August 20, 2011
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I guess this is as good of place as any to start this blog. If you would like to read a little more on how a theology student got interested in economics, see my About Me section . Anyways…
It is rare that these two topics intersect so well as they did in this article from Pope Arrives in Spain . Basically, the story does capture a one sentence line from the Pope’s perspective on what is going wrong in Spain he says, “the market doesn’t function with market self-regulation but needs an ethical reason to work for mankind.” He added that “a moral dimension is ‘interior and fundamental to economic problems.'” What exactly does this mean? Sure enough, the purview of Economics does not include “ought,” or ethics. The “market” helps see you what is in demand or not. What occurs in the market is only regulated by certain laws like the “invisible hand” and the like. The other factor that I think economics often overlooks is human error or inability to act logically, but certainly it is not concerned with ethics. This is not to say that people should not be. We act in a market and ethics should play a role. But, I wonder if the Pope is aware of what has happened in Spain in particular when the Catholic church has been directly involved with financial dealings?
One of my favorite blogs and podcasts is Planet Money. Several months ago, they ran a podcast on the “cajas” in Spain which are basically medieval savings accounts that are often run by people in a community who know nothing of banking. You can listen to the full podcast here: http://www.npr.org/v2/?i=132450100&m=132456232&t=audio. One of the major cajas was run by the Catholic Church. Planet Money goes so far as to call them “the poster child of what went wrong in Spain.” These priests run this not-for-profit banks and start lending at money and giving credit to people who were not reliable, including mortgage problems. Cajasur was the name of this caja. They even started taking on loans themselves in order to start expanding. Its hard to predict exactly what it means that these cajas are failing, but they are part of the larger issue going on in Spain’s debt problems. Over 50% of Spanish people deposit there moeny in these cajas.
If Spain defaults on its loans, these cajas will be part of the problem. It seems that the Pope should have investigated more on what is actually going on in Spain before making a broad claim. Surely, the criticism he leveled could be leveled against these Priests, maybe they need to be regulated as well, but the Pope, as head of the Catholic Church, could have had some jurisdiction. Part of the problem falls on his head as well. The question to be asked is, if the Pope sees it as so clear that ethics should be guiding our markets, why are his own priests part of the problem? I am not saying it was all these priests fault but the Church is the place that the Pope wants people to look for ethical behavior and they clearly failed in this very country. It would have been interesting to hear the Pope expands his comments to include the issues that even his Church was involved in.
If anyone is reading this, do they have any thoughts on the way in which churches like the Catholic church should be involved in economic decisions? Would we have been better off in this case if churches were more involved in market decisions? Or would that have created a worse problem as did in Spain? These are some of the issues that I would like to explore in this blog. I will be working more on these objectives but I was also just hoping to have a place to write my thoughts and work out some of what has been running through my own head. Will see if anyone else finds it interesting too. Thanks for reading.