Vatican newspaper: “New economy” is a “sham”
I haven’t seen much from church leaders on a Catholic view of the financial crisis, though the church has long-standing teachings and resources that I think could be useful–and an antidote to some of the idolatry and fatalism of unfettered free-marketeering. (“Hey, stuff happens. No pain, no gain. Caveat emptor, don’t you know…”)
So I was glad to see this piece in L’Osservatore Romano, the Vatican’s official newspaper (with an increasingly provocative voice, however), as written up by CNS. The article, “A costly illusion,” was written by Ettore Gotti Tedeschi, an Italian economist and professor of financial ethics at the Catholic University of the Sacred Heart in Milan, Italy.
The U.S. financial meltdown has been blamed on “the greed of managers and lack of regulations. But curiously, no one ever refers to the indirect responsibility of the government’s economic policy” which, he wrote, tried to cover the lack of any real economic development with a booming Wall Street.
He said the U.S. government’s proposed bailout may stave off any worst-case scenario for its troubled financial markets, but it will not repair the root causes of the crisis.
“Despite various attempts, the Western world does not know how to map out a model of development that is capable of guaranteeing stable wealth,” the article said.
The West has “not succeeded with its new economy project, it did not succeed with accelerating growth in Asia by transferring low-cost production (there), and it did not succeed after inventing a boom in the GNP through risky financial models that were poorly conceived and badly regulated,” it said.
“In order to maintain this sham GNP, the banks financed things that were not guaranteed” and that should not have been financed, like the subprime loans, it said. Financial institutions created an “economic growth out of debt and, therefore, (created something) very risky,” it added.
The article said the lesson to be learned is that nations cannot build a healthy economy or experience real development if it is not based on “balanced demographic growth.”
It said the world economy also needs to be run responsibly and transparently with precise rules.