Economy Unfair: Stiglitz & Popes. Folks, meant to have this second.  Much longer.  Shorter version follows.  Thought this was important to consider for the election and for action afterwords with whomever gets elected .
Bob 585-331-7000

Book Review by Robert E. Golden, 9/25/12 at Hoag Library

The following capsulizes Bob's take on and review of the following book and Church documents. Bob has reviewed about 50 books at libraries over the last several years. This is his fifth book on economics. He's had a personal collection of about 4000 books. Bob found the encyclicals and Stiglitz's book to be terrific reads. He highly recommends them. Find further bio at the end.

The Economy Is Unjust (and Impractical)

Economist Stiglitz, Popes Leo XIII, Pius XI, John Paul II, Benedict XVI and Thomas Jefferson Agree

Solutions: We need to convert to a just and fair economy. It's practical and right, says Joseph Stiglitz; we've “lost our moral compass.” The Popes say: We need to follow the tenets of our faith. We followers of Christ believe (and many other religions similarly): “Love thy neighbor as thyself.” We must try to follow this teaching.

The problems: “Our society, our democracy and our economy” are all in peril, Nobel Prize winning economist Joseph Stiglitz says in his June released best seller, The Price of Inequality. The concentration of wealth at the top, the “further impoverishment of the poor, the hollowing out of the middle class” all represent threats to our future. In what John Kay, Financial Times, calls “the best book so far on the financial crises,” Stiglitz describes how it happened and several steps we can take to put us back on track.

Pope Leo XIII in 1891, in response to the Industrial Revolution, wrote the Encyclical, Rerum Novarum on the rights of laborers to “decent work” and a “just wage.”

Joseph Stiglitz shows the impracticality of concentrated wealth and power at expense of the middle and lower classes. Leo XIII focuses on the injustice and immorality of capital taking almost all the profits, when the workers should also share in the “fruits of their labor.” Five succeeding popes, including John Paul II and Benedict XVI have written sequel encyclicals, expanding on Rerum Novarum.

Stiglitz shows how economies work best when everyone gains, not just the 1% or 10% of people at the top.

The super rich tend to squirrel away a lot of their earnings, often in foreign banks to avoid taxes, effectively taking the money out of the American economy. The middle and lower classes spend most or all of their income here in the US. Since we've shifted fortunes to the super rich and reduced the wealth of us others, we've reduced consumption and economic growth in the long run. Henry Ford was asked why he paid his workers so well: “So they can buy my product.”

In 2008, Pope Benedict XVI, drawing from Leo and Paul VI, describes a just wage: that which “makes it possible for families to meet their needs and provide schooling for their children...work that leaves enough room for rediscovering one's roots at a personal, familial and spiritual level; that guarantees those who have retired a decent standard of living.”

However, the exact opposite is occurring. Concentrated wealth, at the expense of the middle and lower classes, lowering of taxes on the rich and deregulation on commerce, Stiglitz shows are ruining this and other nations today. It's was the same as in the late 20's with the resulting Great Depression.

But, now, the people at the top have insulated themselves and their riches, mainly “at the expense of our nation's budget and of current and future taxpayers. At the same time, many in the lower and middle classes have not been able to escape ruin and most have lost ground.”

Stiglitz lays out the “scope of inequality in the US and how it affects the lives of millions in different ways.” He tells what to do to reduce this inequality and return to healthy economic growth.

Stiglitz cites several aspects that caused this current crisis:

1. Early 2000's tax cuts to the super rich. (Accounts for 1/5 of 2012 deficit)

2. Privatizing at much higher costs than government operation. (Stiglitz:2 to 4 times more costly)

3. Iraq & Afghanistan wars and tax cuts. We've raised taxes to pay for all prior wars since 1812.

4. Medicare drug benefit with no bargaining– est.$1/2 Trillion (over 10 years) “gift” to drug industry

5. Financial fraud and lack of enforcement – hurts federal, state and local governments.

6. Great Recession of 2008 and on: Caused in part by by the housing bubble bursting, which in turn was caused by deregulation, lack of enforcement, predatory lending with little risk to the lenders.

7. Outsourcing both jobs and money earned in the US to foreign countries and bank accounts.

8. “Tax breaks for the speculators (Wall Street, banks, etc.) vs. producers of useful products.”

9. Subsidies to super rich: No. 2 &4 are examples. Others: a. federally guaranteed second mortgages, b. “no strings” bailouts, c. subsidies and tax loopholes to oil, mining, timber, big agri-business (often to the disadvantage of the family farmer), d. to lobbying, e. to legal representation, etc., f. generally, freedom to use public assets at little or no cost, g. little pollution clean-up responsibilities, h. bank- ruptcy laws that favor the rich and allow exploitation of the middle class and poor.

Stiglitz's thinking quantifies and expands on the Pope Leo( and his successors) and our founding fathers. Thomas Jefferson, James Madison and others predicted the dangers to democracy if wealth ends up in the hands of a few.

Leo XIII said more than a century ago: we have “...two widely different castes. On one side there is the party which holds the power because it holds the wealth: which has in its grasp all labor and trade: which it manipulates for its own benefit … and which is powerfully represented in the councils of the State itself. On the other side there is the needy and powerless multitude, sore and suffering...” “It cannot but be good for the commonwealth to secure from misery (including Iraq War Vets) those on whom it so largely depends.” (True when it was written in 1891 and pretty much true today in many areas, including the US.)

Pius XI in 1931: “human society appeared more and more divided into two classes. The first, small in numbers, enjoyed practically all the comforts so plentifully supplied by modern invention. The second class, comprising the immense multitude..., was made up of those, who oppressed by dire poverty, struggled in vain to escape...”

“This...was quite satisfactory to the wealthy, who were content to abandon to charity alone, the full care of the unfortunate, as though it were a task of charity to make amends for the open violation of justice, a violation not merely tolerated, but sanctioned as at times by legislation.”

The solutions to our current state of affairs are fairly clear, but difficult to achieve, given the power and greed of many of those at the top and their control of government and the media.

Bob points out that more than wanting to post the Ten Commandments in public places, we need to know them* and try our best to follow them. Many of us insist on calling ourselves a Christian nation, (we're not, we are a multi-belief nation, but most of us are born as Christians, even the Muslims believe in Christ as prophet). We need to obey the second of Christ's “greatest commandments:” “Love thy neighbor as thyself.” (We also know who Christ meant as “neighbor.”) Most of the other major religions have similar teachings.

Some Specific Stiglitz recommendations:

1. Reverse the redistribution started in the 1980's of money from the middle class and poor to the super rich; a redistribution that started with Milton Friedman's “supply-side and “trickle-down economics,” and President Reagan's lowering taxes on the rich and deregulating. (These policies did not raise revenues as expected.) In fact, although the economy improved, it doubled the national debt during the Reagan administration.

2. Reverse the deregulation of 30 years ago and since, which has failed us as a nation so miserably, and in the same fashion, this time and at least two other times in our history.

3. Put the country back to work. We need to respect workers and pay a “living wage.” The Wegmans do it. Certainly the six billionaire Waltons, etc. can afford it. John Paul II in 1989: “...a low value is put on work and the rights that flow from it, especially the right to a just wage and the personal security of the worker and his or her family.”

4. Allow the 2001-2003 tax cuts to the rich to lapse as law says, which can reduce the deficit and debt dramatically.

5. Create a level playing field: currently (Stiglitz:) the “speculators are taxed at a fraction of rate of those who work for a living.”

6. Curb the excesses at the top.

7. Stronger, better enforced competition laws

8. Improving corporate governance – limit CEO's ability to divert so much corporate resources for their own benefit.

9. Reform bankruptcy laws, which currently favors the super-rich

10. End government give-aways to big business

11. End hidden subsidies to corporations

12. Democratize access to justice

13. Temper globalization – level the playing field

14. End current wars and scale back wasteful defense spending (note Senator McCain's ideas.)

15. Allow the government to negotiate prices with the drug industry.

16. Stop predatory lending and credit card abuses, especially aimed at the “uniformed” and meek: often poor and elderly, especially elderly women.

17. Educate and protect our children, not just those whose parents can afford private schools and top colleges. Thus, we need to hire enough qualified teachers and pay them fairly. We need to hire enough police so they can protect us and do their job with some degree of safety and pay them fairly, and firemen likewise. They were our heroes 11 years ago.

Leo XIII: “the safety of the commonwealth...is a Government's whole reason of existence...the object ...of the State should be not the advantage of the ruler, but the benefit of those over whom he(it) rules.” “The richer population have many ways of protecting themselves, and stand less in need of help from the State.” Stiglitz shows how the powerful 1% has gotten government twisted around, protecting the rich, but not the rest of us, giving the rich tax breaks, subsidies, giveaways and tax loopholes.

We often hear the rich say they've worked hard for their money and should be able to keep it all. First of all, others help, frequently including we taxpayers. Secondly, how many of the rich produce anything of value? The richest of us seem to make it manipulating or helping manipulate money: the hedge fund managers, insurance, Wall St. trading, patent holding companies, finance lawyers, or selling gambling tobacco, alcohol, soda pop and sugar or marketing, advertising, etc.

Leo recommended in addition to leaders, governmental and business becoming informed by a sense of ethics and justice, the need for workers to band together. Otherwise, “If through necessity or fear of a worse evil, the workman accepts harder conditions because an employer... will give him no better, he is the victim of force and injustice.”

Some suggest that the rest of us are jealous of the super-rich. Not me, nor most of the folks I know in my generation, who lived and profited from a more just time. We're satisfied and thankful. What gnaws at most of us is the unfairness, dishonesty, cruelty and greed of the top 1, 10 or 20%, at the expense of those less fortunate and later generations, our grandkids.

Pius XI in 1931: Concerning Leo XIII's call for justice for workers, “...Priests and laymen sought to relieve the undeserving misery of the laboring classes, ...could not persuade themselves that so radical and unjust distinction in the distribution of temporal goods was quite in harmony with the designs of an all-wise Creator.”

As the Popes say and Stiglitz suggests we need to insert faith and belief into our deliberations and actions and resuscitate our “moral compass (Stiglitz).” It can no longer be “Let the buyer beware,” “but let the seller be fair and just.” To Bill Gates warning to college graduates, “The world isn't fair, get over it,” he needs to add, 'but that doesn't excuse you from being fair and honest in your dealings .”

* * * * * * * * * * *

Bob Golden, worked in Criminal Justice for 34 years. 16 years of Catholic Education, Eucharistic Minister, numerous Church activities, including being a member of the Buffalo Diocese Justice and Peace Commission. Was chair of one of President Reagan's Advisory Committees. He has his Masters in Counseling. He's served on numerous local, regional, state, national and church committees and has trained and spoken numerous times across the country.

*(ironically one of the vocal advocates for posting them, couldn't recite them)

Bibliography:

The Price of Inequality, How Today's Divided Society Endangers Our Future (June 2012), by Joseph E. Stiglitz, Winner of the Nobel Prize in Economics

From Vatican Website: Encyclicals:

Pope Leo XIII, Rerum Novarum, The Condition of Labor, (1891)

Pope Pius XI, Quadragesimo Anno, Reconstructing The Social Order, (1931)

Pope Paul VI, Populorum Progressio, The Progress of Peoples, (1967)

Pope John Paul II, Centisimus Anno, The Hundredth Year, (1991)

Pope Benedict XVI, Caritas in Veritate, Charity in Truth, (2008)