#105 The Free Market Feeds the Poor

christian economist

#105 The Free Market Feeds the Poor

Father Robert Sirico has become the Lord Acton of our generation for telling Pope Francis that the free market feeds the poor. How else would there be enough “leftovers” to give away?

I am a great admirer of Father Robert Sirico.  He founded the Acton Institute in Grand Rapids, Michigan.  The Acton institute has produced some of the best work on Christian Economics.  I have read many of their books, shown their videos in my classes, and attended the Acton Institute Forum.  Perhaps most importantly, there are multiple citations in my book Biblical Economic Policy from Father Sirico’s very good book Defending the Free Market.

But today, my respect has increased even greater.  An article in Fox news recently announces, “Rev. Robert Sirico says Pope Francis makes an enemy of the poor’s best friend – the free market.”  In the article, Father Sirico asks, “Without a market, how do we feed anyone?”  Ok, it’s one thing for a loud-mouthed protestant like me to take on the Pope.  But it takes an extra measure of character for a Catholic Priest to contradict his own Pope.  

Matter of fact, Lord Acton did it, in the act that made him famous, he stated, “Power corrupts.  And absolute power corrupts absolutely.”  He said that about the Pope.  I recommend the book by Gertrude Himmelfarb.  

So, is Father Sirico the next Lord Acton?  He has the strength of character to be.   

If you Love Your Neighbor

Love Your Neighbor is the title of my podcast #18.  The Pope denounced the “Cold logic of the market.”  Will the Pope refuse donations that were earned in the market?  They are from this very same, “Cold logic of the market.”  Cold?  What’s cold about supplying the demands of your neighbors?  In economics we call it consumer surplus.  Here’s how it works.  A poor person shops at Wal-Mart and puts some things in her basket.  When she gets to the check-out counter, those items are run over the scanner.  The customer stands at that counter and says, “I would rather have this can of green beans, than the 78 cents in my purse.  She willingly makes the exchange.  Who gets richer?  BOTH!  Wal-Mart gets richer by the 78 cents, and the poor person gets richer by a can of beans.  People who have NOT had economics would say that Wal-Mart gets richer because they get the 78 cents.  That is correct, that Wal-Mart get richer FINANCIALLY, but the consumer gets richer by one can of beans. 

This information is old, but the last study I saw, indicated that Wal-Mart produced $2,600 in consumer surplus for every American family.  The specific amount is not important.  The concept is.  Free Market Capitalists suppliers like Wal-Mart make the poor richer, but providing the highest quality goods and the lowest prices because they are in a competitive market.  In the book, Economic Shalom, John Bolt writes, “The biggest poverty-reduction measure of all is liberalizing markets to let poor people get richer.” Of course, by “liberalizing markets” he means the free market. 

I was speaking at a University last week and a student asked, “But Wal-Mart has billions of dollars….”  And I asked, “How did they GET the billions?”  They GOT the billions by providing consumer surplus for their neighbors.  

If you love your neighbor, you will supply the products and services she demands.  If you love yourself, you will make a profit while doing so. 

The Pope decries a system in which BOTH parties get richer.  So that means, he would favor a system where one party gets richer, while the other gets poorer?  That’s Socialism.  Socialism is cold, because it is based on the exercise of power.  Free Market Capitalism is warm, because the supplier has to satisfy the demander before HE gets satisfied.  Think about Wal-Mart again.  They bought the land, built the store, hired the people and stocked it with $4 million worth of goods.  All the consumer has to do is walk in and put some things in his basket.  Who served first?  Wal-Mart did!  And, to keep the customer, Wal-Mart has to continually satisfy the customer.  

Markets are Warm

The Pope claimed that markets were based on cold logic.  Hold it.  You may have noticed there’s something of a race divide being attempted by race hustlers in America.  But Ginger and I noticed in our travels to and around North Carolina last week that we were treated very warmly by a number of black people.  You have to assume that if the race divide is as wide as Black Lives Matter claim it is, that some of the people we encountered in restaurants, hotels, and gas stations, were Blacks who hated whites.  Why did they treat two white people so well?  It’s because they were participating in the free market, and they knew if they mis-treated their customers, we would bolt for their competitors.  You see, the Pope has it totally backwards.  Markets are warm.  Socialism is cold.  In Socialism, the government owns the means of production and distribution.  Why should they treat their customers well?  I hesitate to even call them customers, because in Socialism, goods are re-distributed from each according to his ability and to each according to his need.  With governmental control of the market, there’s no need to treat people well.  People naturally treat each other badly.  We un-naturally treat others well, because we are induced to do so by the market.  I unpack more details in podcast #78 titled Are we Born Good?  By the way, the answer is “no.”  We are born cold.  We are made warm by the market. 

Socialists are good at identifying needs: Police, fire, education, healthcare, but they are terrible at realizing that supply comes first.  In Biblical Economics, RC Sproul writes, “Under socialism, the rich get poorer and the poor get poorer. Under capitalism, the rich get richer and the poor get richer.”

Here’s how Jonathan Witt wrote about this subject in the book Counting the Cost, “Free economies do a far better job than socialist economies at giving greedy people socially useful ways to get rich.”

Markets Require Interaction 

Socialism does not.  How about the quip, “I’m from the government and I’m here to help.”  That’s a joke, because the government is NOT here to help.  For more on the helping government, I’ll refer to you podcast #69 Who Cares?

You see, in a market the supplier HAS to care for his demanders.  If he doesn’t, they will take their demand to the competitor.  But the Pope seems to dis-avow this.  He seems to dis-avow the entire fallen nature.  Without it, there would be no Catholic Church. 

I’m as astounded as I was when I heard that Toy R Us gave money to Planned Parenthood.  Think about it: They donated money to a cause that decreased the size of their target market.  The Pope seems to be doing the same thing.  By denouncing free market capitalism, he is cutting the Catholic church off from their supply of resources.  

Socialism only works in two places: Heaven, where they don’t need it, and hell, where they already have it.  This was originally stated by Freidrich Holderlin, but popularized by President Ronald Reagan. 

The Prophet Who Made a Profit is the title of podcast #2.  Do you really think the Pope would denounce Jesus for making a profit while he worked with his Dad for about 15 years from the age of 15 to 30?  We do not have documentation of that, but we assume that he followed his Dad into the furniture or construction business of some kind.

By the way, what has the Catholic church done for the poor?  The answer is “Plenty.”  But where did that money come from?  The Catholic church doesn’t run any businesses that create value.  They simply accept donations from profit-making enterprises and re-distribute it.  

Look, this is very clear.  The Free Market Capitalist system is the only system that serves the poor.  Churches who serve the poor do it with the money that’s been given to them by for-profit entities.  Think about it: How can a non-profit make a profit?  Without profit, there are no “left-overs” to give to organizations like the Catholic church, so they can care for the poor. 

A Socialist system has no profit.  This is an economic law.  You can change economic policy, but you cannot change economic law.  “From each according to his ability, and to each according to his need,” produces no profit.   Father Sirico is correct, “The pope’s anti-market message leaves many wondering how food to nourish the hungry will be produced.”

Without Profits You Can’t Give

Ann Bradley and Art Lindsley, writing in For the Least of These, calls profts “left-overs.”  You have to have something left-over after paying operational cost, so you can have profit.  Without profit, you can’t give.  The Pope supports Socialism, whose bumper-sticker philosophy is “From each according to his ability, to each according to his need.”  If you only receive what you need, how can you give?  We are commanded to give.  But if you are only supplied what you need, where is the “left-over” that you give away?

Father Sirico writes, “The pope’s words decry the very market system that feeds more hungry people today than ever before in the history of the world.”  I support Father Sirico’s assertion in podcast #9 titled The Poor Will NOT Always be with you.  Extreme poverty was reduced from 18.3% of the world’s population to 8.6% from 2010 to 2019.  That’s just astounding.  And, that miracle was accomplished by the very market that the Pope denounces.  I firmly believe that we will have the ability to eliminate extreme poverty by 2030 and the only remaining vestiges will be out of our reach in places like Cuba and North Korea.  

The Cold Logic of the Vatican

I’ve been in the Vatican three times.  You buy a ticket, show up at a specified time, go through the heavily guarded turnstile and the metal detector, before you can enter the museum.  The ticket to enter is 10 Euro.  You get an audio guide for another ten.  They attempt to route you through the gift shops where they practice the “Cold logic of the market.”  After my first visit, I found a door at the back of the sisteen chapel that led to a narrow passage to a stairway that allowed me to skip the gift shop and go straight to St. Peter’s Cathedral.  So the Vatican practices the exact “cold logic of the market,” that Pope Francis denounces.  The same free market that Father Sirico correctly identifies as the system that feeds the poor.  And it does it without power.

Socialism uses power.  How about this observation: God wants you to be rich, but Socialists don’t.  In Wealth and Poverty, from 1981 George Gilder writes, “Under a system of forced redistribution, the rich, aggressive, and ambitious gain their inevitable advantages not by giving but by taking.”  The Pope certainly can’t be endorsing that kind of system.  But listen, many people who are new to economics make this same mistake.  They don’t realize that when you criticize free market capitalism, you are endorsing the kind of Socialism that George Gilder was writing about.  You see, goods WILL GET produced and distributed.  A society chooses only HOW they get distributed. 

George Gilder concludes,  “It is capitalism that best combines the desire and ability to do good and create value with the resources to accomplish these goals.”   

I will close with another quote from my new hero, Father Robert Sirico, “As a priest, I am bewildered when my colleagues (even the pope), out of great moral intention no doubt, nonetheless insist on making an enemy of the very institution that has and can continue to be the most effective tool to fight hunger and poverty—the free market.”

 

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