Tag Archives: free market

In God We Trust: Morally Responsible Investing

George P. Schwartz, CFA
TAN Books, 266 pages

Socialism as an economic system has never worked, asserts George P. Schwartz, investment fund manager and founder of the Ave Maria Mutual Funds, which offer portfolios that respect pro-life and pro-family values. In addition to presenting a rousing endorsement of free-market capitalism, Schwartz describes how investors can reap the benefits of economic growth without backing morally objectionable enterprises — insurance firms that cover elective abortions, for example, or companies with ties to pornography or Planned Parenthood. Earning profit from principal does not require sacrificing principles, and Schwartz shows how this is not only possible, but also the right thing to do.

 

Order: Amazon

Of sharks and saints

My family is hooked on Shark Tank. On this show, self-made millionaires (“sharks”) meet aspiring inventors and entrepreneurs, analyze their products and business models, and decide whether or not to invest in their companies.

Lance Richey

Lance Richey

As the father of several teenagers, I hope the program teaches them about how new businesses are created — as well as the necessity of hard work and risk-taking for success in life. (Added bonus: It’s also addictively fun to watch.)

Some of the products featured are truly impressive and deserving of success: A radically improved sippy cup, a smartphone-operated lock that could revolutionize home and business security, a long-lasting and hygienic household sponge that cleans effectively without scratching surfaces. Products like these provide value and improve the quality of life for customers, showing the dynamic creativity of the free market at its best.

Shark-Tank2Other products? Well … not so much. A bacon-cooking alarm clock? Wooden bowties? A bicycle-powered smoothie blender? An automated sunscreen application booth? Edible tableware? Sadly, all these products were pitched on the show. I’m amazed that anyone thought these were good ideas. Even more amazing is that there seems to be little or no correlation between the usefulness of the products being pitched and their appeal to the sharks. No one asks whether these products will actually improve people’s lives. Instead, the only question asked is whether or not there is a market for them.

Some ideas seem to thrive off customers’ gullibility and impulsiveness, such as the Internet business offering customized (and poorly done) drawings of cats for anyone willing to pay $9.95. Yet one investor paid $25,000 for part-ownership of the company. Eventually, thanks to the publicity generated by the show, almost 19,000 customers made orders. Other than the owners and investors, who could have benefitted from this service?

Examples of such worthless products are legion. Plastic cups with built-in shot glasses on the bottom? (The perfect gift for the fledgling college dropout in your life.) Energy bars made from crickets? No thanks. Beer-flavored ice cream? I’d rather eat the cricket bars. But investors’ willingness to fund them seems almost limitless. Almost. (The beer-flavored ice cream failed to find any takers.)

shark-tankDesigner dog apparel? All-natural organic dog treats? Colored hairspray to brighten your pets? The closet capitalist in me feels a grudging respect for people clever enough to sell such ridiculous items. But the theologian in me has to ask: Are any of these things really necessary? Do they improve the quality of our lives (or, for that matter, those of our pets)? Jesus tells us that even dogs get the scraps from the master’s table, but he never said anything about a line of cake mixes for your pooch. In a world where untold millions go hungry, are such items even morally defensible?

Notably missing from Shark Tank and from our consumeristic culture in general, is the Catholic understanding of “the common good” — that is, the idea that ultimately products and services exist for the good of people, not the other way around. Instead, the show treats customers not as persons to be served but as consumers to be exploited, and the show considers the best product to be one that maximizes the seller’s profit rather than improving a customer’s life.

The free market can be a wonderful thing, allowing individuals with creativity and initiative to improve their own lives and those of others. But, as the Catholic tradition has always held, true freedom is freedom for the good, not just freedom from external control. Unless we are willing to subordinate the forces of the marketplace to a true vision of human flourishing, we will end up enslaving ourselves.

The failure of communism shows that totalitarian governments are incapable of replacing the marketplace in producing or distributing wealth. However, a mindless consumerism based solely on generating and satisfying material wants without reference to the dignity of individuals and the needs of society is hardly better. Indeed, as Pope Francis reminds us, in God’s eyes the two are not very different.

Shark Tank contestants always end their sales pitches with: “Who wants to make a deal?” As Catholics, we should instead ask: “What does it profit a man to gain the entire world if he loses his soul?” Perhaps there is a reason sharks are never mentioned in the Bible.

LANCE RICHEY is dean of the School of Liberal Arts and Sciences at the University of St. Francis in Fort Wayne, Ind

The free market & the Catholic faith

PAUL J. VOSS examines the Church’s relationship with the free market and business through four quotes from Church documents. He quotes from Pope Francis, Pope Benedict, Pope Leo XII and the Catechism of the Catholic Church. Voss writes that the Church should have an official Catechism of Business. Legates, he said, must to rise to the challenge . . .

Paul J. Voss

Paul J. Voss

The Catholic Church has not historically engaged intellectually with matters of business and economics. There is not, for example, an official Catholic “theology of business.”

The Church reasons that such activities largely fall outside the realm of faith and morals and thus, the judgment of the Church is limited in scope and comprehensiveness. I respectfully disagree. Conducting business necessarily involves morals and ethics — as well as a measure of faith. I submit, for your consideration, four discrete quotes on the topic. I ask readers to attempt to construct a unified argument presented by the Church (if such a unity can be found). The first is from Pope Leo XIII’s 1891 encyclical Rerum Novarum (On Capital and Labor).

“It is surely undeniable that, when a man engages in remunerative labor, the impelling reason and motive of his work is to obtain property, and thereafter to hold it as his very own.

“Thus, if he lives sparingly, saves money, and, for greater security, invests his savings in land, the land, in such case, is only his wages under another form; and so, consequently, a working man’s little estate thus purchased should be as completely at his full disposal as are those wages he receives for his labor. Socialists, therefore, by endeavoring to transfer the possessions of individuals to the community at large, strike at the interest of every wage earner, since they would deprive him of the liberty of disposing of his wages, and thereby of all the hope and possibility of increasing his resources and of bettering his condition in life” (#5).

The Catechism of the Catholic Church has little to say about specific matters of business and industry. However, this quote is insightful.

“The Church has rejected the totalitarian and atheistic ideologies associated in modern times with ‘communism’ or ‘socialism.’ She has likewise refused to accept, in the practice of ‘capitalism,’ individualism and the absolute primacy of the law of the marketplace over human labor.

“Regulating the economy solely by centralized planning perverts the basis of social bonds; regulating it solely by the law of the marketplace fails social justice, for ‘there are many human needs which cannot be satisfied by the market.’ Reasonable regulation of the marketplace and economic initiatives, in keeping with a just hierarchy of values and a view to the common good, is to be commended” CCC #2425.

The next quote comes from Pope Francis’ 2013 encyclical Evangelii Gaudium (The Joy of the Gospel).

“In this context [the disposable culture], some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting” #54.

The final (slightly edited) quote is from Cardinal Timothy Dolan (Wall Street Journal, May 22, 2014). “Yet the answer to problems with the free market is not to reject economic liberty in favor of government control. The Church has consistently rejected coercive systems of socialism and collectivism, because they violate inherent human rights to economic freedom and private property. When properly regulated, a free market can certainly foster greater productivity and prosperity. But, as [Pope Francis] continually emphasizes, the essential element is genuine human virtue.

“Business can be a noble vocation, so long as those engaged in it also serve the common good, acting with a sense of generosity in addition to self-interest.”

Each quote presents compelling and thought-provoking ideas. Yet how can the individual Catholic find a coherent argument — not to mention practical guidance — for conducting business from these various quotes?

Both The Vocation of a Business Leader (Pontifical Council for Justice and Peace, 2013) and A Catechism for Business (Catholic University of America, 2014) attempt to provide a framework, and they have added greatly to our understanding of just, ethical business practices. Yet more work remains. Certainly Legatus members will rise to the challenge of integrating theory and practice.

PAUL J. VOSS, PH.D., is president of Ethikos, a professional organization offering ethics training, and an associate professor of literature at Georgia State University.