Saturday, January 29, 2011

Paul Krugman Agrees with Reich that Morality Has a Place in Economic Analysis

How does Quadragesimo Anno Compare?

Krugman noted that President Obama called on Americans to “expand our moral imaginations, to listen to each other more carefully, to sharpen our instincts for empathy, and remind ourselves of all the ways our hopes and dreams are bound together.” Krugman agrees, but claims that in the U.S. there is a great moral – ideological divide over what constitutes justice. One side believes in a “private-enterprise economy, but one in which society’s winners are taxed to pay for a social safety net-morally superior to the capitalism red in tooth and claw before we had the New Deal. The other side believes that people have the right to keep what they earn, and that taxing them to support others no matter how needy amounts to theft." (N.Y. Times, January 14, 2011) In my opinion this is a simplistic, but useful distinction. The breakthrough here is that professional economists, Robert Reich and Paul Krugman, are not opposed to economic analysis in a moral context. These two economists, well recognized in their profession, oppose the ‘enlightenment view’ that economics is a study of given phenomona like chemistry, biology, or physics. Reich and Krugman are saying that the focus of economics is on analyzing and creating a socially made system for the purpose of promoting human well being. They are in conformity with Pius XI who stated in Q.A. and was noted in the previous posting of this blog, “Even though economics and moral science employs each its own principles in its own sphere, it is nevertheless, an error to say that the economic and moral orders are so distinct from and alien to each other that the former depends in no way on the latter.” (Q.A. Para. 42)

Roman Catholic Social Teaching has evolved since the 1891 Rerum Novarum and the 1931 Q.A., but it has consistently attempted moral analysis based on reason. Currently what is presented as Catholic Social Teaching is based on hierarchical authority focusing on: abortion, gay rights, and stem cell research. This puts the hierarchy on the side of those reluctant to help the poor by government regulation and spending. Roman Catholic liberal opposition is concerned with showing that the position of the hierarchy is absurd, but neglects Catholic Social Teaching that insists on labor unions as essential. Both liberal and conservative Roman Catholics on either side of Krugman’s moral spectrum have dismissed and or forgotten that the seminal writing of Catholic Social Teaching, Rerum Novarum was entitled ‘On the Condition of Workers.’ Middle class morality, including that of Reich and Krugman, does not focus on – ‘the condition of workers.’

This puts Reich and Krugman in the discussion of the moral aspects of economic analysis and leaves the current church, liberal and conservative, out in a sea tempest debating church issues fundamentally resolved in the past.

Even though Rerum Novarum and Q.A. were written over one-hundred years ago, Reich and Krugman could benefit from considering them. Important for them to consider would be the emphasis on “the condition of the working class” and the principle of ‘subsidiarity’ established in Q.A.

Saturday, January 15, 2011

Quadragesimo Anno -1931

What is the foundation of Roman Catholic Social Teaching?

What the Lord requires of us is this:
“to act justly,
to love tenderly,
and to walk humbly with our God.” Micah 6:8

Rabbi Stephanie Aaron, leader of Congregation Chaveim and spiritual advisor to the courageous Congresswoman Gabrielle Giffords, is quoted in the N.Y. Times: “In Jewish practice, we have an idea of repairing the world … (Ms.Giffords) was very active in doing that work and being a pursuer of justice.” N.Y. Times, Jan. 10, 2011.

Roman Catholic Social Teaching, in advocating justice, is based on moral principles. But is economics a moral discipline? Could it be that the “enlightenment” has erased morality from economics, and this is why Catholic Social Teaching is ignored? Pius XI in Quadragesimon Anno says, “Even though economics and moral science employs each its own principles in its own sphere, it is, nevertheless, an error to say the economic and moral orders are so distinct from and alien to each other that the former depends no way on the latter.” (Q.A. para. 42)

What do economists and business people say? Q.A. was published in 1931, forty years after the first Social Encyclical Rerum Novarum. It appeared after W.W. I, in the middle of the Great Depression, and during the run-up to W.W. II. In 1902 George F. Baer, spokesman for financiers and mutual owners and operators of mines and coal bearing railroads, responded to striking coal miner’s union leader John Mitchel through the press, “Anthracite mining is a business not a religious, sentimental or academic proposition.” (Theodore Rex, Edmund Morris, p.133, Random House 2010) President Theodore Roosevelt settled the strike with a 10% raise to the coal miners because of political necessity.
Roosevelt declined the Republican nomination for President in 1908. He explained why and in doing so he agreed that economics is independent from moraliy. “New issues are coming up. I see them. People discuss economics more and more: the tariff, currency, banks. They are hard questions and I am not deeply interested in them: my problems are moral problems and my teaching has been plain morality.” (Ibid. p. 528)
In contrast, former Secretary of Labor and economist Robert Reich considers the possibility of moral economic analysis concerning the current economic crisis. Reich writes in his recent book, After Shock (Alfred A. Knopf New York, 2010) that he could have grounded his argument in morality, but chose to base his argument on political and economic principles. Reich concludes with a section on, “What Should Be Done: A New Deal for the Middle Class.” I would say that if he based his argument on the ethical or moral he would have to insist on a “New Deal” for the poor, not only in the U.S., but worldwide.

Don’t give up hope. Reich was once criticized for not using moral principles in his economic analysis. In a recent New York Times interview, Reich agreed. (Michael Powel, “Obama the Centrist Irks the Liberal Lion,” New York Times, January 7, 2011) Reich said, “I left out the questions of power and inequality. The Great Recession has made it impossible for me to ignore that. Economics takes its origin as moral philosophy.”