Analyzing the Economic Stimulus based on the Pope’s encyclical

Before I continue reflecting on the Pope’s recent social encyclical I would like to offer a personal comment on the economic stimulus. One of the core points of the Pope’s economic message is that business as usual with regards to the global economic activity cannot continue. In the last blog reflection I shared the Catholic position that is based on the social teachings of the church and the spirituality of our Christian faith that a whole social moral framework that is based on the “Consistent Ethic of Life” must permeate the fabric of our global society including the economic system.

I would like to share one specific economic activity that the Pope suggest we should reexamine.  That is the unregulated market that is bent on a short term vision towards the unsustainable creation of wealth.

It should be remembered that the reduction of cultures to the technological dimension, even if it favours short-term profits, in the long term impedes reciprocal enrichment and the dynamics of cooperation. It is important to distinguish between short- and long- term economic or sociological considerations. Lowering the level of protection according to the rights of workers, or abandoning mechanisms of wealth redistribution in order to increase the country’s international competitiveness, hinder the achievement of lasting development. This requires further and deeper reflection on the meaning of the economy and its goal.

As I reflect on this invitation by the Pope to reevaluate the goals and purpose for the economy I am struck with great concern for our current economic situation. So far a number of economic indicators are telling us that there are signs of some financial stability. These indicators are trying to give us hope that we may be able to expect an economic upswing based on this current stability. I am understanding that much of this small economic Short-term gain may have been brought about by the massive economic stimulus that was used to pump the financial sector and certain industries with assets to help stabilize the downward trend. However it seems to me that for all the expenditure that is going on through the stimulus, nothing is really changing. Economically we seem to be moving with “business as usual.” And now we hear whispers of another economic stimulus.

Earlier in the year I personally favored the economic stimulus, in principle I still do. Based on my knowledge of the Great Depression I believe that there is a social benefit to maintaining the financial sector from falling apart. However it has also been my hope that a responsible stimulus would allow the market to purge itself of irresponsible and unsustainable market practices while stimulating new economic growth and innovation especially with regards to the energy industry and providing for a social safety net in the midst of this transition. Instead what I see happening is that the money is propping up the unsustainable market practices and focused on short-term economic growth while failing to correct the overall failures and providing for the needed social safety net. The outrageous return of Corporate bonuses and the debacle regarding the health care legislation is the latest indicator to me that nothing substantial is happening to our economy. This latest article by the Financial Times added to my fears by placing the activity of the economic stimulus within the violent cycle of financial  bubbles that are doomed to burst.  

FT.com / Comment / Opinion – America is for now still blowing bubbles.

Consolidation, as it is used by Richard Bernstein, is a gentle word to express the violent contraction of the market that is doomed to happen when these bubbles end up bursting. I believe that the comparison with what is called “the lost decade” in Japan is an analogy worth considering when we examine the current economic policy. When contractions happen the market is healing itself from unsustainable commercial activity. In paying heed to the wisdom of our Catholic social tradition I am hoping that the American People and our Government can truly reflect on our own goals for the national and global economy. Under the laws of capitalism the market will grow and contract. My own goal is not that we prop up a system that is economically and ecologically unsustainable and that we continue living with the same material and consumerist habits that has dengrated our own value system and sense of worth. Rather it is my goal that we can develop a deep sense of solidarity with the global environmental,  the economic community and to each other. And that based on this solidarity we can develop long-term policies to promote sustainable commercial activities, socially responsible mechanisms such as healtcare and cap and trade programs, and government sponsored research and innovation for competeive ecological industries.

One Response to “Analyzing the Economic Stimulus based on the Pope’s encyclical”

1. hesparza says:

   July 29, 2009 at 2:04 pm

   Those who create this Financial Crisis must not try to come up with the answers by themselves, for the contractions, or the growth, of the market are disproportionate around the world. A bilateral approach to this crisis will, no doubt, bring about a wider discussion as to how to go about creating a solution. Yet, the Powers-that-be continue to have the winning hand as they implement their solutions to this Global Crisis. Hence, “the dynamics of cooperation” continue to be exclusive and unilateral.
   The link/video below continues this dialogue.

   http://www.youtube.com/watch?v=RgsXGvLD1KM