The Pope is wrong

No, no, this isn’t a post about religion. It’s about economics. Reuters recently declared that the Pope “attacked unfettered capitalism as ‘a new tyranny’…” 

The gist of the economic portion of his “apostolic exhortation” is that “the prevailing economic system” “reject[s] the right of states, charged with vigilance for the common good, to exercise any form of control.”  He goes on to discuss society’s responsibility for caring for the poor and to blast income inequality, etc.

Now, I have no problem with the Pope’s concern for the poor. I have no problem with his call for state control over the economy. I have no problem with any of the religious stuff in the document (and I’m not Catholic). I won’t quarrel with any of it! It’s his opinion and he’s entitled to it! Preach on brother! Whatever!

My one and only problem with this document? He attacks a “prevailing economic system” that doesn’t exist! I don’t know of any economic system anywhere that is free from state control. Even Republicans in the U.S. who scream about free markets and government regulation and bureaucracy and blah blah blah lack the courage to create a truly free market in the United States.

“What?” you say. “I’m a Republican, and by God we believe in free markets! Cut taxes and regulation to unleash the creative force of America and we’ll raise tax revenue by creating more growth!” Yes, yes, yes, I hear you. Now sit down and wipe that spittle from the corner of your mouth.

First of all, I’d like to distinguish between the wealth-creation part of the economic system and the wealth-re-distribution part of the economic system. From a purely wealth-creation view, your choices fall on a spectrum. You can have dispersed control (a free market) or centralized control (a planned economy) or some mixture of the two. This determines how you decide where capital and resources are allocated. For my part, I think a free market will do this job more efficiently than a planned economy – and more efficiency means more aggregate wealth and less aggregate waste. Witness the last 100 years of human history, and there’s a reason China has exploded in productivity as it has opened up its markets. But that’s just my opinion and is neither here nor there.

The wealth-re-distribution aspect I like to think of as synonymous with taxes, which seems to be state-controlled across the globe. The problem, it seems to me, is that sometimes the taxation part is lumped in together with the wealth-creation part.  This can happen explicitly like in a purely socialist system or it can happen implicitly, like in the United States, when the tax system is used to incentivize or de-incentivize capital and resource allocation. And here is where Republicans fuck it up.

Republicans love the rhetoric surrounding “cutting taxes” because they have a nice story about it by linking it to wealth creation (notwithstanding that such government intervention is the very essence of socialism!). But it’s really just an indirect transfer payment to Republicans’ favored constituents.  No, the U.S. Treasury doesn’t necessarily cut a check to corn farmers or corporations or whoever gets subsidies or tax breaks (and they are too numerous for me to even begin to touch on it), but it’s a re-distribution of wealth nonetheless. At the same time, Republicans scream about the direct transfer payments that Democrats prefer to make to their favored constituents. Call me a cynic, but in both cases, politicians are just buying votes! If Republicans had balls, they’d legislate what they say they believe – everyone would be taxed on a basis separate from taxation’s impact on wealth creation, i.e., they would just let the market create whatever it’s going to create without trying to exercise centralized control over it (i.e., tax incentives) and they’d tax the wealth coming out of it at whatever rate they argue for. This way, all you have are direct, non-hidden transfer payments and you can argue over what payments to make to whom and how much.  All above board!  But politicians don’t like that.  A post for another day.

Anyway, Pope Francis, that’s my problem with your statement – there is no such thing as an economy free from state control, even the world’s largest “free” market economy is not anywhere close to free. If you’re going to rant against something, at least call it by its real name.

P.S.  Ok, so when I said “my only problem”, I was exaggerating, but the rest of the Pope’s statement is so confused and lacking as to defy response, so I won’t attempt it, i.e.:

    • From para 202:  “As long as the problems of the poor are not radically resolved by rejecting the absolute autonomy of markets and financial speculation and by attacking the structural causes of inequality, no solution will be found for the world’s problems or, for that matter, to any prob­lems. Inequality is the root of social ills.”  Ummm…what? Care to identify the ‘structural causes of inequality’ for us? Care to identify any market that has ‘absolute autonomy’? No? How about explaining the causality in the statement ‘inequality is the root of social ills’?
    • From para 56: “While the earnings of a minority are grow­ing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ide­ologies which defend the absolute autonomy of the marketplace and financial speculation. Con­sequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules… The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of in­creased profits, whatever is fragile, like the envi­ronment, is defenseless before the interests of a deified market, which become the only rule.” Hate to break it to you, bro, but you’re not describing capitalism – you’re describing every society, under any economic system. Chavez? Not hurting for money (when he was alive). Castro? Nope. Stalin, Mao, Khrushchev, Caesar, Genghis, Hitler? Not them either.
    • From para 53: “Today everything comes under the laws of competition and the sur­vival of the fittest, where the powerful feed upon the powerless.” From para 56: “…the right of states, charged with vigilance for the common good…”  I don’t know about you, but if you think a rich individual is powerful, what about an individual wielding the power of a state? Think Putin is a paragon of piety? What about those other leaders listed above? Want any of them running around again? I’m sure they’d humbly accept acting in the service of vigilance for the common good.
    • Throughout, there’s this weird juxtaposition of “consumerism is bad, stop consuming so many goods” and “the poor would be happy if only we gave them more goods!”  I mean, I know what he’s getting at, but all together, it just isn’t a cogent view of how to deal with the problem, or perhaps it betrays the lack of an educated understanding of what the problem even is!

Notwithstanding the problems of a constitutionally limited representative democratic republic, such as the United States, and a “free”(ish?) market economy and the tyranny, nepotism, political favors, etc. inherent therein, weighed against the centuries of other systems, I’ll take my chances with decentralized control.

As far as Popes go, I like the guy – shaking things up, practicing what he preaches.  But…maybe stick to the religious angle, your view of economics and state power leaves much to be desired.

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One thought on “The Pope is wrong

  1. Pingback: On Politics in the U.S. | noonethinksthat

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