Why is socialism bad by Church teaching?

[Black_Rose]

Regarding the commitments by banking institutions on the CRA:

The dollar amounts are based on commitments for community development
lending, not the amount of lending that actually occurred. In some cases the
actual lending amount may exceed the dollar targets, in other cases the dollar
target may not have been met. In addition, many commitments are multi-year
commitments that extend beyond 2007. Thus, it is important to remember that
there is a substantial amount of CRA-related lending and investing that falls
outside of the agreements documented in this study.

community-wealth.org/_pdfs/articles-publications/cdfis/report-silver-brown.pdf

Right from the horses mouth, just like you said! Also, for the $4.5 trillion also includes other things besides mortgage lending such as small business lending.

Exactly… they are in question. The manner in which they are broken down and presented doesn’t even come close to giving the whole picture. Wow, seven cherry picked appendices… from a few years of the implementation of the CRA. The inclusion of statistics is great, but he’s using very specific numbers from a few years to generalize the entire implementation of the CRA which has much more history and future unfortunately.

Back at you, Edward Pinto’s relies only a few stats such as that only one Cleveland Bank. As Cricket pointed out, there is no information about the loans in its profolio, or how large it is. Googling “Third Federal Savings and Loan” AND “cra” fails to bring up an independent confirmatory source beside anything related to Pinto. But I did find that “Third Federal Savings and Loan” of Ohio did not lend do any CRA related lending in 2003 and despite this, it received a “satisfactory” rating from the OTS in 2004. Furthermore, the entire CRA lending in 2003 was only $42.3 billion, far less than the $711.7 billion in “commitments” reported in 2003.

 

[Sandy_Kay]

ITT: Christians deliberately estranging people for absolutely no reason.

Consider socialism on its own merits. THERE IS NO PROBLEM. THERE IS NO CONFLICT. Christ’s teachings of equality, mutual love, disregard for wealth etc. are closer to socialism than anything else.

You are in error my friend, stealing from one person and giving it to another is not christian charity. It is stealing. Thow shalt not seal. Class envy is also a sin. Thow shalt not covet thy neighbors goods!

 

[Monk21]

You are in error my friend, stealing from one person and giving it to another is not christian charity. It is stealing. Thow shalt not seal. Class envy is also a sin. Thow shalt not covet thy neighbors goods!

So if you have private health insurance you are paying for someones claims if you never use it.
Your car insurance is the same if you never use it, you have supplied the money to pay for others claims.
Now you have the government tax you and it is stealing…what nonsense.

 

[Black_Rose]

Regarding the Bank of America data:

Yes, Pinto sited the correct factoid and was rather accurate, but he deceptive and dishonest due to a key omission. As one could infer, given the proximity of the caveat to his desired data point (within a few sentences), Pinto did not do slipshod research because he did not delve into the minutiae, but outright dishonenty:

From a transcript of the earnings call:

Our residential mortgage portfolio showed an increase in net losses to $242 million or 37 basis points for the quarter, that would be 41 basis points excluding the Countrywide portfolios. We continue to see deterioration in our community reinvestment act portfolio which totals some 7% of the residential book. Additionally, California and Florida which combined comprise 42% of the legacy Bank of America balances drove 62% of the net losses through August.

The annualized loss rate from the CRA book was 1.26% and represented 29% of the residential mortgage net losses. Although approximately $129 billion or 50% of our residential mortgage portfolio carries risk mitigation protection, it does not cover our CRA portfolio. Now, of the $129 billion, approximately 92% is protected where we sell mezzanine risk exposures to cash collateralized structures, thereby leaving us with no counterparty risk. The remaining 8% is protected by GSEs.

By failing to mention BoA’s shrewd use of structured finance, by selling higher risk mezzanine (and presumably equity) tranches to outside investors while retaining supersenior debt, he exaggerates the credit risk of CRA loans since losses that would occur in the hedge proportion of the portfolio would not be included “net losses” because other investors absorbed the losses instead of BoA. Simple math shows that BoA CRA portfolio only has $18 billion in assets, a relatively small amount for a company that made a $1.5 trillion pledge in CRA loans, even if it sold a large proportion of originated loans to GSEs and other investors.

Regarding the GSEs.Here is something from Dwight Jaffee:

The management of the GSEs were consciously aware of the poor performance of high-risk mortgages in 2004 because of the the substantial defaults in 2001 in the aftermath of the tech-bubble.

I now consider what motivated the GSEs to acquire large portfolios of high-risk mortgages. The managements of the GSEs at the time could, of course, provide an answer, and I recommend that the Commission acquire that information. For the present, I will make the case that GSE management would have believed that a high-risk mortgage portfolio was in the best interests of their shareholders while also satisfying their lower-income housing goals.

I begin by noting two sets of information that the GSE managements would have had
available as they expanded their portfolio of high-risk mortgages starting in, say, 2004. Figure 5 shows the foreclosure rates on different classes of mortgage loans as tabulated by the Mortgage Bankers of America. Standing in 2004, an informed observer would have been well aware of the serious wave of subprime mortgage foreclosures that peaked in 2001 at over 9%, a level reached by subprime mortgages again only in 2008. The 2001 peak in foreclosures was the result of the dot-com recession. The implication is that GSE management would have known by 2004 that loss rates on subprime and similar high-risk mortgages could be an order of magnitude higher than the default rates they normally faced on standard portfolios of prime conforming mortgages.

 

[Black_Rose]

Jaffee’s summary of the profit-driven incentives of the management of the GSEs.

The bottom line is that GSE managers long understood that they and their shareholders
would benefit from risk-taking as long as the higher risks created higher expected returns. To understand the GSE motivation, of course, does not make it right. As noted above, the GSE losses have already cost U.S. taxpayers $111 billion, and the ultimate cost could very well be double or even quadruple that amount. In my view, the GSEs’ high-risk mortgage investments reflect truly unacceptable decisions by the managers of large financial firms with a public mission to stabilize mortgage markets, with government in their status, and with almost unlimited access to low-cost funding based on an implicit guarantee of government support. While we might hope to receive much more responsible behavior from such managers, I fear this is the inevitable result of combining a public mission with private profit incentives.

The fundamental GSE disposition toward risk-taking also sheds light on the convenient complementarity that might allow high-risk mortgages to satisfy both the GSEs’ profit motives and their Congressional and regulator-imposed housing goals to acquire lower-income mortgages. Indeed, if the same loans literally satisfy both factors— profitable risk-taking and lower-income housing goals—then the two factors will be observationally equivalent: empirical observations will be unable to distinguish them.

That the GSE housing goals are consistent with high-risk mortgage activity, however, does
not imply that the housing goals caused the GSEs’ high-risk activity. Indeed, several factors lead me to the view that the** housing goals were a distinctly secondary priority for GSE management compared to profits as a factor motivating their investments in high-risk mortgages**:

• The GSEs failed to meet their housing goals at several points between 2005 and 2008, and without any significant repercussions from their regulators; see Federal Housing Finance Agency (2010).

• The computations carried out by regulators for setting the goals explicitly exclude the riskiest categories of subprime mortgages; see Federal Housing Finance Agency (2010).

• The consensus of the academic literature is that the affordable housing goals have not
  substantially increased homeownership among lower-income families. A key factor is that
  the GSEs appear to have “cherry-picked” only the highest quality qualifying loans, loans that would have been made by other lenders in any case. See Jaffee and Quigley (2007) for further discussion and citations to the academic literature/

In conclusion, I do not consider the GSE housing goals for lending to lower-income
households and in lower-income regions to have been a primary factor motivating the GSE
investments in high-risk mortgages. However, I recommend further research to determine which GSE high-risk mortgage features created the highest default propensities, and whether these features are also a common component of the GSEs’ housing-goals-eligible mortgages.

Jaffe notes that the GSEs “cherry-picked” only the highest quality qualifying loans”. I suppose one can argue that GSEs contributed to the housing bubble in another way: crowding out other lenders of capital, making it difficult for those lenders to originate high-quality loans. Because that niche is already crowded, private investors have to occupy a new niche were they offer more innovative loans.

 

[Black_Rose]

Geo…

So how much of the financial crisis would you attribute to the CRA? I expect a rather qualitative response or quantitative one with one significant figure (like 10%, 30%.) I might be willing to concede that it did exacerbate it bit, but the proposition that it is a necessary cause or a substantial contributor to financial crisis seems rather dubious. In other words, I am saying that it might have made a minor contribution, but I will not say it had a profound impact or enabled the mortgage crisis.

I will proffer Barry Ritholtz list of causes of the mortgage crisis (not that agree with him) as an example:

I don’t mean a soft, squishy, this influenced that who then influenced that guy; I mean a hard list, from most at fault to the least, numbered from 1-20. When you think about all of the moving pieces, and start to assess blame both in absolute and relative terms, the actual blame of real bad guys becomes more obvious.

In Bailout Nation (Chapter 19), my list went something like this:

1. Federal Reserve Chairman Alan Greenspan
2. The Federal Reserve (in its role of setting monetary policy)
3. Senator Phil Gramm
4-6. Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings (rating agencies)
7. The Securities and Exchange Commission (SEC)
8-9. Mortgage originators and lending banks
10. Congress
11. The Federal Reserve again (in its role as bank regulator)
12. Borrowers and home buyers
13-17.  The five biggest Wall Street firms (Bear Stearns, Lehman Brothers, Merrill Lynch,Morgan Stanley, and Goldman Sachs) and their CEOs
18.  President George W. Bush
19. President Bill Clinton
20. President Ronald Reagan
21-22. Treasury Secretary Henry Paulson
23-24. Treasury Secretaries Robert Rubin and Lawrence Summers
25. FOMC Chief Ben Bernanke
26. Mortgage brokers
27. Appraisers (the dishonest ones)
28.  Collateralized debt obligation (CDO) managers (who produced the junk)
29. Institutional investors (pensions, insurance firms, banks, etc.) for
buying the junk
30-31. Office of the Comptroller of the Currency (OCC); Office of Thrift
Supervision (OTS)
32. State regulatory agencies
33. Structured investment vehicles (SIVs)/hedge funds for buying the junk

Several names were omitted for reasons of avoiding repetition: CEOs of major banks and investment firms, the Crony Boards, the AWOL Mutual funds. While the the list in chapter 19 is somewhat incomplete, the book as whole is not.

ritholtz.com/blog/2009/06/who-is-to-blame-1-25/

Of course, Ritholtz list are not composed on independent factors. For example, Moody’s, S&P, and Fitch (4-6) enabled institutional investors and hedge funds (29 and 33) of buying mortgage backed securities.

As for me, I would primarily blame general geopolitical trends, such as the hegemony of neoliberal globalization and the triumph of deregulated finance capitalism, not particular people. (Ritholtz’ list captures the latter but not the former.) But Ritholtz list seems fairly accurate to me, and I have no compelling reason to change the rankings or certain people/factors on their culpability or insert or omit anything in this list. I will offer only one criticism for the list, that the term “Congress” is rather ambiguous because it do not know what session(s) it refers to.

I close with some pithy wisdom from Henry CK Liu.

By the next expansion, Greenspan meant the next bubble which manifested itself in housing. The mitigating policy was a massive injection of liquidity into the banking system.** There is a structural reason why the housing bubble replaced the high-tech bubble. Houses cannot be imported like manufactured goods, although much of the content in houses, such as furniture, hardware, windows, kitchen equipment and bath fixtures are mostly manufactured overseas.** Yet construction jobs cannot be outsourced overseas to take advantage of wage arbitrage. Instead, some of non-skilled jobs are filled by low-waged illegal immigrants.

henryckliu.com/page14.html (written in 2005

The rise of prices is the quickest way to improve the state of credit. Prices in general are mostly determined by wholesale transactions which are commonly not cash transactions, but bill transactions. Years of improving credit, if there be no disturbing causes, are years of rising prices, and years of decaying credit, years of falling prices. Deflation is the deadly enemy of outstanding debt. In the US, when house prices have generally tripled in less than a decade, it is evidence that the value of the dollar has decline by a factor of three in the same time period. Consumer prices have not risen by the same amount because of outsourcing of manufacturing to low-wage economies overseas also acts as a depressant on domestic wages. Imbalance in the economy appears if wages and earnings have not risen proportional to prices. ** A homeowner whose house has increased 300% in market price while his income has risen only 30% has not become richer. He has become a victim of uneven inflation. He may enjoy a one time joy ride with cash-out financing with a new mortgage, but his income cannot sustain the new mortgage payments if interest rates rise and he will lose his home. And interest rates will rise if his income increases because that is how the Fed defines inflation. Thus when his income rises, the market price of his home will fall, giving him an incentive to walk away from a big mortgage in which he has little equity tie-up.** This can become a systemic problem for the mortgage-backed security sector.

)
henryckliu.com/page17.html

 

[Abu]

Cricket123
#531: before any of these government agencies or regulations, Wall Street, through deliberately manipulated speculation, drove the country into the Great Depression.

False.
Unlike the sharp depression of 1920-21 which was sensibly handled, the Great Depression was caused by pumping money into the economy.
Alan Greenspan has highlighted the “excess credit which the Fed pumped into the economy," resulting, finally, in an American economic collapse. The collapse of which Greenspan wrote of was, of course, the Great Depression beginning in 1929 and extending, mostly, until 1941. This judgment which Greenspan makes about the “excess credit” that directly brought about the Great Depression was made in a 1966 article in Ayn Rand’s Objectivist magazine and subsequently republished in Rand’s Capitalism: The Unknown Ideal.[2]
[2] Alan Greenspan, “Gold and Economic Freedom” in Ayn Rand’s Capitalism: The Unknown Ideal (New York: Penguin, 1987), pp. 20ff.

As Federal Reserve chairman between 1987 and 2006, Greenspan acted even more irresponsibly than the Fed officials he was criticizing. Rather than, “sopping up the excess reserves,” Greenspan added even more, transforming a stock market bubble into a housing and consumer spending bubble of historic and unprecedented proportions.[3]
[3] Peter Schiff, *Crash Proof: How to Profit from the Coming Economic Collapse *(Hoboken, NJ: John Wiley & Sons, Inc., 2007), pp. xiii-xiv.
[From Peter Chojnowski, Ph.D].

illmatic
#539: Consider socialism on its own merits. THERE IS NO PROBLEM. THERE IS NO CONFLICT. Christ’s teachings of equality, mutual love, disregard for wealth etc. are closer to socialism than anything else.

Christ’s Church condemns socialism with good reason and as a self-styled Catholic you should know that (see post #148). The Christ praises the creation of wealth and the wise use of wealth, not the disregard of wealth. (see post #128). It is the creation of wealth through the utilisation of the economic laws of the Catholic Late Scholastics that has enabled untold millions to participate in wealth creation and escape from dire poverty.

 

[Sandy_Kay]

So if you have private health insurance you are paying for someones claims if you never use it.
Your car insurance is the same if you never use it, you have supplied the money to pay for others claims.
Now you have the government tax you and it is stealing…what nonsense.

A government has the right to tax it’s people to cover the government’s expences. Part of a good governments expences should be to meet the basic needs of the poor. There is a vast difference between meeting the needs of the poor and the redistribution of wealth that socialism calls for. No person or government has the right to determine how much people are entitled to have, how rich they are entitled to be. Doing so is stealing! Desiring to do so is class envy!

 

[Cricket123]

Pulling back a little? - You have been claiming alll along that the federal government has the responsibility to intervene on many issues as constituted through “promoting the general welfare”.

No. I will post my reply to this next.

I’ll take the popes comments on general thought and principle, but he has no more weight with economics than physics.

This is completely untrue. There is no morality of physics. Every economic decision has a moral component.

And the principle of subsidiarity doesn’t work that way. The point of subsidiarity is to lay responsibility where it actually belongs. Whether it is met or not is a different story all together. That’s like saying that because the banks can’t fulfill their responsible we have an obligation to bail them out. You were against the bailout were’nt you? Didn’t the bailouts only reward failure of responsibility? Be consistent. If a community fails to fulfill its responsibilities should we reward them by doing it for them? What about the burden we place on others for their stupidity? Even then, subsidiarity would demand that those closest to the failure exhaust their charity to help those affected out before it goes any further. It’s arguable though(especially in our society) that depending upon the situation whether help should be given in the first place.

The banks did not fail in their financial obligations. They did exactly what they meant to do; they made a select group of their owners very rich. They failed in their moral obligations, thus these belong to a higher authority. To paraphrase Pius XI , the role of a higher authority is to support the lower: directing, watching, urging, restraining. Subsidiarity demands far greater regulation of the banks, not a bailout.

Subsidiarity is not a simple issue. Where responsibility lies is not always clear. The Church has given us no rules for this because there can be none - each case must be considered in its full context. Even then, what is an appropriate subsidiary relationship in one context may be inappropriate in another.

Subsidiarity can be quite slippery when you try to pin it down. The EU lifted the principle directly from Catholic doctrine in their formative Treaty of Maastricht, yet they’re having the devil of a time trying to codify it and determine how it ought to be applied.

I will answer your question now. For the benefit of anyone picking up the thread at this point, my original contention was this: The Church defines socialism very specifically; the popular press defines socialism very broadly. Everything condemned by the popular press as socialism is not necessarily condemned by the Church.

My specific example was single-payer health care. Following is my defense of why single-payer health care is in keeping with Catholic doctrine. It may not be the only solution. It may not be the best solution. But it does not contradict the teaching of the Church.

I doubt, Geowitz, that I will ever defend this point of view to your satisfaction. Even so, your question was worthwhile, as it prompted me to see if I could even defend it to my own. Yours in Christ, Cricket

 

[Cricket123]

All technological advances have moral implications. The atomic bomb has led us to question whether such a weapon can ever truly be used in justice. Yet even apparent blessings should also be examined in this light. Developments in medicine demand that we ask similar questions. Should these be considered private property, for the profit and benefit of a select few? Or are they gifts of God intended for all humanity?

If we are to speak of human rights, we must necessarily speak universally. It reduces the concept to nonsense if human rights depend upon nationality or state in life. Is medical care a universal human right? Blessed John XXIII is clear on this point:

“But first We must speak of man’s rights. Man has the right to live. He has the right to bodily integrity and to the means necessary for the proper development of life, particularly food, clothing, shelter, medical care, rest, and, finally, the necessary social services. In consequence, he has the right to be looked after in the event of ill health; disability stemming from his work; widowhood; old age; enforced unemployment; or whenever through no fault of his own he is deprived of the means of livelihood.” - Pacem In Terris 11 (cf. CCC 2211)

If medical care is then a universal human right, we have an obligation in justice to promote it.

Until recently, medical care was quite limited; a doctor had recourse to first aid, amputation, and a limited number of remedies. The essential relationship was between doctor and patient. Care of the sick was largely limited to what we would call palliative care, and could be done at home or in hospital. The hospital itself was a place to go to be sick, not necessarily to get well.

Technological advances have changed this. Medical care has become increasingly specialized. Drugs, diagnostic tools, surgical techniques - all have become increasingly complex and increasingly expensive. This has given rise to the modern hospital, as well as all manner of intermediary institutions. In our day, medical care has become far more than a simple transaction between doctor and patient. In addition, we have changed the primary goal of medicine from caring for the sick to healing the sick. Truly this is a blessing. Yet if medical care is a right, as Blessed John XXIII taught, then these advances must be shared, in justice, with all humanity.

How do we promote this right in society? What social structure is proper to this end? The principle of subsidiarity holds that nothing should be done by a larger and more complex organization which can be done as well by a smaller and simpler organization. Yet the Church has given us no rules for deciding which functions are proper to a given social institution. In complex situations, how do we measure subsidiarity?

Again, Blessed John XXIII gives us one example:

“In our own day, however, mutual relationships between States have undergone a far reaching change. On the one hand, the universal common good gives rise to problems of the utmost gravity, complexity and urgency—especially as regards the preservation of the security and peace of the whole world. On the other hand, the rulers of individual nations, being all on an equal footing, largely fail in their efforts to achieve this, however much they multiply their meetings and their endeavors to discover more fitting instruments of justice. And this is no reflection on their sincerity and enterprise. It is merely that their authority is not sufficiently influential.

We are thus driven to the conclusion that the shape and structure of political life in the modern world, and the influence exercised by public authority in all the nations of the world are unequal to the task of promoting the common good of all peoples.” Pacem In Terris 134-135

He sees the inability of the separate nations to promote the common good as evidence of their insufficient authority to do so, and calls for the United Nations to be given real authority to effect reforms. (cf. Caritas in Veritate 67) He then continues:

“Now, if one considers carefully the inner significance of the common good on the one hand, and the nature and function of public authority on the other, one cannot fail to see that there is an intrinsic connection between them. Public authority, as the means of promoting the common good in civil society, is a postulate of the moral order. But the moral order likewise requires that this authority be effective in attaining its end.” Pacem In Terris 136

We see here a way to take the measure of subsidiarity in a complex social interaction. Though subsidiarity demands that nothing should be done by a larger organization that can be done as well by a smaller organization, it does not expect any organization to act beyond its proper competence. If a public authority is not effective in attaining its end, we must consider whether this action properly belongs to a higher order.

The case of universal medical care in the United States is analogous. Many other nations have been able to achieve this, yet we seem to fail in our attempts. In one sense, we are a single country; in another, we are a union of separate states with a complex web of often conflicting interests. We are separate states, yet we have delegated powers to the federal government. We are not 50 independent nations. Our inability to provide for this universal human right shows that our current structures are unequal to the task and thus a higher authority is needed.

(continued)

 

[Cricket123]

If this is indeed the case, the obvious higher authority is the federal government. The Canadian model of single-payer medical care shows one way this problem could be solved. The role of a higher authority is to support the lower levels without usurping their proper functions. The Canadian model fits this description. The central government supports the provinces by financing and regulating medical care. However, the system is administrated at the provincial level with variations peculiar to each province. While hospitals are public institutions, there is a significant role for the private sector. Private insurance also has a limited role. Even so, the essential relationship of doctor and patient is preserved; care itself is provided in a human context, close to the need. The government facilitates this by subsidizing the cost and ensuring medical care for all citizens. The subsidiary relationship clearly exists, each level supports the others within its appropriate sphere of action.

Is this socialism? No. Canadian medical care is socialized, it is not socialist. (cf. CCC 1882-1886) As Pope Pius XI wrote:

“… if the class struggle abstains from enmities and mutual hatred, it gradually changes into an honest discussion of differences founded on a desire for justice, and if this is not that blessed social peace which we all seek, it can and ought to be the point of departure from which to move forward to the mutual cooperation of the Industries and Professions. So also the war declared on private ownership, more and more abated, is being so restricted that now, finally, not the possession itself of the means of production is attacked but rather a kind of sovereignty over society which ownership has, contrary to all right, seized and usurped. For such sovereignty belongs in reality not to owners but to the public authority. If the foregoing happens, it can come even to the point that imperceptibly these ideas of the more moderate socialism will no longer differ from the desires and demands of those who are striving to remold human society on the basis of Christian principles. For certain kinds of property, it is rightly contended, ought to be reserved to the State since they carry with them a dominating power so great that cannot without danger to the general welfare be entrusted to private individuals.

Such just demands and desire have nothing in them now which is inconsistent with Christian truth, and much less are they special to Socialism. Those who work solely toward such ends have, therefore, no reason to become socialists.”

Quadragesimo Anno 114-115

Single-payer medical care does not imply class struggle; it provides for a universal human right. Human rights belong to rich and poor alike. Neither does it call for abolition of private property, but rather its just regulation. Thus, it is not socialism.

Is this government mandated charity? No. The Church teaches that medical care is a universal human right. Providing it is a measure of justice, not charity. I may freely give you a gift, in charity, to provide for your needs, but I cannot make you a gift of your rights. These are already yours: a gift from God. They can only be provided for in justice.

Is this the Welfare State? No. Universal medical care does not diminish our call to personal charity. Poverty exists everywhere, regardless of the state of medical care. Universal medical care does not provide for every human need. It provides a structure that harmonizes a variety of social interests, promotes the common good, and guarantees a fundamental human right.

Is the taxation required an unjust infringement on private property? No. Again, from Pope Pius XI:

“… the wise Pontiff [Leo XIII] declared that it is grossly unjust for a State to exhaust private wealth through the weight of imposts and taxes. “For since the right of possessing goods privately has been conferred not by man’s law, but by nature, public authority cannot abolish it, but can only control its exercise and bring it into conformity with the common weal.” Yet when the State brings private ownership into harmony with the needs of the common good, it does not commit a hostile act against private owners but rather does them a friendly service; for it thereby effectively prevents the private possession of goods, which the Author of nature in His most wise providence ordained for the support of human life, from causing intolerable evils and thus rushing to its own destruction; it does not destroy private possessions, but safeguards them; and it does not weaken private property rights, but strengthens them.

Quadragesimo Anno 49

Furthermore, it is not obvious that further taxation would strictly be necessary. This end could well be accomplished by reexamining our priorities within current revenues: that is, if we were willing to spend more on the preservation of life and less on its destruction.

(continued)

 

[Cricket123]

Is this Constitutional? This question, though important, is secondary. The United States Constitution, for all its merits, is clearly the laws of men. Few would argue that man has no inalienable rights. Even so, in composing the Bill of Rights, Madison himself feared that enumerating some rights would imply the absence of others. If medical care is a universal human right, as the Church teaches it is; and if the federal government is, in fact, necessary to promote this right; then the Constitution has no legitimate authority to legislate against it. In this case, either the Constitution must be interpreted more broadly, or it contains an inherent injustice which must be addressed.

We have left aside, for the moment, the necessity of sharing our medical advances with all humanity. While this must be our ultimate goal, we should begin by providing universal medical care to our own citizens. Is the Canadian single-payer model the best possible system of universal medical care for the United States? While I believe so, this is debatable. However, there is nothing in such a system that violates Christian truth, and therefore, it is consistent with the teaching of the Church.

 

[Cricket123]

Christ praises the creation of wealth and the wise use of wealth, not the disregard of wealth.

From yesterday’s readings:

Hear this, you who trample upon the needy
and destroy the poor of the land!
“When will the new moon be over,” you ask,
“that we may sell our grain,
and the sabbath, that we may display the wheat?
We will diminish the ephah,
add to the shekel,
and fix our scales for cheating!
We will buy the lowly for silver,
and the poor for a pair of sandals;
even the refuse of the wheat we will sell!”
The LORD has sworn by the pride of Jacob:
Never will I forget a thing they have done!

Amos 8: 4-7

No servant can serve two masters.
He will either hate one and love the other,
or be devoted to one and despise the other.
You cannot serve both God and mammon.

Luke 16:13

Amos just loves that free market, doesn’t he? I’m kind of missing Christ’s pro-business message, too. Maybe in Matthew?

Do not store up for yourselves treasures on earth, where moth and decay destroy, and thieves break in and steal. But store up treasures in heaven, where neither moth nor decay destroys, nor thieves break in and steal. For where your treasure is, there also will your heart be. "The lamp of the body is the eye. If your eye is sound, your whole body will be filled with light; but if your eye is bad, your whole body will be in darkness. And if the light in you is darkness, how great will the darkness be. “No one can serve two masters. He will either hate one and love the other, or be devoted to one and despise the other. You cannot serve God and mammon.”

Matthew 6: 19-24

I don’t know. I just don’t see it. Maybe it’s me?

 

[Abu]

Cricket123
I don’t know. I just don’t see it. Maybe it’s me?

You’ll never see it until you take off the blinkers.
I was privileged to be the Reader at Mass for Amos on Sunday. Against the confused and misled, it is wise to examine Christ’s teaching on using our talents, and on wealth.

Facing Reality
Christ’s teaching on wealth and property
In his outstanding work Christians For Freedom, Ignatius 1986, p 43-47, (with a new edition, since), Dr Alejandro Chafuen has examined carefully the teaching of Christ and wealth. Citing the case of the rich young man in Luke 18:18-25, Dr Chafuen remarks that many authors think that Jesus was condemning the possession of riches, but “the Late Scholastics indicated that this was not the correct interpretation. Citing Luke 14:26, where Jesus says, ‘If any man come to Me without hating his father, mother, wife, children, brothers, sisters, yes and his own life too, he cannot be My disciple,’ the Scholastics pointed out that this passage does not enjoin Christians to hate their fathers. Such doctrine would contradict the Fourth Commandment. Thomist and Scholastic interpretations of this passage is that the entrance to the kingdom of Heaven is denied to anyone who values things more than God. In Matthew’s Gospel (10:37), the same passage reads: ‘Anyone who prefers father or mother to Me is not worthy of Me. Anyone who prefers son or daughter to Me is not worthy of Me.’ It would be a violation of the natural order to value a created thing above its creator, as did the young ruler who pursued riches as his ultimate goal.

“As is indicated in Luke (12:29-31): ‘you must not set your heart on things to eat and things to drink; nor must you worry. It is the pagans of this world who set their hearts on all these things. Your father well knows you need them. No; set your hearts on His kingdom, and these other things will be given you as well.’ Dr Chafuen notes that “many people close to Jesus were quite wealthy for their times. Joseph seems to have had his own business and perhaps a donkey; Peter owned a fishing boat, and Matthew was a tax collector. Jesus praised the rich man Zaccheus. It was the wealthy Joseph of Arimathea who kept faith even when the Apostles were beset by doubt (Mt 27:57). Jesus does not condemn the possession of riches but, rather disordered attachment to them.” Notice also that Jesus did not ask His Apostles to renounce their property.

In the Parable of the Talents, Jesus Christ, God the Son, lauds the servant who has multiplied talents – “For to everyone who has, more will be given, and he will have abundance; but from him who does not have, even what he has will be taken away. And cast the unprofitable servant into the outer darkness. There will be weeping and gnashing of teeth.” (Mt 25: 14-30).

In the Parable of the Talents, Jesus is teaching that the true servant must be faithful, prudent and industrious. Of the three, two doubled the master’s money after some considerable time, while the third servant only buries the money and throws the responsibility on the master, very much like some on this DB who fault “capitalists” for everything – as the master has no share in the operations but expects a profit. The master unmasks the charade to uncover the true motive for the third’s conduct – sloth. The faithful servants are well-rewarded by being faithful, prudent and industrious with the master’s money. “For to everyone who has, more will be given, and he will have abundance; but from him who does not have, even what he has will be taken away. And cast the unprofitable servant into the outer darkness. There will be weeping and gnashing of teeth.” (Mt 25: 14-30).
The parable primarily teaches that God’s gifts, of nature and especially of grace, are held in stewardship and must not be allowed to lie idle. They are to be used to further His kingdom.
[See *A Catholic Commentary on Holy Scripture, Ed. Dom Bernard Orchard, Thomas Nelson & Sons, 1951].

The Medieval Schoolmen who preferred to be called the “Doctors”, “were the foremost thinkers of their times.” (Chafuen p 21). They employed logic and reasoning for the development of mankind. Chafuen incisively points out: “The Doctors offered utilitarian arguments to show that goods that are privately owned are better used than commonly owned goods. This explanation offers a budding theory of economic development: the division of goods and their ultimate possession by private individuals facilitates increased production.”

Free enterprise is not “greed driven” it is common good driven for the welfare of the greatest number and dependant on consumer satisfaction and competition, dependant on the laws of cause and effect involving God-given reason, and based on a standard social principle of Christ’s Church – subsidiarity

 

[Cricket123]

Free enterprise is not “greed driven” it is common good driven for the welfare of the greatest number and dependant on consumer satisfaction and competition…

Perhaps in an ideal world this would be so. But, as you mentioned in a previous post, fallen human nature is real. If you believe that an unregulated (or barely regulated) market would produce such a result, you are living in as much of a fantasy world as those who call for a classless society.

The market as it is portrayed in Amos is the end result of that sort of “freedom.” Fallen human nature, remember?

It is true that Jesus does not condemn the possession of riches but, rather disordered attachment to them. However, this disordered attachment is the reality of the world and is what the social teaching of the Church is intended to counteract. For example, the Church is very clear on what constitutes a just wage, and goes even further to say that “…agreement between the parties is not sufficient to justify morally the amount to be received in wages.” (CCC 2434)

Good luck reconciling teachings like that with your vision of a free market. I’m not convinced that I’m the one wearing the blinkers.

 

[Geowitz]

With regard to minutia and the CRA - You only highlight the problem I’ve been trying to highlight all along. It’s so blatantly obvious that a lot of you here can’t see it right in front of you. It’s plain common sense - THERE ARE TOO MANY COOKS IN THE SOUP KITCHEN. I couldn’t care less about you proving there are schrewd practices because they are all allowed to happen through crony capitalism and government intervention. All of our problems here are a result of misplaced effort on governments part. We have a fallen nature, but government is supposed to protect our rights in spite of those who are fallen and would try to take them away, not encourage them! Since we are fallen why would it be good to increase government and our reliance upon “fallen men”? You’ve got it backwards. It is exactly because of our fallen nature that we need limited government. Have you not studied history? More people have been enslaved, kept in poverty, and killed in the wake of government than by any capitalist.

The poor are best served through means that are voluntary and personal. Government and socialism don’t trend that way by any means and in fact coax the trend in the opposite direction.

Let me ask you guys this… How much should I tithe?

10% right? Well, gee if my taxes to government qualify as serving the “poor and disadvantaged” then why should I tithe anything at all if my tax dollars take care of it all? I mean, by your thought process, that’s the purpose of government right?

Black Rose - your psuedo intelectual posts are nauseating… I guess you shut me out. Too bad you’ve missed the entire point of Pinto and I. You want government that governs by control, I want it to govern through freedom.

 

[Sandy_Kay]

From yesterday’s readings:

Hear this, you who trample upon the needy
and destroy the poor of the land!
“When will the new moon be over,” you ask,
“that we may sell our grain,
and the sabbath, that we may display the wheat?
We will diminish the ephah,
add to the shekel,
and fix our scales for cheating!
We will buy the lowly for silver,
and the poor for a pair of sandals;
even the refuse of the wheat we will sell!”
The LORD has sworn by the pride of Jacob:
Never will I forget a thing they have done!

Amos 8: 4-7

No servant can serve two masters.
He will either hate one and love the other,
or be devoted to one and despise the other.
You cannot serve both God and mammon.

Luke 16:13

Amos just loves that free market, doesn’t he? I’m kind of missing Christ’s pro-business message, too. Maybe in Matthew?

Do not store up for yourselves treasures on earth, where moth and decay destroy, and thieves break in and steal. But store up treasures in heaven, where neither moth nor decay destroys, nor thieves break in and steal. For where your treasure is, there also will your heart be. "The lamp of the body is the eye. If your eye is sound, your whole body will be filled with light; but if your eye is bad, your whole body will be in darkness. And if the light in you is darkness, how great will the darkness be. “No one can serve two masters. He will either hate one and love the other, or be devoted to one and despise the other. You cannot serve God and mammon.”

Matthew 6: 19-24

I don’t know. I just don’t see it. Maybe it’s me?

The scriptures don’t condemn those who have money, it condemns thoes who have the inordinate love of money that makes them greedy, uncharitable, cheating liers, theives and robbers. Not all people who have money are like that and even some who don’t have money have an inordintate love of money.

 

[anthony022071]

I am not ignoring your point on subsidiarity. I am saying that, regardless of what proper level of society is suited to implement a policy, Benedict is, in fact, recommending government policies be implemented.

Many government policies to regulate businesses,banks,and to redistribute private income already do exist,as Benedict knows. It was a government policy,the Community Reinvestment Act,that helped to cause the economic crisis,by forcing banks to give loans to people who weren’t able to pay them back. It was done intentionally,to cause banks to become bankrupt and to have the government take them over.

And now the next passage of Caritas in Veritate:

"39. Paul VI in Populorum Progressio called for the creation of a model of market economy capable of including within its range all peoples and not just the better off. He called for efforts to build a more human world for all, a world in which “all will be able to give and receive, without one group making progress at the expense of the other”. In this way he was applying on a global scale the insights and aspirations contained in Rerum Novarum, written when, as a result of the Industrial Revolution, the idea was first proposed — somewhat ahead of its time — that the civil order, for its self-regulation, also needed intervention from the State for purposes of redistribution. Not only is this vision threatened today by the way in which markets and societies are opening up,** but it is evidently insufficient to satisfy the demands of a fully humane economy.**

When both the logic of the market and the logic of the State come to an agreement that each will continue to exercise a monopoly over its respective area of influence, in the long term much is lost:** solidarity in relations between citizens, participation and adherence, actions of gratuitousness, all of which stand in contrast with giving in order to acquire (the logic of exchange) and giving through duty (the logic of public obligation, imposed by State law). In order to defeat underdevelopment, action is required not only on improving exchange-based transactions and implanting public welfare structures, but above all on gradually increasing openness, in a world context, to forms of economic activity marked by quotas of gratuitousness and communion. The exclusively binary model of market-plus-State is corrosive of society, while economic forms based on solidarity, which find their natural home in civil society without being restricted to it, build up society. The market of gratuitousness does not exist, and attitudes of gratuitousness cannot be established by law.** Yet both the market and politics need individuals who are open to reciprocal gift."

Benedict is not rejecting the intervention of government for redistribution of wealth. He has not rejected the logic of public obligation, imposed by State law, or the implanting of public welfare structures. He is calling for these in a wider context of solidarity.

Actually,he is calling for gratuitous giving and communion. Solidarity entails gratuitousness and communion,not government intervention. State law and public welfare structures are not about solidarity.

He also says:

In the face of the unrelenting growth of global interdependence, there is a strongly felt need, even in the midst of a global recession, for a reform of the United Nations Organization, and likewise of economic institutions and international finance, so that the concept of the family of nations can acquire real teeth.

Is this a violation of subsidiarity? No. He says this should be done in keeping with subsidiarity, yet he is clearly calling for a higher authority to remedy the defects of a lower one. So subsidiarity can work both ways - when a lower order of society fails to meet its obligations, perhaps these should be delegated to a higher authority.

That is not what subsidiarity entails. It says that human needs ought to be met at the level nearest to them. It does not suggest that personal and local responsibilites be delegated to a higher authority,but that they must be preserved from interference by a higher authority. If a lower order of society is failing to meet its obligations,then it ought to be morally reformed,not usurped by the government.

See posts my replys to you in posts 523 and 537.

 

[ab75]

For anyone who has 40 minutes to listen to a speech and is interested in this subject, I can’t recommend this highly enough. Father Robert Barron speaking on Catholic Social Teaching in Capitalism, which by necessity also addresses socialism. Very rich with a lot of encyclical support.

wordonfire.org/WOF-Radio/Lectures/Mission-Chicago-2006-Lecture-3-The-Church-s-Soc.aspx

From my perspective, in a purely practical sense, it is only because of the inefficienct action of Christians and our Churches that socialism is considered. If all Christians answered the call to support our extended families and help the poor, we would need very little government social programs, at least in western society.

 

[Black_Rose]

With regard to minutia and the CRA - You only highlight the problem I’ve been trying to highlight all along. It’s so blatantly obvious that a lot of you here can’t see it right in front of you. It’s plain common sense - THERE ARE TOO MANY COOKS IN THE SOUP KITCHEN. I couldn’t care less about you proving there are schrewd practices because they are all allowed to happen through crony capitalism and government intervention.

Who doesn’t deny that there are “THERE ARE TOO MANY COOKS IN THE SOUP KITCHEN” or that government intervention played a role? No, Abu linked to a Free Republic post that said this:

The crisis has its roots in the Community Reinvestment Act of 1977

which implies that it is a predominant factor. But I do believe the evidence conforms to the conclusion of the Federal Reserve Bank of Minneapolis:

In total, of all the higher-priced loans, only 6 percent were extended by CRA-regulated lenders (and their affiliates) to either lower-income borrowers or neighborhoods in the lenders’ CRA assessment areas, which are the local geographies that are the primary focus for CRA evaluation purposes. The small share of subprime lending in 2005 and 2006 that can be linked to the CRA suggests it is very unlikely the CRA could have played a substantial role in the subprime crisis…

Regarding “shrewd practices”, I only pointed out a hedging strategy involving structured finance used by BoA in their mortgage portfolio to mitigate any potential losses. In no way that I implied that BoA’s hedging strategy contributed to the mortgage crisis; I just point out how misleading Pinto was by reporting the total losses of BoA’s mortgage portfolio by neglecting to report that 50% of the portfolio (which does not include any CRA loans) was hedged.

But the large CRA commitments by banking institutions is a moot point because of the disconnect between commitments and actual lending. Also the alleged higher default rate would be irrelevant unless one shows a high volume of CRA lending or that it was a large proportion of all mortgage lending.

10% right? Well, gee if my taxes to government qualify as serving the “poor and disadvantaged” then why should I tithe anything at all if my tax dollars take care of it all? I mean, by your thought process, that’s the purpose of government right?

I guess one could always tithe to pay for the upkeep of the Church, assuming that the state does not fund it. But I could say this, in the Scandinavian countries where church attendance is low and presumably tithing would be low, the poor and disadvantaged are adequately taken care off.

Black Rose - your psuedo intelectual posts are nauseating… I guess you shut me out.

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No, I did not post long enough to actually do that. A single person cannot get “shutout”, though; the “shutout” refers to the inability of the conservative posters to effectively respond to posts taking an opposing point of view.

Too bad you’ve missed the entire point of Pinto and I. You want government that governs by control, I want it to govern through freedom.

What’s the entire point? I missed it Maybe I really am I dumb so I would be incapable comprehending Pinto or you, or that your are very inelegant or strident in your expatiation that it is difficult to understand. But I offered you a chance to list the culpability or contributions of certain parties, institutions, individuals. What would you change in the Ritholtz list so that it is consistent with your political proclivities and the empirical evidence? Where would you insert the CRA so you could make it consistent with the conservative view that it was solely the result of intrusive big government while that profit-driven institutions and financial deregulation did not significantly contribute? As Dwight Jaffee pointed out, the actions of the GSEs can be explained through the confluence of profit-driven incentives along with its public mission of providing affordable housing.

In Bailout Nation (Chapter 19), my list went something like this:

1. Federal Reserve Chairman Alan Greenspan
2. The Federal Reserve (in its role of setting monetary policy)
3. Senator Phil Gramm
   4-6. Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings (rating agencies)
4. The Securities and Exchange Commission (SEC)
   8-9. Mortgage originators and lending banks
5. Congress
6. The Federal Reserve again (in its role as bank regulator)
7. Borrowers and home buyers
   13-17. The five biggest Wall Street firms (Bear Stearns, Lehman Brothers, Merrill Lynch,Morgan Stanley, and Goldman Sachs) and their CEOs
8. President George W. Bush
9. President Bill Clinton
10. President Ronald Reagan
    21-22. Treasury Secretary Henry Paulson
    23-24. Treasury Secretaries Robert Rubin and Lawrence Summers
11. FOMC Chief Ben Bernanke
12. Mortgage brokers
13. Appraisers (the dishonest ones)
14. Collateralized debt obligation (CDO) managers (who produced the junk)
15. Institutional investors (pensions, insurance firms, banks, etc.) for
    buying the junk
    30-31. Office of the Comptroller of the Currency (OCC); Office of Thrift
    Supervision (OTS)
16. State regulatory agencies
17. Structured investment vehicles (SIVs)/hedge funds for buying the junk

Several names were omitted for reasons of avoiding repetition: CEOs of major banks and investment firms, the Crony Boards, the AWOL Mutual funds. While the the list in chapter 19 is somewhat incomplete, the book as whole is not.