly resolve… that this nation, under God, shall have a new birth of freedom—and that government of the people, by the people, for the people, shall not perish from the earth.”
  • In 1952 President-Elect Dwight Eisenhower acknowledged that the “Judeo-Christian concept” is the “deeply religious faith” on which “our sense of government…is founded”.
  • “Under God” was added to the pledge of allegiance in 1954.
  • The national motto (since 1956), which appears on U.S. currency, is “In God We Trust.”
  • Presidents take the oath of office on both an Old and New Testament Bible.

America exemplifies the logic of modernity par excellence. That is why there is such a thing as the American Dream—which continues to draw people to our exceptional shores from the world over.

For those among you who are want to pose the question empirically: “do Americans see themselves as exceptional” you can look at the results of a very recent December 2012 Gallup Poll.

It turns out that Americans widely agree that the United States has a unique character because of its history and Constitution that sets it apart from other nations as the greatest in the world. This view, commonly referred to as “U.S. exceptionalism,” is shared by at least 80% of Americans in all party groups, including 91% of Republicans.

One of the extensions of the belief in American exceptionalism is the notion that, because of its status, the United States has an obligation to be the leading nation in world affairs. Americans generally endorse this position, as 66% say the United States has “a special responsibility to be the leading nation in world affairs.” Republicans, Democrats, and independents generally agree, with fairly modest differences among party supporters.

My friends, Yale students and pundits everywhere along the Yale Political Union party spectrum: embrace American exceptionalism.

The World Needs a Dozen Hong Kongs

Communist China’s decision to join the global economy triggered the greatest contraction of poverty in world history. Yet amazingly, the indispensable impetus to that transformation—its inspiration and guide, the source of much of its talent and capital—has been widely overlooked, and never replicated. The model of Hong Kong has been hiding in plain sight.

Hong Kong was always different than other colonies. It began in 1842 as a minor trading post, surrounded by empty territory. Like the United States, most of Hong Kong’s citizens were drawn there for freedom and opportunity. As Milton Friedman noted, after WWII Britain allowed Hong Kong to pursue a classical liberal, free market policy. Even during its own dalliance with socialism, Britain allowed capital to move freely in Hong Kong. Taxes were kept low and there were no exchange or trade restrictions. The results were spectacular. Despite absorbing millions of impoverished refugees, Hong Kong’s per capita income rose from about a quarter of Britain’s to more than a third larger in just four decades.

In 1984 Margaret Thatcher’s UK signed an agreement with China that promised to continue Hong Kong’s unique role for another 50 years. Post-colonial Hong Kong became a free city inside China, with its own laws, democratic legislature and independent judiciary. It kept its free market economy, its low rate tax system, and its separate, convertible currency. China traded a negligible dilution of its sovereignty for the enormous benefits it derives from a free Hong Kong. It calls this arrangement "One Country, Two Systems."

With billions of people still trapped in poverty today, why shouldn’t we build new Hong Kongs? Why shouldn’t other developing countries and regions have vibrant outposts of freedom like Hong Kong?

The United States should create a Free Cities Program that would build treaty-based "Hong Kongs" in countries that genuinely want democracy, prosperity and a way to outflank corruption. These new Cities would be joint ventures between the United States, an international financial institution like the World Bank, and the host governments. The U.S. would negotiate 50-year bilateral treaties with the host countries, authorizing the joint venture to purchase undeveloped plots the size of Hong Kong, establish property registries, and institute a complete set of Western freedoms and responsibilities.

Treaty-based Free Cities would offer democracy, low taxes, rule of law, limited government, reliable prosecution of corruption, freedom of faith, speech and press, multiethnic meritocracy, and free trade. They would exemplify free market globalization, rather than the economic exploitation of protectionist colonial mercantilism. Like Hong Kong, these tiny places would become safe havens for investors and entrepreneurs. They’d allow citizens to raise capital, attract the skills they need from abroad, and create thousands of new jobs where there are none today.

This strategy would be inexpensive, yet philosophically revolutionary. In a Free City development wouldn’t be a problem at all. Investors and workers will absolutely flock to places where there is freedom, secure property rights and the rule of law—thereby reversing the brain drain that hobbles every developing country.

The joint venture would only have to build the Free Cities’ public infrastructure, and that would be financed by resale of City land, City taxes and bonds. The global private sector would gladly develop everything else because they’d be able to reap the rewards of their own enterprise.

The people attracted to Free Cities would become stakeholders who would resist aggressively any interference with their freedoms, as the citizens of Hong Kong have. And the host country’s ruling elite would learn quickly, as China’s did, that they can earn much more from their Free City than they’d ever be able to pocket from foreign aid or "squeeze."

This strategy could change the focus of America’s official development programs from government-to-government to people-to-people. Free Cities would mobilize the private sector, NGOs and the faith community, to build first world economies in destitute places. In the process, it could stimulate a profound new American engagement with the poor of the world.

A Free Cities program would appeal powerfully to the idealism and generosity of the American people—and to the friends of freedom around the world. It would put the U.S. on the offensive in the worldwide war of ideas. And it would put dictators, kleptocrats, and terrorists on the defensive.

The world needs at least a dozen new Hong Kongs. The United States should lead the way and begin building Free Cities in Eastern Europe, Africa, Latin America, and Asia in the next five years.

Ken Hagerty is Chairman and Founder of the Global Venture Investors Foundation; Theodore Roosevelt Malloch is Chairman and Founder of the Spiritual Enterprise Institute

Freedom and Opportunity Back Home For Illegal Immigrants

The desperation that drives millions of illegal immigrants into our country will never subside until there are jobs and genuine opportunity in their stagnant home economies. Fortunately, there is a way the U.S. could jump-start non-corrupt, democratic, private sector-led, globalized economies inside otherwise destitute third world countries. We could do it soon, and we could do it for a lot less than we’d have to pay to assimilate millions more illegal aliens. The solution is to adapt the free market model of post-colonial Hong Kong.

Hong Kong was always different than other colonies. It began in 1842 as a minor trading post, surrounded by empty territory. Like the United States, most of Hong Kong’s citizens were drawn there for freedom and opportunity. As Milton Friedman noted, after WWII Britain allowed Hong Kong to pursue a classical liberal, free market policy. Even during its own dalliance with socialism, Britain allowed capital to move freely in Hong Kong. Taxes were kept low and there were no exchange or trade restrictions. The results were spectacular. Despite absorbing millions of impoverished refugees, Hong Kong’s per capita income rose from about a quarter of Britain’s to more than a third larger in just four decades.

In 1984 Margaret Thatcher’s UK signed an agreement with China that promised to continue Hong Kong’s unique role for another 50 years. Post-colonial Hong Kong became a free city inside China, with its own laws, democratic legislature and independent judiciary. It kept its free market economy, its low rate tax system, and its separate, convertible currency. China traded a negligible dilution of its sovereignty for the enormous benefits it derives from a free Hong Kong. It calls this arrangement “One Country, Two Systems.”

With billions of people still trapped in poverty, it’s time to build new Hong Kongs. The best solution for millions of illegal entrants rushing to the U.S. is to offer them hope and opportunity in their own countries.

The United States should create a Free Cities Program that would build treaty-based “Hong Kongs” in countries that genuinely want democracy, prosperity and a way to outflank corruption. These new Cities would be joint ventures between the United States, an international financial institution like the World Bank, and the host governments. The U.S. would negotiate 50-year bilateral treaties with the host countries, authorizing the joint venture to purchase undeveloped plots the size of Hong Kong, establish property registries, and institute a complete set of Western freedoms and responsibilities.

Treaty-based Free Cities would offer democracy, low taxes, rule of law, limited government, reliable prosecution of corruption, freedom of faith, speech and press, multiethnic meritocracy, and free trade. They would exemplify free market globalization, rather than the economic exploitation of protectionist colonial mercantilism. Like Hong Kong, these tiny places would become safe havens for investors and entrepreneurs. They’d allow citizens to raise capital, attract the skills they need from abroad, and create thousands of new jobs where there are none today.

This strategy would be inexpensive, yet philosophically revolutionary. In a Free City development wouldn’t be a problem at all. Investors and workers will absolutely flock to places where there is freedom, secure property rights and the rule of law- -thereby reversing the capital flight and worker exodus that hobbles every developing country.

The joint venture would only have to build the Free Cities’ public infrastructure, and that would be financed by resale of City land, City taxes and bonds. The global private sector would gladly develop everything else because they’d be able to reap the rewards of their own enterprise.

The people attracted to Free Cities would become stakeholders who would resist aggressively any interference with their freedoms, as the citizens of Hong Kong have. And the host country’s ruling elite would learn quickly, as China’s did, that they can earn much more in their Free City than they’d ever be able to pocket from foreign aid or “squeeze.”

This strategy could change the focus of America’s foreign aid programs from government-to-government to people-to-people. Free Cities would mobilize the private sector, NGOs and the faith community, to build first world economies in destitute places. In the process, it could stimulate a profound new American engagement with the poor of the world.

A Free Cities program would appeal powerfully to the idealism and generosity of the American people—and to the friends of freedom around the world. It would put the U.S. on the offensive in the worldwide war of ideas. And it would put dictators, kleptocrats, and terrorists on the defensive.

The world needs at least a dozen new Hong Kongs. The United States should lead the way and begin building Free Cities in Latin America, Eastern Europe, Africa, and Asia in the next five years. The real answer to illegal immigration is to share the freedom and opportunity we enjoy in America with people around the world.

Ken Hagerty is President and Founder of the Global Venture Investors Foundation;
Theodore Roosevelt Malloch is Chairman and Founder of the Spiritual Enterprise Institute

Spiritual Enterprise Institute Looking at the Spiritual State of the Union

The purpose of the Spiritual Enterprise Institute is straight forward: It has a clear vision that comes directly from conversations with the legendary financial entrepreneur and philanthropist, Sir John Templeton. Founded in 2005, SEI focuses on the research, lessons and potential value of understanding spirituality as an essential component of economic development and progress. It carefully targets opinion leaders to learn more about the significance of spiritual capital and the enterprises it generates, across a range of issues relevant to leaders and the media in the private, public and social sectors.

Recently, the Spiritual Enterprise Institute inaugurated an annual Gallup Poll on the “Spiritual State of the Union” to examine the role of both individual and corporate spiritual commitment in American life. Although survey respondents provided their own definitions to “spirituality,” the working definition is deemed to be “sensitivity or attachment to religious values and things of the spirit rather than worldly or material interests.”

One of the most noteworthy projects undertaken by the Institute, the “Spiritual State of the Union” received a great deal of national attention when it was released last month, and reveals much about spiritual life in America today. Here are some of the most cogent Headline-catching findings:

Economic health is related to spiritual health.

Ethical issues were found most important to 50-64 aged group who attend church. Many so-called hot issues like gun laws, technology, overpopulation, education, don’t register very much or at all. Of non-economic issues, fuel oil prices are more important than anything else across all groups.

Regionally: people in the South care more about ethical/moral issues; in the East about terrorism; the Mid-West, Iraq; and far West, education.

Republicans care much more about moral decline, while Democrats care about poor leadership. Liberals are twice as unhappy about the general economy as Conservatives

Those whose faith shapes success and the spiritually committed are much more concerned about ethical/moral issues. The richer you are the better you think the economy is doing. The US economic system –capitalism- -is viewed as “basically OK.”

Our economy depends on the spiritual health of the nation.

The resounding answer is “a great deal!” – except for non-church goers.

In the South support is overwhelming for such a statement and a majority of activists and poor people believed this even more than the rich. In fact, many people have come to think that work makes the world a better place. The only disagreement is in our youngest workers who are more cynical.

Work is of value to the world.

Christians and the spiritually committed are most likely to completely agree. The poorer you are the more you agree that work is important. College graduates completely agree; the same as church goers. Republicans agree more so than Democrats but Independents agree the highest. Those in the East and West are most likely to disagree showing the existence of a coastal bias.

More than half of all Americans think being ethical will pay off economically.

85% mostly agree, across the nation. The highest totals for agreement were: satisfied workers, spiritually committed, faith-based, activists and entrepreneurs. Most people still think breaking the rules is a no-no and a significant population thinks that people are always ethical.

Open expressions of religion in the workplace are encouraged or tolerated by 79% of Americans.

People are equally split on prayer and religion at work, but the trend appears to be growing as a practice.

The Protestant work ethic is still alive and well.

Hard work may offer some guarantee of ultimate success according to half of those polled, however when asked whether the strength of the US is based on business: 77% agree; 82% of Republicans vs. 71 % of Democrats.

Government regulation does more harm than good: 60 % argue.

Success in life is determined by spiritual forces: 58% agree. Government however is no longer viewed as the savior or even first agent for change and betterment.

Belief in God remains high.

82% believe in Him; but increasingly many see themselves as spiritual not necessarily religious. When asked: Does God want us to find work that suits our talents, 87% agree. Asked Does God want us to be useful to the world, 91% agree. Asked if faith equals purpose in life, 69% agreed. The least likely to agree: young, males with college degrees who infrequently go to church and have high incomes.

People with a purpose are satisfied in their work and believe their faith shapes success.

When asked are you spiritually committed: just under 65% said yes. Faith encourages development of God-given talents 65% vs. 87% of religious.

Political divisions may run deep in America but the spiritual health of the nation is viewed as critically important.

When asked: Are you happy with whom you are: 88% said basically yes. College graduates and church-goers were the happiest at 92%. 63% of all Americans found the spiritual health of the country to be very important.

People can no longer be trusted.

59% said you can’t be too careful. Trust is out the window! Distrust is highest in 18-34 age groups and in frequent church goers. 69% of the poorest income people lack any trust. Who has hope? Women who attend church and are satisfied in their jobs.

Americans are very generous people.

65% of Americans volunteer a great deal or some of the time vs 89% for the spiritually committed. There is such a thing as spiritual capital. Where do people volunteer? Church 85%; Charity 53%, School 37%. How many Dollars a year do they actually give? $100 18%; $500 30%; $1000 17%; $5000 22%.

In his executive summary of the poll, George Gallop suggests that the survey marks rapid shifts in American attitudes as well as confirmation of the critical underpinning of religious and spiritual beliefs as they relate to managing current problems, the economy and work; volunteerism and the giving of money; meaning and purpose in life; and one’s outlook to the future.

My one, personal take-away from the research is close to the mission of SEI and is good news: The 18th Century concept of a Protestant work ethic has not only survived the 20th century waves of communism, fascism, socialism, secularism, and the welfare state, but may be positioned for a resurgence.

China: In Transition

Everything is progressing, changing nearly overnight. Building continues apace following the historic 2008 Beijing Olympics. Massive and dramatic changes are underway everywhere, in every corner of China –from the gilded skyline coast to the remote far west.

What is China becoming? How exactly is it advancing? How are religion and spirituality now viewed in a country with a communist government and a capitalist economy? President Hu has held a number of summits over the past few years with Western leaders. They have been meetings of significant proportion, ripe with historic opportunity.

There is potentially a win-win plan that appears to be emerging, all sides willing. Arguably, nothing is more critical to the project of the 21st century than Western-Sino relations. China is now woven into the global, interdependent economy. How can formerly tense relations be so improved? Is it possible to build a new dynamic that would give both sides a boost, improve economic conditions, allow more freedoms, stabilize political relations and effect the future of the world for good? Will China step up to the task, away from the Orientalist trappings of the past and its ensnarled bureaucracies and outdated ideology?

China boasts one of the longest single unified civilizations in the world. Its 5000 year history is characterized by dramatic shifts in power between rival factions, periods of peace and prosperity when foreign ideas were assimilated and absorbed, the disintegration of empire through corruption and political subterfuge, and the cyclical rise of ambitious leaders to found each new empire. But for the last three hundred years China has more or less been asleep. The error and mistake of Mao’s disaster are all too evident today. But the sleeping dragon empire is now reemerging in a vibrant dynasty. China is attempting changes on a scale never before achieved and at break-neck speed. A new ‘harmonious’ society is the objective and today nearly everything is in a constant state called: transition.

Twenty-five years after Deng Xiaoping’s reform and opening policy allowed the West back into China, the country remains as mysterious and undiscovered as it was in the 19th century when gunboat diplomacy forced the last tottering dynasty to open up the country to trade and exploration. China’s vast population has grown from 400 million to over 1.3 billion in less than a century. This has driven a boom in consumerism most evident in the cities where advertising abounds and an entrepreneurial and materialistic China is literally, bubbling up.

There are four gigantic transformations happening in China, simultaneously. No country has ever in all of human history been involved in such dramatic change. But in this case, given China’s size, power and integration into the global economy, the risks and rewards involve the entire planet.

The four transformations or transitions are:

  • Rural to Urban
  • State Owned to Free Enterprise
  • Communist to Consumerist
  • Anti-religious to Spiritual

The West would be well prepared to comprehend and ponder each of these concurrent transformations in attempting to understand modern China.

The emerging China, surely involves combating rampant corruption, enforcement of intellectual property laws, assistance by way of expertise on reforms, an open admission that Maoism is both wrong and dead (a museum to this effect, is in the making), and realization that consumers increasingly come first in China’s emerging “harmonious society.”

This is not to suggest that there are no problems in or with China or that it magically can assume an instant superpower status; becomes our keen rival or eventual enemy. It is simply time to recognize the facts and seize the day. There are many hard questions we will ask, some of which include:

  • The economic growth question. Is China’s boom of the past quarter century extendable into the distant future? Or does China’s large and growing dependence on global markets mean that external markets could damage its economy by disrupting resource flows, obstructing market access, or slowing the growth of global demand for Chinese products. Will international conflict within East Asia or over offshore oil deposits or even conflict in the Middle East undercut China’s economic prospects? How can we together mitigate such risks to growth?

  • The reform question. Long neglected institutional deficiencies constrict seemingly promising growth prospects, as history has repeatedly proven. Is China’s reform, while broad and deep, uneven? Vital institutions affecting important clusters of activity in banking, land allocation, dispute resolution, and business regulation, exchange of property, corporate governance, capital markets, public finance, investment decisions and administrative structures surrounding these segments of China’s economy have witnessed only limited reform. How can China with our help make progress on reform over the coming decade? Are religious freedom and the growth of spirituality inevitable in modern China? How will they deal with it now that it is out of the box and possibly out of control, as well?

  • The intellectual property question. Large multinational companies and especially their CEOs are anxious to see results on the contentious issues of IP protection in China. I have personally been sold copies of bootleg movies for US 75 cents (repeatedly); purchased pharmaceuticals in a large drug store with the Pfizer label and logo that are not Pfizer products; bought clothing such as Vuitton and Ralph Lauren Polo that are imitations; and discussed with a major beverage company how its designs were ripped-off in China in just days. What should we tell CEOs about trademark and IP infringement in China? Is it worth doing business there?

  • The corruption question. Widespread corruption, now often linked to transactions involving land in China and a vibrant black market, have tilted market outcomes toward select groups within the Chinese population. In recent Transparency and Opacity Indexes for all countries, China has been ranked poorly. What can be done to actively combat corruption and promote the rule of law?

  • The finance question. The dominance of China’s state-owned banks have increased since the 1990s, raising renewed questions and global concerns that non-performing loans are worsening. The continuing unwillingness of the big state-owned banks to make loans to entrepreneurs limits the growth of private business and exacerbates China’s already serious problem of unemployment. How is China planning to avoid the kind of economic lethargy that affected Japan’s formerly dynamic economy for about a decade?

  • The information question. Most in the world agree that as the euphemism suggests,’ information is power”. While in China articulate, young, professionals repeatedly approached us asking if they could view or CNN or surf the Internet in our hotel. They relayed that Chinese authorities block many websites, including news sources. Why? What does China fear from the free flow of information, if its intention is to build knowledge based economy and populace?

  • The America question. How has China’s perception and understanding of America’s role in the world and global economy shifted over the past few years? Is it China’s view that the American century has ended and the Chinese century has begun? What is the role and responsibility of a superpower? Is China America’s friend or rival? Why is China building up militarily?

  • The Communism question. Marxism-Leninism has been defunct as a philosophy for many decades in intellectual circles and since the collapse of the Soviet Union its empire no longer holds sway as an ideological system. What has China learned from the Soviet example and the void it has left as a result? China’s Communist Party is authoritarian and repressive to human, and especially religious rights. China is also increasingly a consumerist society. Therein lays the contradiction. Is China likely to be a communist country in 10, 20, 50 years? How and employing which means?

    Confucius (551 – 479 BC) is still the foremost Chinese thinker and teacher. He is once again coming back into favor. A real interest in religion, Buddhist, Taoist, Neo-Confucian, Muslim and especially, Christian is sweeping through China like a tornado. Confucius taught a philosophy of ren (benevolence) and yi (righteousness). Perhaps, enjoined in meaningful dialogue, China can rediscover these. The world depends on it. Spiritual pluralism may be the critical key that unlocks China’s future and assures its smooth transition to the future.

The Executive Committee of the China: In Transition project includes:

  • Dr. Theodore Roosevelt Malloch, Partner, Donegality Productions LLC, Executive Producer
  • Kang Phee Seng, Professor of Religion, Hong Kong Baptist University
  • Dr. Christopher Hancock, Director Christianity and China Institute, Kings College, London University
  • Dr. Carol Hamrin, CEO, Chinawise
  • Dr. John Seel, Partner, Donegality Productions LLC, Associate Producer
  • Dr. Michael Stephens, Thomas Nelson, Distribution Liaison
  • Randall Wallace, CEO, Wheelhouse Productions, LLC
  • Fenggang Yang, Director, Center on Religion and Chinese Society, Purdue University
  • Liu Peng, Professor, Chinese Academy of Social Sciences

Donegality Productions LLC is a media company that develops books, films, and other cultural projects that promote human flourishing and the common good. Donegality Productions will oversee the project in partnership with Wheelhouse Productions and distribute the film and curriculum through Thomas Nelson, the leading Christian publisher.

The director, screenwriter and producer of the documentary is Randall Wallace, President of Wheelhouse Productions and producer and author of the award-winning feature film, Braveheart and many other hits, including PBS documentaries and a series for The History Channel.

The budget for the film is $2.5 million, which incorporates both a traditional and viral marketing strategy with a global audience in mind.


The following is a concept outline of the documentary. There may be slight changes in settings and locations as the script is developed and completed. But these are the four themes that are explored and illustrated in the film. Each theme will be examined by a dramatic narrative story designed to reach both an elite/intelligent and a younger generation of emerging viewers curious about China.

  1. Rural to Urban
  2. Summary: People on the Move

    This story is filmed in China’s urban coastal cities and discusses the loss of innocence. It describes how the experience of living in modern China has reinforced new ways of thinking, living and working. We will follow a young man from a primitive state of subsistence farming in the distant countryside into the urban jungle, without his wife, children or traditions. We will demonstrate the effect and record the scale of massive demographic change over the last decade for some 300 million such persons.

    • Experience of Modern China
      • Industry
      • Loss of Community
      • Loss of Family
      • Loss of Traditions
    • Thinking in Modern China
      • Individual
      • Subjective
      • Power
      • Consumer
  3. State Owned to Free Enterprise
  4. Summary: Central Planning gives rise to corporations

    This story filmed in a Wal-Mart in Middle America and at various Chinese factories. It discusses how China is connected to the global economy. It traces a number of commonplace products back to their origin in China and documents the new industrial life that has come to define the Chinese economy. We will meet workers, CEOs and trace the route from factory to ship to store. The end of central state enterprise has brought a flood of new companies.

    • Inside Wal-Mart
    • Outside China’s teeming factories

  5. Communist to Consumerist
  6. Summary: The power of the Communist Party is shifting to the all-powerful consumer

    This story filmed on Shanghai’s equivalent of Rodeo Drive discusses how the pursuit of the self and material gratification has given rise to the modern Chinese consumer culture. Old ideas about the soul, religion and character have been gradually replaced by the appearance of considerable wealth. It concludes with observations about the new celebration of self and ends in the collapse of self; but not before it becomes a surrogate divinity and the object of idol worship. We talk to Chinese celebrities, billionaires and members of the Central Committee of the Communist Party to gage their opinions.

    • Ideology to Personal Values
    • Communist Community to Individual Personalities
    • The New Nature of Self as Consumer
    • Shame and Control to Autonomy and Experience

  7. Anti-religious to Spiritual
  8. Summary: From Official State Atheism to Spiritual Choice

    This story filmed in the five different faith communities in present day China discusses the way in which the object of spirituality has been changed from being something closed and persecuted to something open and respected, even valued for its contribution to a ‘harmonious’ society. Such views and forms of worship will be viewed from the temples, shrines and house churches where real believers live and pray. We will see first hand how spirituality is transforming China in every faith community.

    • Spirituality from Below
    • Spirituality from Above
    • Protestant, Catholic, Islamic, Buddhist, and Daoist lived experience


The aim of this project is to reach emerging influentials both in the United States and abroad. Prior to the release of the film and companion book, we will be host town hall meetings in leading places across the United States on the thesis.

Development DVD Budget

Production Personnel
Executive Producer 175,000
Producers 250,000
Direction 175,000
Cast 50,000
Personnel Subtotal 650,000
Story Rights 3,500
Screenplay 150,000
Pre-Production Subtotal 153,500
Production Staff 182,500
Set Operations 147,500
Property 20,000
Wardrobe 2,500
Makeup and Hairdressing 500
Electric 35,000
Camera 50,000
Sound 15,000
Transportation 165,000
Location 150,000
Production Film and Laboratory 8,000
BTL Travel 25,000
Production Subtotal 800,500
Editing 125,000
Music 20,000
Post-Production Sound 7,000
Post-Production Film and Laboratory 7,000
Titles 2,000
CGI 15,000
Post-Production Subtotal 176,000
Insurance 85,000
General Administrative 65,000
Completion Bond 20,000
Administrative Subtotal 170,000
Contingency 50,000
Marketing 500,000
Total 2,500,000

Book and Bible

A companion book, China: In Transition, to the movie in popular style, written by the lead group but drafted by an award-winning journalist, will accompany the film documentary. The book will be aimed at a broad market with best-seller status and with deep praise expected. It will have incredible endorsements from renowned leaders.

Along side the film documentary and companion book is a new translation of the Chinese Bible. The 1909 version now in use is being redone and updated and will be ready for publication in about a years time. We have access to the Chinese translation team of scholars doing that Bible. We have had high-level discussions in China with the proper officials that suggest if we co-produced with a leading university we could co-publish it and sell it in bookstores and churches throughout all of China and of course in Asia through normal channels.

The combination of the best, thoughtful documentary on China, a companion book, and this new Bible make for a powerful group or ‘bundle’ of products that can be marketed and sold together and/or alone.

Commencement Address

I was asked by your esteemed interim president, my friend, Luder Whitlock, to stand-in for our President today. That seemed an impossibly tall order. When I told my sons, they laughed and said I suppose you are sort of a Bush-heavy as opposed to Bush-lite. My young daughter half facetiously asked if this meant I was a number two. The one thing I always liked best about graduations but rarely experienced is the short speeches. Does anyone really appreciate some so-called expert droning on and on under the heat of the mid-day sun when all you really want to do is celebrate with your families. So, I promise to be short and stay focused.

To be honest, there are only two commencements I even faintly remember; my own, in 1974, where Senator Mark Hatfield gave a confession or actually lamentation about being between a rock and a hard place in the political culture of Washington, DC; and, some 25 years later in 2002 when my oldest son, graduated from Yale. Governor Pataki of New York, whose son Teddy was in the class, offered a moving ten minute charge on courage after 9/11!

Last year at Stanford University, Apple Computer, CEO, Steve Jobs gave a short graduation address that become instantly famous and circulated widely on the internet. He told three deeply personal stories and concluded: You need to connect the dots, by staying young and staying foolish. I recommend his hip speech to you but do not think its recommendations nearly sage enough.

In a similar vein, I have three stories for you this morning but first and foremost, I want to congratulate YOU, the graduates, on a job well done. Equally important, we all should say a loud and pronounced THANK YOU to your parents, grandparents, friends and families who have provided and prayed for you in this attainment. Max Dupree, the wise, Christian CEO of the Fortune 500 furniture company, Herman Miller, who was also a college and seminary president I should add, in his book, Leadership Jazz, said: ‘Pointing the way and saying thank you is the first and last word of true leadership.” Remember that good advice. Being nice, polite and grateful is no more difficult than the opposite. In fact, doing so pays large rewards. God told us to have a joyful heart: how do you get one? It starts with praise and thanksgiving, goes through forgiveness and leads directly to servant leadership: cause and effect.

Here are my three short stories for your guidance. The first one took place in Europe nearly five hundred years ago; it involved our ancestors in the Protestant Reformation. Both Luther and Calvin used the word vocation or calling from Berufung in German with reference to someone calling or addressing one, vocally. The one who called was the living God. Their view was different than the prevailing medieval sense of a restricted calling of a person to leave their work and enter a monastic way of life or holy office. The Reformers held that Christ’s crucifixion and resurrection from the dead was a total victory that included the salvation of both life and nature. Natural work was already sanctified, made holy, and did not require prior or additional sanctification dispensed by a church or through sacraments. Since then, everywhere human beings stand and live Coram Deo, directly before the face of the living God who summons them to serve Him and their neighbors by doing what they do: as farmers, craftsmen, kings, housewives or merchants. Daily work itself became a vocation; it needed no further spiritual dimension.

Tie this to the doctrine of the sovereignty of God. It is critical for understanding of role of the Christian –you graduates — in the world. The question I put to you is this: does this sovereignty relate to soteriology as well as your individual salvation? Or has God’s sovereignty been slowly shoved to the margins and effectively privatized? If linked to creation it has wide implication. The biblical phrase, "Christ is Lord of All" means more than lordship of narrow individual behavior or for one hour on Sunday morning in a church pew. The phrase has a cultural mandate also impelling action in society and in the economy. The possibilities are manifold, all with an option to serve God or to bend to another manmade idol. Faithful stewardship is careful administration of what has been entrusted to you by someone else who is higher than yourself. In Aristotle the "oeconomia" which translates as stewardship did not have to do with some separate category of ethics that can or cannot be related to real life decisions. It had to do with the whole character of the actor. We have removed this normative element.

The question of this story of old for you gathered here is simply: what is your calling? Listen … even now for the quiet voice of Him who made and sustains you. And then pick up your nets and have the courage to follow Him wherever it takes you. If you need encouragement I suggest you read N.T. Wright’s new book, Simply Christian. He supplies a focused view of the meaning of Easter:” When Jesus emerged from the tomb, justice, spirituality, relationship and beauty rose with him. Something happened in and through Jesus, as a result of which the world is a different place, a place where heaven and earth have been joined forever. God’s future has arrived in the present.”

While you may think you have finished your education today or that you now posses a terminal degree, I have to tell you that nothing could be further from the truth. You see the global economy that we compete in and the very nature of free enterprise and competition mean that you all will have to become what I call, “perpetual learners”. Because the minute you stop learning, you die. I do not want to leave you with an impression that this is just mad activity, memorizing more facts or cramming for more tests as cogs caught up in the hustle and bustle of modern life as we know it. Josef Pieper once wrote an elegant work that suggested that leisure is nothing less than “an attitude of mind and a condition of the soul that fosters a capacity to perceive the reality of the world. “He demonstrated that leisure has been, and always will be, the first foundation of any culture and he observed,” in our bourgeois Western world total labor has too often vanquished leisure. Unless you regain the art of silence and insight, the ability for non-activity, unless you substitute true leisure for our hectic amusements, we will destroy our culture, its collected wisdom – and ourselves.” So graduates, continue to set time apart for thinking, for praying and for re-creation. Be perpetual learners!

My second story began a number of years ago on a beautiful and balmy, tranquil spring day as we flew into the Bahamas and went through the gates of the private Lyford Cay Club. My heart raced as I was about to encounter the world’s greatest investor for the first time. I was not there, as so many before me had trekked, to gain some useful perspective on the market or to discover which global companies to invest in. My conversation was even more profound. Over time, I was privileged to have many conversations with him and to embark on a friendship that turned into a challenge.

Sir John Templeton was a humble, yet penetrating soul. His gaze was truly like that of a sage, of a person both entirely other-worldly and so infused with spiritual information that he exuded, well—joy. He enjoined me in a direct yet simple challenge: to demonstrate how enterprises and the entrepreneurs who started them are guided by a spiritual force rooted in faith. I took up his challenge and with his generous support and my own endowment, founded the Spiritual Enterprise Institute.

What challenges you? What do you want to be remembered for when all is said and done? Do not fall prey to the temptations of material life, of work as toil or living without a purpose. Make yours a purpose-driven life. Make a difference not just for yourself but for a Kingdom that lasts for eternity. It may not make you popular, rich or famous—that was never promised. As C.S. Lewis put it in his tale of Narnia, captured now in film, “He doesn’t like being tied down—of course he has other countries to attend to. It’s quite all right. He often drops in. Only you mustn’t press him. He’s wild, you know. Aslan is not like a tame lion.” Aided by that wise and magnificent lion, the children lead Narnia into a spectacular climactic battle to be free of the wicked witch’s glacial powers forever!

You have achieved a personal milepost today but, my friends rarely do you achieve results entirely from your own effort. You, like I, will or have been blessed in this life with loving parents, a helpful spouse, many friends, wonderful children and a community of persons, a network of colleagues and supporters, a free country, the list goes on and on — all who have both believed and invested in you. For this, be eternally grateful and fully acknowledge that no person is an island nor are they formed of their own being. We are works in progress and God has designed meaning in it all. He is working those purposes out throughout the ages, even here and now. Be willing to play your part in His story.

Neither is a life entirely one’s own product. Rather it is shaped by the tides of the times and one’s own background, experiences, and mentors. Having been reared in an observant home and raised in the cradle of Reformed faith, I was never outside of belief. My intellectual pedigree, interdisciplinary training and a life of real world work led me to undertake the tasks I have been given. As an academic, who early on became a “recovering academic”, I was perhaps fortunate to leave the ivory tower to join the blood, sweat and tears of the active life. Wherever I have been involved, in politics, investment banking then diplomacy, and for nearly the last two decades as a strategist in the corporate world, I have tried, often failed, and tried again, to be a Christian. From Davos to Aspen I have had the good fortune to interact with and to come to know senior business people, keen on inventing the future. I have come to know them and their companies, intimately and to advise them while peering into their souls. What have you been challenged to do? When they read your obituary sixty or seventy years hence: what will your lasting contribution be?

My final act; I grew up singing old and new hymns. The songs I most recall, include the likes of Hide it under a Bushel, No, Jesus Loves Me, and Deep and Wide. For me, faith was and remains the ultimate purpose for living and serving. Each summer my family would travel from the heat and humidity of the inner city to vacation at a camp in the Adirondack Mountains, on what is literally, Lake Pleasant. The image still reverberates in my over-educated mind especially on sleepless nights. It was as cool, calm and refreshing a place as is a heavenly breeze. That is because it likely was. It was a religiously inspired but nondenominational setting. They called us gospel volunteers—as if we were free and roving ambassadors for Christ. I guess I still am. I recall my last summer there, then as a counselor. Every Sunday morning at chapel, set high on a hill overlooking that ever pleasant lake, we would march in carrying about a hundred different flags. They were from nearly every country around the globe — from America to Zimbabwe. As they paraded forward to the stage the orchestra would play and the ebullient choir would sing in the loudest and most melodious voices I have ever heard, Crown Him with Many Crowns… Thy praise and glory shall not fail for all eternity.

My prayer for you as graduates today is that you too will have your Lake Pleasant, as a reservoir of strength; and that you will remember this special place of higher education, the character and friendships formed here, so that you can give all the Glory to God. Because in the end, life is a calling, and taking on your challenge is a nothing more than a long doxology; from Him all blessings flow and to Him they shall return.

Being Generous

Being Generous

The Dalai Lama

“If you want others to be happy, practice generosity and compassion. If you want to be happy, practice generosity and compassion. This book will help you accomplish both.” (requested) Tibet House NYC

Prahbu Guptara, author of The Hindu World

“Gandhi, Jesus, King – in fact all of the greatest leaders in human history – lived and communicated the view that generosity can help us to discover life’s true riches. Dr. Malloch authoritatively guides us on a wonderful journey of discovery through areas we may initially think are foreign, but which we recognize with a sudden shock are actually our long forgotten home.” Prahbu Guptara

Professor Abdul Aziz Said, Chair Islamic Peace, School of International Service, American University

“We discover peace through (and in) the realization that the whole of existence is reflected in the parts, and from the parts comes the ever-greater whole. What Ted Malloch has done with the understanding of “gift” rooted in human generosity is help us discover that the whole world needs the whole world.”

His Eminence Francis Cardinal George, O.M.I., Roman Catholic Archbishop of Chicago

” At its best, generosity is a preparation for love and a sign of love’s influence in one’s life. In his extensive reflection on generosity, Dr. Malloch encourages the reader to recognize that what has been received from God is to be shared generously with others.” 312-534-8200 his asst

Wing Tu Mei, Professor of Confucian Thought, Harvard University

“In a world where information is confused with data, data with knowledge, and knowledge with wisdom, the voice of wisdom is rarely heard and the practice of putting wisdom into action is rarely observed. Ted Malloch’s observation of generous acts by people with sympathy and compassion is a precious account of the human spirit in a time when materialism, commercialism, and egoism feature prominently in the global community. It is a book of pure wisdom.”

Stephen G. Post, Ph.D., Director, Center for Medical Humanities, Compassionate Care, and Bioethics, Stony Brook University

“Theodore Malloch is among the most creative minds of his generation when it comes to enhancing our insights into the role of virtues in economic success both at the individual and the systemic levels. Without the “hardy” virtues such as courage and perseverance, and without the “compassionate” virtues from kindness to forgiveness, there is really no way to function optimally, and in the end, we fail. Virtue indeed is its own reward, and yet it also tends to create wealth, health, and happiness, and this is pure gain. Malloch does a beautiful job of weaving together theory and narrative, exhortation and science on generosity. Bravo! “

Todd Harper, Executive Vice President, Generous Giving

“We need to see ourselves, first and foremost, as receivers—grateful, joyful recipients of Christ’s grace—and only secondly as givers. I know this book can serve you on your journey of generosity. Read it and become a generous giver.”

Oprah Winfrey “O” thru Rich

“This book is a true gift. It can bring the whole world together in acts of generosity.”

Bill Enright, CEO, Lake Institute on Faith and Giving, Center on Philanthropy, Indiana University

“Wise people take time to think. In this book Theodore Malloch invites us to listen in as he reflects publicly on generosity as both a religious virtue and a philanthropic practice. In his musings he explores the religious underpinnings of generosity as exemplified in the worlds great religious traditions. The upshot is a book captivating and informative in its perusal of history, theology, economics, sociology and philanthropic practice. His global perspective on giving also rescues the word generosity from the banality which currently threatens its frequent usage in philanthropic circles. Malloch concludes with a series of inspirational journalistic snapshots of people who actually model the art of giving and living generously.”

Paul Schervish, Director, Center on Wealth and Philanthropy, Boston College

“Increasing numbers of individuals are approaching, achieving, or even exceeding their financial goals at younger and younger ages. A level of affluence that had been rare has come to characterize large groups and even whole cultures. In the context of an ongoing intergenerational transfer of wealth, the demographic and spiritual trends that are motivating wealth holders to allocate an ever-greater portion of their financial resources to charity is demonstrable. This insightful book highlights more than a trend. It explores the inner life animating the current wave of generosity, tracing the flow of grace from soul to community to world.”

Richard Mouw, President and Professor of Christian Philosophy, Fuller Theological Seminary

“We need this book. Not only does Ted Malloch hold up for us wonderful past models of generosity- -he also shows us how a generous spirit is crucial for
human flourishing.” Rich Mouw rjmouw@FULLER.EDU

Dennis Whittle, CEO, GlobalGiving

“Why give? Regardless of what religion or philosophy you practice, this book will help you find your own answer to that question. Ted Malloch’s own journey from ‘keeper’ to ‘giver’ will inspire you no matter what faith you practice or what philosophy guides your life.”

Brian Gallagher, President & CEO, United Way

“In ‘being Generous’ Theodore Roosevelt Malloch offers a valuable look at the history, intent and spirit of giving, and he advances a powerful idea: Giving is not only natural, but also a fundamental part of moral health. Malloch contributes generously to the pursuit of a civil society. This book is a rewarding read for those who invest themselves in advancing the common good.”

Israel Gaither, National Commander, The Salvation Army

“The Salvation Army’s partnership with both private and public philanthropy continue to bring comfort to the needy, while the proclamation of God’s redemptive love offers individuals and communities the opportunity to enjoy a better life on earth and a place in Christ’s everlasting Kingdom. being Generous articulates the American relationship to charitable giving in a most powerful way.” Thru member of the board

Joseph Johnston, Jr. Retired Partner and Chief of Litigation, Drinker, Biddle Reath LLP,

“ This book is a fascinating and historic work. Ted Malloch develops with great sensibility and clarity the spiritual, psychological, and social roots of generosity. This argument is both compelling and inspiring. It simply put, will make you a better person.” Joe Johnston

Pere Nicolas Buttet, Moderator and Spiritual Director, Fraternite Eucharistein, Switzerland

“In reading and then practicing this book you will understand what generous virtue is — justice and fair dealing — as it leads to true happiness. I pray that the Lord will look kindly on this great gift, presented by His faithful servant.”

Dr. J. Stanley Matson, Founder & President, C.S. Lewis Foundation

“In this age of rampant consumerism, fueled by unprecedented prosperity and a prevailing social climate that all too often exalts the self above the common good, Dr. Malloch unashamedly offers the reader a highly engaging and informed invitation to share in the joys of a lifetime characterized by intentional and generous giving. In so doing, he has himself tendered his readers nothing less than a most generous gift, one that becomes increasingly evident in the reading.”

“Malloch is absolutely right that generosity is a critical virtue for human flourishing. Without it the mediating structures that make possible our lives would be next to impossible. Faith-based contributions to civil society are indeed rooted in what he forcefully describes and here advocates!” Jay Hein, Director of the White House Office of Faith-Based and Community Initiatives

“We must give as God gives. But joyful generosity infuses that message with a cheerful challenge to view every part of one’s life as something to be received gracefully from God and shared generously with others. This book is a way to start down that path.”— Francis Cardinal George, O.M.I., archbishop of Chicago

“In a world where information is confused with data, data with knowledge, and knowledge with wisdom, the voice of wisdom is rarely heard and the practice of putting wisdom into action is rarely observed. Ted Malloch’s observation of generous acts by people with sympathy and compassion is a precious account of the human spirit in a time when materialism, commercialism, and egoism feature prominently in the global community. It is a book of pure wisdom.”— Tu Weiming, Harvard-Yenching Professor of Chinese History and Philosophy and of Confucian Studies, Harvard University

From the Inside Flap

Through the ages, the world’s cultures and great religions have in profound, though different, ways sought to answer the big question: How should we live? Part of the answer has to do with how we ought to treat others, particularly those who are most in need. Ample evidence suggests that giving selflessly to others lies at the heart of what it means to be a thoughtful and moral human being. In Being Generous, author Theodore Roosevelt Malloch leads an exploration of this important concept of generous giving.

Weaving together narrative, history, social theory, biography, scientific research, and practical guidance, Being Generous offers readers unique insights into what it means to live a truly generous life.

Includes Profiles of the Following Exemplars of Generosity:

The Pew Family
Calouste Gulbenkian
Wafic Rida Saïd
Li Ka-shing
The Maclellan Family
Sebastian Spering Kresge
George Cadbury
William Wilberforce
Johann Sebastian Bach
Felix Mendelssohn
J. C. Penney
John Walton
Henry Ford
Eli Lilly
Jeffrey Skoll
John Templeton
John D. Rockefeller
Gary Ginter
Andrew Carnegie
Joan Kroc
Mother Teresa
Bill and Melinda Gates
Warren Buffett
Oprah Winfrey
Michael Bloomberg
Arthur Blank

Free to Choose- -Linking Liberties: Economics, Politics and Religion

Presentation live on Radio Free Europe
Prague, The Czech Republic
September 28, 2009

Freedom of religion and economies actually go together, like—well you fill in the blank. One is not possible without the other because they emanate from the same source. They not only gravitate in a similar and related direction but they originate from the same basic truths. As two sides of the same coin we are finding in the 21st century a new fact: nations and economies that witness religious liberty have greater economic freedom and the opposite, namely, countries with the most economic freedom also engender more religious liberty and democracy. The reason for this can be summed up in a single word, and that word is, competition.

Freedom of religion in the Western tradition and evidenced in Western nation-states is generally considered to be a fundamental right. As such, it is underscored by a guarantee of respective sovereign governments to allow the freedom of belief for individuals, including women and children, as well as the freedom of worship for all persons and groups. Logically, freedom of religion also includes the freedom not to follow any religion at all.

In the 1948 Universal Declaration of Human Right freedom of religion is defined as “Everyone, including women and children, have the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief, and freedom, either alone or in community with others and in public or private, to manifest his religion or belief in teaching, practice, worship, and observance.”

This definition makes it abundantly clear that freedom of religion is a legal concept related but not completely identical with toleration, diversity, or the separation of church and state. Indeed, throughout history even for states that allowed for freedom of religion that theoretical freedom was often abrogated or limited and included such acts as punitive taxation, repressive social legislation, or even political disenfranchisement.

In the last three decades the concept of economic freedom has grown out of the writings of notable, mosly neo-classical econmists. The agreed cornerstones of economic freedom are: personal choice rather than collective action; voluntary exchange coordinated by markets rather than allocation via the political process; freedom to enter and compete in markets; and protection of persons and their property from aggression or harm by others.

While there is much debate on which precise policies promote economic freedom most, there is more or less agreement that the size, expenditures, and taxes of government, and the right to enterprise formation along with the legal structure and security of property rights are most essential to its flourishing. Access to sound money and transparent capital markets, freedom to trade internationally and minimal regulation of credit, labor, and business, also count a great deal.

The nation-states / economies with the most economic freedom, witness individuals that are free to work, produce, consume, and invest in the way they please, and their freedom is both protected by the state and unconstrained by it. In locations of economic freedom which can be measured and scaled, there are free public and private companies, in other words, enterprises that flourish as a result of the protection of both the rule of law and enforced codes of business. Business law and capital market access are twin pillars that allow entrepreneurs the freedom to start businesses, merge businesses and sell businesses in freedom and without political interference or undue regulation.

Now the question must be broached because the data assebled is obvious for all to see: Why do those countries with the greatest degree of religious liberty also exhibit the greatest measure of economic freedom? Further still, those same places give rise to and apparently encourage entrepreneurs who benefit themselves, their companies, employees, shareholders, consumers, stakeholders and the entire community by growing enterprises as engines of development from which all benefit.

Why, we must ask is this the case; and why are we so blinded to acknowledge these facts? The corollary, namely that religious liberty begets economic freedom is now provable. If we desire more economic freedom we need to begin by insuring religious liberty. If you want economic growth and development we need to tolerate and permit religious groups and persons to do as they chose. Competition for religious activity is as healthy as for economic activity. Those states that fail to allow economic freedom are universally those that do not permit religious liberty. And likewise, those that fail to encourage religious liberty often, almost always it turns out, fail to give rise to economies of prosperity with economic freedom. Some countries may have mineral or other wealth or large productive workforces but they cannot sustain their economic growth. Why? It circles back to the link between religious and economic freedom.
spiritual capital is in a sense is the missing link. Lord Keynes, it is said, once remarked that for centuries we had kept religion and business in “different compartments of the soul”. By breaking those divisions apart and seeing their connection we overcome one of the dilemmas of modernity. For economic growth to take place, capital is necessary. Money buys tools, pays labor, and builds infrastructure. Obviously, to this is added human capital, mostly in the form of education and personal betterment. But for countries / economies to make efficient use of their reserves, spiritual capital is also required.

Like all forms of capital its formation depends on delayed gratification, why else have capital. Future benefit is thereby weighed against immediate consumption. In the same way money capital accumulates in savings accounts and investments, so too spiritual capital is built up, over time through habits of the heart and realized in mediating structures, such as families, churches and religious institutions, social groups, schools and in the wider culture. In that sense, when critics complain about the lack or unequal distribution of capital in the modern world they too often forget that spiritual capital is as imporant as other forms of capital to restore communities or build nations. Here ia a truism that has become more apparent as secularization theories and modernization models have fallen by the wayside or been overcome or contradicted by factual reality: freedom and responsibilty lead to capital formation. Sense of purpose, moral purpose, primarily established by and in religious freedom gives rise to economic freedom and the formation of every kind of capital.

In the West an understanding of natural law has evolved from Aristotle’s notion of private property to Grotius, on to Locke’s trinity of life, liberty and estates, to the Scottish Enlgthenment’s described moral sense tied to benevolence and self-love and the right to contract with others. In Smith, the desire to engage in mutually beneficial voluntary exchange of private property is viewed as an innate propensity of man. Modern commerce in that sense then grew out of this rich religious tradition and is sustained by it in a spirit and morality of democratic capitalism. In the 21st century the abiding question may well be for an integrated global economy and a world of increasingly democratic political systems: does your religious liberty match your economic freedom and vice versa? If not, why not? And if so, how so? Closed religious systems foul economic development and stunt growth. Closed economic systems are unkind or worse to religious sentiments and practice. You need both to sustain human flourishing.

The analysis of this set of new comprehensive data demonstrates that the countries with the least religious liberty also suffer the worst economic freedoms and are lacking in political rights. Who are they? Let’s name names: Burma, China-Tibet, Eritrea, Iran, Iraq, Maldives, North Korea, Saudi Arabia, Sudan, Turkmenistan, and Uzbekistan come in as the worst of the worst. But following not far behind are: Afghanistan, Bangladesh, Belarus, China, Cuba, Mauritania, Pakistan, Palestine, and Vietnam. For country specifics read the national surveys in greater detail in our book, Religious Freedom Around the World published in 2008.

When you look at religious freedom and economic freedom in comparison to civil liberties ratings a number of countries pop out as especially problematic and include: Bangladesh, India, Maldives, Serbia, and Turkey. When compared to overall religious libery ratings, another country sticks out as far worse, Kosovo.
So what are the implications, then?

  • For companies? Corporations, small or large, national, multinational or digital exist and operate on the basis of trust. Contracts are honored, relationships continued and sales increased only to the extent any given company lives up to its word and on the basis of its earned reputation. Companies must therefore more than any other actor in society uphold economic freedom and see that it is linked to religious liberty. They should do business only and to the extent that it opens up economies and insures religious freedoms. Businesses need to step forward with moral courage and say to these worst regimes, change your ways or we will not do business here. They would not accept these practices or prejudices at home or internally, so they should muster the courage to say something is wrong and back it up with words, muscle and hard cash. They should be willing to do this alone, in groups or as blocs, coordinating and announcing efforts to bring about good.

  • For governments? Governments who have made religious liberty and economic freedom a priority, and there are an increasing number of them across the whole world not only in the developed countries, need to establish a policy in foreign policy called linkage. This same policy has worked in the past against the Soviet Union and South Africa. The stakes are the same and the effect could prove remarkable. Bilaterally and regionally countires need to speak, back-up and enforce their words with real policy, investment, trade flows and development assistance based on hard criterion. Too much of the effort here has been humanitarian work, which is surely good but what is needed is foreign policy not some stand afar office to take care of complaints or rescue individuals. A pact among collaborative countires rooted in such convictions makes infinite sense. Multilaterally this linkage should move front and center in the United Nations, the Human Rights Commission discussions and in every nook and cranny of foreign policy. It should be on the agenda of the G-8 and at summits wherever they take place.

  • For the international financial institutions? For too long the IFIs, namely the World Bank Group, the International Monetary Fund and the regional development banks have ignored both economic freedom and religious liberty. Rarely, if ever have they linked them. They neither study the cultures they operate in or the religious faith traditions of their clients and members. That should change. Loans should be made on the condition of certain standards of both economic freedom and religious liberty. If the standards are not met then the countires will suffer until they change or amend their ways. The World Bank should establish a unit not only on corruption but on this critical linkage in its research department and then operationalize the results. Donor countries should insist on high standards or pull back on their commitments.

  • For capital markets? The integrated global capital markets are increasingly sophisticated and driven by economic performance. Sovereign debt is big business. Banks should make loans based on factors that include religious liberty and economic freedom and the ratings should gage such rankings. The world’s capital markets should be closed off to countries that do not meet minimum standards. At the least they should be forced to pay premimums. Money talks and this is one means of forcing change.

  • For trading regimes? The World Trade Organization and other trading bodies of a regional or bilateral nature need to more adequately reflect religious liberty and economic freedom and link the two. Trading with countries that do not respect human rights, either in the religion or economic spheres should have penalties attached. Fines, tariffs, or even economic sanctions should be considered and enforced in order to sway public opinion and to ultimately change behavior.

  • For civil societies around the world? In the past few decades the emergence and significance of civil society in the form of mediating structures located between the individual and the State have come to the fore. Without these little platoons there would be no structure for freedom, no civil rights, no advancement or progress in humanity. Nongovernmental institutions and organizations must be allowed and permitted to thrive. The encouragement of this sector and the role it plays in society needs to be more appreciated and highly valued. It is a bulwark against tyranny and injustice. It should also be a force for religious liberty and economic freedom. As such it should be favored and fanned, financed and bolstered but it must in turn do the same for religious liberty for people everywhere and for the benefits of an open economy.

  • Trade not aid is the real engine of enterprise. Interdedendency trumps dependency everyday, everywhere. Countries or economies that dwell in the never-ending cycle of poverty are often those with the least freedom of religion or economy. As totalitarian regimes or kleptocracies, they are too often either cults of personality built around the leader of the opportune moment, or a defunct ideology. Some are desparate places that still exhibit tribalism and iternacine warfare, or have come to live like welfare queens – off the fat of the state, which in this case turns out to be the aid system of guilt-ridden developed countries, who are quick to give aid but slow to build or invest. These regimes remain stuck, mirred in the past with no where to go and no way to break free, unless they step – out into the risky zone of freedom. If they start with religious liberty they will also get a degree of economic freedom. And if they commence changes in their economic freedoms, they will soon give rise to religious demands for liberty. The mistake is trying to separate things which are forever joined, that naturally go together. Linking religious liberty, politics and economic freedom to form enterprises of lasting value is the clarion call of humane people and enlightened nations today, in every country, every region, and on every continent.

Dr. Theodore Roosevelt Malloch, Founder and Chairman, Spiritual Enterprise Institute

Economic Development Needs Religious Freedom

In our increasingly religious world, religious freedom is important because it shapes the lives and sufferings of hundreds of millions of people. But increasing empirical evidence, including the recently released Heritage Foundation-Wall Street Journal Index of economic freedom, also suggests that it is an avenue to many other human benefits, including most notably, economic ones. Consequently, hard nosed politicians, economists and businesspeople need to take it more seriously.

Our current survey of a hundred countries and territories finds that religious freedom correlates strongly and significantly with Freedom House’s civil liberty index (.862) and political liberties index (.822), with Reporters Without Borders’ press freedom index (.804), with the longevity of democracy (.646), and the Heritage/WSJ scale of freedom from corruption (.608).

Some of the most striking relations are with economic wellbeing. The countries with the worst religious freedom records — Burma, China-Tibet, Eritrea, Iran, Iraq, the Maldives, North Korea, Saudi Arabia, Sudan, Turkmenistan, Uzbekistan usually have terrible economic records, though Saudi Arabia has oil. A similar relation holds at high levels of freedom, and for those in the middle.

This also holds for economic freedom. In statistical terms, our religious freedom scores have a correlation of .656 with the 2008 Economic Freedom Index. Also, the level of earned income for females, measured in purchasing power parity dollars, goes down as government restrictions on religious freedom go up (– .565), and the same is true for males, though to a slightly lesser degree (– .535). Economic wellbeing, as measured by human development indices, is also inversely related to such restrictions, as is having fewer physicians (– .251), higher infant mortality (.437), and a higher percentage of underweight children (.293). Brian Grim, of the Pew Forum on Religion and Public Life, who did these calculations, found more than one hundred statistically significant relations.

These measures are, of course, merely correlations and do not establish that one causes the other. However, the scores reflect more than the intuitively plausible idea that different freedoms often go together: there are good indications that religious freedom contributes to good economic outcomes.

In a recent American Sociological Review article, Grim, together with Roger Finke, conclude that their data show that “while governments typically view religious regulation as a necessity to maintain order and reduce potential violence, the irony is that more regulation leads to increased persecution, which means less order and more violence.” Since disorder and violence are known to be bad for economic growth and wellbeing, then religious repression is also.

Economists Robert Barro and Rachel McCleary, have examined relations between religious beliefs and attitudes to cooperation, government, working women, legal rules, thriftiness, and the market economy, and found that many religious beliefs are closely associated with good economic attitudes, where ‘good’ is defined as conducive to higher per capita income and growth. They also find that religion has a demonstrable effect on economic development by fostering religious beliefs that influence thrift, a work ethic, honesty, and openness to strangers. In turn, religious freedom highlights personal responsibility for religious commitments, so increasing the degree to which individuals actively accept their core ideas, concepts, worldviews, habits, virtues, social engagements, and behaviors. In doing so it fosters what economists are now calling “spiritual capital.”

The evidence is that closed religious systems hamper personal responsibility and therefore economic development. This means that, if we want prosperity, then we should promote religious freedom. If we want economic growth and development, we need to allow religious groups and people to follow their beliefs. Companies and other economic actors should realize the importance of religious freedom, and seek to do business that builds and reinforces it.

This is also important for negotiations with religiously repressive regimes. Some, like Mugabe’s Zimbabwe, care not a whit about their population’s wellbeing but others, such as China and Vietnam, desperately want strong economic growth, not least because their legitimacy depends on it. If they can be shown that their religious repression actually hampers their development goals they might be persuaded to do something even a good bit more about it.

Of course, China might respond that it needs no lessons from anybody in how to promote growth. But China is a poor country, with a per capita income about two thirds that of Botswana’s: it’s just that when you have 1.3 billion capita then you have a colossus of a demoninator. Mainland China is far outpaced by religiously free Taiwan and Hong Kong. Areas within China, such as Tibet, that are worse in religious freedom are correspondingly, worse economically.

Tom Farr, previously the Director of the State Department’s Office of International Religious Freedom, describes in his forthcoming World of Faith and Freedom the continuing “strong diplomatic distaste for understanding religion as a policy matter.” This distaste needs to be overcome. Religious freedom needs to be moved from the fringes of diplomacy, and economics and business, and given a centrality that reflects its growing importance; otherwise we will be ill equipped to face a modern world in which religion increasingly shapes political and economic actors.

Paul Marshall is Senior Fellow at Hudson Institute’s Center for Religious Freedom and editor of the Center’s just released Religious Freedom in the World. Survey rankings are available at And Theodore Roosevelt Malloch Chairman and Founder, Spiritual Enterprise Institute

The Deeper Roots of Our Current Financial Crisis

Address to the TWU Faculty
March 5, 2009

Almost all of the liberal and conservative commentators on the Great Recession and Financial Collapse/Bailout of 2008 have neglected the cultural and moral reasons for this economic mess. Unless those causes are addressed, all the finger pointing and all the proposed “solutions” will be like putting band-aids on a tumor. Let me be as specific and concrete as I can.

In the 1980s, Michael Lewis wrote a comedic book called Liar’s Poker that depicted the excesses of Wall Street at my old firm, Salomon Brothers. He recently updated it with an article entitled, “After the Fall, Greed, Stupidity, and Really Bad Luck: How Wall Street Did Itself In.” The bottom line is Wall Street learned next to nothing, from the past, the scandals, schemes, downturns and the criminality. The materialism and culture of greed was just too addictive. To quote Lewis’ last line, “Something for nothing. It never loses its charm.”

Certainly macroeconomic weakness, heightened economic imbalances, over-leverage and extreme credit risks have contributed to the unbelievable levels of market volatility we have witnessed in this downturn, now become a near collapse. Almost all financial experts and many policymakers have started to cry out for financial reforms, greater financial transparency and measures to rebuild confidence. Trust is needed in the financial architecture and institutions, regulatory agencies among them, that underlie our now highly interconnected global economic system. Yet this is why the sage market advisor, David Smick spells out so explicitly in his, The World is Curved, “The distasteful reality, is that there are no quick fixes for the global credit system’s dilemma, which is why the world has become a dangerous place with so much economic heartache.”

Let’s be completely honest since so much is at stake. Why did the financial giants: investment banks, hedge funds, ratings agencies, large investors for that matter, get us into this “risky business” and dangerous situation in the first place? The answer in a word, actually a deep-seated and virulent vice, is greed.

The outcries for punishment, heads rolling, massive government regulations and bureaucratic solutions are only now beginning. There will be dozens of plans and much hand wringing. Congress and Parliaments will over react and yet more firms and perhaps half of all hedge funds will fail, hurting yet more people and dragging down the economy as a whole. No one can even predict what will happen to the credit default swap market, which totals just shy of a quadzillion dollars (do the math).

It is characteristic of the age in which we live to see the ‘moral dimension’ as a matter of following yet more rules or dictated regulations. The ancients however seldom referred to rules or even principles. For them a moral life was not a matter of what you do but of what you are. The fundamental notion was not duty but virtue (Latin virtus, Greek arête) and the task of the moral person was to describe the virtues that we should emulate and teach. This is how Socrates, Plato and preeminently Aristotle conceived of the moral life. St. Thomas Aquinas synthesized it into Christianity. The words of the Roman, Cicero closely correspond, as do those of the great sage Confucius, in China. Like him, the Greeks, Romans and Christians all attempted to find a basis for moral conduct in human nature. They all believed that the core idea is virtue.

Today ‘virtue’ is literally and figuratively missing from our public vocabulary and the idea of ‘the moral’ has been either trivialized or totally relativized. No training session or quick executive briefing can revive ethics and morality because they are habituated over years and years not in some late afternoon consultants’ PowerPoint presentation or a touchy feely weekend retreat. At the very root of our financial crisis is a moral vacuum, which can only be filled with true virtue. Virtue can be defined as, ‘moral excellence’ which is gained on the grounds or basis of reason. It is a core positive quality that advantages both individuals and society.

Capitalism, the goose that laid our golden eggs over the past decades, brings about immense transformation, particularly in its globalized form. It is in nature as Adam Smith reminded us in his first book, The Theory of Moral Sentiments, written long before his better-known work, The Wealth of Nations, all about what he called ‘the moral sentiments’. He himself distinguished between self-interest, which he promoted and greed. Self-interest is both good and essential. Greed is always wrong and bad. The key difference is the former uses self-restraint, which obviously requires a moral code and a moral compass. There are moral preconditions in a market economy: the sentiments of sympathy, benevolence, trust and compassion, of approval; disapproval and indignation, which underpin the social order and make it possible to engage in business in the first place. Human beings are not just profit-maximizers. They have moral scruples, personal commitments and the desire for happiness. These set limits to their plans for personal profit, and also stimulate them to pursue profit in ways that honor their higher values and generosity. Many companies, large and small exhibit these; they live and conduct business by these values, in every industry and on every continent. I collected sixty examples in my recent book but there are thousands upon thousands.

Those nations, peoples, and businesses that neglect the moral ecology of their own cultures, especially corporate cultures, and financial firms’ cultures are most noteworthy, cannot enjoy the fruits of capitalism. Because that system must essentially be moral or it falters, declines and fails. What we need to rediscover and renew today at this time more than any other in modern memory is spiritual enterprise, which is capitalism in its most profound and important virtuous form.

spiritual capital is the fund of beliefs, examples, and commitments that are transmitted from generation to generation through a religious, moral or spiritual tradition, and which attach people to the transcendental source of human happiness. Without rediscovery of the virtues we cannot understand or resolve the deepest roots of this financial and ultimately, moral crisis.
That moral crisis cannot be dictated by governmental power or throwing money at ‘problems’. One of the paradoxes of the ‘progressive movement’ is that it has spawned public policies that have had as their collective consequence an end totally opposite to the one intended. Instead of offering temporary help to a needy few, we have expanded the ranks of those perpetually in need. Where communism failed to create “new socialist man” behind the former Iron Curtain we are succeeding in America. Instead of creating a society of free and responsible individuals, it has created the entitlement generation(s). Ever since we proclaimed that we should be free from fear, we have been afraid to be free.

There is, lest we forget in this era of Obamanomics, a very corrosive and morally corrupting influence of government which stimulates the ‘something for nothing’ mentality more than anything else in our present culture. The latest episode in so-called ‘stimulus’ is mostly a series of government giveaways or payoffs to interest groups now in power. There is nothing virtuous about such bailouts to any and every constituency that screams loudest or turns out the vote. Quite the opposite, such actions inevitably destroy freedom, cripple the market, and like drug addiction lead to a need for more and more without regard to effect. At some point we will wake up and there will be hell to pay, i.e., hyperinflation and a worthless currency.

Theodore Roosevelt Malloch, is author of Spiritual Enterprise: Doing Virtuous Business, Encounter Books, 2008 and CEO of The Global Fiduciary Governance LLC, a global strategy firm.

How to Create Freedom and Opportunity for Illegal Immigrants in Their Own Countries.


THE DESPERATION THAT drives millions of illegal immigrants into this country will never subside as long as they see no hope and no opportunity in their stagnant homeland economies. Fortunately, there is a way the United States could jump-start vibrant, non-corrupt, globalized economies inside otherwise destitute third world countries. We could do it soon, and we could do it for a lot less than we’d have to pay to assimilate millions more illegal aliens. The solution is to adapt and propagate the free market model of post-colonial Hong Kong.

Hong Kong was always different than other colonies. It began in 1842 as a minor trading post, surrounded by empty territory. Like the United States, most of Hong Kong’s citizens were drawn there for freedom and opportunity. As Milton Friedman noted, after the Second World War Britain allowed Hong Kong to pursue a classical liberal, free market policy. Even during its own dalliance with socialism, Britain allowed capital to move freely in Hong Kong. Taxes were kept low and there were no exchange or trade restrictions. The results were spectacular. Despite absorbing millions of impoverished refugees, Hong Kong’s per capita income rose from about a quarter of Britain’s to more than a third larger in just four decades.

In 1984 Margaret Thatcher’s UK signed an agreement with China that promised to continue Hong Kong’s unique role for another 50 years. Post-colonial Hong Kong was to become a free city inside China, with its own laws, democratic legislature, and independent judiciary. It kept its free market economy, its low rate tax system, and its separate, convertible currency. China traded a negligible dilution of its sovereignty for the enormous benefits it derives from a free Hong Kong. It calls this arrangement “One Country, Two Systems.”

With billions of people still trapped in poverty, it’s time to build new Hong Kongs. The best solution for millions of illegal immigrants rushing to the United States is to offer them hope and opportunity in their own countries.

The United States should create a Free Cities Program that would build treaty-based “Hong Kongs” in countries that genuinely want democracy, prosperity, and a way to outflank corruption. These new cities would be joint ventures between the United States, an international financial institution like the World Bank, and the host governments. The U.S. would negotiate 50-year bilateral treaties with the host countries, authorizing the joint venture to purchase undeveloped plots the size of Hong Kong, establish property registries, and institute a complete set of Western freedoms and responsibilities.

Treaty-based Free Cities would offer democracy, low taxes, rule of law, limited government, reliable prosecution of corruption, freedom of faith, speech and press, multiethnic meritocracy, and free trade. They would exemplify free market globalization, rather than the economic exploitation of protectionist colonialism. Like Hong Kong, these tiny places would become safe havens for investors and entrepreneurs. They’d allow citizens to raise capital, attract the skills they need from abroad, and create thousands of new jobs where there are none today.

This strategy would be inexpensive, yet philosophically revolutionary. In a Free City, development wouldn’t be a problem at all. Investors and workers will absolutely flock to places where there is freedom, secure property rights, and the rule of law- -thereby reversing the capital flight and worker exodus that hobble nearly every developing country.

The joint venture would only have to build the Free Cities’ public infrastructure, and that would be financed by resale of city land, city taxes, and bonds. The global private sector would gladly develop everything else because they’d be able to reap the rewards of their own enterprise.

The people attracted to Free Cities would become stakeholders who would resist aggressively any interference with their freedoms, as the citizens of Hong Kong have. And the host country’s ruling elite would learn quickly, as China’s did, that they can earn much more in their Free City than they’d ever be able to pocket from foreign aid or “squeeze.”

This strategy could change the focus of America’s foreign aid programs from government-to-government to people-to-people. Free Cities would mobilize the private sector, NGOs, and the faith community to build first world economies in destitute places. In the process, it could stimulate a profound new American engagement with the poor of the world.

A Free Cities program would appeal powerfully to the idealism and generosity of the American people–and to the friends of freedom around the world. It would put the United States on the offensive in the worldwide war of ideas. And it would put dictators, kleptocrats, and terrorists on the defensive.

The world needs at least a dozen new Hong Kongs. The United States should lead the way and begin building Free Cities in Latin America, Africa, Eastern Europe, and Asia in the next five years. The real answer to illegal immigration is to share the freedom and opportunity we enjoy in America with people around the world.

Ken Hagerty is president and founder of the Global Venture Investors Foundation. Theodore Roosevelt Malloch is chairman and founder of the Spiritual Enterprise Institute

Fuller Pastor’s Conference

There is a very old Puritan hymn we grew up singing; perhaps, you recall it as well:
Dare to be a Daniel,
Dare to stand alone;
Dare to have a purpose firm,
Dare to make it known.

In a famous essay just after WWII, George Orwell, in one of his great punch lines, suggested, “To bring this hymn up to date one would have to add a ‘Don’t’ at the beginning of each line." Let’s repeat it that way together. He was talking about the utter timidity of modern people, thinkers and doers alike, in relatively safe circumstances and of great material abundance, to be quiet about dishonesty. Doesn’t intelligence require truth telling? But then in the first sentence of 1984 Orwell himself wrote: “It was a bright cold day in April, and the clocks were striking thirteen."

The question I have for you on this beautiful sunny California morning is: Is it not time to pull ourselves from the swamp of political correctness and from the lies of advertising that have benighted so many secular pundits, in the pews and even the pulpits?

This week you and your congregants have likely shopped to you dropped; consumed a cow; perfectly multitasked, and paid homage to almighty cash. But have you and your churches adequately re-celebrated the greatest story ever told. It may be twenty-one centuries since that babe appeared in a manger; but it has been God’s most direct communion with us to date. In I John 5:20 we read that, "The Son of God has come." Do you; do they believe this? It is worth noting that Jesus, the Christ, was called the only Son of God and declared the "I am" of the Torah or Old Testament. Very God, of very God.

A Messiah had long been expected. People had sought for many saviors in whom to believe. Here we have what claims to be the most cataclysmic event of all of time and of interstellar space taking place in a backwater of the Roman Empire, in some provincial Podunk of a town, in a lowly manger, to a teenage, unwed Jewish girl of no status or wealth. God’s choice for entering history may seem peculiar. As the British historian Arnold Toynbee put it, it is His Story, and as such, it became the turning point for all other human events. It became the axis on which everything else turns. Do you/they believe and live this story? Is this the best that God could do? How could it possibly be true? What are the implications if it is?

Since that birthday, everywhere human beings stand and live, Coram Deo, directly before the face of the living God who summons them to serve Him and their neighbors by doing what they do: as farmers, craftsmen, kings, housewives or merchants. Daily work itself became a vocation; it needed no further spiritual dimension.

The issue I raise for you this lovely October morning in the year of our Lord 2006 AD, (even our calendars resolve around his descension) is this: has God’s sovereignty been slowly shoved to the margins of life and effectively privatized? The biblical phrase, "Christ is Lord of All" means more than lordship of narrow individual behavior or for one hour on Sunday morning in a church pew. The phrase rings a cultural mandate also impelling action in society and in the economy. The possibilities are manifold, all with an option to serve God or to bend to another manmade idol. Faithful stewardship is careful administration of what has been entrusted by someone else who is higher than yourself.

The flip side of this question is the ancient one: what is a calling? Are you asking your parishioners to listen … for the quiet voice of Him who made and sustains them. To pick up their nets and have the courage to follow Him wherever it takes them. If they need encouragement, I suggest you have them read N.T. Wright’s new book, Simply Christian. The Bishop of Durham supplies a focused view of the meaning of it all:
" With Jesus birth and later emergence from the tomb, justice, spirituality, relationship and beauty rose with him. Something happened in and through Jesus, as a result of which the world is a different place, a place where heaven and earth have been joined forever. God’s future has arrived in the present." Has it? For you? For them?

We are all of us, pastors and ministers in other domains, called to be prophets, priests and kings. Modern day Micah’s or Jeremiah’s are certainly shunned; giving solace and comfort in reverence is quite rare; and while nearly everyone seemingly wants to be king of their castle, lifestyles or some polity—the biblical notion of providing justice is frequently avoided altogether. Will you dare to be a Daniel? As pastors, shepherd your charges to fulfill their prophetic, priestly and kingly duties? Our salvation and society both await your answer.

Have a blessed day and extend it into the months and years ahead by reacquainting those in your flocks again with the God who made and sustains life and who makes possible all human flourishing.

Pasadena, CA, October 2, 2006

“What would Sir John say?”

As “annus horribilis” 2008 recedes into the background it might be timely to look back a few years and ask: who really saw all of this coming? Was such an economic and financial disaster foreseeable? What kind of financial sage would have predicted it three or four years ago, in the middle of the ‘go-go’ years? Well, it turns out there was such a prescient, counterintuitive person, keen of mind and generous of soul. That person himself passed away at age 95 to be with the saints in heaven in mid 2008. He was, Sir John Templeton, stock picker of the century, innovator, renowned philanthropist, and always a step or more ahead of the pack … far ahead. I had the benefit of knowing Sir John and visiting him often where he lived, at Lyford Cay, the Bahamas. I also served on his board of advisors of the John Templeton Foundation. So more recently, in the throes of deepening recession, massive foreclosures, government bailouts, a global stock sell-off, indeed, near financial collapse and all around general — doom and gloom, I found myself repeatedly wondering out loud the same question: “What Would Sir John Say?” Then I remembered. I happened upon this urgent and wise ‘Memo’ from him, written in June 2005. If only we had all taken it to heart and acted upon it then, how much better off we would be now. Read on:


Subject: Financial Chaos
By: John M. Templeton
Date: June 15, 2005

Increasingly often people ask my opinion on what is likely to happen financially. I am now thinking that the dangers are more numerous and far larger than ever before in my lifetime. Quite likely, as we near the end of the first six months of 2005, the peak of prosperity is behind us.

In the past century, protection could be obtained by keeping your net worth in cash or government bonds. Now, the surplus capacities are so great, that most currencies or bonds are likely to continue losing their purchasing power.

Mortgages and other forms of debts are over ten-fold greater now than before 1970. This can lead to manifold increases in bankruptcy auctions.

Surplus capacity, which leads to intense competition, has already shown devastating effects on companies, which operate airlines, and is now beginning to show in companies in ocean shipping and other activities. Also, the present surpluses of cash and liquid assets have pushed yields on bonds and mortgages almost to zero when adjusted for higher costs of living. Clearly, major corrections are likely in the next few years.

Most of the methods of universities and other schools, which require residence, have become hopelessly obsolete. Probably, over half of the universities in the world will disappear as quickly in the next 30 years.

Obsolescence is likely to have a devastating effect in a wide variety of human activities, especially in those where advancement is hindered by restricted bureaucracies or by government regulations.

Increasing freedom of completion is likely to cause many established institutions to disappear with the next 50 years, especially in nations where there are limits on free competition.

Accelerating competition is likely to cause profit margins to continue to decrease and even become negative in various industries. Over ten-fold more persons, hopelessly indebted, leads to multiplying bankruptcies: not only for them, but also for many businesses that extend credit without collateral. When this occurs, voters are likely to insist on rescue-type subsidies, which transfer the debts of governments, such as Fannie Mae and Freddie Mac. Research and discoveries in efficiency are likely to continue to accelerate. Probably, in as quickly as 50 years, as much as 90 percent of education will be done by electronics.

Now, with well over 100 independent nations on earth and rapid advances in communication, people with superior educational backgrounds are likely to progress more rapidly than others. These people with more advances education are likely to be true innovators.

Comparisons show that prosperity flows toward those nations having the greatest freedom of competition. Especially, electronics and computers are likely to become helpful in all human activities, including even helping persons who have not yet learned to read.

Hopefully, many of you can help us to find published journals and websites and electronic search engines to help us benefit from accelerating research and discoveries.

Not yet have I found any better method to prosper during the future financial chaos, which is likely to last many years, than to keep your net worth in shares in those corporations, which have proven to have the widest profit margins and the most rapidly increasing profits. Earning power is likely to continue to be valuable, especially if diversified among many nations.


He was, you have to admit, amazingly spot on. But what would Sir John say today in the midst of the greatest recession since the thirties, a global credit crunch of unparalleled proportions and unprecedented market turmoil?

I was with him less than two years ago at the famous Morgan Stanley equity conference at Lyford Cay and he was weak and frail from plain old age. He attended as much as he could because his mind was still sharp, even if his body was in decline. In the final session all the giants of financial services, the hedgies, asset managers, and top fund gurus told a bit about their plans for the future year or so. When Sir John spoke the room fell deafeningly silent, like in those old EF Hutton commercials, you could actually hear a pin drop. When he said he would ‘short’ the financials, autos, airlines, housing, the QQQ, and Wal-Mart it was like a bomb had gone off and people (in this case the largest hedge funds and asset managers in the world) gasped for air. You see, Sir John was not known to normally — go short. One person who runs the world’s largest private equity fund asked sheepishly,” Is there nothing you would buy?” Sir John’s quiet but sure answer I will always remember. He said, “No, because nothing is cheap yet, but they will be shortly.”

Over his long lifetime Sir John while constantly urging for free markets, competition, spiritual knowledge and moral character would also be searching the world over and buying cheap stocks, and then holding them to sell when they had fully appreciated. He would see this moment, this next year, 2009, I think, as the buying opportunity of a lifetime, not only in the US but also as was his predilection, in markets around the world. Mark his words and check back in five, ten, or twenty years. And when in doubt always ask, “What Would Sir John Say?”

Theodore Roosevelt Malloch, author of Spiritual Enterprise: Doing Virtuous Business, Encounter Books, 2008, which is dedicated to Sir John Templeton