We don’t have to take every pronouncement or opinion on every topic from every Pope as if it were the Lord’s ipsissima verba. What the Bishop of Rome teaches about concerning faith and morals… those things we Catholics had better take really seriously and, often, give consent of will to. On the other hand, when it comes to contingent moral choices (exactly how to accomplish that which is incumbent on Christians in this vale of tears), we can have an argument.
Here is an interesting contribution to the discussion.
From Forbes:
Pope Francis Doesn’t Really Understand This Economics Thing, Does He?
Pope Francis has told us all that we’re really very naughty indeed to allow food to become a product like any other, a product in which people can speculate and profit. Which leads to a rather sad observation about Il Papa‘s understanding of basic economics: he doesn’t, essentially, he doesn’t understand basic economics. [He must be pretty cynical about economics, given that he comes from Argentina.] It is indeed an outrage that there are still 800 million or more of our fellow human beings who are malnourished. Appalling that while the world grows the calories to feed all not all get fed. [Therefore, we seem to have the supply… there seems to be a demand… so… what’s up?] But once we’ve noted those points, decided (as we damn well should) to do something about them, the interesting question becomes, well, what? At which point we might note that it’s the places with well functioning markets, subject to all that horrible speculation and profit making, that have the people who are not malnourished and not starving. Something Pope Francis might have considered before he said this:
The 77-year old said the world had ‘paid too little heed to those who are hungry.’ [Which we can stipulate is true.]
While the number of undernourished people dropped by over half in the past two decades, 805 million people were still affected in 2014. [Which will must stipulate is horrible!]
‘It is also painful to see the struggle against hunger and malnutrition hindered by ‘market priorities’, the ‘primacy of profit’, which reduce foodstuffs to a commodity like any other, subject to speculation and financial speculation in particular,’ Francis said. [Which we …. huh?]
Before I go further in arguing with this distinguished and holy man perhaps I should point out that I was brought up as a Catholic, indeed expensively educated in an attempt to turn me into a Catholic Gentleman (something that has obviously failed on both points), so I do understand the background to these remarks. There’s nothing unusual about them in the context of Catholic social teaching. However, they are still wrong: not in the goal, of course not, we all want the hungry to be fed. But in the understanding of the policies that are required to make this happen.
I’ve argued this so many times that the web is littered with pieces. Here, here and herejust as examples.
But just to lay it out in very simple terms in one place.
Regarding that first point, about profit. Profit is the incentive for people to do things. If people don’t profit from their actions then they won’t do them. Of course, we can take a wide view of what “profit” is: we could, for example, say that the warm feeling a farmer gets from watching a starving child eating the food he has grown is a profit. And it would be as well. [And let us not forget sacrificial love, charity properly understood.] But as we’ve found out over the past century or so (looking at those various attempts at the collectivisation of agriculture is really most instructive) [and “redistribution of wealth”] that that good feeling of having produced what others need is not actually enough. Any and every society that has relied upon such public feelings has had extensive malnutrition if not out and out famine. [Read: it doesn’t work.]So, we want the producers of food to profit from their having produced it. Otherwise we just don’t get enough food.
Then on to speculation and financial speculation. These move the prices of things through time. This is also highly desirable (as Adam Smith pointed out 238 years ago) as by moving prices through time we also move supplies of food through time (see the linked pieces for this in more detail). [NB] We move food from, as Smith said, a time of plenty to a time of dearth: thus reducing malnutrition and starvation. And yes, again, the incentive for people to do this highly desirable thing is to make a profit. [Because by making a profit we can feed more people.]
So we actually want both profit and speculation in food. For the end results are desirable. We get both the production of food in the first place and the movement of it, in both geographic and temporal, terms, to where it is needed.
And thus the Pope is wrong in his condemnations.
That isn’t the end of the story though. [NB] It is still true that there are those malnourished, that there are still people starving. And also that we’ve a moral duty to do something about it. [Precisely!] But if it’s not the greed for profits nor speculation that causes the problem then what is? At which point we can turn to another economist, Amartya Sen. Who has pointed out that, for the past century at least, starvation and famine have not been caused by an absence of food. They’re no longer supply side phenomena and they’ll not be solved by looking at that supply side. [!]
No, instead, famine now is an absence of purchasing power among those who simply cannot buy the food that is available. This is such a well known matter that even George Bush, when President, tried to get the rules about US famine relief changed (Obama is trying again now, too, according to reports). Instead of shipping US grain to starving people ship US money to starving people so they can buy the food that is already there. Or if not exactly there, then nearby. And we can rely upon the existence of that effective demand to incentivise people through that profit motive, through speculation, to ship the food from where it is to where the hungry people are.
That is, modern hunger is a demand side phenomenon and will be solved by demand side measures. Like, as above, giving poor people money to buy food with.
This is what actually works, this is how most NGOs now see hunger, many governments too. The problem is not that there’s no food for the poor to buy. It’s that the poor have no money to buy food. The answer is thus not to fiddle around with the supply side, that’s working just fine. For there are supplies of food available. What’s going wrong is the demand side so that’s where the solution must lie. We must turn actual demand (empty bellies) into effective demand (people with empty bellies with money to buy the food that exists).
And that is where I really criticise the Pope. Yes, absolutely it is a Christian duty (and for those of us without faith, a moral one just as strong) to feed the starving and the hungry. But [But…] there are effective ways and ineffective ways to make this happen. And the Pope is putting forward an ineffective one, messing with the supply system of food. When the answer actually is messing with the demand for food: getting the poor the money they need to buy the food that exists. What really annoys is that most of the Catholic charities now know and acknowledge all of this. Why is the Pope so ill informed* on the matter then?
*Yes, a possible joke here on the infallibility of the Pope. But that does only extend to the Pope being infallible upon matters of doctrine. And as far as I can remember it has only been asserted once, that the assertion of the infallibility of the Pope when pronouncing upon doctrine is infallible. It most certainly doesn’t apply to economics any more than it insists that he gets the lottery numbers right every week.
Interesting. Perhaps this might elicit some thoughtful comments.
Loading ...
There more problems than just lack of funds to use for food in many places. Local thugs and corrupt officials interfere with food shipments, both donated food and food for sale. In many places in it used by men as a bargaining chip for sex with the mothers trying to feed their families. Hunger is more than a economic issue in much of the world. Free markets are fine where there is a lawful structure in lace to ensure that it stays free, but where there is little law food is a weapon used against the people. Criticizing the profit motive does nothing to help those poor people.
Sigh…Pope Francis doesn’t condemn profits per se. He is specifically condemning financial speculation. Do we need to remind the writer at Forbes that European Christendom fed people just fine with profits and without financial speculation?
Those more knowledgeable (older) can correct me, but didn’t Popes B16 and JP2 both have some pretty troubling statements over the years? Not just the typical ‘capitalism must be tempered by justice’, etc., but more along the lines of ‘capitalism is bad’?
I remember more than one conservative / Republican in the U.S. criticized Pope Benedict XVI’s social encyclical “Caritas in Veritate”, calling him a socialist, etc.
Catholic Social Doctrine just does not fit in the capitalism vs. socialism category.
Green light is exactly right. As much as I love Pope Benedict XVI, he did not seem to grasp how markets and human commerce worked much better than Pope Francis.
Consider this: the Popes will throw darts at Capotalists and Capitalism based on the self certification of rulers and systems as such. Yet we readily point out people who claim to be Catholics and act contrary to those tenets; we should do the same of self-proclaimed Capitalists.
The author’s claim that poor people don’t have enough money to buy food is correct in an academic sense. What might be more accurate is to say that starving and poor people do not control the flow of money that would otherwise bring them food. Many, if not all, poor countries have an almost unlimited access to weapons that cost far more per capita than the food they need. This diversion of resources is from their governments and rulers.
The problem is not that food has been made a commodity; it is that money has, when it is really only a symbol for wealth. Nor is capitalism the problem-it is the banks that are the problem and which are really socialistic as we now know, and require public subsidy to survive. I would recommend the writings of Louis Even based on the theories of Major Clifford Douglas. These gentlemen advocate a system of Social Credit (this has nothing to do with socialism), in which the State, not the banks which would be redundant, supplies the money, which would not be a subject of speculation, but merely a symbol of the wealth that a person is entitled to via his share of a social dividend inherited from generations past or which he has earned through work. Thus, everyone would be entitled to a regular, sufficient payment to subsist, whether rich or poor and entitled to supplement it with as little or much work as they wish-no means testing for welfare and so on. Of course it is much more complex than that and needs someone capable of explaining it better. One source is “Michael” magazine, an orthodox Catholic mag dedicated to this subject and with its own website.
I think it’s really hard to beat Robert Cardinal Sarah’s statement which Father Z has referred to several times in his blog:
Although, His Holiness’ exhortation deserves equal merit according to the Epistle of St. James [2:14-17] :
In Pope Francis’s defense, none of the recent Popes have been all that great when it came to judging current economic matters.
Forbes: If people don’t profit from their actions then they won’t do them.
This statement deserves highlighting. Let’s face it, if people didn’t do things unless they could profit from them, then the world would be full of saints and martyrs — you’d be able to find folks from every nationality and walk of life who had made no end of sacrifices for others without any thought to their own gain. And how realistic is that? That’s no way to get ahead in the world, and Pope Francis ought to know that. It’s his inability to understand the bottom line that makes him a Disaster For The Church™.
Greenlight:
JPII, coming from a country that was enslaved by communism, did not say capitalism was bad. UNRESTRAINED capitalism is bad is the message I got from reading him; unrestrained and unregulated capitalism. Someone with more knowledge may correct me, but that’s always been my feeling. And even B XVI wasn’t as hard on capitalism as Francis is.
Nothing was said about the problem of sending money and the middleman taking 80% of each dollar for “administrative expenses.”
Nothing was said about the problem of sending money and the middleman taking 80% of each dollar for “administrative expenses.”
Well written and simply presented.
Governments are also much more of the problem than Pope Francis seems to consider.
There is plenty of food produced in the world, enough for all. The problem in the developed world is obesity. Not a metabolic disorder no matter how much the obese try to persuade themselves otherwise, but simply overeating.
Worstall? is correct in saying that the profit motive is essential and that people must have purchasing power. This is established basic economics.
Yes we have to treat the poor with dignity. Handing out food parcels, however nicely wrapped does not do that.
Giving them agricultural equipment and assistance in the villages, factories in the towns to produce goods locally so that they have products, they can sell for profit locally, does give them dignity. Above all, the construction of a logistics network of road, rail, and power and water distribution creates work and purchasing power. It is in these areas that international money should go, professionally supervised. That will give then dignity.
The 0.01% who make it to Europe as refugees tend to be those with initiative, or money, or determination, or whatever. They would be much better being persuaded to remain in their own land perhaps with external finance, loans or grants depending on circumstances, so that they help to create this wealth, I use that term “wealth “technically please note, locally. Now that will give them dignity.
I’ve argued before, and probably will continue to do so to my dying day, that bishops – the Pope not excluded – do the Church a disservice talking about areas that are within the realm prudential judgement and that they have no particular expertise upon. They will decrease the respect for the church, and when disagreement with bishops becomes a habit, that habit will likely extend to areas where it is damaging.
How to feed the hungry, and why this isn’t happening despite the fact there is no supply shortage, and which institutional factors would be responsible, firmly falls into the category their eminences should leave alone.
By the way, strictly speaking this isn’t even a question of economics. It’s a question of governance. The poor go hungry – in general at least – not because they are poor, but because the countries they live in are poorly governed. If it’s corruption, a rampant distrust of anything foreign or free-market based, or just we-don’t-care (or perhaps a poor population is easier kept in check), war, insurrection, or perhaps a combination of the above, doesn’t really matter. As soon as you have a somewhat functioning government that is beholden to the population at large, a way will be found to feed that population. Basic calorie intake is dirt cheap if one doesn’t interfere.
But on the topic of economics, I fear that Pope Francis is especially ill advised to talk about this subject. That he hails from the only country that has ever (in modern times) regressed from a rich economy to developping country status (and still Argentina hasn’t learned one bit) is likely to have left him with some very bad reflexes on the matter.
Three excellent comments – to which I would add that the capitalism that Adam Smith championed condemned the sort of speculative gambling that plagued the stock market before the Great Depression and which also seems to have tried to reassert itself in the run-up to the economic crisis. This kind of behavior tempts one to greed and to pursuing morally dubious behavior to gain advantage over other investors. Smith envisioned a much closer and more involved relationship between the capitalist underwriting the endeavor and the entrepreneur providing the goods or services. The abuses condemned by Pope Emeritus Benedict, Pope Francis and by Sts. John XXIII and John Paul II are those that pervert or otherwise thwart Smith’s model. Which leads to a related point – the effects of Original Sin on our nature also require that some regulatory system exist to ensure as far as humanly possible that the playing field is level and the uniformly agreed-upon rules are fairly applied for the benefit of all of society. By default this task must fall to government. (“That to secure these rights [to Life, Liberty, and the Pursuit of Happiness], Governments are instituted among Men, deriving their just powers from the consent of the governed”, as Jefferson wrote in the Declaration of Independence). The widespread perception that this is no longer so is a major reason that small investors are currently avoiding the historically wealth building engine of the stock market.
This author says “we’ve noted … not all get fed… [we’ve] decided to do something…[but] what?” He is right about much regarding markets and profits and poverty. And he has much sympathy from me. I hope my fairly technical points below will not seem merely pedantic — they are not.
But either he received a poor education in moral theology at his Catholic schools or he did not listen. The quotation expresses a confused model of moral action. In reality, cognition of truth precedes the imperative good. A person can see that people suffer without already knowing what should or can be done to remove that evil. But it is senseless to speak of “deciding to do” something without knowing what to do. Such a wrong conception encourages irrational, hysterical, feckless arm waving. The prudent agent must resist the lustful urge for action, taking the time to identify the causal situation (in this case immensely complex and potentially much enlightened by classical economics) before formulating a plan of action and before decisively and swiftly moving in act to understood improvement.
Furthermore, the entire discourse is addressed to an anonymous and plural pseudo-agent, namely “we”. At worst, this facon de parler could confirm us in the leftist assumption that global poverty is the responsibility of governments; at best it leads us into the false notion that each of us is not directly challenged by the spectacle of poverty.
From Phil_NL says:
26 November 2014 at 4:24 pm
“By the way, strictly speaking this isn’t even a question of economics. It’s a question of governance.” — For me, just an opinion, it is a question of poverty of the soul on leadership, thus, a question of governance.
I take the writer at his word and agree he is neither a gentleman nor a Catholic. He might be some sort of Calvinist like Adam Smith. His problem is he thinks the Pope is interested in an economic system. He is not – he wants to revive Christendom.
The people I know who are at times hungry are Americans, men, 40-70 years old, haunted by demons and completely rejected by our economic and social system. A century ago they would have done some work, made a small amount of money and retained some shred of dignity. Today our economy is very good are protecting very, very wealthy people and also very good at destroying families and producing miserable poor people. So what is a gentleman and a Catholic to do? I say give the hungry man $20 or better yet invite him to breakfast after mass tomorrow morning.
Our miserable poor are very much a product of our mistake of divorcing economics and politics from religion. Economics is made for man not man for economics……
All governments are corrupt, some more than others. But if food donations do not get to the hungry, money never will.
So is the writer and everyone here urging Congress not to cut spending on Food Stamps, and even to increase it, for the hungry in our midst?
I think I utterly dismissed anything that this Pope could say on the matter when he announced a few days ago that the poor don’t really want food or money – they want “dignity.” What the heck is that supposed to mean? The poor actually do want food and money so they can stop being the poor. But the left is all about bizarre symbolic gestures, symbolic phrases, “accompanying” and “solidarizing” and things which don’t matter a whit to the truly poor. Dorothy Day once told me that the poor don’t want you to join them, they want to join you.
Also, one of the biggest causes of hunger is neither the failure of the producers or even lack of money on the part of the market…it is politics, whether in Islamic attacks that blow up markets and market goers, or loony dictators who think they’re economic experts and in a few short years turn a country like Venezuela, which had been an exporter of food, into one that has to import virtually all of its food…but that would go against the Pope’s 1970s warmed over Jesuit leftwing economic mush.
The basic issue for me is that we have forgotten who and what Adam Smith was. Yes, in the Wealth of Nations he talks about the “invisible hand” of self-interest promoting wealth and overall well being. But remember, Adam Smith was also a member of the clergy and a moral theologian. The author of The Wealth of Nations is also the author of The Theory of Moral Sentiments. When Smith talks about self-interest, it is a self-interest informed and guided by moral sentiments, including empathy, solidarity with and for those in need. We have forgotten that self-interest is a morally informed and guided self-interest.
Look at Ireland: over 1000% debt/national income ratio (public and private external debt): no nation in history has ever had such levels. Yet when its debt was about 500%, it was still getting very high bond ratings from international credit agencies. Banks were ready to give out 5 million euro loans to anyone coming in off the street. Moral hazard all over. Ireland and much of Europe is in a long-term stagnation brought on by “banana republic” crony financial wheeling and dealing. Once we separate self-interest from moral sentiments, watch out, and be prepared to rue the consequences.
As maybe the only farmer on this list I need to comment
sending food except in crisis, flood earthquake etc, does a lot of damage
if sent to government probably sold to highest bidder to fill tyrants coffers
food used as bribe to silence critics
food sold for arms
and the most overlooked, when “free” food is provided it bankrupts the LOCAL farmers, why buy from my local farmer when its FREE. bankrupt the local farm economy and you create MORE hungry people (the farmer who no longer can support his family and may lose his holdings besides) and the food he produces is gone too so even more shortages. If you wish to destroy a country destroy its ability to feed its self
——————————————————————-
to quote my deceased German aunt who grew up during Hitler’s reign,” feed a starving population and it will follow you anywhere even to hell”.
and I add
In turn a population that is self sufficient is independent. socialists don’t like that.
clarification I am a certified organic dairy farmer and milked cows my entire life, 55 years old and loving it, great way to be close to God
This article is right on, and simply put. I might add, that often government stands in the way of getting product to the right place, especially in countries that have totalitarian governments or governments who are racist who are constantly killing each other, like the Hutsi’s and the Tutsi’s.
Praying for the fallen-away Catholic Forbes writer’s journey home. I used to be a fallen-away Catholic. We need people to pray for us.
Sometimes I wonder if the Bishop of Rome knows what he is talking about. Sometimes I’m afraid he does!
From an old NYP article
“It’s not like Benedict XVI (whom Binelli compared to Freddy Krueger) was an apostle of Milton Friedman either: “Both capitalism and Marxism promised to point out the path for the creation of just structures,” he said in 2007. “And this ideological promise has proven false.
Capitalism, Benedict continued, left a “distance between rich and poor” and is “giving rise to a worrying degradation of personal dignity.”
Pope John Paul II showed perhaps the most enthusiasm for capitalism of any pope, yet even he said, “There are many human needs which find no place on the market. It is a strict duty of justice and truth not to allow fundamental human needs to remain unsatisfied.” He warned against a “radical capitalistic ideology” that lacks an “ethical and religious” core.”
I believe the Pope does not need to have a degree on Economy or MbA or any other kind of major, in order to speak about hunger. The message got across, so not exactly what learned ears expected? .
That people in other parts of the world, leaving aside America, need to eat as in this case, is a harsh reality.
M Voris has an excellent vortex on the meaning of poverty to PF. CHech thhat out if you will -.
Some people may do well to cross the Ecuador and visit places, before writting thouthful pieces such as this, I remember when EG came out there were tons of economists, mostly conservatives lined up to take their hit at this exhortation based on the lack of economic accuracy?
PF one day came out, and said it clearly:” I’m not an economist, I’m sorry, and EG was not intended to be a treaty on economics.”
So, I think looking for pieces on the defects of weakneses of the Holy Father is in a way , to somehow prove the authors undoubtable and experience knowledge of economics, while compared to the poor ones of PF is sad.
We should also be beating on him for speaking about terrorism whitout having been a member of a police force or agency and on an on.
It has been done before and will surely happen again so, really is it such a big thing to point out?
There may be some nice aspects about the Pope we could write about and in the process, learn that omnipotency will lead us nowhere
A couple thoughts, first there is profit and then there is “over the top profit or greed.” Rather than condemning profit takers/makers, the Church should do a better job educating people as to the distinction between the two.
Serve meals at a homeless shelter and see how much food gets thrown away by the poor. Not many desserts, lots of veggies and fruit though.
Same goes for the use of food stamps/cards at the grocery store. Not lots of healthy items for the dinner menus.
In spite of being very poor, (I shall not have one full meal today, just dates and some cheese and nothing tomorrow), as a loyal daughter of the Church, I am against socialism, as has been all the Popes for over 150 years.
The problem is that socialism is the main “religion” of Europe. The Pope does not understand the large forces at work which want to create a two-tiered system of rich and very poor, the very poor to be reduced to positions of slavery. This is not the stuff of science fiction, but the goal of those who long ago left Christianity at the door. Socialist governments have been consistently voted in by Catholics, who do not really care about the individual poor person.
Charity must be personal. Many of us either do not want government hand-outs, or fall through the cracks anyway. Christ told his disciples that the poor would be always with them, with us-why? To help us be saints by giving even out of one’s own need, or by receiving in humility.
sorry has should be have….
“Profit” is taken as dirty, shady, under-handed, a kind of theft, and so on. In the professional economist’s world, when properly used, the term refers to a return to a producer beyond what has to be paid to the factors of production. So it is a return that is not “earned” by the sweat of your brow or by letting people use land, or giving them goods to turn into other goods, or lending them money to finance all these things. True profit comes when, for example, an entrepreneur accepts the uncertainty of putting a new product in front of the public, and finds that the public, against everyone else’s expectations, actually likes it and will pay for it, quite beyond what it costs to produce it, even taking into account all costs, even a decent return to the entrepreneur’s time and talent. That’s profit.
When we teach economics, we like to show the results of a perfectly competitive and open market in which there is pretty complete and certain knowledge of things, an open and competitive market in which to buy resources, and no surprises. In such a structure, profit does not appear. And if we look for a real-world example, the closest industry we find to the (economic) profit-free model is — you guessed — agriculture. If there is any activity at all in this world that is nearly devoid of true “profit,” it is in feeding people.
But I’m told that no, it’s not really profit that Francis is inveighing against, it is financial speculation. And there is indeed a great deal of financial speculation in such things as wheat and corn and oats. Pope Francis might take it as vindication to find out that the volume of speculation in wheat on the major markets is many times in excess of the amount that could possibly be delivered to fulfill the nominal contracts. I was told by one trader who specialized in cocoa futures that in the entire history of the London cocoa exchange — the largest market in cocoa in the world — only exactly four contracts had ever actually gone to delivery.
And yet … when I buy Oreo cookies I pay very nearly, if not exactly, the same price today that I paid six months ago, and I can be confident that the price I pay six months from now will not be much different, despite the fact that the wheat harvest is disastrous or, perhaps instead, is bountiful beyond any previous experience. How is it that Nabisco can pay the same price for wheat, and my budget is not strained to buy Oreos, whether the wheat is scarce or plentiful? The answer lies in the fact that Nabisco hedges its future purchases of wheat in the commodities market by matching its projected need to purchase wheat in the future (in practice, at least two growing seasons forward) with offsetting contracts against financial speculators. Yes, if there is a terrible harvest Nabisco will have to pay a lot more for wheat, but having hedged its purchases in the futures market (by being “long”), it will profit on those “speculative” contracts and, if they have done it perfectly, the profit on the hedge will exactly pay for the increased cost of the wheat. The result is that my capacity to buy my necessary Oreo cookies is not impaired.
But this is not about me, it is about all food consumers who get their food in markets in which food is a commodity (I’ll not go into why that is a necessary condition for futures markets to work), and the markets are open and governed by good commercial law. In those conditions, and only in those, the food consumer pays for the resources to grow, process, and get the food to him, and no more, and is not whipsawed by crop failures. Profits and commodification of food and financial speculation are not the problem and it is counterproductive to say they are.
Is there nevertheless a moral imperative to feed the hungry? You betcha. But it is not profits and financial speculation and treating foodstuffs as commodities that keep food from the hungry or make it too expensive. To the contrary, if only the hungry could live in the structures that allow such things to function robustly and securely, they would be much better off. Would there still be hunger? Yes, and it is the business of our charity, each of us, to relieve that. But if we want to do some institutional thing, best that we promote free and open markets in just those things that are most important and basic to life, and not harry and criticize those who are trying to make an honest buck by supplying food to the people who want it.
“Profit” is taken as dirty, shady, under-handed, a kind of theft, and so on. In the professional economist’s world, when properly used, the term refers to a return to a producer beyond what has to be paid to the factors of production. So it is a return that is not “earned” by the sweat of your brow or by letting people use land, or giving them goods to turn into other goods, or lending them money to finance all these things. True profit comes when, for example, an entrepreneur accepts the uncertainty of putting a new product in front of the public, and finds that the public, against everyone else’s expectations, actually likes it and will pay for it, quite beyond what it costs to produce it, even taking into account all costs, even a decent return to the entrepreneur’s time and talent. That’s profit.
When we teach economics, we like to show the results of a perfectly competitive and open market in which there is pretty complete and certain knowledge of things, an open and competitive market in which to buy resources, and no surprises. In such a structure, profit does not appear. And if we look for a real-world example, the closest industry we find to the (economic) profit-free model is — you guessed — agriculture. If there is any activity at all in this world that is nearly devoid of true “profit,” it is in feeding people.
But I’m told that no, it’s not really profit that Francis is inveighing against, it is financial speculation. And there is indeed a great deal of financial speculation in such things as wheat and corn and oats. Pope Francis might take it as vindication to find out that the volume of speculation in wheat on the major markets is many times in excess of the amount that could possibly be delivered to fulfill the nominal contracts. I was told by one trader who specialized in cocoa futures that in the entire history of the London cocoa exchange — the largest market in cocoa in the world — only exactly four contracts had ever actually gone to delivery.
And yet … when I buy Oreo cookies I pay very nearly, if not exactly, the same price today that I paid six months ago, and I can be confident that the price I pay six months from now will not be much different, despite the fact that the wheat harvest is disastrous or, perhaps instead, is bountiful beyond any previous experience. How is it that Nabisco can pay the same price for wheat, and my budget is not strained to buy Oreos, whether the wheat is scarce or plentiful? The answer lies in the fact that Nabisco hedges its future purchases of wheat in the commodities market by matching its projected need to purchase wheat in the future (in practice, at least two growing seasons forward) with offsetting contracts against financial speculators. Yes, if there is a terrible harvest Nabisco will have to pay a lot more for wheat, but having hedged its purchases in the futures market (by being “long”), it will profit on those “speculative” contracts and, if they have done it perfectly, the profit on the hedge will exactly pay for the increased cost of the wheat. The result is that my capacity to buy my necessary Oreo cookies is not impaired.
But this is not about me, it is about all food consumers who get their food in markets in which food is a commodity (I’ll not go into why that is a necessary condition for futures markets to work), and the markets are open and governed by good commercial law. In those conditions, and only in those, the food consumer pays for the resources to grow, process, and get the food to him, and no more, and is not whipsawed by crop failures. Profits and commodification of food and financial speculation are not the problem and it is counterproductive to say they are.
Is there nevertheless a moral imperative to feed the hungry? You betcha. But it is not profits and financial speculation and treating foodstuffs as commodities that keep food from the hungry or make it too expensive. To the contrary, if only the hungry could live in the structures that allow such things to function robustly and securely, they would be much better off. Would there still be hunger? Yes, and it is the business of our charity, each of us, to relieve that. But if we want to do some institutional thing, best that we promote free and open markets in just those things that are most important and basic to life, and not harry and criticize those who are trying to make an honest buck by supplying food to the people who want it.
In Argenina the Peronista government is at war with food (soy) producers over the exorbitant retention taxes for soybeans. If the Peronistas, Francisco’s party, took less taxes argentina would produce much more food for the poor provided buyers pay, unlike the Argentinean Peronist government which does not honor its debts.i
sirlouis,
That those cacao contracts aren’t delivered is working as intended, those 4 must have been accidents. But this is not a sign of anything that’s wrong: these markets do not trade cacao, but they trade price risk on cacao.
If I want cacao beans, the London market is not the place to go; you go to agri traders or suppliers (mostly in Afrrica) directly. But then the problem starts: the next harvest will take time to come in, and depending on whether it is good or bad, prices may swing considerably. To keep those Oreos level in price, it is essential to plan and fix the price even before the harvest is in. Is the havest bad, and prices high, one cannot increase the price of cookies that easily, so the bakery would make a heavy loss. The price must be fixed somehow to ensure proper operations.Likewise, producers will want to insure against a drop in prices. So they need a second contract on top of the actual sale of the physical goods, one that bridges the gap between the present time and the time of harvest/delivery
That’s where an exchange comes in. Rather than trading the actual cacao on the exchange, parties agree to trade the price difference, so both buyer and seller can get insurance against price-movements, to the benefit of both (physical delivery on these markets is only a mechanism to keep prices in line with reality; it doesn’t have to be used, but the possibility should exist).
In effect you trade away the potential upside of a price move in your favor against insurance against the risk the prices moves against you. In other words, these exchanges are all about risk management. Many companies couldn’t exist if they lacked access to these kinds of contracts.
Now where comes all the talk about speculation from? Well, risk management and speculation are two sides of the same coin. If I need 2000 tons, but lock in the price of only 1000 tons, I’m speculating on those last 1000 tons. if I lock in the price of 3000 tons, I’m likewise speculating on a 1000 tons, but in the other direction. That means that risk management can become speculation, and vice versa. Neither is by definition morally onerous. And as with any tool, it can be abused.
Traductoria,
“The poor actually do want food and money so they can stop being the poor.” The truely poor would indeed want that. But one of the big problems on this discussion is that many want to define ‘poor’ as a relative position, rather than an absolute one. If poverty doesn’t mean not having sufficient means to feed, house and clothe one’s family, but is extended to include that one cannot afford the luxuries that lage parts of the population can (cars, TVs, airco for starters; in Western Europe an annual holiday is nearly included), there will be many more poor people. The definition what it means to be poor has not remained constant.
And a lot of those people who are poor mainly by comparison rather than by want, are their advocates, will indeed often demand ‘dignity’. It’s not direct material want that is bothering them, but the fact they are clearly less well off than most of their peers. And to make matters worse, I get the impression countries can have a collective attack of that disease as well – and it seems rampant in Argentina, which has underperformed dramatically in economic terms for the past half century, and almost all through self-inflicted damage.
All of this doesn’t mean that dignity isn’t a necessary element of the discussion about poverty. If people think prostitution is a way to make ends meet, dignity is very much part of the equation, for example. But the waters are muddied considerably by how the terms are used. Sadly, His Holiness isn’t being very clear on how he intends them.
Dear sirlouis,
Your point about the Cocoa Exchange raises an interesting issue. While it can be said that the food commodity markets are free of unwarranted speculation, the same cannot be said for a commodity vital to the production and transport of everything we eat or use – oil. It seems clear that the spike in prices that occurred at the onset of the present economic crisis and continued through this year was not actually related to the cost of production. (The $111.70 closing price for Brent on the London Exchange in July of this year certainly wasn’t since the consensus appears to be that U.S. shale oil can be produced profitably at around $80 to $85 a barrel and oil from the Middle East is even cheaper to produce.) Like the contracts on cocoa that you mentioned, the contracts on oil similarly do not represent actual transactions that culminate in delivery. Further, one of the factors that affects price is gossip concerning potential civil unrest that could adversely impact production and delivery. The allure of windfall profit in this market attracts those who recklessly gamble and whose speculations thrive on the chance of war and strife.
Once again, as we attempt to understand the mind of our current Holy Father, how blessed we are to have the encyclicals of Pope St. John Paul II to fall back on as we look for ways to address Pope Francis’ very real concern for the family and the poor. For this discussion we have from Pope St. John Paul II the encyclical Centesimus Annus, n. 60, addressing what is meant by “capitalism”:
“The answer is obviously complex. If by ‘capitalism’ is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a ‘business economy,’ ‘market economy,’ or simply ‘free economy.’ But if by ‘capitalism’ is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality and sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative.”
As we consider where Pope Francis might be coming from regarding his apparent distaste for capitalism (speculation and financial speculation), his native Argentina comes to the fore again as a country whose capitalism I believe is “not circumscribed within a strong juridical framework…” Although no country’s system of capitalism meets the criteria of Pope St. John Paul II’s first definition, the second definition of capitalism seems to be the only definition our current Holy Father has in mind when condemning its putative abuses and failures. From there, in my opinion, Pope Francis falls into the trap of framing the discussion in terms of “left” or “right”, “socialist” or “capitalist”, instead of framing it in terms of what best serves the true dignity and freedom of the human person.
Socialism promotes a cold distant charity, where we help the ‘poor’ we never met and ignore the ‘poor’ that is our neighbour. Where people become expendable because the non person, the government will have more money, or less debt if they kill the suffering.
Capitalism when coupled with Christian charity, works hard to help more people. Capitalism without Christian charity is pure greed. It promotes divorce because then people need two of everything. It promotes obesity because it can sell more cakes and diet pills, and medication to treat illnesses thus caused.
Man since the fall is not happy in his own skin. He seeks a better life and those without God are doomed to constant and never ending disappointment, thus we can agree with Cardinal Sarah that the greatest poverty is not to know God.
Yes, as a poor person by the standards of those who live around me, I can say that it’s nice to get a basket of food at Christmas or any other time of year! Money given often goes to help pay bills, make ends meet, if it’s ‘extra,’ I might buy my child a book, eat out for a treat, drive to a holy place, etc. But what I dream about what would really be nice, would be if my husband could afford to support us, if we had a better paying job or if we had no debt (from emergencies), thus could we be given ‘dignity.’
Giving money is sometimes the only option. If you want to support a priest or nun in China, for example, you must give money. But you can help the poor at your doorstep by helping a young mother, listening to a teenager, chatting with a four year old, holding the hand of a dying woman, by serving your co-worker who’s having a bad day.
Helping the poor constitutes not giving money so much as meeting the basic human needs of our neighbour. This society we live in is rife with a poverty far greater than you’ll find in any third world country. There is a genuine lack of love of God and love of neighbour, a lack of kindness, affection, gentleness and all the virtues, and after all charity grows cold because it’s wearisome carrying our neighbour all the time, he’s heavy.
I guess i should add the the only way to truly help the poor is to help them help themselves. (and I don’t mean looting aka Ferguson).
correct me if I am wrong but the middle ages monastic ideal was to help the poor and have them help in turn. in our haste to help we overlook the dignity of work, of self sufficiency, of pride. Socialists policies overlook human nature, so does all the food giveaways, while well intentioned it does nothing for the long term human condition, yes we must feed the staving but we should look at where the food comes from, and the local economy, if the local farmers thrive food is plentiful and becomes cheaper. Our ag policies and the socialist tendencies of our “elite” have had the effect of destroying local economies and creating dependency, just as our leftist government here has. A dependency class will usually vote for the enabler.
all true wealth starts with the land, without the stewards of the land all fails. The land and its proper stewards produce from a tiny seed with the Lords sunshine and rain, and the honest sweat of their brow, literally a miracle,
the ancient Chinese understood this, farmers ranked slightly below the emperor and above all public servants.
I wish i could express myself better
Phil_NL — we do have objective standards here: the federal poverty level. Programs are based on what where one stands in relation to that.
I don’t really see the difference between giving the poor food and giving them money to buy food, though some might argue that the money could be squandered on drugs, alcohol, or gambling. What others have properly noted, however, is that the ideal approach is to help the poor to become part of the world economy, either as individuals or as nations. Sometimes, we have to give a poor person money or food because that person has an immediate problem which in charity requires an immediate solution. Despite that, we also have to address the long-term problem if at all possible, or else we’ll see the same beggar at the same location the next day, next week, and next year, which is very discouraging. Addressing those long-term problems is very challenging, and when government attempts to intervene it can make things quite worse very easily, as when rent control causes landlords to abandon buildings because they can no longer afford to maintain them.
To The Egyptian……..Your posts hit the nail on the head! HAPPY THANKSGIVING EVERYONE!
“Speculators” would not exist if they did not perform a vital service.
They benefit from, and absorb, and spread the otherwise-prohibitive costs of risk. They perform a function similar to insurance. Without them, a great deal of commerce would grind to a halt.
Clerics who ignorantly pontificate on economic matters are not exercising their legitimate teaching function as members of the hierarchy. They are exploiting their status as public persons to agitate for their personal opinions, which are no part of the Deposit of Faith. They are abusing their office.
The USCCB is an organized, institutionalized example of this form of abuse.
“The problem is not that food has been made a commodity; it is that money has, when it is really only a symbol for wealth.”
Money (whether fiat money or honest commodity money) most certainly is a commodity. It performs a function; it satisfies a need. It facilitates commerce because the use of money is almost infinitely more efficient than barter. It is a common blunder to think that simply because money is not identical to the things for which it can be exchanged, it isn’t “real wealth.” Without money, everyone would be vastly poorer. (And I don’t mean that in the simple-minded sense that they wouldn’t have any money!)
The answer to your rhetorical question is most probably no. Argentina has been a singular example of a country in which the manipulation of capital by a corrupt few has turned a once thriving economy into a disaster (hey, we’ve got our own political mafia trying to do the same!). Capitalism in Argentina is a farce that enriches a select few at the expense of the masses. Unless our Pope has studied economics privately, he has no clue how capitalism works. His economic pronouncements make sense in the Hall of Mirrors which is Argentina but sound clownish to those of us who live in countries where capitalism is allowed to thrive (like Texas!). May God bless our Holy Father!
The Egyptian, super good posts. How superb to be a dairy farmer! Please give your girls an extra pat from me. I must add to Lin, Happy Thanksgiving Fr. Z. and all commenters! I am thankful for all of you.
“Forbes: If people don’t profit from their actions then they won’t do them.”
This is true not merely in the sense that people seek profit out of self-interest, but that PROFIT IS INFORMATION. If people are deprived of profit from their labor or trade, they not only have no selfish incentive to labor or trade, they have no idea what OTHER PEOPLE WANT.
This is why socialist economies are not merely swamps of sloth and crookedness, but of deadly shortages and towering surpluses rotting on sidings and in warehouses. Price fixing and warring on profit are time-tested methods of genocide.
The Pope’s comments about food and “speculators” are in the same species of nonsense as the dogma of the USCCB that “health care is a right.”
Whenever some material, physical good or service is declared to be “a right,” and “not properly a subject of commerce,” you are hearing economic imbecility, and a veiled call for slavery and worse.
Andrew Saucci says…” the same beggar at the same location”. Most of the poor, at least in this country and probably elsewhere, are “working poor”. Being poor is not synonymous with being lazy, dissolute or improvident. You have working poor who hold even several jobs but which do not pay enough money to support themselves or their families. Anyone, anyone, could become poor due to circumstances beyond their control.
Unfortunately, and I say it with a heavy heart, I all too often come across comments on Catholic, traditionally-minded blogs which speak of the poor in stereotypical ways, mention possible abuses of any help given them, or refer to the difficulties involved in working towards institutional changes, which seem to suggest that the persons making these comments are washing their minds of any further thought of any obligation on the subject.
If we can fight against abortion and Obama’a mandates, we can strive to see that the programs for the poor, e.g. for food, housing, and for energy assistance be well-funded. I’m always a bit suspect of a person who is outraged by abortion but indifferent to the plight of the poor.
or else we’ll see the same beggar at the same location the next day, next week, and next year, which is very discouraging
It is?
Well, classical Christian societies once were supposing that begging is a respectable profession usefully contributing to the common good. There even were orders, that, no, not gave up any working to satisfy needs (there was one that did that too, the Theatines), but restricted themselves on purpose to the profession, the work, of begging.
That said, helping them out of it is a good thing. Gaining, if it somehow can be done, a sense of dignity for them in the meantime would be fine too, though.
After all, if they received one dollar and prayed one Our Father for their benefactor, it is them that have given more, and received less, in absolute values.
The Egyptian, would that all blog comments were as well-expressed (and cogent) as yours.
Dear janol,
forgive me for focussing on where I perceive (quite possibly wrongly, it is true) the actual problem, and thus… what you say:
Being poor is not synonymous with being lazy, dissolute or improvident. You have working poor who hold even several jobs but which do not pay enough money to support themselves or their families. Anyone, anyone, could become poor due to circumstances beyond their control.
is quite true. Of course. But not, in my humble opinion, the point (and in other senses than the obvious one that a man who is begging all day is eo ipso not lazy).
The point is that even if our given beggar is lazy, even ifour given beggar used to be dissolute (doesn’t have many chances to be so now, at any rate) and thus “brought it on himself”, even if he is improvident by character and even if he became poor due to circumstances jolly well within his control…
that he remains a man in a misery, and it remains a meritful deed, and, let’s face it, it’s also fun*, to help him for the greater glory of God. [* Probably a good way to describe the distinction the theologians make between liberality and magnanimity is that the first is fun and the second rather not. That’s theoretical of course, but I love theory.]
I’m being silent on the “obligation” thing, because that’s another thing. The more ideal way of giving is joyful giving, at any rate. (And given organized charity, contribution to organized charity, and tax-based compulsory organized charity, the actual obligation seems quite possibly to fall away in cases not extreme. But that’s another thing.)
Yet it is not sinful to give to such a beggar; it’s still a good thing. Some might say (as Chesterton did) that charity to the undeserving is even the idea of Christian charity.
What about “Chesterbelloc’s” idea of distributism? based on Pius XI’s “Quadragesimo Anno”?
“The encyclical describes in considerable detail a desired tripartist corporatist social structure in which government, industry, and labor work together in concert as part of a third way between capitalism and communism.”
I agree with the dairy farmer, above, that a nation that can’t produce its own food is in peril. Not to sound like a doomsdayer (however, I do strongly agree with Our Lady’s words at Akita), but when happens to our purely capitalist-based economy and nation if, say, a major cyber-attack took down parts of our interlinked electric grid? How would we feed ourselves? I’m a man of my circumstances, as we all are, but I truly believe that our current system will eventually fail, leaving many of us unable–and unknowledgeable–how to provide ourselves with basic necessities. This could also come in the way of a dollar collapse. See former CIA analyst Jim Rickard’s book, “The Death of Money”, on the topic. Interestingly, Rickards was directly quoted from by House member Rand Paul on the Senate floor. Every person reading this should have an acre of land (or more), and an extensive garden, canning ability, and maybe a hunting rifle. I used to be in the US intelligence community myself, and I don’t think this is pure doomsday-prepper paranoia, as even the DHS website used to (don’t know if they still do) recommend a few weeks worth of stored food. Mormons, of course, typically have a year’s worth of stored commodities. Seems like common sense, to me, given that something greater than Katrina is not only possible, but perhaps even likely to happen at some point, in all of our lives.
The article demonstrates that with economics, like sex and marriage, very few people understand Catholic teachings. But, they all feel entitled to comment because they once stepped inside a Church or Catholic school. Personally, as a Catholic, if I find that my viewpoint is out of step with the Pope, a bishop or the Catholic Catechism, then it would first be in my best interest to understand their viewpoint before I go with the knee jerk reaction of criticizing it. That’s best left up to the “recovering Catholics.”
The problem most people have, including many readers of this page, is that they take a quote or a comment out of context. When Pope Francis makes a comment, that comment is always in the context of the Catholic Catechism. I think the Pope understands economics, and he understands the problem of hunger and poverty does not stem solely from a lack of money. “The Church is not an NGO (non-governmental organization). It is a story of love…I know that people from the IOR (Vatican Bank) are here, so excuse me. Offices are necessary but they are necessary only up to a certain point.”
If you see somebody hungry, then you feed him. You don’t ask why he don’t have a job. You don’t ask what happened to the food aid that was sent to him. You don’t question his sincerity. “Who am I to judge?”
Not everybody is capable of functioning in society. These people are with us for a reason:
Whereupon the just will answer, Lord, when was it that we saw thee hungry, and fed thee, or thirsty, and gave thee drink? When was it that we saw thee a stranger, and brought thee home, or naked, and clothed thee? When was it that we saw thee sick or in prison and came to thee? And the King will answer them, Believe me, when you did it to one of the least of my brethren here, you did it to me.
The people who make lots of money by moving imaginary money around the system like to point out that what they are doing is not immoral but amoral. They also like to state that they abide by their strict ethical principles. The problem is they have an ethical system that treats profit as the highest good.
Those people who bought up wheat, and drove up the price of bread, didn’t need wheat. They had never even seen a grain of it. They certainly didn’t move any of the stuff to where people actually live on the stuff.
Those same people didn’t need raw materials such as iron ore. They wouldn’t recognise 600 tonnes of it if it arrived in the post. But they made life very difficult for industry, and for the people who depend on industry for their livelihoods.
And none of us really need to buy cocoa, do we…. when we’ve got eccles cakes.
The Egyptian, spot on. I am still healthy enough and bright enough to work and have applied to literally hundreds of jobs in the past four years without success. The problems are huge facing those of us who cannot get hired either because of our age, being “over-qualified”, or too orthodox.
I would have loved to be working, as my last job ended (temporary contract) in December of 2010.
And, it is not what you know but who you know, and I am in no loops.
Until there are jobs for people to really do, poverty continues…I remember applying and having an interview in 2010 at Merry Maids who said they never hire anyone with higher degrees-reverse discrimination.
The other problem is that poverty is a spiral, no job means no car to get to a job, means no money for car insurance, and so on. This is the problem with the 16.2 percent, the unemployment rate among Americans ages 16 to 24, which is more than twice the unemployment rate for others, and many older people like myself are either underemployed or unemployed. Unless the Church addresses the real problems of work and the dignity connected to working, as opposed to the modernist heresy of socialism, nothing will change in the minds of Catholics.
Gratias says:
27 November 2014 at 1:45 am
In Argenina the Peronista government is at war with food (soy) producers over the exorbitant retention taxes for soybeans. If the Peronistas, Francisco’s party, took less taxes argentina would produce much more food for the poor provided buyers pay, unlike the Argentinean Peronist government which does not honor its debts.i
Gratias:
You are involuntarily incorrect if I may suggest:
If you ever visit , you shall see miles and miles of ground planted with soy beans, Argentina being the # 1 or 2 soy bean producer in the world. But it is not of the edible kind, it transgenic I believe they call it, planted to produce diesel or a certain kind of full not as food.
The “retenciones” or taxing you mention is an issue but “war” is no longer waged on it by anyone.
And here is a clear and good example of what the Pope talks about.
Traditionally Argentina (the barn of the world until the 40’s) would supply the world with meat & grain.
For a few years now the price of this soybean has been skyhigh, Therefore, all surfaces destined to cattle for instance, have been replaced by soy. Same goes for wheat and the rest.
And as result, there is less and more expensive meat of every kind in the market , if I may say so, as well as flour.
Call it what you will but does that help the poor? doub it. Speculation,. supply and demand etc. etc.
Dear Fr. Vincent Fitzpatrick,
Re – “‘Speculators’ would not exist if they did not perform a vital service.”
I think we need to be careful to differentiate between investors who take risks with their money to assist in the establishment and vitality of business endeavors and people who treat the financial and commodities markets like a form of casino who are often popularly labeled as “speculators”. Adam Smith recognized the existence of both groups and understood that the former were essential for an economic system to flourish but roundly condemned the latter as parasites who distorted and endangered the capitalist system.
Gil Garza says:
27 November 2014 at 10:20 am
The answer to your rhetorical question is most probably no. Argentina has been a singular example of a country in which the manipulation of capital by a corrupt few has turned a once thriving economy into a disaster (hey, we’ve got our own political mafia trying to do the same!). Capitalism in Argentina is a farce that enriches a select few at the expense of the masses. Unless our Pope has studied economics privately, he has no clue how capitalism works. His economic pronouncements make sense in the Hall of Mirrors which is Argentina but sound clownish to those of us who live in countries where capitalism is allowed to thrive (like Texas!). May God bless our Holy Father!
Spot on my friend.
In the words of Michael Voris:
“WWhen the pope speaks about the poor, he does not refer to low income housing or food stamps, he point at people (millions) eating out of piles of gargabe bags and living inside cardboard boxes.”
You are mistaken in looking at how capitalism is seen, applied , understood and CONTROLLED in the first world, America particularly and trying to apply that view to the words of the Pope on hunger and the poor amd how it works bellow the ecuador line.
No offense please, but lots make the same mistake and unfortunately go on writting essays and giving lectures on how wrong the Pope in about capitalism and how limited his knowledge is compared to ours as learned posters.
Saint 1106 says
Look at Ireland: over 1000% debt/national income ratio (public and private external debt): no nation in history has ever had such levels. Yet when its debt was about 500%, it was still getting very high bond ratings from international credit agencies. Banks were ready to give out 5 million euro loans to anyone coming in off the street. Moral hazard all over. Ireland and much of Europe is in a long-term stagnation brought on by “banana republic” crony financial wheeling and dealing. Once we separate self-interest from moral sentiments, watch out, and be prepared to rue the consequences.
Not to defend crony capitalism, but it wasn’t the cause of the economic problems. Rather, the cause was the domestic real estate market, with inflated values and lots of iffy and bad loans that were bundled into securities. When the price of oil shot up to $140+, the economy slowed, incomes dropped, and massive loan default followed.
What caused those inflated values? Probably, it was a combo of low interest rates and the trade deficit. Although the Domestic Real Estate market was doing well, the rest of the US economy was slowing. The low interest rates warmed up the economy but overheated the DRE market.
Supertradmum,
I agree, I had a job making well over $100k a year, resigned for personal reasons, then my wife promptly left me–because her golden ticket disappeared when I left that job (instead of, “in sickness and in health, for better or for worse,” her motto was, “in health and in wealth”), I had a medical emergency without insurance, was then $400k in debt, and probably would have been homeless but for my now elderly parents (by the grace of God–or good fortune–I have a well-paying job again).
And I have a Juris Doctorate degree. I think the wealthy capitalists in this Country really do tread on the heads of the poor. In Europe, there is a safety-net, and they care for those unable to care for themselves (especially the mentally-ill; who are all but shunned and ostracized in this Country).
They pay a price for that in taxes, of course. But it is more humane than our system, by far. And I do believe in the free market. But my uber-rich republican brother-in-law (knowing my past circumstances) told me, just recently, “C___, you know, people need to take more personal responsibility; we have people trying to get free health insurance…” blah, blah, blah. I was actually stunned. I like this man, but he was born with a silver spoon in his mouth (old East Coast money). These people have no idea what it is like to suffer, economically.
Supertradmum, I will pray for you, as I truly know what it is like to be where you are…
Having grown up poor I would like to say two things. Nice people, please stop helping. Your “help” just made
things worse and secondly, considering what a basket case Argentina is, unless the person speaking is saying “Do not follow us,” I don’t want to hear an Argentinian’s opinions on economics.
Having grown up poor I would like to say two things. Nice people, please stop helping. Your “help” just made
things worse and secondly, considering what a basket case Argentina is, unless the person speaking is saying “Do not follow us,” I don’t want to hear an Argentinian’s opinions on economics.
I should add (parenthetically) that I do believe people should have “personal responsibility”; but our system is designed so that even hard-working people are left in destitute states. You have to have money to make money nowadays.
You have to be “healthy, wealthy, and ‘wise'” to succeed. And if you’re a young person, that means massive student loans, family money, or pure chance and gall to succeed.
For the aged and infirm, you are castigated unless you have a “safety net”. Unless you are “strong and firm”, “highly educated”, are, by chance, just lucky. Our capitalist society will pass you by. At Tom Sawyer says in Huckleberry Finn, “you see that boat passing by, you better grab that rope, or it will pass you by.” That is the American praxis: missed opportunities are lost opportunities, and YOU are to blame for not catching that rope. That is, of course, the protestant-calvinist-puritan praxis that still runs deep in our Country.
The Catholic sees things differently. I’m reading a great book called “The OPA! Way: Finding Joy & Meaning in Everyday Life & Work” by Alex Pattakos (admittedly, a friend of mine, so I’m biased); it is a great read on how happiness is found in meaning, not things. It’s the Greek model–ancient and new. It is what got Greece through it’s recent financial turmoil. Life is about finding meaning in other people, not personal wealth (they are Orthodox, of course, but Saint John Paul II said that the Orthodox and Catholics are two lungs breathing in the same body).
Phil_NL, Good point.
As for dignity, the thing that gives people dignity is Christianity, which is precisely why the (Protestant) slave owners of the South would not let their slaves be evangelized or baptized…because then they’d have to start treating them like human beings.
But unfortunately, this current Pope has defined preaching Christianity, at least by Catholics, as “solemn nonsense,” whatever that means. So the only thing that could confer dignity and equality is ridiculed by the Pope. This makes no sense whatsoever.
I read:
” Every person reading this should have an acre of land (or more), and an extensive garden, canning ability, and maybe a hunting rifle. ”
Since there are 100 times as many people in the USA as there is land measured in square miles, how is everyone having at least an acre of land a useful claim ? Especially when some of the land is toitally unarable..
Traductora says,
But unfortunately, this current Pope has defined preaching Christianity, at least by Catholics, as “solemn nonsense,” whatever that means.
I thought he was talking about proselytizing.
Vatican.va doesn’t seem to have the text of this CIN2 address, at least not yet.
Imrahil: Begging orders do not train to be professional beggars. They trust God to provide. In the male orders, this is in the tradition of the Levites whose inheritance portion and land was God; and in the female orders, they expect God to bring home the bacon for His bride/s. The concept is that God uses people as his agents to deliver money and supplies, and that begging is simply making themselves available to accept Providence’s deliveries. None of the begging orders had begging as their primary activity. Some members might have done mostly begging all day, but it funded others doing their actual activities (like prayer, scholarship, caring for the poor, etc.).
Begging in medieval times was not a particularly well-regarded trade. It was regulated in some places, but that was so that people wouldn’t be plagued by aggressive beggars (or pickpockets and bandits pretending to be beggars), so that beggars wouldn’t be fighting and killing other beggars for prime spots, and so that the government could get a cut. Beggars who had no other ability to make money were tolerated and there was a certain amount of kindness toward them. There was also a market in being a local character whom people enjoyed. But the deceptions and wicked behavior of beggars were always part of European folklore. There were many charities meant to teach beggars useful trades or to find ways for them to live without begging.
Joy of the remaining hours of Thanksgiving to all in the relevant time-zones!
Perhaps as an interesting tangent, this apparent 10th anniversary Thanksgiving reprint about ‘Protestant private property ethic’ vs. ‘Protestant communal property ethic’:
http://www.independent.org/newsroom/article.asp?id=2378
(Lots of editions of William Bradford’s Of Plymouth Plantation (1651) at Internet Archive, for checking the evidence used – as I have not (yet)!)
Meanwhile, Traductora writes, “As for dignity, the thing that gives people dignity is Christianity, which is precisely why the (Protestant) slave owners of the South would not let their slaves be evangelized or baptized…because then they’d have to start treating them like human beings.”
Any recommended further reading on this? I’ve heard that the 1618-19 Synod of Dort (I think it was) specified that any slave baptized must be released from slavery. Catholic slave owners could clearly combine the union and equality of baptism with continued ownership of one Christian by another. But what range of (self-described) ‘Protestant’ theory and practice was there? For one example, George Washington, as a member of the Church of England, had brothers in baptism into Christ among those he continued to own:
http://www.mountvernon.org/research-collections/digital-encyclopedia/article/slave-religion/
– even as Archbishop Carroll did.
Thank all of you, you humble me with your undeserving praise, and yes i did pat the cows for you Kathleen10 although my son did most of the milking this morning, it is a blessing to see a son grow up in front of you, he plans to take the farm over some day God willing
IMHO, a good rule for the Pope to follow in economics is: If what he says (or writes) has to be followed up by someone saying “He was referring to . . .”, it would be better not to say it.
And in so far as “Capitalism” can have several meanings, it might be smart to be very careful when mentioning it. Otherwise, what is said becomes little else than a caricature.
Egyptian says,
Our ag policies and the socialist tendencies of our “elite” have had the effect of destroying local economies and creating dependency, just as our leftist government here has. A dependency class will usually vote for the enabler.
I think the federal Ag programs were originally intended to stabilize the market: Prevent shortages (which drive up prices and harm the consumer) and huge surpluses (which drive down prices and harm the producer). That’s not a bad thing.
Unfortunately, politicians couldn’t resist turning them into vote-getting giveaway programs.
I have very little to add to the comments, seeing as how I am an economic idiot. Of course, I have a radical suggestions, which, apparently, some anarchist Economist in England has also suggested: everyone who works and performs a job, at least adequately, gets the same pay. Hey, before you pooh-pooh, the idea, hear me out. If everyone (and I mean everyone) got the same pay (let’s say, the U. S. average, if that were possible), then all of the prices of commodities would have to scale to that income. CEO’s would make the same as their workers. They would be one among equals. They could not afford to distance themselves from their workers, because their workers plights are their plights. Everyone could find a job that suits them. Some people are good at command and control, so, they should be leaders. Some are naturally good at interpersonal relations, so they could gravitate to sales. How many football players would play for the love of the game if they were only making the same salary as everybody else? Even if this is not feasible, it would certainly be eye-opening as to why people do what they do. It would also force people to be more frugal and save more. This is not socialism: the state is not doling out services. It simply values work as a qualia, not by quantity. I suppose this is close to Distributism, but not exactly the same. Anyways, this would put the burden of working on working and not on the dream of huge incomes. It would be a nice theory to try.
“If you see somebody hungry, then you feed him. You don’t ask why he don’t have a job. You don’t ask what happened to the food aid that was sent to him. You don’t question his sincerity. “Who am I to judge?”
I suspect that you have either never been really poor or dealt directly with people on the streets. I was in New York waiting for a bus many years ago coming back from an academic conference. As I was standing in line, a young woman approached us saying that she had lost her ticket and was desperate. I gave her the money she asked to get the ticket. As I got back in line, someone else, possibly a savvy New Yorker said to me, “You know she’s a crack-head, right?” My heart sank. Not only was that the last money I had left (like the widow’s mite, I thought I was doing a good deed), but it went to aid in the continued deterioration of another human being. Today, I would have walked her to the bus terminal and bought her a non-refundable ticket and handed it to her. If she really needed it, she would have taken it. Dignity is one thing, but there can also be a certain amount of false pride among the poor, as well. One reason the people in Ferguson are looting is not because they are poor, but they feel they are the entitled poor. Poor people who are really humbly poor would not only not rob the store (except, perhaps of food, but that is another story) for TV’s or other commodities, but would, rather, help clean up after the looting.
Supertradmum, your plight touches me deeply. I have been there, myself. I will pray for you. If I had any way to keep in touch, I would do what I could to lighten your Cross (whatever that might mean). I have friends in a similar situation. The old have become throw-aways instead of treasures. That is a hallmark of greed. The Lord has had a thing-or-two to say about rich men sitting in their houses with the poor lying outside their gates. You may have to be a modern-day Lazarus and pray for the men in the purple cloaks. Their souls are in danger.
There is much I could say because I have had to deal with these issues for so long, but let me just say that dignity is not something you give to another. It is something you recognize as being already there.
The Chicken
The price of food commodities is intentionally distorted by central banks working in collusion to keep them cheap. Why farming is subsidized in first world countries? Because otherwise, we wouldn’t eat either, farmers would stop producing. If local farmers produced in third world countries, they wouldn’t be third world countries. Kill the banks, and everyone eats again….like historians agree that they did during the middle ages (barring drought and blight).
It is truly sad how people today have fallen into this misunderstanding that “profit” is a dirty word. [Exactly.] We have to essentially remember that a farm, whether corporate run or family owned, seeks to be compensated for the monotonous work that farming is. No farmer farms with the hope of “breaking even”. They farm with the hope of having enough money to cover the expenses of farming and having the ability to tuck enough away to pay for household expenses and insure themselves in times of inclimate weather when the crops just don’t grow at all. Price is simply a response to the scarcity of whatever is being purchased. In other words, capitalism works as necessary to make sure all of these areas are cared for.
I have always been a firm believer in direct aid, and I have found that charities like Food for the Poor seem to do it very well. They negotiate the price for the food stuff they deliver (capitalism again at work). What they do feed the poor is a vitamin enriched grain that takes care of the nutritional needs of the people receiving it. It is not easily subjected to the abuses that can be found with cash payments. I wonder why programs like this are not extended to the US, where money could be saved in programs like this, and it would quell the abuses that come along with EBT cards.
How sad the world must be in which the author lives, who believes “profit is the incentive for people to do things. ” [I don’t think he said that profit is the only motive. However, it is undeniable that human beings act also in self-interest. It is naïve to deny it.] Many commenters here have said excellent things. Perpetuating the status quo on the basis of “the only alternative is communism!” is wrong. The Holy Father grew up in “justicialism” or “Peronism”, which thought itself a sort of third way, and reminds us that all ‘capitalism’ is not the Anglo-Saxon variety. And to Supertradmum: dear sister in Christ, please remember that the state which offers pitiless crumbs consists in part of your brothers and sisters in Christ who give willingly to that state to help you.
Pnkn says:
27 November 2014 at 5:53 pm
I read:
” Every person reading this should have an acre of land (or more), and an extensive garden, canning ability, and maybe a hunting rifle. ”
Since there are 100 times as many people in the USA as there is land measured in square miles, how is everyone having at least an acre of land a useful claim ? Especially when some of the land is toitally unarable..
There is in fact plenty of land in the U.S. If we take in the fact that we should be staying together as a family (which includes several generations). one acre of land should be able to house and feed a family enough to get by in times of dire need. But we actually have enough land to allow several acres of land per family.
Three random thoughts after reading the Forbes article and the many comments: 1) The Pope is in good company–Jesus also was vocal on poverty, though he was not an economist. 2) The poor need and want food, shelter, clean water, money, the Good News, AND dignity. Different people and organizations might focus on one or another of these; all the “parts of the body” are vital. 3) Greed is at the heart of matters regarding hunger and poverty–individually and collectively.
Best thing you can do for a poor person is to hire them. If you want to help the poor in Africa, invest in solid, well run businesses there. They need capital, not handouts. Investments not inducements. This is why truly free markets are the surest way out of poverty and the surest way back into poverty is to choke them off under mountains of regulations.
KirkO:
There is sufficient land in the US to give each person more than 8 acres apiece. A family of four would have 32 acres.
“everyone who works and performs a job, at least adequately, gets the same pay.”
I have an education. I worked hard to get that education, and spent 4 years that I could have spent working elsewhere. People should be paid based on whatever the market will bear for their skills. You would never get a nurse, or a doctor under this system. They would all quit because they could get the same pay waiting tables.
“You would never get a nurse, or a doctor under this system. They would all quit because they could get the same pay waiting tables.”
Why would I want to wait tables when I could be solving the mysteries of the universe? Nerds are funny, that way. Most nurses I know would rather help the sick. People have vocations, which are a calling from the Lord. St. Peter talked about this [1 Pe 4:10 -11]:
“As each has received a gift, employ it for one another, as good stewards of God’s varied grace: whoever speaks, as one who utters oracles of God; whoever renders service, as one who renders it by the strength which God supplies; in order that in everything God may be glorified through Jesus Christ. To him belong glory and dominion for ever and ever. Amen.”
The Chicken
The Proverbs 31 section about the Valiant Woman (which has traditionally been read as applying to the Church, Mary, and any believer) is a section saying that the desirable wife is the wife who is enterprising and creates profit. In fact, the Hebrew expression translated as “valiant” or “strong” is the word for making a profit. The same Hebrew expression is used to describe Ruth.
The point is that you’re not supposed to wind up with the same resources you started out with. You’re supposed to work hard, make money or products, and then either use or sell those to create more products or a better life. The Valiant Woman takes care of her household, makes products for their use and to sell to foreign traders, uses the profit to buy food and land for her household, uses the land to grow more products…. etc. The more she has, the more she is able to give and to help her family.
This is also traditionally tied by Catholic theologians to the parable of the talents; you’re not supposed to wind up with the same resources you were given, but rather, you should wind up with more.
So if the Lord is for profit among Jewish women of the pre-modern age, and the Lord is for spiritual profit among his followers, He is not likely to be against profit in normal business transactions.
Dear Chicken,
distributism (which is named for a measure its describers thought necessary to start it) has, in fact, little to do with equal wages. I don’t claim to know much, but it sounds like a free-market economy with restraints on the competition (i. e., striving to earn more is okay, respecting basic standards of quality as evolving in competition too, but “eat or get eaten” is not okay) and everyone having enough capital to start their own businesses if they wish so.
I don’t mind discussion of the equal-wages idea, but I’m quite sure that this is not what Chesterton, or Belloc, or Pius XI for that matter, would have dreamt of.
Dear Banshee,
it is quite true that begging was not a particularly well regarded profession in the middle ages. But then, the idea of an almost physical thing called “honor” which does not have to do with morality in principle is something which we don’t really understand today (I’d guess), but which at any rate they had. So, begging was what (possibly, see below) is technically termed “dishonorable”, but so was the profession of the executioner (despite universal acceptance of the death penalty), and so were, apparently, the professions of miller, shepherd, tower watchman, barber and so on. The beggar might have “obviously” (as we moderns would say) belonged to that category, but I find that “beggar” is not even mentioned in Wikipedia’s list of dishonorable professions. (http://de.wikipedia.org/wiki/Unehrlicher_Beruf) It might be that a beggar was accounted a more honorable member of society than a miller. (I did not, of course, claim the Middle Ages were logical.)
That said, my impression was that while, of course, I do not deny teaching beggars a job is a good thing, and while it was of course subject to the one or the other regulation – the wave of general bans, enforced with not voluntary but penitencewise-enforced workhouses and the like, belongs strictly to modernity and was absent in the Middle Ages, and comparatively absent in Catholic Christendom. My source in that question is E. M. v. Kuehnelt-Leddihn, “Catholic nations, where the beggar is a ‘useful’ member of society” (Liberty or Equality V p. 185), who mentions “for a Catholic defense of begging vf. the great Prussian romantic statesman J. von Radowitz, Gesammelte Schriften (Berlin: Georg Reimer, 1854), IV, 38-39)” in footnote 636 of the same book. (I did, of course, not look up Radowitz.)
But as for the mendicant orders, they are called mendicant orders because they beg or used to do so, and (originally) on purpose. There was, as I said, one order too which included an abstention even of begging trusting God to provide, but that was the Theatines and not the classical mendicants.
Dear Imrahil,
You wrote,
“distributism (which is named for a measure its describers thought necessary to start it) has, in fact, little to do with equal wages. I don’t claim to know much, but it sounds like a free-market economy with restraints on the competition (i. e., striving to earn more is okay, respecting basic standards of quality as evolving in competition too, but “eat or get eaten” is not okay) and everyone having enough capital to start their own businesses if they wish so.”
My point was that if everyone started with, “3 acres and a cow,” or a position of equality, as Chesterton said in, What’s Wrong with the World, then things would scale to that. As he further said:
“But my main business is to point out that any reversal of the rush to concentrate property will be an improvement on the present state of things.”
I do not claim that equal wages is exactly what Chesterton had in mind by Distributism, but it is in the same general direction.
The Chicken
Dear Chicken, interesting.
It would? it is?
The thing is that a generally equal wage is feasible only on a highly state-bureaucratic basis, which I would claim is quite the opposite direction.
Also, Chesterton frequently had to answer his critics’ argument that, well, capital even if being equal at the onset, wouldn’t remain that way. I cannot now give quotes, but I think the answer was along the lines of: yes, of course, that would be natural; but the quite different and not natural thing is for capital to concentrate in such an amount as to make the small market-enterer’s stand impossible, or even to press competitors out of the market. That’s why we have anti-cartel legislation. Chesterton did say (I remember, but I cannot look that up now either) that things like that [a secret sort of cartel, I guess, or so] ought to be dealt with plainly by way of criminal law. Which he would of course not have advocated for simply earning more.