Are pro-capitalists heretics?

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I looked up the “Option for the Poor." The U.S. Catholic bishops and I have major philosophical differences! The minimum wage is bad economics. If you want to help the poor, you do not support the minimum wage. As you will tell from my letter, I do not believe in “salvation by law.” I learned a lot by owning a business and traveling to India on business trips.

I was willing to hire the young and unskilled, but it was illegal to pay them what they were worth in the marketplace. The government makes it illegal to pay wages below the minimum wage. **The minimum wage is a floor on wages that causes a surplus of young and unskilled workers. There is 50 years of solid economic research to support this contention. Are the bishops listening? ** The minimum wage that is above the equilibrium wage hurts the young and unskilled.

If I told you that I would take you to eat at some of the finest restaurants in New Orleans, and then proceeded to drive west on I10, you would know that I was going in the opposite direction.

Unfortunately, most people do not know their directions when it comes to government promises. The end does not justify the meams. The “means” is the end. Tell me the means and I will tell you the ending. Such is the beauty of economics. I am not interested in the government’s lofty objectives; I am only interested in the means they use to get there. If you want to help poor workers, abolish the minimum wage. If you want to protect citizens from violent crime, abolish the gun control laws. If you want to increase wealth and employment, abolish taxes.

“An individual who intends only to serve the public interest by fostering government intervention is led by an invisible hand to promote private interest, which was no part of his intention (Friedman).” The “invisible hand” is the reason Milton Friedman says that he is not aware of the government doing much good. The government heads west when it should be heading east.

Economic Justice for All
Pastoral Letter on Catholic Social Teaching and the U.S. Economy
U. S. Catholic Bishops, 1986
A Pastoral Message
Brothers and Sisters in Christ:
  1. Who are the unemployed? Blacks, Hispanics, Native Americans, young adults, female heads of households, and those who are inadequately educated are represented disproportionately among the ranks of the unemployed. The unemployment rate among minorities is almost twice as high as the rate among whites. For female heads of households the unemployment rate is over 10 percent. Among black teenagers, unemployment reaches the scandalous rate of more than one in three [8].
  2. In recent years the minimum wage has not been adjusted to keep pace with inflation. Its real value has declined by 24 percent since 1981. We believe Congress should raise the minimum wage in order to restore some of the purchasing power it has lost due to inflation.
 
CPA2 said:
I looked up the “Option for the Poor." The U.S. Catholic bishops and I have major philosophical differences! The minimum wage is bad economics. If you want to help the poor, you do not support the minimum wage. As you will tell from my letter, I do not believe in “salvation by law.” I learned a lot by owning a business and traveling to India on business trips.

I was willing to hire the young and unskilled, but it was illegal to pay them what they were worth in the marketplace. The government makes it illegal to pay wages below the minimum wage. **The minimum wage is a floor on wages that causes a surplus of young and unskilled workers. There is 50 years of solid economic research to support this contention. Are the bishops listening? ** The minimum wage that is above the equilibrium wage hurts the young and unskilled.

If I told you that I would take you to eat at some of the finest restaurants in New Orleans, and then proceeded to drive west on I10, you would know that I was going in the opposite direction.

Unfortunately, most people do not know their directions when it comes to government promises. The end does not justify the meams. The “means” is the end. Tell me the means and I will tell you the ending. Such is the beauty of economics. I am not interested in the government’s lofty objectives; I am only interested in the means they use to get there. If you want to help poor workers, abolish the minimum wage. If you want to protect citizens from violent crime, abolish the gun control laws. If you want to increase wealth and employment, abolish taxes.

“An individual who intends only to serve the public interest by fostering government intervention is led by an invisible hand to promote private interest, which was no part of his intention (Friedman).” The “invisible hand” is the reason Milton Friedman says that he is not aware of the government doing much good. The government heads west when it should be heading east.
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If you want some credible proof of how fixing a minimum wage will increase youth unemployment, then look no further that the Australian experience. For many years up to the mid 1990s, Australia had a centralised wage fixing mechanism, strong unions and collective bargaining. It was all a recipe for low productivity.

For youth and the unskilled, it was tantamount to long term unemployment. Why would an employer take on an unskilled employee at a certain fixed wage when that worker’s productivity would not give a return? Collective bargaining meant unions effectively had a monopoly on labour/wage negotiations. It was a one size fits all approach to wage determination. A wage increase across an industry type did not take in to account the individual circumstances of each enterprise. So, for example, I had a shoe manufacturing business and wages went up 10% as a result of collective bargaining, but I’d just bought new machinery and was heavily in debt. It would be a bitter blow. My competitor down the road, who is still using outdated machinery and is debt free, can absorb the wage increase. So what happens to productivity in each factory? One can’t afford the new wage levels, so he automates even more, shedding labour in the process and the other has such a high level of costs asociated with wages he can’t modernise. It happened and many companies went offshore. The young and unskilled became a burden on the welfare system and learnt no skills and gained no experience.

Australia’s minimum wage of around $27,000 a year (not including on-costs) is close to 60 per cent of the median wage, which makes it the second highest minimum amongst OECD countries. This stops a significant proportion of lesser skilled workers from getting a job. pushes low skilled people into a welfare dependency situation and requires higher taxes to foot the bill and their capacity to obtain jobs is much reduced because employers are unable to offer a wage commensurate with their lower productivity.

Unions are quick to ensure a high minimum wage. And what is it really? It is rent seeking. The basic thesis of the theory of rent-seeking is that people, acting individually or as interest groups, seek to manipulate political and legal processes with the objective of creating a legal and institutional environment which enables them to extract transfers of wealth, outside the normal processes of voluntary market exchange, from other people in society. In essence, rent-seeking groups seek to acquire, through statutory and/or legal privileges, the power to restrict the quantities supplied of particular goods or services, thereby acquiring for themselves the monopolistic power to set prices for those goods or services above those that would prevail in openly competitive or contestable markets. The resultant wealth transfer is known as an ‘economic rent’ because it derives from an asset with especially valuable characteristics which, in this case, is the exclusive, politically or statutorily based power to set prices significantly above corresponding competitive market prices. Economic rents are conceptually completely distinct from commercial rents, the latter being money paid for leasing property such as a house, an office, or a shop, which are part and parcel of everyday commercial life. In addition to the perverse effects of such wealth transfers on income distribution, rent-seeking also damages living standards by distorting consumer prices, and therefore the value people derive from the goods and services they consume.
 
GodLovesTheSpek said:
The incentive is to do a good job so as to not get voted out of public office by the people.

A despot doesn’t have to do a good job or be concerned about votes or the people – just has to avoid being killed.
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The voting incentive is not as strong as a market one. In democracy, you need to get 51 or more % of the people behind your proposals. If someone has a really radical need for protection, you need to first get most people behind that person in order for him to recieve help.

In the market, the person who needs help the most just pays a lot of money for it to signal his desires -no need for canvassing or etc.

And as for monarchy, (that is what you mean by despot) the monarch can actually have a greater incentive to protect the people, in as much as the people are his personal property and the income streams from their productivity=his income.
 
John21652 said:
If you want some credible proof of how fixing a minimum wage will increase youth unemployment, then look no further that the Australian experience. For many years up to the mid 1990s, Australia had a centralised wage fixing mechanism, strong unions and collective bargaining. It was all a recipe for low productivity.

For youth and the unskilled, it was tantamount to long term unemployment. Why would an employer take on an unskilled employee at a certain fixed wage when that worker’s productivity would not give a return? Collective bargaining meant unions effectively had a monopoly on labour/wage negotiations. It was a one size fits all approach to wage determination. A wage increase across an industry type did not take in to account the individual circumstances of each enterprise. So, for example, I had a shoe manufacturing business and wages went up 10% as a result of collective bargaining, but I’d just bought new machinery and was heavily in debt. It would be a bitter blow. My competitor down the road, who is still using outdated machinery and is debt free, can absorb the wage increase. So what happens to productivity in each factory? One can’t afford the new wage levels, so he automates even more, shedding labour in the process and the other has such a high level of costs asociated with wages he can’t modernise. It happened and many companies went offshore. The young and unskilled became a burden on the welfare system and learnt no skills and gained no experience.

Australia’s minimum wage of around $27,000 a year (not including on-costs) is close to 60 per cent of the median wage, which makes it the second highest minimum amongst OECD countries. This stops a significant proportion of lesser skilled workers from getting a job. pushes low skilled people into a welfare dependency situation and requires higher taxes to foot the bill and their capacity to obtain jobs is much reduced because employers are unable to offer a wage commensurate with their lower productivity.

Unions are quick to ensure a high minimum wage. And what is it really? It is rent seeking. The basic thesis of the theory of rent-seeking is that people, acting individually or as interest groups, seek to manipulate political and legal processes with the objective of creating a legal and institutional environment which enables them to extract transfers of wealth, outside the normal processes of voluntary market exchange, from other people in society. In essence, rent-seeking groups seek to acquire, through statutory and/or legal privileges, the power to restrict the quantities supplied of particular goods or services, thereby acquiring for themselves the monopolistic power to set prices for those goods or services above those that would prevail in openly competitive or contestable markets. The resultant wealth transfer is known as an ‘economic rent’ because it derives from an asset with especially valuable characteristics which, in this case, is the exclusive, politically or statutorily based power to set prices significantly above corresponding competitive market prices. Economic rents are conceptually completely distinct from commercial rents, the latter being money paid for leasing property such as a house, an office, or a shop, which are part and parcel of everyday commercial life. In addition to the perverse effects of such wealth transfers on income distribution, rent-seeking also damages living standards by distorting consumer prices, and therefore the value people derive from the goods and services they consume.
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Very, very good! Are you an economics professor?
 
Anytime you see the phrase, “to protect the public interest,” a little red flag should go up! Rent seeking behavior is at play.

“In yet another huge announcement from the AICPA this morning, Roger CPA Review was told that panels are being formed in order to determine a new passing score for each section of the exam. This is in conjunction with the new CBT-e changes that are set to occur 01/01/2011.”

“Before you start freaking out and signing up for all your exams at once, worrying that the passing rate will be pushed up to 100 points and you will have to get each and every question right - consider that the reasoning behind this review process is to protect the public interest and make the CPA designation stay as prestigious as it is. The AICPA will ensure that the exam is still fair and completely passable (Roger).”

“Rent seeking is the term used by economists when referring to actions taken by individuals and groups seeking to use the political process to plunder the wealth of others (Rowley, Tollison, & Tullock).” Rent-seeking behavior is the idea that government licensure of professions is necessary to protect the public. Milton Friedman, 1976 Nobel prize winner in economics, wrote his PhD dissertation at Columbia in the 1940’s on rent-seeking behavior. He refuted the constantly repeated mantra of rent-seeking behavior. Milton Friedman’s works provide empirical evidence that licensure is nothing more than a mechanism used by members of a profession to raise the entry costs, and thus keep wages and profits artificially high. Rent-seeking behavior improves the welfare of someone at the expense of the welfare of someone else (Baker, Morris, Barnett).

Now I understand why the CPA license requirements went up from 120 hours to 150 semester hours! Accounting majors who graduate with 120 hours are not “qualified” to sit for the CPA exam. Voila! Fewer CPAs translate into higher fees.

I am also willing to bet that the change in the four CPA exams in 2011 will force the pass rate for each exam to go back down to 40%, rather than the current pass rate of around 45%! Additionally, I assume that the probability of passing all four CPA exams on the first try will also go back down 10%.

None of this has anything to do with protecting the public interest. Ditto for medical doctors.
 
CPA2 said:
Very, very good! Are you an economics professor?
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Economics professor?
God forbid! :eek:

I sometimes think the academics are blinded to the realities of life in the commercial lane. Too much reliance on regulation, too pessimistic a view of human nature.

Anyhow, have a read of An Open Letter to my Friends of the left.

Very enlightening, for those willing to be so enlightened!
 
"Anywho -I guess my views are church-compatible? "

Yes, No?

(sorry if I’m being pesky -a whole new conversation seems to be taking place on this thread! :D)
 
opens thread to clear out the cobb webs

“hello, is there anyone in there? There’s still stuff I would like to know -if you don’t mind answering?”
 
No. A capitalist or someone who supports the ideals of capitalism is no more a heretic than is a socialist who goes against SUBSTIDARITY. Or a Communist who has as its’ core, secular humanism, or fascism which is nothing more than enslavement of the masses for the state.

Point in fact, Distributism is the mode and model of the faith. All others fall short of this truly catholic belief. Those who claim to follow the Church and her teaching must strive to this ideal for all others are lacking.
 
"Point in fact, Distributism is the mode and model of the faith. All others fall short of this truly catholic belief. Those who claim to follow the Church and her teaching must strive to this ideal for all others are lacking. "

What then, in the name of pete, does the church teach about society that must be followed?
 
fakename said:
"Point in fact, Distributism is the mode and model of the faith. All others fall short of this truly catholic belief. Those who claim to follow the Church and her teaching must strive to this ideal for all others are lacking. "

What then, in the name of pete, does the church teach about society that must be followed?
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I thought I was supposed to answer the question and I did…NO.

however, since you asked we are supposed to support what is right. We are to always work for the greater glory of God in all that we do. Don’t spend your life serving the state…lest you land on your deathbed bemoaning the fact that had you served your God as you did your political ideology/government/king, He would not in this hour have abandoned you!

Catholics are called to a higher purpose. Them’s the brakes 🙂
 
“I thought I was supposed to answer the question and I did…NO.”

Sorry and thanks.

“however, since you asked we are supposed to support what is right. We are to always work for the greater glory of God in all that we do. Don’t spend your life serving the state…lest you land on your deathbed bemoaning the fact that had you served your God as you did your political ideology/government/king, He would not in this hour have abandoned you!”

makes sense. For distrib. I too sorta like cooperatives.
 
Someone said that Catholicism “does not support socialism.” That statement may or (may not) be correct, but it says nothing about whether the Catholic church “supports” capitalism. The latter does not automatically follow from the former. If the Catholic Church does officially “support” capitalism, I would very much like to see the details of the official statement(s) of support. Similarly, I am unaware of any official position on whether the Catholic Church classifies socialists or capitalists as heretics, though we may all have our own opinions, which will vary of course, of what they are or are not.
 
"Communism/Socialism tends to take away peoples rights and free will. Look what happend in China and the USSR in the 20th Century. The Church was persecuted and 100 million people were killed in the name of the state. Countless others starved. As far as capitalism goes, it can violate social justice teachings of the church - I.e. corporations could get away with “slave labor. How are these things not moral issues?”
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fakename said:
Oh, I see. So the church means by capitalism “slave labor” and by communism “atheism/tyranny”.

Because all this time I just defined capitalism as a sushi economy of 100 laborers who were paid sushi rolls for their work and at t+2 produced more output which was then paid back to them in a continuing cycle. And communism to me was just a bad case of capitalism. Sort of like how human beings are defined as rational animals and a bad human is one that doesn’t fulfill his essence.
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fakeman, it sounds to me like you are faking out everyone. If I’m reading you correctly, your issue isn’t one of whether or not socialism and capitalism are moral issues, but that capitalism is evil. After all, the way that you define capitalism here is that people who are at the bottom of the capitalistic totem pole are stuck in this “continuing cycle.”
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fakename:
One last question though, shouldn’t the church know something outside of faith and morals in order to pronounce on some moral thing? Namely that such a thing exists and that it naturally tends to be destructive?
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There also seems to be this underlying premise to your argument that the type of political system that a government chooses is a political question, and as such the church should just keep her nose out of it. But here in America, our political system was built primarily on Christian principles of self-sufficiency. However, this is not to endorse capitalism per se, but that regardless of the system, self-sufficiency should be held as the moral pinnacle to which we all should strive.
 
Limbo said:
Someone said that Catholicism “does not support socialism.” That statement may or (may not) be correct, but it says nothing about whether the Catholic church “supports” capitalism. The latter does not automatically follow from the former. If the Catholic Church does officially “support” capitalism, I would very much like to see the details of the official statement(s) of support. Similarly, I am unaware of any official position on whether the Catholic Church classifies socialists or capitalists as heretics, though we may all have our own opinions, which will vary of course, of what they are or are not.
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Look to CCC 2425:
The Church has rejected the totalitarian and atheistic ideologies associated in modem times with “communism” or “socialism.” She has likewise refused to accept, in the practice of “capitalism,” individualism and the absolute primacy of the law of the marketplace over human labor. Regulating the economy solely by centralized planning perverts the basis of social bonds; regulating it solely by the law of the marketplace fails social justice, for “there are many human needs which cannot be satisfied by the market.” Reasonable regulation of the marketplace and economic initiatives, in keeping with a just hierarchy of values and a view to the common good, is to be commended.
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A very interesting question - thank you. In any situation where profit is put above the welfare of people we have a problem. The early Church seemed to take steps that resembled a form of socialism - looking after widows and orphans and sharing what they had.

Capitalism does give us the freedom to empower those in need and for this we are blessed - but it also takes us down other roads of anonymous exploitation of persons and resources. The complicity of government in these enterprises is something to keep and eye out for.

my thoughts…
 
PEPCIS said:
fakeman, it sounds to me like you are faking out everyone. If I’m reading you correctly, your issue isn’t one of whether or not socialism and capitalism are moral issues, but that capitalism is evil. After all, the way that you define capitalism here is that people who are at the bottom of the capitalistic totem pole are stuck in this “continuing cycle.”
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Not at all. The cycle increases real output every time it is completed. Just as all actions of a roundabout nature do. For instance if I take the time to hire someone to help me build a net to catch more fish I will (if the forecasting is right too) catch more fish and that other person’s wages will go up.
 
fakename said:
Not at all. The cycle increases real output every time it is completed. Just as all actions of a roundabout nature do. For instance if I take the time to hire someone to help me build a net to catch more fish I will (if the forecasting is right too) catch more fish and that other person’s wages will go up.
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So, does the Church, in your opinion, have the right/duty to speak out on whether or not we should embrace capitalism or socialism as a government policy to support? Or do you consider this to be outside of her purview?
 
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