Phil Lawler, former editor of Catholic World Report and director of CatholicCulture.org, has an excellent commentary today on the new document from the Pontifical Council for Justice and Peace. I hardly know which part to excerpt, since the whole thing is so good. But here’s a sample:
…[P]erhaps the Vatican might learn a few lessons from economic analysts. Just for instance:
- that government does not create anything, and therefore does not have funds unless it obtains those funds from ordinary people: taxpayers;
- that the world’s financial system is currently endangered because of the soaring level of government debt;
- that regulatory agencies have an abysmal record of failure in protecting the public from market fluctuations, speculative bubbles, and even outright fraud—and it is only reasonable to expect that a worldwide authority would reproduce those failures on a global scale;
- that government interventions in the markets invariably produce unintended consequences, many of them deleterious;
- that government regulation invariably furnishes opportunities for powerful corporations to manipulate the market for their own purposes, to the detriment of the general welfare.
Oh, yes, and most important of all:
- When an obscure Vatican agency issues a statement that contains 50% solid Catholic social teaching, and 50% flaky leftist theory, the world’s media will ignore the distinctively Catholic content—what the Church should say, what the world should learn—and concentrate exclusively on the leftist theory. So for the great mass of ordinary readers, who will never read the full document, but only scan the headlines, the important message will be lost. What will register, instead, is that the Vatican has not learned its lessons about economic affairs and political realities.
Over at Crisis Magazine, Jeff Tucker has a column called “The New Vatican Document on Finance: Right Diagnosis, Deadly Cure.” A sample:
Nonetheless, the document’s identification of loose credit with market liberty is the beginning of the end of the good sense here. From this point, we plunge straight away into a full endorsement of a world central bank, a world political authority, taxes on financial trading, and heavy regulations. The document doesn’t actually call for an end to the free market. On the contrary, it imagines that enlightened world planners will protect, guard, and even “create” what it calls “free and stable markets.”
This is beyond naive. It seems to illustrate a near total absence of clear thinking. Centralization of money and credit caused this problem. Centralization of political authority caused this problem. Why would anyone imagine that more centralization is therefore the answer? This approach takes a terrible situation and makes it much worse.
Probably this document had many authors, one of whom gets the Austrian theory of the business cycle. He prevailed in the first section. Another author seems to know nothing about politics and power or the history of the problems of centralized states and central banking. He prevailed in the second section. Tragically, this document is music to the ears of the very institutions that are responsible for our current plight. The document might as well announce to the world: “Give the power and financial elites more power!”
Finally, in addition to my NPR commentary I have a piece up at LewRockwell.com today; a sample:
The widespread misdiagnosis of the crisis now engulfing us has led to the frequent claim that lax regulation, or deregulation, must have caused it, and that better supervision of the system can prevent future crises. This is a delusion, albeit a common one.
In the United States we have 115 agencies that regulate the financial sector, and the Securities and Exchange Commission never had a bigger budget or staff than under George W. Bush. There has been a threefold (inflation-adjusted) increase in funding for financial regulation since 1980. For reasons I’ve explained in my 2011 book Rollback, the repeal in 1999 of one provision of Glass-Steagall had zero to do with the financial crisis. Europe has never operated under Glass-Steagall-style restrictions and is none the worse for it. There is no repealed regulation that would have prevented the crisis consuming the world right now.
The banking industry is by far the least laissez-faire sector of the U.S. economy; it is a cartel arrangement overseen by the Federal Reserve and shot through with monopoly privilege, bailout protection, and moral hazard.
The present malaise, therefore, does not call for another layer of supervision, as the Pontifical Council appears to think. It calls for a serious moral and economic reevaluation of institutions, among them central banking and fiat money, that we have long taken for granted, and in support of which all manner of historical and theoretical fallacies have taken widespread root.