WASHINGTON, December 25, 2013 – Pope Francis invited four homeless men to join him on his birthday. This is not the traditional way papal birthdays have been celebrated.
People with the pope’s power and influence just do not do such things.
Francis is bringing a different message to the world than his predecessors did. He has been showing us by his example the ways Jesus wanted humanity to exist.
If the message of his example is crystal clear, the message of his words is confused. His Apostolic Exhortation proclaiming the Gospel of Jesus in today’s world drew a mixed response. He was accused of being anti-capitalist. Many accused him of being sympathetic to Marxism.
Two sentences at the beginning of paragraph 54 particularly irked people: “In this context, some people continue to defend trickle down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system”
These two sentences are, to any economist worth his papers, a demonstration of confusion at the Vatican. Francis has confused trickle down economics with the free market. The two were never the same and are not interchangeable.
Trickle down economics is an ideology, not an economic theory. The term was coined to express derision for the idea that the rich and powerful should be given tax breaks and encouraged to make more money. They are supposedly the job creators, the most important people in our economy, and their success will make the rest of us better off. When they make money, they spend money. By spending money, they uplift all of society; their wealth will trickle down to the rest of society.
Bank bailouts and other bailouts are a direct result of trickle-down thinking. These people are too important to fail, even if they have no talent. Society owes them; they are entitled to vast, tax-funded bailouts so that they can get their salaries and their bonuses, go buy things and help perk up the economy.
Trickle down economics is about a certain section of society being entitled to benefits from the government that other individuals are not entitled to. At the end of the day, a corporation is run by individuals and it is individuals who benefit.
The free market requires that everyone be treated equally by the law. The law gives equal protections and equal rights. You can never have a free market economy without those guarantees; they are fundamental.
The free market’s virtue is that we are all human beings who should choose our own paths. We receive the rewards or the penalties for taking risks. It rewards us for exceptional endeavors. The law under a free market does not distinguish between a bank and a bakery. If the baker makes bad bread, he will run out of business; if the banker is a bad banker, he will run out of business. The law does not favor one over the other. Only an unjust system will favor one over the other, claiming falsely that one is more important than the other.
Trickle down economics is best described as fascism, if fascism is as Mussolini described it, a union between corporations and governments. The larger the corporation, the more access it has to government. The free market, on the other hand, requires that government take a minimal role in people’s affairs. It requires maturity. Only in a mature society to people understand that religion and state do not mix without corrupting each other. The same argument holds for state and corporations; they cannot mix without corrupting each other.
Evidence of that corruption is found in quantitative easing. The government has stepped in to help the biggest to survive, to boost their wealth and hope that some will trickle down to ordinary citizens. There is nothing free-market about this; the state and Wall Street have corrupted each other. Liberal and conservative economists fight on all sorts of issues, but when it comes to bank bailouts and quantitative easing, the hoax is clear; they all supported it when it started.
At beginning of paragraph 57 of the Apostolic Exhortation is the heading, “No to a financial system that rules rather than serves.” Banks are supposed to offer a service. When they stop offering the services we expect, the market will punish them. It did punish them. If the markets had been free, these banks would have collapsed and been replaced by institutions that put their customers first.
With a trickle down ideology, this does not work. The banks are defended by people who claim to support free markets, but that is a lie. They craft a few useless rules that disregard the concerns of bank customers, but that attend to the wants of the owners.
Free trade is only part of a free market. We have seen unprecedented growth in international trade around the globe in the last two decades, but it has been distorted by favoritism to large corporations. Resource rich countries have chased millions off their land and given mining contracts to international corporations. The residents’ property rights have been completely ignored, often with no or inadequate compensation compared to what would have been theirs in a free market.
We are seeing global fascism, not free markets. The Pope was talking of trickle down economics, fascism, of an imperial and aristocratic nature, not the free market, not libertarian followers. He is right to warn us of economic injustice, but he should be careful to accurately identify the source of the problem. It’s trickle down economics, not free markets.\
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