Pope Francis denounces ‘trickle-down’ economic theories in critique of inequality

[ProVobis]

The FRB wanted to keep printing money. Reagen said no. Recovering from the last 20 years of bad polices was difficult, but things really turned around in 1983.

Carter-appointee Volcker raised rates to some 20% to stop inflation, most of it caused after Nixon had removed the gold standard and helped by Miller and Burns easy money policy. When Volcker then started dropping rates, home prices and the stock market went up in value. A few years later and within 6 months after Reagan appointed Greenspan, the stock market crashed about 30%.

youtube.com/watch?v=EY9QFtk9QTU

Say what you want but Greenspan’s reaction to that was not Austrian school. All kinds of regulations ensued.

 

[SuperLuigi]

Does that mean you are against a minimum wage law?

The problem with minimum wage laws is that they price out young people who want a job.

It certainly does bother me that the American left can’t seem to admit that minimum wage laws mean giving up some freedoms.

It isn’t the magical solution the left thinks it is.

I am in favor of just wages, but I also want employers and employees to enter into contracts where both parties agree.

 

[SuperLuigi]

Carter-appointee Volcker raised rates to some 20% to stop inflation, most of it caused after Nixon had removed the gold standard and helped by Miller and Burns easy money policy. When Volcker then started dropping rates, home prices and the stock market went up in value.

youtube.com/watch?v=EY9QFtk9QTU

Say what you want but Greenspan’s reaction to that was not Austrian school. All kinds of regulations ensued.

That’s the modern left-wing solution. Print money, and once inflation kicks in, raise interest rates to compensate.

It doesn’t work, because either you make the dollar worthless or no one can loan money because no one can afford the outrageous interest.

A few years later and within 6 months after Reagan appointed Greenspan, the stock market crashed about 30%.

That’s no surprise. The stock market, as we can see today, reacts positively to the fed artificially enhancing the economy for short-term gain.

**It’s just the market correcting itself back to reality. **The stock market should have been what it was then and the idea that the DOW breaking 16,000 today as a good thing is absurd.

 

[SuperLuigi]

Reagan also tried to cut the budget - but Tip O’neill never allowed that to happen. The Reagan budgets were always “dead on arrival” as the Democrat House would vote in new spending every year. True - Reagan could have fought harder for lower spending and fiscal restraint, but Reagan believed (rightly) that there were more important, pressing concerns - such as rebuilding our military and getting his tax cuts passed.

The idea that Reagan was some kind of hypocrite because he campaigned on fiscal restraint but ended up increasing spending is nonsense - because Reagan didn’t control the congress. And he wisely understood that he wouldn’t be able to pass all of his programs.

Ishii

O’Neill and Reagen at least were able to have some semblance of dialogue and “were friends after 6 pm”.

Forget that today with Harry Reid running the Senate into a hospital to protect vulnerable democrat seats.

 

[SuperLuigi]

remember when reagan was a pro-choice politician then switched to pro-life when it was politically more popular w/n his party. Man that guy was a good actor, why did he ever leave Hollywood?

I’m glad he did.

Are you this harsh on democrats who are pro-choice?

 

[SuperLuigi]

I´m not american and I do not consider myself a liberal but if this video is accurate I think every catholic should be able to recognize something´s wrong with this picture. It´s not a matter of capitalism vs socialism, but of inequalities and human dignity.
youtube.com/watch?v=f0ehzfQ4hAQ

If you are talking about the USA, what is truly ironic is that conservative capitalists are the biggest givers by far.

People become communist and socialist not because they want to sacrifice, but because they think they’ll get more somehow.

That’s why so many Catholics vote against their Church year after year without even batting an eye.

Those who truly want to be charitable won’t wait for a revolution or for others to do it.

Real charity comes with lack of concern for self and concern for others.

 

[Elizabeth502]

THIS:

The problem with the video is that it speaks of wealth “distribution” in America. There is no distribution under a capitalist system. There is opportunity and different abilities to take advantage of that opportunity to create wealth. Capitalism doesn’t “distribute” money. To speak of distribution, “inequitable distribution of wealth in America” etc, is to not understand the nature of our economic system. Now, there is re-distribution by the government taxing wealth and then giving it to groups in order to get votes or political support. Those who rob Peter to pay Paul will get the votes of Paul. The biggest mistake that the left makes is to believe that the economy is a finite pie, and that government needs to decide “who gets what” and that the best system is to have a government that forces everyone to be equal.

Capitalism can have evil capitalists - but also good ones. The system itself isn’t evil.

No, but unregulated (or insufficiently regulated) it supports, by default, a kind of predatory and entitlement dynamic by those who have accumulated wealth. I am absolutely not in favor of “redistribution” by force, nor in a level of regulation which also de-motivates. I think there’s a balance which is possible and which is morally called for.

I never cared much for George W. Bush as a president, but one thing he suggested I really liked. Unfortunately, the Left (including, shockingly, much of the Catholic Left) vigorously opposed it. It was his faith-based initiative whereby there would be some kind of cooperation between government and religious organizations on the local level for various kinds of help for the needy. We have become so aggressively atheistic as a nation, with government standing in for religion (while upholding its heavy and heavily immoral agenda), that the Left and their darlings in the media have become overtly hostile to religion, including religious groups which serve the poor. Few see the great irony here, but it has never missed me.

…My point being that government is capable of providing, in addition to some level of regulation, strong incentives (rewards) for such cooperation with private groups in a much more personalized way than now exists.

Pardon the analogy, but the vast majority of corporate “giving” or “community” outreach is no better than the blind flooding of Haiti, post-earthquake, with excessive food, randomly available without a plan. (When most of that food was diverted, and when secure housing was far more urgently needed.) Modern NGO’s, including their various counterparts on the corporate level, remind me of the carpet bombing in Vietnam, or those who may remember that period: lazy, unfocused, random, inefficient, overkill. It’s what’s worst about America, not what’s best. Like gov’t assistance, it stresses grand gestures, everything operating on the mega and macro level, but lacking discernment, clarity, thought, accuracy, and efficiency…

 

[KSU]

The problem with the video is that it speaks of wealth “distribution” in America. There is no distribution under a capitalist system. There is opportunity and different abilities to take advantage of that opportunity to create wealth. Capitalism doesn’t “distribute” money. To speak of distribution, “inequitable distribution of wealth in America” etc, is to not understand the nature of our economic system. Now, there is re-distribution by the government taxing wealth and then giving it to groups in order to get votes or political support. Those who rob Peter to pay Paul will get the votes of Paul. The biggest mistake that the left makes is to believe that the economy is a finite pie, and that government needs to decide “who gets what” and that the best system is to have a government that forces everyone to be equal. Such a government denies human nature - that is why it is ultimately evil. Capitalism can have evil capitalists - but also good ones. The system itself isn’t evil. But socialism is because it denies human nature.

Ishii

As you know, ishii, you are echoing the teaching of the Roman Catholic Church. tfp.org/tfp-home/catholic-perspective/what-the-popes-have-to-say-about-socialism.html

As you also know, the folks comprising the Catholic Left will not be swayed, which is why they cling to mistranslations of the what the popes say (as evidenced by this thread), misrepresentations of our political history, platitudes and insulting conversation stoppers, e.g., “Yes, we acknowledge the killing of pre and even post-born babies, and defiance of Church teaching on sex and subsidiarity, but Jesus really emphasized feeding the poor”.

The beat goes on.

 

[freeRadical]

The problem with minimum wage laws is that they price out young people who want a job.

It certainly does bother me that the American left can’t seem to admit that minimum wage laws mean giving up some freedoms.

It isn’t the magical solution the left thinks it is.

I am in favor of just wages, but I also want employers and employees to enter into contracts where both parties agree.

I agree.

 

[stinkcat_14]

That’s not Keynesian.

I would suggest you need to re-read “The General Theory of Employment, Interest and Money” because what Reagan did was classic Keynesianism.

Conservatives know that by lowering taxes, businesses will take the money and invest it. This creates jobs and expands the tax base.

It depends on a number of factors, for example Obama cut Social Security taxes for a couple of years, but businesses did not respond by investing and creating jobs. Also, businesses often invest and create jobs when taxes are not cut, such as during the Clinton years.

Reagen doubled the revenue stream into government and that’s why he was able to increase spending.

Actually, in inflation adjusted terms, revenue to the federal government increased by about 20%. It increased by about 37% during the Clinton term.

The FRB wanted to keep printing money. Reagen said no. Recovering from the last 20 years of bad polices was difficult, but things really turned around in 1983.

Actually, the President has no control of the FOMC.

It had everything to do with Reagen’s policies. I think you are just trying to give credit to anything but free market economics, which work and do not need excuses to do so.

Demographics surely had nothing to do with Reagan’s policies. As to increased globalization, this was facilitated by lowered transaction costs (through smaller communications costs), lower transportation costs and lower trade barriers. The first two Reagan’s policies had very little to do with and Reagan did not to a lot of reduce trade barriers.

I actually am in favor of free market economics, but one has to be honest when evaluating the effect of economic policies. I realize it is not politically popular to take an honest look at things instead of canonizing Reagan and his policies. Reagan had some good policies, and some very bad policies as well.

 

[ProVobis]

That’s the modern left-wing solution. Print money, and once inflation kicks in, raise interest rates to compensate.

From all indications, the left wants to force interest rates down to zero forever, so they can justifying all the borrowing all they need. Senator Warren sounds like she wants the Fed to lend directly to the consumer bypassing the banks altogether. It might SEEM fair but I didn’t see any moral high ground to lend to the banks so they can make a killing raising oil prices and selling the market short using depositors’ money in the process. Do you realize oil was at a reasonable $20 a barrel before the repeal of Glass Steagall?

In any event, we’ll see how much the Republicans are serious in sound monetary policies when the vote on Janet Yellen’s nomination comes up.

It doesn’t work, because either you make the dollar worthless or no one can loan money because no one can afford the outrageous interest.

As I said before, the free market should set the interest rates, provided no country cheats. I would rather have a hard asset standard to limit the money printing. Using the U.S. dollar as the world’s reserve currency is just not working.

That’s no surprise. The stock market, as we can see today, reacts positively to the fed artificially enhancing the economy for short-term gain.

**It’s just the market correcting itself back to reality. **The stock market should have been what it was then and the idea that the DOW breaking 16,000 today as a good thing is absurd.

But it wasn’t absurd when it was almost that high under a Republican administration? But my point was that a crash almost inevitably leads to more government regulations. Under Reagan that turned out to be stopping trading altogether when a certain trigger is met, etc. That’s hardly a free market approach but the bulwark of capitalism, the stock market, rules the world unfortunately. Even the Pope looks at the bottom line in that regard.

Do you realize how much power the Securities and Exchange Commission has and the unfairness of the system in regards insider trading and such? Oh, and did we mention the abuse of the bankruptcy laws? If that hasn’t created poverty, I don’t know what has.

 

[seekerz]

THIS:

No, but unregulated (or insufficiently regulated) it supports, by default, a kind of predatory and entitlement dynamic by those who have accumulated wealth. I am absolutely not in favor of “redistribution” by force, nor in a level of regulation which also de-motivates. I think there’s a balance which is possible and which is morally called for.

I never cared much for George W. Bush as a president, but one thing he suggested I really liked. Unfortunately, the Left (including, shockingly, much of the Catholic Left) vigorously opposed it. It was his faith-based initiative whereby there would be some kind of cooperation between government and religious organizations on the local level for various kinds of help for the needy. We have become so aggressively atheistic as a nation, with government standing in for religion (while upholding its heavy and heavily immoral agenda), that the Left and their darlings in the media have become overtly hostile to religion, including religious groups which serve the poor. Few see the great irony here, but it has never missed me.

…My point being that government is capable of providing, in addition to some level of regulation, strong incentives (rewards) for such cooperation with private groups in a much more personalized way than now exists.

Pardon the analogy, but the vast majority of corporate “giving” or “community” outreach is no better than the blind flooding of Haiti, post-earthquake, with excessive food, randomly available without a plan. (When most of that food was diverted, and when secure housing was far more urgently needed.) Modern NGO’s, including their various counterparts on the corporate level, remind me of the carpet bombing in Vietnam, or those who may remember that period: lazy, unfocused, random, inefficient, overkill. It’s what’s worst about America, not what’s best. Like gov’t assistance, it stresses grand gestures, everything operating on the mega and macro level, but lacking discernment, clarity, thought, accuracy, and efficiency…

I think you make a very valid distinction which is missed by many participants in the government assistance versus charitable giving debate. In terms of “discernment, clarity, thought, accuracy, and efficiency”, it is not so much about who does the giving, but HOW the giving is done.

There have been long-running debates in the international donor community about the HOW part and as your posts suggest, international aid has suffered from a lack of long term effectiveness, prompting some NGOs to explore other approaches.

At the level of governments, there is somewhat of a consensus that to help a country in the long run, you have to strengthen its institutions and systems rather than simply taking a piecemeal approach. I would think similar reasoning would apply to helping the poor in our own country, taking aim at the structural barriers or weaknesses that keep people poor (something that the government is better equipped to do) in addition to targeting individual families’ needs (something that charities and individuals are invaluable at).

There is also a greater focus in the aid community, on involving the affected people in crafting solutions to their problems. For example, a charity I know gives a fixed one-time sum of money to the very poor in a couple of African countries. On reviewing how the money was spent, they found that the vast majority of people switched from thatch to tin roofs. Seemed like a pretty vain way to waste money…until they delved deeper and found out the cost, health risks and work associated with maintaining and replacing thatched roofs! Yes, even people with minimal or no education may know their own needs better than we who stand outside their windows looking in…

 

[seekerz]

As you know, ishii, you are echoing the teaching of the Roman Catholic Church. tfp.org/tfp-home/catholic-perspective/what-the-popes-have-to-say-about-socialism.html

As you also know, the folks comprising the Catholic Left will not be swayed, which is why they cling to mistranslations of the what the popes say (as evidenced by this thread), misrepresentations of our political history, platitudes and insulting conversation stoppers, e.g., “Yes, we acknowledge the killing of pre and even post-born babies, and defiance of Church teaching on sex and subsidiarity, but Jesus really emphasized feeding the poor”.

The beat goes on.

Are any of these Christian beliefs mutually exclusive? Jesus did not give multiple choice tests, He said: “Go and do likewise”…

 

[JoeCarpenter]

People won’t give as much if there’s too much economic uncertainty. ObamaCare is a huge albatross for the economy, and some folks know that hyperinflation is coming.

Social Security has suffered the same fate as any other federal program: It has gone beyond its intended purpose, spiraled out of control financially, and is rife with fraud and abuse.

Social Security when passed under FDR in the 1930s was done so in an era where there were 12 workers per recipient and it was “intended for widows and orphans” to quote Jason Lewis, not as a retirement fund.

It will probably be a bankrupt program in the next 20-30 years at its current rate.

I’m a younger person and I’m not counting on it.

My friend, in the free market private sector you would be amazed at what could happen.

I’m not in favor of scrapping social security or the generic safety net, but I do know that the people who earn their money can spend it much more effectively than any kind of government.

Social Security has changed surprisingly little since it was passed. It was designed as a safety net for those unable to fully provide for themselves, including orphans widows and the elderly.

Social Security is in no real danger of going bankrupt even 30 years from now. The program will spend more than it takes in as the baby boomers retire, but it also ran a surplus for most of the baby boomers working years so there is plenty of cushion. There may need to be some small modifications, but it will (barring political reasons) exist when you and I retire.

And no, private donations cannot be expected to have that type of impact. Explain how charities could have anywhere near the impact of social security when all charitable giving is less than half of what social security costs. That’s not a knock on charities, they just have different scopes and capabilities.

I realize you aren’t advocating getting rid of social security, but it sounds like you would be against the government improving the social safety net which doesn’t make sense because there is strong proof that a strong safety net is a very effective way of reducing poverty.

 

[seekerz]

I agree, but unfortunately the American people, including apparently many members of the clergy, have come to associate “help” exclusively with big organizations, be those secular government, NGO’s (many of which are international), or large Catholic organizations such as CRS, CCHD, etc. Even the latter have suffered from the effects of centralization, and we have a mania in this country for preferring an assumed model of “efficiency” (production-line style, bureaucracy in spades) for local work, local workers, local information, and personal encounter with the poor. It’s a form of laziness, i.m.h.o.

Big organizations tend to be broken models. Perhaps some of the U.N. efforts have not suffered from that, but then the U.N. also promotes questionable initiatives which in themselves violate Catholic teaching. Why does the answer have to be gigantic, seekerz? (“I remain to be convinced (based simply on the track record of large NGOs operating locally and internationally) that the nongovernmental approach is any more efficient.”)

What LOOKS to be more efficient, because supposedly they have the resources and the organizational pattern, is not necessarily so, because the most important aspect to starting any initiative, including a business one, is to gather information. The proof that the NGO’s didn’t know what they were doing or what the primary needs were in Haiti after the earthquake is that their efforts had a net zero effect one year later. They hadn’t bothered to research the essential needs which would aid the people most desperate and most innocent.

It is possible to be both local and networked, without the inefficiencies of size. (Please see my post 368)

I had missed that post Elizabeth, and I agree that it does not have to be gigantic at all. I was simply making the point that efficiency might well be a factor of the size of the entity doing the helping, rather than whether the entity is governmental or not.

 

[seekerz]

And

This has been addressed ad nauseum in this thread but I welcome the opportunity to reiterate facts and arguments again.

The thinking behind your argument seems to be something like this: only the federal government can afford to pay people not to work, charities can’t compete with that. And that’s probably true. But it misses the point entirely.

Otto von Bismarc did not institue the welfare state because lower levels of society had failed to provide for the poor. Other countries did not copy him because lower levels had failed there. From the start, and ever since, the welfare state has been an exercise in politics. The institution of the welfare state has never been in response to people starving in the streets. That is pure myth.

Neither has it been an instrument of lifing the poor out of poverty. Instead, as one would expect from its origins, it has served primairly to create a dependent class. Popes have long recognized this reality.

In short, the principle of subsidiarity has never been tried and found wanting, it has been discarded because it does not serve a political purpose.

And subsidiarity does not mean that charity starts with Catholic (or other) institutions. Subsidiarity begins lower than that with the individual and family. Public policies that have the effect of destroying families are yet another impediment to justice and none has been more destructive than the welfare state.

I’ll close with a quote from one of my prior posts:

I know it is a popular theme among scholars and experts of all shades, that the welfare state has resulted in family breakdown. All I can give in response in my anecdotal experience: (and here, I’ll bite the unspoken bullet too) anyone who has lived for some length of time in Central/South America or the Caribbean, will have seen high rates of broken families among the poor. Afro-Caribbean family patterns among the poor are mirror-images of those of among poor African Americans. FYI, government assistance is minimal to non-existent in most of those places I submit for comparison, so is it the welfare state, poverty itself or something else that destroys the families of the poor?

My two cents: experts from all backgrounds need to rethink and reframe their cherished theories of the link between poverty, family and the welfare state.

 

[Bubba_Switzler]

I know it is a popular theme among scholars and experts of all shades, that the welfare state has resulted in family breakdown. All I can give in response in my anecdotal experience: (and here, I’ll bite the unspoken bullet too) anyone who has lived for some length of time in Central/South America or the Caribbean, will have seen high rates of broken families among the poor. Afro-Caribbean family patterns among the poor are mirror-images of those of among poor African Americans. FYI, government assistance is minimal to non-existent in most of those places I submit for comparison, so is it the welfare state, poverty itself or something else that destroys the families of the poor?

My two cents: experts from all backgrounds need to rethink and reframe their cherished theories of the link between poverty, family and the welfare state.

I don’t think anyone is claiming that that welfare is the singular cause of the breakdown of the family but much research has shown a very strong correlation. See e.g. Thomas Sowell’s work.

I agree that rethinking is always a good thing and perhaps it should begin by questioning the dogma assumption that material welfare programs are good for the poor.

But for me the most interesting question is this:

If someone is otherwise a Catholic in good standing but he refuses to steal from the rich to give to the poor or to support politicians who promise the same what sin is he committing?

Although I cannot cite chapter and verse it’s been pretty well established for some time that it is wrong for Catholics to vote for a politician for the reason that the politician supports abortion on demand. Is Pope Francis claiming that it is similarly wrong to support a politician who opposes welfare?

My reading of the pope’s encyclical is that he is very much concerned with the poor and that he is calling upon Catholics do do something directly saying, in part, that the free market will not do the job automatically. Although he framed it in questionable terms, the underlying point is true enough. Even if free market capitalism does everything that its advocates promise and even if welfare is everything it’s critics decry, it is still the case that charity has a role to play.

I’d love an opportunity to set the pope straight on a few things but I’m not convinced that he is teaching anything new with respect to politics. I’m not convinced that he is teaching against free market capitalism.

 

[seekerz]

I don’t think anyone is claiming that that welfare is the singular cause of the breakdown of the family but much research has shown a very strong correlation. See e.g. Thomas Sowell’s work.

I agree that rethinking is always a good thing and perhaps it should begin by questioning the dogma assumption that material welfare programs are good for the poor.

But for me the most interesting question is this:

If someone is otherwise a Catholic in good standing but he refuses to steal from the rich to give to the poor or to support politicians who promise the same what sin is he committing?

Although I cannot cite chapter and verse it’s been pretty well established for some time that it is wrong for Catholics to vote for a politician for the reason that the politician supports abortion on demand. Is Pope Francis claiming that it is similarly wrong to support a politician who opposes welfare?

My reading of the pope’s encyclical is that he is very much concerned with the poor and that he is calling upon Catholics do do something directly saying, in part, that the free market will not do the job automatically. Although he framed it in questionable terms, the underlying point is true enough. Even if free market capitalism does everything that its advocates promise and even if welfare is everything it’s critics decry, it is still the case that charity has a role to play.

I’d love an opportunity to set the pope straight on a few things but I’m not convinced that he is teaching anything new with respect to politics. I’m not convinced that he is teaching against free market capitalism.

He is not teaching against free market capitalism, he is teaching against relying on free market capitalism to provide for the weakest among us without us setting specific safeguards in place to ensure this is done. I don’t see how his words can be interpreted as a wholesale condemnation of capitalism. If I criticize some aspects of how the Church works am I “teaching against” the Church?

And btw, I’m pretty sure he’d appreciate the opportunity to “set us straight” too. I’m under the impression that’s exactly what he is doing.

 

[Bubba_Switzler]

He is not teaching against free market capitalism, he is teaching against relying on free market capitalism to provide for the weakest among us without us setting specific safeguards in place to ensure this is done. I don’t see how his words can be interpreted as a wholesale condemnation of capitalism. If I criticize some aspects of how the Church works am I “teaching against” the Church?

And btw, I’m pretty sure he’d appreciate the opportunity to “set us straight” too. I’m under the impression that’s exactly what he is doing.

I don’t think you are getting to my question here. I am referring very specifically to your assertion that “he is teaching against relying on free market capitalism to provide for the weakest among us without us setting specific safeguards in place to ensure this is done”.

Is he, in fact, teaching that we must support “safeguards” meaning welfare state solutions?

Or is he merely teaching that free markets are insufficient?

I agree that the pope is suspicious of free markets and shares a leftist view of them. It is unclear to me that he is actually crossing the line to declaring free markets plus charity to be insufficient.

Is the pope teaching that voting for politicians who favor cutting or eliminating the welfare state is a sin? Are now we required by Catholic teaching to steal from the rich to give to the poor?

 

[KSU]

…I’d love an opportunity to set the pope straight on a few things but I’m not convinced that he is teaching anything new with respect to politics. I’m not convinced that he is teaching against free market capitalism.

Of course he isn’t; he’s Catholic and therefore in favor of free market capitalism; even with the mistranslated English version of his Exhortation. Here is the corrected version: catholicculture.org/commentary/the-city-gates.cfm?id=697

See also post #257.