Tuesday, July 07, 2009

Theologians shouldn't tresspass on economics.

If an economist used his position to pontificate on theology the world would laugh. But when a theologian uses his credentials, in an imaginary field, to lecture on economics we are expected to pay attention.

As this blogger sees things the one institution that has no right anymore to lecture on morality is the Roman Catholic establishment. But the Vatican has been sticking its nose into the affairs of the world for centuries and won’t stop now. Consider some of the uninformed statements made by the current Vatican leader, Joseph Ratzinger, who uses the name Benedict when pretending to speak for God.

In a new encyclical on economics Ratzinger continues the Catholic tradition of opposing depoliticized, free markets. Like his predecessors he misstates what depoliticized markets are. He writes that “profit is useful if it serves as a means towards an end” but if profit “is produced... without the common good as its ultimate end, it risks destroying wealth and creating poverty.”

Ratzinger has been concerned with imaginary “truth” for so long that he doesn’t understand how this world works or why. Profit is a motivating factor. Each of us acts to promote our self interest—even the Catholic hierarchy. That motivation can lead to good and to bad but seeking “the common good” is more likely to lead to bad results than good. Let me explain something that the Vatican, always besotted with power, has never understood.

When profit-making is politicized it leads to bad results. When profit-making is depoliticized it leads to good results. First, consider the depoliticized market. A depoliticized market is one where individual entrepreneurs are unable to impose their will on unwilling consumers. To a large extent the local grocery store is a depoliticized market (though even here politics can distort things). This store must entice you to buy there because it has no ability to force you to purchase there.

The result is that they have to make an effort to serve your good if they wish to make a profit. Because they lack the ability to use force they need your voluntary co-operation in order to make a profit. Like them, you too are looking out for your own self-interest. You will trade with them provided you believe that you are better off making this exchange than any other trade you might make. Your decision, like theirs, is based entirely on your self-interest.

You are not attempting to increase their profits. If they profit, or not, is of no concern to you. You are merely making an exchange that you believe will benefit yourself. Similarly the store is doing the same thing. By seeking their own self-interest both are acting in ways that makes the other better off. Yet neither is seeking to improve the life of the other.

The danger comes in when concepts like the “common good” are allowed to dominate. This concept is used to politicize the market. The argument is that an unregulated market is not one where the common good dominates so individuals act in bad ways. But how? Without the ability to force other traders into unwilling exchanges there is no ability to create exchanges where one party loses.

The only way to systematically destroy the mutual benefits of free exchange is to politicize the market. Politicization means that the state will forcibly intervene into the exchanges. But what can government intervention accomplish?

It might require two individuals to exchange, who would have done so anyway. But since they would have exchanged without the intervention then government has, in fact, accomplished nothing.

It might force an exchange where neither of the parties would have made the exchange. Why didn’t they make the exchange voluntarily, in this case? The answer is: because each considered the exchange a net loss. Intervention here makes each trader worse off, not better off.

What the advocates of politicized markets really want is to force exchanges where one partner benefits and the other one loses. Ratzinger, totally ignorant of economics, believes that the political classes will use state power to force exchanges that benefit the poor and powerless. The Vatican, one of the wealthiest institutions in the world, is quite willing to use the wealth of other people to “benefit” the poor but rather unwilling to use their own wealth in that manner. They are willing to use funds donated from their members for such things but the vast holdings of the Vatican itself are not sacrificed for the “good” of the poor.

Politicized markets attract predatory individuals who use state power for their own benefit, or for the benefit of their favored friends or supporters. The poor and powerless never control the politicized power structures no matter what Ratzinger or Marx or anyone else may think. Power attracts the powerful, not the powerless. Concentrated political power, established under the pretence of the “common good” always ends up in the hands of private interests. More importantly these private interests are able to impose exchanges on individuals that they otherwise would not make.

The reality is that politicized markets can never serve the common good since they can only impose exchanges which are not wanted, not exchanges that are wanted.

What Ratzinger wants is political control over markets. He fantasizes that political power will be used according to the values he espouses. In truth, that power will be used in ways quite different from what he wants.

Ratzinger wants a state system of redistribution of wealth. How ignorant can this man be? When power is in the hands of the powerful there is real wealth redistribution. But it comes at the expense of the poor and the powerless. One of the great myths of redistributive state is that it redistributes wealth toward the needy. While there may be some show-programs which appear to help the poor and powerless, for the most part redistribution will go up the economic ladder not down.

Ratzinger continues what has been church tradition for centuries: opposition to depoliticized markets and a belief in centralized control of markets based on Catholic teaching. The Vatican has never been happy promoting their own morality on matters such as sex or economics. What they have always yearned for, and still yearn for, is for state power to coercively force Catholic moral values on others. Ratzinger wants the forced redistribution of wealth, not charity. The Vatican has consistently been unable to envision their moral agenda without the use of state power. This sort of fascistic tendency is not one the Vatican is about to give up, no matter what some “libertarian” apologists for Catholicism say.

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