20 Responses to Redistribution of Wealth: A Catholic Perspective

  • I would suggest that it would be far more consistent with Catholic teaching and the Biblical admonition we find in the Gospel of Matthew if the Church were the vehicle for assisting the poor and disadvantaged and not the State as it has been proven by history that the poor tend to be exploited by those politicians who use their poverty as a means of creating or maintaining power.
    If government reduced its role to the fundamentals and allowed and encouraged the private sector to assume its proper role as our brother’s keeper, in the strict sense of helping to improve his condition, I dare say that the effects would be more desirous than the current state of dependency upon the government.
    And given the penchant for government to grow larger and larger, consuming more of the private sectors’ disposable income, the opportunity for us as individuals to follow the commandment to “feed the hungry and clothe the naked” becomes more difficult.

    Thus I would provide for more limited government and generous incentives to encourage charity beyond the immediate needs of the person, and to create a means of helping him to throw off the chains of poverty.

    It is clear from the waste by government of our taxes in this regard that the private sector and the Church could do a whole lot better job and get more people off of the dole.

  • G-Veg says:

    Joe,

    Thank you for the thoughtful post. I will mull over it before I ask too many questions.

    One question in leaving though – What does the Church say of the responsibilities of those who need the safety net? One of the critiques of the system established under the Johnson Administration is that it sapped the will to and experience of honest labor, thereby creating a virtually permanent underclass. My guess is that the Church has as strong an argument for the duty to labor in support of one’s obligations as the argument for distribution you cite above.

    Can you speak to this as well?

  • Joe Marier says:

    Yes, so far so good.

    I would, though, make one point about partnership models: companies don’t always succeed, and if the worker-owner is part of a failed company, it means the worker-owner takes the hit both in cash income and loss of personal wealth. One basic principle of financial planning is to diversify your personal wealth, and to keep an extremely limited amount of your wealth invested in the company you work for. Partnership models tend to work against that principle.

  • Blackadder says:

    Government action almost invariably involves some form of redistribution. The question, to slip into Commie lingo for a moment, is Lenin’s one: Who, whom? Historically redistribution has been towards the ruling classes and away from everyone else. We might like to think that those days are long behind us, but as I’ve mentioned before, a lot of social programs aren’t actually very progressive, and many are regressive in nature.

  • E Seifert says:

    “the Biblical admonition we find in the Gospel of Matthew if the Church were the vehicle for assisting the poor and disadvantaged and not the State”.

    I heard this before, and the question I have is where is all this private charity that can help people in my situation. I was until 3 years ago a government employee looking forward to an average middle-class retirement (the kind that used to be the norm). My parents who worked hard all their lives couldn’t afford to retire on their social security. Sadly, they spent their money on sending their kids to private schools instead of banking it for their retirement. So they moved in with me. We lived an average middle class life, looking forward to having some leisure time when I retired. My Dad had a stroke in 1998, but remained functional for many years, and my Mom took care of his predominantly normal needs (the stroke oddly saved his life; he had inoperable lung cancer that was killed by radiation). Then the year before I was going to retire, Mom had a mild stroke. But I had to stop working to care for her. We lurched from one health problem to another from December 2005 to November 2006 (both parents) until I couldn’t handle it any more. So my sister got the parents. But as a result, I had to borrow (credit card checks)money to make up the income I wasn’t getting that year. I then had to raid my 401(k) to start paying back all that money. I was staying even until circumstances resulted in my mother coming back here. Great, until she fell and fractured her pelvis. And the economy tanked, so I was no longer earning enough on the 401(k) to equal the credit card payments. So, my 401(k) is disappearing. The credit card companies have decided to screw me by lowering my credit card limits to the balances, now they’re increasing my minimum payments from $700 a month to $1500 a month, which I don’t have, and they’re cancelling at least one of the cards. My mother’s health continues to deteriorate, resulting in higher medical bills that I’ve been charging as my regular retirement is just enough to pay the regular household expenses, not the extra. Thank God for Medicare and Kaiser Permanente, otherwise we’d have tens of thousands of dollars in medical bills that we couldn’t pay. I have to pay someone to take care of Mom when I go buy groceries or go to church – she has dementia in addition to her mobility problems. So, instead of normal retirement where maybe we can go to a national park or visit the parents’ grandkids or just relax for even a minute, I am having nightmares of how I can keep this up without having a nervous breakdown or declaring bankruptcy. My 401(k) is shot to pieces, feeding the greedy credit card company (Chase). The only thing keeping us alive is my pension, the tiny social security my folks get, Medicare and Kaiser. I’m hoping to apply for Medicaid to help pay someone to take care of Mom. I can’t afford to do it alone any more. Though California is cutting aid to the elderly and disabled so I may not qualify. God alone knows what we’ll do.

    So, back to my original question – where’s all this private charity to help us survive? Medicare, Medicaid, etc. were started because the private charity didn’t exist.

  • Joe Hargrave says:

    John,

    What about public financing of private projects such as cooperatives?

    G-Veg,

    I’m skeptical of the claims that welfare created a “permanent underclass”. There is a lot of garbage out there about welfare. Here are some myths debunked:

    http://www.fair.org/index.php?page=1302

    Now obviously if welfare were as bad as some people say, I’d be against it. Perhaps in the past it was worse than it is today. But temporary assistance to those who are in need of it is a necessity in societies that experience structural and cyclical unemployment.

    And sure I’d like to see more charity and a larger role for the Church. But how do we get there? Here I agree with what Michael I. was saying elsewhere – whats the alternative in the meantime? Whats the guarantee that if you pull the plug one form of help today that these others will be in place tomorrow? As far as I can see, none.

    JM,

    I’d say that the vast majority of people who would be partaking in worker ownership would have had very little wealth to diversify in the first place. I mean, 90% of stocks in this country are owned by 10% of the population. Meanwhile a worker-owner is going to have wealth in pretty much the same places as a wage worker.

    Over time, though, I see no reason why a worker-owner can’t save and invest and build whatever kind of portfolio he likes. I don’t think that a cooperative economy means the end of stock markets or any other kind of market.

    BA,

    I’m not sure whether or not the sort of ‘public financing’ mentioned in the Compendium counts as a ‘social program’ as we normally think about it.

    Anyway it is clear there is a logistical problem, and that is why I think organizations such as the US Federation of Workers Cooperatives have a good set of guidelines and incentives for loans that perhaps local or even the federal government could adopt, such as incentives for creating jobs among people who are poor or otherwise disadvantaged.

  • Joe Hargrave says:

    “So, back to my original question – where’s all this private charity to help us survive? Medicare, Medicaid, etc. were started because the private charity didn’t exist.”

    That’s my question too. Or rather, I know that there is some private charity out there, so the question is – why doesn’t anyone know about it? Why doesn’t anyone expect it?

    That we live in a society where the notion of charity is so alien to so many people is in itself a major problem.

    Can private charity support people like E Seifert? It’s a question that I don’t think has been tested. In the Middle Ages the Church was a social program – it took care of the poor and the sick. But the Church was also ubiquitous, and respected – without her, the feudal system would have been much worse and no concept of Christian duty would have existed.

    Today the Church is besieged, and worse still, endlessly mocked and ridiculed. There are billions diverted to lawsuits over sex scandals – churches are shutting down across the country because of it. And we have to remember that in the Middle Ages the Church owned roughly 1/3 of the property in Christendom; there are centuries of violent expropriations between then and now.

    In short we’re lucky to have a Church at all. We can’t expect it to fulfill the same role it did in the Middle Ages. And while private charity is a good thing, the Church’s attitude today is that charity must not be ‘humiliating’ – that it must not take on the same basic form as welfare.

  • G-Veg says:

    Joe,

    I don’t think my question warranted such a flippant response.

    You presented Church teaching on mitigating the harms of Capitalism through redistribution. I asked whether there is a complimentary teaching on the individuals duties to use his gifts to fulfill his obligations.

    You did not answer my question.

    That “welfare” or immigration or any other question of great importance is encumbered by myths is not news. I don’t, frankly, need a primer on why those who need assistance are deserving of such consideration. I understand that better than you know.

    I remain convinced that good social policy correctly honors the duties of individuals and the State. You have eloquently articulated the duties of the State. Are you up to the challenge of discussing the duties of individuals too?

  • Joe Hargrave says:

    G-Veg,

    I didn’t mean to be flippant. I apologize. Your question deserves an answer, and the answer is, the Church teaches that everyone who is able to do so has an obligation to work.

    I’m not sure what more can be said about it. The state doesn’t have an obligation to support those who can work but simply won’t.

  • Elaine Krewer says:

    E. Seifert, I am sorry to hear of your difficulties. They could just as easily have happened to me, since my parents (my dad passed away recently) are elderly, and I have a lot of debt to pay off as well.

    I note that you live in California, which as we all know, is going through a huge budget crisis. I work for the state of Illinois, which is going through the same thing. Already, numerous social service providers to the elderly and disabled have been forced to shut down or drastically cut back services. State employees may have to take 12 unpaid furlough days (one per month) this year.

    The most obvious and, of course, most controversial way to cover our budget deficit would be to raise the state income tax. Currently Illinois charges a flat rate of 3 percent, the lowest among states with flat rate income taxes. Yet even the mere suggestion of raising this provokes such outrage among voters that our lawmakers have courageously decided to wait another 6 months (by which time they will know if they have opposition in the February 2010 primary elections) before they decide what to do. So things could get a lot worse before they get better, that is, IF they get any better.

    Recently I read Dorothy Day’s autobiography “The Long Loneliness” in which she recounted her founding of the Catholic Worker movement with Peter Maurin. Although Day is usually thought of as being pretty far to the left due to her pacifism, she and Maurin were NOT fans of the New Deal social programs of the 30s. Maurin, especially, believed that letting government take care of the poor was another way of enslaving them, and of alienating them from the middle and upper classes. (To this day, many Catholic Worker houses and other insitutions don’t apply for tax exemption, because Day believed works of charity should be done for their own sake, and the government should neither encourage nor discourage them.)

    Seeing the hostility that sometimes rages on newspaper/political comment boards between people who depend on state-funded services for their survival (parents of disabled children, social workers, child abuse investigators, etc.) and others who insist that these people are all just greedy “tax eaters” sucking the life out of the middle class, I am beginning to think that Day and Maurin were onto something.

    However, to revert to the “good old days” when people “took care of their own” and government social programs were unnecessary is not something that can be done overnight. In fact, it would require turning back the economic and social clock at least 50 years, to the era when 1) most women stayed at home, 2) blue-collar jobs were readily available in most communities, 3) most adults who could read and write (and even some who couldn’t) could find work that paid a living wage, 4) divorce and unwed motherhood were rare, 5) most children or adults with severe disabilities died young or spent their lives in institutions, and 6) Catholic institutions such as hospitals and orphanages were run by Religious living under vows of poverty who didn’t have to worry about salaries, Social Security, or health insurance.

    I will conclude with this thought. Pope Benedict XVI wrote in one of his early documents (can’t remember the title offhand, though) that social justice and charity are complementary, and one can never replace or supplant the other. Building a just society is done via politics and social activism, he says, but even a perfectly just society will never remove the need for individual charity toward those in need.

  • Joe Hargrave says:

    “However, to revert to the “good old days” when people “took care of their own” and government social programs were unnecessary is not something that can be done overnight.”

    This is very true, Elaine, and it is also sometimes the hardest point to make.

    The state has stepped in and took over many roles that were once outside its province. Whether or not the conditions for that were brought about by the state itself, or by other forces, is besides the point.

    I think if you “pull the plug” a lot of people are going to fall right through the cracks.

    The necessary coexistence of justice and charity is a theme that goes way back in Catholic social thought as well. I was reading it in one of Pius XI’s encyclicals the other day.

  • Elaine Krewer says:

    “The state has stepped in and took over many roles that were once outside its province. Whether or not the conditions for that were brought about by the state itself or by other forces is beside the point.”

    Very true Joe, and it’s a point I wish more conservatives would take seriously. A responsible individual does not simply renege on his/her financial obligations, even if they were incurred unwisely or arguably should never have existed (for example, the obligation to support a child born outside of marriage). At the very least, he or she talks to those to whom such debts or obligations are owed and attempts to work out a sustainable payment plan, or failing that, legally declares bankruptcy and accepts the consequences.

    In some ways, the state has a similar obligation toward those who are dependent upon it. If spending on social programs like Medicaid, disabled/elderly services, retiree pensions, etc. is truly out of control, and cannot be sustained without massive and unreasonable tax increases — then cut back, but not necessarily all at once. If possible, draw up a multi-year program for cutting back enrollment or benefits at a reasonable rate that gives people time to find alternatives (and stick to it!). Or in the case of pensions, change the benefit level for new workers entering the system, raise the retirement age, etc. so that people in the system know what to expect and have time to adjust their financial expectations.

    It puzzles me that people who describe themselves as conservative and would never tolerate an individual simply refusing to pay their debts or to support their own children or disabled/elderly parents in need, think it’s perfectly all right for the state to do this as long as their taxes aren’t raised. I am NOT saying we have to remain a perpetual nanny state or that no social program can ever be abolished; but changing course needs to be done in a way that causes the least amount of harm to the vulnerable.

  • Joe Hargrave says:

    Elaine,

    “I am NOT saying we have to remain a perpetual nanny state or that no social program can ever be abolished; but changing course needs to be done in a way that causes the least amount of harm to the vulnerable.”

    I think this is exactly what the Church teaches as well. And it may be what many conservatives believe, but they haven’t done a good job articulating it. The bottom line is that any policy that is going to leave needy people in the lurch is unacceptable. If we’re going to do away with the welfare state, it has to be replaced with something immediately.

    None of us are obliged to wait for a renaissance of private charity that may never come. We have a right to insist that welfare be replaced with policies that will better enable local communities to provide what the welfare state was providing. We need to see real proposals and we need to know that people in our area are willing to actually do what needs to be done.

    I think it would be a mistake to simply assume that they would. I think a working infrastructure needs to be in place before the plug is pulled on welfare.

  • Caritas in Veritate mentions redistribution of wealth no less than eight times. And as is clear from the post, this is consistent with the long tradition of Catholic Social Teaching.

    Nevertheless, a distinction has to be made between redistribution of wealth and redistribution of income. The later is the Keynesian technique for rebalancing incomes within an economy. The plain truth of the matter is that markets do not work where there is a concentration of incomes, where there are huge disparities between wealth and poverty. The Keynesian solution is to allow the markets to continue to produce income in an inequitable manner, and then to tax and redistribute that income. This solution has worked well for the last 60 years, but it is far from optimal and is, in any case, breaking down. It creates the nanny state on one hand and dependency on the other. And the new encyclical actually attacks this solution in paragraph 37.

    The other issue is redistribution of wealth, that is, income-producing property. Property in CST is a sacred but limited right whose purpose is to ensure that those who work get the full benefit of their labor. This is the solution that the Church has favored since Rerum Novarum. It is an economically sound position, because all market theory (with the exception of the Austrian strain of libertarianism) are based on the “vast number of firms” condition, which states that production for any given commodity is spread over such a vast number of firms that no one firm has any pricing power. Without this, the market is not free. But the precondition for the vast number of firms hypothesis is that property be widely spread throughout society. Thus, the Church’s solution is more free-market than most so-called free market solutions.

    The best political response to this that I have seen is Phillip Blond’s “The Civic State” which has three aims: re-moralize the market; re-localize the economy; re-capitalize the poor. Blond is a part of the “Red Tories” in England, and the conservative party leader, David Cameron, has endorsed the idea, at least officially. Read Blond’s speech on this subject at http://www.demos.co.uk/files/File/Phillip_Blond_-_The_Civic_State.pdf

    It is the best brief speech in politics I have heard in decades.

  • Yes, he’s on my Facebook as well, although I am not really into the social networking scheme. I got to meet him last week in Nottingham, where we were both presenting papers, and I was impressed. I looked up his speech to the Tories. Good article for InsideCatholic.

  • Micha Elyi says:

    Redistribution of wealth.

    The envious have often found that to be an effective catch phrase for duping others into accepting covetousness as a way of life. However when examined, the phrase is found out to be meaningless.

    For redistribution to be possible, the stuff in question had to first be distributed. In America, as much as the State meddles in people’s lives – especially their economic lives – one cannot honestly claim that the principle source of wealth is some sort of distribution mechanism. Therefore, talk of redistribution of wealth is either mistaken or dishonest.

    There are a few cases in which talk of distribution and redistribution can be honest. For example, the manna in the desert that fed the Israelites fleeing Egypt was distributed, then gathered and redistributed. In contrast, wealth in America does not drop from the sky or appear by some other supernatural means – however much the envious would like to attribute wealth to mere luck. Outside of the narrow, technical statistitician’s sense of the word “distribution,” to speak of wealth in America being obtained through some form of distribution (that implies a distributor) is misleading. To talk of redistributing wealth is doubly misleading. Honest earners do not need to mislead. The dishonest and the envious do.

  • Joe Hargrave says:

    Micha,

    Talk of wealth redistribution is a mainstay of Catholic social teaching. I’m sorry if that bothers you.

    The integrity of society, the dignity of the worker, and social justice are Catholic social priorities.

    I’m glad to be in the camp of such “dishonest” Pontiffs.

  • Redistribution is also a mainstay of economics. When wealth and income concentrates, economic mechanisms no longer work. When income is concentrated, the market narrows and purchasing power is lost, since the upper levels cannot spend as efficiently as the lower levels. Further, the narrowing of the market reduces investment opportunities, so that there are fewer good investments and the over-supply of capital is forced into speculation rather than real investment.

    When wealth (the means of production) is concentrated, the “vast number of firms” hypothesis–which lies at the heart of all free market pricing theory–is falsified and the pricing mechanisms no longer work. We did not go to a system of redistribution in the 40′s because of some supposed socialist conspiracy, but because of a capitalist consensus that this was the only way to make the economy stable.

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