There’s a story that I heard, of a miner, a family down in– it was in the Appalachia area and the church there really thought that they were doing a great deal because they would go in, they said they would pick the poorest families and they would take them Christmas gifts and turkeys and that sort of thing. So they did. They went to this family and they presented them with all the gifts and gave them to them and all the children had gifts; they had a hot meal on the table. The church was so pleased with what they had done, and then they left. And the husband just broke down and cried because he said, “You mean in this community, we are thought of as the poorest family in the community?” The shame that came with that, with the charity that had been given so lovingly out of the best of intentions, but it absolutely shamed him and it destroyed his life. I heard it from his son. He said, “It destroyed my father because he said he was so shamed in front of the rest of the community because they didn’t think that he was a person of worth that they had to take care of his family for him.”
I’ve just returned to Rome following our Lisbon conference on Catholic Social Teaching, Free Enterprise and Poverty. Judging from the crowded auditorium and the lively comments from the audience, it was a very successful event. Here I’ll mention a few of my personal highlights from the event:
– Bishop Filippo Santoro gave an excellent presentation on the errors of using income transfers to achieve a more equal society, and especially the dependency the poor develop on the state.
— Professor Raúl Diniz reminded us that there is no particularly “Catholic” model of economics and that more Catholics should heed the advice of free-market or “liberal” economics in our time.
— Fr. João Seabra offered a spirited defense of Pope Pius XI’s anti-communism, which sadly still needs to be recalled twenty years after the fall of the Soviet Union.
— Paul Atkins explained to our Portuguese audience how decades of well-intentioned policies carried out by the US government to promote home ownership lead to the recent financial crisis and the lessons concerning regulation that should be drawn by developing countries.
— Samuel Grottis spoke about how successful businesses are not just profit-making but transformational.
— Professor João César das Neves exploded the myths surrounding the Chinese economy, calling it a seductive form of Marxism. (Apparently his PowerPoint presentation was quite a hit as well, but I couldn’t see it from where I was seated as the moderator of his panel. Perhaps the good professor will kindly share it with us on the PowerBlog.
There were many other intriguing points raised by the speakers and during the Q&A session about the challenges of capitalism to Christianity and the conference could have easily lasted another day or two. The viewing of the Poverty Cure trailer was especially well received.
On a side note, the Saturday before the conference, there was a large protest of public-sector employees against the Portuguese government’s austerity plans. From what I could tell from my meanderings through the streets of Lisbon that day, even the slightest reduction in benefits will meet with stiff resistance from the public-sector unions, which should put paid to the idea that government workers are somehow more concerned with the common good than private-sector workers.
All in all, it was an auspicious beginning for what many hope will be a continuing fruitful relationship between the Institute for Political Studies at the Catholic University of Portugal and the Acton Institute. Mui obrigrado to all who made this a great conference.
I’m currently in Lisbon ahead of Acton’s fourth conference in the seven-part series Poverty, Entrepreneurship, and Integral Development. Entitled “Catholic Social Teaching, Free Enterprise, and Poverty”, it will take place on Tuesday, November 9 at the Catholic University of Portugal. Click here for more information or if you happen to be in the Lisbon area and want to join us.
Tuesday’s conference was designed to focus on the Portuguese-speaking world, primarily because of its inter-continental scope and close connection to the Catholic faith, and to discuss the challenges posed by extreme poverty in developing countries and what can be done to address them. As often happens with our conferences, the reality of current events has a way of stressing the importance of principles that support a free and virtuous society.
I was still reeling from the news that the U.S. Federal Reserve will print $600 billion of new money upon my arrival yesterday when I read that the Portuguese prime minister criticized “speculative movements” for the country’s high bond yields.
Later in the day, I learned of the recent election of the left-wing Dilma Rousseff in Brazil, and her desires to continue her predecessor Lula’s economic reforms towards an environment of inflation targeting and broad fiscal responsibility. Rather surprising coming from a former guerilla fighter whose tendencies should be to distrust markets and increase the size and scope of the state.
And finally, the United Nations published its 2010 Human Development Report, which shows that developing countries have become much wealthier and healthier in the last 40 years, which not coincidentally is more or less when many of these countries have opened themselves up to the benefits of free markets, both domestically and internationally. The UNDP report’s central thesis that “people are the real wealth of a nation” echoes, of course, Pope John Paul II’s 1991 social encyclical Centesimus Annus and its proclamation that “man’s greatest resource is man himself” (n. 32).
What current events such as these are telling me is that while poorer countries have adopted free markets in order to improve the living conditions of their people, it is the developed world that has forgotten the lessons of wealth creation and free enterprise. The former colonials now have much to teach their former masters! Quite a remarkable shift that, in my mind, looks poised to stand for some time to come.
These and other delicious ironies of the day will certainly make for a stimulating event on Tuesday.
In the “Wealth Inequality Mirage” on RealClearMarkets, Diana Furchtgott-Roth looks at the campaign waged by “levelers” who exaggerate and distort statistics about income inequality to advance their political ends. The gap, she says, is the “main battle” in the Nov. 2 election. “Republicans want to keep current tax rates to encourage businesses to expand and hire workers,” she writes. “Democrats want to raise taxes for the top two brackets, and point to rising income inequality as justification.”
This is a constant refrain from the religious left, which views the income or wealth gap as evidence of injustice and grounds for reforming political and economic structures. In the video posted here, you’ll see Margaret Thatcher, in her last speech in the House of Commons on November 22, 1990, brilliantly defending her policies against the same charge.
Furchtgott-Roth zeroes in on a recent interview with Robert Reich, Secretary of Labor for President Bill Clinton and now a professor at the University of California, Berkeley.
[Reich said:] “Unless we understand the relationship between the extraordinary concentration of income and wealth we have in this country and the failure of the economy to rebound, we are going to be destined for many, many years of high unemployment, anemic job recoveries and then periods of booms and busts that may even dwarf what we just had.”
Mr. Reich is wrong. He and other levelers exaggerate economic inequality, eagerly, because they rely on pretax income, which omits the 97% of federal income taxes paid by the top half of income earners and the many “transfer payments,” such as food stamps, housing assistance, Medicaid and Medicare. This exaggerated portrait of inequality undergirds the present effort by the Democrats to raise income tax rates for people with taxable incomes of $209,000 a year on joint returns and $171,000 a year on single returns.
A more meaningful measure of inequality comes from an examination of spending. On Wednesday the Labor Department presented 2009 data on consumer spending, based on income quintiles, or fifths. This analysis shows that economic inequality has not increased, contrary to what the levelers contend.
Much of the discussion around this issue from the left uses the data to portray America as a heartless land of haves and have-nots. Here’s a quote from a Sept. 28 AP story on new census data, including income figures:
“Income inequality is rising, and if we took into account tax data, it would be even more,” said Timothy Smeeding, a University of Wisconsin-Madison professor who specializes in poverty. “More than other countries, we have a very unequal income distribution where compensation goes to the top in a winner-takes-all economy.”
Here’s an amazing statistic: The average 2009-10 faculty salary at Wisconsin Madison was $111,100. But the median household income for all Americans in 2007 (a roughly parallel comparison) was just over $50,000. Isn’t something out of whack here? Isn’t this evidence of severe economic injustice demanding structural reform? Sounds to me like the Bucky Badger faculty has been helping itself to second and third helpings at the “winner-take-all” buffet.
The faculty at Prof. Reich’s school do even better on average income: $145,800. I suspect some celebrity professors might even be … above average.
This is from “Capitalism: The Continuing Revolution,” an article by Peter Berger in the August/September 1991 issue of First Things. Emphasis mine.
… recent events have added nothing that we did not know before or, more accurately, should have known as social scientists or otherwise as people attentive to empirical evidence. The crucial fact here, of course, is the vast superiority of capitalism in improving the material standards of living of large numbers of people, and ipso facto the capacity of a society to deal with those human problems amenable to public policy, notably those of poverty. But, if this fact had been clear for a long time, recent events have brought it quite dramatically to the forefront of public attention in much of the world, and by no means only in Europe. It is now more clear than ever that the inclusion of a national economy in the international capitalist system (pace all varieties of “dependency theory”) favors rather than hinders development, that capitalism remains the best bet if one wishes to improve the lot of the poor, and that policies fostering economic growth are more likely to equalize income differentials than are policies that deliberately foster redistribution.
[ … ]
… to opt for capitalism is not to opt for inequality at the price of growth; rather, it is to opt for an accelerating transformation of society. This undoubtedly produces tensions and exacts costs, but one must ask whether these are likely to be greater than the tensions and costs engendered by socialist stagnation. Moreover, the clearer view of the European socialist societies that has now become public radically debunks the notion that, whatever else may have ailed these societies, they were more egalitarian than those in the West: they were nothing of the sort. One must also remember that, comparatively speaking, these European societies were the most advanced in the socialist camp. The claims to greater equality are even hollower in the much poorer socialist societies in the Third World (China emphatically included).
Robert Joustra, writing on the website of the Canadian think tank Cardus, has published a thoughtful review of Jordan Ballor’s Ecumenical Babel: Confusing Economic Ideology and the Church’s Social Witness. The reviewer understands that when,
… controversial social science infiltrates ecclesial confessions, twin dangers emerge: compromising the integrity of the Gospel, and splitting the church on political and economic issues. Ecumenical superstructures claiming to speak with ecclesial authority on technical matters worry me, even when technical experts are enlisted. The point is not just that expertise can be limited in these cases—it’s that different institutions have differing spheres of authority and competency.
How, then, should the church speak? Ballor provides good signposts by talking about churches preaching justice, rather than prescribing policy. The environment, for example, must be stewarded and protected, certainly. But does that specifically mean cap and trade or renewable energy investment? Should the church as denomination really have an opinion on these particular issues? Wouldn’t such an opinion violate its own sphere of authority and uncomfortably blur lines with the task of government and public policy? Accountability on principles is one thing; policy advocacy is quite another.
Joustra weighs in none too soon. Over the past few days, Christian ecumenical organizations have been busy issuing press releases and official statements in and around and following the UN summit on the Millennium Development Goals (MDGs) which took place in New York on Sept. 20-22.
Typical of the language employed by the ecumenical-industrial complex (Jordan’s apt phrase) are these lines from a letter sent by World Council of Churches general secretary Rev. Dr Olav Fykse Tveit to UN Secretary-General Ban Ki-moon:
In pursuit of just trade, churches have specifically called for international regulations to end agricultural import dumping which has displaced and impoverished millions of small farmers. Just trade also means addressing declining terms of trade faced by developing countries by establishing international commodity agreements setting stable base prices for products.
[ … ]
Insofar as nation-states have the responsibility for upholding peoples’ economic, social and cultural rights, the MDG Review Summit must put in place binding mechanisms and accountability frameworks to ensure that commitments are met and the maximum of resources are made available for the MDGs.
You would think from reading this that ending global poverty was simply a matter of the UN master minds “regulating” the global economy and dumping more money into the MDG programs. Fortunately, no such power is vested in the UN.
Read the Joustra review. He warns that “a tyrannizing ecumenical agenda fashioned from all-too-controversial political and economic assumptions stands to do more harm than good.” Is it too much to hope that Ecumenical Babel gets a reading at the UN or WCC?
Forgive the blunt title of this blog post, but the point needs to be made in no uncertain terms.
The Zenit News Agency has interviewed John Medaille, author of Toward a Truly Free Market: A Distributist Perspective on the Role of Government, Taxes, Health Care, Deficits, and More, which calls for a direct if brief (more later, perhaps – I have yet to read the book) response from this Catholic defender of the market economy.
Whether or not Pope Benedict’s Caritas in Veritate is a boon to “alternative economics” as the Zenit interviewer claims, the market economy has come under attack from just about every corner since the global financial crisis of 2008. It’s easy enough to kick a system when it’s down, even when there’s plenty of blame to go around. Some critics, however, have been suffering through many decades of capitalist triumphalism to get their revenge. Among these are the distributists.
As I’ve noted in some recent blog posts, distributism has its origin in the writings of G.K. Chesterton and Hilaire Belloc who, for the brilliant Catholic apologists they were, seem to have known very little about economics. As the Zenit interviewer remarks, “many are skeptical, and believe distributism is simply romantic agrarianism, or worse, just an aesthetic sensibility, without any real practical solutions.”
Identified as a “neo-distributist,” Medaille wants to make up for the deficiencies of his fathers. He takes economics more seriously and argues that distributism is the “truly” free-market system compared to capitalism or socialism, though it should be remembered that Chesterton and Belloc also supported distributism in the name of economic liberty, private property and less interference from the state. Be that as it may. The question is ultimately whether distributism, neo- or paleo-, lives up to its claims as an “alternative” or “third-way.”
Medaille starts by critiquing the related notions that economics is a physical, rather than a human, science and that economics has nothing to do with ethics, especially justice. I don’t know who he is debating here. When I studied economics as an undergrad at a large secular university and worked as an international economist for the U.S. government, I may have come across such types, though no one was so brash to say that ethics didn’t matter. But it definitely does not describe those of us who appreciate Austrian economics and promote a Catholic understanding of the market economy.
More to the point, the question is how economics as a human science is to “practice” justice. How exactly can an economic system ensure justice between a buyer and a seller who come to a common agreement? Doesn’t the virtue of justice require just persons? And isn’t legal justice the purview of the state that legislates against force, fraud, theft, etc.?
For an example, Medaille says that, in matters of trade, foreign financing of domestic consumption is impoverishing to both parties and presumably unjust. While I could be convinced of its imprudence or undesirability in certain situations, I fail to see why or how such financing is always and everywhere unjust and therefore deserving of a blanket condemnation.
Medaille then states his case for distributism as the truly free-market system compared to capitalism and socialism. He makes the obvious point that any system that concentrates power is bound to leave individuals worse off and less free. Socialism is clearly guilty as charged but does capitalism necessarily lead to greater concentrations of economic power? The problem of concentrated power mainly occurs when corporations and the state work together – a.k.a. corporatism – which hardly describes a market economy worth defending and may even resemble the distributist model.
A truly free-market economy must allow free competition; it is only when capitalists collude to restrict competition that power is concentrated and freedom restricted. Yet this is precisely what guilds seek to do. Or have the neo-distributists distanced themselves from Chesterton and Belloc’s defense of guilds and critique of competition and advertising? I cannot tell.
Medaille is on firmer ground when he reminds us that the government should be doing less and that government interference often leads to the concentration of power. But he then ruins his case by looking to the state and trade associations to collude, which seems to be acceptable so long as it all happens at a local level.
Medaille explicitly proposes using tax policy, property law, licensing authorities and other political means to the advantage of some over others. But how is local government somehow exempt from draconian or overly restrictive interference? In fact, the history of republican government is full of such examples, especially in cases where an obstinate minority asserts its rights against the majority. The concentration of power often begins “small”, “locally” or “popularly” and grows from there; see Hayek’s The Road to Serfdom for a well-known demonstration of the phenomenon.
In the end, I am left wondering just what the distributists think is so good about economic freedom. As far as I can tell, it is not about using our God-given skills and talents through the division of labor for the benefit of all, and I see absolutely no mention of poverty reduction, longer life expectancies, medical and technological advances, the social virtues encouraged by commerce, and other goods brought about by economic freedom. The distributist vision of economic liberty and private property seems to feed a misguided notion of self-sufficiency and pride that is as antithetical to Catholic social teaching as materialism and consumerism.
Furthermore, the neo-distributist case for free markets is riddled with the same contradictions and problems that plagued its predecessor. Making the case against socialism and a mythical laissez-faire state of affairs is simply not good enough these days. Instead of urging serious Catholics and others who take ethics seriously to seek new economic models or “lifestyles,” why not encourage them to understand how markets work and what moral freedom and responsibility require from us as citizens and in the marketplace?
On his recently launched Ambiguorum Blogis site, Fr. Michael Butler is reviewing Elizabeth Theokritoff’s Living in God’s Creation: Orthodox Perspectives on Ecology (St. Vladimir’s Seminary Press, 2009). Fr. Michael, who joined us for Acton University 2010, examines the author’s exhausted earth meme, beginning with this quote from the book:
It is hard to escape the conclusion that with an ever-growing human population, it is not enough for humanity as a whole to do more with less; individually, we must also learn to do less with less (Theokritoff, p. 21).
Fr. Michael comments:
This statement is astonishing. It is a call to reduce our quality of life, and I find it hard to square with her concern for the poor and the weak, for whom learning “to do less with less” is a recipe for catastrophe. She says, on p. 19, “most environmental problems take their toll on the poor and weak long before they affect those who can afford to live far from the landfills, upwind of the factories or power plants, and well above sea level”. If the poor and the weak suffer in our current economy, their suffering in a reduced economy will be unspeakable. A vibrant economy helps everyone; poverty in the United States, for example, is incomparable with poverty found elsewhere in the world. The poor and weak will not be helped by making everyone else poorer and weaker.
The author spends some time describing a “culture of control,” which is “a way for us to arrange the world for our own convenience, with no reference to some higher will for the world or for us” (p. 22). She goes on,
Many people regarded it as quite normal, for instance, to have strawberries to eat in mid-winter, relax and a cool house in mid-summer in a subtropical climate, or sit on a well-watered lawn beside the swimming pool in a semi-desert. (Theokritoff, p. 23)
I freely disclose that I eat strawberries in midwinter. My winter strawberries come from Mexico and Chile. What is for me an “indulgence” (Theokritoff’s term) is probably not an indulgence for the Latin American farmers who grow the strawberries and depend upon their sale for their livelihood. Taking to task people who live in the South for air-conditioning their homes strikes me simply as mean-spirited. She might as well take northerners to task for presuming to heat their homes in the winter. I don’t have a swimming pool, so I won’t comment on that part.
Fr. Michael has been a priest in the Orthodox Church in America for more than 15 years in Michigan and Ohio. See his bio and scholarly interests here. And put him on your blog roll and newsreader today.
In a recent article in World magazine, Acton senior fellow Marvin Olasky urged evangelical minister Jim Wallis to drop the pretense of being post-partisan. Olasky, World magazine’s editor-in-chief, went on to assert that (1) Wallis’s organization, Sojourners, received money from the foundation of secular-leftist George Soros, and that (2) Wallis had lent the Sojourners mailing list to the Obama campaign.
In an interview here, Wallis appears to deny these charges. But now former Acton research fellow Jay Richards has followed up with some additional findings in a new piece at NRO. The findings strongly support Olasky’s claims, and make it all the more unclear why Wallis would respond to them by denying them and calling Olasky a professional liar.
Richards has been keeping tabs on Wallis for a while now. In an October 2005 review of God’s Politics, Richards shows how Wallis sits squarely on the left and has even capitulated to the secular left on key social issues. The book review also examines Wallis’s questionable biblical exegesis as well as some of the economic fallacies that drive much of Wallis’s political thinking.
Wallis may mean well, but the big-government policies he advocates have been a wrecking ball to the very communities he seeks to help. An Acton/Coldwater video short examines why the left’s approach to poverty alleviation has done so much harm. It’s called How not to Help the Poor.
The Detroit News published a new column today by Acton president and co-founder Rev. Robert A. Sirico:
Faith and Policy: Free markets, not aid, will help poor nations best
Rev. Robert Sirico
At the recent G8 and G20 meetings in Toronto, a hue and cry was raised by nongovernmental organizations and other activists about the failure of industrialized countries to make good on promises to raise aid to the developing world.
Instead, the activists should have called for a summit of African and Asian leaders and others who are calling for expanded trade, not more dependency in the form of foreign aid.
It has not been aid, after all, that has lifted hundreds of millions of people out of poverty in China and India but the move to market-oriented reforms, freer competition and the unleashing of the creative, entrepreneurial spark in the human person. In a recent book, one of India’s former finance ministers put it this way: “We got more done for the poor by pursuing the competition agenda for a few years than we got done by pursuing a poverty agenda for decades.”
The poverty agenda ignores, for the most part, market mechanisms in favors of huge grants to government leaders, who often pocket large chunks of the aid. The market makes room for the free interactions of people pursuing their own limited economic goals, in an almost infinite number of daily interactions. The market economy, despite the superficial appearance of chaos, ends up creating a larger social or common good for the largest number of people.
When we speak of the idea of the common good, we need to also be mindful of the political and juridical institutions that are most likely to bring it about. The answer is not to be found in the “commonality of goods” but in the very institutions that the socialists worked so hard to discredit. Let me list them: private property in the means of production, stable money to serve as a means of exchange, the freedom of enterprise that allows people to start businesses, the free association of workers, the enforcement of contracts, and a vibrant trade within and among nations (with benefits that would ultimately flow to Michigan) to permit the fullest possible flowering of the division of labor.
In an interview with Der Spiegel published this month, when Rwandan President Paul Kagame was asked a question about Africans complaining of exploitation, he responded that it was the wrong question: “Why don’t we talk about how we can get on our feet on our own? We do not always want to be the victims and to serve as a battleground for foreign interests.”
The market economy moves Africa and other developing nations away from dependency and offers the hope of real growth, a growth that provides vastly improved conditions for all.
Our gifts are to be put to work for the common good, and as such our talents and our wealth need to be put into action — not reduced to a line item in some aid bureaucrat’s master plan.
In this week’s Acton Commentary, I discuss whether the Environmental Protection Agency’s planned regulation of carbon emissions can be justified from a Christian perspective. The EPA has found that carbon emissions endanger “public health and welfare,” and it is on track to begin regulating vehicle and power plant emissions.
Environmentalists claim that policies targeting carbon emissions, such as EPA regulation or a cap-and-trade program, will stimulate the economy by creating green jobs. Unfortunately, this is not the case – the government does not have the ability to create jobs.
Rather than stimulating the American economy, full regulation of carbon emissions will damage it severely. Essentially, a cap or a regulatory burden on carbon emissions would create energy scarcity, making it just as expensive to purchase energy from fossil fuels as it is to purchase energy from “renewable” sources. The supply of efficient energy would drop in order to encourage production and consumption of inefficient energy, and prices would skyrocket as a result.
Barack Obama himself admitted, as a presidential candidate, that rising energy prices form a crucial component of emissions regulation.
It’s not just energy prices that will rise. Prices for virtually all other goods and services will rise as well, because it takes energy to produce them. It takes energy to get a vegetable from a farmer’s field to your kitchen table. It takes energy to plant the vegetable, cultivate it, harvest it, transport it, keep it fresh, sell it in a lighted grocery store, drive it from the grocery store to the house, and cook it.
If energy expenses increase at every stage of the vegetable’s journey, what will happen to the price of the vegetable? It will rise. And rising prices will have the worst impact on the poor. Before Christians jump on the bandwagon of carbon politics, they would do well to think through not just the good intentions of climate policy, but the real-world consequences.
Read “In the ‘Green’ Economy, the Poor Pay More” on the Acton website.