Thursday, July 23, 2015

My response to "Francis excoriates global capitalism"

I submitted this to the San Antonio Express-News but it will probably not be printed.
"I was surprised and disappointed to read the pope's unrealistic and inflammatory rhetoric about capitalism ("Francis excoriates global capitalism," July 12).

For example, he compares the excesses of global capitalism to the “dung of the devil.” The excesses of anything are never good. The pope does not seem to be interested in the excesses of socialism, either.

My first concern is that the article, being a shorter version of one in The New York Times, left out a quote from Rev. Robert A. Sirico, president of the Acton Institute for the Study of Religion and Liberty.  

Sirico strongly disagrees with the pope's message. San Antonio readers need to know that not all religious leaders share Pope Francis's views.

We can't examine capitalism without looking at the alternatives. We can become more market oriented or less, having the government make more decisions about resource allocation and who gets what through taxation, regulation and spending programs.

In many ways the pope either ignores or is unaware of what capitalism does well.

According to the book “The Economics of Macro Issues,” The poorest 10% of the population in the most capitalist countries have incomes about nine times higher than in the least capitalist countries.

Hundreds of millions of people have been lifted out of extreme poverty in the last few decades in China and India as they came to rely more on markets and less on government planning.

George Mason University economics professor Tyler Cowen observed in The New York Times last year that global inequality fell in the last 20 years, partly due to improvements in China and India. International trade played a big role, too.

Perhaps the pope's views are colored by his home country of Argentina. Things could be better there. But is it the fault of too much capitalism?

Maybe not. Argentina ranks 169th out of 178 countries in the Heritage Foundation's Index of Economic Freedom, which takes into account the rule of law, limited government, regulatory efficiency and open markets.

Argentina's rank has also been slipping in recent years. They have high unemployment (7.3%) and high inflation (10.6%). Its per capita GDP is only about $18,000, not even half of the U.S. level.

The pope might benefit from reading the work of Peruvian economist Hernando de Soto. His studies have shown that many third world governments make it very difficult for the poor to start businesses or register property ownership. This prevents them from fully participating in markets.

The pope is also concerned with what capitalism does to the environment. But capitalism pushes businesses in ways that sometimes help the environment.

Cars may have brought us smog. But city streets are no longer covered in horse manure like in the nineteenth century.

Using petroleum means we no longer hunt whales for oil. Fracking has increased natural gas production while we use less coal. This reduces global warming.

This all comes from the “logic of markets,” which the pope distrusts. Businesses constantly develop better technologies that use resources more efficiently. That leads to less pollution.

That won't be a cure all for the environment. But it is an aspect the pope ignores.

The pope should acknowledge that, in the U.S., for example, we have many environmental regulations and an Environmental Protection Agency. We have recycling programs. There is also the Corporate Average Fuel Economy (CAFE) standards that mandate each car maker achieve so many miles per gallon.

So things are not as one sided as the pope indicates. Let's work for better outcomes without demonizing capitalism."

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