Thursday, December 5, 2013

Christian Democracy foulup

Christian Democracy is a monthly e-magazine that regularly raises my blood pressure. They are reflexively anti-libertarian and free market. This month they're mocking the Acton Institute and an article from their head researcher responding to Pope Francis' apostolic exhortation Evangelii Gaudium.

Originally I was going to do a long comment there but I went beyond the limits of their commenting system so decided to turn it into a post. If you don't read the article, you might want to pass on the response below.

This article goes downhill from about the second sentence. It assumes an opposition without demonstrating it. Fr. Sirico himself has addressed Evangelii Gaudium in a video that came to me via youtube. It can be found here.

The response is not "inevitably" anything of the sort.

Venezuela sends the army into the biggest national chain's electronic stores and forces prices downwards at the point of a gun. This is not hyperbole, but the reality of mid November
http://www.theguardian.com/world/2013/nov/15/venezuela-army-occupy-shops-profiteering

This sort of redistribution just guarantees that once the goods are gone nobody will volunteer to lose money buying more and the familiar socialist spectacle of near empty shops will happen one more time. So what forms of redistribution is Pope Francis talking about? What form of redistribution is Samuel Gregg worried about? I'm not convinced that they're on the same page, talking about the same sorts of redistribution.

There are plenty of changes in economic regulation that would help the poor economically that would be perfectly fine with the Acton Institute. I have a feeling that Pope Francis would be happy if these changes would be made too. Reductions in licensing laws that permitted more new company formation and small enterprises done by the poor are not, I think, a matter of disagreement.

But this would not be an increase in economic regulation but a decrease in regulation that hurts the poor. One of the things that my own private interpretation of Francis is detecting is unhappiness with the tilted playing field of capitalists renting government for their private benefit and to the detriment of the poor. Rules that insufficiently take into account adverse possession, impoverish the commons, and unnecessarily make it expensive for the poor to protect their own goods and to access justice are real issues.

These forms of economic playing field rigging have never been part of the official capitalist playbook but they show up often enough in real life that it is a real problem for capitalism as it is actually lived in the world.

This playing field rigging has led to lower and lower rates of company formation as incumbents continually work to rid themselves of the plague of economic insurgents trying to compete with them which both restricts the supply of C level management (and thus raising their compensation) and reduces the supply of jobs, lowering the demand for labor and thus wages.

There is no theoretical difficulty for capitalists. There has always been lip service paid to these issues. The real world where regulations are written and legislation to un tilt the playing field is proposed tells something of a different story. The anti-rigging coalition is very often a minority one. I think that this lack of success at running an honest in reality capitalism as opposed to an honest in theory capitalism is what Pope Francis is aiming at. He is not issuing a theoretical challenge to capitalism but a practical one of ensuring that practice matches theory in a way that is a preferential option for the poor.

The downward pressure on wages is not an immutable feature of capitalism. It is an artifact of the fact that we still do not live in a capitalist world and there is always another supply of subsistence farmers out there that will happily get out of rural poverty to take a crack at the utterly miserable but better than their past sweatshop factory jobs. But this is a mode of economic activity that is entering its end game because India and China are undergoing wage inflation and we shall not see a like flood of new workers onto world markets again. But the cure for this labor supply problem is more capitalism, more company formation, more labor demand to bid up wages.

I disagree that the Pope is looking for structural reform as an end. He is looking for radical, personal involvement of love and solidarity to help solve the economic exclusion of the poor in a way that promotes dignity and justice. That's a major change but not one that is fundamentally a problem the legislature can address.