Friday, July 10, 2009

The Pope Takes On Capitalism

Pope Benedict greeted the G-8 summit with an interesting papal encyclical entitled "Charity in Truth" that proposes an entirely new economic order:

In "Charity in Truth," Benedict denounced the profit-at-all-cost mentality of the globalized economy and lamented that greed has brought about the worst economic downturn since the Great Depression.

"Profit is useful if it serves as a means toward an end," he wrote. "Once profit becomes the exclusive goal, if it is produced by improper means and without the common good as its ultimate end, it risks destroying wealth and creating poverty."

"The economy needs ethics in order to function correctly — not any ethics, but an ethics which is people centered," he wrote.

While acknowledging that the globalized economy has "lifted billions of people out of misery," Benedict accused unbridled growth of recent years of causing unprecedented problems as well, citing mass migration flows, environmental degradation and a complete loss of trust in the world market.

He urged wealthier countries to increase development aid to poor countries to help eliminate world hunger, saying peace and security depended on it. He specified that aid should go to agricultural development to improve infrastructure, irrigation systems, transport and sharing of agricultural technology.

At the same time, he demanded that industrialized nations reduce their energy consumption, both to better care for the environment — "God's gift to everyone" — and to let the poorer have access to energy resources.

"One of the greatest challenges facing the economy is to achieve the most efficient use — not abuse — of natural resources, based on a realization that the notion of 'efficiency' is not value-free," he wrote.

He denounced that the drive to outsource work to the cheapest bidder had endangered the rights of workers, and demanded that they be allowed to organize in unions to protect their rights and guarantee steady, decent employment for all.

Benedict called for a whole new financial order — "a profoundly new way of understanding business enterprise" — that respects the dignity of workers and looks out for the common good by prioritizing ethics and social responsibility over dividend returns.

"Above all, the intention to do good must not be considered incompatible with the effective capacity to produce goods," he wrote. "Financiers must rediscover the genuinely ethical foundation of their activity so as to not abuse the sophisticated instruments which can serve to betray the interests of savers."

Pope Benedict has written similar things before during his career as a cleric and an academic, and as I understand it, this encyclical is very much in line with a large part of long standing Church doctrine.

In fact part of what led to the Schism and later the Protestant Reformation was a revolt against the Church's attempt to limit natural, economic man and his self-interest.

"The Imitation Of Christ" ( 1389 or so) by Thomas A Kempis, one of the most famous and influential books on Catholic theology spends a decent amount of ink on the topic of repressing economic man and self-interest.

Pope Benedict's chief misunderstanding here is similar to President Obama's in a way, and characteristic of people who have essentially spent their lives in institutions supported by the taxes or stipends taken from others rather than living directly by the fruits of their own labor.

A corporation or business by its very nature is an entity that takes an investment by shareholders or a proprietor and translates it into income and profit. That's why it exists. Businesses are there to make profit, not to 'do good'. Obviously, just as with individuals, there are some very necessary legal constraints that have to be put on that mission. No one wants someone selling shoddy or unsafe merchandise,infringing the rights of others by creating public nuisances or health hazards, taking money for goods and services that are never delivered, or using illegal means like blackmail or arson to coerce trade or eliminate the competition.

But aside from obvious criminal behaviour, when government, the Church or other institutions attempt to get in the way of self-interest and profit or hammer on business to channel or legislate profit towards what they deem to be 'social responsibility', several interesting things happen.

Since the primary motive of business is profit, diverted from that in the form of taxes, money spent to comply with onerous government regulations or money spent on public relations via social responsibility projects has to be made up in some way.

Businesses don't actually pay taxes or spend money to comply with regulations. They merely raise their prices to the consumer, cut the quality of the product or service they produce, cut future growth areas like expansion and research and development,move their facilities to where costs are cheaper or close production and lay off workers...or all of the above combined.

The end result? Smaller tax revenues, fewer jobs,smaller GDP, less charity and a lot more misery. And of course, ultimately, a lousier climate for investment, sometimes to the point where people mostly give up the idea of starting new businesses and employing others altogether.

That's simply how life works in the real world, and always has.And any time an attempt has been made to co-opt those rules 'to do good' in the eyes of the beholder, it's always failed miserably.

As an example, the US has been morphing in the direction of overtaxing, over regulating and otherwise interfering with economic man and the primary profit motive of business for quite some time now, and the results are quite evident. Foreign investment and the purchase of US government debt in the absence of safe and secure vehicles in places like East Asia along with the purchases by the American consumer have staved off some of the harsher realities for some time. But as America's consumer market dwindles and there's more and more demand for safe investment and savings vehicles that provide decent rates of return outside the American financial markets and the dollar, the day of reckoning gets closer. And we're in the process of making Obama's Great Leap Forward which should accelerate that day of reckoning considerably if we're unfortunate enough for it to be completely implemented.

As a sideline, this illustrates one of the philosophical differences between Judaism and Catholicism. I think that the Church attempts to suppress much of what John Locke would have called 'the natural man' and earthly self-interest to promote spiritual well-being in the next world, and the afterlife is paramount. I consider this a natural development since Christ was an Essene ( an ascetic Jewish sect) as well as a Rabbi.

Judaism's difference in this area as I see it is that while the afterlife is not unimportant, it is not emphasized in the same way. There is no vividly descriptive Hell or Purgatory, although there is the concept of Gehenna, which is not even mentioned in the Torah but is first referred to obliquely in the Book Of Daniel and the other prophets and defined as a place without G-d's presence. Instead, the emphasis is on channelling the natural man (which includes economic man, of course) with certain restrictions such as the the Ten Commandments, halacha and the mishna with the idea of building a better society here on earth.

This was a primary reason why the Church, even though it's doctrine was openly anti-Semitic at the time, allowed Jews a place in Europe, albeit a tenuous one. The Jews were the middle men needed to mitigate the problems of the Church attempting to repress economic man with things like 'the doctrine of the just price' and other restrictions on capitalism by providing a necessary outlet to secular Europe for activities like banking and credit while still allowing secular Catholic rulers and businessmen to fulfill church doctrines.

The Pope's latest encyclical is likely to be a scant interest except to th edevout and unlikely to be influential on countries like India and China interested in moving into the 21st century and growing their economies.

As intellectually brilliant as he is, I'm certain he must be aware of that, but feels too weak to avoid the necessity of bowing to political currents within the Church, just as he has in his positions on Islam and the relationships with Israel and the Jews.

Disappointing, to say the least.

(hat tip and a commendation to Joshua's Army member Louie Louie)


louielouie said...

it never ceases to amaze me how ff can take a subject and explain it the way he does.
please note, that is neither patronizing or a compliment.
just statement of fact.
the link i sent to ff was nothing more than a profanity laced diatribe with the link.
ff has indeed taken lemons and made lemonade with this essay.

Freedom Fighter said...

Awww, shucks!

Anonymous said...

I agree! Ethics have no place in business or politics. That's why I'm a huge Palin supporter and I think Madoff got screwed. If the people Madoff ripped-off don't like it... then they should just move to Russia or something!
The Pope should shut his mouth. Maybe he and Obama should go start some hippie commune together!
Damn liberals expecting people to be ethical and do the right thing... bah!
Palin for PRESIDENT!

Freedom Fighter said...

Your attempt at sarcasm leaves something to be desired, Anonymous. And only a monomaniac could bring Sarah Palin into this discussion out of left field. In view of the other comments you've left regarding her on different threads, perhaps you should seek professional help to rid you of your obvious obsession.

I suggest you actually get your act together and attempt to create a serious argument on thetopic at hand if you want your comments published in the future.

A word to the wise...M'kay?

Anonymous said...

I brought up Palin because she is always being hassled with pesky ethics complaints. Wasn't that the topic of this post? Ethics?

Freedom Fighter said...

Nice try...this piece is obviously about the Pope and his mistaken understanding of economics.

Be're obsessed with Governor Palin and just felt like tossing that into the mix.

But as for Palin, perhaps you need to know a little bit more about those 'ethics complaints'..and maybe about the reward given by the Obama Administration as a payback to the Alaska Democrat who spearheaded the bogus 'troopergate' nonsense that turned into horse manure and was toosed out of court once the campaign was over...just like the other 14 bogus ethics complaints have.

Perhaps you need a few more facts and a little less acceptance of what the dinosaur media is telling you so you can make an honest assessment of Governor Palin instead of going off half-cocked.

FTR, I had the opportunity to meet her in Alaska before she went national and she is absolutely nothing like the cartoon character she's been portrayed as. She's an intelligent and principled leader who actually considers herself a public servant, and we could do with a lot more like her in politics.

What's been done to her and her family is morally reprehensible.


Anonymous said...

No more reprehensible than what was and what is currently said about Obama. If you can't take the heat...
Let's face it... she is, admittedly, an easy target.

Freedom Fighter said...

Anonymous, I've tried to be polite,but you're absolutely full of it.

Having failed to actualy address th etopic at hand with any valid point, you stoop to the same old garbage.

Even the elements of the dinosaur media itself admits that Obama and Biden have gotten a free ride.

You ever see anyonein the MSM attacking Obama's family, or even the fact that he has no experience that qualifies him for the office he holds? The fact that he's quadrupled the deficit in 6 months with billions going to his political allies? You see anyone in the MSM criticizing or attacking his wife or his children, or even going into Obama's sleazy associates? Rev Wright, Khalid al-Mansour and Tony Rezco ring a bell?

After this, I think we can do without your input. Anyone who could make this kind of comment seriously is beneath contempt.

And the funny thing is that, politics aside, you're too ignorant to understand how harmful this kind of crap is to our democracy.

Anonymous said...

I figured you wouldn't publish my last comment.
Typical right-winger... you shut up when confronted with something that logically challenges your narrow-minded world view. You say that "you won't even dignify it with a response."
You won't hear from me again! Good day to you sir!

Freedom Fighter said...

Well actually, it was more like my lifelong practice of not wanting to waste any more of my precious time on someone clueless.

Oh, and uh...good riddance.