SPRING 2012
J. Dennis Hastert Center
for Economics, Government and Public Policy
Discussion panelists, Pictured from left to right, former Speaker J. Dennis
Hastert, the Honorable Bobby Rush, Casey Mulligan, and Andrew Biggs
Fiscal Imbalances Panel Discussion: “How Much
Government Can the Economy Afford?”
On October 20, 2011, students and
community members gathered in
Barrow’s Auditorium to hear a panel
discussion addressing fiscal imbalances
entitled, “How Much Government Can the
Economy Afford?” The prestigious panel
consisted of two politicians and two
economists, affording a balance between
practical experience and theory. Former
Speaker of the House of Representatives,
J. Dennis Hastert and the Honorable Bobby Rush, Representative for Illinois’
1st Congressional District were joined by Casey Mulligan, Economics Professor
at University of Chicago and Andrew Biggs, Resident Scholar at American
Enterprise Institute. Moderator, Michael Gerson, framed the discussion by
referencing prominent venture capitalist, Mary Meeker, who sees our debt
problems as “large, structural and getting worse. Problems that will not be solved
by marginal spending cuts or marginal tax increases.” Conversely, both political
parties give the impression our problem can be solved if only a few people took
more of the burden. One Republican proposal suggests cuts in areas such as
Foreign Aid, which is less than 1% of our budget, while many Democrats propose
tax hikes on only the very wealthy. The remainder of the discussion clarified the
depth of sacrifices that would need to be made to address our serious budget
deficit.
Speaker Hastert reflected on recent history as one who led Congress during
a time of unprecedented debt reduction. This path was radically altered by the
continued on page 2
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Director’s Welcome
The fall semester at the Hastert Center sped by with a full slate of formal
coursework and public events that augmented the curriculum and provided
for alumni and community enrichment. In the fall, I taught a new course at
Seth W. Norton
Director, J. Dennis Hastert
Center for Economics,
Government, and Public Policy
the college—the Political Economy of the Financial Crisis. The course highlighted important sources of the
financial crisis—excess money growth and low interest rates, constricting land use controls, excesses of
government sponsored enterprises, as well as amplifying effects of a poorly engineered stimulus package,
and remaining puzzles such as the precipitous and protracted declines in America’s labor earnings. Student’s
absorbed important works, like John B. Taylor, Getting Off Track, and Thomas Sowell, The Housing Bust and
Boom.
In November, I received an offer to present a paper at the Friedrich Nauman Foundation for Freedom in
Potsdam, Germany. The title of my address was, Institutional Conditions for Economic Development. Many
thanks to long time Wheaton College Trustee, Mac Airhart, for covering my class on the housing crisis during
my quick trip to Germany.
Our Hastert Center fall calendar was likewise full. We had an address by Oxford Professor Paul Collier
dealing with mechanisms to address the conditions largely fueled by corruption that play a big role in keeping
the world’s poor with little hope. We also had an address by Harvard and Duke Professor Erica Field on the
effects of land titling on urban squatters in Peru.
The Hastert Center also sponsored a panel discussion on fiscal imbalances entitled, “How Much Government
Can the Economy Afford?” Speaker Hastert, Congressman Bobby Rush, Casey Mulligan of the University of
Chicago and Andrew Biggs of American Enterprise Institute addressed the issues. The task is imposing; the
solutions are elusive. The Hastert Center will return to the topic in the future.
Remaining plans for the spring semester include, Pierre Dersochers, Professor at the University of Toronto,
on transportation economics with a specific focus on the advantages of long agricultural supply chains. William
Von Hoene Jr., Executive Vice President, Finance and Legal for Exelon, will be speaking on the Political Economy
of Energy and Robert Woodberry, Professor of Sociology at the University of Texas, will be addressing the impact
of missionaries on democracy and economics. Finally, we plan to revisit fiscal imbalances on April 11.
The Iron Sharpens Iron study-travel program is currently in the planning process. The plans call for on
campus coursework and extended off campus travel to South Korea, Hong Kong, and China. Additionally, plans
are in process to offer another summer program of derivative markets for college faculty.
We are grateful to you, the friends of the Hastert Center, for your support. We are grateful for the resulting
rich programs offered by the J. Dennis Hastert Center at Wheaton College.
Seth W. Norton
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continued from page 1
Moderator, Mike Gerson with discussion panelists, Pictured from left to right, former Speaker
J. Dennis Hastert, the Honorable Bobby Rush, Casey Mulligan, and Andrew Biggs.
terrorist attacks of 9/11. Our government turned to a wartime
focus instead of a peacetime focus. Our war efforts created
short-term economic benefits because of increased government
spending but failed to address the underlying economic issues of
a stalling economy. Hastert cites our energy dependency as one
of the underlying sources of drag on our economy. As long as we
remain largely dependent on other countries for our energy our
economic growth will remain tied to these other countries.
Representative Rush cautioned us to not forget the plight
of the poor as we consider the size and role of the government.
He cites Scripture’s call to “take care of the least of these,” as
a guiding principle for shaping our priorities as a government.
Rush desires to have the government help arm the poor by
making them viable members of the workforce.
Michael Gerson asked Casey Mulligan to address the debt
in light of healthcare costs and entitlement programs such as
Social Security, Medicare and Medicaid. Mulligan cited various
European governments as examples that we can afford as much
government as we are willing to fund. It is possible to not touch
our entitlement programs but if we do not make adjustments
we will have to pay for them in high tax rates similar to Europe.
He points out that these tax hikes will not affect just the
wealthy but everyone. For example, Sweden has a 25% sales tax,
which falls heavily on the poor. Andrew Biggs, former Deputy
Commissioner of the Social Security Administration, added that
Social Security, Medicare and Medicaid are the main issues that
drive our long-term debt problem. Biggs states that in the past,
“Republicans got their low tax rate, Democrats got their high
spending, kids got the debt, but they don’t vote so nobody cares.”
This type of decision-making cannot continue and changes must
be made to these entitlement programs. Both Speaker Hastert
and Andrew Biggs identified the 3rd party payer method for
healthcare costs as a structural item in need of change. When the
person paying the bill is not the person requesting the services it
removes a level of responsibility that is essential to remove waste.
Payment options were suggested that would create more of an
incentive for the patient and provider to have some “skin in the
game” when deciding what services are offered and accepted.
Providing debt reduction solutions outside of the healthcare
field, Hastert suggested we create incentives to bring back some
of the 26 trillion dollars in trapped capital that we have overseas.
Hastert also provided a practical example of ways to reduce
mandatory spending. Many mandatory spending categories
have duplicated programs that create waste. Politicians are also
going to need to be rewarded for using their political clout to
bring about real change. Speaker Hastert gave an example of
Representatives who made political sacrifices to make significant
cuts in mandatory spending during his time, only to see many
of these cuts removed during the bill’s time in the Senate and
then in the Conference Committee. The failure of large cuts to
ultimately make it out of Congress nurtures Representatives who
are hesitant to make a strong commitment to budget reductions.
Finally, a change needs to take place in the way the debate is
framed. The current focus is on two opposing philosophies of
government promoted by the different political parties. The focus
needs to shift from protecting these philosophies at all costs to
carefully reaching a compromise that can create real progress in
relation to our current fiscal imbalances. Overall, the evening
provided specific details to help clarify the problems in our
budget, as well as practical solutions for addressing the current
challenges to our nation’s budget crisis.
4
Going
Global
Hastert Intern Experience
Name
Major
Internship
Location
Clement Bilhorn
Political Science
American Enterprise Institute
Washington D.C.
Jason Chapman
International Relations
1) State Department; US investment in manufactured goods.
2) Ministry of Foreign Affairs
1) Brasilia, Brazil
2) Pristina, Kosovo
Peter Court
Political Science
US Congressman; Campaign finance assistant
Washington D.C.
David Daum
Political Science
Congressman Rob Portman; alternative energy technologies, small business Washington D.C.
support and reduction of trade barriers
Timothy Durham
Business/Economics and Philosophy
US Department of Commerce; trade promotion and e-commerce initiatives
Johannesburg, South Africa
Sophia Har
International Relations
Bread for the World; congressional support
Washington D.C
Josiah Highmark
Political Science and German
National Headquarters of the Christian Democratic Union
Berlin, Germany
Jeremy Jones
Political Science
Lawndale Christian Legal Center
Chicago, Illinois
Eric Lowe
Political Science
The Center for Public Justice
Washington, D.C
Joshua Miller
Political Science
Federal Bureau of Investigation Head Quarters
Washington, D.C.
Bethany Pennington
International Relations/Spanish
US Department of State
La Paz, Bolivia
Kerilee Van Schooten
International Relations
The World Federalist Movement –Institute for Global Policy
New York, NY
Jasmine Young
International Relations
US State Department: Bureau of European and Eurasian Affairs
Spain
1. What was the most helpful insight you gained from being involved as a Hastert
Intern and why would you recommend this type of experience to other students?
Through my internship I was able to gain valuable insight into the administration of running a local NGO in addressing poverty
development. This incredibly valuable experience has improved my understanding of the inner workings of running an organization.
2. What skills did you learn this past summer that you consider most valuable?
Rebekah King
with Louder than
Words in Honduras
I was able to critically evaluate the benefits and potential harms associated with programming in poverty development.
Additionally, I had the opportunity to conduct surveys to assess citizen perception of government, which bridged my theoretical
understanding with a practical life application for those living in a non-consolidated democracy.
3. How did your internship help clarify your career plan?
Prior to my internship I had interest in pursuing a career in international development. Through working with an organization
that strives to create solutions to these pressing problems, I am now hopeful that through furthered human action and individual
responsibility we can better address these needs in our global society.
5
Speaker Hastert Visits
Wheaton College Classes
“Power and Politics” Lecture—Principles of Management/Jim Carr
Former Speaker of the U.S. House
of Representatives came and spoke at
Wheaton College on Tuesday, January
31 as part of Jim Carr’s Principles of
Management class. Faculty, staff, and
students were given the opportunity
to hear someone who has held one of
the highest political positions of power
in our land come and talk about “Power and Politics.” Speaker Hastert
acknowledged that power can be acquired by threats and leverage but this
type of power does not last long. Conversely, power built on trust, developed
over time, is what lasts. Although counter-intuitive, power also comes from
giving it away to others. If one wants to have true power, it is achieved by
helping those under your authority achieve to their maximum abilities. This
idea was shaped by Speaker Hastert’s days as a coach, where wins come from
making individuals successful so they can make the team successful. This was
eloquently summarized when Hastert said, “If the team is in the headlines
every week, things are going well. If the coach is in the headlines every week,
things are not going well.” This sense of humility and service was evident in
the way Speaker Hastert conducted his visit. He graciously took time to shake
hands and introduce himself to many of the members of the audience, after his
presentation he took 30 more minutes to answer questions and then stayed and
spoke to many individuals who had questions after the session had concluded.
Guest Lecturer—Congress & the Policy Process/Dr. Amy Black
Speaker Hastert has agreed to be a guest lecturer for the Congress & Policy
Process course taught by Dr. Amy Black, Associate Professor of Political
Science. This course examines the role of Congress in the American political
process, including its historical development, structure and function, and
decision making. The department encourages students seeking internships
or employment in Washington DC to take this course. Speaker Hastert is
covering the topics of: 1) House and Senate Differences, 2) Campaign Trail
Experiences, 3) Leadership and Parties, and 4) Members of Congress and
Religion. The former Speaker will also offer feedback to students who will
explain and defend a bill they are proposing as part of a legislative simulation
class project. Hastert’s practical experience in all of these areas creates a
unique opportunity for these students. One member of the course, Peter Court,
acknowledges "It is both a privilege and a blessing to have the longest-serving
Republican Speaker of the House guest lecturer in our Congress and Policy
Process class at Wheaton. Speaker Hastert's profound insights, history-altering
experiences and personal stories helped humanize my understanding of how
Congress functions. It is truly a special opportunity to learn from someone who
has dramatically influenced and shaped the laws of our nation."
Retrospective
of Paul Collier
Lecture
By Will Craddick ’13
As the world becomes increasingly interconnected
and globalized, the privileged “lucky billion” are being
joined by the rise of another five billion, who have been
rapidly moving up the socioeconomic ladder of privilege.
A lone billion, however, have been left behind, trapped
in hopeless living situations by societies that offer no
opportunity to the poorest. It is with this demographic
in mind that Paul Collier gave his lecture titled, “The
Plundered Planet and the Poorest Countries” on
September 14, 2011.
The bottom billion do not just lag slightly behind
the rest of the rising crowd, they experience a five to
one gap between themselves and the upwardly mobile.
While the upward movers have been experiencing the
benefits of globalization and interconnectedness, until
recently the bottom billion was falling behind by 5%
per year. Collier stressed that the main difference
between the poor in the countries of the bottom billion
and the poor of other countries is a matter of hope
in the future. As Collier explained, “there is a world
of difference between being poor in China and being
poor in Chad.” Most people in the world can at least
expect their children to live a better life, but the bottom
billion cannot. Collier emphasized that given the recent
increases in quantity and prices of resources, this could
potentially be changed.
Collier outlined a five-step plan for stimulating
growth in the nations of the bottom billion to bring,
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“…credible hope to the societies which haven’t provided credible
hope.” The idea initially involved attaining public geological
information before bringing in extraction companies to harvest
natural resources. Once the resources were out of the ground, a
means to evenly distribute the rents (the difference between the
costs to remove the resources and their price) amongst the entire
population should be in place. Collier remarked that resources
were not truly the property of anyone, and so everyone should be
able to accrue benefits and profits from them. Currently however,
the taxation systems of many African countries, which make
up the majority of the bottom billion, are far too inefficient to
achieve this equitable opportunity. More to the point, the resource
extraction process is generally widely corrupt in Africa and other
countries with numerous “bottom billion” inhabitants. Elsewhere,
Collier has noted the same problem is common in construction,
fishing, and public investment.
In order to avoid local insurrections against resource
extraction, Collier posited that while benefits should go to all,
locals should be able to fully participate in them, and extraction
companies should take care to avoid environmental damage
and provide compensation in the event of accidents. In order
to properly distribute these benefits to all, Collier advised that
bottom billion governments should focus on investment for the
future, rather than on consumption in the present. This could be
achieved by a type of investing that would allow spending some
profits gained on present needs, while preserving a sum for future
generations. The focus of this plan is to get countries to buy into
the idea of wanting to “invest in investing.” Collier’s idea includes
building a capacity for public investment, such as providing
proper roads and infrastructure, while also engaging individuals
to invest in the private sector with capital such as trucks to drive
on the roads the government builds.
Collier stressed that the five-step plan was indeed hard
to implement, but was an attainable goal if a state possessed
determination. Citing Germany, whose hyperinflation created
a determination to never again repeat past mistakes, Collier
mused that the failures of African countries during the 20th
century would similarly create a viscerally felt need to avoid
the plunder of their resources. However, in order to feel such a
need, the people of the bottom billion nations must be aware of
the existence of these resources and sense joint ownership in
them. Additionally, Collier argues that the younger, tech savvy
generation would need to campaign to raise awareness of the
issue. Finally, though international institutions are already on
board with his reform campaign, Collier called on the US, as
leaders in the international community, to play a part in the
process.
1
Paul Collier, The Plundered Planet, Oxford University Press, 2010
Erica Field Lecture
Development and
Human Dignity: Part 2
By Will Craddick ’13
Erica Field presenting an address on Development and Human Dignity:
Part 2, Property Rights, to a packed Phelps Room on November 15, 2011
Cobbled of cardboard, newspaper, plastic bags, poached electrical
line tethered to the top, the ubiquitous squatter’s shack can be found in
Manila, Tijuana, Nairobi or Mumbai. Over half of the earth’s 7 billion
inhabitants live in urban settings. In this great migration of the modern
age, many individuals find themselves reduced to squatting, without
title to their property and with no sense of security for themselves
and their families. On November 15, Erica Field, Associate Professor
of Economics at Duke University addressed Wheaton students and
community members explaining the problems arising from lack of
property rights, attempts to remedy the situation by issuing property
rights, and comprehensive research illustrating recent successes in the
area of property rights.
Professor Field has examined the effects of Peruvian urban land
reform. Many of those reforms reflected the powerful influence of
Peruvian scholar and activist, Hernando De Soto, the author of The
Mystery of Capital. Land titling is one of many reforms aimed at saving
“dead capita”—the term assigned to potentially valuable assets that are
encumbered by poor legal systems.
With over one tenth of the world’s population living in squatter
communities, the issue of titling is both relevant and necessary. Field
described a program intended to issue titles to this target population,
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proposing that the program would be key to economic development in these areas. Central to the supporting research was the
discovery that households with titles to their property felt more secure and were far less likely to sit at home protecting property and
possessions. In one study, households with titles were 45% less likely to leave an individual to guard the house. In the wake of land
titling reform, there were large increases in adult, especially male workers in the labor market and notable decreases in child labor.
Field also anticipated changes in women’s bargaining power, and explained that most women in titled houses reported significantly less
unilateral decision making in the house.
Titling was not, however, a panacea. Squatters who had been titled were still often not able to use their property as collateral to
obtain loans. While it was indicated that titling increased demand for credit as investment in property increased, it did not necessarily
influence the ability to obtain it, due to the fact that banks shied away from accepting recently titled land as collateral.
In addition to bolstering labor markets and spurring demand for credit as investment increases, titling has also been credited for
easing community based unrest and reducing elevated fertility rates. Overall, titling of landless residents has shown numerous positive
benefits. The evidence documented by Professor Field is that land titles generate enormous benefits in wages and quality of life for
large segments of the Peruvian population. It is an example of a government reform that worked.
Iron Sharpens
Iron: Asia 2012
Iron Sharpens Iron 2012 participants,
Pictured from left to right, front row:
Yaphet Tedla, Kathryn Waldron, Lauren
Dille, Jonathan Bryant; back row: Tom
Cardle, Emory Griffith, Tyler Cuculi,
Jacob Carter, Matthew Lorier, Josh Bell.
The Hastert Center is planning for the summer 2012 Iron
Sharpens Iron program. Dr. Rachel Vanderhill, Visiting
Assistant Professor of Politics and International Relations;
Dr. Greg Bunch, Adjunct Professor of Entrepreneurship at
the University of Chicago’s Booth School of Business; and
Dr. Edd Noell, Visiting Professor of Economics and Business
from Westmont College will be leading the coursework for this
program. For the overseas portion, Steve Bretsen, JD, Volkman
Associate Professor of Business and Law; Dr. Annette Tomal,
Professor of Business; Dr. Winnie Fung, Assistant Professor
of Economics; Dr. David Lumsdaine, Professor of Political
Science at Gordon College, and Dr.Edd Noell will be the field
faculty leaders. This competitive program will enable a group of
10 students to have a firsthand learning experience in Asia. The
program will begin on May 8 with four weeks of coursework on
campus followed by a departure June 4, for South Korea, Hong
Kong and China. Students will travel for four weeks studying
important political and economic institutions at sites in Asia.
Coursework for the program includes eight cross-listed
credits in the business, economics, politics and international
relations majors. Classes are designed to give an overview of
contemporary politics, economics and globalization in Asia.
Students will be exposed to global business strategy, government
and public policy issues, and the effects of globalization on
human flourishing. A major aim is to examine the nature and
performance of market and nonmarket economies. The program
will include site visits and guest lectures by business and political
leaders in the host countries. Some of the potential site visits
include General Motors, UBS, Tyco, US Embassies and select
churches.
As part of the coursework, student teams, with faculty guidance,
will develop research projects designed to be presented at
the corporate or policy executive level. Last year, the Hastert
Center hosted a dinner where ISI students presented their
group projects to former House Speaker Hastert, College
administrators and faculty. The Hastert Center plans to host a
similar forum when the students return from this coming trip.
The J. Dennis Hastert Center for Economics,
Government, and Public Policy
Wheaton College
501 College Avenue
Wheaton, IL 60187
Phone: 630-752-5975
Fax: 630-752-5731
www.wheaton.edu/hastertcenter
[email protected]
mission statement The J. Dennis Hastert Center for Economics,
Government and Public Policy exists to
advance the training of Wheaton College
students and the greater community in
the understanding of market economies,
representative democracies, limited
government, and the redeeming effects of
the Christian worldview on the practice of
business, government and politics.
Hastert Center Program Support
Hastert Center programming is made possible through the generosity of friends who partner in its vision to advance the training of
Wheaton College students in the understanding of market economies and representative democracies. If your stewardship priorities
resonate with Hastert Center programs, please contact the Center at [email protected] or 630-752-5975. Your investment in
the Hastert Center will have a dramatic effect on students who will make a difference in the marketplace for Christ and His Kingdom.
For futher information, please contact Heidi Leffler at 630-752-5975 or write to [email protected].
Spring 2012 Edition
PG 1Fiscal Imbalances Panel
Discussion: “How Much
Government Can the
Economy Afford?”
PG 2 Director’s Welcome
PG 4 Going Global
PG 5
Retrospective of Paul
Collier Lecture
Speaker Hastert Visits
Wheaton College Classes
PG 6 E
rica Field Lecture
Development and Human
Dignity: Part 2
PG 7
Iron Sharpens Iron: Asia
2012 and Futures Markets