“Towards Reforming the International Financial and Monetary Systems in the Context of Global Public Authority” – a roundup of reactions

On Monday, the Vatican’s Pontifical Council for Justice and Peace published a statement on the global economic crisis: “Towards Reforming the International Financial and Monetary Systems in the Context of Global Public Authority” [click link for full text]

Suffice to say, reactions were spirited (and in many cases, predictable), reflecting “a tired pattern”, to quote Zach (Civics Geeks)

Everyone once and a while there is a news story about “the Vatican”. “The Vatican” issues a document of some sort. The document says something about current affairs. Immediately there are two very predictable reactions, depending on whether the person is inclined to agree with the Church or not.

  1. “Look! The Church teaches that Catholics have to think like I think! My opinions have acquired divine authority. The world would be a better place, and the Church would be a better Church, if every Catholic just obeyed Church teaching like I do.”
  2. “I don’t have to obey the Church – I can think for myself. It’s fine if some old white men in Rome think that, but I don’t have to and I am still a good Catholic.”

These are, of course, caricatures, but I think they express two attitudes that are quite common. They are alike in that they are both dogmatic and reactionary.

What follows then are some mostly thoughtful responses — fodder for a discussion here at American Catholic).

  • “The Pope, Chaplain to OWS? Rubbish!” – George Weigel in a characteristic clarification from National Review‘s The Corner, on those who would imbue the document with too much authority:
    The truth of the matter is that “the Vatican” — whether that phrase is intended to mean the Pope, the Holy See, the Church’s teaching authority, or the Church’s central structures of governance — called for precisely nothing in this document. The document is a “Note” from a rather small office in the Roman Curia. The document’s specific recommendations do not necessarily reflect the settled views of the senior authorities of the Holy See; indeed, Fr. Federico Lombardi, the press spokesman for the Vatican, was noticeably circumspect in his comments on the document and its weight. As indeed he ought to have been. The document doesn’t speak for the Pope, it doesn’t speak for “the Vatican,” and it doesn’t speak for the Catholic Church.

  • Pope Benedict Calls For “Central World Bank” … Only He Didn’t. Here’s Why – Thomas Peters (American Papist) counters the spin of Fr. Tom Reese, who “seems perfectly happy to help the mainstream media fundamentally misunderstand the authority of teaching this document enjoys, [claiming] that the pope has “more in common with the people at occupy wallstreet” than the tea party.”

  • “while economists are learning from the Vatican, perhaps the Vatican might learn a few lessons from economic analysts” muses Phil Lawler (Catholic Culture): “If you want to promote Catholic social teaching, don’t wander beyond your expertise. Stick to moral principles, and leave economic analysis to the economists.”

  • Also weighing in from “The Corner”, Dr. Samuel Gregg with Catholics, Finance, and the Perils of Conventional Wisdom:
    Plenty of other critiques could — and no doubt will — be made of some of the economic claims advanced in this PCJP document. As if in anticipation of this criticism, the document states, “We should not be afraid to propose new ideas.” That is most certainly true. Unfortunately, many of its authors’ ideas reflect an uncritical assimilation of the views of many of the very same individuals and institutions that helped generate the world’s most serious economic crisis since the Great Depression. For a church with a long tradition of thinking seriously about finance centuries before anyone had ever heard of John Maynard Keynes or Friedrich Hayek, we can surely do better.

    (Samuel Gregg is research director at the Acton Institute. He has authored several books including On Ordered Liberty: A Treatise on the Free Society, his prize-winning The Commercial Society, Wilhelm Röpke’s Political Economy, and his 2012 forthcoming Becoming Europe: Economic Decline, Culture, and America’s Future).

  • Mark Brumley, President and CEO of Ignatius Press, on “Going the way of World Government” (Catholic World Report):
    If the Pontifical Council for Justice and Peace is trying to make the Catholic Church sound as if she’s living in a fantasy world or trying to portray Catholic social teaching as completely irrelevant to real world problems, I’d say, “Mission accomplished.” If, on the other hand, the council wants people seriously to think about the problems of globalization, it’s going to have to demonstrate a much better grasp of political and economic practicalities, as well as the limits and dangers of international solutions. At the risk of sounding like an End of the World visionary, I suggest we should temper our enthusiasm for world-authority solutions by re-reading the Catechism of the Catholic Church, paragraphs 675-677, and by consulting the Book of Revelation, chapter 13.

    By all means, let’s discuss global problems and possible solutions. Let’s recognize the dangers of nationalism and the imbalances that exist between rich and poor nations. Let’s not overlook the weakness of international capitalism or pretend the free market has all the solutions. Let’s have a good philosophical discussion about world government, and its long-term prospects, if the world endures for a few more centuries. But let’s remember that, historically speaking, those who have tried to act on their talk about a world political order have wound up being tyrants.

  • Jeffrey Tucker, editorial vice president of the Mises Institute, author of Sing Like a Catholic (2009) and Bourbon for Breakfast
    (2010), and (familiar to many readers) as a daily contributor to The New Liturgical Movement“Right Diagnosis, Deadly Cure”:
    … 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.

  • Over at Commonweal, “unagidon” asks “do we need a Global Public Authority to fix the economy?” — and answers in the negative.

  • “The Vatican Renders Unto Caesar”, by Nicholas G. Hahn III (Real Clear Religion) 10/25/11:
    Any sane person can recognize that the notion of another global civil authority flies in the face of subsidiarity. Simply because the Council says subsidiarity should regulate the relationships of authority, doesn’t mean it actually will.

    In fact, global institutions do not often respect autonomy or individual freedom of their memberships. Perhaps even Pius XI, for all his griping against the “greed” of financial systems, might consider the creation of a new “supranational Institution” a “grave evil and disturbance of right order.”

    And so, a question that must be asked is: does Rome want a king?

    Dr. Robert Moynihan (editor, Inside the Vatican):

    The positive thing: this document, in keeping with all of the Church’s social teaching, wishes to defend honesty, transparency, truthfulness and justice in financial dealings over against dishonesty, opacity false representations and injustice.

    In this, the document is to be praised, and praised highly. We need honesty and truth-telling in a global economy that is seemingly careening toward a train wreck which will inevitably hurt the poor and weak most of all.

    The negative thing: the global economy, and especially the global derivatives market, is big, enormous, in fact, so big, so opaque, so complex, that literally no one knows what the situation really is, or what measures to take to undo the financial detonator that seems ready soon to go off.

    In this sense, the Vatican office’s policy recommendations are inevitably insufficient.

  • John Allen Jr. (National Catholic Reporter), counters the critics by calling attention to “a southern consensus”:
    Focusing on how much papal muscle the note can flex, however, risks ignoring what is at least an equally revealing question: Whatever you make of it, does the note seem to reflect important currents in Catholic social and political thought anywhere in the world?

    The answer is yes, and it happens to be where two-thirds of the Catholics on the planet today live: the southern hemisphere, also known as the developing world.

    It’s fitting that the Vatican official responsible for the document is an African, Cardinal Peter Turkson of Ghana, because it articulates key elements of what almost might be called a “southern consensus.” One way of sizing up the note’s significance, therefore, is as an indication that the demographic transition long under way in Catholicism, with the center of gravity shifting from north to south, is being felt in Rome.

  • Disputations reflects on lessons of the Tower of Babel in the concluding paragraphs of the document:
    … the story of Babel not only warns us that we are bound to lack concord if we don’t speak the same language, but — reading it in parallel with the story of Pentecost — that the concord upon which any global authority must be founded to thrive in virtue is nothing less than the peace of Jesus Christ.

    As a practical matter, the world is some way away from establishing that foundation. Whether Christians possess the peace of Jesus Christ in sufficient fullness to serve as the cement which, when mixed with the world’s crushed stone, can form a concrete of sufficient strength to bear the weight of the Pontifical Council for Justice and Peace’s proposals is, I suppose, open to question.

  • Notes on the Vatican Statement on Global Financial Reform – solid, section-by-section analysis by DarwinCatholic (American Catholic 10/26/11), revealing points that are congenial to both ends of the political spectrum (“There’s much in here that American conservatives and libertarians are not going to like, but there’s just as much that leftist Catholics (particularly populist ones) aren’t going to like either (if they read it.)”).

See additional responses from Rick Garnett @ Mirror of Justice (“many are (perhaps strategically and tactically) mis- and over-reading the Note in order to overstate the consonance between its vision and the current policies of the Democratic Party in the United States and its special-interest constituencies”); Michael Brendan Dougherty @ Business Insider (“WHOOPS! Vatican Lets Slip Plans For One World Government”); Fr. John Zuhlsdorf; Sean P. Daily of Gilbert magazine (“if there is one institution that could unite us, even if it unites [distributists and followers of the 'Austrian' school] only in opposition, it is the Pontifical Council on Justice and Peace”) — and, now blogging for The American Conservative, Rod Dreher hosts a vigorous discussion on his blog here; here; here and here.

16 Responses to “Towards Reforming the International Financial and Monetary Systems in the Context of Global Public Authority” – a roundup of reactions

  • “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.”

    This basically sums up my view, along with the assumption that it has as much chance of being carried out as does Michael Moore of making a truthful movie. My other reactions are that Vatican bureaucrats have way too much time on their hands obviously if they can waste it putting together such Cloud Kukooland proposals, and “My Peter’s Pence collection money helped pay for this drivel?”. The saving grace for me is remembering other initiatives throughout history that have emananted from Vatican bureaucrats and which are now, mercifully, forgotten except for people like me of an antiquarian bent.

  • From Phil Lawler’s comment on this dog’s breakfast of a proposal:

    “However, while economists are learning from the Vatican, perhaps 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.

    Those are the economic lessons. There are some political realities that the Vatican might eventually recognize, too. Say:
    •that the UN, the World Bank, the European Union, and other international organizations are not friends of the Catholic Church, and probably never will be;
    •that any international agency empowered to regulate financial markets will—following a pattern that is now well established—be exploited by social engineers to promote contraception, legal abortion, and legal recognition of same-sex marriage;
    •that liberal politicians will gladly accept and exploit the Vatican’s statements on economic affairs, while continuing to work assiduously to promote the culture of death;

    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.”

    http://www.catholicculture.org/commentary/otn.cfm?id=856

  • RR says:

    The document is worth a read. Section 1 is a largely unobjectionable historical summary. Section 2 is good teaching if you get past the politically-charged terminology. Section 3 is the most important IMO. It’s orthodox teaching often ignored by the hyper-subsidiarists. Centralization need not violate subsidiarity! Section 4 contains the controversial prescriptions, namely a central monetary and financial authority.

    Given that centralization doesn’t necessarily violate subsidiarity, is there is a need for an international monetary and/or financial authority?

    We had a voluntary international monetary convention in the Bretton Woods system. I’m no expert but from a distance, a global monetary authority seems like a good idea. Specifically, a global reserve currency like the IMF’s SDRs. Countries wouldn’t have to abandon their own currencies.

    The global financial authority envisioned in the document is more problematic. There are three suggestions mentioned: (1) A Tobin tax, (2) a bank bailout fund, and (3) Glass-Steagall. Sweden had to abandon its Tobin tax. If you want to raise revenue, there are better ways. I was going to dismiss the other two points but remembered the whole reason the document is addressing this subject in the first place, i.e., to promote the common good. Imagine a poor farmer in a nation with a weak government. He’s drawn in by a bank’s promises. How do we protect him from getting screwed? I don’t know if bailout funds and bank regulations are the answer but they do speak to a real problem that probably requires a global authority. My preliminary thoughts are some kind of minimal financial standards backed up by trade sanctions against offending nations. Like a Universal Declaration of Human Rights for economic rights.

  • The re-presentation of Phil Lawler’s comments actually seem to demonstrate his lack of familiarity with the financial situations that put the economy in peril — at least with regard to the American economy.

    Primarily what jumps out of Lawler’s comments is regarding regulation. While a central regulatory agency might present problems of its own, the problem in American finance was due to a significant de-regulatory environment; namely, the creation of previously outlawed derivative instruments, primarily backed by toxic credit products, that created artificial capital assets in financial institutions.

    In the case of what spurred the American crisis, it was not the failure of regulatory agencies, but instead the deregulation by governmental/political forces that allowed the system to be put at risk. That risk became peril when a small sector of credit backing these derivatives folded, and the phony capital was lost … causing credit tightening, closing of business lines of credit, etc., which spiraled into the other areas of the economy.

    This type of behavior, and similar, by investment banks has led the SEC to fine several hundreds of millions of dollars each. But, no one’s put a stop to this type of behavior. Recently, Bank of America’s Merrill Lynch moved huge amounts of toxic derivatives to its depository arm, so if they go belly up … Merrill Lynch is protected, while the FDIC will have to come to the rescue of depositors — in other words, another taxpayer bailout.

    But, that’s the financial side of this. To turn to the moral side … well, there is no morality and ethics in what the “free markets” are churning out these days. There’s no concern about what it means for growing global and national poverty. And I would hope that the PCJP would take on those types of issues, speaking to the duty businesses, markets, financial institutions, and society in general has to promoted, protect and defend the common good and general welfare of the poor, sick, elderly, young, and unemployed. It is in their failure to do that, that I think this document really fails the Church and all the aforementioned segments of our society.

  • Deregulation did not cause this mess Catholicsphere, but rather a willingness on the part of too many in government not to let businesses that made dumb decisions fail. Unlike the Pope, and bloggers (: , business men and women are not infallible and make dumb decisions every day and normally, in a free market, if enough dumb decisions are made, the enterprise fails. This is precisely what should have happened here.

    Politicians by and large are certainly not smarter or more honest than the average business man or woman, so the idea that regulatory regimes will save us is illusory. What will save us is a robust market where losers end up as vulture bait and winners thrive. So long as government bails out losers in the economy, we will not come out of the current recession/depression. There is no substitute for the free market if economic prosperity for the greatest number of people possible is the goal.

  • Alex Binder says:

    Donald–

    Isn’t the common good the goal? Not simply economic propserity?

    Has the market ever truly been free?

    And to everyone, shouldn’t we read what the Popes have actually said about a global authority and global relations in general before inserting our own interpretations about what an economist at the Vatican said?

  • Define common good for me Alex. It is a term that is often tossed around but it fails to recognize that goods often clash. In regard to economics I think economic prosperity for the greatest number is far preferable to equality in poverty.

    Market freedom has varied throughout history. As a rule, I believe there is a fairly high correlation between market freedom and economic prosperity.

    “And to everyone, shouldn’t we read what the Popes have actually said about a global authority and global relations in general before inserting our own interpretations about what an economist at the Vatican said?”

    I have done so.

  • Foxfier says:

    Donald-
    an illustration of your point, perhaps; ask folks if it’s better if everyone is a two on a scale of one to five on wealth, or that the majority be a three or four and there be a few fives. You may or may not be surprised to see how many think the prior is superior to the latter….

  • Everyone is in favor of equality Foxfier until they need something done, and then everyone wants the best: lawyer, doctor, plumber, you name it. I think Americans are more tolerant than many other peoples of the idea that we all have different abilities and that some people are going to excel in some facets of life. In my experience most people are usually willing to pay a high price for good quality when it counts.

    In regard to economics and history I rather like this Robert Heinlein, perverse jerk though he could be at times, quote:

    “Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded – here and there, now and then – are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. This is known as “bad luck.”"

  • Foxfier says:

    A slight detour:
    this morning during my routine, I had a chance to marvel: really hot water in the shower, a cup of inexpensive but very drinkable coffee, two healthy little girls who either wouldn’t have survived birth a century back or I wouldn’t have survived the saving of them, in a house that’s just a bit chill for the first ten minutes out of thrift instead of picking ice out of the washbasin for the first hour, we’re all in really good health without serious risk of that changing and my husband works inside, being away from home for less than ten hours on a normal day, five days a week.

    This is what comes of people being able to strive to improve their lot. I like it. Disposable income means that you can help.
    Maybe the very richest back then could afford enough servants to live something like this– the bulk of my time is spent with correspondence or “managing” household affairs without a lot of work involved. (Yeah, laundry is a drag… unless you realize how hard it is to get baby poo out of cloth by hand.)

Follow TAC by Clicking on the Buttons Below
Bookmark and Share
Subscribe by eMail

Enter your email:

Recent Comments
Archives
Our Visitors. . .
Our Subscribers. . .