A couple of months ago, after reading an excellent column in the semi-official newspaper of the Vatican, I joked that we should send Obama to Rome for an economics lesson.
I now completely retract that statement. There may be some economically astute people who write for L’Osservatore Romano, but they are offset by the economic illiterates at the Vatican’s Justice and Peace department.
Here are some excerpts from Reuters about the spectacularly misguided thinking from this division of the Catholic Church. For all intents and purposes, they want to double down on the cross-subsidization policies that have undermined markets and crippled the global economy.
The Vatican called on Monday for the establishment of a “global public authority” and a “central world bank” to rule over financial institutions that have become outdated and often ineffective in dealing fairly with crises. The document from the Vatican’s Justice and Peace department should please the “Occupy Wall Street” demonstrators and similar movements around the world who have protested against the economic downturn. “Towards Reforming the International Financial and Monetary Systems in the Context of a Global Public Authority,” was at times very specific, calling, for example, for taxation measures on financial transactions. …It condemned what it called “the idolatry of the market” as well as a “neo-liberal thinking” that it said looked exclusively at technical solutions to economic problems. “In fact, the crisis has revealed behaviours like selfishness, collective greed and hoarding of goods on a great scale,” it said, adding that world economics needed an “ethic of solidarity” among rich and poor nations. …It called for the establishment of “a supranational authority” with worldwide scope and “universal jurisdiction” to guide economic policies and decisions.
Wow. So many bad ideas in so few words.
Let’s look at the three main proposals and translate what they actually mean.
1. A “global public authority” is bureaucrat-speak for a world government. We’re already dealing with statist schemes like the OECD’s “Multilateral Convention” that will morph into an International Tax Organization. A supra-national government would be even worse since it would have power to wreck all sectors of the economy. These proposals are driven by the left’s desire for bureaucratization, harmonization, and centralization.
2. A “Central World Bank” is bureaucrat-speak for a Federal Reserve on steroids. But it would be even worse than that. In the current system, at least investors have the ability to dump dollars and euros and shift to currencies that are better managed, such as the Swiss Franc. A supra-national Fed, by contrast, will give the political elite more power to pursue bad monetary policy.
3. The notion of “taxation measures on financial transactions” is bureaucrat-speak for the Tobin Tax, which is a great scam for politicians since they would get to tax every transaction we make. If you think it is a good idea to put sand in the gears of the economy, sign up for this scheme. This idea is so bad that even the Obama Administration is opposed to it.
Last but not least, I’m flabbergasted by the report’s comments on the “idolatry of the market.”
What planet have these people been living on?
Do they blame the market for the financial crisis, when the mess was the result of the Federal Reserve, Fannie Mae, Freddie Mac, and government-created moral hazard? Do they blame the market for the sovereign-debt crisis, when the mess is the result of over-spending governments?