Friday, April 22, 2011

Earth Day and Good Friday

By happenstance, Earth Day and Good Friday fall on the same day, which causes us to reflect on the possible connections between them. On Earth Day we are asked to reflect on the fate of the planet that sustains us and on Good Friday we are reminded on the extent of God the creator's love for us, "Greater love has no man than this, that a man lay down his life for his friends" (John 15:13). Good Friday can be seen as the culmination of the gift of creation.

Thus it is natural that we connect Genesis with Holy Week, as the beginning of any story is only understood when we fully know the plot and the ending. As economist using CST, we can also see the two days as linking God's creation in Genesis, especially His creation of us in His image and likeness (Imago dei), imparting each of us with that dignity that comes from being a child of God and which no person or collective has authority to take away, with the responsibility that goes with that right, ie the responsibility to be good stewards of God's gift of creation. The Imago dei only becomes truly understandable through the incarnation when God becomes human and teaches us how we are called to live, imparting a deeper meaning to all human activities.

In CST rights and responsibilities are always linked, and this is a perfect example. The Imago dei also provides the perspective of how we need to approach issues of sustainable development, so that it is always human development that needs promotion as an end, and everything else we promote needs to be a means to that end. Our environmental policies must always be human centered, aiming at authentic human development. Human development is the goal, and it is the best means of promoting sustainable development. Keeping always in mind that union with God is our final goal, our ultimate happiness, our return to whence we came, the many leading to the one (you can never have enough references to the late Great Norris Clark).

Below is a speech I had the honor or presenting at the United Nations on sustainable development, which makes the connection between how we view what it means to be human to the issue of sustainable development. Our view of the human person is key to all social analysis and it is one of the great insights CST provides.

I wish all a happy Easter.

As a side note, the Chairperson introdued me as "The representative of the Holy Spirit" He meant Holy See, but I was happy with the promotion :).

Mr. Chairman,

At the outset my delegation expresses its gratitude for the invitation extended to the Holy See to participate in this PrepCom, as it did exactly twenty years ago during the fourth PrepCom in March 1992 just before the Rio Conference where we agreed that the human beings are at the center of our concern.

The promotion of sustainable development is one of the most important challenges humanity faces today. As the main forum for dialogue on global issues, the United Nations as the “Family of Nations” will necessarily serve a key role in promoting international cooperation towards this goal. These preparatory meetings will provide a useful opportunity for Governments and civil society to discuss how the international community can best achieve sustainable development and poverty eradication. My delegation hopes that this second round of preparatory meetings for the Rio+20 Conference on Sustainable Development will be successful, trusts that all concerns will be heard and addressed in mutual respect and in a spirit of goodwill, and proposes its own small contribution in this same spirit. Above all, we must acknowledge that the human beings must remain the center of our focus and basis of our actions for sustainable development.

While many have suggested that this committee should focus exclusively on “strategies” and “best practices” and avoid “theoretical debates,” in the view of my delegation it would be helpful to restate the principles that need to guide development strategies and policies lest our efforts create policies that could be harmful. This is particularly the case when we are considering concepts such as the proposed adoption of the theme of “green economy” as the Committee’s Report recommends. In pursuing the goal of “Green Economy in the context of sustainable development and poverty eradication” (GESDPE), my delegation hopes that we would not forget that the purpose of development is integral human development and that all our strategies and practices must be judged by this standard — for the human beings are and must remain at the center of our concern.

Many years ahead of the Earth Summit, the Holy See called for a new perspective on development that promotes the “authentic human development” of all persons and the whole person. This vision of development is not in opposition to economic growth and progress; instead, it is a recognition that economic growth, whether it is driven by markets or driven by States, will not necessarily promote the kind of development that is worthy of humans. Promoting economic development should not be at the expense of the poor and marginalized or of future generations, which is often qualified as “inter-generational engagement and justice”.

The well-being of all, and especially those who live with the pains of hunger and who are excluded from contributing to and benefiting from the economic, social and political life of their communities, requires that both markets and government policies be directed towards the higher goal of integral human development, grounded in the principle of the fundamental human dignity of each person. With them, it is our solemn obligation to remain in solidarity. We all must work together to ensure that this is incorporated into the goal of sustainable development and the concept of the “green economy.”

Most of the development strategies and policies that have failed to promote integral human development in the past have done so because they reduced humans to a shadow of their humanity. On the one hand we are told that self-interest and greed are the sole drivers of human behavior, and that “free markets” are all that is needed to turn “private vice into public virtue.” On the other hand we are told that human nature is what society makes it, giving us a development strategy that centers on structures and institutions, with the hope that the right institutions will be enough to promote development. Each view has part of the truth: humans often are driven by self-interest and social institutions do greatly shape human attitudes and actions, markets and government policy both have potential to promote the common good. But humanity cannot be reduced to either selfish egos or social constructs. A full understanding of what it means to be human must also include the basic solidarity that is a necessary part of our humanity, that comports to the fundamental dignity of each person and that demands justice. Just as we need to improve the functioning of markets and the effectiveness of government policy, we must also work to promote solidarity and social justice.

Real development will not and cannot be produced by changes in structures or market incentives alone. Of equal importance is the required change of hearts and minds as well as our subsequent action. Benedict XVI wrote: “integral human development is primarily a vocation” (Caritas in veritate, 11), for development to be meaningful and sustainable it has to be human development, the development of each human in the totality of their humanity, directed towards the common good. If our view of the Green Economy in the context of Sustainable Development and Poverty Eradication (GESDPE) is based on either of the two narrow views of personhood, then the strategies developed will center only on “structural and technological changes in the institutions” and will in the end fail to promote authentic human development. Structural and technological changes will only promote real development if they are used to help people become more human. When they do not promote human development they risk becoming tools of social control and exclusion. The economy needs objective moral formation in order to function correctly -- not any ethics whatsoever, but a moral formation which is people-centered” (CV 45).

An economy grounded in a people-centered ethics and morality will necessarily promote the goals of GESDPE, for it will promote both the care of humans and the care of creation. Such an approach must recognize that the economy starts with several vital gifts: first, the gift of creation to all humans and, second, the sharing of that gift between humans. An economy not grounded in a people-centered ethics and morality will undoubtedly instrumentalize the goods of the earth for the benefit of the rich and powerful. It will turn social and environmental indicators, which can be valuable tools for helping to promote authentic human development, into statistical fixations and false goals that give the appearance of progress without producing the reality of true progress.

Or worse, they can become excuses for sacrificing human rights and assaulting human dignity, all for a distorted view of the common good. If humans in their full humanity are not viewed as the ultimate goal of development as was agreed in Rio twenty years ago, then we fear that humans will be seen by many as the primary barrier to development and we can be certain which humans these will be: the poor; the marginalized; the inconvenient; those yet to be born and those who due to age, disability or illness cannot defend themselves.

My delegation hopes that this Committee work will set the stage for a re-commitment to sustainable development at Rio+20. It may be a coincidence that this important conference corresponds to the 45th anniversary of the late Pope Paul VI’s landmark encyclical “Populorum Progessio” (Development of Peoples), considered the magna carta of development. We hope that it will also become a clarion call to people of goodwill for an integral human development that will form the foundation for peace, founded on social justice and animated by solidarity.

Thank you, Mr. Chairman

Thursday, April 21, 2011

Preferential Option for the Poor

A major theme in Catholic Social Teaching is the preferential option for the poor. In its simplest this means giving of one's time, talent, and treasure to those with the greatest and most basic human needs. Usually this means the hungry, homeless, and ill members of our society. Most often people picture the citizens of Africa, Central America, or Southeast Asia for one can certainly find the hungry, homeless, and ill prevalent in these places, but our Bishops remind us constantly that the poorest, most defenseless members of our society are also in our own backyard. They are the unborn:
Abortion and euthanasia have become preeminent threats to human dignity because they directly attack life itself, the most fundamental human good and the condition for all others. They are committed against those who are weakest and most defenseless, those who are genuinely "the poorest of the poor." -- U.S. Bishops, Living the Gospel of Life

Our desire to help the poor should culminate in demanding the eradication of abortion and euthanasia from our society. None of the poor should be neglected, but the poorest must come first. Any violation against the most primary right to life must command our attention before all other violations.

The State has an important role to play:
Laws which authorize and promote abortion and euthanasia are therefore radically opposed not only to the good of the individual but also to the common good; as such they are completely lacking in authentic juridical validity. Disregard for the right to life, precisely because it leads to the killing of the person whom society exists to serve, is what most directly conflicts with the possibility of achieving the common good. Consequently, a civil law authorizing abortion or euthanasia ceases by that very fact to be a true, morally binding civil law." -- John Paul II, The Gospel of Life, emphasis added

But this means more than policy changes. Anyone can observe that making something illegal does not make it go away. We must reach out to our neighbors and establish relationships with each other. The poor must be given proper care and just means of subsistence to not feel as though abortion is the only option. The greatest contributors to abortion, poverty and sexual immorality, must be fought with charity, education, and justice.

As Charley Clark wrote in the previous post, "The main mission of the Church in politics is to get voters and legislators to see everyone as a person with dignity, a child of God, and to call for justice and charity from the system and from individuals." But also that the Church is primarily "in the changing of hearts business." When it comes to abortion, people need more than anything else a change of hearts and minds. It is our responsibility to care for the poor and those considering abortion, to show them charity and love, to let them know that they are not alone, and to be there for them when times are tough. It also means not condemning those who are considering an abortion or who have even had one, but reaching out to them and showing them the love and mercy that Christ shows us.

We can do much more as individuals by volunteering, tithing, showing concern for others even if they're complete strangers, etc.

Jesus put it simply when he said 'Amen, I say to you, whatever you did for one of these least brothers of mine, you did for me.'

Wednesday, April 20, 2011

CST calls for realism in economic analysis

A few years ago I participated in a two day dialogue between Catholic social thought and Henry George (the followers of Henry George). Among the many issues the Georgist could not come to terms with was the assertion that Catholic social thought is not an alternative economic model or policy. In many ways CST is the exact opposite of Henry George in that George had a policy (single tax) and then developed an economics to explain and justify it, and his followers seemed to be developing further the philosophical foundations upon which this economic theory is based, whereas CST is a philosophical foundation for social analysis, but by its very nature, it does not and cannot provide the Catholic model or policy that is good at all times and places. Remember, CST is part of a 2000 year tradition of commenting on economic and social issues. While it asserts values and principles that are universal, it would be insane to think that a policy or model would work for every economy and every society (although this is the claim of neoclassical economics).
A good starting point for understanding the role of CST is Leo XIII statement in Rerum novarum:

“There is nothing more useful than to look at the world as it really is—and at the same time look elsewhere for a remedy to its troubles” (RN 14).

The first part of the sentence is the aspect of CST that is most surprising for what one would expect from a theologically based understanding of the economy; CST calls for an empirical understanding of the economy as an essential first step for understanding economic issues. This is the opposite of the neoclassical/Austrian approach. CST calls for evidence based economic policy making, which seems to be completely lacking in Washington DC now, especially if one has been following the federal deficit/debt debate (see Randy Wray (New Economic Prospects) and John Harvey (Forbes) blogs) where the main theme is to avoid the US governments running out of money and not being able to pay meet its financial obligations, which is an impossibility for a sovereign state that pays its bills with its own currency. Almost as bad is the fear of inflation with 16 million plus looking for work. There are enough real problems to worry about; we don’t need to make any up (unless that is the purpose of these hysterics).

It is a sorry state of affairs when theologians have to remind economists that they need to study the actual economy. CST has always been dialogical in that it has to be in dialogue with the social sciences to analyze social problems, yet for neoclassical economics understanding the actual economy is not seen as being important (see David Colander’s article “the making of an economist” (1987, Journal of Economic Perspectives) and the poll which showed that only 3% of graduate students felt that understanding the actual economy was important for success as an economist).
CST contribution comes in the second part of the above quoted sentence—‘look elsewhere for a remedy”. Looking elsewhere means many things: the most obvious is to look to the Gospels for the values that will guide how we address social problems, especially its understanding of the human person which is the main contribution CST has to social analysis (I am sure that will be a main theme for this site); yet for economists it is also a call to look beyond “markets” as the sole policy remedy, as if all problems are merely inefficient price signals. This is comparable to saying that governments need to look beyond military force as the means to provide peace and security. This is not to say that improving markets is not an important goal and that getting prices right (equate all social costs and benefits) will not help (just as having a competent military is important to protecting a nation).
One of the important insights of Institutional Economics is that markets are social institutions, and thus the rules of the game can be adjusted to improve outcomes. But most economic problems are more than just people making inefficient decisions because they face the wrong prices. Most often, a change in preferences/attitudes is needed. Here we are on the home turf for Catholics, for the Church is in the changing of hearts business. Using the budget battle as an example, while we need evidence based analysis of the effects of fiscal policy on the economy (and the reverse), we also need a populace who value social protection for the poor and the marginalized, supports the just treatment of workers and who want to protect the environment (God’s creation). This changing of hearts will filter into the production and consumption of goods and services, and it will also produce more reasonable and mature legislators. The main mission of the Church in politics is to get voters and legislators to see everyone was a person with dignity, a child of God, and to call for justice and charity from the system and from individuals. While the Church is not going to offer what would be the Christian budget and tax policy, we can safely say that the balancing of the budget by cutting programs that help the poor is clearly unchristian, as is any policy that raises the share of income going to the rich. St. John Chrysostom noted that the only safe place to store our treasure is “in the stomachs of the poor”. This is true for us as individuals and it is true for us acting collectively as citizens. (Remember, God’s covenants are with “peoples” and not with individuals. Mathew 25 applies to us individually and collectively).

Monday, April 18, 2011

O Economics, From When Cometh Thee, upon what foundation art thou built?

Let us begin this journey with a seldom discussed difference between the traditional view of economics, as seen from the curriculum guidelines of the American Economics Association, and the view of economics as set forth within Catholic Social Teaching (CST); what is it that defines the vision of economics? 
Within traditional economics and a part of every principles class is the distinction between “positive” and “normative” economics.  As accepted by many (but not all) within the economics profession over one hundred years ago:
(A) positive science may be defined as a body of systematized knowledge concerning what is; a normative or regulative science as a body of systematized knowledge relating to criteria of what ought to be, and concerned therefore with the ideal as distinguished from the actual . . . The object of a positive science is the establishment of uniformities, of a normative science the determination of ideals.  (Keynes (1895) 1917, 34-35, emphasis in the original)
Proper economics is a positive science; the normative aspects are to be checked at the door for they necessarily involve value judgments.  When asked by a politician what the effects of a tax increase will be, an economist can provide an answer.  When asked if taxes should be increased, the properly trained economist would deflect the question back to the politician inasmuch as the answer would require judgment call.  The politician could rephrase the question, “given that society has set a goal of equalizing incomes, would an increase in taxes as I have described be the least cost manner to achieve the goal society has set?”  To this the economist could respond yea or nay and be within the realm of positive science. 
The trick of the politician was to declare the income equalization as an a priori goal of society.  As long as the economist has nothing to do with picking the goal but only with finding the most efficient manner to achieve them, then that economist is freed from expressing any statement of moral value.  The economist is thus allowed to remain a scientist dealing with “laws of economics” in much the same way that an astrophysicist deals with “laws of planetary motion”.  The laws of economics, then, deal with how to achieve a goal, or in an earlier way of stating it, an end in the most efficient manner:
As we have seen already, there are no economic ends.  There are only economical and uneconomical ways of achieving given ends.  We cannot say that the pursuit of given ends is uneconomical because the ends are uneconomical; we can only say it is uneconomical if the ends are pursued with an unnecessary expenditure of means. (Robbins (1932) 2007, 129)
Economics deals with ascertainable facts. (Robbins (1932) 2007, 132)
What all of this is presupposing is that only that which is observable and measureable is to be admitted to the realm of economic science.  Economic activity happens; economists merely try to discern what may be seen and measured and then systematize that knowledge.
The Catholic approach to economic activity is not that it simply happens; rather it happens for a reason.  What is that reason? 
St. Augustine wrote: “We all want to live happily; in the whole human race there is no one who does not assent to this proposition, even before it is fully articulated.” The Church recognizes, as did Abraham Maslow, that first step to living happily is to achieve some degree of physiological well-being, to stand atop Maslow’s first level in a hierarchy of needs.  Economic activity happens for a reason, the earth and all its bounty was created so that through work (more this later) humanity could begin walking the path towards happiness. 
Given this teleological foundation, this longing for happiness in the midst of a world provided for that purpose, the goals do matter and the ends to achieve those goals become secondary.  Even more, economic activity moves beyond consideration of only that which may be seen, it becomes more than a science based upon empirical positivism.  Meaning, an unobservable characteristic of human interaction, and power, the power to influence, shape, and determine outcomes, also an unobservable characteristic of human existence, become significant.  The latter, power, becomes especially significant because social structures arise from the interaction of people living together, of societies forming.  Social structures can arise which become intrinsically wrong because they deny the individual the freedom to pursue happiness.  Andrew Yuengert, speaking to the Mission Driven Business Education Conference at Notre Dame, August 3, 2010, showed the flaw in the social structure of slavery when he said: The freedom of the individual to act is crucial to human happiness: a well-kept slavery is a greater affront to human dignity that the poverty of a free person.”

To sum up, for the traditional economist, economic activity happens and economic science must be a value-free positive science.  What is important is what may be observed and measured.  The Catholic view of economics is that economic activity happens for a reason and a fundamental first and self-evident reason is that the human being, a creation of God, desires to be happy and has the means to obtain the first step towards happiness, the step of achieving through work a level of material welfare that will permit more steps toward fullness of being.

This difference changes everything.

Keynes, John Neville. 1917. The scope and method of political economy. London: Macmillan. Original edition, 1895.

Polanyi, Karl. 2001. The great transformation: The political and economic origins of our time. New York: Beacon Press. Original edition, 1944.

Robbins, Lionel. 2007. An essay on the nature and signficance of economic science. Auburn, Alabama: The Mises Instiute. Original edition, 1932.

Thursday, April 14, 2011

Economics and Catholic Social Teaching

Taken from the American Economics Association's website is the description of the JEL Classification Code A130:

The Relation of Economics to Social Values:

Covers studies about issues related to the intersection of economics and social values, including general issues involving ethics and morals.

Key Words:  Ethics, Moral Economics, Morality, Morals, Social Economics, Social Values

Social Economics is highlighted because that is the field of economics within which, hopefully, this blog will be considered.   Some may question the Catholic emphasis that provides a foundation to this blog.  There was a time when "Catholic Economics" was an active research field; in fact the Association for Social Economics was founded in 1941 as the Association of Catholic Economists.  The research agenda of the ACE attracted many from outside the Catholic Church and the name was subsequently changed to reflect the developing field of social economics.

Private conversations at the last few Allied Social Science Association meetings have indicated a desire of the part of a few members within the ASE to revisit the organization's Catholic roots.  While an admittedly small observation to support the larger claim of increasing interest is CST, in the last four years there have been three dissertations in economics and CST written, defended, and accepted at the University of Missouri - Kansas City, and a fourth is being developed.  A session in Catholic Social Teaching is being proposed for the meeting of the Missouri Valley Economics Association in October, 2011.  Conferences and workshops have been held to incorporate CST into the teaching of economics at Catholic universities.  This blog is intended to be but one of the many responses to that rising tide of interest in CST.

One last introductory word: Catholic Economics is not considered by the blog's founder as an alternative to free market capitalism or to Marxist thought.  In the words of Pope John Paul II:

The Church's social doctrine is not a "third way" between liberal capitalism and Marxist collectivism, nor even a possible alternative to other solutions less radically opposed to one another: rather, it constitutes a category of its own. Nor is it an ideology, but rather the accurate formulation of the results of a careful reflection on the complex realities of human existence, in society and in the international order, in the light of faith and of the Church's tradition. (Sollicitudo Rei Socialis, 41)

Catholic Economics is seen to be an economics built not upon the emperical postivism that has dominated the discipline since the 1930's.  It is, rather, an economics built upon a different ontological foundation, a foundation that probes further and asks more than what the economics profession typically is willing to allow.  There are elements of Institutional Thought, Post Keynesian Thought, Critical Realism, and much more.  It is a deviation for Classification Code A130, for it is not about the relation of economics to social values, it is about the impact of social values upon economics.