“Today’s structures of sin include repeated tax cuts for the richest people, often justified in the name of investment and development”: so said Pope Francis. Dan Mitchell wrote a pointed article on the Pope’s latest comments.
That the Pope disapproves of tax cuts to “the rich” is hardly news. Ever since ascending to the Holy See, Francis has invested time and effort in placing himself, so to say, firmly on the left. While sometimes the Pope has praised the virtues of entrepreneurs, generally speaking he subscribes to the view that the world economy is a pie and if “speculators” get richer, somebody is getting poorer at the very same time. In a sense, this is hardly news: most people see things this way and there is no reason why the Pope should be economically savvier, or more free-market leaning, than your doorman or yoga teacher. Or is there?
A reason by which the Pope should be economically savvier than your yoga teacher is that, different than the latter, he is well equipped with an army of experts ready to write on his behalf, whenever he is supposed to be speaking on a certain subject. The Pope should not necessarily know better personally, but his advisers should suggest him, at least, some caution in framing his own speeches.
In this last case, the use of the words “structure of sin” is quite disturbing. The Pope is entering the public debate and a quintessential political discussion: how much should be paid and by whom? He does so using his own vocabulary (he speaks of “sin”, not of unwise decisions or dangerous consequences) and clearly draws a line that divides good from evil. The temptation to read his words as a moral indictment of people who support tax cuts for the rich, or for businesses, will be hard to resist. In a sense, such a statement reminds of Francis describing it “an honor” to be “attacked” by American right-wingers. Two cheers for the Pope’s combative spirit, but I suspect many an American Catholic was troubled, if not outraged, by such blunt words.
The Pope seems to consider wealth per se a mark of moral abuse. His defenders would react by saying that his views on wealth are actually more nuanced. I don’t doubt it, but I think in some sense it does not matter. Pope Francis is, in many ways, is the Catholic Church’s Donald Trump. He is a great simplifier: his communication style and, up to a certain extent, his very success are predicated on a certain immediateness and simplicity. His economic worldview comes across as a triumph of simplicity. If the poor exist, it is because the rich exist: so whatever can be labeled as “helping the rich” means damaging the poor. He has no concern with economic development, as he seems to be more interested in providing for the poor today, than uplifting them tomorrow.
The strongest point Pope Francis’s critics have, to me, is that the Pope does not seem to focus on a message targeted at rich people, demanding they renounce their goods for the benefit of the poor – but rather to speak of policies and actions that ought to affect political systems in their entirety and not single individuals. He does not ask the rich to renounce their riches, he deems evil those who think economic development is better attained by incentivizing enterprise, rather than by redistribution. The Church is hardly a non-political institution, but perhaps Francis is the one who is choosing the economic battleground with an intensity whose only forerunner is, perhaps, Paul VI. On Paul VI, by the way, P.T. Bauer wrote a splendid essay, which could speak about People Francis too, reprinted in From Subsistence to Exchange.
READER COMMENTS
Kevin Erdmann
Feb 14 2020 at 11:13am
The funny thing is that nobody is treated with more derision in the New Testament than “tax collectors”.
Chris
Feb 14 2020 at 11:18am
It really should not surprise you that the pope would be against the accumulation of wealth and a system designed to support the wealthy instead of the poor. That is part of his Christian faith. The fact that a lot of wealthier Christians no longer really believe that doesn’t change the underlying basis of the religion. The bible is full of stories about how the wealthy are immoral unless they are actively supporting the poor, and equally fully of stories countering systems that do not support the poor directly. Jesus did not support tax breaks for the wealthy, and so there is no real reason to believe that one of his most important followers would support them.
You also make the assumption that all tax cuts for the wealthy and for businesses are done in support of economic growth and that that growth will trickle down to the poor. The reality, however, is that, while focused support for business may increase everyone’s wellbeing, the tax cuts and other methods governments use to support the wealthy and corporations are rarely in support of some ideal. They are typically heavily lobbied for by wealthy donors, corporations and politicians themselves. On top of this, trickle down economics is pretty well disputed in terms of economic growth of the poor. If it helped the poor, we would not be in a situation where inequality has increased significantly over the last 50 years.
zeke5123
Feb 14 2020 at 11:38am
You also make the assumption that failing to believe in redistribution means the wealthy are not actively supporting the poor.
It seems to me morality cannot be based on coercion — that is, the wealthy person who gives alms is making the choice to give alms. The wealthy person who is taxed (i.e., wealth is confiscated under pain of prison) to fund inefficient welfare programs is acting amorally. There is no moral significance to the act of complying with a legal edict supporting by men with guns. There is moral significance to acting without that compulsion.
In short, the Pope hasn’t read Bastiat. Just because I am against government “charity” doesn’t mean I am against charity. It is dishearten that the Pope uses his platform to signal boast amoral, ineffective policies instead of the moral duty of Christians to help the less fortunate. It is even more disheartening that the Pope fails to understand the underlying moral principal.
The Cardinals made a poor choice.
MarkW
Feb 14 2020 at 1:07pm
On top of this, trickle down economics is pretty well disputed in terms of economic growth of the poor.
Says a person living at the end of a ~250 year period (and hopefully toward the beginning of a process stretching across millennia) during which the free-market system has produced unimaginable benefits for the wealthy and poor alike. And it is the poor whose lives have improved the most dramatically. These unprecedented gains were not obtained by redistributing wealth (whether forcibly or voluntarily) but by exponentially increasing overall wealth through economic growth. Which you must know (how could you not)?
The Catholic Church has been responsible for exactly none of this. Arguably, it has not even been neutral — economic growth has been weakest in countries in southern Europe and in South America (and especially in Francis’s Argentina — a worst case scenario) where Catholicism has been strongest. By creating suspicion of wealth and of the free market economies that create it (as exhibited by Francis and in your comment), the church may have helped keep hundreds of millions consigned to greater poverty than they would have experienced under a more enlightened belief system.
Phil H
Feb 15 2020 at 2:15am
“250 year period…free-market system…lives have improved…not obtained by redistributing wealth…but by exponentially increasing overall wealth through economic growth…you must know”
I’m happy to stipulate most of that (I think it’s less than 250 years, I don’t think markets are free, but those are not the key points for this argument). But your certainty about what we “must know” is misplaced. The driver of more wealth is economic growth, but the economic growth is a result of massive increases in equality. Specifically: public health improvements at the end of the 19th and early 20th centuries reduced death rates (disproportionately improving life for the poor); the introduction of universal education massively leveled the professional playing field; the birth of democracy enabled poor people to obtain some leaders who were actually sympathetic to them.
These changes boosted the resource (human resources) intensity of European & N. American economies, and generated the growth.
Of course the above is just a theory. But it’s a pretty good theory – at least as good as the converse. So no, we definitely are not obliged to know that wealth is unrelated to equality.
MarkW
Feb 15 2020 at 8:49am
The driver of more wealth is economic growth, but the economic growth is a result of massive increases in equality. Specifically: public health improvements at the end of the 19th and early 20th centuries reduced death rates (disproportionately improving life for the poor)
You have that backwards. The growth and wealth must come first. The industrial revolution was over a century old by the late 19th and early 20th centuries. Poor societies do not, can not (and did not) make massive investments in water and sewerage systems. But you’re right that these kinds of improvements do drive more growth — it’s an example of a ‘virtuous cycle’. The same is true of universal education and banning child labor — societal growth and wealth come first, but once a society can afford those things, it does increase human capital and growth.
But you are sneaking up on a realization that the economic growth of market economies inevitably does benefit the poor more. Before the industrial revolution, the wealthy already had adequate food (which is why they grew to be inches taller than the poor did). They had adequate clothing and housing (which they could afford to heat and light during the dark months). They could afford to travel. And they had no need for labor-saving appliances because they had servants or for recorded entertainment since they could afford to hire musicians and actors and have a private box at the theater. Economic growth massively drove down the cost of food, clothing, housing, and energy/lighting (this was once a major expense) as well as providing household machines that replaced the work of servants and entertainers. All of this had to benefit the non-wealthy far more than the wealthy, and of course it did.
Phil H
Feb 15 2020 at 10:37am
I agree with you that growth is great and that it (often) benefits the poor the most. No argument from me about that. But I think you’re wrong in historical terms about the industrial revolution.
“The industrial revolution was over a century old by the late 19th and early 20th centuries.” – Yes, and the first century or so of the IR did *not* bring that much economic growth. I’m struggling to find a good link at the moment, because the great firewall is crazy right now and this is not my VPN computer, but the first chart here kinda shows it visually: https://ourworldindata.org/economic-growth There was growth in the UK in the 19th C, but nothing like the explosive growth of the 20th C. The timing suits my explanation much better than it suits yours.
Phil H
Feb 15 2020 at 10:42am
Sorry about the double post, but yes, I just realised that that first chart at my link is interactive, and I can actually see the figures. GDP per capital for the UK in 1800 is about 2,300, by 1900 has doubled to 4,800; over the 20th century, it multiplies 5-fold to 25,000. There was a qualitative difference in the growth over these two periods, and I have a decent explanation for it.
MarkW
Feb 15 2020 at 12:20pm
You’ve proposed one possible explanation for why growth accelerated in the late 19th century, but there are many other possibilities — the build out of railroads, the creation of the petroleum industry, the replacement of sail with steam, electrification, the internal combustion engine, instant communications through telegraph and then telephone, and so on.
But even if your explanation were the most powerful, what would that tell us? If providing every member of society with clean water, sanitation, sufficient nutrition and education are critical accelerators of growth that would be good to know, but those things have already been done and cannot be repeated. That those changes were historically important would not prove anything about ‘equality’ in the abstract as a driver of growth.
It’s also worth noting that a number of countries provided all of the above and yet experienced disappointing rates growth during the 20th century due to bad, anti-market economic policies — the former Soviet bloc, for example, and Francis’s own Argentina which was one of the world’s wealthiest countries in the early 20th century and has been in relative decline ever since. God help us, we’ve now got a Peronist pope making economic pronouncements.
Phil H
Feb 15 2020 at 1:01pm
Yeah… maybe. I’m nowhere near knowledgeable enough to insist that these ideas I’m suggesting are “the” right answer.
As for the Pope… I will lose no sleep over his waffle. The last guy was an ex-Nazi who specialised in protecting paedo scandal bishops. I make a point of ignoring everything these rotten institutions say.
Christophe Biocca
Feb 14 2020 at 1:28pm
Modus tollens only works if the consequent is actually false. It is not.
robc
Feb 14 2020 at 4:02pm
Those are great graphs. Do you have a link to a separated version, I hate stacked graphs like that and want to see the data separated out by region, instead of stacked.
In this case, the stack does explain the reasoning for the world double peaked distribution in 1975, but I cant figure out what the Americas look like, for example.
Christophe Biocca
Feb 14 2020 at 4:29pm
https://ourworldindata.org/global-economic-inequality# is the source I found. Some of their graphs are interactive, and they seem to cite their sources for the raw data, so worst case you’ll have to re-graph it yourself.
Chris
Feb 14 2020 at 12:08pm
Catholics believe in a god that punishes people for their sins and a heaven and hell for eternity based on those who act good versus bad. They clearly do not take a moral stance against coercion by a higher power. Also, I would guess the argument is that giving the money hoarded by the wealthy to even inefficient public support programs is a better use than letting it sit somewhere earning interest for the wealthy person. He is decrying a system that will support someone who doesn’t need support at the expense of someone who does. If the wealthy needed the tax breaks for investment and development, then they would already be using their wealth for that. Instead most of the money is kept in places where it can continue to slowly make money with relatively low risk.
Also, the wealthy give an average of between 5 and 10% of their annual income to charity, depending on how you measure it. That means that the amount given to charity is often less than the tax breaks, percentage-wise, that we’re talking about. Charity will never offset the support provided by government. The delta between charitable contributions and government funding for welfare is astronomical, and even if you completely stopped taxing the wealthy, that would not be demonstrably impacted.
The pope is speaking from his faith, and while you may disagree with him, he is not incorrect based on that faith.
Lastly, it may be the moral duty of Christians to help those less fortunate, but, in America, they are currently, as a group, failing to personally provide that support in the required amounts while supporting politicians and policies that strip the support out of the government. If Christians are failing to hold their own government to act morally, then I don’t see an issue with the Pope calling them out.
robc
Feb 14 2020 at 4:04pm
That is a poor representation of Christian doctrine.
Maybe (maybe?) slightly more true for Catholicism than most protestant denominations, but still not true even for them.
Cliff
Feb 17 2020 at 11:12pm
“in America, they are currently, as a group, failing to personally provide that support in the required amounts while supporting politicians and policies that strip the support out of the government.”
In the U.S., the after-tax and transfer poverty rate is currently 2%. Is there another country that is lower? Perhaps some Scandinavian countries?
zeke5123
Feb 14 2020 at 12:47pm
I think you are wrong on your economics (i.e., most rich do invest their money — it isn’t mostly earning 2% on Treasuries). Also, historically charity was much more widespread. Perhaps Government claiming charity as it’s domain has suggested to people that charity is a public, not a private issue. That seems like something a moral authority should seek to correct; not reinforce.
As for the broader point, my understanding of Christian good is that you should love righteousness not because of the existence of heaven (or hell), but because it is righteous. It isn’t just about “doing” the right thing; it is about doing the right thing for the right reasons.
Finally, there is an assumption (both in your view and in the Pope’s view) that government charity is actually helpful. I am far from convinced that is accurate.
Chris
Feb 14 2020 at 1:27pm
Charitable donations have been rising for 50 years, in adjusted dollars, so in that time span, your claim is not correct. I’m unable to find anything reaching back farther than that, but if you have a source, I’d love to see it. I did find a few articles discussing charity in the middle ages, and they note that, yes people were relatively charitable then, but that was because the church was a powerful enough institution that they could require tithing. They also note that the church did not use this money to solve large scale problems so much as small scale things like funerals.
In terms of investment, my guess is we see the stock market differently, in that I don’t really see it as an active, helpful form of investment, as much as a method of wealth transfer to those with the resources to game it. The wealthy are not, by and large, using their collected wealth to fund new ventures themselves, or directly contribute to things of value. They are finding the highest return investments with the lowest tax liability.
I’m not arguing that Christians don’t, on a level, believe in good for goodness sake, but, per the bible, there is a definite carrot and stick involved where the righteous are rewarded and the unjust punished in life and death. The bible essentially says “you have the choice to have faith and be good, but if you’re not you will pay”.
Government welfare programs help feed, house, and give healthcare to millions of Americans. It helps people support themselves after they can no longer work. Government funded education provides free education to the majority of our population, letting them avoid what would be an expensive and competitive private education market. The government supports areas that require disaster relief more quickly and thoroughly than any charity could act. The government also provides tax breaks to charitable organizations, allowing them to function more effectively themselves.
On the other hand, there are a wide range of charitable organizations, with a very wide range of effectiveness and goals. There are charities that use the majority of their contributions to help people, but they are relatively few and far between. Most charities spend the majority of their contributions on management and marketing, and many are not even focused on helping those in need, but on any number of other less pressing causes. Then there are the untold number of charities such as Trump’s former charity, which serve as a tax avoidance and self dealing scheme for the wealthy.
Mark Z
Feb 14 2020 at 3:10pm
If the wealthy aren’t funding new ventures, how are they earning these high returns on the stock market? Your characterization of the stock market as something rich people just put money into and get more out, but it isn’t actually invested in anything, doesn’t really make sense. Where are companies getting the money to pay these returns if they’re not investing it? This may indeed be how many people think of the stock market, but then they’re incorrect. If it isn’t engaged in productive investment, it wouldn’t be able serve as this sort of magic money tree for rich people.
Chris
Feb 14 2020 at 3:32pm
Well, they are not necessarily getting great returns, they’re getting good returns on a huge amount of money. Also, many of the corporations that are being invested in are the ones hoarding money in tax havens; meaning they also don’t really need the funding that desperately. Additionally, there are plenty of market based investments, such as high speed trading, that generally make their money by out gaming other investors. Lastly, there are a whole range of companies that are great investments, but are terrible for the world, from coal companies to companies that by drug patents and pump up the price, to facebook.
I’m not arguing that no company raises capital through the stock market and then uses that capital to develop and produce something new, but I am arguing that the stock market isn’t the driver of business that people make it out to be, and that even when it is, that is not necessarily adding to society or funnelling down to the general public in any meaningful way.
Jesse Connell
Feb 14 2020 at 6:51pm
“…not necessarily adding to society or funneling down to the general public in any meaningful way.”
And yet I would rather be poor in the USA today than John D Rockefeller in his time when it comes to drinking a glass of water, having a broken bone, dental hygene, childbirth… wanting to eat pineapple in January. The list goes on and on. Almost all of these things have “trickled down” to the poor as results of people trying to invest their money where it will make them the most profit.
Thaomas
Feb 15 2020 at 9:05am
Although the Pope is not the neo-liberal I’d like (my copy of Laudato Si is thickly marked up with places I think he is mistaken), I’m an America Catholic who is also proud at right wing attacks on the Pope. I can see the logic of calling tax cuts for the rich in the name of promoting investment and growth when the deficits they create in fact do the opposite, “sin.” The same goes for denying the harm being done by the accumulation of CO2 in the atmosphere in the (mistaken) belief that denial will deter prevent counterproductive investments/regulations taken in the name of preventing the accumulation. Likewise promoting the belief that immigrants and refugees are harmful to the societies that receive them. I see the “sin” consists in conflating the good or perceived good of the already well-off with the common good.
Matt Holbrook
Feb 16 2020 at 10:28am
Christianity, including the Catholic Church, has had a net positive effect on modern progress and economic growth, which Thomas Wood has laid out in his book: https://www.amazon.com/Catholic-Church-Built-Western-Civilization/dp/1596983280/ref=nodl_
It’s unfortunate that Francis holds the views he holds, but I don’t think he is that far off from his two predecessors; John Paul II showed similar sentiments in statements on economics, once Communism collapsed in Europe. Francis doesn’t sound any different from what comes out of the current Democratic presidential debates.
The issue of one’s obligations to the poor in Christian ethics as shifted. In developed countries the poor are rich in terms of consumption compared to where they were 200 years ago, and obscenely rich compared to 2000 years ago. There are still people who need help, but I think the main concerns lie with impediments that prevent the relatively poor from advancing, whether we’re talking about immigration restrictions, protective tariffs, occupational licensing, rent control, zoning laws, and minimum wage laws, to name the key ones. These are all issued and administered by government, and in many cases are justified as ways to help the disadvantaged, but in the end they do the opposite.
For me as a Catholic, I wish Francis would talk about these types of impediments to the poor, and get off the redistribution train.
Mr. Econotarian
Feb 16 2020 at 12:39pm
But extreme poverty IS being rapidly reduced by capitalism and free trade (in China especially, which is not a particularly Catholic country, but I digress). Here I define extreme poverty as living in under $1.50 per day.
Now if the Pope wants to fight against moderate poverty of developed countries, that is another issue. But frankly the “poor” in developed countries would be served by reduction of NIMBYIsm with regards to housing costs.
And a great way to remove high levels of poverty from developing countries is to let people move to developed countries, where they will pop into the moderate levels of poverty there through access to higher productivity companies. Or the Pope could encourage enhancements in economic freedom in developing countries.
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