Just Economics

Mr. Gaitley,

You might be interested in a recent essay by Camille Pecastaing about the problems with democracy and the state trying to do/promse too much. Essentially Pecastaing Is saying that the democratic process is undermining democracy.

http://www.hoover.org/publications/defining-ideas/article/146286

It could be that the pope's good intentions will encourage states to do what cannot be done and in the end have a worse situation in which the poor will suffer even more. It is possible that the pope's ideas are distorted by the translation because in another place on this site he was quoted about the negative outcomes of giving the poor direct gifts/support. The translation does seem to think that jobs can be created out of nowhere and seems to lack an understanding of where jobs come from.

Someone said recently that there are 7 billion people on the planet and only enough work for about 4.5 billion of them. In other words one of our problems is that the economies can not gainfully employ people in many areas of the world. We have enough to feed them but not enough economic activity to employ them. Consequently all over the world there are young men with no good prospects of earning a living. That is not the fault of the those who are successful but the result of natural economic forces playing out and interference by many of the nations to favor a politically desirable sub-set of the population. It is also happening in the US to a lesser degree than in developing countries but there are large pockets here who are living outside the normal economic system.

No body has a solution for it and the do-goders attempts will certainly make it worse. It is something that has to be addressed but without emotion and rhetoric.

I composed several drafts of a letter in response to Stacie Beck's rather naïve and uncritical embrace of markets, but they were uninspired and way too long. Just as well, since Pope Francis said it much better than I ever could have in his address to the new ambassadors May 16. http://en.radiovaticana.va/news/2013/05/16/pope:_financial_reform_along_...

The search for justice is a slippery slope.
For example, Islamic jihad is based on the idea of bringing heaven (i.e. "perfection" ) to earth, a philosophy that as we witness justifies the deliberate murder of innocents.
Our freedom to choose our own way in life is just as essential as our spiritual choice.
Those who argue for social or economic justice are really asking people to trade in their individuality and freedom of choice so that "government" can make things right. Unfortunately, as we have seen again and again, when government screws everything up, they eventually blame the people for their mistakes. Their go-to remedy, naturally, is then to control our lives MORE and then, when all else fails, start shipping the misfits and malcontents off to the gulag so they won't rock the boat anymore.
Capitalism is in perfect symmetry with Christianity because it holds each individual responsible for his own efforts. Anything other approach gives people an excuse to be bystanders in life, always seeking to blame someone else for their problems.
That is NOT a Christian perspective. For proof, turn to Jesus' parable about the master who entrusts his servants with various amounts of treasure to do as they see fit. Notice that Jesus, (a true communist, we are told) gives different amounts to each servants. Not very egalitarian, is that? Hmmm. Perhaps Jesus understood that we can be born equal, yet are not guaranteed a silver spoon lifestyle unless we EARN it.

Prof Beck's article would be more credible if she showed more knowledge of Catholic Social Teaching than that garnered from a fourth grade religion text book. The article is untouched by the teaching of Popes John Paul II and Benedict XVI (esp. Caritas in Veritate [2009] or by the Compendium of the Social Doctrine of the Catholic Church (Pontifical Council for Justice and Peace, Vatican Press 2004)

It is fun to imagine what a free market could do. But how could a free market be one of the least efficient ways to allocate goods and services? What could be more efficient? Central planning perhaps? Better check with the Russians before going further down that road.
It is true that oligopolies and monopolies exist today, but that is not due to a free market. For example, electricity production is subsidized and protected from competition because of claims that it is a natural monopoly. But a free market would make short shrift of that rent seeking claim and to the advantage of both economy and environment. General Motors would have been run off the road if not for government bailout. Likewise, big bankers can bank on government bailout.

Congratulations on publishing such a controversial article. First, I don't think the term "free market" is a good description of our economy. For instance, the production of large passenger aircraft is dominated by two companies in the World, Boeing and EADS-Airbus. The success of these companies is partially due to years of government procurement of military versions of their products. Also while alluded to in the article, the theory of comparative advantage within and among nations may really be "absolute advantage". Or "the rich get richer". How about that fire in Bangladesh? Thirdly, many undertakings, whether the economy, banking, the market for financial derivatives, ice hockey or women's roller derby cannot function fairly or responsibly without adequate regulators or referees. The financial meltdown of 2008 showed how poorly regulated the banking, mortgage and derivatives markets were. Frankly, the irresponsible, greedy and the manipulators were way ahead of the sheriff. My breath is just taken away when I read how the U.S. Treasury may swap with the Fed for the trillions of dollars of toxic mortgage backed securities purchased by the Fed during the height of the financial meltdown. Who wouldn't want to accept Treasury Bills in exchange for an underwater mortgage? When the bond holders of Greek, Spanish, etc. government debt were taking a 50% to 70% haircut on defaulted bonds, US investors holding toxic mortgage backed securities were getting paid off 100% on the dollar when the Fed bought them out. Now the shell game is to stick the taxpayer with those toxic assets by the Fed swapping them for T-Bills. Is this a "free market"? Whatever happened to the concept of the higher the reward, the higher the risk? Or "Let the buyer beware". I do think the importance of entrepreneurs is underrated. But the game can't be rigged to favor the few.

Some years ago a fellow history teacher who thought I was a socialist (I am not) said to me, "Socialism is based on the assumption that people are good, and they're not." My reply was, " And capitalism is based on the assumption that people are rational and they're not." First, let me acknowledge the reason I am not a socialist. Although church teaching clearly states that we should always promote the common good, I fear that the majority of people are much more likely to be motivated by their own opportunities for profit. And I agree that we do need a class of people who are motivated to innovate and invent, to take risks in order to promote new ideas and economic opportunities, and (yes, I admit it) to create jobs. I agree that PURE socialism will not provide that motivation, and I agree that history has demonstrated that societies adopting that economic system do ultimately fail. However, to believe in PURE capitalism requires two related assumptions. The first, of course, is the argument that everyone is ultimately better off when each individual is left free to pursue his or her own rational self interest --- the mythical invisible hand of the market place. But please note that phrase, "rational self-interest". Unfortunately, self-interest is rarely rational. People are motivated to pursue their own immediate profit, success, fame, or whatever they deem self-interest. If the behavior of human beings is not rational, then the rational invisible hand is relying on faulty input. If we get past this problem by saying that ultimately the free market is self-correcting and will negate the faulty input, then we have to acknowledge that some people will fall by the wayside while the market is doing its thing. This is where we need the second assumption: that those who fall by the wayside are acceptable collateral damage because they will be the ones who were lazy and irresponsible and deserve what they get. I live a fairly ordinary working class life and have not had an unusual level of exposure to the dark underbelly of life, and yet, even I know that there are many people who are good, normally intelligent, and willing to work hard who get hit by disasters over which they honestly had no control. There are also good people who make one serious mistake at some crucial point in life and are never again able to dig themselves out of that hole. I have seen these people; I know these people; I even have some in my own family. My understanding of Christianity forbids me to write these people off as collateral damage. It seems to me then that there are serious flaws with either PURE socialism or PURE capitalism and that the only real challenge is to find the happy medium. I simply cannot see some hypothetical argument between absolute unadulterated socialism or pure completely uncontrolled capitalism as even being a legitimate debate. The challenge is in the fine tuning of the balance between too much government intervention and too little, and, since economics is not one of the "hard sciences" I suspect that fine tuning will always be with us.

The fresh thinking for social justice advocates is good. Focusing on enabling fishing rather than providing fish is the future.

However, if you do another edition of this article it would help to expand on the connection between rent seeking and advocacy for social justice. Especially in recent decades too many business people with access to power in government have found that rent seeking is profitable. See Stiglitz, "The Price of Inequality" and Hacker/Pierson "Winner Take All Politics". Is this not what Tocqueville was concerned about in Chapter 20 of Book 2 of "Democracy in America"?

"Social justice" (in contrast to the three forms of justice described by St. Thomas) is about making social structures more just, but is often used loosely to include service to the poor more broadly. I spent more than a decade doing antitrust work, and agree that social justice advocates (as well as the public generally) would benefit from better appreciation of the productivity engine that is the free market.

There are three problems with the free market. First, practical markets not infrequently have large enough players and entry barriers that excess profits are not dissipated, which is why we have antitrust laws. Second, real markets develop without attention to market structure considerations that affect whether the market is, in fact, free. The 1918 Chicago Board of Trade case (246 US 231) provides a simple illustration. Third, the political reality is that power usually wins. I recall being told by Congressional staffers in the early 1970s that if the Sherman Act were to come up for a vote in the Congress of that day it would be defeated.

This last point affects social justice advocacy with respect to existing programs (e.g. the tax and transfer programs you discuss) that, upon reflection and experience, could be improved to better enable fishing. Enabling people to fish rather than giving them fish is surely the preferable policy. The problem is a simple risk calculus that depends upon current politics rather than good economic policy. Is the current politics such that it makes more sense to fight for an imperfect status quo rather than risk moving to a social structure that is less just rather than more just?

One hopes that the arc of history is moving steadily from "natural systems" to "open access systems" (to use the terminology of Nobel economist Douglass North in "Violence and Social Orders"), but Tocqueville's observations provide a cautionary note about the realities of industrial power.

Perhaps there are sound arguments to made for higher income tax rates on upper incomes, but looking back to the era of 70% and 90% top tax rates (roughly 1936-1981) as some sort of golden age (Mr. Lien's assessment of the era, posted above on 4/29 at 7:58 pm) actually weakens the case for such high rates. "The era that formed our middle class, the Greatest Generation, taxed its wealthiest at 90% for twenty years. Now we would consider their wealthy to be saps rather than patriots concerned about the country, the good of all." America had a sizable middle class as early as the 1890s and it grew rapidly in numbers during the early 20th century. These were the parents of the Greatest Generation. The "good old days" argument, that high marginal tax rates on upper incomes did no harm is also inaccurate. Some economists point to a narrower income gap as an indicator of a more virtuous (socially just?) era.

History, and the actions of the American people, say otherwise. Except for taxes applied (usually as surtaxes) in the war years (1941-45, 1952-53, and 1968-70), these high rates were intended to produce vital income for government spending on highways and housing, to stabilize the economy and, especially, employment. But unemployment was often above six percent and strikes were frequent, which hardly indicates happy workers. The gains accrued to white men and their families. Blacks were so completely segregated socially and economically that riots erupted in the cities in the late 1960s. Women's career choices were limited well into the 1970s. Capital investment was weak as business owners kept cash or bought Treasury bonds rather than invest in plant and equipment, and Warren Buffett, according to his authorized biography, bought several companies for less than their cash and liquid investments. By 1980, the media referred to America's industrial heartland as the Rust Belt. Non-profits suffered from stifled investment income. An honest assessment of the high-tax era might be: "limited benefits, unevenly distributed." In 1980, Americans voted deliberately for lower taxes. In 1984, the children and grandchildren of voters who had elected FDR to his second term by a 61% popular majority in 1936 now elected Ronald Reagan to his second term by almost the same majority--59%. Any social justice argument for high tax rates must take into account the clear lessons of history. To neglect these lessons is to work against the common good.

The desire for an understanding of economics that is based on some general, inviolate “law” has been around since the enlightenment. Karl Marx tried to define a world view based on the “worker” versus the capitalist that envisions a person’s labor – in this case physical labor - as the only true resource and the only thing of true value. Now we have the economic world view of the “renters” versus the “producers” which defines production of monetary wealth as the only true resource and the only thing of true value. Karl Marx’s ideas are illustrative of certain economic conditions, and they lent themselves to an ideological “us” versus “them”, “good worker” versus “evil capitalist” that ultimately does not and could not capture the reality of human economics and cannot be construed as a “law” of economics or social conditions. The same should be said of the “renter” versus “producer” world view – illustrative of certain limited economic and social conditions but not rising to a “law” and also too easily lending itself to an ideological “us” versus “them”, “good producer” versus “evil renter” mentality.
Although the “renter” versus “producer” world view is attractive in its seeming common sense and simplicity, and on its justification of the existing structure of wealth, power, and prejudice in the U.S., it fails on many levels to be a model of reality, especially if the definition of a “producer” is measured by accumulation of capital. Are our children “renters”, are the sick, infirm, and the old “renters”, are doctors and educators, and the military and the Church all “renters”. Is taking care of our environment and public resources – including infrastructure - activities of the “renters”, and therefore non-producing? Are banks, insurance companies and stockbrokers “renters” or “producers” ? are they producers when making a profit but renters when losing money, do they really create wealth or just move money around – making wealth for some but taking it from someone else? What do the terms producing and renting really mean in this economic construct?
Maybe we are all simultaneously producers and renters. Maybe all of us are producers when we use whatever resources we have in such a way that others benefit, and are renters when we use our resources to benefit only ourselves. Maybe the real underlying principal, or “law”, of economics is that the more resources that are available and spread around the more people benefit, and the more resources that are accumulated and stockpiled, the less people benefit. Everyone, given resources, will become a producer, but before someone can be a producer, they must be a renter. Economics should really be about the well being of people – to live and flourish – not just some people but all people, as the Catholic Church rightly says. Given the complexity of human existence and ideas, the “best” system is that which is adaptable, diverse, and incorporates many avenues for people to flourish which means a non-ideological framework that meets the needs of people and makes resources available – through both private and public means.

I can get this Republican Catholic stuff in lots of places these days. Is it necessary for America to publish it, too?

I'm please that America is broadening its scope to include more conservative writers. The liberal echo chamber gets old. That being said, this article is not much more than standard Chicago economics, rife with unproved assumptions and spurious definitions. Are people really defined strictly by their productivity? What sort of productivity? Does quality time with family count? How about going to church? Or praying? All very productive to my mind and none of it earns a cent.
The blithe notion that one can simply take or leave a job if the wage is too low is stunningly naive. It might say that in some econ textbook but the reality of a low-wage worker being able to just pick up and change jobs on a whim is ludicrous. What if he can't afford a car? What if he has two other crappy jobs and needs the third to fit? What if (like so many) he has only $ for a few days and can't dream of leaving any job, no matter how awful, to seek another. In the time the job turnover takes, he would be homeless. What if (like now) there simply aren't any other jobs?
As to this great prosperity jump in the last 50 years, where is it? I and almost everyone I know live at a lower standards than our parents did, despite hard work, dedicated education, careful planning. Apparently the author seems to think Africa is really booming, so perhaps they took the middle class' money. The millions of starving kids with flies on their faces will be psyched to know that they are so prosperous.
Websites like First Things often have really complex, nuanced conservative arguments. This is not one of them. This is just standard Reagan-era gibberish that would be funny if it weren't so cruel.

In a free market economy, there will be members in the society who cannot fully participate in it, like people with disabilities, the elderly, the infirmed, young children, and other members who are not able to produce something nor have the means to pay for the economic goods. How do we then treat the disenfranchised and the marginalized in a free market system that only rewards those who have the means to participate in it? This is at the core of the social justice agenda, especially one that is based on Jesus’ teachings. How do we care for the most vulnerable members of our society? How do we share resources? Who truly owns the land, the source of natural resources that generate wealth for the nations? Will sharing of resources or caring for the poor really dampen initiatives of entrepreneurs and other wealth creators? Will distribution of wealth destroy the foundation of a free market economy? Can a free market pay the real cost of talent, genius, and true innovation? The problem with free market economy is that it has evolved into a religion in itself where some of its tenets become inviolable and therefore incompatible even with the Catholic social teaching. In which case, inter-religious dialogue is a must in crafting a social justice agenda in a free market economy.

Immigrants also know about labor unions and have, throughout American history, joined them in disproportionate numbers.

This is a full throated endorsement of free market utopia. It's good to see it on this website since it should--but probably won't--silence the conservatives who harp about how one-sided AMERICA is (I await the opening up of such space on conservative Catholic websites such as FIRST THINGS).

Here's where Professor Beck lost me: "People seek to gain income and wealth." Christians do not guide their lives by this principle or behavior. As for his "makers" and "takers" distinction the exploitation of the poor and undocumented at the hands of employers is legend. The surplus value of workers is not reflected in the wage; the social underpinning of successful businesses (e.g., public education, roads, court systems) gives lie to the mythic notion of the solitary entrepreneur.

Thank God for the social justice teaching of the "just wage."

This writer's message is essentially saying "let people starve, that will motivate them -- or those who watch them die." The reality is that as our society has gotten increasingly competitive and wealth redistribution has gone increasingly into the hands of a few, more people are left out -- and its very hard for them to get into the economic game. They are up against it.
According to Nobel laureate economist Joseph Stiglitz, with our low taxes on speculation, we have "drawn our most talented young people into financial shenanigans, rather than into creating real businesses, making real discoveries, providing real services to others. More efforts go into getting a larger slice of the pie than into enlarging the size of the pie."
Such a nation we have: money is speech, corporations are persons, labor is a commodity, pro-life means cutting programs like WIC (milk for babies), and two of our most influential persons are Wayne LaPierre and Grover Norquist. No wonder we are off track, with more and more pundits sounding like Scrooge.

A magnificent piece. The task of alleviating poverty and suffering falls to us as individual Catholics. Without prosperity (and the only economic "system" that has ever delivered it consistently), how exactly are we to do this? The social justice agenda reminds me very much of the politics of the Labour Party here in the UK (and socialist parties throughout Europe) - the politics of envy. It becomes not "you shouldn't have so little" but rather "you shouldn't have so much."

A longer response to Professor Beck's article from Meghan J. Clark of St. John's University has been posted to our blog.

The early Church as describes in Acts of the Apostles took care of the poor, the sick, the disabled. They did not shirk this responsibility and hand it over to some Greco-Roman government. They lovingly, with faith in the Trinity, shared what they had. They didn't worry about the economy or what was happening "in the world." When we, as Catholics start teaching that it is up to us to give generously to our own Church, then the Church can once again do these things. We already have hospitals, we already have Catholic Charities, we already have schools. Unfortunately, they all struggle because WE don't know how to give generously in faith. Let's faithfully put this social justice issue back into God's hands and do our part with personal giving and stewardship, and take it out of the hands of the "elected officials." "In the world you will have trouble. But take courage, I have conquered the world." John 16:33

I read with great interest Stacie's Beck's essay on social justice. (America May 6, 2013). Ms. Beck's argument takes the familiar tone of the village elder bent on delivering a dose of reality to a group of overly idealistic social justice advocates. If only we knew how the world really worked. Ironically, for a piece aimed at "Questioning the Assumptions of Social Justice Advocates," Ms. Beck herself relies on and at least three unquestioned assumptions and some trickery. Unfortunately, both are fatal to her full throated defense of free market capitalism and her canonization of its successful practitioners.

Before discussing Ms. Beck's unexamined premises, it is worth noting that she begins with some sleight of hand. She first notes that scarcity, and not prosperity, has been rule throughout history. She then hopefully notes that world wide poverty has "dropped 80% in the last 30 years." The trickery here is twofold. First, Ms. Beck implies that we must attribute this progress to the spread of free market capitalism and (later on) militarism. Oddly, she does not mention that many successful anti poverty efforts are not the result of free markets, but often the repairing of damage done by free market policies often by refiguring traditional markets, filling the holes that markets ignore, and sometimes by embracing policies antithetical to the free market cause. Precisely how much poverty reduction capitalism can lay claim to is an open question, but is certainly not amenable to Ms. Beck's simplistic narrative. Second, Ms. Beck seems to say that we lack the prosperity to engage in social justice efforts while at the same time underscoring how propserous we have become. She cannot have it both ways.

In a similar way, Ms. Beck wishes to tie economic prosperity to "national security abroad and law and order at home." While it is unquestionable that the rule of law is a precursor to economic prosperity, Ms. Beck offers nothing in support of her inference that American military intervention abroad is also such a precursor. In fact the evidence suggests that the human and monetary costs of America's latest foreign engagements create the absolute opposite of prosperity both at home and abroad.

Ms. Beck then moves to her first egregious, though explicit, assumption: there "is no alternative" to free markets because "economists do not know" of it. (This is stated twice, perhaps in the hope that repitition will render it true.) Well of course economists haven't identified a successful alternative to the status quo. That is not what they do and that is not how economic systems come into being. Economists do not create economic systems. Rather economic systems reflect the values, judgments, struggles and priorities of any given society. Economic systems are the product of thousands of decisions, compromises, and political decisions great and small. Economists may theorize, describe and predict. They may even make monetary policy, but they are not the genesis of any economic system let alone a new one. Because economic systems simply reflect the limits of our imagination, intellect and moral judgment, they are dynamic. At some points our own economic policy embraced values such as environmentalism, equality, and opportunity. More recently our system favors a narrower class of interests that seem to have a disproportionately loud voice in the nation's capital. (To her credit, Ms. Beck castigates the "rent seeking" behavior implicit in this situation.) In sum, Ms. Beck wishes us to believe that free market capitalism, is as they say, etched in stone. Not true. It is a man made creation and we can meld it to our needs. We won't find the right system in a book. We will have to create it ourselves. It will be a product of our hearts and minds and I sincerely doubt we have reached the limits of either. (Other authors have peddled this "end of ideology" line only to be disappointed.)

Ms. Beck's second assumption tops her first in either naiveté (if one is gentle) or speciousness (if one is not inclined to extend Ms. Beck the benefit of the doubt). Hoping to head off any argument about economic fairness, she states: "firms pay wages that reflect worker productivity." Where and when has this has been true in practice? American workers' productivity is second to none and has been growing consistently for decades. Yet wages in America have been stagnant for sometime. Workers in the middle and at he bottom of the labor pool have seen no benefit from their enhanced productivity. In fact, many workers in highly productive and successful industries have lost their jobs or seen their wages flatline. At the same time, those higher on the food chain have reaped tremendous rewards. Obviously, something more than "productivity," affects wages. Notably. Ms. Beck deepens the hole she has dug with the following whopper: "Only by colluding and taking advantage of a labor pool trapped in a location can firms force wages below this [productivity determined] level, a situation less and less common in today's highly mobile society." (emphasis added.) Less and less common? Anyone who has ever examined where their cellphone or t-shirt was made knows this is not true. While the elites of society have become more mobile, the middle and working classes have not. Unable to hop a jet, they are subject to having their poverty used against them in places like China, India and Malaysia.

Lastly, Ms. Beck lastly engages in an all but unstated assumption about our present situation in America. By railing against, taxes and "anti-competive" regulations, Ms. Beck seems to suggest that America is some how inhospitable to business enterprise. That seems to be an odd conclusion given that our taxes rates (statutory or effective) are at their lowest historical levels and pale in comparison to competitor nations. (Ms. Beck never addresses the massive amount of economic growth generated in the post -war era, when the top tax rate was about 90%) Similarly,we have embarked upon thirty years of de-regulation. Anyone familiar with the mining business, oil business, food business or financial business --actually anyone alive in America -- knows the results have been less than encouraging. Disasters and fraud have abounded while our regulators were busy being business friendly. In a similar manner, Ms. Beck suggests that we have a welfare state that somehow encourages people to laze about aimlessly. On the contrary, our weak and minimal social safety net barely provides subsistence to its beneficiaries. Moreover, the idea that such meager programs undermines economic prosperity is theoretical at best. One need only look at the impact of programs such as food stamps on local economies devastated by the latest recession to see that precisely the opposite might be true.

What we are left with is yet another attempt to square a capitalist system based upon the pursuit of economic self interest (a/k/a "greed') with the very different message of the gospels. This effort is not new. All the familiar angels of satan are here: taxes, regulation, welfare, redistribution, and, at the head of the parade, social justice itself. Social justice advocates have heard these same arguments at least since Barry Goldwater ran for president. We heard them again, when Ronald Reagan was elected. They were not persuasive when the former made them and not successful when the latter made them policy. By relying on the standard cant peddled by the Chamber of Commerce and its fellow travelers, Ms. Beck has produced yet another unsuccessful attempt to usher the merchants into the temple.

Thanks. Wonderful to see the responses of the various constituencies of the Catholic Party get their dander up.

Immigrants know more about succesful economic policy and social justice than the entire hierarchy of the Church, institutional or otherwise.

From Margi Sirovatka: My sister Barbara suggested that I read this article. As I am currently reading Pope Francis' biography by Sergio Rubin, I would encourage all to do the same. Ms. Beck echoes Bergoglio's expressed thoughts in Chapter 2..."Por eso, es muy importante que los gobiernos de los diferentes paises...fomenten una cultura del trabajo, no de la dádiva...y no me canso de repetirlo, el trabajo otorga dignidad."

in necessariis unitas, in dubiis libertas, in omnibus caritas,
In necessary things unity; in uncertain things freedom; in everything compassion

Respecting the dignity of every person, loving one another, and refraining from judgment are necessary things to which all Christians are called. On an individual level, these imperatives are challenging enough but the challenge increases when we examine how to follow this calling on local, national or global level. As the challenge increases, certainty decreases. Social justice clearly belongs in the category of necessary and non-negotiable demands of living as Christ commanded. How we best pursue it, let alone achieve it is far from certain, as should be clear from the variety of perspectives expressed here. Paul Krugman does not have the answer. Nor Milton Friedman. Nor Benedict XVI.

Professor Beck does not have all the answers either. But she does raise some important questions and make valid points about how we define social justice and pursue it. The free market system has undeniably created enormous prosperity. Whether that prosperity is distributed justly is clearly in doubt. I have my own views on this, but I do not profess to have the answer either.

But I would like to take up a theme that runs through Professor Beck’s piece – how many social justice advocates and the Church generally treat business people and entrepreneurs.

We were all created in God’s image, given unique talents and appointed stewards of this world we inhabit. Creation was not an event – it is an ongoing process, one in which we are called to be co-creators. In the 21st century, the ongoing process of creation takes on millions of forms. For many of us, our work is one of the most important and vital ways for us to participate and contribute. It is a sacred calling. We do not need to make brandy, jam or highly illustrated bibles in a monastery to do sacred work. We can do this as teachers, firemen, nurses and social workers. It would be hard to find an advocate of social justice who would disagree with that.

But what about business owners, or investment bankers or dare I even say it, lawyers? Do they have a legitimate place in the Church’s social justice framework, apart from paying enough taxes or donating enough money?

Whether we like it or not, for many if not most people in the developed world, work consumes more of their energy and attention than the practice of their religion. For many, work is their religion. And while it is tempting to judge them taking comfort that, like the Pharisee, we are not like those sinners, that is not what we are called to do. Instead, we are called to reach out to them and engage them.

Unfortunately, this is not one of the Church’s strengths. We have countless examples of saints with personal stories of poverty, humility and quiet piety, many who devoted their lives to the poor and destitute. Not too many examples of entrepreneurs or business builders even those who became philanthropists.

Bill Gates was until recently, the richest man that ever lived. In church or at a meeting of social justice advocates, he would be pointed out as an example of the grossly unjust disparity of wealth in the world. Not a word about the millions of people who had jobs as a result of the business he founded and grew. Probably not even a word about the millions of lives his foundation has saved in poverty stricken regions of the world. The Gates Foundation has saved more lives than every canonized saint in history combined. It is even close. I love Dorothy Day and Mother Teresa but this week, the Gates Foundation will save more lives than either of those saintly women did in their lifetimes.

I am not suggesting here that we canonize Mr. Gates nor in any way diminishing the loving gifts made by Dorothy Day, Mother Teresa or any other. I do not know whether the common good would be better served if more of Gates’ fortune had been redistributed by taxes or some other mechanism. I do know that there are millions of Bill Gates out there who are advancing the Kingdom of Heaven one day at a time and they need to know there is place for them in our Church.

Justice is a virtue. in classical Greek philosophy as well as in pre-Christian Israelite oral and written tradition, so far as I know, it has been recognized as a moral virtue, the practice of which involves according to every human person his or her due, that is, according to each person what is due by right. The practice of this virtue was recognized as a factor in making a person a better human being. Its practice always has, both in ancient tradition and Christian tradition, involved some kind of giving to another, recognition of and respect for the humanity of another. As such, it has always been social, by definition. It has, from early times, been a recognized way of contributing to the righting of a wrong. In this respect it differs from that great Christian theological virtue, Charity, since Justice is concerned with acknowledging a person's right, or the right of a group or society of persons, and doing everything in one's power to accept and enable that right. Economic theory does very little toward explicating what is due to a person or to a society of persons by right. Starting a discussion about what is the best way to practice justice (which is always social, by definition) from a premise of economic theory rather that from a premise of human rights seems a little irrational to me.

It's a pity that you did stop there because it was the beginning of a very thought-provoking article. For many years I've been involved in both catechesis in Catholic primary schools and in work for social justice. I've come to the conclusion that we'd be better off leaving 'social justice' as a topic to high school years, while using earlier years for putting more emphasis on the need for right action and right attitudes such as accepting responsibility for our own actions and relationships. There really are too many people now who have been enculturated, by people like myself, to believe they have rights but no responsibilities.

I ony speak for myself, when I find the perverted arguments to justify the present injustice ruling this country diabolic. The following facts are documented in public records, nationally and internationally. The list is by no means comlete, or in the order of priority of importanace:
1. Only 4 out o 150 countirieshave more wdealth iequalities than the USA.
2. An amount equal to ONE HALF of the GDP is self untaxed overeas by rich Americans
3. Ony 3 percent of the very rich are entrepreneurs. And research results which drive the economy come from schools
4. Just 10 rich American individuals made a total of $50 Billions in one year
5. In 2010, this USA has been ranked number 29 in the quallty and quantity of health care provided, while the social healthcare system of Canada, (which is much maligned by our corporate media) came in number 6 in the world. he Scandinavian countries of course are always in first places. These do not have the wealth inequality as the USA has.Those countries have taxes levied according to income.
6. When it coms to child mortality rates, we are even far worse off, and far behind third world countries.
7. The largest USA corporations pay no taxes at all or only 10 percent the past 4 years. This they have achieved on the back of underpaid workers or slave labor overseas, and by paying off legislators.
8. Fifty percent of last year college graduates hav not found any jobs yest,and this nation is short at least 20-30 millions of jobs for its unemployed.
9. The income of the upper few percent as sky rocketed the pat three decades (on the back of the 90 percen) while it has decline for the rest of.
10. The tax deductions for the rich could pay off 100 percent of our deficit at once. Asked Warren Buffet.
11. The edrly and siabled on food stamps are getting $4.30 a day

I could go on indefinitely to refute every point this writer has made. But anybody has access to the truth, if so inclined. Are the editors determned not to know?

Poverty has declined world wide the past years???Whom are you kidding? Who fabricated those numbers? Most certainly not the UNO! I find it incromprehensible that America Magazin should give voice to such false opinion pieces. Whom are you standing with?

What about Scriptures, are these to siple to apply to ecomincs? Matthew 19: 23-24 "I arrue you, only wth difficulty will a rich man enter the kingdom of God. I repeat what I said, it is easier for the camel to pass th rough needle's eye than for a rich man to enter the kindom of God."
James 5: 3-4 zzz'See what you have stored up f yourselves against the last days. Here are cryng aloud are the wages you withheld from your....workers."

When parents have both to work for food rent and clothing, and cannot afford healthcare, this proves, that at present thecountry is rued by greed, power and control by the few over the majority. If people working full time for such as Walmart and the likes qualify for food stamps, then wehae become a facist state

I just read a a headline in this weeks Windsor Time: "Locals tees off to raise money or cncer treatment." A mother of five, having beenmisdiagnosed by the hospital after th last childbirth is battling her insurance company tocover treatments. The intitial screening costs ar $21'000.- The treatments $150'000.- a year. This is a loosing battle millions of people are fighting every year. How can the sick industry and the greedy insurance companies get by withy this? And where is the sense of Christian justice at America Magazine?

While I am not sure how helpful a 4th grade textbook is for evaluating Catholic teaching on social justice, I do know the simple freshman economics model which underlies this article is inadequate for evaluating real economic outcomes. In textbooks wages are supposed to reflect productivity (this is known as the marginal productivity theory of distribution, which according to John Bates Clark ensures that in a competitive market all incomes reflect contributions to output) yet in the real world this is usually not the case. Only economics professors seem to believe the real world fits this model, which is ironic since they are more removed from market forces than almost all other workers. It is near impossible to determine anyone's marginal product in a practical manner (as Hall and Hitch discovered in 1930s). At best some workers might have a proxy for productivity linked to performance bonus, but these are not market prices so they don't fit the theory.

As for workers in general, from 1945 to 1973 average wages rose with productivity, yet since then productivity has continue to rise while hourly real wages have been stagnant. This, I would argue, is a violation of social justice, and it has little to do with market forces and more with the reduction of worker protections and the increase in protection for owners. And in the financial services sector incomes have skyrocketed, yet it is hard to find evidence that all this financial engineering in the past two decades have added to the productivity of the economy (that is Paul Volkers view). If it did, we would expect productivity in the past 20 years to be higher than it was before financial deregulation. It wasn't. People are paid based on contributions to profitability and not productivity and it is only in textbooks that these two are the same. More often high profits come from rent seeking and not productivity.

While the author is correct that rent seeking activity is harmful to the economy, it is more the norm than the exception, and to suggest that the poor, who have very little power, are benefiting from this while not mentioning the fact that the majority of the wealth of billionaires comes from this gives the impression that the rich are creators and the rest are takers. Pick any billionaire, or millionaire for that matter, and you will find rent seeking activity (though I would call it exclusionary institutions and power). If there was the level of competition the author assumes than there would not be any really rich people. Markets are supposed to create short term profits for innovators, which are quickly competed away by scores of followers (moving all down the learning curve and other economies of scale that make for increases in productivity).

Most research shows that economic growth, in the USA, has not lowered poverty rates all that much since 1980 (from 1945 to 1980 a rising tide did lift all boats, not so since then). And in developing countries, according to recent research, economic growth has a much bigger effect reducing poverty when inequality is low and much less of a positive impact when inequality is high. In fact, the famous "Equity/efficiency trade-off" that underlies the authors argument is a false trade-off. There are many policies (like free education and health care) promote both equity and efficiency. Markets will only provide education and health care for those who, as John Paul II noted, have a market voice (can afford it). I think Jesus offered a different standard. As the past 30 years has shown, low taxes on the rich does not effectively promote productivity or job creation, and low regulation does not promote efficient financial markets, even more clearly demonstrated by the recent financial meltdown which we have yet to fully recover from..

It is also problematic to suggest that we all benefit from the few people who create jobs. Economic growth is most promoted by spending on education, research and development (which are highly subsidized by the government). Taxpayers paid for the development of the computer and internet and the "small group of people" have managed to monopolize them to their own benefit (more rent seeking activity). Bill Gates and Steve Jobs are not the poster children for free market economics.

The last part of the article is really confusing, as it seems to be arguing against using the tax code to promote redistribution towards the poor. Outside of Ronald Reagan's Earned Income Tax Credit, and one or two smaller policies, the tax code does not try to help the poor or to redistribute income away from the rich. In fact, its the exact opposite. The tax code is written mostly by lobbyists for the rich and powerful so that they do not pay high taxes. This is why Romney paid such a low tax rate and why so many large corporations pay no tax at all. Furthermore, the tax code is fairly complex, and since few prices in the US economy can be called "market prices", it is not easy to make blanket statements that "redistribution through the tax and transfer system erodes prosperity". Taxing cigarettes can reduce smoking, leading to a more efficient outcome for society (costs less) and for those who don't get cancer, though it could lead to less profits for Big Tobacco and Big Pharma. It all depends on what you mean by prosperity. In the Catholic tradition we have rejected the idea that people are valued by their economic value. Catholic social thought rejects the "rational economic man" view of the human person and instead offers a view based on human's being made in the image and likeness of God. This, I would suggest, is one of the areas where you cannot serve God and mammon.

America has the highest poverty rate among rich countries and the lowest mobility. This is not because our markets create more poverty. In fact, as the Economic Policy Institute has demonstrated, US market poverty rate is a little under the OECD average. The difference is that all the other countries have taken policies to reduce poverty much more than we do. It is a political choice. It is a reflection of our values. It is because we have capitalism for workers and socialism for the rich. We bail out the fraudsters (bankers) and not the victims of their fraud. And the fact that the Justice Department has stated that Bankers will not be prosecuted no matter what they do, while a poor black male who steals $100 from a deli will go to jail shows that we are a long way from the law and order Adam Smith called for. In fact, Adam Smith wouldn't be surprised, as he noted that governments are established to protect the property of the rich from the poor.

Simple freshman economic models are not very useful for explaining actual market outcomes. As Joan Robinson said, the purpose of studying economics is to avoid being deceived by economists.

After a few responses, I thought it best to outline the real theological issue with this article.

Institutional sin exists. There is this false narrative that the world is made up of individual choices everyday and that all we need to do is get everyone to make the right choices and the world will be better. This narrative is alluded to in the following quote:

"Is it right to compel productive people to be charitable? Or is it our duty to persuade them to be so of their own accord?"

Reality is not this simple. Socioeconomic institutions drive people to act in a certain way in order to sustain themselves at the cost of others. Part of this is driven by the free market system, part of this is driven by personal sin, but much of this is due to structures of sin that have been established for decades or centuries. These evils perpetuate themselves with little will exerted by individuals. In fact, it is the lack of individual will that allows them to exist. Social justice is fighting against this institutional sin.

The whittling down of social justice into personal charity is a fallacy. It is a fallacy for two reasons—it is based in materialism and it is denies the evil of institutional sin.

First, the personal charity approach assumes that if we can just "persuade [the rich] to be [charitable] of their own accord" then we do not need to worry about structural poverty. If those who deserve it simply receive some material goods from the rich, then they will be happy and the rich can live as they desire, fueling the engine of consumerism and materialism. In Caritas in Veritate, Pope Benedict rejected this view. Simply providing the poor with material goods is not helping them at all. We must help them both spiritually and physically. The spiritual assistance comes not only from prayer, but from love. It comes from a love willing to attack the socioeconomic barriers to a society in which no one has to endure the indignity of poverty.

This article seems to scoff at the poor. In addition to them being "less productive," "nonproductive," not "enterprising" nor "self-reliant," there are also, supposedly, taking some easy way out:

"There is a failure to appreciate that in many cases, the economic incentives of these policies lead to the problems they are designed to solve and reinforce the behaviors that caused the problems in first place."

The implication here is that the poor are actually led to poverty by economic incentives and not by the institutional sins that perpetuate poverty. How can we honestly talk of a willingness to help the poor while demeaning the poor in this way? We cannot. We must first love and understand the poor before we can begin to help them. This is helping them spiritually. This is the first key to Caritas in Veritate. From this love, we will be driven to support public policies which seek to tear down the systems that perpetuate poverty. This destruction of the structures of sin will have an effect on poverty, not convincing a billionaire to throw more money at Catholic Charities after we cut his taxes. Materialism only breeds materialism. Love breeds salvation.

This leads back to that denial of institutional sin.

CCC 1869: Thus sin makes men accomplices of one another and causes concupiscence, violence, and injustice to reign among them. Sins give rise to social situations and institutions that are contrary to the divine goodness. "Structures of sin" are the expression and effect of personal sins. They lead their victims to do evil in their turn. In an analogous sense, they constitute a "social sin."

The goal of social justice is to tear down there structures of sin. Structures of sin are the "expression and effect" of personal sin, but they are not JUST an amalgamation of personal sins, but a concentration of them. Structures of sin lead us to do evil when we are not actively working against them. They are not willed into being by the many sinful people at all times. They are allowed to perpetuate due to the unwillingness of their victims to stand up to their evil.

In this article outlining a particular perspective on social justice, where is the work being done to tear down the structures of sin? It is not present. It is not present because the author seems more than willing to allow these structures to perpetuate because "there is no other alternative." The denial of an alternative is an acceptance of the structures of sin. It is doing "evil in [one's] turn." It is not social justice. It is not love. It is not Christian.

EDITED TO ADD:
It seems like this quote from Cardinal Sin works nicely here:

"Strength without compassion is violence
Compassion without justice is sentiment
Justice without love is Marxism
And ... love without justice is baloney!"

Thank you, Professor Beck. Go to the front of the Church and keep preaching the refreshing attitude that to conquer poverty we must build wealth. The Church has no real competence economically, and platitudes about helping the poor and preferring the poor (whatever that means) don't pay or feed anyone. Your critics have already posted here their tired and failed notions of economics, some of which are quite skewed. Free markets provide a million ways to make a million dollars or a good living. Markets work, they need time to work, and the rule of law to enforce contracts and punish fraud. Let talent build, make, farm, create--all these things are holy uses of labor. Abusers are everywhere, especially in government. Our government now taxes like gangsters taking too much, destroying capital, or chasing it abroad. It comes down to this formula whether one is a Harvard lawyer or heartland farmer, if you want to get rich or ahead in America, read Wm. F. Buckley, Jr. If you wish to stay poor, read Dorothy Day. Sell something to someone. Work, save, and invest. That third item is often ignored. Funny thing though, the Church lives by charity, saves the donations, and invests in real estate. But this they don't preach.