Pope Francis claims global economy is close to collapse and describes youth unemployment rates as an ‘atrocity’ in damning message

[ralfyman]

The short answer is that, no, the pope is not infallible on matters of economics but although I disagree with Pope Francis on his claim that greed is the cause of youth unemployment, I think it is important to remember that economics is a combination of science and morality and that even where he is not infallible, the pope should speak his mind and we should weigh his words carefully.

I strongly recommend that you visit www.acton.org where I am confident you will find the inspiration you are seeking.

My understanding is that reports on youth unemployment and causes of that were raised by various organizations, including the ILO, the WB, and the IMF. Pope Francis is adding his voice to their concerns.

 

[Confuzzled]

Just jumping in here - I haven’t read all the previous posts.

I saw this World Cup promo film made on the streets of Brazil. I’ve never been to South America. Just one look at the city neighborhoods made me realize where the Pope is coming from. If I grew up in an area like that, I’d talk and think just like him. (And Brazil actually is doing all right economically, right?) You have to keep a cultural perspective on his comments about poverty. I am not dismissing the debate about which economic policies best help the poor and I believe good Catholics can disagree about that. I don’t know enough about economics to really speak to it myself. But we have to remember the background of the Pope. All he has even seen is intense poverty, institutionalized injustice and income inequality on a scale most people in North America or Europe can’t imagine. He has lived with the poor all his life. He will always speak for them. He’s probably right in believing God wants him to.

Hi FollowChrist, I spent nearly 7 months serving in Mayan Mexican villages, and though Mexico is considered a “2nd world” country, they are still rife with poverty. Living there I learned many things, and one of them is that the Mexican government is quite corrupt in the form of government subsidies and favors to individuals or corporations. This form of corruption is not capitalism in any sense and is something I believe is present in very many Latin American countries. Take out the ability for politicians to accept gifts, bribes, donations, favors.

See here as an example for Brazil:
forbes.com/sites/andersonantunes/2013/11/28/the-cost-of-corruption-in-brazil-could-be-up-to-53-billion-just-this-year-alone/

As someone said in a post on this page, some people simply don’t want to work or to better their situations. The Mayan girls were the ones pursuing higher degrees while the men only preferred to just go to school to graduate, and once finished, would work in the ‘milpas’ which is the local farm making about $10 USD per day. You can’t force someone to want more, that comes from God given free will.

 

[hazcompat]

“It depends on what the meaning of the words ‘is’ is.” –Bill Clinton, …
.

 

[Bubba_Switzler]

Definitely.
“ILO warns young hit hardest as global unemployment continues to rise”

It stands to reason that if a general problem worsens then specific instances will worse. That is not in dispute.

But that is not an explanation of the divergence of youth unemployment from general unemployment which, as we hale ling discussed, is a relatively new phenomenon.

So the question is, what caused youth unemployment to rise relative to general unemployment? Why are youth “hit hardest”?

Recession does not explain this. Deregulation certainly does not. And greed is the worst explanation of all.

Minimum wage, welfare, and youth entitlement do explain this.

 

[lynnvinc]

"Thomas Piketty’s numbers aren’t wrong: The Financial Times’ big whiff misstates his central argument "

salon.com/2014/05/28/thomas_pikettys_numbers_arent_wrong_the_financial_times_big_whiff_misstates_the_entire_income_inequality_debate/

It did happen. That is, the level of inequality increased significantly only during the last two centuries.

There’s an even better news article on Piketty’s Capital in the Hindu (a great newspaper in India):
"A classic on issues of inequality: Piketty says there are no automatic stabilisers to correct destabilising and inegalitarian forces" at thehindu.com/books/books-reviews/a-classic-on-issues-of-inequality/article6142628.ece

I’m thinking of getting the book and checking out what is might or might not say about the environment, bec I don’t trust economists to deal adequately with the environment – the environment being fundamental to life and the economy contingent and instrumental. For instance, we could live without grocery stores (economy), but we cannot live without food (environment).

So while economic collapse is a terrible thing for most people, esp the poor, environmental collapse is a much worse situation – with food, clean water, air, and our agricultural-friendly climate failing – and would cause a much greater economic collapse than anything we’ve known.

A great 1993 article that puts the environment and economy into proper order and perspective is “The Anthropology of Trouble,” by Rappaport. (see onlinelibrary.wiley.com/doi/10.1525/aa.1993.95.2.02a00020/abstract – sorry there isn’t a full copy for free online). Here are a few lines from pp. 299-300:
Plants, animals, and societies are complex beyond full human comprehension. To remain healthy, each requires a great variety of distinct materials, generally derived from a variety of sources… Monetization, however, forces the great range of unique and distinct materials and processes that together sustain or even constitute life into an arbitrary and specious equivalence. Phenomena that relate to each other essentially in terms of their qualitative distinctiveness are represented and understood in terms of a logic that reduces all qualitative distinctions to mere quantitative differences, a logic that, as it were, attempts to “bottom line” the world. This logic is especially destructive of ecological systems…. The criticism here is not of all uses of monetary metrics or all forms of economic analysis but of their privileged status….The existence of any and all cultural systems is contingent upon biological-ecological systems, but the converse is obviously not the case….That is, the relationship of the economic to the biological-ecological is a relationship of the instrumental to the fundamental….Life comes first. More important, we have identified a common form of deep disorder, the subordination of the fundamental to the contingent and instrumental…The instrumental, in claiming the place of the fundamental, degrades fundamental value to the status of mystifying ideology at the same time that it generates social injustice, urban turbulence, savings and loan disasters, and environmental degradation and, further, reduces the capacity of social systems to deal with such troubles as they emerge. Witness the ability of the Council on Competitiveness to impede adaptive responses to ozone depletion and global warming at the United Nations conference in Rio de Janeiro…

I don’t know if the Piketty book gets into anything like this, but if it does, that would be great.

 

[faithsmind]

“It depends on what the meaning of the words ‘is’ is.” –Bill Clinton, …
.

Wanted to find that little icon of the yellow guy rolling on the floor laughing but I couldnt. I’m not rolling on the floor but this is hilarious.

 

[stinkcat_14]

I agree that it is debatable, but I think it is reasonable to assume that the minimum wage does have an impact on low-skilled workers, of which youth usually are, however there are a lot of other variables in play that make the issue complex and thus, the relative impact is hard to discern.

I believe that the main reason that youth unemployment is so high is simply that the young don’t want to work or they don’t work to work the jobs they can get for the pay they can get. Maybe they don’t need to work or their parents don’t want them to work, etc. There are a lot of things that could explain why youth unemployment is so high. However, if you are going to use the minimum wage to argue why the youth unemployment is high then you have to make two assumptions: (1) that the young want to work and (2) that they are unable to find work.

I have a question for you: If you wouldn’t use unemployment to argue against the minimum wage, how would you argue against it?

.

I think you are probably right on the effect of the minimum wage on youth unemployment. I think that there is also a group of young people that would still have a hard time finding a job even if there were no minimum wage. When I was 18 and the minimum wage was more likely to be binding, I was still able to find work, it just meant that I had to work the night shift. I also know people near me who work in construction who cannot find people to work when they pay $12 an hour.

Of all the bad policies we have, I think the least worst one is the minimum wage. The main argument against it is that there is always the risk of setting it too high where it actually might have a negative effect on the labor market. So I see it as full of risk more than anything else.

 

[faithsmind]

Sorry–not meaning to be flip with my above comment there, lol but I believe a little bit of humor/humility is always a good thing in this type of context.

onlinelibrary.wiley.com/doi/10.1525/aa.1993.95.2.02a00020/abstract

Plants, animals, and societies are complex beyond full human understanding…

Monetization, however, forces the great range of unique and distinct materials and processes that together sustain or even constitute life into an arbitrary and specious equivalence.

Phenomena that relate to each other essentially in terms of their qualitative distinctiveness are represented and understood in terms of a logic that reduces all qualitative distinctions to mere quantitative differences, a logic that, as it were, attempts to “bottom line” the world.

…More important, we have identified a common form of deep disorder, the subordination of the fundamental to the contingent and instrumental…The instrumental, in claiming the place of the fundamental, degrades fundamental value to the status of mystifying ideology at the same time that it generates social injustice, urban turbulence, savings and loan disasters, and environmental degradation and, further, reduces the capacity of social systems to deal with such troubles as they emerge. Witness the ability of the Council on Competitiveness to impede adaptive responses to ozone depletion and global warming at the United Nations conference in Rio de Janeiro…
at.

Unfortunately,
the growth of my level of my suspicion of an author always corresponds to the length of his sentences.
I need some concrete, here, friend. And the last sentence of this quote ain’t gonna cut it. I am a very practical person, but I do believe in living in harmony with the material world for very practical reasons. Once we step out of the unnatural imbalance of nature, nature becomes an enemy. Am I hearing part of this statement correctly? If so, I agree with it. Everything must be in balance. Concretely, how do you see this relating to worldwide economic collapse? So you say it’s because we are living out of balance? That is a very difficult speculation to back up with concrete. There are very large countries with vast amounts of untouched physical land that are living in concentrated poverty. This question might go to ralfy as well. Maybe ralfy has already answered it somewhere, I don’t know… lol! Uh!

 

[faithsmind]

Ok, I need to edit what I said above, because I reread things and thought about it a little more.

I am a very practical person, but I do believe in living in harmony with the material world for very practical reasons. Once we step out of the unnatural imbalance of nature, nature becomes an enemy. Am I hearing part of this statement correctly? That everything must be in balance. But you say that concretely, it is impossible to relate this to worldwide economic collapse?

I want to point out that there are very large countries with vast amounts of untouched physical land where the people are living in concentrated poverty simply because people are the highest resource, but have been restricted by their own faults or outside forces which have hindered their abilities to tap the land to their advantage.

 

[Bubba_Switzler]

Ok, I need to edit what I said above, because I reread things and thought about it a little more.

I am a very practical person, but I do believe in living in harmony with the material world for very practical reasons. Once we step out of the unnatural imbalance of nature, nature becomes an enemy. Am I hearing part of this statement correctly? That everything must be in balance. But you say that concretely, it is impossible to relate this to worldwide economic collapse?

I want to point out that there are very large countries with vast amounts of untouched physical land where the people are living in concentrated poverty simply because people are the highest resource, but have been restricted by their own faults or outside forces which have hindered their abilities to tap the land to their advantage.

Any ideology which sees people as a liability and not an asset ought to be regarded with the utmost suspicion.

What is natural is a subject of dispute but we should all be able to agree that mankind cannot survive and grow by the billions except by making ever more clever use of what is found naturally. Economics is a very important part of this process.

The balance of a world of several billion people is not the same as the balance of a world of thousands.

 

[lynnvinc]

…Unfortunately, the growth of my level of my suspicion of an author always corresponds to the length of his sentences.

I need some concrete, here, friend. And the last sentence of this quote ain’t gonna cut it. I am a very practical person, but I do believe in living in harmony with the material world for very practical reasons. Once we step out of the unnatural imbalance of nature, nature becomes an enemy. Am I hearing part of this statement correctly?..

Yes, you are.

I cut out the concrete examples (since this is a “protected article” and I didn’t want to abuse too much quoting from it) and sorry that “anthropologuese” is a very convoluted language with terribly long sentences.

You may be able to get the entire article from your library or a nearby university library that carries the American Anthropologist jnl.

Rappaport before his death was an environmental anthropologist. This issue for non-environmentalists is a misunderstanding of what the environment or nature is (altho you seem to grasp it fairly well).

The environment or nature is (among other things) the air we breathe, the water we drink, the food we eat, the chemicals that permeate our body, the natural resources with which we build our buildings and make our products, the climate in which we grow our food, the oceans (which are becoming very polluted, acidified, and denuded of sea life) from which we catch our seafood. All these things are fundamental to life on earth, including human life.

The economy (which we have socially misconstructed to be the mother that feeds us, the all in all, and to be frank, something more important than God or religion) has to do with how we extract resources from the environment and make products (production, division of labor, etc), who owns or has tenure over what, how things are distributed going from one hand to another (e.g., grocery stores and supply lines) or redistributed (taxes, etc).

Animals do not have economies and they do fairly well without them. Economies are human devised institutions that help us get from the environment and each other what we need to survive, thrive and (supposedly) be happy.

The original economies were very simple – people just shared what they got (game, etc) with each other in small bands and there was not much property ownership (spears, bows and arrows, etc). This is called generalized reciprocity (or primitive communism) and is somewhat practiced today among some remote tribal peoples and within our modern families and monasteries. Then came other economic systems, until finally we developed the market system and capitalism and now late modern capitalism. These all facilitated larger and more complex societies to run more smoothly, helping people get what they need.

Rappaport is saying that there is nothing specifically wrong with the field or langurage of economics or how things are accounted in that field (e.g. in monetary terms). He does not see anything inherently wrong with economies as they do help us decide who owns what and to distribute things. I do think he has concerns late modern capitalism as we all should have (not distributing things enough so that many are left to suffer miserably) and Pope Francis shares this concern – the suffering, neglected poor.

However, that is not Rappaport’s focus. His main point is that the environment (the biological-ecological systems as I briefly alluded to above) are fundamental or foundational to life. In other words, God gave us creation to help us live, not to be a wasteland. The economy, OTOH, is contingent upon that foundational biological-ecological system and upon life, and is instrumental (or it can and should be) in facilitating the distribution of these basic life necessities and other goods.

Classical economics of Adam Smith to some limited extent did consider the environment. However the neoclassical economics followed today deleted the environment from its equations, so it is very flawed and only works when there is an environment that can supply an infinite amount of healthy air, water, food, climate, etc that we need. Some “green economists” have figured that only resources in the supply line (not those “in the environment”) are sensitive to supply and demand pricing, so that is another problem with economics.

Many people are becoming aware that these environmental necessities to life are coming under dire threat with serious harms already in the pipes for many future generations to cope with (e.g., see stockholmresilience.org/21/research/research-programmes/planetary-boundaries.html )

I hope that helps explain it.

 

[freeRadical]

Animals do not have economies and they do fairly well without them.

Animals also kill each other. The strong prey on the weak. Survival of the fittest. There is no welfare for the weak, impoverished, or marginalized. They weak are left to die and the strong survive. Have you ever watched what animals do to each other on Animal Planet?

 

[ralfyman]

It stands to reason that if a general problem worsens then specific instances will worse. That is not in dispute.

But that is not an explanation of the divergence of youth unemployment from general unemployment which, as we hale ling discussed, is a relatively new phenomenon.

So the question is, what caused youth unemployment to rise relative to general unemployment? Why are youth “hit hardest”?

Recession does not explain this. Deregulation certainly does not. And greed is the worst explanation of all.

Minimum wage, welfare, and youth entitlement do explain this.

The recession explains it because youth employment has also been slowing down in developing countries, and in these countries high minimum wage, welfare nets, and even entitlement are hardly available.

The reason why we have not just youth unemployment is explained in that article and in this:

“World unemployment figures set to rise in 2013, claims UN labour agency”

theguardian.com/business/2013/jan/22/ilo-unemployment-numbers-rise-2013

That is, thanks to deregulation, investors took incredible financial risks, leading to a crash, then bailouts from governments, and now the re-emergence of asset bubbles and concerns over another crash. What is the source of that re-emergence? The bailouts are being used for more speculation, not for expansion of businesses and hiring workers.

Why a focus on the youth? Because they are the ones most vulnerable in the labor force.

 

[Holly3278]

I completely agree that it is very sad that our world seems to find war to be so profitable.

However, I am curious about his statement about the global economy being near collapse. Is that really true? I had not heard this. I know that the global economy is not in very good shape but is it really so bad that it is near collapse?

 

[lynnvinc]

Animals also kill each other. The strong prey on the weak. Survival of the fittest. There is no welfare for the weak, impoverished, or marginalized. They weak are left to die and the strong survive. Have you ever watched what animals do to each other on Animal Planet?

Don’t see how that relates. Animals manage to find food and other needs for the most part, without economies, except some parent animals feeding their young or wolves and such working in packs. There are also stories of animals helping each other even cross-species, even helping humans, sort of a nascent moral sensing??

As Jesus said, “Look at the birds of the air; they do not sow or reap or store away in barns, and yet your heavenly Father feeds them…”

Our human institutions, such as the economy and political structure, are intended to improve upon this animal state and make our lives better and more secure, and for the most part they do. However, animals are amoral beings who don’t know right from wrong, but we do (or at least we are capable of knowing, if our parents and society teach us), so we are held to much greater standards of moral conduct…and quite frankly we fall short, sometimes very short.

Animals do not commit genocide, but we do. The 20th c was the worst in all of human history, starting with the Armenian genocide in 1915 and going on to many very horrific genocide events, and I suspect the 21st c may be far worse since our Cain-type human behavior has not changed, only the means to accomplish evil have grossly advanced and we have so many more people to kill

They often tell us animals cannot go to heaven. Perhaps that’s true, but neither can they go to hell, but we humans surely can.

 

[freeRadical]

That is, thanks to deregulation, investors took incredible financial risks, leading to a crash, then bailouts from governments, and now the re-emergence of asset bubbles and concerns over another crash. What is the source of that re-emergence? The bailouts are being used for more speculation, not for expansion of businesses and hiring workers.

Maybe the government should have never bailed out those failing businesses.

If anything is responsible for bubbles and crashes, it’s the Federal Reserve. You give out all that “free” money and then you are surprised when there is a bubble followed by a crash? Please.

 

[lynnvinc]

I completely agree that it is very sad that our world seems to find war to be so profitable.

However, I am curious about his statement about the global economy being near collapse. Is that really true? I had not heard this. I know that the global economy is not in very good shape but is it really so bad that it is near collapse?

People don’t really know – they have more trouble in predicting the economy than global warming (which is also a very complex thing). I know there was one anthropologist working for the Financial Times of London (like the Wall Street Jnl) who very accurately predicted the 2008 crash, but she used anthropological methods to figure it out.

I heard years ago in the 70s that the world economy would be collapsing soon – some people were preparing and hording. I thought, well it might be true, but didn’t worry a whole lot about it.

What is sort of scary is that we can have such profound recessions/depressions such as the 1929 or 2008 one and for no good reason (such as running out of food or something serious), but just due to our greed and mismanagement of things, such as “speculating in real estate” with money we don’t have, rather than “buying homes” well affordable and modest within our means with 20% to 30% down.

But what if there were some “real” problems, like world reduction in food production, which may start happening within 20 to 40 years due to climate change and other environmental harms, even if we improve various crop and growing factors, etc. What if we started having 5 to 10 Super-Storm Sandies per year in each country, decimating $billions in property and infrastructure. These real problems will have negative impacts on the economy and already things like that happening that are harming the economy to some extent.

If “non-problems” like greedy speculation can send us into a tailspin, I’m thinking real problems might do worse. The rich, of course, will be much better insulated from economic problems; my husband and I were well off enough and at the end of our career lives that the 2008 downturn didn’t affect us much, plus our area was already poor so there wasn’t much loss in property value, which has since rebounded.

Economic downturns and collapses will affect different people differently; and some rich people may not even feel it…at least not for another 20, 30 or 40 years or so, while the poor are already feeling the pinch with even minor downturns.

 

[Bubba_Switzler]

However, I am curious about his statement about the global economy being near collapse. Is that really true? I had not heard this. I know that the global economy is not in very good shape but is it really so bad that it is near collapse?

This is undoubtedly a bit of hyperbole, the truth of it depends greatly upon what is meant by “economic collapse”. There is a 100% chance that, at some point in the future, the stock market will “collapse”, meaning a double-digit, panic inducing fall.

But I think most people who are talking about is something comparable to the collapse of the Soviet Union. There is much talk of this mainly owing to the extraordinary debt that has been building up in the economic system.

The debate boils down to this: is there a limit to how much debt a government can assume? If you believe no, rest easy, the government will bail out all debtors, including central banks, as necessary. If you think that there is a limit, you might worry a little about countries like Japan where sovereign debt is now 250% of GDP as well as much of Europe, the US, and even China where it is hovering around 100%.

 

[Bubba_Switzler]

The recession explains it because youth employment has also been slowing down in developing countries, and in these countries high minimum wage, welfare nets, and even entitlement are hardly available.

Recession does not explain the divergence. There have been recessions, even depressions, throughout history but none had the effect of disproportionate youth unemployment. In fact, until recently, it was generally assumed that youth held an advantage in the labor market for a variety of reasons. You are not grappling with what is new and unique about the youth unemployment problem.

That is, thanks to deregulation, investors took incredible financial risks, leading to a crash, then bailouts from governments, and now the re-emergence of asset bubbles and concerns over another crash. What is the source of that re-emergence? The bailouts are being used for more speculation, not for expansion of businesses and hiring workers.

Risk and bubbles were not invented after deregulation and regulation has never prevented risk and bubbles. Bubbles are as old as money.

More importantly, the idea that risk needs to be regulated out of existence is foolish and dangerous. Minimizing risk has two negative effects: it depresses growth and it leads to systemic risks. And empowring politicians to regulate risk is what leads to cronyism.

Bailouts are a serious problem because they create moral hazard. The natural and necessary risk that is inherent to the human condition is forcibly transfered to people who have no control and away from those who do.

But bailouts did not create the youth unemployment problem.

Why a focus on the youth? Because they are the ones most vulnerable in the labor force.

It is very debatable that youth are " the ones most vulnerable". Typicaly youth have fewer obligations and are more flexible. There are far more vulnerable groups. Often unemployed youth simply stay home with their parents, an option not available to most other labor groups. They are probably the least vulnerable.

The focus on youth is valid for the fact that they are the future.

But this obscures the fact that youth unemployment only recently diverged from general unemployment. People started worrying about youth unemployment because it has become a unique problem and not merely

 

[ralfyman]

Maybe the government should have never bailed out those failing businesses.

If anything is responsible for bubbles and crashes, it’s the Federal Reserve. You give out all that “free” money and then you are surprised when there is a bubble followed by a crash? Please.

We have to keep in mind that the Fed is a consortium of private banks.

Also, we are looking at a global unregulated derivatives market with a notional value of over a quadrillion dollars. The 2008 crash involved only a fraction of that, and it is likely that there will be more in the future and in the long term.