It is interesting that we have been presented with a gift of sorts. This writer stated in another place that Popes do not reveal their sources. In the case of Pope Benedict XVI, we have an indication from what intellectual tradition he approaches economic problems. In 1985, in a symposium in Rome entitled, “Church and Economy in Dialogue,” Cardinal Ratzinger (at the time) gave a talk, “Market Economy and Ethics.[1] Looking at this document gives many insights into the approach he takes in Caritas et Veritatis.
Ratzinger begins his talk by describing the economic state of the world in the same way as Pope Pius XI described the world in Quadragesimo Anno. To Ratzinger, the world is in terrible economic shape, especially when you consider the differences between the northern and southern hemispheres. He says that this situation poses such a threat “no less real than that “proceeding from the weapons arsenals with which the East and West oppose one another.” He states that all methods used to remedy the situation have been ineffective. In fact, according to the Cardinal, “the misery in the world has increased in shocking measure over the last thirty years.”[2] This is much too general a statement to make much of, but some checking of data leads us to question this assertion. Speaking of the southern hemisphere, in Latin America for the period to which he refers, the trend has generally been upward economically, despite some dips in some countries, and stalling in Haiti.[3] Africa,on the other hand, is illustrative. Northern Africa is developing well,but sub-Saharan Africa does poorly. But this is no mystery, and many economists have the solutions for this state of affairs, but hardly anyone listens.[4] The main point here is that the world was not doing as bad as Cardinal Ratzinger supposes. Some keys to his point of view come from the rest of the article and his admitted source. (Read more)
Introduction
The purpose of this paper is to suggest ways in which the insights of the Austrian school of economics can be applied to the understanding of exactly how institutions behave. While this question has been probed somewhat by political scientists and scholars in the field of management, the results are far from adequate. Firstly, the political scientists have been afflicted with the same positivistic plague that has infected economics. This “physics envy” has them reducing everything to statistics and graphs that are just as vague and generic as those of the neo-classical economists. Just as the economic models assume full knowledge and a single product, the political scientist presumes that all governmental officials and persons working in organizations want power. All attempts to discuss the behaviors of actors by using a version of the Austrian “mind construct” methodology are termed “journalistic,” and not taken seriously. This prevents any methodological breakthroughs. Even so, this method of analysis is still fraught with the presumption that power is almost the only value of persons in their organizational roles, and it seems to pan out in the form of a revealed preferences theory.[1] (Read more)
Some people treat Catholic Social Teachings in the same way that the Church treats revealed dogma—as mostly unchanging, but that there can be some expansion to our understanding of those revealed dogmas, but no change in Social Teaching. But Catholic Social Teaching has three aspects:
The first is eternal principles. Catholic teaching of any kind has to be founded on eternal principles, or else there would be no solid foundation at all. In point of fact, beyond those eternal principles, especially justice, prudence and charity, the Church applies those eternal principles to changing circumstances, which means that the teaching changes. There is no such thing, for example, as pure justice. Justice must be applied to an actual circumstance. In addition, the Church, as Church, has no particular expertise or divine commission in the particular, non-theological sciences. This means that it accepts the opinions of scholars of the sciences prevalent at the time of the writing of an encyclical. Of interest to us is economics. As I have shown in many papers, for many years the Church accepted the conclusions of the German Historical School of Economics as its paradigm for understanding economic reality. That School is totally discredited, and slowly, but surely, Popes have backed away from its worldview, despite the fact that many Catholics tend to quote past encyclicals like Protestants quoting “proof-texts” from the Bible to prove their anti-Catholic views. (Read more)
There are a number of Catholics, thankfully not too many, who believe that it would be more pleasing to God if we all gave up our highly technical lives, or money, vacations, etc., and lived on a subsistence level. These same folks are always championing "Western Civilization." They never ask what made Western civilization possible. The existence of great writers and thinkers does not make a civilization. A civilization is made up of all those people who have learned and accepted the values of the great thinkers of that civilization, and in the West, the teaching and contribution of the Catholic Church, not all of which is doctrinal, but intellectual as well. Notice that it is not just the teachings of the Church that made up Western civilization, but the accumulated wisdom of that whole civilization. Even the Church in its theological debates uses philosophical language and concepts developed by the great, and frequently pagan, thinkers.
But how did this wisdom get around? It got around because some folks had excess wealth to finance the development of schools to educate thinkers. The early Church Fathers were very educated men. The money of dedicated people sponsored schools which they attended. Think about it: one cannot spend time getting the required learning if one has to put food on the table. Learning requires leisure. Leisure is purchased for the student by someone else. That someone else gives that money to the student or the school, or both, so that the student and teachers do not have to spend their time putting food on the table by farming, or working in an asphalt plant (as yours truly once did) and the like. This means that someone in the society has to have discretionary funds. If we all lived in a subsistence mode, there would be no discretionary funds, and there would be no learning, no churches, no artists. (Read more)
To many Catholics a martyr is one who dies for the Faith, usually by open persecution. We think of the Apostles, St. Stephen, St. Peter of Verona, and St. Teresa Benedicta of the Cross, among so many others. Few, however, know the origin and nature of the term "martyr," and hence, the multifaceted aspects of martyrdom.
The word "martyr" means witness (martus) who gives testimony about something he witnesses (martyrian). The apostles were witnesses to Christ’s life, suffering, and resurrection. They died because they gave witness before the enemies of Christ. It is not the dying that made them martyrs, but the witnesses. It was only later in the history of the Church that the term was applied exclusively to those who died for this witness. When you read the Fathers of the Church, you see that anyone who suffered for his witness of the Truth is a martyr, even if they were not put to death because of it. (Read more)
The population-control weirdos believe that people are a blight on the planet. (I am not being harsh calling them weirdos—wait until you see my argument). They think that all people do is use up resources, and eventually the planet will be void. In fact, as the late, great economist Julian Simon pointed out, national income accounting counts the birth of a calf as an increase in capital, but the birth of a baby as a decrease in capital. Those economists who worship mathematical methods divide amount of capital by population. So, if you have $1,000,000 in capital and you have 1,000,000 people, you have one dollar of capital for every person. But if you have $1,000,000 of capital and then give birth to 10 babies, you get $1,000,000/1,000,010, or .9999 cents of capital per person, clearly a decline. One thing that these folks never seemed to learn in Economics 101 is that everybody, except the most handicapped or the most lazy people, produce more than they consume. This is true even in less-developed countries.
These characters also believe that the amount of natural resources in the earth has already reached its limits due to population growth. For example, Paul Ehrlich, a professor of biology specializing in butterflies, wrote the book The Population Bomb in 1968, in the middle of the hippie revolution. In that book, he predicted that in the 1970s there would be worldwide famines and resources would run out despite any emergency programs that would be put into place. To show the nonsense of this, in 1970, Dr. Julian Simon, late economics professor at University of Maryland, bet Ehrlich that the prices of any ten natural resources Ehrlich chose would be lower in 1980. The bet was for $10,000. Simon won; the prices were lower. Why? The resources were more abundant, not less. Ehrlich’s theory of worldwide shortages was an Armageddon fantasy. Simon offered the bet again in 1980 to anyone, but no one took him up on it. Why was that? They knew they would lose, which meant Simon was right, but also they had too much invested in this fantasy. One needs character to admit that one is incompetent, didn’t do his homework, and sold a profitable book on a fraud. (Read more)
"Cash For Clunkers." This, as everybody knows, was the administration’s plan to get environmentally unsound cars off the road. The idea was that if somebody had a car that had been around too long, the piston rings were probably so worn down that you could drive a car through them, burning oil was spewing through the atmosphere, they were gas hogs, and were bought before the current environmental regulations on autos were imposed. If you turned your clunker in, you got $4500 in cash from the government which could be used to purchased a NEW car, which would be less harmful to the environment. The car you traded in would be destroyed so that it could not be resold and put back on the road.
Now, let me get this straight, and maybe put it in more truthful terms. If you were driving a real clunker, could it be that you could not afford a new car to begin with? Now you are to bring the ol’ jalopy in, and for $4500 in cash, go into debt for a new car costing, say, $25,000? While it is true that a clunker would not bring in much exchange value, so that this program would up the return, would you bring in your old car in for $4500 if you were not already going to sell it and buy a new one anyway? Just take my own experience. I drive a 2000 Buick. I bought it used, and it is a great car. I have no intention to sell it, but even IF I wanted to trade it in for a new one, and IF I could have gotten $4500 dollars for it, I still could not afford a new car. Would the promise of $4500 make me go into debt to buy a car I could not afford to make the payments on? Absolutely not. Forget the fact that I am a trained economist. My dog would not do that either. (Read more)
A thorough reading of the Old Testament will show that the worst, and the most persistent, sin that the Chosen People committed was that of idolatry. They did it time and time again. This, and God’s punishments that followed, were actually predicted in Deuteronomy 29, 30, and 32. The people of the Northern Kingdom, Israel, were captured by the Assyrians, never to return, and the Assyrians populated their land with other pagan peoples. The Southern Kingdom, Judah and Benjamin, were captured by the Babylonians and taken to Babylon for about 45 years. When the Persians defeated the Babylonians, the Judeans and Benjaminites were allowed to return to Jerusalem and rebuild the city wall and the Temple, which the Babylonians had destroyed.
What does this have to do with anything? Plenty. We are all sinners. But when we commit a sin, we need to go to confession, if it is a serious sin, and "fess up" before God in the person of the priest. If not a serious sin, we still need to admit our sin to God. Now many, if not most, have skeletons in their closet. If you opened my closet, the skeletons would hit you on the head. These skeletons are generally between you and God, and anyone else who took part in the skeleton formation process. They are no one else’s business—unless they are publicly discovered. But if it is made public, we need publicly to own up to the fault, as painful as it is. Lying is a sin, too. Assuming that this horrendous act is actually true and someone finds out about it, we need admit it and not try to lie our way around it. This applies especially to public figures, upon whom the public trust reposes. (Read more)
In our last entry we discussed the necessity of savings for economic growth. It is savings which buys capital goods so that we can have consumer goods in the future. It was also pointed out that there needed to be enough savings to repair and replace current capital equipment just to consume at current levels, and that in order to grow economically, we must save more than that.
Having said that, it was shown that the United States does not save. We have a negative savings rate. But that does not seem to affect us very much. Sure, there is an economic downturn, but even before this recent recession we did not save, yet our lifestyles did not seem to suffer. Why is that if savings is so important? (Read more)
Dear Dr. Luckey, I realize that savings is good for the individual—for contingencies, vacations, retirement—but why is it good for the nation as a whole?
This is an excellent question, and one which very few people ask themselves, or know anything about. John Maynard Keynes, an economist whom I have roundly criticized in these pages, believed that there was a “paradox of thrift,” that is to say, that savings pulled money out of the economy, so that the things which companies planned to make would not be sold, people having saved money that should be spent on consumption. This would cause continued economic recession as companies would have unsold goods, would have to lower prices, and would lay off employees. This process would continue year after year, unless the government would, by deficit spending, put extra money in the hands of the consumers to offset the savings. This is utter nonsense, but has suddenly become popular again since Obama was elected to the presidency. Look at the media coverage of Christmas time—retail sales, this; retail sails, that. It is as if the whole country depended on retail sales. (Read more)
