A Modest Proposal

Since writing my first post on this blog, I’ve had a number of things I’ve wanted to write about. At first I thought I’d start from the beginning of my year in Texas and detail various basic aspects of my work and living situation, but I’m going to put all of that on hold for a little while in order to take advantage of a current event.

I don’t have much to add to the shock that’s already been expressed over President Obama’s Nobel Peace Prize. I deeply appreciate all that Obama stands for which is good and recognize the symbolic significance of the Nobel Committee’s decision, at the same time as I feel that the prize should go to someone who has not only accomplished something (which should be obvious) and is not (as my friend Hilary remarked when she told me what had happened) currently waging a broadening war, but who has suffered, personally, for his witness to peace. I am reminded of a discussion I had with my friend Eset about Orhan Pamuk, winner of the 2006 Nobel Prize for Literature. After giving me a brief synopsis of some trends in contemporary Turkish literature, Eset suggested that while Pamuk may be one of the best contemporary Turkish writers, he will never be the Greatest Turkish Novelist, because he’s never served time in prison for anything he’s written. While other equally skilled Turkish artists have languished in jail, Pamuk has traveled the world lecture circuit and enjoyed lauds and celebrity in abundance. Similarly, when you look at other names buzzed in advance of the prize this year — like Dr. Sima Samar, Hu Jia, and Morgan Tsvangiri — it is hard not to agree with one of my housemates, who quipped, “Maybe they should have just given it to Obama’s speechwriters, instead.”

Still, their shifting the paradigm of eligibility for the Peace Prize has given me an idea.

To connect this to an account of one of my own experiences in the Jesuit Volunteer Corps: this weekend my friends and I were invited to attend a symposium on Global Solidarity and Immigration at the Mexican American Catholic College of San Antonio. Many of the panelists were really interesting; a highlight was speaking to a Sudanese refugee who sought political asylum in the US after a long stint in India and now works for Catholic Charities of San Antonio doing resettlement. He has invited us to a fantastic Indian restaurant he knows about on the South Side. But I digress…

The keynote speaker at this symposium was Cardinal Oscar Andres Rodriguez Maradiaga, president of Caritas Internationalis and archbishop of Tegulcigalpa, Honduras. Cardinal Rodriguez Maradiaga is a charismatic and brilliant man who had everyone’s attention throughout his eloquent and wide-ranging speech, which explored the ways in which different countries, social strati, and business sectors experience globalization differently and unequally and suggested that in order for justice to be reached, we need to create intentional, extra-economic structures which work very consciously to globalize human solidarity (this may involve various policy positions on immigration, demographic growth, human trafficking, farming and food production, etc.) so that we don’t view the phenomenon as exclusively economic to the point of ignoring its other social dimensions.

That’s a poor way to describe it, and I don’t have the text on hand from which to draw citations, but anyway…

One of the questions during the Q&A section was from an eloquent economics student who wanted to know what a Catholic economist’s responsibility is today. The Cardinal humorously suggested that if the young man’s research is as intelligent as his question was, perhaps he would win the yet-to-be-announced Nobel Prize for economics and set a good example for the world.

This gets me back to my main point. If Obama can win a Nobel Peace Prize for what amounts to little more than a good idea, then here is my modest proposal for the Nobel Prize for Economics (whose real winner will be announced tomorrow): Pope Benedict XVI, for his encyclical letter Caritas in Veritate.

I hope to discuss this densely nuanced, magisterial text many times on this blog, since a person working in social services (especially one who admires this pope as much as I do!) can derive many lessons from it. For now, here is  a good synopsis of some of its main themes by Father Raymond J. de Souza (July 7, 2009):

Issuing a new encyclical letter today, Caritas in Veritate (Charity in Truth), Pope Benedict XVI presented a wide-ranging vision of a new economic order. The encyclical — the highest form of papal teaching — takes something of a turn away from the pro-enterprise teaching of Pope John Paul II toward the generally redistributionist vision of Pope Paul VI, who addressed questions of poverty and development in the late 1960s, the 40th anniversary of which Benedict’s document commemorates.

This encyclical has been in the works for several years, and was much delayed in order to permit Benedict to formulate a response to the current economic crisis. While insisting that the Church has no “technical solutions to offer,” Benedict is not reluctant to offer an analysis of the world economic situation that invites a rethinking of how economic life is organized.

Caritas in Veritate makes the argument that both charity and truth are needed to underpin a just and free economic order. Truth is necessary so that “integral human development” is possible in which men and women are treated as their full human dignity demands, not as mere parts in an economic machine. Charity is essential so that our treatment of each other is not limited to mere contractual obligations, but to the real flourishing of others.

“Without the perspective of eternal life, human progress in this world is denied breathing-space. Enclosed within history, it runs the risk of being reduced to the mere accumulation of wealth,” the Pope writes about the ultimate truth of human existence. “[True development] requires a transcendent vision of the person; it needs God.”

The economic crisis, which Benedict blames on investments that were motivated for “speculative” reasons rather than authentic development, highlights that moral behaviour — honest, generous and not selfish — makes for good economics, as well as good ethics.

“Development is impossible without upright men and women, without financiers and politicians whose consciences are finely attuned to the requirements of the common good.”

Forty years after Paul VI wrote on these questions, Benedict acknowledges that billions of people in vast areas have lifted themselves out of poverty — principally through markets which unleash the creativity and productivity of the human person. Benedict’s focus, however, is not on the successes of the past generations, but on those who have not yet participated in the prosperity of recent decades.

He calls for massive redistribution of wealth, protecting social security systems, strengthening labour unions, combating hunger by investments in rural life, enhancing access to employment, avoiding excessive protection of intellectual property especially in health care, granting access to world markets for the agricultural produce of poor nations, more open immigration policies and a significant increase in foreign aid. Indeed, Benedict argues the welfare systems in rich countries should be made more efficient, curbing bureaucratic waste, with the savings redirected to foreign aid.

On the environment, Benedict says affluent countries “must” reduce their energy consumption through greater efficiency and simpler lifestyles, while cheap energy should be made available to poor countries for their development needs.

All this will require substantial state intervention in economy, and even “a true world political authority … with real teeth,” though such a global body would have to respect local liberties of individuals, families and communities.

Globalization has made peoples around the world “neighbours but not brothers,” and Benedict argues for a new ethos, going beyond the market and the state. The market, while an ethically neutral instrument, responds to self-interest. The state operates according to the rules of power. What is needed, the Pope argues, is a wholly different approach, where economic and political actors look beyond their interest to the service of others.

Benedict proposes a “principle of gratuitousness” and the “logic of the gift” — concepts which would transform the potential for development in his view. “Gratuitousness” and “gift” encourage people to think not of their interest but of service. So Benedict argues that labour unions should think not of their own members alone, but of the good of workers — even foreign workers who might compete with union labour. More far-reaching, Benedict endorses the idea that corporations should answer not only to shareholders but also “stakeholders” — all those who have a stake in a company’s activities.

The last papal encyclical on economic matters was written in 1991 by John Paul II, who made a significant break with his predecessors in emphasizing the positive role of business, free markets and the role of creativity in the economy. He went as far as to say that economic liberty is an essential liberty alongside religious liberty, political liberty and legal liberty.

Benedict has taken a substantial step back from that analysis — the role of the entrepreneur and the potential for wealth creation are secondary. The primary focus is on redistributive solutions to economic disparities. How to reconcile the two approaches remains a task for theologians and economists to work out.

The Pope is not a professional economist. The best criticism of his encyclical seems to come from those who question his less theoretical suggestions, such as his support for a UN-like regulating presence and for the creation of a new economic sector concerned solely with generating profit that might be distributed liberally among the poor. (This may remind us of the well-intentioned yet scandalously meddling World Bank.)

Still, to rest content with such a critique would be to miss the point both of Truth and of Love. In his response to his economist interlocutor, Cardinal Rodriguez Maradiaga mentioned that once (before he undertook a rigorous study of economics, himself!), economists always used to challenge his populist rhetoric, asking whether he really considered himself an expert in world financial systems. “No, but the Church is assuredly an expert in humanity,” he responded, borrowing a famous phrase from the Second Vatican Council. “And the importance of its contribution is not to be underestimated.”

In his encyclical — which I would encourage anyone to read — Pope Benedict offers a powerful and broadly respected theoretical critique of our basic economic presumptions about the Wealth of Nations. Without establishing himself as an expert of the details, he calls us all to a recognition that our social, political, and economic life must be grounded in a dramatic sense of justice, a hopeful vision of transcendence, a loyalty to the truth, and a solidarity with the entire human family. He is, I should say, the Barack Obama of modern economics…and then some.

4 thoughts on “A Modest Proposal

  1. Hey Nick!

    I’m very happy to see you blogging again! It makes me want to try restarting my blog that I tried starting a few months ago and then aborted after two posts – I hope this does not happen with yours!

    I completely agree with you in my disappointment in Obama’s Nobel Prize (not that that’s unique – I haven’t spoken to anyone who thought it reasonable), and I strongly believe that giving the Nobel Prize to a person to advance his/her political agenda, as was likely done here, trivializes the prize immensely and will lead to its irrelevance. (I am not alone in this: http://www.slate.com/id/2232026/). I’m not sure I agree with what you seemed to imply in that being great necessarily requires great sacrifice, but that’s a topic for another time.

    Similarly, I don’t think that having a beautiful, utopian conception of what the world’s economy should be based on earns one anything more than plaudits and good feelings. Pope Benedict is not by any means the first person to pose such a system: a man you just may have heard of named Karl Marx had in certain ways a similar ideal of what the ideal economy would look like. His was not one as humane or nearly as beautiful as Pope Benedict’s, but both fail for similar reasons: they both assume that most or all humans can set aside themselves for the greater good and for other people. While there are clearly some people who can do that (Mother Theresa, Ghandi, etc.), they are few and far between – that’s why they are saints and we are the rabble. In essence, my problem is that neither ideal is pragmatically implementable because each ideal implicitly overestimates the fellowship of man.

    To me, the true problem of our economy today, and the only way we can truly improve the future of the economy, is to have systems in place that make people’s immediate interest coincide with the greater good and with moral, generous treatment of other people. Humans, on the whole, are individually a very, very limited bunch. They are subject to whims, shortsightedness, they can only process a limited number of things at one time, and have a very hard time taking themselves out of their own heads. They are willing to sacrifice a great deal, but by and large they will only sacrifice it for things close to them (and in many cases, these sacrifices have to be beneficial to them in some way). For humans to agree to the policies that follow the principles suggested by Benedict, individual entities have to get something out of the policies for themselves.

    (I don’t actually view this as a bleak view of humanity. I see us as creatures who are really trying to do our best to make it for ourselves in a world far more complex and difficult than any one of us can handle on our own, and in the end we end up being imperfect. I’m fine with that – we do pretty well against heavy odds! And we do end up creating the interesting, the beautiful, and the true.)

    This is why I’m in favor of things like heavy taxes on pollutants and large subsidies for clean energy research – while one would hope that energy companies would be socially conscious, their short-term benefits and concerns (which are largely what they can process and what matter to the individuals who are a part of the companies) must match up to the longer-term goals of society as a whole. To truly get cleaner energy, then, we need to provide the short-term economic incentives for companies to go clean. Another crazy proposal that I’ve never heard of before I just came up with it (and which is probably extremely stupid!) would be to have a progressive charity tax, where you can either contribute X amount to charity on your own or the government will tax you up to X+Y amount and put it into a fund which other charities can apply for grants from. In this case, it would be beneficial for people to contribute X amount to charity.

    I don’t know how you truly implement this sort of scheme (So perhaps my idea isn’t so pragmatic after all! But I do think it’s closer to being implementable in that it doesn’t require a change in human nature). It requires a global roadmap, and people who are able to come up with ways to make what’s best for the powers that be on earth to be the best for the salt of the earth – and to convince everyone that these ways are in fact for the best. May I propose this as a modest business proposal to you? :-).

    It’s getting late and I’m getting sleepy, so I’m worried that my response became less and less coherent as it went on – hopefully it’s intelligible! And I look forward to hearing your thoughts!

    Benny

  2. But the epistemological problem remains: in the effort to “spread the wealth” and promote justice, how do we know that our efforts are successful? Max Weber’s essay “Politics as a Vocation” describes the difference between a politician concerned with the “ethic of responsibility” and the “ethic of ultimate ends”. These names are unfortunately a bit confusing, because it is the “ethic of responsibility” that both Weber and myself actually endorse. This politician (or any person seeking to effectuate change) must be judged on the outcome, not the intentions, of his or her actions. Pope Benedict is certainly and expert on humanity and such he and the Church are no doubt aware of our finite ability to comprehend the world. That, of course, is where faith enters the picture. But faith does not take one very far in a market; or rather, the good faith that implementing specific redistributive policy will actually help the poor does not actually make it happen. The problem is even experts on economics cannot predict the far reaching and unintended consequences of economic political policy. When you say that the pope is “the Barack Obama of modern economics” I’m not sure that it is exactly a compliment. While you know that I agree “that our social, political, and economic life must be grounded in a dramatic sense of justice, a hopeful vision of transcendence, a loyalty to the truth, and a solidarity with the entire human family” the problem is that the Obama and Pope Benedict arguments seem to imply that if we infuse economics with good faith, powerful rhetoric, and virtue, all will be made well. Not the case. Good intentions are theologically valuable, but not materially valuable. And our economy and our society are material. The housing bubble and the credit crisis, lest we forget, were both results of policy intended at redistributing wealth and making certain material privileges of wealth available to lower income people. These policies were aimed at giving poor Americans a chance for dignity and a leg up into a higher socio-economic bracket. And it backfired. The problem, again, is not the intentions. Too much is being made, is always being made in politics, about the evils of Wallstreet and the lack of morality of politicians. Those are simplistic ideas that are easy for people to grasp and make judgments about. If the problem were that easy to comprehend it would have been fixed a long time ago. If we actually want to effectuate the change that Obama and the pope are concerned with, we need to recognize that the intuitive policies that seem like they would be appropriate (but have actually failed over and over and over again to fix anything long term) are not the best means to our ends. Really, what is standing in our way to a certain extent is the desire to do good mixed with our inability to understand the right way to achieve that good. The sooner we recognize that we must accept the ethic of responsibility and not be satisfied with our own good intentions over actual results the sooner we will be able to actually implement social justice.

  3. Hey Nick, good to see you writing.

    As a Catholic Economist, I’m going to have to start by disagreeing with the pope. My senior thesis for Religious Studies pretty much argued the opposite of his ideas. I’ve got 99 counterpoints, but the pope ain’t one…

    1) My senior thesis basically rejected this by examining the one story in modern history where a third world country has developed to first world status: South Korea.

    A short version of my 14,444 word thesis:
    During the Korean War, the armies of both sides marched up and down the entire country TWICE, destroying “the means of production” so thoroughly that Korea was basically farmland with a few scattered huts by the end.

    Up until the 80s, Korea was run by 3 consecutive dictators. These dudes were bad, the baddest of them being General Park, who literally controlled all of the country’s banks. He only gave loans to the businessmen who were his supporters and cronies, so there were maybe only 30 different companies that could even participate in most industries (In case you were wondering, yes, that is why Samsung, LG, and the like make all kinds of different products in different markets)

    Anyway, eventually things got shadily democratic, and now today Korea remains a pretty corrupt place from its legacy of corruption from back in the day when you had to pay off General Park to get a loan to start a business, but all in all things have worked out. They are one of the most wired countries on Earth and have a per capita income after PPP of $27,600, which is better than the Czech Republic.

    The key to this success had nothing to do with charity, kindness, or Jesus. It had to do with the fact that despite the fact that a dictator was helping only his political allies who were giving him kickbacks, the West was still willing to trade with them. South Korea’s economy grew at double digit rates because something like 40% of what they were producing was being exported out of the country.

    2) Against this success story, let’s compare this to any country you want in Africa. Substantial sums of guilt money are sent in called “foreign aid.” I can’t pull it up this second, but in one econ class I gave a presentation on how historically foreign aid has stunted the growth of recipient countries. In this “government controlled” solution, one group of people are given immense sums of money and are told to invest it in their country. They end up investing it in their and/or their brother’s cement company who will make one strip of road for $50 million.

    3) And this is precisely the issue with any “state solution” is that inevitably you have one person in charge of sums of money beyond even Bill Gate’s comprehension, ready to disperse as he/she pleases. Who is this philosopher king with will act without self interest? They don’t exist, or if they do there aren’t enough to go around. Which leads me to…

    4) We are all born with innate self-interest. God didn’t give it to us for us to fight it all the time. What were all those Western businesses and consumers doing trading with the subjects of the brutal South Korean regime for years? Buying cheap stuff. As a result of self-interest, South Korea is now a developed country with a respectable democracy. As a result of free money, Africa is still Africa.

    Disclaimer: Narrow self interest is not the sole solution to the world’s problems. But if I had to chose between that and wrining my hands and sending billions of guilt dollars to be squandered, I choose self-interest

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