Catholic views on Economics

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Theo520 said:
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phil19034:
There are places in the third world where they still use child labor, and sweatshops, etc. That’s what I would call “unbridled capitalism.”
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Have you been to those places?

I would say they resemble our experience during the industrial revolution. The people taking the jobs think it’s a good job to have, and their government is very immature or corrupt. In many cases they may have adopted UN recommendations but they lack any will to enforce. I’m talking about actual sweat shops.

I’ve been to a number of factories in Asia, in the electronics business. Companies hired graduates, not children. The pay was good (for them) and expectations for quality were high. I think the garment industry was more prone to sweatshop working conditions, but that’s my speculation. I only saw factories in the electronics industry.
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No, I haven’t. But I never actually said there were NATIONS that allow those things. I said there are “places.”
 
phil19034 said:
No, I haven’t. But I never actually said there were NATIONS that allow those things. I said there are “places.”
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Yes, there are definitely places of concern, even in the US. Here it tends to fall into sex work rather than manufacturing.
 
JanSobieskiIII said:
Current cannon law has no prohibitions against charging interest on loans.
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Nor against rape, robbery, torture, or any number of other execrable evils. The decision not to impose positive law prohibitions regarding a bad act doesn’t make it licit, it just means that human authority is limited and finite.
It is ridiculous to expect someone to loan you money and you not be held responsible for failing to pay it back.
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It’s fine to require repayment of a mutuum loan, the issue is with requiring more than repayment.

Of course, investors enter into purely collateral-based contracts all the time. If an investment makes good business sense, it generally doesn’t need an individual to be personally on the hook for making sure a profit is returned.
It is equally ridiculous for the person giving the loan not to receive compensation for his assets being used for a time by someone else.
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[The following proposition is condemned as erroneous:] Since ready cash is more valuable than that to be paid, and since there is no one who does not consider ready cash of greater worth than future cash, a creditor can demand something beyond the principal from the borrower, and for this reason be excused from usury. – Various Errors on Moral Subjects (II), Pope Innocent XI by decree of the Holy Office, March 4, 1679 (Denzinger)
 
The article you cite makes no reference to the substance of the Church’s teaching, re: the difference between mutuum loans and collateralized investments.

Again, read Vix Pervenit if you want to understand this distinction clearly.
 
What is the alternative then? How do you propose to incentivize commercial lending to foster economic growth?

For example, my father owns a commercial lending company. He borrows money at 4% and we loan it out for people to buy semi trailers from our other company. These are 40-60k dollar pieces of equipment, these individuals do not have the cash to pay in full at purchase. Why should we loan them money to purchase equipment to make money and not receive a profit?
 
The alternative is collateralized loans. If the contract is tied to specific assets, there’s no problem. The issue is when you make an individual personally responsible for ensuring a guaranteed profit.

Think of it this way, if you make a collateralized loan, you’re effectively buying a (partial) proprietary right to the collateral. What are you buying a proprietary right to when you make a full recourse loan?
 
That doesn’t work with depreciating assets as the value of the collateral goes down over time.
ETA unless you use another form of collateral such as a home. But even then probably 80% of my customer base doesn’t even own a home. They live out of their trucks, at most they rent an apartment usually. There’s not always collateral to be leveraged.
 
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If a person doesn’t have the means to actually afford something (including by selling partial or contingent claims on their existing property), they really shouldn’t be buying it. If they’ll be able to afford paying for its price plus interest in the future, then they should simply wait and buy it for its regular price.

A person being able to effectively collateralize their own personal productivity (i.e. income that they’ll hopefully earn in the future), is an injustice because it gives the creditor a right to tax the future labor of the debtor in excess of what was actually loaned to the person.
 
Guess I’ve found my biggest point of disagreement with the church then. I’ve got some pondering to do.
 
but, what if they don’t need the equipment.

why isn’t a shovel and hoe enough?
 
Efficiency? Maximizing the amount of work that done be done in a given time by one man and free up other people to do other tasks?

eta and who gets to decide need? Is up to me to decide if they really need something or not or is it up To the person buying?
 
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I’d also point out that there’s no reason in principle why objects (intended for use) of any sort couldn’t be collateralized in the same way as mortgages (as in, using the object itself as the collateral). As long as the down payment is sufficient to cover the automatic depreciation that occurs when an object is first bought, and the subsequent payments cover the depreciation that occurs with time, then such as arrangement would be profitable barring an act of God or something like that.
 
“In the fourth place We exhort you not to listen to those who say that today the issue of usury is present in name only, since gain is almost always obtained from money given to another.” - Vix Pervenit

If the widespread practice of usury can “change the nature of money”, then the widespread practice of contraception can just as well “change the nature of sex”.

That article also makes no attempt to distinguish between mutuum loans and collateralized contracts. It is similar to those who ignore the difference between contraception and NFP. And of course, the claim that the Church’s teaching changed (or “developed” in the sense they mean) is simply false.
 
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Theo520 said:
It’s the Catholic body that would be pushing the view of what the poor are entitled too, not the poor themselves.
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Precisely. Which is why Father Logenecker’s suggestion that it “enables the poor by demanding more and more handouts rather than a hand up” is mistaken. The “demander” in his model is the poor, not the Church.
 
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JanSobieskiIII said:
For example, my father owns a commercial lending company. He borrows money at 4% and we loan it out for people to buy semi trailers from our other company. These are 40-60k dollar pieces of equipment, these individuals do not have the cash to pay in full at purchase. Why should we loan them money to purchase equipment to make money and not receive a profit?
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Oftentimes loans like that are the buyer’s stepping-stones to a more prosperous life and the acquisition of productive assets…something heartily endorsed by the Social Encyclicals.
 
Just a side observation on this topic. It is reported that Pope Francis is decidedly anti-capitalistic. Might it be rather that the Pope is against the greed of Capitalism, and not the concept itself? And shouldn’t that be the operative thinking of those of us who are better off than others? I don’t think Christ Himself would be against capitalism, but His words do express the idea that the rich have an obligation to aid the poor. How to do that is a never ending question.
 
Ridgerunner said:
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JanSobieskiIII:
For example, my father owns a commercial lending company. He borrows money at 4% and we loan it out for people to buy semi trailers from our other company. These are 40-60k dollar pieces of equipment, these individuals do not have the cash to pay in full at purchase. Why should we loan them money to purchase equipment to make money and not receive a profit?
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Oftentimes loans like that are the buyer’s stepping-stones to a more prosperous life and the acquisition of productive assets…something heartily endorsed by the Social Encyclicals.
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Contraception can also lead to increased material prosperity. A good result does not justify means that are bad in themselves.
 
Exactly. By owning and operating their own equipment instead of driving for a company as a hired worker they retain more of the profit from the service they provide.
 
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