Friday, January 20, 2012

Wealth inequality “somebody else’s problem”

Perhaps you remember this T-shirt from almost twenty years ago which had all the major religious belief systems classified according to variations of the expression “S*** happens”.  Catholicism was defined as, “If s*** happens, it’s my fault.”  Protestantism, by contrast, was defined as, “Let s*** happen to someone else.”

I happened to think of this T-shirt — and this definition of Protestantism — in reading Chief Rabbi Lord Jonathan Sacks’ talk to the Pontifical Gregorian, “Has Europe Lost Its Soul?”  In it, he specifically mentions Max Weber’s seminal work, The Protestant Ethic and the Spirit of Capitalism, one of the foundational books of sociology.  Weber found Calvinism to be highly influential in the development of capitalism, especially as income inequality was easier to rationalize through the doctrine of predestination: material wealth as a sign of God’s favor and blessing upon a policy of prudential spending, saving and investing.

Another Protestant influence shows up when we consider the effect of sola fide on distributive justice.  When corporal works of mercy and responsibility to the larger community are deemed irrelevant to salvation, it becomes easier to allow vague, impersonal “market forces” to drive wages and salaries rather than consideration of the employee’s actual contribution to the success of the enterprise.  Rabbi Sacks drove this point home for me even further by what he would probably consider an aside: “As for moral responsibility, it seems that that too can be outsourced. It is someone else’s problem, not mine.”


Catholicism receives its understanding of distributive justice as a legacy of its Jewish roots, in which property is not an absolute right or permanent gift but rather a trust bestowed by God for proper stewardship.  It doesn’t follow from this that a Catholic can’t stay rich, but rather that the rich Catholic has greater opportunity and responsibility to give back to the community.

This idea of personal wealth as temporarily entrusted rather than permanently and irrevocably given is cropping up more on Catholic talk radio, and one that deserves wider consideration.  More to the point, though, it stands as an indictment of a system that has become dependent on people spending well beyond their means, mortgaging significant chunks of future income (which may or may not ever be earned) to satisfy “needs” created in corporate boardrooms and identified by Madison Avenue marketing firms.

The problem with debt as an economic engine is that it bakes into the system the gradual, inevitable transfer of capital from the working poor and middle class, concentrating it into the hands of a relative few.  Why is this a problem?  Because the wealthy in whose hands the wealth is concentrating depend on the ability of the working poor and the middle class to consume their products; the less capital that’s in their hands, the less the consumer classes can consume.  The more of the consumer classes’ income is taken up in servicing debt, the less that can be invested for their own wealth.

John Maynard Keynes saw this problem and attempted to correct it with the blunt meat-axe of government redistribution — not, David W. Cooney contends, as “a transition to Socialism; it was developed as a means to maintain Capitalism.  … The economic divide between conservatives and liberals is not that of Capitalism versus Socialism; it is the division of two schools of capitalists who are arguing over how much wealth the government should redistribute.”

Another aspect of this dissociation of the individual from responsibility to and for others also gives rise to “big government”, even statism. As I pointed out in “Of robber barons and moral codes”:

This is precisely why the robber barons are held in dishonor. To achieve their successes, they literally ruined their competitors whenever they could, and built their empires on the broken backs of men to whom they paid bare subsistence wages, most often with no consideration for their safety even when the work was highly dangerous. Nor were they above cheating their customers, misrepresenting their products, bamboozling investors through stock-market fiddles, or bribing government officials. For every good business practice developed by industrial and commercial interests, at least two have been imposed upon them by the government against their stiff resistance.

Indeed, so far as business interests are concerned, government exists to provide contracts and socialize expenses or losses, and steps over its bounds when it attempts to impose social controls.  The market does not “regulate” itself in our understanding of the term, except so far as rapacious business practices and wealth inequality eventually force a “market correction” (i.e., a “bust” cycle) with devastating consequences society-wide.

Of course, this treatment of capitalism as a “Catholic versus Protestant” issue is painting with a broad brush; I’m sure we can scour our economic history and come up with examples of both Catholic “robber barons” and Protestant “stewards”.  More to the point, though, this view of wealth inequality as “someone else’s problem” is so prevalent that even Catholics faithful to the Church fail to recognize it as an economic threat.  So poor is our collective comprehension that, as Joseph E. Stiglitz posted last July, various free-market advocates are pushing for further deregulation and tax breaks despite the role that deregulation played in creating the current economic crisis.

The best way we can pull back from disaster is to break ourselves from slavery to “the market” and exercise good stewardship over our own wealth: either avoiding credit altogether or buying no more than can be paid off within a billing cycle, “self-tithing” (i.e., saving a set percentage out of one’s pay), maintaining an emergency fund, and rationing luxuries.  In the long run, social survival may depend on a ressourcement to agrarianism (about which, see Devin Rose’s excellent post) and the deliberate construction of a distributist economy.

Fixing the present system, though, requires we be honest about its inherent flaw: it says that wealth inequality is “somebody else’s problem”.  Unfortunately, we can’t outsource poverty.