Thursday, March 28, AD 2024 7:12am

Employment for All: A Response

Last week, Alex of Christian Economics wrote a piece arguing, on the basis of both catholic social teaching and modern monetary theory, for the government to act as an employer of last resort. In this post, I’d like to respond to several aspects of his argument. This kind of exchange is always challenging as on the one hand I want to give the fullest possible justice to Alex’s argument, but on the other in an internet debate it seems impossible to respond to every point without both sides getting totally bogged down in novel-length posts. As such, this post will be comprised of several titled sections dealing with different aspects of Alex’s post which I thought most interesting to present counter-arguments to.

The Purpose of Unemployment: Why Looking For Work Is Work
Just a couple months into my first full time job, I was laid off. It was 2000 and the tech bubble was in the middle of bursting, and I was a college senior trying to work full time while finishing off my last few classes. The web hosting company that I was working for had built itself on an unsustainable business model so one day my whole office showed up to work and found out that every single one of us was laid off. Even though I was young enough and my expenses were low enough that I could weather joblessness fairly easily (despite not qualifying for unemployment since I hadn’t been working the job long enough) if was definitely one of the uncomfortable experiences of my working life. Looking at the job listings was infuriating — it seemed like there were dozens of jobs that I could do (and, of course many, many more which required experience or qualifications I didn’t have) but they remained steadfastly silent as I sent out applications and resumes. It only took me a few weeks to find a part-time job at similar wages, and only a month longer to find a full time job that actually paid slightly more than the job I’d been laid off from, but it seemed like a very long time.

I bring up the personal angle because it seems to me that job searching serves very different purposes for the individual job hunter and for society as a whole.

For the job hunter, the goal is simple: Find a job that he or she is able (hopefully even happy) to do which will pay enough to meet his financial responsibilities.

However, the interaction between that job seeker and potential employers actually provides society with a very, very useful function. The process of workers (whether unemployed or not happy with their employment) searching for jobs, and hiring managers searching for the right candidates, powers an allocation mechanism far more complex than any job allocation authority (at however local a level) could manage. It serves to signal workers what kind of work is needed — drawing more people into some fields where more workers are needed, and signaling to others that their field is drying up and it’s time to look in another industry, retrain, etc.

In this sense, short term unemployment (in which a worker takes anywhere from a few weeks to a few months to find a new job after being laid off or quitting) is not necessarily a loss for the economy. Job seekers are doing valuable work by looking for the industries and companies where their skills and experienced will be valued the most.

This runs against the way job seekers normally feel at the time — at the moment the feeling is simply: “I’m willing to work! Why is no one hiring me?” It also runs against the armchair economist wisdom, which would suggest that anyone not working isn’t being productive. But given the importance of organizational capital in a complex modern economy such as ours, where specialization plays such an important role, the job searching process actually produces economic value in the long run by getting people to the right place.

In this sense, a low unemployment rate made up of people who are short-term unemployed is not necessarily a bad thing. (This is, I would argue, one of the reasons why a certain amount of public unemployment insurance is a benefit for a free market economy.)

Obviously, the level of unemployment we have now is far, far above that “healthy” level (which would represent only people who are “between jobs”) in that we not only have lots of people out of work right now who want to work, but many of them have been out of work for a long time. That is, however, a separate issue. Sectors of the economy which had massively overgrown during the last ten years have now bottomed out, leaving some workers struggling to find jobs in new industries, and others trapped in long term unemployment. Meanwhile, many companies that are hiring report that they are having difficulty finding qualified applicants for the jobs they do have open. (In my own field — admittedly a small and somewhat specialized one — I can confirm that recruiters have started calling people up out of the blue to ask if they’d be willing to apply for jobs.)

Make Work and Sticky Jobs: How a Job Guarantee Would Keep People Doing The Wrong Things
So let’s grant that searching for who is willing to hire someone with your skills and experience actually provides economic value. Wouldn’t it still be more productive to have people do some kind of assigned work in their local county via a job guarantee problem than it would to have them simply collect unemployment benefits?

At a strictly economic level, this seems like a no-brainer. The problem, I think, is one of human behavior. When you have a job, your tendency is to mainly focus on keeping it — unless the job itself becomes unbearable (or insecure) or you have the strong sense that you could do better. Not just that, but your current job tends to drain enough energy that it’s hard to maintain a protracted job search while holding down your current job.

My concern is that a job guarantee program would create a set of perverse incentives. Clearly, if you’re holding a job guarantee job, the job security is complete — you won’t be laid off. However, if its essentially a flat organization in which everyone is paid the same “living wage” to do assigned public service work — there’s absolutely no future in it. So by offering people that salary and that security, you implicitly tell them “stay in this job”, but you give them no future.

For your true go-getter, this won’t be a problem. But for a lot of people, who really just want a job that pays the bills and provides some security, there will be a strong incentive to take one of these job guarantee jobs and just stay there. With no prospect for moving up and little incentive to look elsewhere, these people would be sucked into a job with no future, and would not necessarily even be gaining skills or contacts that would help them in finding a better job later. What seems like a help might actually decrease the lifetime earnings of many people by setting them up for the day they wake up and realize they’ve been doing pointless make-work for ten years, and have no skills or contacts that would allow them to get a better job. While it might initially seem like we’re doing people a favor by giving them a job rather than making them search for one — I think in the long run we would slow people down in finding “real” work, and we would cause them to make less and do less useful work as a result.

Value vs. Activity: How the Job Guarantee Would Create Inflation
[This section is going to get a bit tricky, as I think it’s necessary to address the MMT understanding of money — bear with me here.]

It seems to me that the MMT insight which kind of works is that to the extent that the government controls the printing of money, it can get away with “printing money” in order to pay for things in some situations with creating (much) inflation. However, it seems to me that this only works to the extent that the government does this at the rate of economic growth actually going on. Let me try an example here to get this across.

Imagine a closed economy in which there are only ten workers. There are 10,000 dollars in circulation. Three workers grow enough food for everyone, two make tools, two make carts and bicycles, one makes clothes, etc. One day, two new workers show up and start working. More work is getting done now — there’s more food, more clothes, more tools, more luxuries. These two new workers are smart guys and provide some new inventions, and as people specialize more they come up with better ways to do things themselves and things seem to get better and better. But a curious thing is also going on. Since there are only 10,000 dollars in circulation, everyone finds that they are making less money. Prices for all the goods being produced fall, but rather than seeming “cheaper” goods seem more expensive because everyone just has less money. This is particularly rough on a couple of workers who owe one of the others money. Now the amount that they owe is worth more, and it will take them longer to pay off. The problem is that there is more total value being created by all this work (with the two additional workers and the greater specialization of work) but the number of dollars in circulation is fixed.

Now, imagine that one of our 12 workers is not a very honest fellow. He sets up a printing press in his basement and starts printing dollars. He does it slowly, slipping a few extra dollars into circulation every so often. And somehow, this actually solves the problem. Prices are now stable, because our counterfeiter is creating money at the same rate that this little economy is growing. In the process, the counterfeiter becomes rich, because he’s spending more money than me earns. But aside from the counterfeiter getting rich without deserving to, the slow inflation of the money supply is actually good for the economy.

However, eventually the word gets out. The twelve workers call a council and decide that this is actually a pretty good idea, they’re going to make it work even better. They print an extra $2500 dollars in one big run, and they invite two more workers to come in and build a recreation hall for everyone to enjoy. Based on their past experience, they assume that they can have the rec hall built “for free” by printing new dollars to pay these two new workers.

Something is wrong, though. Prices seem to be going up, and there’s not enough food and goods to go around. Inflation has set in.

Why didn’t it work? Well, the 12 workers would like a rec hall, but they don’t actually value it enough to save up their money and pay to have one built, or to take time out to build it themselves. When they print money to pay for building the hall, they’ve introduced more dollars faster than value is being created. The two additional workers are working as hard as the other workers, but they’re not actually producing “value”, as in: something that the other workers are willing to actually pay money for. If you print money in order to pay for something that doesn’t have value (in other words, that you’re not willing to pay for with your own money instead of “free” money) you’re increasing the supply of money faster than you’re increasing the supply of value. The result is that things that people do value will become more expensive. This is price inflation.

By circuitous route, this gets to what I see at the two big issues with the job guarantee idea:

1) The MMT idea that one can pay for this without inflation by simply creating money strikes me as false because the value created by the work being done will not equal the money created to pay for it. Why will the work done not be of value equal to the money paid for it? The short answer would be that if it was so valuable people would be paying for it. The problem, I think, is a variation of the Socialist Calculation Problem: planners, even at a fairly local level, are simply not going to be all that successful in knowing what is truly of value to people and making sure that this is the work accomplished via job guarantee work. This is in part because consumers themselves are often not all that clear what they value. What people tell you they would be willing to pay for is very often not the same as what they actually spend money on when they’re actually managing their own money.

2) While I appreciate the argument regarding the dignity of work, it seems to me that the ELR idea is actually a false solution to the problem. The dignity of work, it seems to me, stems from doing work which actually provides value either to you or to others. I don’t think that doing make-work in return for a guaranteed income will provide a sense of dignity to the worker — and indeed, it may serve to destroy his sense that working has dignity in the longer term, leading to a “they pretend to pay us and we pretend to work” attitude that will be carried through into “real” jobs later on, making it harder for him to provide for himself and find satisfaction in his work.

Without attempting to put a Panglossian shine on things, I think that something much like our current system (in which unemployment benefits which are paid for through payroll taxes are used to support people while they look for new work) is not a bad way to do things. It is certainly being strained in times like this when long term unemployment suggests that we may be seeing shifts in the structure of the economy which businesses and workers have not yet adjusted to, but it does lessen the catastrophe of job loss while placing the emphasis on finding work that people are willing to pay for.

In Closing
I want to thank Alex again for taking on the daunting task of getting this debate off the ground. I’ve found the exchange intellectually stimulating and hope that readers have too. I look forward to the next round.

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RR
RR
Wednesday, September 7, AD 2011 3:16pm

I would limit the program to those out of work for more than some period of time, say a year. Also, it shouldn’t be guaranteed in the sense that you can’t lose it. Only guaranteed in the sense that it’s there if you’re willing.

As for complacency, without the work many of them just wouldn’t work. They would play X-Box in their underwear at their parent’s house all day. It would actually discourage unemployment complacency. At any rate, you can still require that they continue looking for employment. These sorts of programs always have a requirement that you submit proof that you applied to some minimum number of jobs every week.

Foxfier
Wednesday, September 7, AD 2011 6:58pm

Possibly the current form of unemployment is illustrative of the damage done by changing the rules after the ball’s in motion– they do keep on offering more free money each time they get near the end.
(I haven’t had a paying job in several years, but they managed to track me down, correctly tie me to my military pay, and inform me how many weeks I’d “get” … if the big bad politicians over there didn’t “take” it from me by not extending the benefits. The same state gov’t that can’t figure out I’ve moved and should not be sent three ballots in one year managed this.)

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Thursday, September 8, AD 2011 12:03am

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Brett
Brett
Monday, September 12, AD 2011 10:16am

Hi Darwin,
I am, as you know, quite an amateur in all this, though I find it important and interesting. My problem is that I am, in a sense, sympathetic to both arguments. My question to you is, if the current system is as good as you say, what should we actually be doing to help the economy? It strikes me as strange that most conservative arguments say we need to just keep doing what we’re doing, when what we’re doing has made a terrible mess.
Thanks.

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Monday, September 12, AD 2011 10:55am

[…] He has written this post and a later post as a reply to Darwin of DarwinCatholic, who had already replied to the first post. As can be seen, I’m jumping into a developing discourse, so hopefully I […]

DarwinCatholic
Tuesday, September 13, AD 2011 9:06am

Brett,

Good and fair question.

I think, first, let me clarity: It’s not so much that I think the current “system” is great, it’s that I think it has the virtue of mostly staying out of the way and allowing a solution to emerge. By paying unemployment benefits (if necessary for a fairly long time during a deep jobless recession like this one) that keep people out of extreme poverty while being significantly less than the worker used to make, we give people the time and incentive to find new work.

This leaves a lot up to individual workers and entrepreneurs: Workers may look for a job just like their old one, or a similar one in a different industry, or they may start on a whole new career, go back to school, etc. Entrepreneurs are looking for new ways to run businesses, new products and services to provide. Millions of people all over the country trying to solve their problems, some succeeding and some failing.

So it’s not so much that, as a conservative, I would say we shouldn’t do anything. Rather, I’d say we should be doing millions of different things, not having a single big thing that we do to solve the problem.

As for why we should keep doing what we’re doing when what we’re doing has made a terrible mess: I think it’s important to bracket what made the terrible mess. Among other things, there was a bad set of incentives that caused banks to make a lot of money (and create a number of jobs) focused around lending more and more money to buy and refinance houses. Builders and real estate agents and home renovators also boomed. When the bottom fell out of that situation — a lot of people in those industries lost their jobs. And since those people weren’t spending as much anymore (and everyone was in too much debt) fewer people were buying all sorts of goods and services and so the economy as a whole took a beating. Companies slowed down in hiring and people found themselves out of work long term.

As for continuing what we were doing before: I’d be very much against pushing housing and financing as ways to get the economy growing again. There was a lot of malinvestment there and it need to work itself out.

However, I’d tend to think that simply having a solid set of unemployment benefits and letting people work out where the best place for them to work is were not, in themselves, “the problem” which got us into this mess. These strike me as fairly value neutral mechanisms for allowing us (and the economy is, after all, just “us”, it’s not some big whirring machine full of gears that need tuning) to figure out what to do next.

In this sense, I don’t think that continuing on is going to perpetuate the current terrible mess. Indeed, I’d see it as the only way of really getting out. Now, I’d say it’s likely that there will be other terrible messes in the future. But that seems to me to simply amount to saying: There will be people in the future, and people are imperfect.

Mike Petrik
Mike Petrik
Tuesday, September 13, AD 2011 11:54am

I have a somewhat different response, Brett. As a conservative I do think markets generally work better than planned economies, including labor markets. I do not believe markets work perfectly, since that would require both perfect information and perfect rational behavior — neither of which is possible. For that reason market economies will always have business cycles. Alhough proper monetary and fiscal policies can soften those cycles somewhat, I don’t think such policies can eliminate them altogether. The question that emerges is what government polices are appropriate to address the hardships associated with recession induced unemployment. I do think government can have a remedial role via transfer payments, but the prudential questions are what kinds work best and how much is enough or too much. The most fundamental point to remember is that perfection is not attainable, either by government policies or by functioning markets, and that one cannot assume that well-intended policies aimed at problems, however real and severe, cannot make such problems worse — even much worse. Doing nothing or doing less is often the optimal choice, even if politically unpopular and psychologically difficult.

Brett
Brett
Tuesday, September 13, AD 2011 9:30pm

Does ” bad incentives” mean that the financial industry should have been more regulated? In Canada, we were more regulated and we have come through this much better than you guys. (Not that it matters in the long term. If you go down, our tiny lifeboat will get caught in the whirlpool.)

Brett
Brett
Tuesday, September 13, AD 2011 9:38pm

And how do conservatives interpret JPII’s “strong juridical framework”?
(I’m not being sarcastic. I’m genuinely curious.)

Donald R. McClarey
Admin
Tuesday, September 13, AD 2011 9:40pm

You were blessed with a Conservative government in Canada Brett throughout the economic crisis while we have been cursed with Obama. Some of us will do our best to remedy this discrepancy in 2012.

Donald R. McClarey
Admin
Tuesday, September 13, AD 2011 9:49pm

“And how do conservatives interpret JPII’s “strong juridical framework”?”

This conservative lawyer believes that John Paul II, a great pope, would have been less fond of a “strong juridical framework”, whatever the heck that really means, if he had possessed practical experience as a small business man, an attorney or a politician. Whenever clerics write about economics I always recall that very few of them have ever had to wonder how they were going to make a mortgage payment or meet a payroll, or ponder how businesses in the private sector get along without donations from people in the pews rolling in. Popes are great about telling us how to get to Heaven, relatively poor as economists or businessmen, as a history of Vatican finances graphically reveal.

Foxfier
Admin
Tuesday, September 13, AD 2011 10:10pm

Seeing as I had to look up “juridical,” I’d say that we greatly support it– it appears to be about following the actual laws.

Most of the conservatives I know are greatly displeased with Obama for precisely this lack– laws are used as sticks, and exemption from them as carrots.

A secondary meaning offered is that it promotes justice. That meaning, also, would be in line with a major conservative complaint in the financial recovery area– that of regulations and laws being made to harm fair competition, to favor the interests of one business over another in the same field.

RL
RL
Tuesday, September 13, AD 2011 11:23pm

Does ” bad incentives” mean that the financial industry should have been more regulated?

I’m of the mind that this is the wrong question about all sorts of government regulation. The meaningful question to me is not should something be more regulated or even less regulated, but should it be better regulated. The answer is usually yes. Better regulated will usually mean little but effective regulation. Even with that there are likely to be many arguments about the what, how, and how much of it, but it’s erroneous to assume that to fix the shortcomings of poor, misguided, or malicious regulation is to add more of the same.

Art Deco
Art Deco
Wednesday, September 14, AD 2011 7:28am

And how do conservatives interpret JPII’s “strong juridical framework”?

A body of corporate law, bankruptcy law, general commercial law, labor law, tax law, tort law, banking law, insurance law, securities law, real estate law, and environmental & resource & land-use regulations that is transparent, stable, and respectful of unmanipulated price systems. An optimal balance between risk pooling and moral hazard. A means for the most expeditious acknowledgement of bad debts and liquidation of insolvent enterprises.

Phillip
Phillip
Wednesday, September 14, AD 2011 7:50am

“And how do conservatives interpret JPII’s ‘strong juridical framework’?”

I guess it depends on what such a framework looks like. Just as there is progressive taxation in America as well as an extensive social safety net, there are strong laws regulating business. The question becomes how progressive taxation, safety nets and strong laws should be. That is up for prudential discussion. But I don’t think one can say there is no strong juridical framework in America.

Brett
Brett
Monday, September 19, AD 2011 9:49pm

Thanks all,
I’m certainly willing to grant that “better” regulated is preferable to simply “more.”
Can someone tell me, then, how Canada was better regulated in order to make it through this in better shape? And would you be willing to import such better regulation?

Sorry Don, I’m not buying the Conservative government bit. Not unless you can show me that the better regulation we had in Canada was their policy (and not simply a hangover from previous governments) and that it was the same kind of policy that conservative Americans are clamoring for. (“Conservative” often means something quite different when you cross the 49th. Heck, we have actual socialized medicine (not just restrictions on insurance companies) and even with a Conservative majority, there is no hint that we want to get rid of it.)

Brett
Brett
Monday, September 19, AD 2011 9:51pm

And I’m sorry Don, but the bit about how the Pope is not to be trusted on matters where he does not have practical experience is an argument I’ve seen before in places like the National Catholic Reporter. Only they weren’t talking about money.

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Monday, September 19, AD 2011 10:49pm

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Donald R. McClarey
Admin
Tuesday, September 20, AD 2011 5:49am

“And I’m sorry Don, but the bit about how the Pope is not to be trusted on matters where he does not have practical experience is an argument I’ve seen before in places like the National Catholic Reporter. Only they weren’t talking about money.”

Because the National Catholic Reporter and other heterodox Catholics have little problem with contraception, abortion and homosexual conduct, sins universally condemned by the Church since the time of the Crucifixion, in no way negates my observation that when popes are talking about economics that we must judge them as we would anyone else making an economic argument. The popes as a whole have no special expertise in this area, as many of them have dramatically illustrated by the feckless manner in which they have overseen Vatican finances, and infallibility does not extend to papal pronouncements outside of the areas of faith and morals. That brief does not include a pope attempting to draft a blue print for how economies should function. Pius IX of blessed memory is a perfect example of a pope who was great when he stuck to faith and moral issues, and a complete failure throughout his ventures into secular arenas. His Syllabus of Errors should be a standing reminder to all popes of the limitations of their office.

Donald R. McClarey
Admin
Tuesday, September 20, AD 2011 5:58am

“Sorry Don, I’m not buying the Conservative government bit.”

Of course not Brett, because your political sympathies lie with the Left, at least on economic issues, and my response is an inconvenient one that you do not wish to attempt to rebut.

The Harper government has followed classic conservative themes of reducing taxes and government regulation. Read all about it:

http://www.bullfax.com/?q=node-canadian-elections-further-proof-our-northern-neighbors

Donald R. McClarey
Admin
Tuesday, September 20, AD 2011 7:09am

“Heck, we have actual socialized medicine”

Oh please Brett. I tend to keep a fairly close eye on developments north of the border and government care in Canada is in crisis, hence the explosive growth of private clinics:

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3091914/

When Canadian elites need quick and the best health care they often come to the US:

http://www.cbn.com/cbnnews/world/2010/February/Newfoundland-Premier-Defends-Surgery-Choice/

A slogan for socialized medicine in Canada: “Good enough for the proles!”

DarwinCatholic
Tuesday, September 20, AD 2011 7:29am

I’m certainly willing to grant that “better” regulated is preferable to simply “more.”
Can someone tell me, then, how Canada was better regulated in order to make it through this in better shape? And would you be willing to import such better regulation?

You could probably get a lot of people to tell you, and they’d tell you different things. There’s very little agreement on what in detail caused things to go wrong in the US — I don’t see why there’d be more agreement on what caused things to go comparatively right in Canada. (And as I pointed out, if there’s the “more regulation” argument for Canada there’s the “less regulation” argument for Texas.)

Also, at broad strokes, keep in mind:

a) Even in the US the housing bubble on the ground was restricted to areas on the country with dense population where limited amounts of housing were bid up rapidly. Areas where people could simply build more houses were much less effected.

b) Part of the reason the securities aspect of the bubble hit the US so hard is that the US is where the whole world comes to trade securities. Wealthy Canadians probably took a solid hit from the US bubble, but they did so via funds and securities being traded in New York. This is why for a little while everyone was blaming the US for their financial problems — that is, until real estate markets collapsed in a number of European countries. And, of course, if we have a second round of global economic problems it will doubtless be because of the collapse of the Euro due to social safety net overspending in a shared currency zone. (Would you be eager to sign up for a significant reduction in social safety net spending as a result of such a collapse?)

Brett
Brett
Tuesday, September 20, AD 2011 7:48am

Economics isn’t within faith and morals?!? Tell Amos.

Donald R. McClarey
Admin
Tuesday, September 20, AD 2011 7:53am

Condemn the rich all you want for ignoring the poor Brett and I will agree with you. However, Amos, a dresser of vines, did not seek to draft an economic plan to guide Israel, nor did our Lord in his parable of Lazarus and Dives. Our popes would do well to follow their example.

Brett
Brett
Tuesday, September 20, AD 2011 7:55am

As for not attempting to rebut, that is a stretch. My stated belief is that it need not be rebutted unless it can be demonstrated that there is more to it than the name “conservative.” You need to show that it was actually their policies that were in place vis-a-vis regulation and that such policies are what conservatives like yourself have been after in the US. That seems a pretty fair request, but you declined. (The link you posted, while interesting, had nothing to do with my question about regulations on the financial sector.)

I certainly can’t rebut the name of the party in power. Let’s not play games with words.

Brett
Brett
Tuesday, September 20, AD 2011 7:59am

As for the proles, I’m much happier to be proles here than there. So was my brother when he was diagnosed with brain cancer. Don’t pretend that the service Danny Williams got is available to any American at the asking.

Sure elites travel for healthcare. But that doesn’t prove anything except that your system has a bigger gap between service for rich and poor than ours does. Congratulations.

Brett
Brett
Tuesday, September 20, AD 2011 8:00am

Amos and Jesus said nothing about artificial contraception either. Should the Popes follow that example?

Phillip
Phillip
Tuesday, September 20, AD 2011 8:06am

Actually Medicare and Medicaid, as well as old fashioned indigent care by Catholic and other non-profit hospitals, would take care of almost all if not all patients. This I know from working at a Catholic hospital at this time. Nobody is turned away and all get the same care.

“But that doesn’t prove anything except that your system has a bigger gap between service for rich and poor than ours does. Congratulations.”

I’m not sure all gaps in services between rich and poor are rejected by Catholic Social Teaching.

Brett
Brett
Tuesday, September 20, AD 2011 8:20am

Also, who said anything about infallibility? Must something be infallible before Catholics owe the Pope allegiance?

Phillip
Phillip
Tuesday, September 20, AD 2011 8:27am

I suspect one does not need to take everything that is not infallible and reject it. Thus deferring to the Pope, particularly in matters of Faith and morals, that have not been infallibly defined.

Though I think the Popes have defined that the application of CST is subject to legitimate variety of opinion and that Catholics of good faith may disagree. Also, that it is the laity, and not the clergy, that have the charism of applying the teaching of the Church to the secular order.

Darwin
Darwin
Tuesday, September 20, AD 2011 9:35am

As for the proles, I’m much happier to be proles here than there. So was my brother when he was diagnosed with brain cancer. Don’t pretend that the service Danny Williams got is available to any American at the asking.

FWIW, I’ve had a number of relatives go through long intensive medical issues here in the dreaded US — including my dad in his seven year fight with non-Hodgekins Lymphoma — and the only one who can be described as having suffered any adverse outcome as a result of the US system was a great uncle who was put off too long on diagnosis for his cancer to be treated well — a problem which various “socialized” systems are pretty well known for as well. Nor is that because we’re “rich” by any stretch. My mom and dad were both the first in their families to ever go to college, and my dad was a teacher while my mom stayed home. The whole extended family is solidly lower middle class.

Brian Martin
Brian Martin
Tuesday, September 20, AD 2011 11:34am

I am struck by the fact that when the Pope says something, or issues an encyclical, we have a tendency to look at it through the lens of our opinion. No one questioned Pope John Paul II’s critiques of the Communist economic system…but we suggest that he is ill informed when he challenges the excesses of Captalism. Or when he suggests that Invading Iraq may not have been justified. We see the Pope’s statements about economics through our lens of human greed, and write it off as “ome old religious dude who knows nothing about economics who should keep his nose out of things he doesn’t understand” when in fact he (they) have clearly been teaching and speaking to the morality of econimic systems…and we as Catholics are called to apply our Catholic moral beliefs to all aspects of our lives…not just to those areas where it is “convenient”.

Donald R. McClarey
Admin
Tuesday, September 20, AD 2011 12:03pm

“Also, who said anything about infallibility? Must something be infallible before Catholics owe the Pope allegiance?”

I don’t think Catholics owe any allegiance to the Pope when he is acting outside of the realm of faith and morals. Respect always, but not allegiance. When popes go into areas beyond this their arguments must be judged based upon their strength and not upon the office they hold. When a pope condemns greed he has the strength of his office behind him. If he were to then say that therefore no one should earn more than a million a year and government should confiscate the rest, he is venturing a personal opinion that is entitled to no greater weight because he is pope. Considering how frequently popes have contradicted each other in areas outside of faith and morals, I can only assume that is the attitude they take to such positions of their predecessors.

Donald R. McClarey
Admin
Tuesday, September 20, AD 2011 12:07pm

“Amos and Jesus said nothing about artificial contraception either. Should the Popes follow that example?”

Apples and rock salt Brett. The Church has condemned with one voice contraception throughout her history. In regard to economics, popes have been all over the ball park, as one would expect in an area where they have no charism of infallibility and no particular expertise.

Paul DuBois
Paul DuBois
Tuesday, September 20, AD 2011 12:08pm

Darwin, the recent analysis I have seen as to why Texas suffered less to the housing collapse had to do witht he fact the people are not allowed to borrow 100% of their homes value, they are limited to 80%. I would call that either more or better regulation, not less. Plus Texas bank are heavily regulated, they were not allowed to branch when I lived there. This lead to the growth of the savings and loan industry which was regulated by the federal government. When the regulations on the S&L industry were relaxed by the federal government in the 1980’s, the result was the savings and loan crisis of 1989 which was entirely in Texas except for 1 S&L in Ohio and 1 in California.

Donald R. McClarey
Admin
Tuesday, September 20, AD 2011 12:10pm

“Don’t pretend that the service Danny Williams got is available to any American at the asking.”

Actually it is. The finest medical treatment available in the Midwest for cancer is at the Mayo Clinc in Rochester, Minnesota. People in Central Illinois go there routinely, several of my personal acquaintance. Few of them could be considered rich, some without insurance and several receiving treatment in excess of their insurance policy limits.

Donald R. McClarey
Admin
Tuesday, September 20, AD 2011 12:15pm

“I am struck by the fact that when the Pope says something, or issues an encyclical, we have a tendency to look at it through the lens of our opinion. ”

And so we should when a pope ventures beyond faith and morals in an encyclical to purely prudential matters. A fascinating exercise is to compare statements of popes on these types of matters: Pius XII on the death penalty for example and John Paul II on the death penalty; or Pius IX on religious freedom and Pope John XXIII on the same subject. Where popes differ, I do not think that a pope can expect uncritical obedience from the laity.

Darwin
Darwin
Tuesday, September 20, AD 2011 12:24pm

Paul,

Darwin, the recent analysis I have seen as to why Texas suffered less to the housing collapse had to do witht he fact the people are not allowed to borrow 100% of their homes value, they are limited to 80%. I would call that either more or better regulation, not less.

Well, clearly the conclusions will depend a lot on who you have do you analysis, but just to be clear on some facts: I bought a house in Texas in 2004 for which I put down 3%. In 2008 I refinanced that house, and even then I only owned 15% of it. (I sold the house in 2011 when I had to relocate for my job, still owning less than 20% of it.) So I believe it’s safe to say that Texas mortgage law does not require that one own 20% of one’s house. I routinely saw real estate signs around the Austin area advertising “Buy with no money down!”

So while Texas usury laws may play a minor part in its being spared, I would tend to place much more stock in the fact that through most of Texas zoning was not used to try to restrict the amount of development and intentionally drive up housing prices. In the few areas where this was done (like some parts of old Austin near the river) there was in fact a pretty hard crash in home prices, but since this was restricted to some very small and expensive areas, it wasn’t nearly as bad as what happened in places like California, Florida and the Northeast.

Plus Texas bank are heavily regulated, they were not allowed to branch when I lived there.

Perhaps, but since I did all my banking while I was there with Chase and Wells Fargo — two non-Texas banks which are not kept from operating there, and indeed which had more convenient branches than any local bank — I would tend to draw from my experience that state regulations on local banks didn’t do much to slow down people’s ability to act the same way in Texas as they would have elsewhere in the country.

Brian Martin
Brian Martin
Tuesday, September 20, AD 2011 1:09pm

You keep saying “outside faith and morals”
Are you suggesting that their comments about economies and political systems are not comments about morality and justice?

Phillip
Phillip
Tuesday, September 20, AD 2011 1:34pm
Donald R. McClarey
Admin
Tuesday, September 20, AD 2011 4:17pm

“Are you suggesting that their comments about economies and political systems are not comments about morality and justice?”

Depends upon the comment. For example, Pope Benedict apparently has a great deal of faith in the role to be played in the world by an institution like the UN, if not the UN. I think that opinion is clearly his own and not directly related to either faith or morals. I would say the same about John Paul II’s anti-death penalty stance, especially since his stance was at odds with traditional Church teaching in that area.

Where the popes decry the conditions of the poor and call upon all of us to help the poor, they are clearly telling a basic Catholic truth. If a pope were to go beyond and mandate a particular social program or organization of a polity in order to carry out the helping of the poor through government action, I believe that goes well beyond their office.

A very good book, along the lines of Sic et Non, is waiting to be written comparing and contrasting the political and economic stances of popes across the history of the Church. Some interesting debates are being waged on various such questions no doubt in Heaven. I would love to be a fly on the wall for example in a debate between Julius II and John Paul II on war and peace.

Paul DuBois
Paul DuBois
Tuesday, September 20, AD 2011 6:08pm

Darwin,
I was in error the 80% rule was on home equity rules (http://www.occc.state.tx.us/pages/brochures/home_equity_lending.html#eighty) My reference to the branching of banks was when I lived there in the early 1980’s and I am sure the bank consolidations and the S&L mess resulted in changes in regulations. The point that Texas’ success is not based on less regulation but rather on more is still valid though.

T. Shaw
T. Shaw
Tuesday, September 20, AD 2011 6:15pm

By faith I authorize the pope (plus Church teaching for 2,000 years) to tell me I need to give alms to the poor out of my money.

The pope does not have authority to tell me to vote to tax money from a hard-working person and give it to someone else.

Morality and fairness? How do you define fairness and morality based on 40,000,000 diverse facts, circumstances, and conditions?

But, no sweat! Philosophers and theologians know everything about everything and those of us who dare disagree are evil.

Brian Martin
Brian Martin
Tuesday, September 20, AD 2011 7:59pm

Actually, Catholic teaching back to at least to the First Vatican Council and the document Dei Filius, states that the internal and sincere assent due to teachings presented even in a non-infallible way by the supreme teacher and ruler of the Church is definitely and seriously obligatory.What this means is that teachings by the Pope may not fall under the category of infallibility, but we are still follow them until such time as the Church modifies them.

T. Shaw
T. Shaw
Tuesday, September 20, AD 2011 8:10pm

A comenter above wondered why Canada did not have a housing bubble burst induced economic debacle. It seems to have had nothing to with excesses of capitalism. But, everythiing to do with usual hells that result when do-godders try to creat heaven on Earth.

Outlined from Mark J. Perry, professor of economics, School of Management, Flint campus of the University of Michigan:

1. Full Recourse Mortgages in Canada. The buyer pledges the house and everything else he owns as collateral.

2. Shorter-Term Fixed Rates loans in Canada – generally 5 years and renegotiate

3. Mortgage Insurance (for lower down payment/initial owner investment loans) Is More Common in Canada than in the United States

4. No Tax Deductibility of Mortgage Interest in Canada

5. Higher Prepayment Penalties in Canada discourage refinancing and home euity loans – HEL’s

6. Public Policy Differences for Low-Income Housing. Canada provides public funding for low-income rental, and thus avoided the mistake of using misguided policies to turn good, low-income renters into bad homeowners. Canadian government has not used public policies like the Community Reinvestment Act in the United States, which encouraged homeownership for lower-income and less creditworthy borrowers, financed frequently with subprime mortgages.

7. A Few Other Differences that Contribute to Bank Safety in Canada. There is a much lower rate of loan originations by mortgage brokers in Canada (only 35 percent) than in the U.S. (70 percent), far less mortgage securitization in Canada than here, and a much smaller subprime mortgage market. Banks in Canada keep and service 68 percent of the mortgages on their own balance sheets that they originate and underwrite, which encourages prudent lending since banks are putting much of their own capital at risk.

8. Canada – a healthy “pro-lender” environment absent political motivations for greater homeownership, compared to the often politically motivated “pro-borrower” and “pro-homeowner” policies of the United States. While Canada’s banking system has promoted responsible borrowing and prudent lending and underwriting practices with little politically motivated interference, the U.S. banking system seems to have encouraged excessive lending to risky borrowers because of the political obsession with homeownership.

It wasn’t me! That was Professor Perry’s analysis.

Donald R. McClarey
Admin
Tuesday, September 20, AD 2011 8:53pm

“2. The forms, by which a General Council is identified as representing the Church herself, are too clear to need drawing out; but what is to be that moral cathedrâ, or teaching chair, in which the Pope sits, when he is to be recognized as in the exercise of his infallible teaching? the new definition answers this question. He speaks ex cathedrâ, or infallibly, when he speaks, first, as the Universal Teacher; secondly, in the name and with the authority of the Apostles; thirdly, on a point of faith or morals; fourthly, with the purpose of binding every member of the Church to accept and believe his decision.

3. These conditions of course contract the range of his infallibility most materially. Hence Billuart speaking of the Pope says, “Neither in conversation, nor in discussion, nor in interpreting Scripture or the Fathers, nor in consulting, nor in giving his reasons for the point which he has defined, nor in answering letters, nor in private deliberations, supposing he is setting forth his own opinion, is the Pope infallible,” t. ii. p. 110 [Note 3]. And for this simple reason, because on these various occasions of speaking his mind, he is not in the chair of the universal doctor.

4. Nor is this all; the greater part of Billuart’s negatives {326} refer to the Pope’s utterances when he is out of the Cathedra Petri, but even, when he is in it, his words do not necessarily proceed from his infallibility. He has no wider prerogative than a Council, and of a Council Perrone says, “Councils are not infallible in the reasons by which they are led, or on which they rely, in making their definition, nor in matters which relate to persons, nor to physical matters which have no necessary connexion with dogma.” Præl. Theol. t. 2, p. 492. Thus, if a Council has condemned a work of Origen or Theodoret, it did not in so condemning go beyond the work itself; it did not touch the persons of either. Since this holds of a Council, it also holds in the case of the Pope; therefore, supposing a Pope has quoted the so called works of the Areopagite as if really genuine, there is no call on us to believe him; nor again, if he condemned Galileo’s Copernicanism, unless the earth’s immobility has a “necessary connexion with some dogmatic truth,” which the present bearing of the Holy See towards that philosophy virtually denies.”

Cardinal Newman, “Letter to the Duke of Norfolk”

Brett
Brett
Tuesday, September 20, AD 2011 9:46pm

The DEATH PENALTY isn’t a matter of faith and morals?!?!?
Is this whole thing a hoax?

Brett
Brett
Tuesday, September 20, AD 2011 9:53pm

But Don, my question wasn’t about a concrete application of principle. There is no question here of Pope’s mandating social programs.

John Paul II articulated a principle to which Catholics owe religious submission of mind and will, namely, that for captialism to receive a positive evaluation from the Catholic perspective, economic freedom must be constrained within a strong juridical framework. There is certainly room for a conservative, even minimalist, interpretation of this principle, as Darwin demonstrates, but there is no room for pretending that it is not a principle but rather something akin to mandating a specific social program. Neither is there any room for pretending it is not a matter of morals. Neither is there any room for suggesting that a such a principle articulated in a papal encyclical has no more demand on you as a Catholic than a blog post by yours truly.

The more you write, the more you look exactly like the progressives you so openly despise.

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