President Donald J. Trump’s economic program, at least what we know of it, fits comfortably with free-market ideas but conflicts with Catholic social thought as embedded in a number of social encyclicals and the U.S. bishops’ 1986 letter on the economy, “Economic Justice for All.” The bishops’ pastoral letter argues that concern for human dignity in social solidarity is at the core of Christian faith. Catholic social thought reflects a communitarian conception of society that prioritizes the common good. Because economic institutions and policies have a major impact on human dignity they raise not only technical but moral concerns as well. Therefore, the bishops argue, every perspective on economic life that is human, moral, and Christian must be shaped by three questions: What does the economy do for people? What does it do to people? And how do people participate in it? In addition, the bishops argue that in pursuing the common good special concern must be given to the economy’s impact on the poor and powerless because they are particularly vulnerable and needy.
Free-market thought, by contrast, is the child of an eighteenth-century liberalism that repudiates the very idea of a common good: society is merely a collection of individuals who enter into voluntary exchanges driven by self-interest. Individual liberty is the highest good, and, if individuals are left free to pursue their self-interest, the result will be the maximum material welfare. Advocates of this approach argue that the best way to deal with economic problems is to rely on the individual’s pursuit of self-interest in a private-property system, regulated by the forces of market competition; the government, in this view, should act as the neutral umpire of the rules of the economic game. In order to have an income each person has to provide something (a product, a service, or their labor) that others want and are willing and able to pay for, and through a process of voluntary exchange, overall production will be maximized while at the same time protecting individual freedom.
Stefano Zamagni has elaborated the differences between Catholic social thought and free-market approaches to the common good:
Freedom has three dimensions: autonomy, immunity and empowerment. Autonomy has to do with freedom of choice. Immunity has to do with the absence of coercion. It is, in brief, the negative freedom (that is to say the “freedom from”) cited by Isaiah Berlin. Empowerment, in the sense given to it by Amartya Sen, has to do with the capability to choose—that is to say to reach goals that are set, at least in part, by the person himself. One is not free if one is never (at least partially) able to fulfill one’s own life plan.
Free-market thought focuses on autonomy and immunity while neglecting empowerment. But the concept of the common good within Catholic social thought is the connective tissue that binds these three dimensions of freedom together: autonomy, immunity, and empowerment. The bishops’ three questions—what does the economy do for people, what does it do to people, and how do people participate in it—reflect these three dimensions of freedom.
The Trump administration has not embraced free-market policies on every issue, but the core tenets of free-market thought are central to his economic program: that markets work well; that government controls are seldom effective; and that investors, who are the driving force of the economy, must be given incentives such as lower taxes and fewer regulations to perform their magic. These are dubious assumptions, and putting them into practice is unlikely to “make America great again.” Catholics attentive to our tradition of social and political thought especially should be wary of such policies. Taking the examples of tax cuts and deregulation, both at the heart of Trump’s economic vision, will show why.
Trickle-down economics rests on the idea that policies that benefit the wealthy will ultimately help everybody, even the poor. The term was coined by Will Rogers, who observed of President Herbert Hoover’s 1928 tax cuts: “The money was all appropriated for the top in the hopes that it would trickle down to the needy. Mr. Hoover... [didn’t] know that money trickled up.”