April 21, 2014
Inequality: “The richest 1 percent appropriated 60 percent of the increase in US national income between 1977 and 2007.” WTF!Posted in Global Economy · 64 comments ·
The other day, I went for a coffee with one of the local priests here in Dalkey. Father Declan was chatting about all sorts of stuff, and we touched on the first year of Pope Francis and what it has meant. For millions of Catholics all over the world – whether practising or not – the image of a truly humble man, who says the right things and seems honestly interested in the poor, is a relief.
He has had quite a remarkable effect on the brand and image of the church.
An overwhelming proportion of Catholics in the rich world (America and Europe) are impressed by him. Mass attendance, which had been falling all over the world, has stopped falling. In Latin America, the growth of evangelical Christianity has been stopped in its tracks. The evangelicals had been eating into the Catholic market share for the past decade.
Even The Economist magazine, heralding Francis as the “turnaround CEO of the year”, commends him for grabbing a huge corporate entity like the world’s biggest institutional religion and shaking it up, with immediate positive results.
Some may argue that it is all style over substance. He may now live in a boarding house instead of the traditional Papal palace, he may go out at night and talk to the poor, he may even wash the feet of the downtrodden, but what, the cynics argue, about women priests? Others will point out that he may have swapped the faintly ridiculous and outrageously camp dainty red shoes of his predecessor for normal brogues, but what about gay rights?
But this narrow assessment misses the point. He is the boss of the Catholic Church not the rotating chairperson of a civil liberties lobby group.
Change takes time and the Catholic Church, like any enormous institution, is extremely difficult to change fundamentally; it is also important to understand that in leading, you must take your constituency with you.
There is little point in Pope Francis ‘doing a Gorbachev’ by leading your followers in a direction they don’t want to go and watching the institution you were trying to reform crumble underneath you. (The unfinished business of the Soviet Union’s collapse is now playing out 25 years later in Ukraine.)
The task of the corporate turnabout is always going to be a combination of changing the inner workings of the organization while at the same time reinforcing the message to the outside world that you are moving in a particular direction. This is what appears to be happening in the Catholic Church.
This Pope is softer on gay rights (“Who am I to judge?” was his response to questions about morality and gay people), contraception and tolerance in general. He knows that certainly in Europe and America these messages are much more in tune with the average Catholic than the hardline rhetoric of predecessors. On the poor and inequality, the Pope is actually repeating what previous Popes have said but because he has washed the feet of convicts and walks around rather than being chauffeured, his intentions seem less hypocritical.
Fr Declan spoke to me about Pope Francis’ view on economics as articulated in a writing late last year in which he showed a willingness to use tough language in attacking what he views as the excesses of capitalism.
Using a phrase with special resonance for free marketers everywhere, he was strongly critical of the idea of ’trickle down economics’, which is an economic theory (often affiliated with US conservatives) that discourages taxation and regulation.
Trickle down economics contends that even if the rich get a disproportionate amount of the wealth, wealth generation at the top will trickle down to the bottom eventually and there is nothing the State has to do other than watch this process.
Francis wrote in the November 2013 papal statement:
“Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world.
This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacred workings of the prevailing economic system.”
It is impossible, even for ideological right wing economists, to argue with the Pope on this one. Inequality is rising at a horrendous rate around the world; fewer and fewer people are getting more and more of the goodies.
An Oxfam report revealed last month that in the UK, the top five families own more of the national wealth than the bottom twelve and a half million people. This is inequality on a feudal level and is certainly not the recipe for any sort of social cohesion.
I’d say if the same calculations were done here we’d find similarly outrageous figures. While they might not be quite so outlandish, there can be little doubt that the top 1 per cent in Ireland own multiples of the wealth of the bottom 10 per cent.
In the past few years, this trend towards inequality has been exacerbated as wages have been undermined by competition and globalisation while the return to capital, whether it’s the stock market or companies’ profit margins, has sky-rocketed.
Now that the house prices in South Dublin – which is where the already rich live – are up 20 per cent in the past year, the wealth of the already wealthy is rising 10 times faster than wages for the average worker.
The Pope’s worries about inequality mirror those of a new book that is taking economics by storm.
The French economist Thomas Piketty’s new book, Capital is an extraordinary attack on trickle down economics.
By looking at statistical evidence, Piketty reinforces the Pope’s assertion that trickle down economics is an ”opinion that has never been verified by the facts.
Piketty shows that in America the richest one per cent appropriated 60 per cent of the increase in US national income between 1977 and 2007.
In a review of the book in the Financial Times the influential economics commentator Martin Wolf says that,
“Piketty shows that there is no general tendency towards greater economic equality and that the relatively high degree of equality seen from the 1950s to the 1980s was the result of deliberate policy, especially progressive taxation and the destruction of inherited wealth, particularly in Europe, between 1914 and 1945″.
A further lesson is that we are slowly recreating the patrimonial capitalism – the world dominated by inherited wealth – of the late 19th century.
This Easter Sunday, it is worth considering the economic message of Pope Francis. When the Argentinian Jesuit leader of the Catholic Church and the French son of radical Trotskyists are on the same page, you know we are in interesting times.