Pope Francis Understands Economics Better than Most Politicians
Photo Credit: Philip Chidell/Shutterstock.com
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Pope Francis is a pontiff who has constructively broken all the rules of popery – so far to widespread acclaim. He's faulted the Catholic church for its negative obsession with gays and birth control, and now he has expanded his mandate to economics with a groundbreaking screed denouncing " the new idolatry of money".
As the Pope wrote in his " apostolic exhortation":
The worship of the ancient golden calf has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings.
His thoughts on income inequality are searing:
How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by when food is thrown away while people are starving? This is a case of inequality.
The pope's screed on "the economy of exclusion and inequality" will disappoint those who considers themselves free-market capitalists, but they would do well to listen to the message. Francis gives form to the emotion and injustice of post-financial-crisis outrage in a way that has been rare since Occupy Wall Street disbanded. There has been a growing chorus of financial insiders – from the late Merrill Lynch executive Herb Allison to organizations like Better Markets – it's time for a change in how we approach capitalism. It's not about discarding capitalism, or hating money or profit; it's about pursuing profits ethically, and rejecting the premise that exploitation is at the center of profit. When 53% of financial executives say they can't get ahead without some cheating, even though they want to work for ethical organizations, there's a real problem.
Unlike Occupy, which turned its rage outward, Pope Francis bolstered his anger with two inward-facing emotions familiar to any Catholic-school graduate: shame and guilt, to make the economy a matter of personal responsibility.
This is important. Income inequality is not someone else's problem. Nearly all of us are likely to experience it. Inequality has been growing in the US since the 1970s. Economist Emmanuel Saez found that the incomes of the top 1% grew by 31.4% in the three years after the financial crisis, while the majority of people struggled with a disappointing economy. The other 99% of the population grew their incomes 0.4% during the same period.
As a result, federal and state spending on social welfare programs has been forced to grow to $1tn just to handle the volume of US households in trouble. Yet income inequality has been locked out of of the mainstream economic conversation, where it is seen largely as a sideshow for progressive bleeding hearts.
In the discussions of why the US is not recovering, economists often mention metrics like economic growth and housing. They rarely mention the metrics that directly tell us we are failing our economic goals, like poverty and starvation. Those metrics of income inequality tell an accurate story of the depth of our economic malaise that new-home sales can't. One-fifth of Americans, or 47 million people, are on food stamps; 50% of children born to single mothers live in poverty; and over 13 million people are out of work. Children are now not likely to do as well as their parents did as downward mobility takes hold for the first time in generations.