Big-Picture Social Justice

I recently heard a religious leader say that the “welfare state” is good for the poor as he encouraged even more government spending on “social programs.”  A safety net for the truly poor is certainly a matter of social justice. But it’s not the only social justice question; before we can even get to such issues, we need a keen consciousness of a fundamental moral imperative – in justice – to run a responsible economic system for the sake of the common good, which includes the poor.

Suppose you are the father of a large family and earn $80,000 a year, but spend $100,000, plus another $20,000 on your credit card.  And what if your credit card has a $300,000 balance and every month you merely pay the interest. You’re relaxed because interest rates are low, for the moment.

But your Visa credit card starts demanding principal payments of $20,000 every couple of months.  Instead of cutting expenses, you choose to transfer the balance to another credit card, and continue to pay the interest.  Instead of addressing the problem, you’ve made it worse.  You increase your annual spending to $120,000 even as your annual salary remains at $80,000 – adding $40,000 to another credit card every year. Your personal finances have become a Ponzi scheme as you and your family fall into escalating and crushing debt.

Further, suppose your financial condition is really worse than it appears.  You didn’t tell your family you secretly owe another $600,000 for legal promises you made.  But the debt is not on a credit card. You’ve convinced yourself that what your family doesn’t know won’t hurt them, just yet. Further let’s assume it’s impossible to declare bankruptcy and your heirs will inescapably have to pay for your huge debt after you die.  So your debt is $300,000 (maybe as high as $900,000 with those hidden obligations) and increasing at least $40,000 every year on an annual income of only $80,000.

There are words that would describe personal finances in such a state: Grim. Catastrophic. Irresponsible.

There are about 120 million households in the United States.  Imagine if every household spent as recklessly as this fictional family.  If you are horrified at the thought, you should feel the same about U.S. deficit spending and our national debt.

CP_Federal_Spending_2014
[Click to enlarge]
The Federal Government has $18 trillion of debt on its “credit card.”  Fortunately, interest payments are relatively easy because interest rates are very – and most would argue, artificially – low, at least for the time being. The entire Federal budget is something like $6 trillion (the accumulated debt is $18 trillion).  That means to pay off the debt, the Government would have to shut down for three entire years, except to collect revenues to pay off the national “credit card.”   (To put things into perspective, the annual GDP – the earnings of the entire nation – is nearly the same as the Federal debt at $17 or $18 trillion.)

In recent weeks the Government was forced to pay down $1 trillion in principal.  The Government did so by transferring the balance to another “credit card.” But the Government not only continues to spend more than it collects, but hopes that the “credit card” interest rates don’t go up.  In addition, there can be no end in sight in the ever increasing demand to pay off the principal when due, even if other credit companies are able and willing to accept a transfer of debt.  (Of course, the $18 trillion debt doesn’t take into account the unfunded liability of Social Security and Medicare programs for the aging baby boomers, which is estimated to be something like $50-$70 trillion!)

If you’re having trouble imagining the magnitude of the problem, return to the family example and add nine zeroes to the numbers.  And be afraid, be very afraid.

I’ve noticed that a lot of the clergy hardly ever (well, never) talk or write about the national debt as a social justice issue.  But it’s immoral for one generation to steal from another generation.  And this happens when a government accumulates a huge debt that can’t be paid off for decades.   Every major Western country has the same problem so everyone is frozen in indecision for the foreseeable future. (Greece, for example, is being bailed out by Germany – and Germany bails them out because they fear of a devastating ripple effect of financial instability if Greece defaults.)

Where will this lead?  Frankly, I do not place much hope in the financial geniuses.  If the experts cannot agree on the obvious humanity of an unborn baby, what makes us think they will get financial realities right?  I hope there isn’t a major financial collapse but some experts do not rule that out.  My guess – and perhaps best-case scenario — is that there will be rampant inflation in the years ahead because our politicians (and our tone deaf religious leaders) haven’t paid attention to massive government budget deficits and runaway spending.

But inflation is often called “the cruelest tax,” because it affects poor people more than rich people.  Could this the reason very wealthy people like George Soros, Bill Gates, and Warren Buffett support big-spending politicians?

Somehow it continues to be easy to support big spending as a “social justice” issue, especially by the clergy.  But isn’t it high time for social justice advocates to put the mundane – nay, grim and catastrophic and irresponsible — business of the national debt and the evils of deficit spending on the table precisely in the name of “social justice”?

Rev. Jerry J. Pokorsky

Rev. Jerry J. Pokorsky

Father Jerry J. Pokorsky is a priest of the Diocese of Arlington. He is pastor of St. Catherine of Siena parish in Great Falls, Virginia.

  • ARCY

    The only problem I see with your example is the heirs of the family who can’t stop spending, can’t go into bankruptcy, will not have to pay his debt. It will die with him. Even funeral cost come out of the estate before bills. It is the creditors who will lose, them and only them, thanks again to our system. Makes the rest of us who live with in our means look like fools!!

  • Fr. Tom Bartolomeo

    I am saddened, too, when many in the American episcopacy seemly support partisan political agendas and align themselves with the promoters of illegal immigration. Better to promote social justice for people where they live. There can be no just fruits by evil ends especially with a Federal administration which promotes abortion and the genocide of the preborn. In the case of illegal immigrants would the Church support the transport of children to our country by drug cartels? No truly loving parents would endanger their their children in this way.

    Father Tom Bartolomeo

    • ForChristAlone

      It is certainly cruel to import cheap labor from poor countries to keep our own costs down and inflation under control. People are encouraged to leave their homelands to support American greed. If we really cared about the poor in the Southern Hemisphere, every parish, every diocese in the US and Canada would have tens of thousands of missionaries there to support the economic development of the indigenous people in their own homeland. What would American and Canadian Catholics get out of the deal? A remedy for our spiritual impoverishment.

    • malonth

      There has also been support for Obama’s lawless “amnesty” program. Section 1904 of the Catechism supports the value of the “rule of law”. This means that even the executive power of the presidency must comport with the Constitution. If you support lawless decrees of Obama to “help immigrants” at some point it will be your ox who gets gored. Indeed, we can see it already as the same administration believes it has the right to order citizens to pay for abortions and contraceptives for others.

  • pj

    ARCY, that’s going to happen here too, but the trouble is the whole country will go down with it. The government has tied its balance sheet to the banks’ who are invested in Federal Reserve excess reserves and Treasuries. When the government defaults, all the banks will fail and people will lose their savings. The government won’t be able to pay deposit insurance. We will all be restarting from nothing, and the means of commerce will have to be reformulated. It will be far worse than the Great Depression.

    • RainingAgain

      That’s the way I see it playing out. And now there is a huge dependency class. The urban segment of this class will be particularly lost and completely unable to help themselves. God help them, as even those with initiative who remain will have enough to do to themselves survive. Another problem-how to run a tractor when the oil, which is certainly not a limitless resource, runs out? No tractors=wholesale famine.

  • brucenyc

    While I appreciate the tone of your article, its fallacious to compare debts of nations to debts of individuals. Individuals have relatively defined lifetimes and life cycles which is decidedly not the case for nations. That difference permits decidedly different moral debt management policies.

    • RainingAgain

      I’m not sure that’s correct. Civilisations, if the term applies any longer to The West, also have relatively defined lifetimes, although several times longer than those of the individual. History presents many examples of civilisations enduring economic collapse, Rome being the most well-known example. If our own declining civilisation is in any way exceptional it may perhaps be that we are the most highly “leveraged”.

    • To an extent, yes. And leaving the debt to one’s children wouldn’t be so abhorrent if we were also leaving our children something to show for it. I cannot for the life of me see what we are leaving them, though, other than bloated pensions to be spent in warm-weather retirement and infrastructure deteriorating before our very eyes.

      • brucenyc

        No one leaves a debt to their children. Those who die with assets insufficient to extinguish their liabilities, leave their creditors unpaid. The children are not obligated to pay.

        • craig

          Only because the law assigns the liabilities to the dead man’s estate and not to his heirs individually. In the case of government liabilities, the ‘estate’ and its liabilities pass automatically to the next generation; they cannot not inherit the debt, except to default on it and accept ruination. See the decline of Argentina from a prosperous state to a poor one due to serial default.

    • DB

      The extrapolation from the debts of individuals to the debts of nations is solid in terms of a basic ethical principle regarding how debts are accumulated and the immoral shifting of the responsibilities for the debts from one person (or persons making up a nation) to the next while accumulating more debt and imposing more burdens on others in the process.
      In any event, I am intrigued by your last sentence. What do you consider to be a moral debt management policy for a nation, and why do you believe it to be moral? Is it morally acceptable for the federal government to continue to engage in ongoing debt accumulation despite the negative impacts like inflation, currency collapse, and so on that arise from ever increasing debt spending and accumulation?

    • FreemenRtrue

      completely wrong – see Thomas Jefferson
      the Feds spend $30,000 per family in the US. Spending the savings of the present generation and future generations. The irresponsible spending by government is theft, it is disastrous and it is always enthusiastically supported by our poor Church. The clerics do not have the real world experience of trying to make a living and raise a family. They are much like government workers, living large on the productive work of others.

    • Militaris Artifex

      brucenyc, You might want to tell that to the Germans who experienced the hyperinflation of the Weimar Republic. Further, nations have lifetimes and life cycles as well,and while they are generally longer than those of individuals, such longevity is not guaranteed, particularly when the leaders of the nation ignore economic realities.

      Keith Töpfer

  • I agree. But even more than that, it hurts the poor themselves to be on total dependency. It strips them of dignity and entraps them in idleness. If one can work for the same amount that one gets in a welfare check then one should work. It will lead to better prospects and provide dignity and a sense of worth.

    • FreemenRtrue

      Yes institutionalized charity is not charity at all – it is more kin to a tax – sometimes voluntary – but very much vulnerable to waste and abuse, such as massive salaries for government honchos and executives of ‘charitable’ organizations. Demand a form 990 from any charity that wants your money. See what they pay themselves before you give a dime.

    • Bro_Ed

      I’m glad you said that. Yes, society has a responsibility to the poor, but the poor have a responsibility also. A responsibility to work, learn, trade up, and improve their own lot through their own effort. The idea should be to provide the poor with help now to survive while simultaneously helping them find ways to help themselves.

      • Thanks. I am not a Libertarian.

  • ABBonnet

    @Fr. Pokorsky
    Most social justice promoters think they don’t need to know what the consequences of their actions to reshape society actually are; they just need to assert that they were done with good intentions. In Roman Catholic moral theology, the threefold nature of the moral act reassures them that even if their acts have unintended evil consequences, they are not sins attributable to them. Whether they are correct in this way of looking at their actions has been debated, but for the most part, the social justice promoters have carried the day by simply pleading “Something must be done to bring justice into situation X!! Can’t you hard-hearted Pharisees see we’re just trying to do good!”

    They generally refuse to look more deeply than the immediate consequence of their acts to reshape society. And their barbaric short-sightedness has caused more misery and injustice than it ever relieved. And all because they arrogate to themselves knowledge of the future they cannot have, and proclaim for themselves a moral height which only exists in their heads.

    As Fredrick Hayek said, in his Nobel Prize acceptance speech,

    “To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm. In the physical sciences there may be little objection to trying to do the impossible; one might even feel that one ought not to discourage the over-confident because their experiments may after all produce some new insights. But in the social field the erroneous belief that the exercise of some power would have beneficial consequences is likely to lead to a new power to coerce other men being conferred on some authority. Even if such power is not in itself bad, its exercise is likely to impede the functioning of those spontaneous ordering forces by which, without understanding them, man is in fact so largely assisted in the pursuit of his aims.”

    The evils of unintended consequences lie at every turn of the path of these social justice promoters. Will they pay for their sins?

    • FreemenRtrue

      excellent – Hayek, the brilliant, explains that they have no idea really, what they are doing.

      • It is not that hard to figure out that if you and I give Tom $100 our actions are quite less expensive than creating a state administration to give Tom $100. Our lack of solidarity and true Catholic action created the opportunity for the left to “come and help” and pay themselves with power and money for “doing the poor a favor.” The best remedy for Liberalism (of the Left and Right) is a healthy Christian society where we have PERSONAL concern for the poor. Writing a check once a month is NOT personal involvement. We have to get close to our poor smelly brethren. Our salvation depends on that, and that alone. I am not making this up.

  • Walter

    The debt burden is still manageable and a lot of the recent increase is due to Great Recession. Economists still debate whether the increase in debt prevented another Great Depression. If so, it was worth it.

    There is indeed a structural debt problem looming and it will hit in about 10 years. But it’s not from welfare, tax rates, defense spending, bridges to nowhere or interest expense. It’s not about what amorphous government and lobbyists do.

    The real issue that will eventually make debt unsustainable are ones that this crowd probably does not want to hear: entitlements. In partciular, Social Security and Medicare spending are demographically unsustainable. The current generation of beneficiaries has lived longer than the programs originally anticipated and have taken out additional benefits added to the programs without paying for them. As a result, current beneficiaries (62+) will pull out multiples of what they contributed, and working families who support the generous benefits of today’s retirees will probably never pull out what they contributed.

    Time to stop kicking the can down the road.

    • FreemenRtrue

      If I could have opted out of SS and put 13% of my compensation into a retirement account I’d have no need of a SS pension. LBJ and the Demoncrats raided SS funds and put phony 2% vouchers in place of them. The debt burden is not manageable and cannot be repaid even at miniscule rates without a massive increase in taxation and confiscation of private property. The Demoncrats are now proposing to add illegal aliens to SS benefits. I guess that will help. Medicare was never properly funded but as a government run healthcare program it serves as a shining example of why the government should stay out of healthcare except for the destitute.

  • ericdenman

    Father, Your point is right on the money…so to speak. Preaching fiscal irresponsibility in the name of noble sounding social justice is still condoning fiscal irresponsibility. The only one qualified to mete out social justice is Almighty God. Through charity and a productive economy, we humans should do what we can to ameliorate the suffering of the less fortunate and leave that grander judgment of social justice to God.

  • “But inflation is often called “the cruelest tax,” because it affects poor people more than rich people. Could this the reason very wealthy people like George Soros, Bill Gates, and Warren Buffett support big-spending politicians?”

    The inflation tax allows Soros, Gates, Buffet, and their pawns in government to seem like good guys while actually amassing more and more wealth to themselves at the expense of not only those poorer than themselves (who isn’t?) – but at the expense of the very poorest.

    Did you know that Warren Buffett owns bison? I’ve seen his herds in the Dakotas. Why? Because food doesn’t lose value when money does. These folks aren’t stupid. And the inflation/spending is being driven precisely for these reasons. While our government is owned, lock, stock, and barrel by a few oligarchs pandering to people who want freebies and good feelings, this will continue to be the result.

  • Paul Vander Voort

    Well said, over spending is like drinking too much. If you don’t stop drinking you’ll never get a hang over. Trouble is you’ll end up an alcoholic and who’s going to keep buying you drinks once your broke. You can pay now or you can pay later, but eventually you’ll pay and the longer you wait the worse it’ll be.

  • Elijah fan

    Google best countries for elderly…we’re not there…Scandinavia is but maybe because their defense budget takes advantage of ours.
    But the family example doesn’t include the family having billionaires and millionaires it could tax better….who somehow are working less than a coal miner but being compensated astronomically more than a coal miner. We have failing ceos who get paid millions as they resign. We have a weird imbalance problem between work and pay. Steve Cohen whose hedge fund was recently restricted for honesty infractions by the government made a billion a year some years and has a private art museum in CT where he lives. You can say he works hard studying the market but If you think that hard is the same hard as mining at risk of disaster for low pay….well….hmmm. We have many people with private planes and several mansions while widows on social security lose a fourth of that ss check to property taxes just to keep their once middle class home which results in their not being able to afford crowns during tooth repair because medicare pays only part of crowns.

  • Militaris Artifex

    It is particularly encouraging to read an economically literate and cogent article addressing the irresponsible fiscal conduct of our nation written by a Catholic Priest. Thank you Father Pokorsky for this article.
    Pax et bonum,
    Keith Töpfer

  • Padre

    Thank you Fr Pokorsky! Merry Christmas and a Prosperous (and debt free) New Year!

  • christine

    Great article. It makes simple the complexities of numbers and trillions and overspending- even for ‘a good cause’. I would like to put in my 2 cents on the national debt as a social justice issue. (4th paragraph from the end). “It’s immoral for one generation to steal from another”. Agreed. But that is not the sole reason for the immorality of the national debt. It is in and of itself immoral to spend beyond your means-no? Whether or not the debt falls to the family, the investors, the taxpayers, or even if the overspender him(her)self repays the debt, it’s the overspending that is immoral. Making restitution or repayment does not erase or negate the bad deed.