BOMFOG & Towards Reforming the International Financial & Monetary Systems in the Context of Global Public Authority

Thursday, October 27, AD 2011

Well, I have had an opportunity to review the latest musings of the pontifical counsel for justice and peace.  My overall reaction is the same as the famous comment that a Professor once put on a term paper.  “This paper is good and original.  Unfortunately where it is good it is not original, and where it is original it isn’t good.”  On to the fisk!

“The world situation requires the concerted effort of everyone, a thorough examination of every facet of the problem – social, economic, cultural and spiritual. The Church, which has long experience in human affairs and has no desire to be involved in the political activities of any nation, ‘seeks but one goal: to carry forward the work of Christ under the lead of the befriending Spirit. And Christ entered this world to give witness to the truth; to save, not to judge; to serve, not to be served.’”

So far so good.
With these words, in the prophetic and always relevant Encyclical Populorum Progressio of 1967, Paul VI outlined in a clear way “the trajectories” of the Church’s close relation with the world. These trajectories intersect in the profound value of human dignity and the quest for the common good, which make people responsible and free to act according to their highest aspirations.

The last sentence reminds me of a phrase that Nelson Rockefeller used to work into many of his speeches:  “The Brotherhood of Man under the Fatherhood of God!”  His aides used to refer to it as BOMFOG.  The more high-falutin the language, the closer you need to read any concrete proposals embedded within.




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25 Responses to BOMFOG & Towards Reforming the International Financial & Monetary Systems in the Context of Global Public Authority

  • We have better economics experts chanting in Belgium. There are 15 Trappist monks at Rochefort brewery located inside the Abbey of Notre-Dame de Saint-Rémy, near the town of Rochefort, a brewery brewing beer since 1595. They charge over $6 a bottle….a bottle!
    I bought two by mistake. I can only say this…before I drank a bottle, I could not play the Conga drum…and now I can…and Santana’s people want to talk to my people about an upcoming concert.
    These monks will brew and make rediculous margins for another 400 years God willing. Let them write about economics. They give excess profits to charities while many monasteries are charities. Let THEM write about financial matters. St. Benedict’s rule said that abbots must listen to the least brethern because God sometimes chooses to speak through the least brethern as his messengers. Let the 15 smiling monks from Belgium speaketh on finance. Margins north of 1500% cannot speaketh wrongly.

  • “Good and Original.” I think I literally laughed out loud at that. Kudos! Best analysis I’ve read so far and I’ve read a ton of ’em (including Shea.)

  • Than you Paul and Brian.

    Bill, brew master monks could hardly do worse as economic analysts.

    Thank you Tim for the link to Mark Shea. As always, Mark’s comments were colorful and interesting, although I sometimes suspect that if the Vatican issued an edict that all Catholics were to paint their bottoms yellow, Mark’s response would be to ask what shade.

  • I’m not sure it’s beneficial to fisk this document. I think its value is found in its broad policy approaches, not in each individual sentence or paragraph. I have my problems understanding this document, particularly in the first section, but I don’t think your approach is the right way to work though it. It tends to make each sentence a point of contention.

    I think they’re supporting something more organic than a new supranational authority. Individual sentences emphasize that to varying degrees. I think they could have calmed some people’s nerves by talking more about the trade agreements that have been developed in recent years than by citing the UN model.

  • “It might have been a good idea here to explain why an organ of the Church has any competence to give advice on “reforming the international financial and monetary systems in the context of global public authority”.  When I wish to read a good examination of the dogma of the Assumption I normally do not turn to bankers, economists or politicians.”

    So for a competent response we turn to a… lawyer? 😉

    Kidding aside, Don, I value statements like this — even when I disagree with aspects of them, as I do in this case — because they demonstrate that the principles we hold to as Catholics have ramifications in *every* aspect and dimension of human life and activity. They show that Catholicism extends beyond Sunday mornings into all that we are and do, and I’ll take that, even if it means that aspects of the text may not always be on target. If nothing else, this document might prompt a conversation about what a thoroughly Catholic financial & monetary system might look like. Unfortunately, the bulk of the responses aren’t engaging in that sort of response, but given that the document is less than a week old, I guess that’s to be expected.

  • “what a thoroughly Catholic financial & monetary system might look like. ”

    I suspect Chris that this document is much more beholden to ideas commonly found in the ditzier extreme ends of European socialism than it is from ideas that have deep roots in Catholicism. I think documents like this that attempt to rebrand such ideas with a Catholic stamp of approval are simply wrongheaded. When Vatican bureaucrats venture into realms where they obviously lack any expertise at all, their proposals are subject to the give and take of normal debate that proposals from a secular source would receive, and I am glad that thus far this vapid document is receiving the rugged reception it so richly deserves.

  • A couple thoughts, Don:

    1. Cardinal Turkson is African, not European, and as far as I know, he’s not a socialist of any stripe.

    2. I have no problem with a give & take over this document, and I bet Turkson doesn’t either; my point as noted above is that most of the responses thus far focus more on fisking than on the heavy lifting of setting forth an alternative vision.

  • I doubt if Turkson wrote a word of the document Chris, other than the intro, although if he wishes to claim pride, if I may use that term in connection with this document, of authorship for other sections I will stand corrected. I believe that one of the major authors was probably Professor Leonardo Becchetti. Father Z has all the gory details about this gentleman who is definitely a European and most definitely a socialist:

    The alternative vision is capitalism Chris, and no world financial authority and no world government. However that is not really a competing vision but simply reality. This document on the other hand will never get past the com box analysis state, although if I could observe it from a safe distance, say in another solar system, I wouldn’t mind seeing what would happen if an attempt were made to implement it.

  • We have this world God gave us.

    And, it’s the peace and justice department’s job to make this one world we have from God the best they can make it.

    And, it’s not enough that each day we work and do the worldly things to fund the government and its dependents; and they are so liberal as to allow us use the gleanings to provide for our families and keep body and soul together . . .

  • “The alternative vision is capitalism Chris, and no world financial authority and no world government. However that is not really a competing vision but simply reality.”

    The following might be the basis for a forthcoming post on this, but I as I was thinking more about this, Don, I was reminded of Alan Greenspan, who spent his career trying to implement a Randian/libertarian/laissez-faire approach to regulation, i.e. as little as possible, only — after the collapse of ’08 — to startlingly assert that he was wrong.

    We’re fallen beings, and as such, no system is or can be perfect, and hence some checks & balances are necessary. [Yes, regulation can go overboard, but I’m not worried about my fellow TAC’ers advocating over-regulation. :-)] But laissez-faire is exactly what we have now at the global level, isn’t it? How are we going to regulate, then? That’s not a rhetorical question… a wild-west approach elsewhere in the world can have significant repercussions elsewhere, including here. So how do we check & balance things as is?

  • “But laissez-faire is exactly what we have now at the global level, isn’t it?”

    No. Governmental interventions wreak havoc with markets and the free flow of goods and services continually. We are indeed fallen beings living in a fallen world, and that is precisely why allowing government to exercise control and regulation of business is a very bad idea. Government officials are just as fallen, some would say usually somewhat more fallen 🙂 , as the rest of us and putting too much power in the hands of one group usually ends in disaster. Just as I want government to keep its hands of religion, I also want government to almost always keep its hands off business.

  • Why do you trust big business more than big government, Don? I’m just as suspicious of the one as of the other.

    Am I to take it that you disagree with Greenspan’s change of heart, and that he was right before?

  • I trust neither big government nor big business Chris, and I must say I have been vastly disappointed over the years by various big Churchmen also. Since I have a fair amount of distrust of humans in general when given large amounts of power, I think it is a very bad idea to allow one group to exercise too much power and that is precisely what happens when we look to government to regulate and supervise business. I trust them no more to do that then I would trust them to regulate and supervise religion.

    In regard to Alan Greenspan whose opinions tend to be all over the lot these days, if he thinks that more regulation of business by government would be helpful to the economy than I do disagree with him.

  • I’m glad we both agree that big is never good, Don, but how do you envision we “check” business’s inexorable desire to acquire more power? Teddy Roosevelt comes to mind as someone unafraid to do just that.

    As to Greenspan, he’s certainly more competent than you or I when it comes to economic matters, and he said that deregulation was partly to blame for the ’08 collapse, in particular deregulation of the financial markets.

    Google [alan greenspan I was wrong] for the October ’08 congressional hearing in which he distressingly acknowledges that fact. Some quotes from the hearing:

    “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.”

    In response to this question, “Do you feel that your ideology pushed you to make decisions that you wish you had not made?” he said, “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”

    I’m repeating myself now, and I also know I’m not telling you anything you, TAC’s resident historian, don’t already know when I point out that one of the geniuses of our political system is the numerous checks & balances which (ought to) prevent any branch or faction from gaining undue power. Things aren’t any different in economics than in politics.

  • The facts are opposite of the above comment: “Alan Greenspan, who spent his career trying to implement a Randian/libertarian/laissez-faire approach . . . ”

    I know basically nothing about philosophy or theology.

    The committee for peace and justice know that much about banking and finance.

    The economic collapse precipitated by the 1990’s to 2000’s real estate boom/bust could not have occurred without government (the Fed monkeying with rates and money supply, FDIC insurance providing for unlimited funds, the Long Term Credit Management bail-out precedent, HUD, FNMA, FHLMC, CRA, etc.) interference and misallocating financial resources.

    Point of information: As Fed Res. Bd. of Governors Chairman, Alan Greenspan used open market operations (the Fed buying or selling huge amounts of US Treasury securities to keep market interest rate in the desired range)and kept rates too low too long so as to keep the DJIA and stock indexes up and foster economic activity. In the 1980’s Greenspan was a “hired gun”, er, expert witness before Congress for the S&L industry. He was equally on the wrong side of that massive fuster cluck, which also could not have occurred without government.

  • T.,

    Greenspan was a devotee of Rand’s philosophy; I agree that his policy decisions impacted the market by keeping rates too low and hence paving the way for a bubble (at least), but that doesn’t change the fact that when it came to the regulation of the financial markets, he was a strong advocate of deregulation. And one of the major factors which led to the ’08 collapse was the derivatives markets, which were largely unregulated, and Greenspan explicitly preferred it that way.

    By the way, how do you know what the PCPJ does or doesn’t know about banking & finance? Why is there this presumption that they know any less about it that all the fiskers out there, most of whom have no professional background in these industries either? George Weigel, for instance, has no formal expertise on many of the matters he writes on, yet many people — myself included — value his input all the same. I take the same approach with those individuals entrusted by a figure such as Pope Benedict with their respective responsibilities.

  • if he thinks that more regulation of business by government would be helpful to the economy than I do disagree with him.

    The question is ‘what are you regulating?’ and ‘where?’. Superintending common property resources and allocating costs from externalities are public functions. How intelligently it is done is on a spectrum. Intellectual property registration is likewise a public function. The absence of perfect information among consumers, the presence of externalities, and tilted playing fields and information deficits in workplaces make some sort of health and safety regulation advisable; the question that arises is how to get the most bang for the buck among the variety of instrument which promote health and safety.

    You had several wretched problems in the fall of 2008: institutions erected to rapidly resolve bank failures were either ill-equipped (or lacked any legal authority) to tackle the sort of institutions which were failing; the bloody credit default swaps made the boundaries around institutional failure even more uncertain than is usually the case with financial firms; disjunctions between the practice of bankruptcy law in the U.S. and Europe impeded the settlement of Lehman Bros. It seems not quite right to speak of ‘more’ or ‘less’ regulation, rather than regulation insufficiently current to address financial innovations.

  • “It seems not quite right to speak of ‘more’ or ‘less’ regulation, rather than regulation insufficiently current to address financial innovations.”

    I’d agree with that, Art. Greenspan didn’t though, as his opposition to “modernizing” regulations for the new derivatives market made clear.

  • “I’m glad we both agree that big is never good, Don, but how do you envision we “check” business’s inexorable desire to acquire more power? ”

    By keeping business from controlling government which is a far easier task than keeping government from controlling business. I might also note that the more government meddles with the economy, the more incentive there is for businesses to seek to have a voice in government. The higher the regulation of business, the greater the involvement of government officials and business men and women conspiring together as a result. Imagine the lobbyists that the Church would be paying for if each year the Church had to fear some new legislation that would impact its operations in this country. (However, come to think of it, that is precisely what the Obama administration is seeking to do now in regard to forcing Church affiliated groups to pay for contraceptive coverage. The movement in several states, including Illinois, to mandage that any groups involved in adoptions not “discriminate” against homosexual parents is effectively driving Catholic Charities out of helping to facilitate adoptions. A government big enough to seek to minutely regulate business will always be overstepping its bounds.)

  • “It seems not quite right to speak of ‘more’ or ‘less’ regulation, rather than regulation insufficiently current to address financial innovations.”

    I am not a libertarian Art and some regulation of business will always be needed, but regulations often stay forever whether they make sense or not. A prime current example is the mandating that all health insurance policies provide certain types of coverage. Traditionally this type of regulation has been done by state government. Lately this type of regulation has grown so onerous in some states that insurance companies have simply pulled out of the states.
    The best regulation of any business enterprise is to simply allow it to succeed or fail in the market. Today government regulation is an impediment to new businesses entering the fray while favored enterprises, those “too large to fail”, experience government as a deus ex machina to bail them out. Both these developments constitute a severe drag on the economy.

  • C. B.,

    As I said, I don’t know zilch about Rand. I thought if Greenspan was a l-f, libertarian he would want to shut down the Fed.

    OTOH, I have been highly involved in analyzing US banking institutions and markets on high levels for over 34 years.

    Here are my recommendations for your catholic banking system.

    Day one, Big Brother declares that FDIC-insured depositors are the only persons who will ever again see one penny of taxpayer “bail-out” money.

    It’s the Board of Directors. They need to set and enforce the control environment (see Treadway Commission of Sponsoring Organizations internal control concepts). E.G., compensation programs must not foster high risk acts, as we saw in the housing bubble – this has been around since the 1980’s. The US 1993 FDIC Improvement Act and the 2002 Sarbanes-Oxley made it law/regulation. Boards must force operating management to each day act in total consideration of the Two Great Commandments. Do not lie, cheat or steal; and don’t associate with anyone that does. Act like the money you invest, lend, manage is your own money. Act only after analyzing all the risks/rewards, and discount all so-called “paradigm changes” like: “the business cycle has been repealed”, “real estate prices never decline.” Collateral protection is but one of the five requisites that must be resolved in lending decisions: collateral values “go away” when they are most needed, as we see today.

    I don’t know zilch about theology. Where in the Gospels does Christ say He came to bring peace and justice here on earth?

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