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Obergefell and Non-Profits

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The American philanthropic community is in danger. The recent 5-4 Supreme Court ruling in support of same-sex marriages creates the potential for vast and encompassing regulations to take hold of the most foundational elements associated with 501 (c)(3) non-profits; namely their tax exempt status. Without the ability to maintain a conscientious objection right, Christian non-profits and individuals alike will become a jeopardized segment of the population at large. While “promises” have already been made, stating, “the IRS does not intend to change the standards that apply to section 501(c)(3) organizations by reason of the Obergefell decision,” the writing on the wall indicates that 501(c)(3)’s could be stripped of their tax exemptions.

Dr. Henry Potrykus, a Senior Fellow within the Marriage and Religion Research Institute (MARRI) at the Family Research Council, is currently conducting a study that will examine the impact of regulations on the Christian non-profit community. The study, which will characterize the non-profits tracked by the IRS, especially the more than 84,000 Christian non-profits listed by GuideStar, will inform and empower efforts that are already well underway both inside and outside the philanthropic community to ensure Christian non-profits are afforded their tax exempt status. 

The Black Family

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Only 17 percent of African American youth who reach age 18 have always lived with their married mother and father. In the District of Columbia, this number drops to 9 percent. Any policy initiative or social movement to ameliorate the plight of the black community must first address the deterioration of the black family. Contrary to popular public opinion, violent crime, drug abuse, and mass incarceration among African Americans is not a matter of race, and positing it as such fatally distracts from the root problem of family breakdown.
Across every race, the non-intact family poses significant challenges and development barriers to youth. The prevalence of non-intact families in the black community is especially high. As shown below, the black family is the least intact of all races/ethnicities. Almost four times as many Asian adolescents are raised by their married parents as black youths. Because black youths are least likely to come from intact families, the public frequently confounds the role of race and family intactness in shaping adolescents. 

As Kay Hymowitz pointed out in her Atlantic article this week, although racism has significantly decreased since the 1960s family brokenness has significantly increased. Between 1950 and 2012, the percentage of black youth raised by their married parents was cut in half. Rather than rejection stemming from race, black children now face rejection stemming from their parents’ relationship, and resulting in their family being broken. Put a lot of these families together and you get a broken community. As shown in the Violence in Baltimore report, non-intact families tend to foster frequently detrimental environments for children. According to the Fourth National Incidence Study of Child Abuse and Neglect:

Compared to the intact married-parent family, the rate of physical abuse is:
    • 3 times higher in the single parent family
    • 4 times higher if the biological parents are cohabiting
    • 5 times higher in a married stepfamily
    • 10 times higher if one biological parent is cohabiting with a partner

Compared to the intact married-parent family, the rate of sexual abuse is:
    • 4.8 times higher in the single-parent family
    • 5 times higher when the biological parents are cohabiting
    • 8.6 times higher in a married step-family
    • 19.8 times higher if one biological parent is cohabiting with a partner
Children frequently respond to this rejection in externalizing behaviors like aggression and crime. State-by-state analysis indicates that, in general, a 10 percent increase in the number of children living in single-parent homes (including divorces) accompanies a 17 percent increase in juvenile crime. Compared with children raised in intact married-parent families, the rate of youth incarceration is 2 times higher in mother-only families, 2.7 times higher in mother-stepfather families, and 3.7 times higher in father-stepmother families.

The link between family structure and crime and abuse rates is well-established, and downplaying its significance is detrimental to our youngest citizens. As Ms. Hymowitz states, “Waving all of this away as ‘respectability politics’ ignores this history; it ignores anthropology; and it ignores many decades of research. It also risks neglecting the real suffering of black children and their communities.”

The Pope and the Family

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Pope Francis’s recent visit to the US and to Cuba was focused, repeatedly, on the family. Here are a few excerpts from different speeches:

“It is my wish that throughout my visit the family should be a recurrent theme. How essential the family has been to the building of this country! And how worthy it remains of our support and encouragement! Yet I cannot hide my concern for the family, which is threatened, perhaps as never before, from within and without. Fundamental relationships are being called into question, as is the very basis of marriage and the family I can only reiterate the importance and, above all, the richness and the beauty of family life.”
“The family is, forgive me, a factory of hope, of life, of resurrection. God was the one who opened that path.” “We renew our faith in the word of the Lord which invites faithful families to this openness. It invites all those who want to share the prophecy of the covenant of man and woman, which generates life and reveals God!”
“I leave you with this question, for each one of you to respond to. In my home, do we yell, or do we speak with love and tenderness? This is a good way to recognize our love.”  “Like the warm supper we look forward to at night, the early lunch awaiting someone who gets up early to go to work.  Homely gestures. Like a blessing before we go to bed or a hug after we return from a hard day’s work.”
“Family is beautiful, but there’s effort involved, and there are problems. Husbands and wives quarrel, and end up badly, separated. Never let the day end without making peace. Let’s protect the family, because it’s in the family that our future is at play.” 
“In families, children bring headaches. I won’t speak about mother in laws. But in families, there is always a Cross. Always.  Because of the love of God, the Son of God opened up that way. But also in families, after the Cross there is Resurrection.”
“When one doesn’t live as a family, one will strengthen the part that always says: I, me, my, with me, for me. One totally centers around these things and doesn’t know solidarity or fraternity.” 

At the end of the event, it was announced that the next World Meeting of Families would take place in Dublin, Ireland in 2018. It will be the ninth time it has been celebrated since 1994 when Pope John Paul II launched the first event in Rome.

Divorce and Children

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Six-year-old Tiana made headlines this week as she asked her divorced mom and dad to treat each other as friends. In a video posted by her mom, which would go viral, Tiana said, “I don’t want you and my dad to be replaced and meanies again. I want you and my dad to be placed and settled and be friends.” This young girl’s plea to her parents exemplifies how impactful divorce can be on children.

Research has shown that, on average, children in divorced families receive less emotional support, have weaker relationships with their family, and have a weaker ability to handle conflicts, among many other negative repercussions. However, for those children who grow up in an intact-married family structure (raised by a mom and a dad), the benefits for the child are numerous. They are less likely to get into fights, less likely to have gotten drunk, less likely to have had intercourse at age 14 or younger, less likely to have had an unwed pregnancy, and almost four times less likely to have stolen from a store.

To read more about the effects of divorce on children, please read MARRI’s synthesis paper on the topic 

Religious Growth Projections

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Continuing our praise of Pew Research Center’s work on Religion and Public Life, we draw attention to their projections of the growth of different religions around the world between now and 2050.  Christianity does not grow by percentage (though it does in numbers) while the Muslim religion does in both percentage and numbers, with both being rather close by 2050.  If, in the context of overall Muslim growth, militant Islam expands as Christianity remains constant, it is worth pondering how this will affect religious liberty throughout the world. It is also worth noting that Pew Research projects that “Nones” (unaffiliated) will decline worldwide.  A few months ago Pew told us how our own religious affiliation has changed recently in the US: Christianity decreased while “others” increased

Religions Freedom

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The Pew Research Center is a major social science resource for the nation. Its Religion and Public Life sector has produced some very informative and tellingly illustrated reports. Earlier this year they produced Restrictions and Hostilities around the World.  It is worth noting that in this ranking the U.S. does not rank number one in religious freedoms.

Last year, their comparative report on increasing levels of hostility to religious people and their practices illustrates the growing and very large percentage of the world’s population that lives under such conditions.  

Parental Religious Influence

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Parents’ religious practice benefits not only their children’s faith but also their well-being. This has become increasingly apparent over the last decade as research on religious practice has increased.  David Briggs of the Association of Religion Data Archives (ARDA) illustrates five benefits of religious belief and worship on parents and teens:

The family that worships together supports one another: Youth who go to church with their parents appear more likely to experience higher psychological well-being throughout adolescence. The study analyzed data on 5,739 young people from the 1992–2006 waves of the Child and Young Adult Sample of the National Longitudinal Survey of Youth.

Building social skills and parental trust: Adolescents who converted from no religion to affiliating with a religious group were more likely to have higher social skills than those who left their faith. The study of 209 adolescents and their primary caregivers also found youth who held on to their faith scored higher than those who gave it up on measures of parental communication and trust as well as social competence.

Developing healthy relationships offline: College students who reported high levels of religious belief and practice were more likely to form strong relationships with peers and less likely to search online for porn or watch pornographic movies.

Finding ecstasy in all the right places: Young men who believe in God and practice their faith were less likely to abuse alcohol, smoke or take illegal drugs, according to a study analyzing data from a sample of 5,387 Swiss men approximately 20 years old. Being affiliated with a religion also predicted healthier choices in most cases.

Developing compassion amid privilege: Even young people fortunate enough to have all their material needs met can find resources to overcome the psychological malaise often associated with affluent teens, according to a new study.

Well-off adolescents who were highly religious and spiritual at age 18 were likely to hold on to a strong spiritual and religious life at age 24. This in turn was associated with fewer signs of depression, higher life satisfaction and greater compassion for others.

Religious Expression

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In a collaborative study with five professors from five different universities (Simon Fraser University, University of Maryland, University of Hawaii and Michigan State University), doctoral student Sooyeol Kim found that employees who openly discuss their religious beliefs at work are often happier and have higher job satisfaction than those employees who do not:
… employees who valued religion as a core part of their lives were more likely to disclose their religion in the workplace. Employees who felt pressure to assimilate in the workplace were less likely to disclose their religious identity, Kim said.
But most significantly, the researchers found that the employees who disclosed their religion in the workplace had several positive outcomes, including higher job satisfaction and higher perceived well-being.
“Disclosing your religion can be beneficial for employees and individual well-being,” Kim said. “When you try to hide your identity, you have to pretend or you have to lie to others, which can be stressful and negatively impact how you build relationships with co-workers.”

Military Suicide Rates

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Over the last decade, the Armed Forces have become increasingly hostile to religious liberty and also have a record suicide rate. Restoring religious liberty and encouraging religious practice would significantly improve the mental well-being of our nation’s soldiers, as religious practice delivers fundamental benefits to mental well-being.
Threats to religious liberty in the Armed Forces have amplified in recent years. In June 2011 Christian prayer was banned at military funerals, and in September the Walter Reed National Military Medical Center declared, “No religious items (i.e. Bibles, reading material, and/or artifacts) are allowed to be given away or used during a visit.” The prayer and Bible bans were eventually reversed but other religious liberty violations have continued to emerge.  In 2012 the Army censored Catholic chaplains, and the Pennsylvania Army Reserve training document labeled Evangelical Christians and Catholics as “extremists.” In 2013 the Army ordered soldiers to remove crosses and steeples from a chapel in Afghanistan, and an Air Force officer was forced to remove a Bible from his desk because it “‘[might]’ appear that he was condoning a particular religion.” These are only “the tip of the iceberg”. Last Thanksgiving an Army chaplain was punished for telling his suicide-prevention class how his faith helped him counter depression, and this past May a Marine was sentenced to bad-conduct discharge for displaying three Bible verses at her work-station.
During this time of increased religious censorship, suicide rates amongst deployed soldiers and those who have never fought grew. In the last three years of World War II, the Army peaked at 10 suicides per 100,000 soldiers; between 1975 and 1986 the Army averaged 13 suicides per 100,000 soldiers; in 2011 the Army reported 23 suicides per 100,000 soldiers—more than twice the number of suicides during the World War II era. These suicides reflect a poignant truth: American soldiers struggling with mental difficulties are not adequately taken care of. 
Religious liberty is a requisite to ensuring that our service men and women are mentally healthy. MARRI research shows that religious worship is correlated with greater happiness, a greater sense of purpose in life, and a positive morale. More frequent religious attendance predicts less distress among adults, and membership in a religious community enhances coping skills. A review of more than 100 studies found that religious participation is associated with a reduced risk for depression, and 87 percent of studies surveyed concluded that religious practice correlates with a reduced incidence of suicide.

As hostility to religious practice grows in the military grows, depression and suicide rates are simultaneously reaching new heights. No secular course or counseling session can offer the consolation that religious practice provides. Furthermore it is free. If military commanders sincerely desire to improve the mental well-being of our country’s soldiers, they will not only allow our armed forces to freely worship God, but will even encourage it. 

Japan’s Foreboding Demographics: Lessons for America

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By Henry Potrykus

The Federal Reserve Bank of Atlanta published an important paper a little while ago on “The Implications of a Graying Japan for Government Policy.”  The title rather understates demographics’ fiscal gravity.  The analysis within the paper does a better job.  Here I relate the findings to those of us here in the West in a four-part development: ‘context,’ ‘strengths,’ ‘weaknesses,’ and ‘implications.’  You might want to skip down to “implications” if you just want the highlights.  The ‘context’ to follow also makes for relatively easy reading.  ‘Strengths’ and ‘weaknesses’ will not be for everyone.  They contain economics, which is a practical necessity – the paper is on economics.


Japan is not the United States.  Critically, Japan did not have a post-war baby boom.  Instead, its realized family size was high just before the War.  This is the main way in which Japan is a forerunning first-world economy.  Germany and other Western European countries will follow Japan’s demographics, and then we’ll have our own run of it.

Japan had exceptionally strong trade surpluses (Current Account surpluses; like Germany does).  Remember worrying about Japan owning the US?  Worry about that anymore?  Even more important than that penchant for over-seas saving (which is being cashed-in on), is that Japan controls its own debt:  Japanese savers (future retirees) buy Japanese paper. 

Thus, as a demographics “policy experiment,” Japan might be considered an ideal case:  The fiscal picture – issuance and redemption of bonds; payout of pensions; and the whole fiscal balance sheet – is centrally manageable.  I am sure there are benefits to the US having the reserve currency of the world.  Control over federal bond auctions is not one of them.  (A lot of swaps have to be written between a lot of interested parties to “control” that market.)

Watching Tsunami footage also shows one how unified Japan is in caring for its elderly.  (In this case that means watching 60 year-olds take care of 80 year-olds.)  So, again – Japan has a relatively manageable problem.  By way of comparison, Western states see incipient riots over public pension changes.

Perhaps that’s not a perfectly fair comparison, but, in one way, Japan’s problem is more urgent; in another, it is less so. In the latter sense, Japan may just be able to smoothly reallocate and reduce its population’s consumption and so avert Argentina-like fiscal crises.  There is more on this in the ‘implications’ section.


With this paper, finally, economists get demographics.  The paper models populations moving through the life cycle.  Cohorts are born, grow up, get to working, retire, and die. 

It should be obvious that when one wants to understand the fiscal picture of a state, enumerating aging populations is required:  The picture for entitlements (think Social Security and Medicare; Japan has its analogs) is determined by whom you tax (workers) and who receives remittances (retirees, who, except in special circumstances, have not yet died).  The fiscal picture for welfare states (like our own) is driven by their entitlements.  This holds especially for Japan.  (Allow me to throw our generous poverty programs in here, and the statement becomes general, and air-tight.)

Another “strength” is the simplicity and constancy by which the modelers treat the Japanese credit markets.  This will be controversial to some (in particular, the public behaves “non-Ricardian”).  What I find important is that interest rate spreads are held constant.  Rate spikes (“runs”) that might take place – perhaps at any time – are not considered.  (See below for other credit events.)  In this sense, the central bank helps the government manage its debt burden well


Many economists will find the dynamic model, with its perfect foresight, etc., to be a strength of the paper’s analysis framework.  You say strength, I say assumption.  Certainly it is good to attempt to model how people will shift their behaviors (“dynamically”) to changes in government policy like pension generosity and tax increase.  Without further comment, let’s just say, “how do you know, quantitatively?”

Two quantitative parts of the analysis that are real, powerful factors in determining future fiscal economics are the rate of productivity growth (“total factor” productivity of the macro economy, irrespective of capital or labor contribution) and the fertility rate (rate of growth of the population). 

The analysts treat the first term optimistically.  I am being generous here (as they are, to Japan):  Japan had a “lost decade” in the 1990s, and the hoped-for productivity recovery didn’t materialize in the 2000s.  I link this phenomenon to demographics in “Decline of Economic Growth: Human Capital and Population Change.”  (The term “total factor” means, precisely, that it is not so-linked in other analyses.  The present analysis’ real departure is more subtle, however, again, because this work gets demographics “right.”)  So, then, Japan has had two lost decades.

Productivity (irrespective of capital and labor) is especially important in systems where capital is crowded-out by an all-consuming public sector (trust for a little while that I am not being alarmist here; we’ll return to it as we go into ‘implications’ below), and labor declines (a demographic hole).

So, optimistic views of productivity can help us gloss-over public-sector rapacity and labor collapse.  In other work I [and others] analyze on how labor collapse can be the harbinger of economic depression.  Other think tanks have spilt plenty of ink on public-sector encroachment.  Maybe I should weigh-in myself sometime.

If the first term is treated optimistically, the second term is treated fancifully.  Japan will rediscover its lost desire to have families, we are told.  Now, Japanese sociology deserves its own study, which I haven’t done yet!  But, closer to home, there are plenty of sociologically compelling reasons to ignore fairy tales of demographic recovery.  It is obvious that population replacement affects the fiscal picture, quantitatively.  (Sensitivities vary.  See the next paragraph and the ‘implications,’ below.)  But I have another, seriously wonkish point to make here:  The authors desire closed, solvable systems (in a very formal sense; they need so-called “transversality conditions”).  I think it’s time we jettison silly assumptions that dictate family recovery and start accepting the solution that asymptotes to zero.  The former is nowhere indicated by any of our real social policies anywhere.  Zero is a mathematically serious number.  It is fiscally serious too.

One will note that even without more reasonable demographics, the study still finds that there is nearly one pensioner for every working-age Japanese individual (by around 2090).  Let’s get into the ‘implications’ of that.


If Japan doesn’t reform its “Social Security” and “Medicare” system (they don’t use our terms), nor its tax system, they would have to raise consumption taxes to never-witnessed levels; likely beyond 55 percent. This must happen before 2040, which turns out to be an annus mirabilis – see below. 

That’s more than half of consumption, taxed away, if they just kick the can.  If Japan raises taxes quickly to the required level (by 2018; remember this is “quick” by public standards), that level “only” needs to be 35 percent or so.  The welfare-state paradises of Denmark and Finland have value-added taxes of about 25 percent.  Higher levels (still below the needed 35 percent) are hardly seen.  This, and the resistance to Prime Minister Abe’s comparatively small consumption tax increases, pretty much signals the infeasibility of this line of reckoning.

Obviously, what is going on here is that there are many retirees.  Workers need to be taxed as much to ensure enough money is transferred to keep the pensioners at their current (and expected) standard of living.  I have heard people say that this does not “necessarily” constitute an inter-generational inequity, but I personally find that to be a tough horse-pill to swallow.  I’ll let you decide; but let’s look into those inequities.

First, the study goes through other ways to balance the budget.  (The government is given the chance to do this in the long run; I’ll go into what this entails in two paragraphs.)  Besides substantial “Medicare” copays and deeper cuts to pensions, the analysts also consider cuts to other government programs.  For the US that would mean cuts to defense and poverty programs.  Of these ways, it turns out that increased copays look the most fair.  That is, the other balancing techniques have sometimes impressively large net income redistributions between the generations.  These can be something like 10 percent or more of lifetime income. I would imagine most would consider these rather large inequities.  Lowering pensions doesn’t level the playing field much from the (massive) consumption tax increases posited in the work. 

In pretty much any case, big inter-generational transfers are afoot for Japan, and about any other first-world country with similar welfare-state programs.

Now back to why 2040 is an annus mirabilis.  Elsewhere, Congressman Paul Ryan (referencing the CBO) mentioned an interesting phenomenon in fiscal modeling:  When the going gets tough, sometimes you can’t find a budgetary solution!  For the present study this happened at debt-to-GDP ratios below 4.  What this means is, if you don’t change taxes or spending or both by enough and soon-enough (see above) there is no path forward for the government fiscal apparatus.  Of course, this trusts, to a certain extent, the completeness of the computer’s algorithm in finding solutions.  Let’s soft-peddle that wonkish issue and say these algorithms are “reasonably good” at doing their job (searching for and finding a budgetary solution over time, if one exists). 

If that is the case, and the simulations reasonably mirror reality (they aren’t out-of-this world, I assure you; re-distributable GDP doesn’t fall from helicopters, after all), doing nothing up to 2040 means creating a set of real fiscal flows that cannot be sustained long term.  ‘Fiscal flows’ here means pension outlays, medical payments, programs, taxation, and bond issuances and payments.

This failure (“epic fail,” the younger generations once said) is the simulation analog of the situation where compounding interest payments take up more and more of government income.  That is, the government must float more debt just to pay interest on debt.  At that point (interest compounding), things get out of hand fast, and it is safe to say a credit event will occur.  For everyone apart from Dr. Krugman and maybe the Kirchners, this is a bad thing. 

For this post, because we are happily dealing with the easier and insular Japanese case, it means the necessity of a radical restructuring of how pensions and medical care are financed.  That is, the system doesn’t work.  But remember what we’re interested in studying is (Japanese) systems that do function.  This requires raising taxes, and also – see above – reducing program generosity.  (I tacitly assume one cannot realistically jettison the welfare-state apparatus, which, given what political interests are, is a Libertarian fantasy.)

It turns out things are worse.  Those earlier (high taxation) solutions already had gradual reductions in a reformed pension payments system baked-in.  I’m sure Prime Minister Abe fought hard to make those reforms reality.  Our system has these reductions baked-in too; it’s called the Trust Fund, and I’m sure it will prove a battle-ground in time as well (cf. Greece, Detroit).

So, even that reduction is not enough.  The authors of this important paper find Japan also needs a “Medicare” copay of 30 percent, in addition to (touching) Denmark’s rate of taxation.  Well, I guess we know what the future looks like. 

Except, it will probably be worse.