Dear Friends of Istituto Acton,
Well, that didn’t take long. One week to be exact. Just after free-marketeers praised Italian Prime Minister Mario Monti for attempting to fix the country’s sclerotic labor markets, it appears that his plan has been watered down to the point of near uselessness, and we’ll probably see even further dilution in coming weeks. All this as Italy’s borrowing costs continue to rise. You’d think that the words of Prince Tancredi Falconieri in Il Gattopardo would resonate these days: “If we want things to stay as they are, things will have to change.” Alas, not so.
The next question is: if not enough people really want to change, how long can things stay as they are in Italy? Italian politics are unintelligible to outsiders, so I recommend following what our friends at Istituto Bruno Leoni are saying about the Monti reform plans. It is a shame that the Keynesians have succeeded in framing the debt-crisis debate in the United States and Europe in terms of austerity vs. growth, so as to make it seem that any attempts to get government spending under control must come at the expense of employment and economic growth. There is some truth to this warning, however, especially in countries that have followed Keynesian policies for several generations now. Once you make government spending a large part of your economy, reducing its growth, let alone scaling it back, is bound to take some oomph out of the national income. But we also need to understand that there will be no economy to speak of if current spending levels, with all the unfunded liabilities on the horizon, continue. Government spending often comes at the expense of, or “crowds out” in economic parlance, the private sector. Only the Germans seem to understand this. Everyone else in Europe seems to think the Germans should pay their bills. If not, they will go back to the days of national currencies that can be devalued by government fiat, giving their citizens the illusion of economic well-being. It is more comforting to prefer illusions to reality but it is still false.
This ought to strike us as highly unethical and bad economics at the same time. Last October, the Pontifical Council for Justice and Peace was heavily criticized for its note on global financial reform. But one issue it got right was the importance of sound money, that is, money whose value can be relied upon not to fluctuate wildly when politicians get the itch to manipulate it. This is the very reason why central banks are supposed to be independent of political influence, though it seems hard to argue that this is still in the case with Ben Bernanke’s Federal Reserve in the United States, which has assured us of virtually zero percent interest rates (read: free money) for the next few years. Sound-money advocates are looking at the US and saying: Physician, heal thyself!
As you’ll read in this month’s newsletter, some of us at Acton were pleased that the Pontifical Council for Justice and Peace published a quite sensible reflection on the vocation of the business leader recently. The National Catholic Reporter’s John Allen went so far as to call it the rarest of Vatican texts, Catholic social teaching, Socrates-style. It is unfortunate that the business vocation document seems to have received very little attention from the press, including the Vatican’s own press office, which made no mention of its release. Even if it did, it’s unlikely that it would have elicited much response; there’s nothing too surprising about the Church encouraging good, honest work. Common sense it may be, but it’s still a message that goes largely ignored in today’s world and widely unpracticed in places where high-paying, benefit-laden jobs-for-life are considered a human right.
Meanwhile, it’s looking like the Socialists will win the May 6 run-off election in France, where both the far-Left and the far-Right ran relatively successful campaigns in the previous round. While no one seems particularly enthusiastic about the return of a Mitterand-esque President, Nicolas Sarkozy’s half-hearted attempts to liberalize the French economy went nowhere. As Monti is learning in Italy, many Europeans seem to be under the delusion that things can stay the way they have been without any changes. Or perhaps no one really cares what happens to their fellow citizens, including their children and future generations, so long as their own benefits are not touched.
The irony is that the Left is usually the side that is constantly talking about “solidarity,” criticizing the free-market Right for its emphasis on individualism and self-interest. No one, of course, likes to see his benefits cut, but you’d think that those who preach the virtues of sharing and caring would be willing to sacrifice a bit. The designation of the Right needs to be qualified because there is also, in France at least, a growing anti-free-market, populist Right that extols the nation and a “tenacious” sort of solidarity, as Christopher Caldwell describes it. Looked at in conjunction with Rick Santorum’s calls to return to the glories of America’s manufacturing past, there is reason to doubt that free-market arguments are political winners these days. The alliance of social and economic conservatives typified by Ronald Reagan and Margaret Thatcher seems to be fraying everywhere, and this will make dealing with the debt crisis and resulting economic problems that much harder to tackle.
Perhaps it had to come to this, especially in heavily secularized Europe, where God has been “dead” to the people for some time. Next week, I’ll be participating in a forum of European Christian leaders in Copenhagen, and hope to get a better idea to see where things stand in other churches and other countries. But it’s getting harder and harder for those of us who believe in the compatibility of religion and liberty to remain hopeful about Europe’s chances.
As Christians, we are not allowed to give in to despair, at least not of the supernatural sort. But Christians should not be naively optimistic either. A good dose of Christian realism is in order, and thank God, we have a Christian realist in the pope. So as not to end on a dour note, I’ll recommend this column by Sandro Magister on Benedict XVI and his brilliant homilies, which Magister believes will outlive his encyclicals. As I’ve noted before, the Pope is trying to get us shut up and listen to God, who has never left us, now more than ever. Will this call for spiritual renewal find a receptive audience anywhere?
Kishore Jayabalan
Director
