Our Wrong Economics

The nation’s quadrennial election charade is upon us once again, and once again there is no major-party candidate a Catholic can support with a completely clear conscience, not if he is serious about pro-life, peace instead of perpetual war, and economic justice as its main lines were laid out by popes before unity of the Faith broke down into liberal, conservative and traditional camps in the aftermath of Vatican II.

In some past election seasons still within memory there might be a candidate without a realistic possibility of winning his party’s nomination but whom a Catholic could consider as if his chances were otherwise (Pat Buchanan and Ron Paul would be examples). Not now.

Even when the field of candidates was more crowded than now (the first weekend in March in real time) most were sworn to uphold a woman’s “right” to kill her preborn children, and most of them, like the rest, were committed (despite the failures of Afghanistan, Iraq and Libya, not to speak of Vietnam forty years ago) to global democratic revolution (and its oft-time adjunct air-strike diplomacy) which entails, among other things: 1) regime change in Moscow because it is intolerable to them and most of their counterparts in the E.U. that Vladimir Putin, if only as part of his defense of Russia’s national interests, aims to insulate the country from Western liberalism’s grand project of subverting religion and the family by assuring space in its public life for the Christian God but not such “human rights” as same-sex “marriage”; 2) preserving Israeli hegemony in the Middle East if only by fomenting and fueling instability and conflict in neighboring countries.

More to the point of the present commentary, all of the candidates, and most other U.S. politicians, espouse a form of economics at odds with historic Catholic social teaching. I propose that we take a look at their economics. It requires a historical perspective.

The form of economics espoused by the candidates is rooted in what economists call mercantilism. Like so much else that took a wrong turn when the English, having cut themselves off from Catholic Christendom, supplanted North America’s original Spanish and French settlers, mercantilism is a British import.

Its leading American proponent when thirteen of England’s North American eastern-seaboard colonies went independent and formed the original United States was the new republic’s first Treasury Secretary, Alexander Hamilton. He set the pattern by which the U.S. economy has operated more or less ever since — the economy and, after 1865, government.

The kind of government we have had since 1865 is not at variance with Hamilton’s overall vision. He championed the concentration of political power in Washington rather than have it exercised by sovereign states because centralization is essential to the unimpeded operation of mercantilism.

If the sway of the system we are talking about was not total during the first eighty years after U.S. independence, it is because it had strong opponents, all of them statesmen from the South, including James Madison, James Monroe, John C. Calhoun, John Randolph and Andrew Jackson.

The political vehicle for mercantilism and whose advance such statesmen labored to thwart was the Whig Party, which eventually became the Republican Party. The Republicans fielded their first nominee for President, John C. Fremont, in 1856. His ambition always had exceeded his gifts and he lost to James Buchanan. Four years later the party nominated an ex-Congressman and wealthy lawyer who made much of his money representing the interests of what was then the largest railroad in the country, the railroads being the Big Oil of his day. He was Abraham Lincoln and he won with forty percent of the popular vote and not a single electoral one from Southern states.

Why no Southern support for him? Contrary to what high-school U.S. history textbooks claim, it was not because of slavery, but Whig economics and politics. Lincoln had served as a presidential elector for the Whig Party in elections in the 1840s, and during the famous Lincoln-Douglas debates, Douglas defined Lincoln by summing up the difference between himself and his opponent: “Lincoln goes for consolidation and uniformity in our government while I go for maintaining the confederation of the sovereign states.” Understanding what Lincoln’s election in 1860 meant for them, Southern states began seceding before his inauguration.

What did it mean for them (and all America after 1865)? In terms of economics, libertarian economist Murray Rothbard described mercantilism as “a system of statism which employed economic fallacy to build up a structure of imperial state power, as well as subsidy and monopolistic privilege to individuals and groups favored by the state.”

“Economic fallacy”? Mercantilists (even if they don’t call themselves that anymore) have always worked, often successfully, to convince the American people that their political and economic system which favors special interest groups instead benefits everybody. The “trickle down” theory of which we heard so much in the 1980s is an example. Do you know many persons who were reached by the trickle? Were you? The hard fact is that with inflation taken into account real wages for average Americans in most work categories have been static since 1972. Yet voters bought into “trickle down” and many still do. It sounds good. People want to believe it the same way many believe now that everybody goes to heaven regardless of whether they merited it when living. This is what Rothbard meant when he spoke of using economic fallacy — in other words, lies — to build up state power.

Readers may be surprised to see a Catholic commentator, myself, citing a libertarian. Catholics who know the Church’s historic social teaching understand that making wrong economics right so that the majority benefit depends on right politics, that right politics depend on having right morals, and the morals derive from the religion. I don’t want to get bogged down here discussing what is wrong with doctrinaire libertarianism, but too many of its acolytes pervert morals and ignore religion (think Ayn Rand) and they all give primacy to economics over politics.

That doesn’t mean they are wrong in their economics, or not entirely. Some degree of regulation is needed if only to enforce contracts and punish fraud in commerce, trade and banking. However, libertarians are correct to see true capitalism as a system of free, voluntary exchange, one in which capital finances investment projects of likely real benefit to consumers, not a system based on government, business and banking cronies scratching one another’s backs.

Christians would also hold, if libertarians would not, that private-sector enterprises should not be larger than ones that members of a family can run without a huge army of employees. Small is better than giant. This is where politics, the means by which the life of society is governed, come into the picture and should have primacy over economics. Politics should aim to keep things small, and this is where morals and the religion come into play if the politics are not to become intolerably coercive. Individuals must practice self-restraint, which is as necessary to the health of society as it is to the sanctification of individuals. Sanctification is of course necessary for our entry into heaven. If ordinary sinners, most of us, will require time in Purgatory to make it, it is harder for the man who devotes his life to seeking wealth instead of virtue — as hard, Our Lord says, as for a camel to pass through the eye of a needle.

In the Christian view, as expressed by popes who have written on the subject, a man is entitled to a just wage for his labor. Let’s not haggle over “just.” It has to be enough for the man to support himself and his family, and also for him to set aside something against the day he can no longer work, if he lives that long. Since “man does not live by bread alone,” it is also desirable that we earn some amount of money beyond what is strictly necessary in order to make life gracious. What amount would that be? Who can say?

This can be said: 1) Deciding the amount beyond what is strictly necessary and acceptably desirable is where restraint must be exercised. 2) It is for sure that nobody needs a billion dollars, let alone many billions, to live well, The only thing billions will get anyone that a man of ordinary means lacks is the favor of men of power, politicians and government officials, who are corruptible. Of course this will give him power of his own, the power to corrupt, which he can exercise to make still more money. This is why billionaires contribute to politicians regardless of the stands they take on issues.

Great Catholic political thinkers of the past held that the best safeguard against the abuse of government power is not government institutions supposed to prevent it but the consciences of men of power themselves when they are well-formed by the teachings of the Faith. Unfortunately, there aren’t many of them around these days, and this brings us to what actually exists: our modern economic and political system of greed and corruption rooted in mercantilism and how it works.

Three elements characterize historic mercantilism. (To be continued)