Wealth redistribution is not charity

The new "papal encyclical" Caritas in veritate or "Charity in Truth" from Joseph Ratzinger (aka "Pope Benedict") has garnered some attention and a lot of concern for the language it uses.

Granted, I am not all that interested in theological ponderings from Joseph Ratzinger and I am even less interested in his economic theories. Much of the encyclical is filled with flowery pronouncements and reiterations of prior papal declarations, sprinkled liberally with quotes like this:

It is an expression of the prophetic task of the Supreme Pontiffs to give apostolic guidance to the Church of Christ and to discern the new demands of evangelization.

That reinforces the misguided notion that the men who style themselves “popes” somehow speak for all Christians everywhere. Regardless, there are some useful statements within this declaration. Certainly he is right that charity and love play a central role in the Christian life and all too often both are missing from those who claim the name of Christ. We all certainly need to reflect on our lack of charity, our failure to express love to those around us as Christ expressed love to the unlovely, i.e. redeemed sinners.

Where I have grave reservations is where Mr. Ratzinger applies how this should be practically lived out.

There are numerous statements that exhibit an misunderstanding of basic economics, like this one:

On the part of rich countries there is excessive zeal for protecting knowledge through an unduly rigid assertion of the right to intellectual property, especially in the field of health care.

Intellectual property rights in the private sector provide protection of investment, especially in health care. It is not like a new drug springs forth ready for market after an afternoon of brainstorming. The process is extremely competitive, very expensive and new drugs have limited protections before they become available for generics, so even a breakthrough drug must go through exhaustive regulatory hoops and then the clock starts ticking toward the day when the drug is able to be replicated as a generic. It is precisely because of patent protections that companies are willing to invest enormous sums of money that lead to life saving drugs. People have these drugs that save, extend and improve lives because of the right to intellectual property. Another example:

The repeated calls issued within the Church's social doctrine, beginning with Rerum Novarum, for the promotion of workers' associations that can defend their rights must therefore be honoured today even more than in the past, as a prompt and far-sighted response to the urgent need for new forms of cooperation at the international level, as well as the local level.

Quite to the contrary. Rerum Novarum was written in 1891 when basic workers rights were absent. Today, we see the collapse of venerable institutions like General Motors and Chrysler and the crippling of Ford because of, in large part, these very same workers associations.

The words “redistribution”, “solidarity” and “exploitation” appear often in the encyclical and are not chosen by accident. When he writes: “What is also needed, though, is a worldwide redistribution of energy resources, so that countries lacking those resources can have access to them.”, one is forced to wonder how this is to happen, who is decide how much is to be redistributed and who is to receive these resources.

The strongest statement comes in this paragraph (emphasis added):

To manage the global economy; to revive economies hit by the crisis; to avoid any deterioration of the present crisis and the greater imbalances that would result; to bring about integral and timely disarmament, food security and peace; to guarantee the protection of the environment and to regulate migration: for all this, there is urgent need of a true world political authority, as my predecessor Blessed John XXIII indicated some years ago. Such an authority would need to be regulated by law, to observe consistently the principles of subsidiarity and solidarity, to seek to establish the common good, and to make a commitment to securing authentic integral human development inspired by the values of charity in truth. Furthermore, such an authority would need to be universally recognized and to be vested with the effective power to ensure security for all, regard for justice, and respect for rights. Obviously it would have to have the authority to ensure compliance with its decisions from all parties, and also with the coordinated measures adopted in various international forums. Without this, despite the great progress accomplished in various sectors, international law would risk being conditioned by the balance of power among the strongest nations.

Did you catch all of that? A centralized international authority with the power to ensure "security" and enforce "compliance". I am sure all of the end-times types are jumping all over this, but this is not a sign of the coming "rapture", it is a sign of a dangerous call for international authority over U.S. property and resources.

In the end, Christian charity is expected of Christians but nations are not Christian. They may contain many Christian citizens who are bound to demonstrate love and perform acts of charity not as a condition for but as a result of their salvation, but nations are not and should not be expected to behave in “Christian” ways. Even with that in mind, what Mr. Ratzinger proposes is not only economically unsound, it also misinterprets what the Bible teaches about charity. What he is proposing: wealth redistribution, class warfare, socialism/communism, authoritarian centralized international government are not the signs or the enablers of charity and love. Wealth seized by force or the threat of force is not charity. When the early church sold their belongings and gave the proceeds to the apostles, they did so freely and out of love for one another. A central international authority reallocating resources from "rich" countries to "poor" countries is not only doomed to failure, it is also foreign to what the Bible speaks of in regards to Christian charity.

Caring for the poor is noble but centralized governments and wealth distribution do not lead to positive economic equality but instead lead to shared misery. To expect countries and companies to behave in a Christian fashion is foolhardy and unrealistic, and ultimately is counter-productive. If Mr. Ratzinger is truly concerned for the poor, he should be encouraging the free market not calling for centralization. It is the free market, capitalism for lack of a better word, that has led to unprecedented increases in the standard of living for hundreds of millions of people. True, it has not been equitable but that is not a fault of free markets but of totalitarian governments. Without the free markets we would certainly have equity, but it would be equitable poverty and misery. (As a gratuitous cheap shot, if he is so concerned about the poor, maybe the Vatican can sell of some of its treasures and use the proceeds for hunger relief?)

Why do I care? I reject Joseph Ratzinger's claims as the "Vicar of Christ" and I see his office as contrary to Biblical teachings and an invention of men. His opinions to me are irrelevant and hold no authority or sway. So why does this warrant the attention of Christians? Many people outside of the church see Mr. Ratzinger as representing Christians, and I am sure that this encyclical will be put forth by some as a defense of socialism. Many Christians also don't recognize the unBiblical nature of the papacy and the use of Scripture quotes and "God talk" may confuse some people. Finally, anytime someone misrepresents the teaching of Scripture, it warrants a response.

So take my thoughts for what they are, my thoughts, and tell me what your thoughts are. Is Mr. Ratzinger correct? Is this who kerfuffle irrelevant? Is this encyclical a veiled call for one world government and socialism?

Caritas in veritate

I am reading through the "papal encyclical", Caritas in veritate "Charity in truth", from Joseph Ratzinger having to do with economics. Just a ton of stuff in here, not much stuff I care for. Lots of language that amounts to calls for international controls over the economic system, lots of language of wealth redistribution. I am going to put together some thoughts once I actually read it but I know that lots of Catholics already don't like what they are seeing. I think, based on a facebook comment, that Russell Moore might speak about this tomorrow while guest hosting on the Albert Mohler show...

It's the end of the world as we know it

Not feeling grim enough yet? We are pretty focused on the U.S. economy here in America, obviously, but things are very interconnected in the world financial systems and they trauma is global. No one seems to know what to do, and that is dangerous because when the pressure is on to DO SOMETHING, it almost always ends up being wrong (i.e. the $700 billion bailout). There is a very insightful article by Niall Ferguson in Time Magazine called The End of Prosperity? and it is pretty sobering stuff. Here is a sample:

The U.S. — not to mention Western Europe — is in the grip of a downward spiral that financial experts call deleveraging. Having accumulated debts beyond what's sustainable, households and financial institutions are being forced to reduce them. The pressure to do so results from a decline in the price of the assets they bought with the money they borrowed. It's a vicious feedback loop. When families and banks tip into bankruptcy, more assets get dumped on the market, driving prices down further and necessitating more deleveraging. This process now has so much momentum that even $700 billion in taxpayers' money may not suffice to stop it.

In the case of households, debt rose from about 50% of GDP in 1980 to a peak of 100% in 2006. In other words, households now owe as much as the entire U.S. economy can produce in a year. Much of the increase in debt was used to invest in real estate. The result was a bubble; at its peak, average U.S. house prices were rising at 20% a year. Then — as bubbles always do — it burst. The S&P Case-Shiller index of house prices in 20 cities has been falling since February 2007. And the decline is accelerating. In June prices were down 16% compared with a year earlier. In some cities — like Phoenix and Miami — they have fallen by as much as a third from their peaks. The U.S. real estate market hasn't faced anything like this since the Depression. And the pain is not over. Credit Suisse predicts that 13% of U.S. homeowners with mortgages could end up losing their homes.

Banks and other financial institutions are in an even worse position: their debts are accumulating even faster. By 2007 the financial sector's debt was equivalent to 116% of GDP, compared with a mere 21% in 1980. And the assets the banks loaded up on have fallen even further in value than the average home — by as much as 55% in the case of BBB-rated mortgage-backed securities.

To date, U.S. banks have admitted to $334 billion in losses and write-downs, and the final total will almost certainly be much higher. To compensate, they have managed to raise $235 billion in new capital. The trouble is that the net loss of $99 billion implies that they will need to shrink their balance sheets by 10 times that figure — almost a trillion dollars — to maintain a constant ratio between their assets and capital. That suggests a drastic reduction of credit, since a bank's assets are its loans. Fewer loans mean tighter business conditions on Main Street. Your local car dealer won't be able to get the credit he needs to maintain his inventory of automobiles. To survive, he'll have to lay off some of his employees. Expect higher unemployment nationwide.

Anyone who doubts that the U.S. is heading for recession is living in denial. On an annualized basis, real retail sales and industrial production are both declining. Unemployment is already at its highest level in five years. The question is whether we're headed for a short, relatively mild recession like that of 2001 — or a latter-day version of what the world went through in the 1930s: Depression 2.0.

Is that sobering enough for you? We are drowning in a sea of debt, and there isn't an easy way out of it. Ferguson actually knows what he is talking about as a recognized expert on economic history, unlike many of the talking heads on CNN, Fox and even CNBC.

What is even more troubling is the very real chance that the world governments will band together and DO SOMETHING that will further cement the global nature of not just financial systems but governments. Spurred on by the International Monetary Fund and other international groups, look for a call for greater consolidation of economic governing bodies. I am all for free trade in the global marketplace, but I am not in favor of foreign nations, many of whom envy and hate the U.S., making policy decisions that are binding on the U.S. Nor am I enraptured with the likely other results, a massive set of new regulations that will further cripple our ability to compete economically. I am pretty much at the when Obama, instead of if Obama, becomes president mindset at this point and you know given his voting record that we are looking at bigger government on a scale we haven't seen since the New Deal and the War on Poverty. Once government gets involved in something, it is virtually impossible to extricate ourselves, and massive government interference has already led to America going from the economic engine of the world to teetering on the brink of total economic collapse and ruin.

Be afraid. Be very afraid.