On Pope Francis, think deeper

Pro-market Christians in America could learn much from Pope Francis about holy living and compassionate thinking if only they’d think more deeply about his message. Instead, they’re too quick to extract superficial, tangential inferences about what his teaching means for the cause of free market capitalism. Indeed, advancing free markets is no end in itself — it is, or ought to be, a corollary cause for those believe, with sound and defendable reasons, that markets are a just way to bring economic progress to all peoples. Citing Pope Francis’ (alleged) anti-capitalism alone to argue against his teaching reveals a total misunderstanding of why beliefs about economic life are worth holding and, possibly, of the very nature of God.

Neither should one evaluate Pope Francis according to whether he’s pro-America. If a Christian disagrees with the Pope, it ought to have something to do with the Pope’s theology. Patriotism, as an ideal, simply doesn’t rise high enough to serve as any defense against anyone who claims to speak for or about God, no matter what one may think of such a teacher’s true place or motive. If my God is wrong because you’re country is great, it’s country, not God, who you serve.

So don’t interpret Pope Francis’ exhortations against greed and inequality as falling somewhere to the left-of-center on the political spectrum. When the Pope criticizes the market, he’s not doing so as an advocate of further state regulation. He’s doing so as an advocate of holy living. In this sense, we ought to take his teaching on restraint, discretion, and sacrifice personally — applicable to our own lives in some way that perhaps only we can know — and not as part of some larger, implicit ideology or political campaign. Ironically, if we all did this, I’m convinced we’d hear much less about the “evils of capitalism,” even in the context of an economically competitive, “free market” society.

All of this hits on a larger, more insidious issue plaguing American churches today. Sadly, how many have chosen to interpret the Pope — as speaking anti- this or pro- that, instead of do this or do that — is how so many Christians interpret sincere exhortations from truly good teachers. Sound, Biblical teaching on issues like sexuality, family, and citizenship are too quickly seen as denouncements of this or that way of thinking about such issues rather than as (sometimes hard) lessons on how we, personally, can walk with God. The extent to which we think about the Pope’s, or any good teacher’s, lessons on life in such terms is the extent to which we fail to glean what’s truly valuable in good teaching. To be wise has never been so much about understanding what’s true and good, but about willing and living accordingly.

Hayek on competition and discovery

From F.A. Hayek’s Competition as a Discovery Procedure:

I should like to begin with the observation that market theory often prevents access to a true understanding of competition by proceeding from the assumption of a “given” quantity of scarce goods. Which goods are scarce, however, or which things are goods, or how scarce or valuable they are, is precisely one of the conditions that competition should discover: in each case it is the preliminary outcomes of the market process that inform individuals where it is worthwhile to search.

How to argue with the Pope

If you’re going to argue with Pope Francis, at least respond in kind.

When the Pope speaks about immigration reform, wealth redistribution or climate change, he’s proclaiming God’s perspective. You may not believe he knows anything more about God’s perspective than you do, but you can, I hope, acknowledge that he believes this is true. His comments on “political” issues like the ones I listed above are rooted in, he believes, a correct understanding of Scripture and what we know about God through our observations of the universe.

So saying something like…

“The Pope is wrong about climate change. Anti-warming policy is bad policy — it’s just a red carpet for bigger government.”

…means nothing to him and those who believe him. He, along with millions around the world, believes this is God’s perspective. It doesn’t matter what you think about anti-warming policy, even if you could prove it wrong, as long as God is for it.

So if you’re going to argue with the Pope, do so in kind. Here’s how:

If you don’t believe in God, then don’t argue with the Pope’s facts. His facts are of a different kind than yours. For you, the Pope is simply wrong because he believes in a false being called “god.” Why argue any further than that? Why analyze and critique his statements according to your understanding of things? He says what he says because, he believes, God says it that way. Showing him some “evidence” that is rooted in something other than God’s revelation is pointless.

If you’re a Christian but not Roman Catholic (or, for that matter, Roman Catholic but not a Francis fan), then correct the Pope with Scripture and an appeal to general revelation (that is, what we know about God from our observations of the universe). Correct his theology. Correct his view on God’s will for these particular “political” issues, specifically. Don’t go around saying he’s wrong about, say, immigration reform because that’s bad economic policy. Why should he care? Why should anyone who takes him seriously care? If God said it, it’s not bad economic policy (according to those who take him seriously).

What’s worst is when Christians who don’t like the Pope think he’s wrong because his views don’t align with free market capitalism. What if God’s views don’t align with free market capitalism? If you want to wage a sound argument against the Pope’s ideas, show that God supports free market capitalism, or whatever you think God supports.

These thoughts are jumbled. I hope you get what I’m trying to say.

Basically, if you think Pope Francis is wrong about things and you’re not a Christian, don’t argue with the specifics of his propositions. Argue with the source of his ideas. If you think Pope Francis is wrong about things and you’re a Christian, take issue with his theology. Don’t say he’s wrong just because the numbers don’t add up — again, why should he or his supporters care if they truly believe he speaks for God?

Are Americans generally wealthier than Brits?

From Fraser Nelson at The Spectator:

That fits our general idea of America: a country where the richest do best while the poorest are left to hang. The figures just don’t support this. As the below chart shows, middle-earning Americans are better-off than Brits. Even lower-income Americans, those at the bottom 20 per cent, are better-off than their British counterparts. The only group actually worse-off are the bottom 5 per cent.

I recommend the rest of the piece. It’s important to remember, though, that GDP isn’t everything. This Time response piece hits on that point:

It is also a little simplistic to equate poverty with GDP, which measures business and government spending as well as individual consumer behavior. Poverty is better reflected by rates of joblessness, education level and life expectancy. The UK’s unemployment rate is 6.6%, roughlycomparable to New York (36th among the states). The UK has a 91% high school equivalent graduation rate, which would put it in the top 5 among states. And the UK’s life expectancy at birth is over 80; that would rank it among the top 10 states.

Imagination, boldness, and modeling human choice

Israel Kirzner on entrepreneurial discovery:

For neoclassical theory the only way human choice can be rendered analytically tractable, is for it to be modeled as if it were not made in open-ended fashion, as if there was no scope for qualities such as imagination and boldness. Even though standard neoclassical theory certainly deals extensively with decision-making under (Knightian) risk, this is entirely consistent with absence of scope for the qualities of imagination and boldness, because such decision-making is seen as being made in the context of known probability function. In the neoclassical world, decision-makers know what they are ignorant about. One is never surprised. For Austrians, however, to abstract from these qualities of imagination, boldness, and surprise is to denature human choice entirely.

It does nobody any favors

From Theodore Dalrymple:

If we can sympathize only with the utterly blameless, then we can sympathize with no one, for all of us have contributed to our own misfortunes – it is a consequence of the human condition that we should. But it does nobody any favors to disguise from him the origins of his misfortunes, and pretend that they are all external to him in circumstances in which they are not.

No one needed stuffed animals

From the Facebook page of Steve Horwitz:

Isn’t it interesting that Bernie Sanders (and GOOD FOR HIM for doing so) can give a speech at the religiously conservative Liberty University, where his views are absolutely noxious to those students and where being pro-choice effectively makes him a supporter of mass murder in their eyes, yet no one protested, and no one said they were unsafe, and no one was triggered, and no one needed stuffed animals to feel comfortable with this wicked man on campus?

There’s something seriously wrong with the students at elite colleges when Liberty University is a more liberal, open, tolerant, and civil place, not to mention having students who are better able to engage with intellectual diversity, than the Ivy League or the top liberal arts colleges or the top public universities.

[Yes, maybe those students are just more passive in general, but if you read accounts of the speech, they actually asked good questions and engaged him intellectually. You also don’t see THAT enough when the roles are reversed.]

Larry White on lowering long-term risk

I’m taking Larry White’s Monetary Theory and Policy class this fall at George Mason University. Here’s a selection from his book, The Theory of Monetary Institutions on one interesting utilitarian argument for adhering to a gold standard.

A more reliable unit of account lowers the risk of long-term nominal contracts, as we have just noted with respect to bonds. Lower risk on long-term bonds encourages more long-horizon investment. When savers are more willing (do not demand so large a purchasing-power risk premium) to buy long-term bonds, a firm with a long-payback project, like a railroad company, can more cheaply sell bonds long enough to match the duration of its expected payoff stream from the real assets being financed. Such duration-matching eliminates the significant refinancing risk involved in relying on short-term debt, which is the risk that interest rates will be higher when the firm goes to roll over its debt. High-payoff long-horizon investment projects are therefore not shelved simply because of inflation risk, which undoubtedly aids economic growth, though the size of the effect would be hard to estimate.

A gold standard, then, has the effect of boosting confidence in money’s purchasing power in the long-term, thereby increasing general confidence in long-term investment and long-term bonds. Just a paragraph before, White explains that some railroad companies in the nineteenth century found willing buyers for 50- and 100-year bonds! Today, corporate bonds of 25 or more years are uncommon.

I recommend the book. Great so far.

OCA as normative theory

From a 1998 paper by Charles A.E. Goodhart (a great read, by the way):

One possible rationale is that the [Mengerian-form] theory was never meant to be a positive, explanatory theory, but instead a normative theory, of what should be. As one referee commented: ‘‘OCA theory is a normative, not a positive theory.’’ A weak form of this would be to recognize that, in practice, monetary institutions are inherently and au fond associated with considerations of political sovereignty, but that the subsidiary function of [Mengerian-form] OCA theory is to assess the balance of purely economic benefits and costs that this may generate. The problem with this is that the historical record of the association of money creation with the establishment and maintenance of a stable sovereign power is so overwhelming (apart from the case of tiny, and by the same token politically weak, states) that the balance of purely economic benefits and costs entailed by OCA must presumably be of second order importance.

Misusing “perfect competition”

From Peter Boettke’s 1997 paper Where did Economics Go Wrong? Modern Economics as a Flight from Reality:

Previously, the model of a perfectly competitive market was primarily used in thought experiments designed to be contrasted with real-world market institutions. Such counterfactual thought experiments illuminated the positive function of those institutions. In a world of complete information, for example, neither firms nor profits would logically exist. Therefore, the contrast of this imaginary world against the real world of firms and profits showed that such institutions may have some functional significance in coping with imperfect and incomplete information.

This counterfactual use of the theory of perfect competition was reversed by the formalist revolution in economics. The departures of reality from the model of perfect competition were now thought to highlight interventions in the market ecnomoy that would be necessary to approximate equilibrium. Competitive equilibrium and the maximizing behavior that would ideally produce it represented the hard core of the research program f economists from 1950 on. As this happened, economics as a discipline was transformed.