We Shouldn't Turn to the Church for Economic Analysis

Last week saw the publication of an apostolic exhortation written by Pope Francis, Evangelii Gaudium. The wide ranging document (over 200 pages long) is self described as "on the proclamation of the gospel in today's world" and opens:

The joy of the gospel fills the hearts and lives of all who encounter Jesus. Those who accept his offer of salvation are set free from sin, sorrow, inner emptiness and loneliness. With Christ joy is consistently born anew. In this Exhortation I wish to encourage Christian faithful to embark upon a new chapter of evangelization marked by this joy, while pointing out new paths for the Church's journey in years to come.

So, naturally, everyone decided it was about economics.

Yes, the document does touch on economics. Page forty-six has the section that generated headlines:

We have created a "throw away" culture which is now spreading. It is no longer simply about exploitation and oppression, but something new. Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society's underside or its fringes or its disenfranchised -- they are no longer even a part of it. The excluded are not the "exploited" but the outcast, the "leftovers".

In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and I the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting.

There's something a bit frustrating about this one section out of a wide-ranging document which addressed everything from the need for a personal discipleship to Christ, to the importance of marriage to how homilies should be written to abortion and the sacredness of unborn life becoming the one passage which people reading news coverage of the exhortation hear about. It seems typical of the urge, both inside and outside the religious community, to reduce any complicated message to its most political application. "Pope Condemns Capitalism" is a headline which allows one side of the political spectrum to cudgel the other, while "Pope Calls Everyone To More Personal Relationship With Christ" just doesn't have that conflict-driving ring. Though, of course, it's the latter message that we arguably need to hear more. Given the way this reaction has developed I can't help but be reminded of the intro to the Hitchhiker's Guide to the Galaxy radio play:

This planet has — or rather had — a problem, which was this: most of the people living on it were unhappy for pretty much all of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movement of small green pieces of paper, which was odd because on the whole it wasn't the small green pieces of paper that were unhappy.

Francis, I think, gets this, and the focus of his exhortation is not primarily economic. Be that as it may, Pope Francis did certainly choose to include the controversial section, and so it's not unreasonable to address it, though I think people should be spending more time on the rest.

The Pope's comments have received attention even outside Catholic circles. For instance, Harvard economist and textbook author Greg Mankiw offered the pope's remarks a pretty skeptical reception. There have been a range of Catholic reactions as well, from politically left-leaning Catholics trumpeting "I told you so!" to politically right-leaning ones muttering that the pope does not know what he's talking about on economic matters.

Pascal-Emmanuel Gobry has provided a more thoughtful approach in First Things with a piece entitled "Let’s Listen to Pope Francis on Economics". Arguing that Catholics should allow their preconceptions to be challenged by the pope, Gobry writes:

I’ve long believed in free market economics and believed that the Church would do a lot of good in the world if it embraced it. And I still believe those things. But what the financial crisis has laid bare is that the most conventional version of free market economics was actually dead wrong.

It would have been a pastoral, doctrinal, and theological disaster if the Church had, over the past twenty years, blindly subscribed to what I’ll now refer to as the Washington Consensus. What in 2006 looked like the invisible hand of the market leading the financialization of the economy turned out to be a disastrous instance of crony-capitalist central planning. And when the Pope denounced it, I was among those condescendingly explaining to him that he didn't get it. What it turns out is that economists actually know very, very little, and that a lot of what we thought we knew turned out to be wrong. Given this hard-to-swallow fact, the prophetic voice of the Church that reminds us of what must be the ends of economic activity is very salutary.

I do think that free markets have allowed a great increase in economic growth throughout much of the world, and that this has been a great human good, but I don't think that the Church would "do a lot of good in the world" if it embraced capitalism. Indeed, I very explicitly think that the Church should not endorse capitalism.

Why not?

Because the Church is not on earth to conduct economic analysis any more than it is on earth to decide whether the sun is at the center of the solar system or the manner of the origin of species. Its job is not to figure out what sort of economic system will result in the highest growth or the greatest equality or any other such thing. Its job is to transmit God's graces to us through the sacraments, and to preserve and pass on to us His teachings. These teachings are not simply abstract, and throughout history (including the modern social encyclicals) the Church has sought to apply the teachings of Christ to the changing situations (the "new things" of Rerum Novarum) in which Catholics find themselves living out their lives.

However, while the application of moral principles to new situations most absolutely includes situations which we think of as "economic", and thus may have a certain appearance of being "economic teachings" they are not in fact economic analysis of the sort which we normally think of under the term. The Church's insight here is moral rather than economic. The Church teaches on how we ought to treat each other as people, not what actions will result in the greatest efficiency, the greatest growth, or the greatest profit. As such, the best response to Church teaching on economic interactions may not be "the state should require that everyone behave the way the Church says they should", since that may well not have the intended consequence. (For example, it may be far more beneficial for society to have need based programs which assist the working poor than to have a high one-size-fits-all minimum wage, in part because doing this would remove from employers the dilemma of either paying some workers more than the market value of their work because of their needs, or else being undercut by those employers who do.)

Reading Francis's exhortation with care (and in the light of some of the translation issues which have come up) I think it's fairly clear that Francis is not denying the efficacy of markets as functioning economic mechanisms, but rather condemning those who imagine that because markets allow for greater growth, and growth tends to help society as a whole, that by supporting markets we have now fulfilled the whole of our obligations to our fellow men. Far from it, the fact that on average people do better in a given situation does not mean that some people are not still doing very badly, and that we have a duty to help those people in every way we can.

Importantly, this critique applies no matter what one's economic preferences. Even after supporting what one imagines to be the right economic policies, one still must help those who find themselves in difficulties in whatever the prevailing situation may be. This applies to slacktivists on the left just as much to the misguided free enterprise fans who seem irresistibly drawn to writing defenses of Scrooge this time of year.

Notes on the Vatican Statement on Global Financial Reform

UPDATE:
Thinking this post (written last night) over again in the light of morning, it strikes me that while getting a lot of the real text out there is doubtless is a real service, many people simply won't read the whole thing, so I'm adding the following summary bullets at the top. The document:

- Blames easy money and easy credit for the origins of the global financial crisis (classic Austrian business cycle explanation)
- Criticizes a "liberalist approach" to avoiding intervention and the failure to bail out Lehman Brothers (notes later that financial institutions should be bailed out on condition of contributing to the real economy through "virtuous behavior")
- Notes that globalization has been a huge benefit to many, but has left others behind
- Calls for people to remember spiritual and ethical considerations rather than putting their hope in technocracy
- Expresses concern that speculation has hurt global markets and the developing world in particular
- Praises the G7 and G20
- Suggests the need for a global "authority" stronger than the UN of IMF
- Says that such a world authority would have to be voluntary in nature, not use force or compulsion, and would probably start as an association of a smaller number of nations (like the G20 or EU)
- Expresses concern that financial markets have grown faster than "real markets"
- Endorses the idea of a world central bank
- Lists as purposes of a world authority and central bank that it would: 1) encourage free trade and efficient markets, 2) prevent excessive government deficits, 3) pursue sound money, 4) prevent speculation and excessive credit, 5) fund itself via a financial transaction tax

Now on to the detailed post.

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If my circle of Catholic acquaintance on Facebook is any guide, there's been a fair amount of buzz going around about the "note" released Monday by the Pontifical Council for Justice and Peace: TOWARDS REFORMING THE INTERNATIONAL FINANCIAL AND MONETARY SYSTEMS IN THE CONTEXT OF GLOBAL PUBLIC AUTHORITY. Those of a more left-leaning description did some preemptive crowing that this would "put the pope to the left of Nancy Pelosi", but having downloaded a copy of the full document yesterday I figured I'd avoid any commentary, read the document cold, and post thoughts on the text itself.

First, a little context: This document was written by the Vatican's Pontifical Council for Justice and Peace, an office responsible for providing thought on social justice issues. This is, thus, not something written by the pope, but it does come from people that Benedict XVI has put in charge of thinking on political and economic issues. The document itself is fairly short and less densely written than most encyclicals. Given what it covers, it seems to me that there's not really any teaching presented here, per se, but rather an attempt to summarize the understandings of certain experts about the current global economic situation, and then to apply well established Catholic moral teachings to the current world situation.

Without getting further into editorializing, I'm going to work through a number of quotes from the text while providing some notes with my own thoughts on it. I've preserved the numbered headings of the original document. (The document is in the block-quote indents, my notes are in the out-dents.)

1. Economic Development and Inequalities

In material goods markets, natural factors and productive capacity as well as labour in all of its many forms set quantitative limits by determining relationships of costs and prices which, under certain conditions, permit an efficient allocation of available resources.

This is a fairly standard observation, but as a pricing guy I found it interesting that one of the first things in the document was a note to the efficiency of price as a means of achieving efficient markets.

In monetary and financial markets, however, the dynamics are quite different. In recent decades, it was the banks that extended credit, which generated money, which in turn sought a further expansion of credit. In this way, the economic system was driven towards an inflationary spiral that inevitably encountered a limit in the risk that credit institutions could accept. They faced the ultimate danger of bankruptcy, with negative consequences for the entire economic and financial system.
...
The speculative bubble in real estate and the recent financial crisis have the very same origin in the excessive amount of money and the plethora of financial instruments globally.

This is interesting in that it is an essentially Austrian account of the sources of the financial crisis: blaming it on easy money and easy credit. As Blackadder observed a while back, this wouldn't be the first time that a Vatican official has taken an explicitly Austrian (and anti-Keynsian) stance on economic issues.)

If nothing else, this should serve as a reminder that thinking on economic issues coming out of the Vatican tends not to fit well in American political alignments. As if to emphasize this, the next interesting point comes from what to American eyes would seem very much the other side of the political spectrum:

A liberalist approach, unsympathetic towards public intervention in the markets, chose to allow an important international financial institution to fall into bankruptcy, on the assumption that this would contain the crisis and its effects. Unfortunately, this spawned a widespread lack of confidence and a sudden change in attitudes.

Here the author blames the actual start of the 2008-present global financial crisis on the failure to bail out Lehman Brothers. (There's something to this, though arguably part of the reason this was catastrophic is that Lehman appears to have expected to be saved after the way Bear Stearns kind-of was, and thus avoided some painful but possible solutions to their problems before they absolutely hit critical.)

This endorsement of bailing out Lehman is probably unlikely to be palatable to either the populist right or the populist left, but it's certainly an arguable claim from an establishment perspective.

Turning to the more general world scene:

Global economic well-being, traditionally measured by national income and also by levels of capacities, grew during the second half of the twentieth century, to an extent and with a speed never experienced in the history of humankind.

But the inequalities within and between various countries have also grown significantly. While some of the more industrialized and developed countries and economic zones – the ones that are most industrialized and developed – have seen their income grow considerably, other countries have in fact been excluded from the overall improvement of the economy and their situation has even worsened.
...
Nonetheless, it should be reiterated that the process of globalisation with its positive aspects is at the root of the world economy's great development in the twentieth century. It is worth recalling that between 1900 and 2000 the world population increased almost fourfold and the wealth produced worldwide grew much more rapidly, resulting in a significant rise of average per capita income. At the same time, however, the distribution of wealth did not become fairer but in many cases worsened.

This is one of those passages you can probably expect left leaning Catholics to attempt to throw at right-leaning Catholics for some time. There's a strong belief in some sectors that if developed countries are more wealthy than undeveloped ones, that's because they somehow "stole" their money from the undeveloped ones. I'm not at all clear that this is the only way that the above passage can be interpreted -- especially given that this is still obviously a rough translation that hasn't even been fully spell-checked. But I imagine that, regardless of the intent of the authors, we can expect to see phrases like "other countries have in fact been excluded from the overall improvement of the economy" again.

What has driven the world in such a problematic direction for its economy and also for peace?

First and foremost, an economic liberalism that spurns rules and controls. Economic liberalism is a theoretical system of thought, a form of “economic apriorism” that purports to derive laws for how markets function from theory, these being laws of capitalistic development, while exaggerating certain aspects of markets. An economic system of thought that sets down a priori the laws of market functioning and economic development, without measuring them against reality, runs the risk of becoming an instrument subordinated to the interests of the countries that effectively enjoy a position of economic and financial advantage.

On the one hand, this section seems to endorse the idea that classical liberalism (free markets, free societies, etc.) don't necessarily work all that well -- however I think the second half is perhaps of greatest importance, where it's stated that no system can be taken as self-validating, as not requiring any kind of verification from the real world. When people accept ideological conclusions without caring whether they actually pertain to how things work, there's invariably trouble. This is the case whether one is talking about the planned economies of the left (that somehow never work as advertised) or the theoretical libertarian utopias of Ayn Rand and her acolytes. (The difference is that I would tend to see planned economies as having been tried more times than Rand's ideas.)

In his social encyclical, Benedict XVI precisely identified the roots of a crisis that is not only economic and financial but above all moral in nature. In fact, as the Pontiff notes, to function correctly the economy needs ethics; and not just of any kind but one that is people-centred. He goes on to denounce the role played by utilitarianism and individualism and the responsibilities of those who have adopted and promoted them as the parameters for the optimal behaviour of all economic and political agents who operate and interact in the social context. But Benedict XVI also identifies and denounces a new ideology, that of “technocracy”.

Again, there's probably material here to make just about everyone at least a bit uncomfortable. I'm willing to bet that the author considers at least some of what I would consider sensible market-drive ideas to be "utilitarian" or examples of "individualism" -- though I would disagree. At the same time, a "technocracy" (and a somewhat utilitarian one) is precisely what many in the current progressive establishment have been pushing for. Obama was, after all, supposed to be the technocrat who would save everyone, the man who would be competence to the White House. (How's that working for ya'll...?)

2. The Role of Technology and the Ethical Challenge

However, to interpret the current new social question lucidly, we must avoid the error – itself a product of neo-liberal thinking – that would consider all the problems that need tackling to be exclusively of a technical nature. In such a guise, they evade the needed discernment and ethical evaluation. In this context Benedict XVI's encyclical warns about the dangers of the technocracy ideology: that is, of making technology absolute, which “tends to prevent people from recognizing anything that cannot be explained in terms of matter alone” and minimizing the value of the choices made by the concrete human individual who works in the economic-financial system by reducing them to mere technical variables. Being closed to a “beyond” in the sense of something more than technology, not only makes it impossible to find adequate solutions to the problems, but it impoverishes the principal victims of the crisis more and more from the material standpoint.

This is precisely the kind of double-edged insight which I think it's useful to find in this kind of document. Properly understood, it underscore the hollow core both of consumerism and of the "where's my bail out?" supporters of a cradle to grave welfare state. For all that collectivist societies are supposed to be more "caring", it is hardly a coincidence that it is in the most comprehensive welfare states, in northern Europe, that we see the most total breakdown of the family and of traditional belief. A view of human society which looks only to the filling of material wants, whether through consumerist markets or the nanny state, is a tragically self centered and incomplete view.

3. An Authority over Globalization

On the way to building a more fraternal and just human family and, even before that, a new humanism open to transcendence, Blessed John XXIII’s teaching seems especially timely. In the prophetic Encyclical Pacem in Terris of 1963, he observed that the world was heading towards ever greater unification. He then acknowledged the fact that a correspondence was lacking in the human community between the political organization “on a world level and the objective needs of the universal common good”. He also expressed the hope that one day “a true world political authority” would be created.

This is true. It seems to me that the record of history is that this is not very practical, but just as it was important in the 19th century for faithful Catholics who believed the benefits of a free and democratic society to recognize that the Church authorities generally favored (rightly or wrongly) the old world of throne and altar, it is important now for Catholics (like myself) skeptical of the idea of a world political authority to recognize that the last several popes have expressed great hopes for the UN and for an eventual authority of similar scope with "more teeth". We'll shortly get to what I think are some of the inherent contradictions of this desire given those same pope's views on political domination and war.

The purpose of the public authority, as John XXIII recalled in Pacem in Terris, is first and foremost to serve the common good. Therefore, it should be endowed with structures and adequate, effective mechanisms equal to its mission and the expectations placed in it. This is especially true in a globalized world which makes individuals and peoples increasingly interconnected and interdependent, but which also reveals the existence of monetary and financial markets of a predominantly speculative sort that are harmful for the real economy, especially of the weaker countries. [emphasis added]

This certainly represents a certain conventional wisdom, but as a matter of actual fact I'm not clear on the extent to which "speculation" actually drives up the costs of real products needed by developing countries. After all, speculators are speculating on what the future balance of supply and demand will be. If they're wrong, they lose money. If they're right, they simply cause prices to adjust slightly sooner than they otherwise would.

In the short term there could be a very real problem here. If a speculative bubble on a commodity causes prices to rise in the short term, and a buyer is short enough on supply he has to buy during the bubble rather than waiting for it to pop, it doesn't do him any good that the bubble pops later.

However, speculation (and sheer volume of trading) can also help to smooth out prices by passing around more information. And much of the worst poverty is caused either by political forces (using hunger as a weapon) or in those areas of the world where people are still living in subsistence economies rather than buying food and other essentials that pass through the global commodity markets.

This is all rather abstruse wonkery, perhaps mostly of interest only to people (like me) with an excessive interest in pricing, but it seems to me that there are two sides to this question.

This is a complex and delicate process. A supranational Authority of this kind should have a realistic structure and be set up gradually. It should be favourable to the existence of efficient and effective monetary and financial systems; that is, free and stable markets overseen by a suitable legal framework, well-functioning in support of sustainable development and social progress of all, and inspired by the values of charity and truth.

Once again, this is the sort of thing that both sides will find things to dislike. Many on the left have hopes for an overturning of "the nation state" as a means of power. However, many of those same people hope to move "beyond capitalism". For instance, earlier this year we had the specter of Terry Eagleton writing in Commonweal under the title "Was Marx Right" about how, among other things, we should abandon markets for a more "democratic" way of distributing resources. And yet, here we have the authors of this document endorsing a "supranational Authority" with the express purpose of providing "free and stable markets overseen by a suitable legal framework". Clearly, that's not something which those who consider Cuba to be a leading example to the world are going to endorse. At the same time, those who have (as recent events would perhaps suggest, rightly) questioned the efficacy of organizations such as the European Union and its central bank are going to be deeply skeptical of an even larger bureaucratic organization, even if it is supposed to foster free markets.

There are also the practical questions:

It is a matter of an Authority with a global reach that cannot be imposed by force, coercion or violence, but should be the outcome of a free and shared agreement and a reflection of the permanent and historic needs of the world common good . It ought to arise from a process of progressive maturation of consciences and freedoms as well as the awareness of growing responsibilities.

This all sounds very good, but it doesn't seem to tie very well with human experience. Authorities which aren't imposed with "force, coercion or violence" don't tend to be able to impose restrictions on the people who are most bent on misbehaving. And it's not clear that there has been much "progressive maturation of consciences" since the days when they were throwing jaw bones at each other.

Perhaps the author sees this as rather speculative as he goes on:

Consequently, reciprocal trust, autonomy and participation cannot be overlooked as if they were superfluous elements. The consent should involve an ever greater number of countries that adhere with conviction, through a sincere dialogue that values the minority opinions rather than marginalizing them.

So it seems to be assumed that this would start out as some sort of smaller group of countries with a common economic and political authority, and that others would join as (and if) they saw it to be working.

Though again, color me skeptical as to the likelihood that any organization can operate that "values the minority opinions rather than marginalizing them". I mean, for goodness sake, we have Occupy Wall Street (that supposed ultimate example of bottom up governance) apparently at the breaking point over whether playing the drums all day is a good idea.

A supranational Institution, the expression of a “community of nations”, will not last long, however, if the countries’ diversities from the standpoint of cultures, material and immaterial resources and historic and geographic conditions, are not recognized and fully respected. The lack of a convinced consensus, nourished by an unceasing moral communion on the part of the world community, would also reduce the effectiveness of such an Authority.

This seems to very nearly admit the impracticality of the idea. Come to that, would one need an Authority if there was "an unceasing moral communion on the part of the world community"?

Likewise, governments should not serve the world Authority unconditionally. Instead, it is the world Authority that should put itself at the service of the various member countries, according to the principle of subsidiarity. Among the ways it should do this is by creating the socio-economic, political and legal conditions essential for the existence of markets that are efficient and efficacious because they are not over-protected by paternalistic national policies and not weakened by systematic deficits in public finances and of the gross national products – indeed, such policies and deficits actually hamper the markets themselves in operating in a world context as open and competitive institutions.

Having just shown a fair amount of cynicism over the chances of the kind of Authority described coming together, there's now a surprise for our left-leaning friends: One of the primary ways that the World Authority will serve governments is by encouraging them to avoid deficit spending and remove barriers to free trade.

Again, this is why a "this is a far left document" meme is way off. There's much in here that American conservatives and libertarians are not going to like, but there's just as much that leftist Catholics (particularly populist ones) aren't going to like either (if they read it.)

As we read in Caritas in Veritate, “The governance of globalization must be marked by subsidiarity, articulated into several layers and involving different levels that can work together.” Only in this way can the danger of a central Authority’s bureaucratic isolation be avoided, which would otherwise risk being delegitimized by an excessive distance from the realities on which it is based and easily fall prey to paternalistic, technocratic or hegemonic temptations.

The elephant in the living room in all this is that what's being described here sounds a lot like the EU and ECB, which seems to be in the process of tearing the European currency zone to pieces (and causing an awful lot of fear and rioting in the meantime.) I can't help wondering if the above is an attempt to distance what is being described from what people have seen of the operation out of Brussels.

4. Towards Reforming the International Financial and Monetary Systems in a way that Responds to the Needs of all Peoples

The second factor is the need for a minimum, shared body of rules to manage the global financial market which has grown much more rapidly than the real economy. This situation of rapid, uneven growth has come about, on the one hand, because of the overall abrogation of controls on capital movements and the tendency to deregulate banking and financial activities; and on the other, because of advances in financial technology, due largely to information technology.

This is one of those pieces of conventional wisdom that I've always been a little curious at to the truth of. Is it accurate to say that financial markets actually grow faster than the real market? Or is it just that some products are overvalued relative to others? How would you measure the value or "real" markets in terms of something other than the financial markets the denominate them?

I've noticed one or two gold bug-type Austrians or traditionalists saying some positive things about this document, and I can't help wondering if this (along with the condemnation of easy money) is part of the motivation there. I don't really have a critique, I'm just not exactly sure how one can assert what's being asserted here with surety.

Specific attention should be paid to the reform of the international monetary system and, in particular, the commitment to create some form of global monetary management....

In fact, one can see an emerging requirement for a body that will carry out the functions of a kind of “central world bank” that regulates the flow and system of monetary exchanges similar to the national central banks.

Without having read the pieces, I gather from the links being thrown around on Facebook that there's been a certain amount of controversy as to whether the document endorses a central world bank. It seems to me that the above sections make fairly clear that it does.

The endorsement is fairly vague. It's not stated what exactly the bank would be doing to manage the global monetary system. One assumes something other than the way that the relatively affluent members of the Eurozone are currently putting the thumbscrews on the relatively poor members via their shared bank.

Given the news at the moment, I would have to think that it's relatively hard to make a good case for a global equivalent to the European Central Bank -- from virtually any political point of view -- but there are those who have a lot invested in the idea that a group of well meaning people could achieve a lot with such an institution, and I can only assume that the authors fall into that camp.

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On the regional level, this process could begin by strengthening the existing institutions, such as the European Central Bank. However, this would require not only a reflection on the economic and financial level, but also and first of all on the political level, so as to create the set of public institutions that will guarantee the unity and consistency of the common decisions.
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In this process, the primacy of the spiritual and of ethics needs to be restored and, with them, the primacy of politics – which is responsible for the common good – over the economy and finance. These latter need to be brought back within the boundaries of their real vocation and function, including their social function, in consideration of their obvious responsibilities to society, in order to nourish markets and financial institutions which are really at the service of the person, which are capable of responding to the needs of the common good and universal brotherhood, and which transcend all forms of economist stagnation and performative mercantilism.

I honestly hope that I'm wrong or over-simplifying here, but this strikes me as an example of how Catholic thought (both in it's modern social-democratic form and in its old throne and altar form) has historically not dealt much with the idea that there may be lack of consensus (honest lack of consensus) among well meaning individuals as to what "the good" is, in relation to some particular situation.

I am absolutely in agreement that the primacy of the spiritual and of ethics needs to be restored in the interest of the common good. However, I'm not necessarily optimistic about the ability of politics to achieve this. (Not that I'm any more optimistic about the financial sphere achieving this either.) Given that even faithful Catholics have trouble agreeing on how to practically run even very small institutions in such a way as to foster the common good, I don't see how large states full of moneyed interests and disparate belief systems can be expected to achieve such an agreement.

On the basis of this sort of ethical approach, it seems advisable to reflect, for example, on:a) taxation measures on financial transactions through fair but modulated rates with charges proportionate to the complexity of the operations, especially those made on the “secondary” market.
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b) forms of recapitalization of banks with public funds making the support conditional on “virtuous” behaviours aimed at developing the “real economy” ;

Again, this is an area where the authors seem to align clearly with some of the same proposals often put forward by American leftists. The idea of having some sort of financial transaction tax is fairly popular right now, on the theory that this would hit high-frequency traders hard. Personally, I'm not sure this would necessarily do much other than have people pursue other trading tactics -- I don't think it would reduce speculation or keep prices more stable.

On recapitalizing banks with public funds but with the condition of virtuous behaviors that develop the real economy: This seems to assume that there are lots of virtuous behaviors that banks could be engaging in right now to grow the real economy but some reason aren't. I'm not necessarily convinced that's the case. (Or that, if it is, there's much agreement of what those behaviors are that they need to go do.) Generally speaking, it seems like the track record is that in most of these situations either the bankers end up running the show and increasing their power, or rabble-rousing populists end up running the show and increasing their power. Unless one is sure that one of these two is conducive to the common good -- which I'm not.

Conclusions

In a world on its way to rapid globalization, the reference to a world Authority becomes the only horizon compatible with the new realities of our time and the needs of humankind. However, it should not be forgotten that this development, given wounded human nature, will not come about without anguish and suffering.

Well, the document ends on a note of caution, and so I do, I guess.

I understand the motivation of the Vatican to try to provide guidance into issues like "what the G20 should do", but I can't help thinking that for most Catholics it would be far more helpful to get guidance as to what the other 99.9 percent of us should do -- though in a sense that hasn't changed at all since Christ's words in the gospels so there's no need. Also, I think that when Church officials try to provide very concrete advice on issues of public policies such as these, it tends to underscore the doubts and divisions that exist within well-meaning and faithful Catholics. And perhaps also the limitations of the knowledge and experience of those trying to provide the advice.

By bringing so many quotes to the fore, I hope I've at least provided a fairly clear picture of what is in this document.

Charity, Act Not Emotion

At times looking at an example of someone getting an idea wrong is actually the most helpful thing in formulating a better understanding of the topic. That's how I felt, some while back, when I ran into this post descriptively entitled, "Love Never Ends, So How Could A Just Society Bring An End To Charity?" which argues:

I have heard it said by many people that if the government provides for the needs of society through its social services, there will no longer be any need for charity. Yet, we are called to charity, and therefore, we must not allow governments to interfere in our acts of charity. There is something very mixed up with this notion. It is perverting the very nature of charity, twisting it in a way to make sure there will be people who are suffering, so that they can be the objects of our good will. We are being told we cannot wish for a more just society because if such a society exists, charity will vanish.

But this cannot be the case, can it?

What exactly is the aim of charity but love? Love can be manifest in many ways; when someone is in dire straights, love seeks to help them out of it. But that is not all love seeks for them. Indeed, does a husband or wife love their family less after they have provided for their family’s needs? Certainly not! If we would not look at our family relationship in this way, why do we look at the world in this fashion?

...

Charity is caritas, love; to act in charity is to follow the dictates of love. Charity seeks for the betterment of others; in doing so, it recognizes that the most immediate need should be taken care of first (food, shelter, clothing, health, quality of life, etc). If these are taken care of, this does not diminish the need for charity: it provides room for greater forms of charity, for greater forms of love.

Now, I don't think that, "Where will that leave charity," is a universally good answer to suggestions of instituting social services. In a society which is already weak and uncohesive, there's clearly a need for some minimal level of social services. The legitimate question to be argued between political factions is what the appropriate extent and form of social services should be -- not whether there should be any at all. (If you're unsure of this, ask yourself if you'd really support closing government homeless shelters and food assistance, abolishing unemployment, or eliminating the federal deposit insurance that assures that if your bank runs into problems your saving account doesn't vanish over night. The sight of people literally dying in the street was not uncommon 150 years ago in many parts of what is now the developed world, and the fact that we've largely eliminated that -- though social programs as well as through charity -- is certainly not a bad thing.)

However, I think the above blockquote shows a fairly common progressive misunderstanding of human nature and the nature of moral action, which it's important to recognize and counter if we're to come to a proper understanding of social and moral relationships.

It is suggested that since charity is love, it clearly goes far beyond providing people with physical necessities. And so, even if we are not responsible for providing people with physical necessities, we need not worry about charity losing its place in our social relationships. What I think this misses is that we are, as humans, incarnational beings. We are not pure minds or pure souls, but mind and soul bound intimately to physical body. And as such, our physical actions are not only one way to express our love and relationship with others, but one of the primary things that forms our relationship with others.

Picture an extreme example of this: Imagine that at some future point it become a pressing political issue that nearly 10% of children are unparented and a shocking 30-50% are under-parented. Children are our future, and we cannot stand by while people neglect our future! No loving parent would want to see their children disadvantaged as a result of his or her not having time or training for proper parenting! A national parenting agency is established, and properly trained government workers will make sure that all children receive minimum levels of food, affection, personal interaction and age level appropriate conversation in intellectually stimulating and hygenic surroundings. Parents will, of course, not be sidelined. So long as they obey proper child rearing regulations, they are welcome to provide above-and-beyond care and gifts to their children, and they can even engage in primary care opportunities such as nightly read-alouds and tucking into bed, so long as they have suitable training to provide as rich and nurturing an experience as parenting agency workers would.

I think virtually everyone would see such a system as clearly dystopian, because it would disrupt a relationship which we see as fundamental to human society. People would talk about the state "seeking to replace parents" -- and in a practical sense this would be true to a certain degree. But more insidiously, such a program would strike at the very root of relationship between parent and child. This is because it is through the act of caring for our children that we as parents learn to love them. It is the knowledge that this small life is dependent upon us for all things which first awakes love in us. And it is the slow training in putting other before self which parenting involves -- the nights spent awake when one would rather sleep, the diapers changed, the games played, the knees bandaged, the stories told, the awkward performances watched, the living earned, the necessities and small luxuries bought -- that we tern that inclination to affection into a deep and active love. And if the necessity of that care was removed, I think it takes little imagination to see that this fundamental relationship would be blighted at its root. Indeed, we have a rather good test case of this looking at those times when it was common for rich parents to put the day-to-day raising of their children almost entirely in the care of a nurse maid -- which if the literature written by such societies is to be at all believed often left the relationship between the nurse and the children incredibly intimate, while the relationship between parents and children became distant.

A less outlandish example of the replacement of familial relationships with statist ones can be seen in our relationships with our parents. Working with a large number of recent immigrants from India, one of the biggest social differences that stands out when family interactions are discussed at work is that in Indian families it is expected that unless they are very rich, when parents retire they will go to live with one of their married children, or circulate from one filial household to another, staying at each for several months out of the year. This is practically unheard of in the US at this time, and it is frequent for US-born people around the office to say, when hearing about this, "I couldn't stand to have my parents visit for more than a week." However, such arrangements were far more common both in the US and in Europe before social programs to assure an independent income for the retired rendered such arrangements unnecessary. One can argue that longer distances make for closer families, and certainly, human nature being what it is, enforced closeness can lead to resentment instead of love, but I don't think it takes a great deal of imagination to see that this is a case where removing the need to care for each other in a practical and financial sense has allowed the erosion of social relationships.

Going beyond the family, and as I began my annual re-reading of Dickens' A Christmas Carol the other evening, I'm reminded of the famous exchange between Scrooge and the charitable gentlemen in Stave One:

"At this festive season of the year, Mr. Scrooge," said the gentleman, taking up a pen, "it is more than usually desirable that we should make some slight provision for the Poor and Destitute, who suffer greatly at the present time. Many thousands are in want of common necessaries; hundreds of thousands are in want of common comforts, sir."

"Are there no prisons?" asked Scrooge.

"Plenty of prisons," said the gentleman, laying down the pen again.

"And the Union workhouses?" demanded Scrooge. "Are they still in operation?"

"They are. Still," returned the gentleman, "I wish I could say they were not."

"The Treadmill and the Poor Law are in full vigour, then?" said Scrooge.

"Both very busy, sir."

"Oh! I was afraid, from what you said at first, that something had occurred to stop them in their useful course," said Scrooge. "I'm very glad to hear it."

"Under the impression that they scarcely furnish Christian cheer of mind or body to the multitude," returned the gentleman, "a few of us are endeavouring to raise a fund to buy the Poor some meat and drink and means of warmth. We choose this time, because it is a time, of all others, when Want is keenly felt, and Abundance rejoices. What shall I put you down for?"

"Nothing!" Scrooge replied.

"You wish to be anonymous?"

"I wish to be left alone," said Scrooge. "Since you ask me what I wish, gentlemen, that is my answer. I don't make merry myself at Christmas and I can't afford to make idle people merry. I help to support the establishments I have mentioned -- they cost enough; and those who are badly off must go there."

Quite the progressive in his own day, Dickens' view of social solidarity is the opposite the modern progressive outlook, in that he sees Scrooge's failure as being that of refusing to involve himself directly in supporting charitable work. Perhaps in an updated version, Scrooge would instead be asked to commit himself to gathering signatures to raise awareness of the necessity of opening a new and improved union workhouse funded via a tax on those in the top five percent of annual incomes. In the modern progressive pantheon, much greater virtue would be assigned to such advocacy for the many than for the more personal virtues of contributing to a fund for Christmas jollity for the poor, buying a prize turkey for a poor family, doubling Bob Cratchet's salary, or securing better care for Tiny Tim.

The danger of such an approach is that whereas we shall always have some contact with our families, even if we are not responsible for providing care in old age, unemployment, and distress for them. In the wider society, if we are absolved of any direct responsibility for helping to provide for those suffering in our neighborhoods or parishes, we are more likely than not simply never to encounter them at all. Expanding social services fund a contracting of our social sphere to only those whom we wish to see, since we are told that, like so many Scrooges, we should pay our taxes and rely upon the workhouses and the poor law to do their work. When real actions are no longer required, our relationships, which are formed by our actions, will soon shrivel quietly away.

This is why the Amish, hardly a group known for lacking solidarity with those in their community who are in need, eschew both government programs such as social security and medicare and also private insurance, using instead a direct community fund from which they pay for medical care and other emergency expenses on a case by case basis.

In the wider world, our communities are already far more fractured than those of the Amish, so we would be foolish to immediately abandon all the mechanisms we have developed for securing basic necessities for those in need in a mobile and fragmented society. At the same time, however, we must not allow ourselves to imagine that, when we place ever more needs under the maintenance of massive programs paid for through taxes, that we diminish our social solidarity and our relationships with others.

Economics and Morality

I may have to turn in my Catholic Geek card for this admission, but I still haven't finished reading Caritas in Veritate, I'm only about ten pages in. Though I've tried the usual background reading, Benedict's prose (though more readable than some of his predecessor's) is not really the sort of thing one can read one paragraph at a time in between working. And while I do usually have 30-60min between 11pm and midnight in which to read before falling asleep, I must confess I've mostly been devoting that time to finishing a spy novel rather than turning tired eyes to Catholic social thought.

However, if I may nonetheless take the liberty of addressing some of the general discussion of economics and morality which has been stirred up by the encyclical, there is what seems to me a familiar dynamic coming into play as people discuss whether the Church can or should teach on matters of economics. The situation strikes me as somewhat similar to the argument about whether the Church can teach on matters of science.

On science, I would like to think, the terrain if fairly well understood. The Church does not and cannot teach with any particular authority on scientific theories themselves: Is the universe six billion years old, or only 6000? Is string theory a load of rubbish? Does the Earth revolve around the Sun? Will the expansion since the "big bang" end in a "big crunch" or in the heat death of the universe?

Spiritual Armor and Social Justice

Fr. Fox, the best blogging priest on the 'nets, posted his recent talks for a homeschooling conference. Go and read; perusing Fr. Fox's homilies and speeches is like taking a mini-retreat.

From his talk on equipping your children with spiritual armor:

Paul tells us our Faith is a shield.

There are a lot of things to say about Faith, but let me highlight three aspects.

Faith is about knowledge—it matters that we know our Faith;
Faith is about obedience to what Christ teaches—it matters that we live our Faith;

And above all…

Faith is a choice of the will—which is why the habits of faith matter, because they’ll help us stand our ground and keep our choice strong when it’s not easy.

Notice Faith is a shield—not the sword. Our Faith is not mainly an offensive weapon, but a means of defense—against the attacks of the enemy.

"Flaming arrows" sound pretty scary, but St. Paul assures us our shield of Faith will do the job.

Remember, our Faith is not just ours—when we speak of our Faith, we mean our personal, individual choice of faith, but we also speak of the Faith of the Church. Remember that from the Ritual of Baptism?

Right before the child or the adult is baptized, the deacon or priest asks that person—or others to speak for her—to renounce the devil, and profess faith in the Father, Son, and Holy Spirit. Everyone joins in, and then the priest says, "This is our Faith. This is the Faith of the Church. We are proud to profess it in Christ Jesus our Lord. Amen!"

When we recall that people die for that profession, even at this hour, those words take on new meaning, don’t they?

My point is, we have as our shield not only our personal faith, but the Faith of the Church, the whole Church. But it has to be personal, too; we have to be used to holding it, with a familiar grip—or we’ll fumble and drop it at the first sign of trouble.

And from his talk to teenagers on social justice:

Now, that example raises a couple of issues associate with the Church’s social teaching, did you notice?

Unions…

What do you think the Church says about unions?

Ø People have a right to form or associate with unions—Rerum Novarum, Pope Leo XIII.
Ø Unions should be about advancing the good of working people but not at the expense of others’ legitimate rights and the common good
Ø Catholics should not affiliate with unions if they aren’t compatible with Catholic teaching in general.

What the Church does not say about unions:
Ø That working people must belong to them.
Ø That unions are always right or should always prevail.
Ø That unions should be about employee versus employer: Pope Leo suggested the possibility of unions including employers—what idea was he trying to cultivate there?

Solidarity: i.e., yes, I am my brother’s keeper.
Related to this is the "common good." The idea is that sometimes I have to ask, not just what’s good for me, but what’s good for…us.

Let’s go back to that example: you go buy food in the store. You pay for it. You eat it. But you decided to buy some extra food and drop it off at the food pantry on the way home: you remembered the poor man, Lazarus.

Now, are you finished thinking about "justice" in this case?

Ø What about the workers who produced the food or brought it to you?
Ø What about the way the food was produced—care for the natural environment?

The workers involved in bringing this food to you are entitled to a fair wage and just working conditions—did they have the ability to negotiate and bargain collectively if they wanted to?

A Case Study on Costs and "Basic Health Care"

One of the elements of discussion about health care from the perspective of Catholic Social Teaching that often bothers me is when someone states, "Basic health care is a human right" and then goes on to insist that this means we need a system by which the maximum range of health care paid for by the best insurance in the modern US is available to everyone via a government single payer system. (The which leaves aside the practical matter that virtually no single payer systems cover as much as cushier US private insurance plans do.)

Modern medicine has brought us incredible benefits, which we rightly want to make sure that everyone in society is able to share. But modern medicine has also make it possible to throw large amounts of money at a problem to achieve a return which is statistically pretty small. Should this be considered "basic healthcare"?

When we sit down to ask ourselves, "Why can some people not afford health care coverage in this country," it seems to me that one of the reasons is that we've raised our standard of "basic" so high that it becomes hard to afford.

We've been experiencing an applied study in this as we sort out our options in regards to BabyDarwin being breech. 3-4% of pregnancies are breech. BabyDarwin is in what is termed a Frank Breech position, which means his bottom is down, and his feet are up near his head. This is, according to most of the reading we've done, by far the safest form of breech positioning, and some medical authorities maintain that it's basically as safe to deliver a baby in a Frank Breech position as it is deliver a baby who's head down. Others maintain it's slightly more dangerous. The only actual numbers I was able to find were in the Wikipedia (with all appropriate provisos):

Umbilical cord prolapse may occur, particularly in the complete, footling, or kneeling breech. This is caused by the lowermost parts of the baby not completely filling the space of the dilated cervix. When the waters break the amniotic sac, it is possible for the umbilical cord to drop down and become compressed. This complication severely diminishes oxygen flow to the baby and the baby must be delivered immediately (usually by Caesarean section) so that he or she can breathe. If there is a delay in delivery, the brain can be damaged. Among full-term, head down babies, cord prolapse is quite rare, occurring in 0.4 percent. Among frank breech babies the incidence is 0.5 percent, among complete breeches 4-6 percent, and among footling breeches 15-18 percent.

There are also some other dangers that are more of an issue in other breech positions or with a premature baby -- in that if the legs and torso are delivered first and are much smaller than the head (which is usually only the case with premature babies -- at full growth the torso is large than the head) then the baby may be partly delivered while the mother is insufficiently dilated, and then the head gets stuck. This can cause damage to the head, loss of oxgen, and a range of injuries resulting from trying to pull the baby loose.

Because of the 0.4% versus 0.5% difference in risk between standard postion and Frank Breech, and because "breech" in general has a bad name as a result of the other issues (with premature babies and with other positions), the verdict we're getting is pretty much that if we can't get BabyDarwin to turn, we'll have to go the c-section root, because no doctor around here is willing to deliver a breech baby naturally. (And the home birth midwife is clearly not willing to touch it with the proverbial ten foot pole.)

We have solid insurance, so the c-section root will actually cost us less out-of-pocket than what the homebirth route (not covered by insurance, and unfortunately already paid for). But the overall health care cost issue is significant.

Googling around for costs on a c-section I'm seeing a "list price" in the ballpark of $20,000 (though I'm sure the insurance company manages to get it for less.) The prices I'm seeing for a normal vaginal delivery in a hospital are around $6,000. The home birth cost was $2,100 (though that was with an early payment discount -- and before they raised their prices, so apparently "list" is now $3,600.)

The difference in risk between normal delivery and c-section in our particular case is apparently around 0.1%. So comparing a c-section and hospital delivery, we as a society are spending just shy of $28 million on doing 1999 unnecessary c-sections in order to avoid one natural delivery that would have resulted in serious problems. Looking at the difference between a c-section and a home birth at list price, that difference grows to $33 million.

We're justly hesitant to put a dollar value on a human life, and obviously, if you're the 1 out of 1000 who sees your child die or severely injured as a result of the difference in risk between normal positioning and Frank Breech, knowing that the chances were low would do nothing to console you. However, aside from the question of how many lives could be saved if that $30 million were used in some other way than getting c-sections for all breech babies, there's another element to the incentives at play here.

This is primarily an academic discussion for us because we're middle class and well insured, and so we have no problem at all affording the c-section if we can't get the baby turned. (And no problem affording the multiple ultrasounds and consultations and such involved in trying to get the baby turned.) But imagine that we were poor an uninsured. Because the incentives and regulations for our medical system are built around the assumption that everyone worth thinking about has the deep pockets of an insurance company behind him, we'd still be faced with no doctor of midwife being willing to provide a normal delivery, so we'd be stuck going into $20k of debt that we had absolutely no way to pay off in order to get a c-section that we probably didn't need.

As it stands, our medical system is built around the assumption that cost is no object. And doctors are very heavily penalized based on any "avoidable" injuries or deaths that occur on their watch. The result is that instead of providing good, high quality "basic" health care, and using extreme (and expensive) measures only when necessary, we often require extreme measures "just in case". This makes it far, far more difficult to provide "basic" health care to all.

I don't know enough about health care to provide specific policy proposals, but just working through this example it seems clear to me that we are not discussing enough variables when it comes to making sure that "basic health care" is available to everyone. Instead, the only debate going on in our political arena is on how to provide everyone with the level of health care which is often provided under comprehensive insurance policies -- a level which we probably cannot afford to provide to everyone, and which is determined as much as a matter of tail-covering as medical need.