Wanted: a reformation of papal economics

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.

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.

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.

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.

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.

Given this zero-sum view of the world, we will perhaps hear in the Pope’s next economics lecture that, by consuming more than their fair

IN THE POPE’S WORLD OF ALTERNATIVE ECONOMICS, IT SEEMS, UP IS DOWN, LEFT IS RIGHT, GOOD IS BAD ...

share of the world’s health care, the countries with the most physicians per capita are responsible for the relatively shorter life expectancies in the poorest countries where there are the fewest doctors.

These sorts of economic errors from Pope Francis are nothing new. In 2013, he claimed, as if reading a script supplied by the Occupy movement, that “while the income of a minority is increasing exponentially, that of the majority is crumbling.” This “imbalance” was allegedly the result of the “tyranny” of financial markets and free market ideologies that “deny the right of control to states, which are themselves charged with providing for the common good.”

The Pope again castigated capitalism earlier this year as “a fallacious economic model that has been followed for too long.” The focus on economic growth instead of sustainable development, said the Pope, “has led the modern economic system down a dangerous path where progress is assessed only in terms of material growth, on account of which we are almost obliged to irrationally exploit the environment and our fellow human beings.”

Free markets as tyrannical? Voluntary exchange as irrational exploitation? State control as the formula for promoting the common economic good? In the Pope’s world of alternative economics, it seems, up is down, left is right, good is bad, black is white, capitalism creates poverty, and obesity is the cause of starvation.

Like Martin Luther, good economists should find much of the Pope’s thinking in need of reform. In 1517, Luther protested the Pope’s sale of indulgences to build St. Peter’s Basilica on the backs of the poor. In 2019, the current Pope’s impoverishing economic ideas also deserve protest.