The Catholic Thing
Justice & Peace – and the Financial Crisis Print E-mail
By George J. Marlin   
Wednesday, 02 November 2011

In his 1904 novel, The Napoleon of Notting Hill, G.K. Chesterton hailed the virtues of the neighborhood, which he deeply believed permitted people to exercise freedom and contained “the essentials of civilization, a chemist’s shop, a book shop, a provision merchant for food and a public house for drink.” 

Chesterton was rebuking the “One World” government visions of the utopians H.G. Wells and George Bernard Shaw. Such utopias, for Chesterton, meant “regimentation rather than emancipation, repression rather than expansion.”

Although the novel was published eighteen years before he converted to Catholicism, Chesterton instinctively embraced the basis of Catholic social thought – subsidiarity. Hence, he questioned the likelihood of any single international governing body successfully managing hundreds of nations and hundreds of thousands of national sub-divisions – states, counties, cities, towns, villages, hamlets, tribes. 

Because, Chesterton argues, it is difficult enough to successfully govern a small municipality – thanks to all the bickering that goes on within families and between neighbors – it would be impossible for a handful of potentates perched on the highest thrones to manage a world of billions of bickering people.

Unfortunately, Cardinal Peter K.A. Turkson of the Pontifical Council for Justice and Peace did not read Chesterton before signing off last week on “Towards Reforming the International Financial and Monetary Systems in the Context of Global Public Authority.” Fortunately, this severely flawed document is not signed by the pope and, therefore, not binding on Catholics.

The document begins by explaining the need for all to promote the common good based on the principle of subsidiarity, which is defined as “the higher authority offer[ing] its subsidium, that is, its aid, only when individual, social or financial actors are intrinsically deficient in capacity, or cannot manage by themselves to do what is required of them.” 

So far so good. But then it makes dubious claims that the financial crisis and the worldwide lack of confidence in banks are the result of economic liberalism, utilitarian thinking, technological ideology, selfishness, collective greed, and “hoarding of goods on a grand scale” (whatever that means).

These overbroad and, therefore, deceptive observations lead to the conclusion that to promote “a free stable world economy and financial system at the service of the real economy,” subsidiarity demands the creation of a worldwide financial authority with “universal jurisdiction.” In other words, a supranational tribunal would now regulate even your neighborhood bank. Sounds like a recipe for subsidiarity in reverse to me, and a system likely to result in more and even worse disasters than we’ve already experienced.

         Cardinal Peter K.A. Turkson of the Pontifical Council for Justice and Peace

This new international authority would, among other things, possess taxing powers on financial transactions; would create a “world reserve fund to support the economies of the countries hit by crisis”; and would recapitalize troubled banks “making the support conditional on virtuous behaviors aimed at developing the real economy.”

What the Pontifical Council for Justice and Peace fails to understand is that the financial crunches in the United States and Europe were the direct result of unrighteous, profligate, bloated governments that made decisions based on suppositions that were diametrically opposed to the principles of subsidiarity.

In America, the seeds of financial destruction were planted by President Clinton in 1994, when he announced that the federal government was determined to “expand the American Dream” by increasing the number of homeowners across the nation, even if they were not financially qualified. 

In response, the government-sponsored Fannie Mae relaxed loan-underwriting standards. Banks were directed to eliminate the usual down payments of 20 percent on homes, and normal income verifications. Lending institutions were also told to approve mortgages in a more “democratic” fashion, to expand creative financing, and to simplify the home-buying process. 

The result:  mortgages were given to millions of unqualified borrowers who could not possibly keep up with monthly payments.

Thanks to these well intentioned but ill-conceived policies, Fannie Mae bought tens of billions of subprime mortgages, which were bundled and then sold to investment banking firms who procured insurance guarantees and AAA ratings from Moody’s and Standard & Poor’s. 

The investment bankers then sold these toxic securities to unsuspecting individuals, mutual funds, and bank investment portfolios. When the real estate bubble burst, millions of people and scores of banking institutions went broke thanks to this government-sponsored Ponzi scheme.

European financial institutions have been imploding because national governments – in Greece, Italy, Spain, Portugal – have borrowed and spent themselves into bankruptcy. For generations, they have financed an unsustainable welfare system that has created a self-righteous, indolent working class that views material benefits and security as entitlements, not achievements gained through dedication and hard work.

The worldwide financial crisis was precipitated precisely by big-government managers who replaced subsidiarity with centralized power and discarded the common good in favor of a license – indeed a right – to act irresponsibly. The resulting maladies will not be cured by creating yet another governing body – this time global, and likely to make even larger and more costly errors – that would, no doubt, be manned by bureaucrats who believe liberty means their freedom to impose enlightened values, whauch are, of course, their own.

Before Cardinal Turkson and his collaborators release more recommendations on how economies and banks should be regulated, I recommend they crack open the works of Catholic thinkers well-versed in the meaning of subsidiarity and the common good – Jacques Maritain, Michael Novak, and, of course, G.K. Chesterton.

By following their advice, pontifical councils might avoid embarrassing themselves and the Church they serve. 

George J. Marlin is an editor of The Quotable Fulton Sheen. His newst book is Narcissist Nation: Reflections of a Blue-State Conservative.

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Comments (11)Add Comment
written by Ray Hunkins, November 02, 2011
Spot on Mr. Marlin. I hope your piece is read far and wide, hear and abroad.
written by Brian English, November 02, 2011
What would lead anyone to believe that such a world financial body would not almost immediately become an implacable enemy of the Church?
written by Alecto, November 02, 2011
This is possibly the the most accurate take on this travesty I have read since its publication. I believe the Peace and Justice crowd have failed to recognize and respond to the concept of moral hazard in promulgating something as evil, as truly oppressive in nature as a worldwide financial council. The Halloween release date must not be coincidental for it surely is a hobgoblin.
written by David J. Peterson, November 02, 2011
This comment’s arrogant and cynical dismissal of the PCPJ is very disappointing. It might be a much better fit on a website called the Wall St-Thing. As a Catholic, I view the Vatican initiative (while not a panacea) as a very positive and hopeful development. Many of the responses lack charity and vision. Certain pundits and prominent Catholic Think Tanks are reviving an old theme which goes: “The Vatican can not be trusted, and should not be suggesting solutions and economic proposal. This is because (they contend) the ‘unscientific” and unsophisticated popes (like John Paul and Benedict) have little or no knowledge about “REAL ECONOMICS.” It appears they believe these matters must always be left to “experts” like the IMF, World Bank, G8 and the many Wall St. gurus. The document presents one of the best analyses of the world financial crisis, with insights that have escaped the Wall St. journal and the American left/right media elite. The Pontifical Academy shines a light on the tremendous lack of justice and fairness of the dominant global institutions. In addition, many well informed scholars agree that the creation of the Breton Woods system, despite its faults, did a commendable job in the decades immediately after WW II.

written by Martial Artist, November 02, 2011
Mr. Peterson,

Your comment presumes a great many things as fact that were not so much as hinted at in Mr. Marlin's essay. In point of fact, a careful reading of what he is saying flatly contradicts your assertion that "these matters must always be left to 'experts' like the IMF, World Bank, G8 and the many Wall St. gurus." Rather, his comments suggest that the "Wall St. gurus," the G8 and the World Bank share some of the blame for the current economic problems. I very sincerely doubt that Mr. Marlin would have much positive to say about those parties. It makes one wonder if you actually read the whole article.

Pax et bonum,
Keith Töpfer
written by Chris in Maryland, November 02, 2011
The statement by the "Pontifical Council for Justice and Peace" was incompetent, and shows a preference for relying on incompetent agencies, not because they are incompetent, but because these centralizing agencies permit tinkerers to tinker.

Disband and re-assign the "Pontifical Council for Justice and Peace," ASAP.
written by A commentator, November 02, 2011
This "Council" should be given as much credence as would be a statement of the Chamber of Commerce concerning the orthodoxy of the Albigenses.
written by Graham Combs, November 02, 2011
I'm surprised that no one recalled that it was Cardinal Turkson who was sent to the United States a year or so ago to inquire as to why so many American Catholics are wary of the rhetoric of "social justice." I'm afraid it sounds as if his eminence either did not listen or dismissed our reservations.

I find it hard to believe that the Holy Father who is intimately acquainted with abuse of power on a grand scale in National Socialist Germany would not have his own questions about the pontifical council's recommendations.

Every once in a while I make the mistake of raising the idea -- with Catholics and non-Catholics -- of the freedom of the church basement. The AA or Knights of Columbus did not arise in Russia or Germany or China and for a very good reason. One could also compare these countries unfavorably to England and its Boy Scouts and Salvation Army among other up from the congregation civic/religious organizations. A civic culture from streets and parishes and villages would not be tolerated. Men would be sent around, doors would be knocked, questions would be asked. Developments would be stopped. (Then there's Hewlitt-Packard or Apple and the freedom of the suburban garage -- a freedom Mark Zuckerberg of Facebook finds "chauvinist.") In Praise of the Church Basement invariably evokes boredom or blank looks. Of course most people under 30 have been trained to suspect the Church (and when necessary report her to the authorities in the faculty lounge, personnel dept., or local civil rights organization.) And yet even Occupy the Sleeping Bag enjoys just such freedoms (regardless of where the money comes from).

One hates to sound chauvinist but there does seem to be something about the English-speaking world (at least until now) that promotes Burke's "little platoons." Yet one could also note all those religious orders and their works in Italy as well. Don Bosco comes to mind. Catholic entrepreneurialism at its finest. But Cardinal Turkson's world view seems to be more prominent despite growing evidence to contradict it. I can only think of those misquided clerics at St. Paul's in London deferring to children. Out of the mouth of babes, mostly babytalk. Anglicanism has an excuse; it's only 500 years old. But the Church... Mr. Marlin's list of writers and thinkers could have drawn on over 2,000-years of wisdom wrought from struggle and faith.
written by Ben Horvath, November 03, 2011
I read the 'Towards Reforming...' statement. I had assumed that most of the commentators panning and celebrating it were getting a little excited about some language they which did or didn't support whatever agendas the commentators usually support. I was surprised at how low quality it was and how little theological content it contained.

For those that haven't read it, it starts out ok but soon gets to the bit about the world financial authority and goes down from there. The world financial authority part doesn't read like a document written by theologically minded people - it reads like a manifesto written by a college professor who sees all problems in the world being fixed if we 'just' undertake his rather eccentric solution. While the document claims to respect subsidiarity and disclaims particular political solutions, its obvious in the context of the documents that these disclaimers mean that 'the little people get to figure out the tiny details of my bigthink specific political solution.'

Cardinal Turkson got rolled.
written by Chris in Maryland, November 04, 2011
To David:

Re: "The Pontifical Academy shines a light on the tremendous lack of justice and fairness of the dominant global institutions."

Here's the problem David: what Card. Turkson et all propose is insanity. They insist that the solution to "the lack of justice and fairness of the dominant global institutions" is another dominant global institution.

"A Commentator" and Graham have it right.
written by Dennis O'Donovan, November 04, 2011
I am wondering whether each document put forth by an entity such as a Pontifical Council should be required to have a disclaimer at the end of the document. This would make clear to what extent, if any, the document is binding on Catholics. Along the same thought line, when a bishop urges political action on the part of Catholics in his diocese, for example passage of The Dream Act, I believe that "Prudential Judgement" should be defined and explained how that relates to the action for which the bishop is calling.

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