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Francis, Papal Perónista, Courts Redistributional Mirage

15 Thursday Mar 2018

Posted by Nuetzel in Markets, Marxism, Redistribution, statism, Welfare State

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Argentina, Che Guevara, Daniel J. Mitchell, Economic Freedom, Eva Peron, Juan Peron, Judialismo, Maureen Mullarkey, Pope Francis, Property Rights, Robert P. Murphy, Vatican, World Bank, World Poverty

Is world poverty really increasing? Actually, no, quite the opposite, and you can blame economic liberalism, capitalism, and free markets for that. Yet we hear exactly the contrary from Pope Francis who, despite his evident compassion, has an amazingly poor understanding of economics. He misstates basic facts, offers dimly reasoned analyses of human rights, and promotes ill-considered policies. Now that the Vatican is set to release the Pope’s first feature film, no doubt a stirring piece of social justice propaganda, it seems as good a time as any to review the confounded state of Francis’ economic reasoning. This is not the first time I’ve discussed the Pope’s policy views: this link contains three previous posts from SacredCowChips on which Francis was tagged.

The False Narrative

My inspiration for this post comes from Robert P. Murphy, whose recent commentary on Francis’ pronouncements is trenchant. Murphy covers this speech written by Francis for the World Economic Forum, but delivered by a Vatican proxy, in which the Pope asserts the following:

“… governments must confront … the growth of unemployment, the increase in various forms of poverty, the widening of the socio-economic gap and new forms of slavery, often rooted in situations of conflict, migration and various social problems.“

Francis refers to increasing unemployment and poverty, and I could let that phrase pass if he was referring to certain nations or locales that have experienced chronically depressed economic growth. But Francis’ description is rather general, as evidenced by his diagnosis of causes. More on that below. Regarding his statement about trends in poverty, he is flatly incorrect. Here is Murphy:

“As the World Bank reports, the global “extreme poverty” rate in 1990 was cut in half by 2010. Back in 1990, 1.85 billion people lived on less than $1.90 per day, but by 2013, the figure had dropped to 767 million such people—meaning that more than a billion people had been lifted out of crushing poverty.“

After the Great Recession, world unemployment decreased from 2009-2015, according to the World Bank, though it is estimated to have crept up slightly in 2016-17. Again, the Pope’s woeful tale of growing unemployment and increasing poverty is nonsense.

But the world is a difficult place. In the underdeveloped world, the range and quality of goods available is extremely limited, and $1.90 represents bare subsistence, yet it’s a condition that exceeds the historical norm in many places. Movement above that threshold can represent a meaningful improvement in economic well-being.

Francis may lack an appreciation for the general enrichment in material conditions that has been taking place over the last two centuries, which is ongoing, or perhaps he believes that even greater achievements are easily within reach but for certain injustices, though he offers no qualifications. Perhaps he is mistakenly generalizing specific instances of exploitation in the underdeveloped world, which often occur with the explicit blessing of the state apparatus in exchange for kickbacks.

Rights and Markets

Even more egregious is the Pope’s presumption that private markets are at fault for any stagnation that he has identified. A notable difference between countries with successful, growing economies and those mired in stagnation is the degree to which their citizens enjoy freedoms, especially economic freedom. That is a well-established empirical fact, as Murphy explains. But the Pontiff goes further with preposterous dogma on the meaning of human rights. Again, from Murphy:

“Although inspired by concern for the poor and the marginalized, the Vatican’s message is seriously flawed…. On a conceptual level, Pope Francis posits a false dichotomy between economic freedom and human rights. … ‘Economic freedom must not prevail over the practical freedom of man and over his rights, and the market must not be absolute, but honour the exigencies of justice.’ 

What does the concept of “economic freedom” entail? It means freedom to work in any occupation of one’s choice, without permission from the government, and certainly without being conscripted into service against one’s will. It means the freedom to start a business. It means the freedom to keep what you have produced, without having your assets seized by a rapacious regime. It means the freedom to trade with people who live in another country. It means the rule of law, where contracts are interpreted fairly and government officials can’t exercise arbitrary power.“

Economic freedom, more than anything else, means that individuals are endowed with property rights. To deny such rights is to banish any reward for work and differential rewards for work well done. If free individuals are rewarded, it is a matter of their own discretion as to whether they immediately consume the reward or save it in order to accumulate wealth. Yet Francis takes the misanthropic and childish view that economic freedom, private property and markets imply exploitation. He lacks a basic understanding of the revolutionary power of markets as a form of social organization.

Within just a few hundred years, a small fraction of the many millennia during which mankind was mired in poverty and pestilence, markets have dramatically transformed the existence of most human populations. Peaceful, arms length transactions made in mutual self-interest exploit only one thing: gains from trade that would otherwise be wasted. And only a form of social organization that enables those gains can dovetail with the human rights and justice that Francis so strongly desires. The denial of economic freedom, property rights, and self-interest prohibits those gains, however, denying humanity of the wealth necessary to achieve anything like justice.

Pope Francis is a redistributionist, and that goes well beyond the charitable giving, good works and service performed voluntarily by individuals. In fact, he is a statist, advocating an economic system in which property rights are abrogated, wholly or in part, and wages above a politically determined threshold are confiscated.

The Pope and Perón

Francis is often described as a “Perónist”, after Juan Perón of Argentina, the so-called “right-wing socialist” (and sometime associate of the murderous Che Guevara). Anyone familiar with the economic history of Argentina should know that’s not praise. Here is Maureen Mullarkey from the last link:

“Both Juan and Eva understood the enchantments of populism. A charismatic pair, they ruled more by dint of personality—personalismo—than democratic procedure. Ushers of an ‘option for the poor,’ they glorified the lower classes and denigrated the wealthy. (This, while they amassed a huge personal fortune from the Eva Perón Welfare Foundation.) …

When Francis speaks of ‘the people’ as a revolutionary vanguard that ‘overflows the logical procedures of formal democracy,’ he is lapsing toward that ecstatic Peronist vision of a Third Way—justicialismo. That the disposition and design of it ended in economic collapse and misery is nothing against the splendor of the mystique.

In his youth, Francis absorbed the myth but not its lessons. Chief among them is how much Argentina’s fiscal catastrophe owed to an extravagant welfare system that favored enforced wealth redistribution over development. Among the many factors of Argentina’s historic economic crisis, one cries for attention: Perón’s increasing reliance on redistributing income, not only between industries and occupations but between skilled and unskilled workers.“

For further perspective on Francis, Perónism, and the disastrous Argentine “experiment”, see this piece by Daniel J. Mitchell.

For many years, naive Marxists have accepted the myth that central economic planners could and would direct productive and distributional activities with foresight, efficiency, and integrity. None of those is possible. The only form of social organization capable of registering and processing the myriad and dynamic signals on preferences and scarcity is free market capitalism. It is the only system capable of spontaneously harnessing appropriate responses based on the complex incentives faced by consumers and producers, and all at a minimal administrative cost for society, free of the government intervention that typifies the Peronist welfare state and corporatism.

Conclusion

Pope Francis should know better than to make claims having no empirical support. He should also have the wisdom to understand and advocate for the empowering nature of private property rights and markets. Elevating the human condition is possible only by allowing people to be free — economically free — and endowed with opportunities to earn private rewards and build wealth. Francis should realize that the massive private gains afforded by the market mechanism enable rewards which spill over, inuring to the benefit of parties external to a given exchange. On the other hand, state domination and control of economic activity gives over decision-making to selfish and ill-informed public commandants, who are all too pleased to grant special advantages to those in a position to return private favors. Such graft and mismanagement of resources comes at the expense of others. That way lies decay and a return to the much more brutal conditions of the past, unlike the mutually beneficial promise of market exchange.

Those Halcyon Days of Desperation

18 Monday Jan 2016

Posted by Nuetzel in Capitalism, Markets, Poverty

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Environmental Left, Human Progress, Julian Simon, Luc Sante, Matt Ridley, Minimalism, Nostalgie dela Boue, Profit Motive, Sarah Skwire, Sustainability, The Rational Optimist, Thomas Malthus, World Poverty

chickennostalgic

Nostalgia is hard to resist. Youth is fleeting, and for most of us, it seems more magical in hindsight than it might have been at the time. It’s also easy to imagine that certain historical eras were more interesting or romantic than the present. For example, my spouse tells me she’d love to have lived in the frontier days, yet she can’t tolerate the reality of a camping trip. We also tend to lionize certain leaders of the distant past, ascribing greatness based on history written by victors. Our objectivity may be obscured by narratives shaped over many years.

Today, some imagine and aggrandize the past in a different way: as a time when motives were “selfless”; when the world was inhabited by less acquisitive and more “minimalist” folk; when practices were more “sustainable”, or even “legitimate”. Despite the primitive conditions of that world, it was a better place for “free” human beings. So it is said, seriously!

Sarah Sqwire takes a look at these flights of fancy in “The Good Old Days of Poverty and Filth“. She dissects the views of one Luc Sante, a cultural historian, as an archetypical patron of primitivism. She invokes the French phrase “nostalgie de la boue, ‘longing for the mud,’ which means a romantic yearning for a primitive or degraded behavior or condition.” Here are some of Skwire’s colorful comments about the past:

“We don’t need every medieval romance novel to remind us that the heroine’s breath didn’t smell like cool mint Listerine. It’s probably for the best that the historical re-enactors at Colonial Williamsburg don’t actually use authentic colonial medical remedies for their health problems…. Any lover of history will occasionally find him or herself dreaming about attending a performance in the pit at Shakespeare’s Globe, or roughing it in the saloons and shacks of a gold rush town. … But a good student of history will acknowledge that the Globe was undoubtedly loud, smelly, crowded, and occasionally even dangerous for playgoers. And the rugged romance of the gold rush town is offset by the knowledge that you were probably far more likely to die of gangrene or cholera than you were to strike it even moderately rich. And those glorious 18th-century wigs? Heavy, hot, smelly, and prone to harboring bugs.“

She then quotes Sante:

“In the Paris I write about, people ran businesses to make a living, not to make a profit. Cafes, bars: they’re no longer public institutions or part of a community. There’s no possibility for eccentric self-determination amongst the shopkeepers.”

Skwire notes the odd distinction that Sante makes in the first sentence above, as if profit is not how proprietors ever made “a living”, or that they observed certain limits on their finances not imposed by market forces (i.e., their customers). She adds that businesses often seek to “create communities” as part of their business models, now in the era of social media more than ever, contrary to Sante’s presumption. Here’s Skwire’s verdict:

“Sante, though, has so much mud in his eyes that he is blind to the tangible and important progress that has been made in human wealth and welfare. His mucky nostalgia leads him to claim that our increasing wealth — which has given us more health, more discretionary income, more food, and more free time — is a danger more pernicious than terrorism.“

I am surprised that Skwire fails to mentions the environmental left in this context. It is, after all, the source of hysteria related to population and scarcity, and the source of so much criticism of modernity. As an antidote to such nonsense, I recommend the Human Progress web site. This recent entry on Julian Simon is instructive. I also recommend Matt Ridley’s Rational Optimist blog. Try this entry on “The Long Shadow of Malthus” for a start.

Skwire views Luc Sante’s infatuation with pre-modern life and lifestyles as an elitist’s prescription for “other” people. That may well be. It also fits the profile of many environmental elites. Whether or not Skwire’s characterization of Sante is accurate, he is at least ignorant of the great diffusion of prosperity taking place around the globe, fueled by markets and economic development. It seems awkward that anyone would bemoan economic progress when, in fact, world poverty is declining, yet that very misgiving is implied by many critiques of markets and modernity.

Francis Pontiff-icates In His Fallible Zone

24 Thursday Sep 2015

Posted by Nuetzel in Capitalism, Global Warming, Poverty, Socialism

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Anti-Capitalism, Bono and Capitalism, Cafe Hayek, Don Boudreaux, economic growth, Karl Marx, Matters of Faith, Opiate of the Masses, Papal infallibility, Pope Francis, Raul Castro, Reason.com, Stephanie Slade, World Poverty

Francis Politics

Pope Francis dispenses guidance in matters of faith from his heart. In matters of economics and science, his guidance doesn’t come from a well-informed mind. I’ve devoted two posts to Francis’ political follies this year: “Green Hubris: The Flub of Rome“, and “Francis’ Statist Vision Not Shared By Venezuelan Clergy“. While foreswearing ideology in the pulpit, he nevertheless promotes leftist economic ideology and denigrates capitalism, the single-best form of social organization for lifting mankind from privation. He ignores mountains of evidence demonstrating that his hopes for humanity are best served by free markets and liberty. Francis further confuses the issue of church teachings versus personal ideology by claiming that his views are longstanding views of the Church.

A dark theory of the Pope’s anti-capitalist rhetoric occurred to me. It has to do with an ecclesiastical variant on statism: just as statist elites like President Obama seem to prefer widespread dependence on the state, so too does the Pope wish for widespread dependence on the Church for spiritual nourishment. Karl Marx is often quoted as having said “Religion is the opiate of the masses.” However, the full quote is the following:

“Religion is the sigh of the oppressed creature, the heart of a heartless world, and the soul of soulless conditions. It is the opium of the people.“

Perhaps the Pope understands this all too well. An impoverished world may well be a more pious world, and his condemnation of capitalism might help to lead us there. Is such an ulterior motive too Machiavellian to describe the kind-hearted pontiff? Probably. Perhaps the Devil made me think of it!

Like most on the Left, the Pope does the world’s poor no favor by way of blindly accepting the global warmist agenda, which is based on a hypothesis “proven” only in the sense that a certain class of climate models predict a directional outcome. Those models have accumulated a long track record of bad forecasts. Not only that: the surface temperature records reported by U.S. Government agencies and the media as “evidence” of global warming are not supported by satellite records, and trends have been heavily manipulated via downward adjustments to past temperatures. But even if we stipulate that the carbon-forcing models and the surface temperature records are correct, there are major questions regarding the severity of the outcome and whether it poses a two-sided risk to human welfare. Mediation of this hypothetical risk is extremely costly, requiring diversion of vast quantities of resources, and that takes a real human toll. This is why the policy prescriptions of the warmist community lack internal consistency. For example, they wish to restrict power production from fossil fuels in the developing world, forcing populations to deforest and rely on unhealthy wood burning — indoors! — to meet basic needs like heating and cooking.

Here is the full text of a letter from Don Boudreaux to the Washington Post:

“On the opening page of your website today you ask readers to register their agreement or disagreement with this statement of Pope Francis: ‘This is our sin: Exploiting the Earth and not allowing her to give us what she has within her.’

This claim is laughable. History testifies unmistakably that the earth is extremely stingy in volunteering to humans ‘what she has within her.’ Indeed, what the earth has within her are mere raw materials, by themselves useless unless and until human creativity discovers not only how to transform them into actual resources and outputs that improve human well-being (Ever try fueling your jet with crude oil?) but also how to ‘exploit’ the earth so that she releases her materials to us at a reasonable cost.

The Pope is vocal about helping the world’s poor. I believe that he’s sincere. So I sincerely hope that he comes to realize that the greatest sin of all against humanity would be the suppression of those capitalist institutions that have proven to be the only practical means of transforming what the earth has within her into a bounty of goods and services that allows the masses, for the first time in history, to live lives of material abundance and dignity upon her.“

A few of the comments that follow Boudreaux’s post on Cafe Hayek are good, too.

Stephanie Slade has an excellent piece in Reason entitled “If Pope Francis Wants to Help the Poor, He Should Embrace Capitalism“. Here are some samples addressing the power of markets and capitalism to improve human welfare and eradicate poverty:

“Pope Francis thinks free marketeers have been deluded by a ‘myth of unlimited material progress.’ If we have, it’s because we’ve seen for ourselves the wonders that economic development and technological advancement can bring—from modern medicine stopping diseases that were the scourge of civilizations for centuries, to buildings more able to withstand natural disasters than at any time before, to ever-widening access to the air conditioning he wishes us to use less of.“

“‘Entrepreneurial capitalism takes more people out of poverty than aid.’ With those 10 words, spoken to an audience at Georgetown University in 2013, philanthropist rock star Bono demonstrated a keener understanding of economic reality than the leader of global Catholicism.

The U2 frontman clearly has it right—and Pope Francis is wrong to suggest that poverty is growing, or that capitalism, free markets, and globalization are fueling the (non-existent) problem. In just two decades, extreme poverty has been reduced by more than 50 percent. ‘In 1990, almost half of the population in developing regions lived on less than $1.25 a day,’ reads a 2014 report from the United Nations. ‘This rate dropped to 22 per cent by 2010, reducing the number of people living in extreme poverty by 700 million.’

How was this secular miracle achieved? The bulk of the answer is through economic development, as nascent markets began to take hold in large swaths of the world that were until recently desperately poor. A 2013 editorial from The Economist noted that… ‘Most of the credit… must go to capitalism and free trade, for they enable economies to grow—and it was growth, principally, that has eased destitution.’“

As Slade explains, far from a scourge on the environment, capitalism is and has been a great blessing:

“Both the economics and the history are clear: The more prosperous the developing world becomes, the more it too will be able to demand and achieve livable conditions. If your goal is to move the world to concern for the preservation of biodiversity, the answer is economic growth. If you want to increase access to clean water, the solution is to increase global wealth, and the consumer power that comes with it. Studies have shown that deforestation reverses when a country’s annual GDP reaches about $3,000 per capita. While some environmental indicators do get worse during the early stages of industrialization, the widely accepted Environmental Kuznets Curve hypothesis convincingly argues that they quickly reverse themselves when national income grows beyond a certain threshold. If the pope wants a cleaner world, the best way to get there is by creating a richer world—something Pope Francis’ own policy recommendations will make more difficult.“

A theme in Slade’s essay is that Francis is simply confused. On one level, he seems to know that technological advance is of great benefit to mankind, yet he is extremely wary of economic growth and believes that less production and consumption is better. That would make the job of alleviating conditions for the world’s poor much more challenging, if not impossible! He acknowledges that the environment has improved drastically in some parts of the world, but he seems unaware that the same areas are the most economically developed, and have the most well-developed markets. Like most on the Left, he also seems confused about the real meaning of capitalism. And the Pope “often blurs the line between public and private action.”

Slade concludes with some messages for Catholics. First, the Pope’s opinions on matters of faith are said to be infallible, according to Catholic doctrine. But opinions on topics like capitalism and the environment are outside his sphere of infallibility. Second, Slade is rightly offended by the Pope’s attitude that libertarianism and a belief in the efficacy of free markets is not compatible with Christianity.

Thus far during the Pope’s visit to Cuba and the U.S., he has thrilled the murderous Castro brothers and spoken out in favor of Obama’s climate agenda. Raul Castro is so happy about the Pope’s opinions on capitalism “that he might ‘start praying again’ and rejoin the church“. I truly hope that members of the Catholic flock, or any others,  don’t take the Pope’s political exhortations too seriously.

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