Judge the Pope’s Exhortation by Results, Not Rhetoric
Pope Francis recently urged all people to have greater compassion for the poor. And to his credit he emphasized the moral imperative of helping to reduce poverty around the world. Unfortunately, the approach advocated by Francis would result in more human suffering, not less.
In his strongly worded apostolic exhortation “Evangelii gaudium” or “The Joy of the Gospel,” Francis blamed capitalism, which he sees as essentially a zero-sum system, for much of the world’s poverty:
Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.
Francis believes that under a capitalistic system people get wealthier by feeding “upon the powerless.” The rich get richer by making the poor poorer. His solution, therefore, is to redistribute money from the rich to the poor:
I encourage financial experts and political leaders to ponder the words of one of the sages of antiquity: “Not to share one’s wealth with the poor is to steal from them and to take away their livelihood. It is not our own goods which we hold, but theirs.”
If Francis truly believes poverty reduction begins with redistribution, he could accelerate the process by liquidating Church assets and transferring the proceeds to the world’s poor.
The Roman Catholic Church owns more than 18,000 works of art as well as gold, stocks, bonds, helicopters, land, and buildings including St. Peter’s Basilica and the Sistine Chapel. Some estimates peg the Church’s wealth at more than $300 billion.
But Catholics would have good reason to oppose redistribution of Church wealth to end poverty. No country in the history of the world has ever redistributed itself to self-sustaining prosperity.
History teaches that redistribution of money by “political leaders” does not end poverty or create prosperity. Instead it fosters dependency, cronyism, and government corruption. Most of the money is squandered, lining the pockets of the politically connected and powerful. People devote their time to capturing the transfers instead of enhancing their productive skills, thereby shrinking the total economic pie.
This result highlights the key difference between redistribution and investment.
Statist redistribution results in multigenerational dependency and less output for society. On the other hand, steady private investment in physical and human capital within a secure system of private property rights (which minimizes government corruption and exploitation) results in self-sustaining economic growth. Prosperity requires entrepreneurial freedom to start new businesses, hire workers, and innovate, while being guided by profits and disciplined by losses.
Pope Francis offers no guidance on the creation of wealth. Instead he parrots dog-eared socialist slogans. He denigrates capitalism as an ideology favoring the “absolute autonomy of the marketplace and financial speculation” to produce “a new tyranny” that results in the earnings of the rich “growing exponentially” while the poor suffer an income gap “separating the majority from the prosperity enjoyed by those happy few.”
That will come as news to the more than 500 million people in China who lifted themselves out of crushing poverty after recent pro-market government reforms allowed unprecedented levels of new investment, new business startups, labor mobility, and trade in China. These 500 million people are much better off, not victims of “a new tyranny.”
China’s government allowed economic freedoms to expand more than any Asian country since 1980. As a result, hundreds of millions of people have escaped some of the worst poverty on earth.
Facts confirm that countries with freer capitalist economies have higher incomes and a better quality of life for the average person than countries with command-and-control economies dominated by politicians who dole out special privileges, sanctions, and redistributive transfers. Compare South Korea to North Korea today, or, in the 20th century, West Germany to East Germany, Europe to the Soviet Union, Taiwan and Hong Kong to China.
Contrast Pope Francis’s views with those of Pope John Paul II, who experienced authoritarian socialism first-hand in Poland:
The free market is the most efficient instrument for utilizing resources and effectively responding to needs. . . . [Capitalism within the rule of law is] the model which ought to be proposed to the countries of the Third World, which are searching for the path to true economic and civil progress.
Pope Francis is at his best when he speaks on the moral responsibility to help the poor. But his policy recommendations on how to do this are wrong. His remedy leads to declining economies, massive government corruption, and prolonged human misery. National leaders and citizens alike should judge the papal exhortation by results, not rhetoric.
A full 2.4 billion people live on less than $2 a day. Their best hope for a better future is capitalism, which, when allowed to flourish, has lifted more people out of poverty throughout human history than any other system of economic organization.