What’s
Wrong Today:
Yesterday,
the Wrongologist wrote about Freeports,
those tax-free locations where the ultra-wealthy hide their spectacularly
expensive stuff. He concluded with:
so-called “trickle down” effect of lower taxes and tax
“avoidance” for the rich. Trickle
down does not result in increased investment in production (thus increasing
employment and prosperity). Instead, it has simply bid up the price of
expensive assets, the symbols of wealth, which since the Bush Tax Cuts in 2001 and
2003, seem to have produced better
financial returns than investing in productive businesses
He said: “We
gave them a break, thinking they were job creators, but they preferred to buy
art and classic cars.”
Well, yesterday,
Pope Francis showed that he
understands economics better than many of our politicians and their right-wing
economists. In an 84-page document, called an apostolic
exhortation, he attacked unfettered capitalism as “a new
tyranny”, urging global leaders to fight poverty and growing inequality in
the first major work he has authored alone as pontiff.
The WaPo reported
that Francis decried an “idolatry of money” in secular culture: (emphasis by the
Wrongologist)
continue to defend trickle-down theories which assume that economic growth,
encouraged by a free market, will inevitably succeed in bringing about greater
justice and inclusiveness in the world…This
opinion, which has never been confirmed by the facts, expresses a crude and
naive trust in the goodness of those wielding economic power and in the sacralized
workings of the prevailing economic system. Meanwhile, the excluded are still
waiting
He also
called on rich people to share their wealth:
commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the
value of human life, today we also have to say ‘thou shalt not’ to an economy
of exclusion and inequality. Such an economy kills. How can it be that it is
not a news item when an elderly homeless person dies of exposure, but it is
news when the stock market loses two points? This is a case of exclusion. Can
we continue to stand by when food is thrown away while people are starving?
This is a case of inequality
The WaPo
quoted Michael Sean Winters, a fellow at Catholic University’s Institute for
Policy Research and Catholic Studies about Pope Francis’s exhortation:
no way a Catholic who is a serious intellectual can ever again not address the
issue of income inequality, of the structural sins of our economic system. This
is so front and center…This is a pastor’s voice. He’s saying, ‘If we’re
serious Christians, we need to be knee-deep in this stuff’
Meanwhile,
professional Catholic, Rep. Paul Ryan (R-WI), who has said before that he tries
to uphold Catholic teaching “as best I can” and believes his policies match
Catholic teaching, declined
comment on the Pope’s take-down of Trickle Down.
Pope Francis
gives a voice to the post-financial-crisis outrage that we have not seen since
Occupy Wall Street disbanded. Pope Francis bolstered his argument with two emotions
familiar to any Catholic-school graduate: shame and guilt. He wants to make improving
the economy a matter of personal responsibility.
It’s time
for a change in how we approach capitalism. That doesn’t mean we must discard
capitalism, or hate profit; it’s about pursuing profits ethically, and
rejecting the premise that exploitation must be at the center of profit. When
53% of financial executives say they can’t
get ahead without some cheating, even though they want to work for ethical
organizations, there’s a real problem.
Inequality
has been growing in the US. Economist Emmanuel Saez found that the incomes of
the top 1% grew
by 31.4% in the three years after the financial crisis, while the majority
of people struggled with a disappointing economy. The incomes of the other 99%
of the population grew 0.4% during the same period.
As a
result, federal and state spending on social welfare programs has
grown to nearly $1 Trillion just to handle the volume of US households in
trouble.
Yet income
inequality is rarely part of the mainstream economic conversation. When
economists and politicians discuss why the US is not recovering, they often
mention metrics like GDP growth, unemployment and housing. They rarely mention the metrics that directly tell us we are
failing at our economic goals, like reducing poverty. Remember:
- 15%
of Americans, or 47 million people, are on food stamps
- 50%
of children born to single mothers live in poverty
- Over
13 million people are out of work
- Children
are now not
likely to do as well as their parents did as downward mobility takes hold
for the first time in generations
Pope Francis correctly identifies that inequality is the greatest
economic issue of our time – for everyone, not just for the poor. Nearly any
major economic metric – unemployment, GDP growth, consumer confidence – prove that the vast majority of Americans are struggling in some
way.
You don’t
have to begrudge the rich their money, or champion income redistribution. The rich
need to pay more in taxes, particularly on assets they hide offshore.
On
Thanksgiving, it’s hard to justify ignoring the financial problems of 47
million people who don’t have enough to eat. Until they have enough money to
fill their pantries, we won’t have a widespread economic recovery.
We won’t have
a recovery if one-sixth of the US population is trying to eat on $1.50 a day.
Happy
Thanksgiving to all, except to the turkeys in Washington. Off with their heads!
Bravo for this very Thanksgiving appropriate blog on the state of 21st Century America.