Joy of the Gospel, Part 4

This Pope has people coming out of the woodwork to attack his letter.  Even the redoubtable Mises Institute is hosting a guest contributor who plainly misreads the notorious paragraph and then sets about demolishing a straw man argument.  Here is the quote in question

...trickle-down theories, which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. 

Here is the original complete sentence...

54. In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. 

and here is his argument...

However, the criticism of free markets is clear and presents a difficult challenge to suggest that the document does not refer, indeed, to free markets after arguing for “semantic nuances.” ... the Pope inserts a negative bias against the free market; a neutral term would been a better choice of words. 

Well, no, there is criticism of trickle-down theories.  Not the free market.  Bad theories always look for a solid basis to build upon.  Socialism is based on worker ownership of the means of production.  Good idea.  Capitalism is based on power in accumulated means of production.  Proven.  It's when prescriptions come in that things get very un-free market.  The language is plain: the Pope is criticizing supply-side economics, which is clearly NOT free market, and supply-side economics does indeed ground it's pedigree in free markets.  So this statement by the Pope is unremarkable.  The controversy is introduced by people mischaracterizing what the Pope plainly says.

And WSJ editor Jude Wanniski, supply side champion, and I exchanged emails on trickle-down, where I pressed him in detail.  His plan was the government would simply watch the price of gold, at some arbitrarily set price, and sell as the price drifted up, and buy as it drifted down, thus controlling the whole economy.  And to his mind, this was essentially a free market, certainly based on the free market.  Never mind he envisioned the state controlling all by controlling one price.  A theory encouraged by the free market, but certainly not the free market.

And then the critic goes on to build a case about another statement the Pope made about poor people in rich countries suffering more than poor people in poor countries.  I did not finish the article simply because I've seen poor people in both places, and for reason that have nothing to do with numbers, poor people in rich countries are far more wretched than in poor countries.  Rich countries have the money to run human subject trials on poor populations in their countries, and they do.  Look at obesity, ignorance, drug proliferation, violence.  I'd much rather be poor in the Philippines or India than USA.  (Although USA is certainly the best place to be rich.)

I took apart Judge Napolitano's tendentious reading of this paragraph here, but it will do good to add the next sentence to that which the fellow above criticizes:

This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting. 

So what is the Pope saying?  Trusting those who wield economic power to do the right thing is delusional?  Who can disagree with that?  In a free market there is no one wielding economic power, since free markets militate against the concentration of power one sees in capitalism, a system that depends expressly on concentration of power. There is nothing here to alarm anyone who admires free markets.  In the measure one's pretenses are based on reference to a free market, this letter exposes those liars.  Whole lotta objecting going on.

To continue my reading... and another sentence from that very paragraph:

Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people’s pain, and feeling a need to help them, as though all this were someone else’s responsibility and not our own. The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase. In the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.

I should be alarmed that the Pope seems to be criticising competing on design, wrapped in talk of the poor.  But he is not talking about an economic system that results in new and better solutions to current problems, and the opportunity and wealth derived therefrom, he is talking about things people are thrilled to have something new to purchase, for its ability to distract from life.  Those things that keep us from caring about others....

Something like this:

SAN FRANCISCO – When a California college student was shot dead by a stranger on a crowded commuter train in San Francisco last month, none of the dozens of passengers on board saw it coming - they were too absorbed in their mobile devices, officials said on Wednesday.

A crowded train, a nut waving a gun around, no one noticed.  Films show he did the night before too, no one noticed.  Mass transit is ideal for criminals.  I am glad I like to people-watch.  People are thrilled to have something that so closes us off to others.

The argument the Pope is making is we have a system that crowds out a lot of productive people, and then distracts us from caring. I could not agree more.  I love studying architecture.  People of African heritage are largely excluded from the field in the USA.  I regret they are not competing with everyone else, and showing what they have.  That is just one example of the hard and fast outrages in our economic system.  Another is "get big or get out."  But we all love a system that works for us, so never expect change from those who benefit from the system.

What strikes me as interesting is no one seems to be attacking this point:

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.

"Absolute autonomy of the market" and the right of states "to exercise any form of control." Well, that the gap is widening is not controversial.  That this is the result of ideologies and financial speculation is not controversial.  That we have a system in which the regulated capture the regulators is not controversial (that they do is controversial, but the fact that they do is well known.)  That this makes for a de facto lawlessness, and supra-national entities beyond the reach of states is also well known.  It is a form of tyranny.  When questioned by those who say such entities should be controlled by those charged with vigilance for the common good, these people fall back on the autonomy of marketplace argument.  (Note the Pope did not say "free market.")

Now the Church specifically rejects democracy as a legitimate form of government, a position I agree with.  But if people assent to a democracy, and charge it with vigilance for the common good, and it does not perform, then it is right to criticize the results.  And this is not only a criticism of those who abuse the system, but the system itself.

To be sure free markets are free of State regulation.    But the free market is hardly free of regulation.  Lex Mercatoria is a non-state, or private, law.  The ICC promulgates the UCC which governs LsC.  No state actors in involved in this critical market function.  SWIFT, the international payment mechanism has no state involvement.  The state is unnecessary to a free market, in fact, mutually exclusive.  But all markets have conventions that the members self impose, and violations are met with shunning, in the measure offense is given.  The diamond market, writ large.

A supra-national, utterly autonomous market system, without any form of control, is tyrannical. And such a system is only possible because the states meant to control them become captured by them.  Obviously what the Pope has in mind here is the banking and oil industries, which fit this description to a T.

Enough for today, the same paragraph has another fascinating observation, which I'll address tomorrow.

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