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Wednesday, October 30, 2019

Capitalism, Hunger and the Socialist Pope

The fact that Pope Francis is a raving socialist does not mean that there is something wrong with the Catholic Church. On the contrary: as the world's largest charitable organization they have proven, for two millennia, that the private sector is superior to government in caring for the poor.

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I don't like bashing other advocates of free-market capitalism, but sometimes they deserve a little. In his October 23 opinion piece in Financial Post, Matthew Lau took a jab at the entire Catholic church as part of an argument against the latest anti-capitalist rant from Pope Francis. Instead of focusing on the Pope's ill informed socialist propaganda, Lau starts out with calling the entire Catholic church into question:
On Oct. 31, 1517, in Wittenberg, Germany, Martin Luther nailed his 95 Theses to the Castle Church door, igniting the Protestant Reformation. Now, 502 years later, there are new reasons to call for protest and reform of the Pope’s thinking: his views and pronouncements on the alleged evils of free markets are clearly fallible.
By this Canadian writer's logic we should call for all Canadians who are not socialists to secede from Canada. After all, their newly re-elected prime minister is pursuing some really bad policies, including teaming up with social-media platforms to censor the internet.

Once Lau's misplaced anti-Catholic rant is over, though, he actually makes some good points:
In his latest economic missive, to mark World Food Day last Wednesday, Pope Francis decried capitalism and business profits as the cause of starvation. “The battle against hunger and malnutrition,” he wrote in a letter to the head of the UN Food and Agriculture Organization, “will not end as long as the logic of the market prevails and profit is sought at any cost.” The problem with this statement is that the facts and evidence demonstrate just the opposite.
The problem with this, of course, is not the Catholic faith itself, which has stood firm for two millennia. The problem is the secular superstition of socialism. However, it is not sufficient to just dismiss this as socialism, which is Matthew Lau's strategy. There is a deeper point here that is an often-seen source of analytical shortcoming on behalf of many proponents of capitalism.

It has to do with the concept of poverty. A normal, common-sense definition of poverty says that a person is poor if they cannot provide for their very basic needs, such as food, shelter and clothing. This is the classic definition, one that has guided private charity for millennia (especially the work of the largest such organization in the world - the Catholic church) and it was the basis for American welfare policy deep into the 20th century.

Since the War on Poverty began in 1964, however, our government operates on the basis of a relative poverty definition. It means that poverty is a constant percentage of the prevailing standard of living measured as median household income. Since the new poverty rate was statistically settled in the 1970s, its ratio to median income has been roughly 55 percent; essentially, your family is living in poverty if you make 55 cents of median household income.

This relative definition of poverty has the consequences of codifying socialist political doctrine. Unless we eliminate income differences between households, we will never be able to eliminate poverty. Since income differences will de facto always exist, this means that the welfare state will always exist.

In order to put an end to the socialist advancement in our society, we need to reform the concept of poverty. Matthew Lau is oblivious of this - and he is not excused by the fact that he is Canadian. They use a similar definition of poverty, and have similarly built it into their welfare state.

A conversation about poverty has to begin with the recognition of these basic facts pertaining to the concept itself. If we recognize them, we can move on to Lau's next point, which is actually a good one:
Free markets and capital investment by businesses in search of profits have lifted billions out of poverty and spared the masses from hunger and misery. In 1820, the global rate of extreme poverty was around 90 per cent but thanks to the seeds of economic growth planted during the Industrial Revolution, this number fell to 35 per cent by 1990, and then to 10 per cent by 2015. Over the past two centuries, free markets and capital investment by businesses in search of profits have lifted billions out of poverty and spared the masses from hunger and misery.
Again, we need to make sure we are talking about the same concept of poverty in all parts of this conversation. There is one quantitative standard for poverty being applied in developing countries and a completely different one in the United States.

Logically, we should apply the global definition here as well; if we did, poverty would be eradicated by one stroke of the pen. If that happened, it would not mean we would abandon those who are now considered poor - only transfer the responsibility for caring for them from government to volunteer organizations. They are far better equipped, morally and operationally, to provide relief for those who are struggling, than government is.

Another good point by Lau:
Of course, this 200-year period of progress has not been without setbacks. There was, for example, the starvation of an estimated six million people in 1932-33 in the Soviet Union, though this could hardly be blamed on capitalism and free markets. Similarly, the current hunger crisis and massive impoverishment in Venezuela in recent years are surely not the results of “the logic of the market” and profit-seeking businesses.
He also deserves recognition for picking apart the Pope's irresponsibly false narrative of a zero-sum economy:
From where then comes the idea that capitalism causes hunger? The Pope reaches this conclusion by drawing a connection between the approximately 700 million people around the world who are overweight and the 820 million who are hungry. Apparently, people are starving in poor countries because obese people in rich countries consume too much of the world’s food supply.
Again a good point. It would just have been better if Lau had put it forward without throwing the baby out with the bath water. There is, again, no finer example than the Catholic church of what difference private charity can make in a free, capitalist economy.

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