Financial Markets: First Do No Harm?: Pope Francis condemns 'intolerable' free market effects

Pope Francis said it was "increasingly intolerable" that the world's financial markets have the power to determine people's fate instead of being at the service of people's needs. He also criticized the way "the few derive immense wealth from financial speculation while the many are deeply burdened by the consequences."

The pope called on governments to create an investment market that has a positive impact on people's lives and to combat "an economy which excludes and discards" others. Pope Francis met on June 16 with experts taking part in a two-day conference in Rome on "impact investing," which promotes investing in companies, organizations and funds that will have a positive and measureable impact on communities and the environment.

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The June 16-17 conference, "Investing in the Poor: How Impact Investing Can Serve the Common Good in Light of 'Evangelii Gaudium,'" was sponsored by Catholic Relief Services, the University of Notre Dame's Mendoza College of Business and the Pontifical Council for Justice and Peace.

"It is important that ethics once again play its due part in the world of finance and that markets serve the interests of peoples and the common good of humanity," the pope said. "It is increasingly intolerable that financial markets are shaping the destiny of peoples rather than serving their needs, or that the few derive immense wealth from financial speculation while the many are deeply burdened by the consequences." The pope called the financial speculation on food prices "a scandal which seriously compromises access to food on the part of the poorest members of our human family."

Governments urgently need to promote "a market of high impact investments" in order to combat "an economy which excludes and discards." He said advancements in high-speed financial transactions are meaningful only if such technology "better serves the common good." The pope praised the conference's efforts to look for "timely and realistic strategies to ensure greater social equality" and recognized "impact investing as one emerging form of responsible investment."

"Impact investors are those who are conscious of the existence of serious unjust situations, instances of profound social inequality and unacceptable conditions of poverty affecting communities and entire peoples," he said.

In response, such investors will look for ways their resources can be used to promote the economic and social development of those most in need, especially "through investment funds aimed at satisfying basic needs associated with agriculture, access to water, adequate housing at reasonable prices, as well as with primary healthcare and educational services." The aim is to have a positive impact on local communities while offering investors returns that tend to be more moderate, he added.

The pope said there is a deep connection and "virtuous circle" between profit and solidarity, and Christians are called to rediscover "this precious and primordial unity" of profit and gift. He also asked that people never forget "the transience of earthly goods and to renew our commitment to serve the common good with love and with preference for the most poor and vulnerable."

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Beth Cioffoletti
3 years 5 months ago
and he is just getting warmed up ... I was beginning to despair that I would ever hear this proclaimed from the Catholic Church in my lifetime (oh me of little faith). Yes, it was in the encyclicals and other little read documents, but on the front page of newspapers??!! Next thing you know, you might even hear it from the pulpit of your local Catholic Church!
Carlos Orozco
3 years 5 months ago
I think the current global Capitalism was mortally wounded back in 2007, when the (privately-owned) U.S. Federal Reserve rescued Wall Street and European mega-banks at the expense of the dollar and international financial sanity. The conditions of the rescue have been kept secret thanks to bipartisan complicity in Congress, blocking legislative attempts to open the can of worms of the money cartel. The rescued "too big to fail" banks (Goldman-Sachs, JP Morgan, Citibank, HSBC, Credit Suisse and the likes) are now even bigger than they were seven years ago. We, simple mortals that have the privilege of breathing the same air of the oligarchs, are reduced to waiting for a major derivative operation by any of these banks to go bad for a domino effect to start, basically making the previous crisis look like child's play. What then will replace the current "Socialism for the rich, Capitalism for the poor" system?
Vincent Gaitley
3 years 5 months ago
Someday it will occur to a Pope to encourage the poor to enter the free markets instead of being crushed under them. One way would be to use the world wide membership of the Church to capitalize a bank for the poor that actually focuses on savings, capital formation, investment, and home purchase--four elusive matters for the very poor. Instead we get the economic drivel that inspires liberals (all well heeled) to excoriate the system that made most lives livable in recent history. Build the bank--not, by the way the corrupt crony capitalism the Church operates in its own bank--a real institution that offers 5 bags of gold to the poor, then see what can be done. (Re-read Matthew 25 14:30)
Beth Cioffoletti
3 years 5 months ago
Isn't this, once again, putting the "problem" of the poor on the poor?
John Walton
3 years 5 months ago
"The pope called the financial speculation on food prices "a scandal ..." I suppose Papa would prefer that farmers go bankrupt by not availing themselves of the tools of hedging their crops, or buying futures on fertilizer phosphate prices, perhaps farmers should stop reading long range weather forecasts. Why shouldn't a professor of metrology at some aeronautical school buy/sell soy futures if he perceives a subtle shift in weather patterns through the knowledge he has gained from improving his teaching skills. His action informs the market, supply and demand shift to accomodate and all consumers benefit. This pope, in particular, is stuck with a broken 12th century economics model.
Beth Cioffoletti
3 years 5 months ago
So if consumers benefit (however you define that!) then it's ok, right? Defining the people of God as "consumers", in itself, is grossly missing the mark. People are not to be used for profit. Profits are for people. As Francis said: "there is a deep connection and "virtuous circle" between profit and solidarity, and Christians are called to rediscover "this precious and primordial unity" of profit and gift."
J Cosgrove
3 years 5 months ago
Defining the people of God as "consumers", in itself, is grossly missing the mark.
It certainly not the only way to describe people but when we use the word "poor" it is exactly what we mean. Someone is poor because they involuntary cannot consume much, probably much less than they would like. Some others might decide to consume very little as a life choice and we would not designate them as poor. Thus, the term consumer and poor go hand in hand. And profit is what has driven the massive expansion of wealth in the world in the last 200 hundred years and what has lifted billions out of poverty. Without profit, none of this would have happened.
Beth Cioffoletti
3 years 5 months ago
Could you give me some references for these billions lifted out of poverty, JR? Specifically in the USA? 50 years ago (1960) my very middle class father, a dairy farmer with a high school education, was able to send all of his children to Jesuit universities. My mother did not work. We had good healthcare, and I don't remember any angst over retirement or paying the bills. We were not rich, but we certainly did not consider ourselves poor or lacking in anything. Nowadays even young people with college educations cannot find jobs that pay more than poverty level wages. Healthcare is not affordable. It certainly doesn't look rosy to me. Is this what "profit" that went into the pockets of the rich did for us? Or am I missing something?
J Cosgrove
3 years 5 months ago
Or am I missing something?
You are missing something. I must have seen a hundred articles about decrease in world poverty in the last 10 years. The best visualization of this is Hans Rosling charts which are visualized here. https://www.youtube.com/watch?v=jbkSRLYSojo There is no real poverty in the US. No one here lives like they do in large parts of Africa and Asia. I traveled in Africa a short time ago. If you want to see real poverty, this is where it is still prevalent in many places. If someone here lives in squalor then they are not taking advantage of what is available. For the reasons why this happened, read Deirdre McCloskey's books on this http://www.deirdremccloskey.com The main cause is innovation but McCloskey will tell you why the innovation happened. As someone put it recently, a teenager in Africa is walking around with more computer power in his or her hand than the entire US government had 50 years ago. The innovator often gets rich but the real beneficiary is the rest of the world that gets to use the innovation. The problem with a college education is that the cost of it has risen several times greater than inflation. For that look at the universities themselves including the Jesuits who run several of them. There is no cost reason to explain this. They just assumed they could raise tuition and they did. And people then paid these increased tuitions or borrowed money to pay them. It has reached a point where it is becoming very dysfunctional to our society. But there are alternatives for those who are ambitious.
Beth Cioffoletti
3 years 5 months ago
I'd be more apt to take you seriously if I thought that you were personally working with the poor in your local community, JR. Are you? You seem to be saying that if you are poor in the US, it's your own fault. ("If someone here lives in squalor then they are not taking advantage of what is available.") Yet again, putting the problem of the poor on the poor. Ever hear of "structural sin"?
Beth Cioffoletti
3 years 5 months ago
Poor in America is, in many ways, worse (or at least different) than poor in the 3rd World, where the poor have maintained their bonds of community. PBS has a short interview here about a book I hadn't heard of, The True American. Not long after 9/11 a Muslim immigrant from Bangla Desh was shot in TX by an American out to avenge the attacks. He survived, and devoted himself to trying to stop his attacker's execution. (The attacker had killed two other Asians). His efforts eventually failed and the killer was executed. It's an amazing story. The later part of the interview gets into a good conversation about the American white underclass (my neighbors!) and the distinctive shame and isolation endured by poor people in a wealthy country. The PBS interview is HERE: http://www.pbs.org/newshour/bb/true-american-victim-attempted-murder-tries-save-attacker/ This information came my way via Jim Forest.
J Cosgrove
3 years 5 months ago
I'd be more apt to take you seriously if I thought that you were personally working with the poor in your local community, JR. Are you?
What has that to do with anything? I suggest you stop trying to make this personal. We are all sinners. I provided information. I suggest that is what you should pay attention to, not my failings of which there are many.
You seem to be saying that if you are poor in the US, it's your own fault.
I never said this. I said
Someone is poor because they involuntary cannot consume much, probably much less than they would like. If someone here lives in squalor then they are not taking advantage of what is available.
Both of these are true. There are all sorts of safety nets available in the United States so why do some not take advantage of what is available. It is not an involuntary limiting of choices. Maybe they need some help with this but what is considered poverty in the US is far from what is real poverty in a large section of the world. I just came from a place where there were hundreds of thousands probably millions that are living in aluminum shacks, 10 feet by 20 feet. Often a large family will live in these shacks. And the people there told us that thousands are pouring in every day from all over Africa to live in these shacks because it is better than where they currently live. This is real poverty. The real problem in the US is not material poverty but spiritual and cultural poverty. And there are people with 7+ digit salaries who would qualify here. If you want to learn about alternative views on these topics, I suggest you read some other sources. Here are two for you: http://www.amazon.com/Money-Greed-God-Capitalism-Solution-ebook/dp/B0027KRRKW/ref=sr_1_1?s=books&ie=UTF8&qid=1403188033&sr=1-1&keywords=jay+richards Money, Greed, and God: Why Capitalism Is the Solution and Not the Problem. This is by Jay Richards, a convert to Catholicism and describes his journey from a socialist to a defender of the free markets as the only moral way to organize a society. and http://www.amazon.com/Economic-Facts-Fallacies-Thomas-Sowell-ebook/dp/B004THDT8A/ref=la_B000APQ7EI_1_2?s=books&ie=UTF8&qid=1403188207&sr=1-2 Economic Facts and Fallacies: Second Edition by Thomas Sowell. This book exposes a lot of the false conventional wisdom around race and poverty. Both are available for Kindle and are inexpensive and could be available for reading in about a minute.
John Walton
3 years 5 months ago
putting real per capital GDP aside (India now has more people in their middle class than the U.S. has citizens) -- look at mortality tables in the US, even in the past 10 years the life expectancy of a male (the genus of which I concern myself) increased a startling 4 years between 2001 and 2011 -- if you happen to make it to age 65, things look pretty darned good to see your grand-children graduate college.
John Walton
3 years 5 months ago
The original speculator in agricultural commodities was biblical OT Joseph -- and he shouldn't be forced into the confessional box -- he took a hunch and turned it into a profitable venture for the people of Egypt: "Then it came to pass, at the end of two full years, that Pharaoh had a dream; and behold, he stood by the river. Suddenly there came up out of the river seven cows, fine looking and fat; and they fed in the meadow. Then behold, seven other cows came up after them out of the river, ugly and gaunt, and stood by the other cows on the bank of the river. "

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