The Vatican recently released a report on “the present economic-financial system” of the world that is typical of all pronouncements about economics from the Catholic Church bureaucracy: It is astoundingly ignorant of even elementary economic concepts, and is written in the language of a C-/D+ high school writing assignment. There is confusion over the definition of very simple economic concepts like profit and GDP. There are 49 footnotes, but none of them makes reference to any economic literature. They are mostly speeches by Catholic clergy who don’t seem to have much knowledge at all of the subject they are pontificating about.
Entitled “Oeconomicae et pecuniariae quaestiones”, the report expresses alarm about “the growing influence of financial markets on the material well-being of most of humankind” and urges more government intervention, more regulation, more politics, more welfarism, more central planning, more taxes, and less freedom. As I said, it is typical of all such pronouncements about “Catholic social teaching” in the area of economics.
The first assumption the report makes is that there are no ethical guidelines in markets. The report then declares that the economy “needs ethics in order to function correctly.” And the kind of ethics needs to be “people-centred (sic),” says the Vatican. Well, yah. Is there any other kind of ethics other than human-centered? Robot-centered?? Does no one in the business world have any ethical guidelines, as the Vatican asserts?
There are almost too many straw-man arguments in the Vatican report to count. One of the first ones is the contention that in “our contemporary age” the “human person” is understood “individualistically,” which is assumed to be an immoral thing. Worse yet, he is viewed “predominantly as a consumer, whose “profit” consists only in “the optimization of his or her income.” There may be a few people who judge others according to the size of their bank accounts, but to claim that this is a pervasive characteristic of “our contemporary age” is absurd. Even mainstream economics models consumers as “utility” maximizers, not income maximizers. The Road to Serfdom: T... Best Price: $3.06 Buy New $1.99 (as of 03:40 EST - Details)
One would think the Catholic Church would support the classical liberal philosophy of individualism, defined by F.A. Hayek in The Road to Serfdom as simply respect for the individual – all individuals – and rejection of the notion that individuals should become pawns or slaves of government authorities. But no, as a collection of hardened collectivists and Marxist ideologues the Vatican denounces individualism.
Its use of the word “profit” here in the context of consumers and not businesses is also nonsensical. In fact, the Vatican seems totally befuddled on the subject of profit. Anyone who has studied introductory economics at all, or who has paid attention to how markets in his or her neighborhood (as opposed to inside the walls of the Vatican) work knows that in a free market one must serve one’s fellow man in order to profit. “Give me that which I want, and I will give you that which you want,’ as Adam Smith described the fundamental market relationship in The Wealth of Nations. The Vatican report announces that profit is illegitimate if “it falls short of . . . promotion of the human person . . .” This is rhetorical vagueness based on ignorance.
No economist would contend that GDP statistics are a measure of overall human well-being; they are simply a measure of “output” of goods and services during the course of a year. Of course, increased production produces prosperity and reduces poverty, homelessness, and other societal ills. The Vatican report invents yet another straw-man argument by announcing that “well-being must . . . be measured by criteria far more comprehensive than the Gross Domestic Product . . .” No kidding.
The Vatican’s view of politics and politicians is that of a naïve five-year-old child who still believes in Santa Claus. “Those entrusted with political authority” have as their vocation “servants of the common good” proclaims the Vatican. Because of this, says the Vatican, society needs to be much more politicized than it already is: “These factors make all the more imperative a renewed alliance between economic and political agents . . .” This will serve “the common good,” a phrase that seems to appear dozens of times in this short report. “Alliances” between “economic and political agents” is another word for crony capitalism, one of the great evils of contemporary society because it is a perversion of real, free-market capitalism. The Vatican wants more of this.
Of course, there is no such thing as “the common good” when it comes to democratic politics, for nothing is ever unanimous in politics except in very small groups of a few people. Such unanimity is the domain of the free market, where all voluntary transactions do in fact have unanimous consent. It is the domain of the civil society where individuals join together to support churches, create charities, do volunteer work, play sports, and perform thousands of other voluntary functions.
Government, by contrast, is always and everywhere about the use of violence, force, and intimidation to plunder one group of citizens for the benefit of others. It is about enslaving one portion of the population for the benefit of another, in other words, so that the enslavers – the politicians – can reap healthy “profits” themselves by manipulating the political process. Repeating “the common good” over and over and over again will not change this reality. The Wealth of Nations Best Price: $11.23 Buy New $17.09 (as of 04:45 EST - Details)
“Markets are not capable of governing themselves,” the Vatican announces, obviously oblivious to the week 1, Econ 101 concept that businesses that serve their customers well will be rewarded with profits, and those that do not will be punished with losses or bankruptcy. This is the first example in any elementary economics text about how markets do in fact “govern” themselves. Such texts are not likely to be found within the walls of the Vatican, apparently. Competition is a “governing” device that is more valuable to society than all the regulatory bureaucrats in the world.
Though the Vatican report does not cite any economics literature it does make a vague reference to various Marxist concepts by bemoaning, for example, that “what was sadly predicted a century ago . . . has now come true today,” that “capital annuity can trap and supplant the income from work.” This is a vague and poorly-enunciated version of the old Marxist story about capitalist exploitation of labor.
The Vatican denounces the idea of credit rationing by private markets in which those with bad credit histories are charged higher interest rates on loans than are those with good credit histories, denouncing the higher interest rates as “ethically illegitimate.” This most essential function of capitalism, says the Vatican, is “harmful to the health of the economic system,” exactly the opposite of the truth. The usury laws that are supported by the Vatican will have the inevitable result of no credit being granted to those with poor credit histories, forcing some of them to seek out organized crime for their black-market “loans.”
Not surprisingly the Vatican report also repeats the tired, old, leftist critique of “speculation” as also being “morally illegitimate.” So allowing people to spend their own money in ways that they want to spend it is “morally illegitimate,” but stealing that money from them through taxation and allowing say, the Washington, D.C political class, to spend the money on yet another aggressive war in the Middle East or to ruin more families and destroy the work ethic even more with a bigger welfare state serves “the common good.” Such is the Vatican’s position.
Even honest and successful businesses are morally dubious, says the Vatican, because being so successful in serving consumers (and creating good-paying jobs, enriching their communities, contributing to local charities, etc.) means they have profited by “unjustly disadvantaging others” (i.e., competitors who are not as good at serving their customers). This “disrupts” the undefinable “common good,” they say. Don’t strive for excellence in business, says the Vatican, for it may ”disrupt” the “common good.”
The Official Vatican Position on the nature of markets is that “they can be compared to a giant organism through whose veins, like life-giving sap, flow huge amounts of money.” Well, no, they cannot be characterized in such a ludicrous manner. Money doesn’t grow on trees, the Vatican will be shocked to learn. Profits are earned by successful entrepreneurs who combine land, labor, capital, technology, and knowledge of all kinds to produce products and services that fellow citizens value more than the value of all the resources that are used to create the products and services. Economic value (and jobs, incomes, and poverty reduction) is constantly being created by the people the Vatican Marxists denounce as morally illegitimate. It doesn’t just appear out of nowhere and “flow” randomly and “ungoverned” through some “giant organism.” The Problem with Socia... Best Price: $9.49 Buy New $11.93 (as of 06:45 EST - Details)
Financial markets in the U.S. are already strangled by thousands of pages of government regulations; a dozen or so cabinet-level government departments; pervasive regulation by the Fed, the SEC, and dozens of other regulatory agencies at the federal, state, and local levels of government, as well as the federal antitrust regulators and state attorneys general. That of course is not enough, says the Vatican “[P]ublic authorities should provide a certification for every product generation by financial innovation . . .” This would lead to another orgy of rent seeking whereby businesses would lobby governments to regulate or ban their competitors’ financial innovations but allow their own. It would also provide yet another opportunity for our Mafia-inspired politicians to effectively seek bribes (sometimes called “campaign contributions) in return for certifying financial instruments.
No mention at all is made of the Fed or any other central bank in the Vatican’s references to the “Great Recession” of 2008, only “immoral behavior of agents in the financial world.” But in order for this “immoral behavior” to have been the cause of the recession one of two things has to be true: Either 1) no such behavior existed prior to 2008; or 2) it did exist, but suddenly exploded and expanded exponentially. Neither is a possibility to any sane mind.
There was no “deregulation” of financial markets in the early 2000s, as some dishonest commentators have said. The Fed continued to enforce hundreds of regulations, as did dozens of other regulatory authorities. (The most idiotic of such claims was that: 1) Fed Chairman Alan Greenspan was a protégé of Ayn Rand in the early 1960s; 2) Ayn Rand was an advocate of laissez faire; 3) therefore, the Greenspan Fed totally and completely deregulated financial markets, causing the Great Recession. Historian John Steele Gordon blamed Ron Paul in a Forbes column, claiming that his criticisms of the Fed were so effective that the Fed became incapable of centrally planning and “stabilizing” the economy).
This reality is simply ignored by the Vatican report which claims that “massive deregulation” caused “destructive collapse.” The words “Federal Reserve” do not even appear in its lengthy discussion of the crash of 2008, nor is any other governmental entity named as having anything to do with it. The claim is based on a false assumption, and the real interventionist causes of the recession are studiously ignored.
Legal tax avoidance with offshore investments should be taxed out of existence, says the Vatican, because it supposedly “contributes to an additional impoverishment of the normal system of production . . .” There is no discussion of how such an outcome would occur and is therefore just more market-hating gibberish. The bottom line here is that the Vatican asserts that allowing individuals to keep more of their own hard-earned money for their families, their childrens’ education, to contribute to their favorite charitable causes, or to expand their businesses or start up new ones is morally reprehensible. Handing that same money over to D.C. politicians, by contrast, is saintly, says the Vatican.
Thus, the Vatican advocates “a minimum tax on the transactions accomplished offshore.” It claims that “it was calculated” that such a tax could produce funds that would “resolve a large part of the problem of hunger in the world.” Or, it could be squandered on more corporate welfare, or the bombing of more innocent civilians in the Middle East, or to further enrich the military/industrial/spying complex. There is no mention of what this “calculation” is, who made it, or where one can find a reference to it. How Capitalism Saved A... Best Price: $2.18 Buy New $7.37 (as of 12:45 EST - Details)
It is absurd and ridiculous that the Catholic Church hierarchy is so infatuated and obsessed with pursuing the further politicization of life since it is so contradicted by so many of the Church’s own teachings. Take the Seven Deadly Sins of Catholicism, for example, first enunciated in the sixth century. These are mortal sins that all break one or more of the Ten Commandments. They are also defining characteristics of politics and politcians.
There are some exceptions (although fewer and fewer each year), but in politics self pride trumps humility as the most successful politicians tend to be extremely egotistical with grossly-inflated self images (i.e., Bill Clinton, Donald Trump).
Envy poisons the heart of every crusader for “social justice” one of the Catholic Church’s favorite euphemisms for government-coerced income redistribution schemes. Wrath is what one experiences if one criticize the ruling political class. Such behavior is on display today in the form of “Trump Derangement Syndrome” and all censorship and even physical attacks on conservative or libertarian college campus speakers, among other things.
Sloth has long been associated with government bureaucrats and bureaucracies, the image of which is one man working with a shovel on the side of the road and four more standing around doing nothing. Or the welfare bum who makes no effort – ever – to find a job and become a part of working society.
Greed for power to dominate others and for the accumulation of wealth through political connections, not the market, is a hallmark of politics and politicians. The Clintons, Kennedys, and Bushes would be the poster families for such sin.
Gluttony is frequently on display with image of “state dinners” at which millions of tax dollars are devoted to throwing parties for the ruling class, the palaces built to house our rulers, their lavish spending on international travel, wining and dining, and other perks of politics at the expense of the taxpayers.
Then there is the old “tradition” of (mostly but not exclusively) powerful men using their political power to commit the deadly sin of lust by harassing and sometimes assaulting the females around them. The late Ted Kennedy, his brother the president, and Bill Clinton come to mind as among the more famous examples.
By so relentlessly promoting the greater politicization of society the Vatican is promoting more sin, and more unethical behavior, while castigating the far more peaceful and ethical system of voluntary trade and exchange and the international division of labor with economically-illiterate and fact-less arguments.