Blessed Are the Rich

Samuel Gregg's 'Tea Party Catholics'

Christianity has always been skeptical toward arguments that defend the selfishness, greed, or self-interest of the rich and powerful as a necessary condition for the peace and prosperity of all. In his first apostolic exhortation, Pope Francis denounced a contemporary version of this kind of argument, describing “trickle-down economics” as an opinion that “has never been confirmed by the facts.” This theory has failed, he writes, to bring about “greater justice and inclusiveness.” Recent economic history supports the pope’s judgment. In the past three decades, deregulation and tax cuts for the rich have not helped the poor, while cuts to social-service programs have predictably hurt them.

But not everyone has noticed. The Acton Institute, a Catholic think tank based in Grand Rapids, Michigan, is devoted to reconciling trickle-down economics with the church’s social teachings. In the gospel according to Acton, the church’s preferential option for the poor is really a preferential option for laissez-faire economic policy, which they believe is a sure path to universal prosperity. Blessed are the poor, for they shall enjoy the fruits of free enterprise if only governments will get out of the way.

The institute’s director of research, Samuel Gregg, has recently written a catechism of the Acton creed, Tea Party Catholic: The Catholic Case for Limited Government, a Free Economy and Human Flourishing. Despite the book’s title, Gregg wisely ignores much of the Tea Party’s actual political agenda, which even the Acton Institute might have trouble defending, based as it is on ignorance of basic economic realities and anxiety about the loss of white privilege. Instead, Gregg expounds the theory that “limited government” will allow a “free economy” to promote “human flourishing.” Since no one is in favor of unlimited government, “limited government” wouldn’t seem to be a very useful term. But in Actonese, “limited government” really means minimal government: a government that upholds the rule of law, paves the streets, and throws a few crumbs to the starving. Capitalism will do the rest.

In fact, minimal government always turns out to be government for the rich and powerful, protecting their property, investing in services that help their businesses, and leaving them free to exploit the poor—and leaving the poor “free” to be exploited. In the past two centuries, greater justice and inclusiveness—economic, social, and political—has come through collective action, not individual striving. It was democratically elected governments that came up with minimum-wage laws and programs like Social Security, public education, and universal health care. It has been the bargaining power of labor unions, another form of collective action, that has forced big employers to provide decent wages and benefits to their workers. Pace the Acton Institute, it simply isn’t true that whatever benefits the rich will also help the poor. But it is true that policies that help the poor and middle class also help the whole economy by creating greater demand for the goods it produces. Conservatives often claim that governments do not create wealth, that only businesses create wealth. In fact, no wealth can be created or secured without extensive government involvement. And it’s not only roads and law enforcement that modern economies require from governments; they also need a healthy and educated workforce.

This is not to say that government should take over all the functions of the economy. Most economic activity is best carried out by individuals, small groups, and businesses, with the government playing the supportive role of referee, as well as providing goods and services the private sector cannot effectively provide. Exactly how much the government should do is always a question of prudential judgment, as Gregg’s book often acknowledges. But prudence requires careful and honest observation. There can be no prudential judgment about economic policy without reference to the actual historical and social context of economic activity. Absent such context, all you have is one-size-fits-all ideology. Tea Party Catholic does not seriously address the available evidence about the economic issues we face at the beginning of the twenty-first century; nor does it attempt to engage with the “social-justice Catholics” with whom Gregg disagrees. Instead, he just amplifies the old talking points of free-market ideology, presenting it as the cure for every ill, including the ills it has caused. In the wake of the financial meltdown of 2008—a disaster made possible by deregulation—and in the midst of growing economic inequality, to go on repeating these points is odd, if not pointless.

For someone so inclined to stick to an abstract theory, Gregg is strangely careless about the history of economic theory. He misrepresents the distinction all economic theory makes between value and price—the distinction that makes economic theory possible in the first place. He misrepresents not only Marx’s theory of value but also Adam Smith’s (in fact, Smith had two theories, neither of which is the one Gregg attributes to him). He claims that St. Thomas Aquinas believed that “the normal measure of value” is the price “in the settings of ‘the market.’” But “the market” as Aquinas knew it was nothing like the theoretical competitive market Gregg has in mind; thirteenth-century markets were controlled by guilds and tradition and not “market forces” as economists understand them. But even in modern terms, value is different from the market price on a given day. If it weren’t, price and value would be equivalent terms. Value, as economists use the term, is the long-term equilibrium price—the point toward which prices will tend if there is sufficient competition. This term allows economists to view the economy as an orderly system, but real economies often suffer from conditions that keep free markets from producing the best social outcome. This is called a market failure, and, as the term suggests, real markets can fail: in the real world of conflicting human interests and imperfect information, they are not infallible, self-directing systems. Sometimes markets don’t function well because of too much government interference, sometimes because of too little. What matters most is not the degree of the government’s involvement but the purpose of its involvement.

 

BESIDES GETTING THE theory wrong, Gregg’s use of history is highly problematic. He mentions Charles Carroll as an early example of Tea Party Catholicism. Carroll was the only Catholic to sign the Declaration of Independence, and Gregg presents him as one of a group of Catholics in colonial Maryland who, because Catholics were excluded from public life, put all their energy into business pursuits and became very successful. At the time of the War of Independence, Carroll was reportedly the richest man in the colonies.

But that’s only part of the story. Gregg doesn’t mention that, while Carroll was by all accounts a very good businessman, he owed his inherited fortune to the insider trading of his grandfather, who was Lord Baltimore’s land agent. And much of Carroll’s wealth consisted of the human beings he owned. In fact, he was the largest slaveholder in Maryland. In short, Carroll was hardly an example of a free-market success story.

The quality of Gregg’s analysis does not improve when he gets to the contemporary scene, partly because he insists on the continuing relevance of eighteenth-century ideology in a world whose economy has little in common with that of our nation’s founders. Gregg says the gold standard is something Catholics “are free to argue about among themselves”—yet another question of prudential judgment. But of course the stupidity of promoting a gold standard has nothing to do with Catholic moral principles. A commodity-based currency only makes sense in an economy where most people are Self-sufficient farmers, and where commercial exchange is the exception rather than the rule. In an economy like ours, you need an elastic money supply that grows and shrinks according to the needs of commerce.

Debates about the best scope and scale of government are fundamental to collective deliberation about our future. Such debates change from one generation to the next for the simple reason that our society is continually changing. It’s no use imagining that these debates could have been settled once and for all by a thirteenth-century Dominican or our eighteenth-century founding fathers. No doubt there are things we can still learn from these people, but they have nothing to tell us about problems they could not have anticipated: Aquinas doesn’t discuss credit-default swaps or health insurance or automation. We can only hope to be as attentive to the facts that surround us as those intellectual giants were to the facts that surrounded them—and as open to new possibilities. The goal should be economic policies that suit our current needs, not slavish devotion to theoretical models designed to meet the needs of economies very different from our own. Free-market fundamentalism—an economic ideology that does not fit existing economic realities and often ignores them—is really an enabling myth for the 1 percent, designed to keep those without economic power from questioning the status quo. It is both tragic and farcical when this myth is confused with Catholic social teaching and presented as a defense of freedom.

Published in the June 13, 2014 issue: 

Charles M. A. Clark is professor of economics at St. John’s University in New York. 

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