Saint Thomas Aquinas

Wednesday, February 2, 2011

Distributism versus Freemarket Austian Economics

There is some healthy debate these days regarding Catholic economic theory. The two positions most widely held by Catholics today are the distributist and the free market Austrian theories. Personally, I have to do more investigating on the two positions before I can commit to one side or the other. Thomas Woods has a great blog and has written many books on the subject of Austrian economics and the free market. The Von Mises Institute also has tons of free reading material on this position as well. On the other side we have a couple of groups that promote the distributist theory like the Chesterton Society and the Distributist Review. This is one area where Catholics can engage in healthy intellectual debate. At this point I am leaning more towards the Austrian theory, but that could always change as I learn more. I thought that this post was interesting that Thomas Woods put up that criticizes the distributist theory. On the other side, this Distributist Review article rails against the free market position. Any thoughts on the subject?

36 comments:

Alexander Greco said...

I also believe that I lean towards the Austrian view of economics, but can be persuaded otherwise. Other than taking micro and macroeconomics in college, I still have a lot to learn from both the Distributist and Austrian views. The only views we studied were Keynesian and Chicago arguments.

scotju said...

I'd like to believe in distribtism, but I've never met a distributist who could answer this question: how are you going to get property to distribute? The current property holders are certainly not going to give it away. They might sell some of it, but they are not going to destroy their own means of making a living. The only other way to get that property is to take it by force from the current owners. It sounds like socialism, no? Well, both Belloc and Chesterton were socialists earlier in their lives. Some of the earliest articles written about distribtism were published in a radical magazine called New Age. And finally, has any distributist ever predict any economic trends or economic cycles? I never heard , have yo?

Nick said...

The folks over at The Remnant had some articles very critical of the Austrian view - e.g. that the founder of that view was an rabidly anti-Christian and does not reflect Catholic social teaching.

Search their archives for relevant information. Here are two articles I remember from last year coming down pretty hard on Woods and Von Mises.

http://www.remnantnewspaper.com/Remnant%202011/Archives/2010-0215-ferrara-ludwig_von_mises_versus_christ.htm

http://www.remnantnewspaper.com/Remnant%202011/Archives/2009-1015-mccall-economics_for_catholics.htm

In my limited understanding, I would place heavy caution on the Austrian-VonMises view since it is essentially (and deliberately) secularly grounded and thus a philosophy based on advancing personal wealth (which is the highest goal in life for the materialistic minded).

Matthew Bellisario said...

Hi Nick. Thanks for stopping by. I am more interested in the actual economic theory rather than the guys personal beliefs. Whether or not he is an atheist doesn't really have anything to do with the economic system and whether it is viable or not. Even if the guy was an atheist, which is not confirmed, does not mean that his economic system could not be modeled in a Catholic paradigm. There have been plenty of Catholics who have come up with bad economic theories, and obviously they aren't atheists.

Matthew Bellisario said...

Also, in reading through those articles, there is more time spent calling Woods a dissenter than there is in giving any substantial proof as to why he is a dissenter. Woods has spent some time refuting these guys as well.

http://www.lewrockwell.com/woods/woods127.html

Nick said...

It's something I'm still researching, but my gut tells me the central issue here is a "separation of Church and X," where in this case X is economics.
Basically, it's the notion that economics (including theory) can be divorced from natural law and Church law as if it could operate independently.

Yet just like voting and other civic duties, a Catholic cannot engage in such things like economic theory while disregarding Catholic principles.

In that link you gave, Woods said: "economic policy may possess a moral dimension, but not a single proposition of economic theory involves a moral claim"

If I'm reading this correctly, this seems like an false claim. For example, "one proposition of economic theory" is whether an employer can underpay for the real value of work. To say that doesn't involve a moral claim is wrong. Or, as the article I linked to above states, secular economic theory is grounded upon the notion of amassing wealth, and the more money one generates, the better. Yet to say this can be divorced from moral theology doesn't work.

Alexander Greco said...

Nick,

I think you are missing Woods' point. Economics is it's own science. For example, if someone were to propose that unemployment were undesirable, and everyone should earn a living wage, the economist could rightly argue that living wage legislation increases unemployment.

What do you consider to be a just wage other than what the employer and employee freely agreed to? If I ask the owner of company X to hire me to shovel dirt, and he tells me that he will pay me $5 an hour to do so, if I accept that as payment for my services it doesn't seem to me that action on either end to be immoral. Let's suppose that the common payment for shoveling dirt is $10 an hour. Why would the owner be under any obligation to pay more than what he valued to be a just price for the work performed, especially if someone is willing to earn less?

I hope this isn't a false caricature of the Austrian position.

Alexander Greco said...

Hi Nick,

Here is another article by Woods where he discusses wage theory in the view of the late scholastics, among other things.

http://mises.org/journals/jls/19_4/19_4_8.pdf

Thanks

Nick said...

Thanks Alexander, I'll read it.

I googled and found this from the Catechism of the Catholic Church, which says this (under the 7th Commandment, You Shall Not Steal):
"2434 A just wage is the legitimate fruit of work. To refuse or withhold it can be a grave injustice. In determining fair pay both the needs and the contributions of each person must be taken into account. "Remuneration for work should guarantee man the opportunity to provide a dignified livelihood for himself and his family on the material, social, cultural and spiritual level, taking into account the role and the productivity of each, the state of the business, and the common good." Agreement between the parties is not sufficient to justify morally the amount to be received in wages."

The last sentence is particularly critical here, which seems to me to explicitly rule out the mere mutual agreement.

The social danger in "I can always find someone to do it for less" is that men will be put in a competitive mode that will drive the wages down and force the individual to take and survive off of poverty wages. This is precisely what happens in sweat shops, where the only jobs in town are factories and you're forced to keep competing for your job by bowing down to further and further unjust demands and payment.

The way I understand *traditional* Catholic social teaching from the Popes is that the Boss needs to gauge just how much a specific task is worth such that the individual is not being degraded.

It seems your example works to an extent, but breaks down when it comes to being a *just wage* or not. We are not talking about a highschooler trying to earn some spending money by digging dirt, but a father who has to provide for his family. The answer seems to be in a prudential judgment of the situation: obviously, a Boss cannot afford to pay a guy $35 to dig dirt, but a Boss likewise cannot in good conscience have a father work for poverty wages.

Nick said...

Basically, there is the sin of greed/theft when a Boss doesn't take into account just wage, for then his goal is to "maximize profits" by squeezing the maximum out of the worker while paying him as little as possible.

This is a danger only Catholic Social Teaching can avoid, for the "mutual agreement" model indicates slave-wages are fine and/or don't touch upon morality and well-being of the community, including the idea that greed is the highest virtue and end of life. This is why separation of Church and Economy is just as false and unacceptable as separation of Church and State.

Nick said...

Reading over that link, it appears there are some problematic statements in the opening paragraphs.

For example: "To the contrary, de Roover showed, for the Scholastics the just price was the market price, the price arrived at by the interaction of buyers and sellers on the market."

This seems to be nothing short of "supply and demand," which I doubt the Scholastics were promoting. Supply and demand without regard for the well being of community only results in the rich being able to buy and drive up costs while leaving the average family in the dirt.

Holy cow, check out this next quote: "On the issue of the “just wage,” which has been the source of so
much contention in Catholic circles over the past century, the Late
Scholastics contended that a wage rate mutually agreed upon had to
be just. According to Luis de Molina (1535–1600), an employer was
“only obliged to pay [the laborer] the just wage for his services considering all the attendant circumstances, not what is sufficient for his
sustenance and much less for the maintenance of his children and
family.” Domingo de Soto (1494–1570) argued that “if they freely
accepted this salary for their job, it must be just,” and held that “no
injury is done to those who gave their consent.” His advice to
unhappy employees was simple: “[I]f you do not want to serve for
that salary, leave!”"

This is MAJOR RED FLAGS for me. I smell the worst twisting and liberal distortion of Catholic teaching here. This seems utterly dishonest and deceitful. It goes directly against Papal teaching and the Catechism - which aren't even quoted but ignored.

IF I'M READING these charges correctly, this is Thomas Woods' worst and most reprehensible moment.

I'm utterly shocked Woods would even promote this, for it is nothing short of a recipe for the worst greed imaginable with utter disdain for and trampling upon the working class and poor.

Matthew Bellisario said...

There is a problem here which no one seems to get. Who is going to determine what a "just" wage is going to be? The Catechism can't do it, neither can the Pope. To me it is obvious that everyone cannot live at the same standard of living, otherwise you have to regulate it so closely that you would have a socialist type system. If you pay someone at McDonalds enough to buy a 150,000 house, then no one can afford a hamburger, and McDonalds shuts down. Then those people who made less money who ate a McDononlds now cannot afford to eat anywhere. Also, the Catechism is not taking into account jobs for part timers or students, etc. It does not take into account many economic factors that may impact society on a large scale. It is not a simple as paying a "just" wage. The question that must be answered is, "what is a just wage for each and every job that exists, and who is going to determine if it is just or not?" To me it is obvious that not every job that exists will pay enough to live off of, because some jobs are part time jobs, or jobs geared at students and the like, and it is obvious to me that a "just" wage in one place, may not be "just" for someone else. So, should you pay the kid across the street who cuts your grass enough to buy a house or not? If he cuts your grass every week, how much is a just wage? Is the guy who is paying a kid 20 or 30 bucks to cut his grass so he can make some extra money now going to hell because he did not pay a "just" wage?

scotju said...

Matt, your comments on the just wage are some of the rare ones that make any common sense. Indeed, the whole distributist idea is based on the theory that every wage earner is going to be the head of a family. It doesn't work out that way in real life. Some marry, some never marry, some have a handicap or infirmity that prevents them from having a job. Others, because of life circmstances, work only part-time.

Also, the Chesterbelloc claim that property has to be distributed over the wider population to increase wealth is nonsence. The Jews of ancient and medievel Europe had tremendous wealth, yet the laws forbade them to own property. How the CB's, who wrote some rather negative things about Jews could have missed this is amazing.

Finally, I repeat what I've already said earlier about the basic idea of distributism: who is going to decide how to spread the wealth? I have never gotten a clear answer from anybody how this is to be done. Will someone please give us a straightfoward answer to this burning question?

Alexander Greco said...

Hi Nick,

Is the Church competent to determine how the market economy should work? That is one of the questions Woods is asking. If it appears that in making the sort of proclamations the Catechism does, it demonstrates a failure to properly understand how the market economy works, then the economic basis upon which the teaching is derived must change and in that way inform the teaching.


Frederic Bastiat argued that a common fallacy invariably used in the artificial manipulation of the economy is that too much attention is focused on the short term effects of a policy rather than the long term effects. It appears that often only what is seen is taken into account without consideration of the unseen. While higher wages equivalent to living wages are seen as being good for those employed, the unseen is that there is higher unemployment overall and less production. More people will inevitably suffer in order to maintain the high prices needed to pay, in Matt's example, the guy flipping burgers. Since the teenager flipping burgers in order to make some spending money and learn a disciplined work ethic doesn't have the same needs as the father of four, then he can be paid considerably less. However, if we have to pay the father more, then what's the incentive of the employer to hire the father? Wouldn't the employer prefer to have two employees for the price of one, at increased productivity for this low skilled job? If someone can earn a living wage to meet their needs while working at a low skilled job, what would be their incentive to learn a skill? It seems to me that there are disastrous results in arbitrarily taking into consideration everyone's personal need in determining wages for low skilled jobs. Scotju I think right points out the obvious, who will enforce these policies? Will it be the State? A guild? Are they going to prevent someone who needs a second job temporarily in order to pay something off from bargaining for wages just high enough to satisfy his desire to work, and just low enough to satisfy the employer to hire him if these wages don't meet a living wage? This is simply way too arbitrary and will require a central planning authority to enforce.


In his book The Church and The Market, Woods provides a quote from George Sauvage who poses an interesting question, "As an individual or as head of a family, the laborer produces the same amount of work; how then could the employer as such be obliged in strict justice to take into account a condition which is of no advantage to him?"


Prices are derived by the common estimation of the buyers and sellers of the product. I simply will not pay $10 for a McDonalds burger, and I doubt there are many who would. Therefore McDonalds would not be able to continue it's operation if that's what it would take in order to be profitable and pay all it's employees living wages. If we also throw into the mix Pope John Paul II's call for cheap or free health care and pensions in Laborem Exercens, the rising costs of doing business might simply not meet the willingness of consumers to pay the prices needed to sustain it. Even Pope Pius XI in Quadragesimo Anno realized that the economic conditions needed to maintain sufficiently high wages might not allow such wages to be realized. Therefore, it seems to me that paying less than living wages isn't considered to be an intrinsic evil. 


The Austrians argue that these policies fail to take into consideration economic laws as informed by human action.

Alexander Greco said...

Woods argues that the just wage is the wage determined by the common estimation of the market. He sites the Scholastics Luis de Molina and Domingo de Soto as stating that the owner is not obligated to pay for the sustenance and maintenance of his employee's children, and that the freely accepted salary is just.


It is an argument derived from economic laws that setting wages differently than the common estimation of the market by arbitrarily imposing living wage legislation will cause higher unemployment and everyone will be worse off. While it is hard to see this in a fiat economy where in our case the Federal Reserve increases the money supply year after year, giving us the impression that we have more money, the best estimation is the purchasing power of the money one has. Woods argues that increases in the productivity of labor equates into greater purchasing power. He quotes George Reisman as saying, "it is the productivity of labor that determines the supply of consumers' goods relative to the supply of labor, and thus the prices of consumers' goods relative to wage rates." Woods sums it up by saying, "the more production per capita, the lower will prices be in relation to wages, and the more those wages will buy." Therefore, it seems to reason that economically speaking if the market policies the Catechism calls for makes people worse off, and if different action would provide the intended results which appears to be the aim of the Catechism (the welfare of all), then these means should be considered.


I'm curious, if there is a demand from the Catechism to the extent that an employer must also take into consideration the needs of the employee in the determination of their wages, would the employer be acting as an immoral agent if he were to terminate the employment of half his workforce due to an innovation in machinery which now only requires half the employees he had before? Would he be required to forgo immediate technological growth, even though in Austrian terms this would release labor into the market to provide for other services and desired goods which were hitherto wanted but unable to be provided for until the supply of labor were available? This also brings into question the fact that these "greedy" businessmen just might be taking the profits not paid in giving higher wages and instead investing them in capital goods or in further innovation. 


Woods describes how this all works in his book The Church and The Market. I also want to add that I think we should avoid proclamations to the effect that so and so is a bad Catholic because they are in favor of free market economics. To my knowledge, Woods isn't opposed to caring for the poor and attaining the realization of fathers providing for their families. Woods appears to be operating under the assumption that a father being able to provide for his family is a good thing, full employment is a good thing, and unemployment is an evil which should be avoided. Therefore, he proposes a free market to remedy those evils which prevent a father from earning a life sustaining income.

Nick said...

Firefox is really starting to get on my nerves, it's been hanging multiple times daily, and I'm about to say good-bye to it. This time I lost my response I was going to post. I'll try to remember what I had written.

The notion of a "Just Wage" is part of Catholic Social Teaching, so it's not something we can or should just ignore. It was issued in response to dangers the Church saw in modern economic policies. The key to keep in mind is that for the Catholic, Our Faith influences all aspects of our lives; there is no "separation of Church and X".

The duty of Government and Economics is to promote the well being of the people, not to encourage amassing of wealth and making this the highest virtue in life. This is especially wrong when one's neighbor is seen as irrelevant and on their own, or even a 'competitor' that must be crushed.

Pope Leo XIII in his tome Rerum Novarum says:
"The preservation of life is the bounden duty of one and all, and to be wanting therein is a crime. It necessarily follows that each one has a natural right to procure what is required in order to live, and the poor can procure that in no other way than by what they can earn through their work.

45. Let the working man and the employer make free agreements, and in particular let them agree freely as to the wages; nevertheless, there underlies a dictate of natural justice more imperious and ancient than any bargain between man and man, namely, that wages ought not to be insufficient to support a frugal and well-behaved wage-earner. If through necessity or fear of a worse evil the workman accept harder conditions because an employer or contractor will afford him no better, he is made the victim of force and injustice.


In other words, it is unacceptable to take on a world-view in which letting one's neighbor starve is acceptable policy. A Just Wage is part of natural-law, thus to tamper with or ignore it is bordering on Protestantism-Modernism.

Now in terms of real life application, the Church recognizes this is a difficult question to answer since there is no simple formula and many variables need to be considered. That doesn't mean the principle is to be abandoned. This is similar to the principle that all marital acts must be open to life, yet the Church isn't saying have as many children as possible or even setting a minimum number.

The McDonalds example shows why the real life application isn't so simple, but it also misses a critical point. The point of a just wage isn't necessarily to be able to afford a $150k house, but rather a wage that retains the dignity of the worker. In other words, the goal of McDonalds economic policy should not be to squeeze the worker as much as possible and pay him as little as possible to maximize *corporate* profit.

And further, this is specifically concerned with a wage that will sustain a family, with the father alone working, so this isn't talking about a boy across the street wanting to cut grass. The jobs in view here are more along the lines of career jobs, and the problem being addressed is corporate greed wanting to maximize profits at the expense of worker's dignity.

Nick said...

Alexander asked: "Is the Church competent to determine how the market economy should work? That is one of the questions Woods is asking."

The answer as I see it is that the Church is competent to lay down principles for all aspects of life that touch upon natural law and church law. Just like when it comes to addressing the form of Government a nation should embrace, the Church doesn't force one option over others, but it DOES lay down ground rules of what is and is not acceptable forms of government. For example, "freedom of speech" can never be framed in such a way as to mean a civil right entitling someone to create and distribute porn (with the Government saying that's perfectly acceptable).

With economic policy, the Church teaches private property is a natural human right, and thus many forms of socialism are outright unacceptable.

The notion that the Church is incompetent in areas touching natural law (and divine law) is Protestantism-Modernism, and if the Church says issues like just wage are natural law then we as individuals have no right at all to say the Church is incompetent or has no business speaking on such subjects. The Church is here to help us in all facets of life, and we should trust the Church above and beyond any politician, economist, philantropist, etc.

The example of paying a just wage versus unemployment is, to me, an issue of lesser of two evils rather than one of 'good versus bad'. Lets say a company has two employees which it can pay a just wage during good economic times, and yet currently is in bad economic times. The option is either fire one employee to give the other a just wage again, or to temporarily lower both men's wages. This is a lesser of two evils situation, not one in which taking the lower wage is inherently good.

All the questions you and others are raising are good questions, but I think you're missing the bigger picture of the End Goal of Government and Economy. If you remove the 'maximizing profits' motif as the primary goal from the equation, the Catholic Social View is plausible.

Also, this never is about a company being forced to 'overpay' an employee, e.g. McDonalds having to pay $50/hour. It's rather about if a company can't pay a wage worthy of man's dignity, it shouldn't be hiring or be in business. If Wal-Mart is the only option available in town for work, Wal-Mart's policy can never be to keep seeking someone who will take a lower wage, for the end result is the worker is forced to take slave-wages, Wal-Mart maximizes profits, and we have effectively sweat-shop conditions in the office and poverty at home.

Would you as a Catholic employer ever tell a father his "options" are work for you for $1 an hour or starve? See the problem? You either try to meet his wage needs or tell him you cannot afford to hire him, but in good conscience you can't just pay him $1/hour working as a slave, especially if you're making profit from it.

The Catholic outlook on life has the SPIRIT OF CHRIST in it, while the secular outlooks are BARREN.

Nick said...

In this case, I think Woods is thinking he's smarter than the Church when it comes to economic principles and natural rights of man, which is a dangerous and false road to go down.

The Church is a far surer standard on whether Just Wage is true or not than Woods' PhD.

IF I understand his position correctly, he's saying things such as sweat-shops are perfectly fine and don't infringe on man's dignity.
IF SO, do any of you agree with that?

Alexander Greco said...

Nick,

Sorry about the computer issues. Normally when something like that happens toe I just say forget it and move on to something else. :) Glad to see you stuck with it.

I think the assumption here is that a just wage necessarily implies having a living wage. As I wrote before, even Pope Pius XI realized that this isn't always attainable. You are right that calls for living wages are only done on behalf of those who need it to sustain a family, but this raises some serious issues which ignore economic realities. Why must we assume that a just wage necessarily implies a living wage? Because a pope declares it so in an non-infallible way? This is an important point which needs to be reconciled. What is the teaching directed to? An income which enables one to sustain their family. What is the policy? Living wages. What happens when living wages are enforced? Higher unemployment, less production, higher costs, less purchasing power for the dollars everyone has. It seems to me that non-infallible destructive economic policies can and should be challenged per Canon Law (Can 212 §3. According to the knowledge, competence, and prestige which they possess, they have the right and even at times the duty to manifest to the sacred pastors their opinion on matters which pertain to the good of the Church and to make their opinion known to the rest of the Christian faithful, without prejudice to the integrity of faith and morals, with reverence toward their pastors, and attentive to common advantage and the dignity of persons.)

Your analogy to contraception seems faulty to me because the use of a contraceptive to artificially separate the unitive and procreative goods of marriage within the conjugal act is immoral in and of itself. As seen from Pius XI, the absence of providing living wages isn't always immoral, even if we were to assume that the popes were competent to teach in the realm of economic policies.

We go back to the enforcement of living wages. If they are aimed at families, then why should single men be given less for the same job? The money has to come from somewhere. Moreover, living wages really depends upon the location of the worker. Wouldn't you expect to see non-skilled labor jobs leave one location for another where the living wages are not as high? 

Regarding your latest posts, I will have to touch on them later. I am simply out of time to do them know. I will say though that you have not demonstrated the natural law argument in favor of living wages. You have appealed to authority, but have not demonstrated why it is a violation of natural law. You have also claimed that businessmen are evil due to profits, but have not shown why this is the case.

Pope John Paul II and the modern hierarchy also claim that there is a growing awareness that the death penalty is against human dignity and should be abolished. Moreover, they treat punishment not as just retribution for the evil committed, but as medicinal means. I bring this up because we have a right to challenge these things per canon law. You just can't assume that something is against human dignity and then claim that those who do not follow your opinion is a Protestant modernist.

Thanks again. I hope to respond to you later.

Matthew Bellisario said...

Again Nick you have not answered the questions. Who and how is the just wage going to be determined? You can't have a policy or a law that cannot be defined or applied with any accuracy. Tell us how the just wage is determined and tell us who is going to determine it. Also, what are you going to do about all of the people who are making well over the just wage? Are going to take their money from them? Also, calling us Protestants and Modernists is not going to answer the questions. If the Catechism has defined this just wage as an absolute teaching, then there must be a way to apply it in real social settings. Also, the natural only goes so far as to give people the right to what they are owed, and that people should not be exploited. Aside from that, I do not see that natural law dictating an enforceable living wage for every worker. Until you can tell us how the Catechism rule can be applied in real life, then it is up for discussion. As far the contraception argument goes, they are not even comparable. Contraception violates a rule which is defined, and it can be applied by the defining characteristic that makes it a contraceptive act. This is defined using Thomistic principles. Lets see you use the same type of reasoning to give us definitions of what a living wage is, and when it is being violated and when it is not, and tell us what authority is going to determine this, and how it will be enforced. Until you can answer these questions, I do not think it is your place to tell us we are going against the Church. We have not even figured out what the Church is even teaching at this point, at least in regards to what the Catechism is saying. You can't make a law without some governing principles that will be used to able to apply the law. So far this is the analogy that applies to the Catechism, and your argument.

Example, Catechism says, "You cannot go over the speed limit." I ask, how do I know what the speed limit is? Nick, answers, well that is hard to define, but if you disagree that there should be a speed limit you are going against the Church." I ask, how can I determine what the speed limit is, and who is going to decide what it is. Nick answers, "well if you have to ask then you are already crossing the line." Now I will give you an example of how it should work.

Catechism says, "You cannot go over the speed limit." I ask, how do I know what the speed limit is? Nick says, the state government posts a limit and you are obliged to follow it." Sure this is a simple example, but you get my point.

Nick said...

Hi Alexander,

I wont deny the process of determining a just wage is complex, but I'd guess it's determined similar to how our modern "minimum wage" is determined. Factors such as location, skill, job, etc, etc, must all come into play, along with determining the "cost of living".

You asked: "Why must we assume that a just wage necessarily implies a living wage? Because a pope declares it so in an non-infallible way?"

If I'm reading this correctly: a living wage is essentially the 'cost of living', and if a Just Wage is defined as that which enables one to meet the cost of living, then the LW would have to be taken in consideration. One important note is that the JW system includes frugal living conditions, where as a modern secular cost of living might include cable, internet, 2 cars, etc.

As for the Pope declaring this in a "non-infallible way," I'd respond by saying non-infallible doesn't mean non-authoritative. In fact, the force at which the JW teaching was given was at a very high teaching level, and even said to be grounded in natural law. It could even be infallibility as per the Ordinary and Universal Magisterium. Rerum Novarum was a major encyclical, on par with that of Humane Vitae and such.

You said: "What happens when living wages are enforced? Higher unemployment, less production, higher costs, less purchasing power for the dollars everyone has. It seems to me that non-infallible destructive economic policies can and should be challenged"

I don't believe enforcing LW necessitates higher unemployment, higher costs, etc. For example, a lot of costs are driven by sheer greed, and mark-up is deliberately high. For example, most health insurance is out of reach for many simply because of the outrageous inflation driven by the fact public-sector workers get taxpayer dollars funding their insurance plans and thus health companies know they can squeeze more money out of them.

I don't believe such policies as JW are "destructive," since it's really the only means of putting a check on slave wages.

My comments on how many children to have was more along the NFP lines of when is practicing NFP warranted or not (since there must be sufficient reason to engage in NFP). A couple cannot simply practice NFP just because they're tired of having children, there must be sufficient economic, heath, and/or social reasons for doing so. What those conditions are is not *absolutely* defined, only principles are given, since conditions and circumstances vary. That, is the parallel I was drawing. When Scripture and the Church teach couples are to be "fruitful and multiply," that says nothing directly about contraception, and faithful Catholics who avoid contraception still must ask themselves how many children is enough for them.
(1 of 2)

Nick said...

(2 of 2)

You asked: "We go back to the enforcement of living wages. If they are aimed at families, then why should single men be given less for the same job? The money has to come from somewhere."

These and similar questions are good and important. I don't have all the answers, but I'm sure Catholics have thought about these. Just taking your question on its face, if the JW is aimed at families, then logically single men should be getting paid less. The only "objection" here is whether that's a fair deal. If the purpose of working is to earn a living, then it shouldn't be of huge concern about how much more you can bank at the end of the day. The counter-result of your question is a disastrous problem today, which is that wives are forced to enter the work force (if a job pays $10, a single man will be more wealthy than a father who has to distribute that $10 over 4 others, meaning he's got less disposable income for the same basic needs, brutally forcing the mother to work too). With that, the family is viciously attacked and undermined on purely economic grounds!

You asked: "Wouldn't you expect to see non-skilled labor jobs leave one location for another where the living wages are not as high?"

If the company's policy is to maximize profits (with total disregard for the well being of society), then sure they'll do anything to cut costs. But that just screws everyone in the end, as we see today when all manufacturing goes over-seas and has to pay only slave-wages. Those companies don't give a damn about their nation or people, but rather the money-god.

Lastly you said: "you have not demonstrated the natural law argument in favor of living wages. You have appealed to authority ... you have also claimed that businessmen are evil due to profits, but have not shown why this is the case."

I have appealed to a very high authority, a major Papal Encyclical, the catechism, and other such related Church documents. That's not something I take lightly, especially since it's "traditionalist" in it's origin. The quote I gave from Rerum says this is dealing with natural law, and it and the context explains why it's not enough to simply agree on a wage.

As for the issue of business men being evil due to profits, I am speaking only in the context of where maximizing profits and making the most money is the highest aspiration in life. If we look around today, the folks who garner the most respect are those making the money, with their lifestyle and how they acquire the money a totally irrelevant factor. For example, a company who thrives off of wiping out the competition is the height of greed and goes against moral and divine law and not something to be praised. St Paul's timeless warning to St Timothy has to have some bearing on unchecked capitalism: "For the desire of money is the root of all evils; which some coveting have erred from the faith, and have entangled themselves in many sorrows." (1 Tim 6:10)

Nick said...

Matthew,

You asked: "Tell us how the just wage is determined and tell us who is going to determine it."

The government and unions and such would have to determine it, just as taxing structures and such are determined. They obviously have to take into account many variables, but they're able to come up with numbers. As I told AG, I'd guess it's similar to how the current "minimum wage" (not synonymous with Just Wage) is determined.

You asked: "Also, what are you going to do about all of the people who are making well over the just wage? Are going to take their money from them? Also, calling us Protestants and Modernists is not going to answer the questions."

There is nothing wrong with making over the JW, in fact such is desired since it gives the family more income to work with. The JW is simply a bare minimum, with the family living frugally. The JW essentially says "it's inhumane to pay a father less than this".
As for the Protestant/Modernist thing, I'm not calling you that, but certain policies do embrace such concepts.

You said: "If the Catechism has defined this just wage as an absolute teaching, then there must be a way to apply it in real social settings. Also, the natural only goes so far as to give people the right to what they are owed, and that people should not be exploited. Aside from that, I do not see that natural law dictating an enforceable living wage for every worker. Until you can tell us how the Catechism rule can be applied in real life, then it is up for discussion."

It can be applied in real social settings, what can't be given is an absolute figure or percentage, since the variables cannot be confined like that. When you said "and that people should not be exploited," you're essentially recognizing the root of the JW teaching. Anything below JW is exploitation of the father and thus intrinsically evil.

The contraception argument was a misunderstanding of my original argument which wasn't directly about contraception at all but rather NFP. Further, the notion of JW is placed in the moral realm of social duty, honesty, etc, so something like exploitation is intrinsically evil too. My analogy was essentially how does a good Catholic couple obey the precept to "be fruitful and multiply"? How many children must the couple have? There is no absolute and simple answer or formula.

You said: "We have not even figured out what the Church is even teaching at this point, at least in regards to what the Catechism is saying."

The CCC says: "Agreement between the parties is not sufficient to justify *morally* the amount to be received in wages." This indicates there is a moral component to all economic theory concerning wages.

The going over the speed limit demonstrates the disparity between the actual and abstract, but it doesn't overturn the abstract. We know stealing is a sin, but when does it become a mortal sin? That all depends! If I steal $20 from a family in poverty who needs that for the month's food, that's very likely a mortal sin. If I steal $20 from my brother's room, that might not be a mortal sin, and certainly wont be as sever as the first case.

Just as the government takes into account various factors for each street on what to make that particular speed limit, the same approach must be taken when they determine a Just Wage.

Matthew Bellisario said...

Nick wrote, "The government and unions and such would have to determine it, just as taxing structures and such are determined. They obviously have to take into account many variables, but they're able to come up with numbers."

Ok now we are at least getting somewhere. So Nick, you propose that the government is to determine the following.

1. What each person is entitled to in regards to living standards.

2. A living wage that will afford this standard.

3. It is to enforce the paying of this wage on all businesses for every employee that they employ.

4. This governmental policy is going to produce an economy that will sustain this standard of living, and the ability to pay this living wage.

Let me know if this is your proposal, and then we can analyze this proposal.

Matthew Bellisario said...

Also Nick wrote the following, "Anything below JW is exploitation of the father and thus intrinsically evil. "

I want to address this before it goes any further. I think you are going overboard here since even the Pope himself admitted that it is not always possible to pay a living wage or just wage. So it cannot be intrinsically evil. Sometimes the economy cannot afford it.

Nick said...

I'll address the second point first. The paying of below JW is unjust, but this can be tolerated to avoid worse problems (e.g. a layoff). It's a choice between two evils, the Pope was never saying it was good or just to underpay.

Now onto the 4 point proposition you gave:

"Ok now we are at least getting somewhere. So Nick, you propose that the government is to determine the following.

1. What each person is entitled to in regards to living standards.

2. A living wage that will afford this standard.

3. It is to enforce the paying of this wage on all businesses for every employee that they employ.

4. This governmental policy is going to produce an economy that will sustain this standard of living, and the ability to pay this living wage.


I've not thought extensively about this, but as I see it now, the government is one option, this could also be determined by some other respected or influential authority like a Union, Guild, etc.

Regarding #3, if both parties are acting in an honest fashion, a contractual agreement could enforce and uphold this.

Regarding #4, I don't know about any guarantees that the economy will be successful, but it's possible (and I believe this has worked at times in pre-capitalist eras). What is assured is that the state is being run from a perspective that encourages virtue and morality, which is the highest calling of society. I also believe such an economy would get rid of a lot of waste and materialism.

Matthew Bellisario said...

"I'll address the second point first. The paying of below JW is unjust, but this can be tolerated to avoid worse problems (e.g. a layoff). It's a choice between two evils, the Pope was never saying it was good or just to underpay. "

I didn't say that he did. What I am saying is that it is not an intrinsic evil as you stated earlier, since the economy has a bearing on wages.

Now back to the regulation of this utopian idea where everyone can make a just wage. A guild is obviously not going to be able to regulate standards of living on a large scale. In fact no government can regulate this because one man's opinion of what a standard is to be differs greatly from another. A king back in the middle ages who had tons of wealth lived by a lower standard of living than most poor people in our country today. A person from a poor country is grateful to have a roof over there head and 3 meals a day. Again we come to the real problem. It is not always possible to pay a just wage, the Pope admits this, this is reality. What we need to find out is what type of economic system affords the greatest opportunity for the most people to make a just wage. This is the real argument. We all agree that businesses should not be running sweat shops and trying to rip people off. That is a given. What we have not determined is what economic system is going to get us as close to this ideal as possible.

Matthew Bellisario said...

I will go out on a limb and say that economic model we have had in the US over last several years has allowed more people to live at a higher standard of living than has ever existed in the history of mankind. I don't have any hard evidence to prove this, but I suspect this is the case. I will have to do more investigation. The problem we have today is that so many people have such a high standard of living compared to past ages, that anything less than a 3 bedroom house, a wide screen TV and 2 cars in the driveway is looked upon a being under the "standard." Of course we do have very poor people in our country and more so in others. But lets use the US economy for a model so we can at least be on the same page. What economic system has produced a higher standard of living for the largest amount of a population than that the current US economy?

Matthew Bellisario said...

I also wanted to comment on this comment by Nick. He wrote, "Just taking your question on its face, if the JW is aimed at families, then logically single men should be getting paid less. The only "objection" here is whether that's a fair deal. If the purpose of working is to earn a living, then it shouldn't be of huge concern about how much more you can bank at the end of the day. "

I totally categorize this as socialism, plain and simple. The single man is penalized because he does not have a family? This is not just. A man working the same job in the same company who has the same skill set should not be discriminated against because he is not married. Talk about greed. That is a socialist mentality. Take money from the single guy and give it to the married guy, never mind that the single guy may put more money back into the economy, or give more to the Church, or even save for his future family etc. This is a joke, and this type of thinking clearly shows a lack of understanding in a how an economy works in the first place.

Nick said...

Hi Matthew,

Whether underpaying the JW is a moral issue or not (and thus can be intrinsically evil or not) is obviously a point of dispute here. I believe it is a moral issue, based on authoritative Church teaching.

I think the heart of this debate centers around these comments of yours:
"What we need to find out is what type of economic system affords the greatest opportunity for the most people to make a just wage. This is the real argument. We all agree that businesses should not be running sweat shops and trying to rip people off. That is a given. What we have not determined is what economic system is going to get us as close to this ideal as possible."

You mentioned here and previously that businesses should not be running sweat shops and ripping people off, but does this not tie directly into the notion of a JW? A sweat shop is essentially the degrading of individuals by grossly underpaying them and often placing them in dangerous working conditions (usually because it would cost more to make conditions safer). This is obviously affirming a moral component in the economic theory. The same is true for "ripping people off," which is a crude way of affirming a JW. And if the government can come up with figures for what it deems is a 'minimum wage', then similar calculations can come up with a JW.

I nor anyone else is saying this is an exact science or is going to be easy to apply in every instance. But the same can be said to numerous things, e.g. how much can one morally charge for an interest rate before it becomes the sin of usury. There is no simple or universal formula.

You said: "I will go out on a limb and say that economic model we have had in the US over last several years has allowed more people to live at a higher standard of living than has ever existed in the history of mankind."

It's a tough call for me, especially since I haven't done enough homework on this either. I would (at least to play devils advocate) note some reasons why our economic model is bad for stable and just living conditions. The biggest is that so much of the wealth is based on credit and debt, so much of the spending is families putting themselves in debt. When it comes to 'big' things like cars and houses, people are allowed to take on monstrous debts at also immoral interest rates. It is "popular knowledge" that a significant majority of families save little to no money, are living in major debt, and live paycheck to paycheck. So the standard of living and funding of that lifestyle are both inflated and propped up on toothpicks. As for taxes, many would agree the middle class is being effectively taxed down to a lower-class, and governmental spending (funding many of the things increasing standard of living) is utterly wasteful. So many would argue that the image and lifestlyes we see today is an unrealistic one and illusion that can only be sustained for a short time (e.g. 50 years max).

Nick said...

You also said: "I totally categorize this as socialism, plain and simple. The single man is penalized because he does not have a family? This is not just."

This isn't necessarily true. For example, a boss giving someone a bonus for whatever reason is not necessarily unjust to the other workers. Further, if the boss is more family oriented, he would know a father needs more for his family. For example, if a *standard* wage for a job is $20/hr, it would not be unjust for a boss to go above the standard rate and pay a father $25/hr. There is no penalization here except in a society where economics is 'color blind' to anything but the bottom line. This is also why for a long time women didn't earn the same as men for jobs, because it was implicit that the man was the bread winner.

Or in the case of a minimum wage, it could be the JW is paid to single and married men alike, with the JW calculated based on a family of 5. Thus the single man isn't being paid less than the JW, the JW is just gauged based on 5 person families.

Interestingly, I've read Catholics (incl economists) who say the current wages paid today are specifically designed to keep families small, and there is logic to this. This also explains why houses are larger but number of bedrooms don't increase, and why "family" apartments generally only have 2 rooms so that large families are impractical. It's also often finance problems why couples turn to contraception and abortion after 2 children. So everything is tied together.

Matthew Bellisario said...

Hi Nick, thanks for taking the time to keep the dialog going. Here is the deal on the just wage. A government cannot go in and impose a set of minimum wages and magically expect an economy to pop out of nowhere to support it. That is why again, we must look for an economic system which will afford such an opportunity. Also, no matter what type of government you set up, there are always going to be people who will buck the system, both in and out of authority. It isn't always the economic system that is to blame, its the people operating within the system. Our economy over the past 100 years or so, even with the crashes, etc, has been the most successful in providing the highest wages and highest standards of living that has ever existed, in my opinion. The money and the means are there, we just have people who are not using their money and wealth with a Catholic worldview in mind. They are secular, but that does not mean the actual economic system is "evil." I think the free market allows the best chance for the most people who are willing to work, to have the highest standard of living for the maximum amount of a society. Of course I still have not proven this. But, having a government come in and control everything, concoct artificial prices and wages that it deems to be fair is not going to work. Give us an example of where this particular method has been successful on a large scale. I don't think it exists.

On another note, giving a bonus to someone based on merit is not the same as discriminating against someone because of their skin color, gender, or status in life. It would bu unjust to take wages from a single guy and give it to the married guy based simply on life status. As is said, the single guy can use his resources to put money back into the economy, he can give more to the Church, so the Church can take care of the poor people, and he can save for a possible future family.

Matthew Bellisario said...

Finally, as far as intrinsic evils go, that means it has to be evil in all cases, and therefore always condemned. The pope however has already conceded that it is not always immoral not to pay a just wage, because it is not always possible to do so. You still do not seem to understand that if there is no money, you can't pay people. If an economy goes down the tubes in a particular society and businesses are having a hard time and cannot pay a just wage, they may temporarily need to cut wages to make it through until the economy comes back. Again, we all want to know what economic system is going to be the best to keep this from happening.

Nick said...

Hi Matthew,

I agree an economy doesn't just pop up and work and that there will always be corruption and dishonesty going on, but whatever economic system we go with should strive to emulate Catholic principles. Our economy right now 'works' and we have minimum wage laws in place which could even be higher than a JW, so a JW not unrealistic. Further, I'd guess a JW need not be uniform across every field of work.

Also, I'm not exactly sure how "free market" is being defined, since the more I think about it, I don't see how the market can be completely independent of governmental influence (esp via taxation).

When you said, "I think the free market allows the best chance..." I think the difficulty here is that we've not seen such a economy in practice (as you mentioned), since the US economic system has significant governmental influence. I've read that the Catholic Social model was more or less in place in Catholic nations during the Middle Ages, and I've also been told the Scholastics thought charging interest was wrong, so that seems to all fit. The Socialism-vs-Capitalism schemes seem to be more 'modern' than historic, both originating out of Enlightenment Europe.

As for the single guy earning less, I'm not sure what the common "traditionalist" answer is; I just gave my thoughts. It's true he could have more to give back to the Church and such - one question I've not yet figured is whether Just Wage applies only to fathers (and potential husbands) or to everyone in the workforce such as women and children.

Lastly, the issue of intrinsic evil, the scenario I'm proposing is that it's still evil and condemned but potentially is a lesser evil than outright unemployment (which is how I understand the Pope to be saying it's sometimes permitted not to pay JW). The very texts touching upon JW mention that the state of the economy is a factor of consideration.

Matthew Bellisario said...

Hi Nick, I agree that the US economic system is not a complete free market. And I also think there is way too much government interference going on which hinders it from being better. That is why some think the Austrian free market economic system is better, and would allow for a stronger economy, which would then allow for more people to work and receive a living wage. Again, I am not convinced it is the best, but I still lean in that direction of a free market with minimal government influence. Yes laws are needed to stop fraudulent business practices and such, but as far the economic system and how prices and wages are set in general, this should be determined by a healthy economic market and honest businessmen running honest businesses, not by artificial prices and wages that are determined by some all mighty governing body.

AntisocialMisanthropicPessimist said...

Austrian Economics is a scientific discipline, and not a platform for advancing anything. The overlap between libertarians and Austrians is not surprising, but Austrian economics is just plain economics; there is no 'ideology' or 'secularism' unless by 'secularism' you mean that it involves the application of human reason to actual problems in the material world.

Austrian economics is no more an 'ideology' than particle physics is; just because most physicists are liberals doesn't mean physics = liberalism.