Tag Archives: Samuel Gregg

For God and Profit

Samuel Gregg
Crossroads Publishing, 2016
300 pages, hardcover $29.95

Christianity has always had a difficult relationship with the world of money. Through developing sophisticated understandings of the wealth-creating capacity of capital, Christian theologians, philosophers and financiers exerted influence upon the development of the international financial systems that revolutionized the way the world uses capital.

Subtitled How Banking and Finance Can Serve the Common Good, this book underscores the different ways in which Christians have helped to develop the financial systems that have helped millions escape poverty. Gregg illustrates how Christian faith and reason can shape financial practices and banking institutions in ways that restore integrity to our troubled financial systems.

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Business and the option for the poor

SAM GREGG writes that lifting people out of poverty — and not just material poverty but also moral and spiritual poverty — does not necessarily mean that the most effective action is to implement yet another welfare program. There is no reason to assume that the preferential option for the poor is somehow a preferential option for big government . . .

Sam Gregg

Sam Gregg

Like the term “social justice,” the phrase “preferential option for the poor” is part of the Catholic lexicon. Some use the phrase to insist on interventionist economic policies. Catholic social teaching, however, leads to more nuanced conclusions — economically and theologically.

The term “option for the poor” gained traction in Catholic thought in the late 1960s and ’70s. The term had influenced various forms of liberation theology throughout that period, but such claims tend to downplay the fact that the Church has always maintained a special outreach to the poor.

Old Testament prophets spoke clearly against the oppression of the poor, not to mention Christ’s statements that he himself may be recognized in the poor and in those who suffer persecution. Moreover, love for the poor and marginalized was put into practice from the Church’s genesis. In the Roman Empire, for example, the pagan Greeks and Romans were astonished at Catholics’ willingness to aid the sick and disabled, the elderly and abandoned whether they were Christians or not.

The Catholic understanding of poverty, however, doesn’t make the mistake of imagining that poverty can be reduced to issues of material deprivation. In the 1980s, in the midst of the Church’s sharpest critique of liberation theology influenced by Marxism, the Congregation for the Doctrine of the Faith (CDF) reminded Catholics that poverty had a rather more expansive meaning in Christian belief, thought and action.

From Christianity’s standpoint, everyone is poor inasmuch that all of us are deeply inadequate in the face of God’s justice and mercy. Why else would Christ need to come into the world to save us from our sins and flaws? Indeed the Christian embrace of poverty involves everyone exercising detachment from material wealth: “It is this sort of poverty, made up of detachment, trust in God, sobriety and a readiness to share, that Jesus declared blessed” (Libertatis Conscientia, #67)

What does living out the option for the poor mean in practice? We must engage in works of charity — those activities that often address specific dimensions of poverty in ways that no state program ever could. And this means giving of our time, energy, and human and monetary capital in ways that bring Christ’s light into some of the darkest places on earth.

Yet this does not mean that Catholics are required to give something to everything, or even that Catholics must give away everything they own. As Fr. James Schall, SJ, writes, “If we take all the existing world wealth and simply distribute it, what would happen? It would quickly disappear; all would be poor.” Put another way, living out the option for the poor may well involve those people with a talent for creating wealth doing precisely that.

The option for the poor, however, does not rule out any form of government assistance to those in need. Yet lifting people out of poverty — and not just material poverty but also moral and spiritual poverty — does not necessarily mean that the most effective action is to implement yet another welfare program. There is no reason to assume that the preferential option for the poor is somehow a preferential option for big government. Often, being an entrepreneur and starting a business which brings jobs, wages, and opportunities to places where they did not hitherto exist is a greater exercise of love for the poor (and usually far more economically effective) than another government welfare initiative.

The Catholic understanding of the option for the poor also means recognizing that those who suffer from material deprivation are human beings graced with reason and free will. Hence, like everyone else, they are  also capable of engaging in some form of integral human flourishing. Sometimes a welfare program or new regulation is not the best way to help them — especially when such measures actually impede or discourage people from using their initiative and/or choosing to work.

Though we rarely think about it this way, deregulation is often a concrete way to promote the option for the poor. Living out the option for those in need could be manifested, for example, in working to remove tariffs that block the poor from global markets, or which encourage people to stay in U.S. industries that are becoming uncompetitive in a global economy. It might also involve making the process of creating a business faster, or providing more transparent, less bureaucratically burdensome ways for people to migrate to countries where there are more opportunities.

There are many ways of living out the option for the poor, whatever our vocation in life. With some of the creativity that’s essential for success of business, Catholics can indeed help bring liberty to many of those burdened by poverty.

DR. SAMUEL GREGG is research director at the Acton Institute and the author, most recently, of Becoming Europe and Tea Party Catholic.

Tea Party Catholic

Sam Gregg’s new book details how Catholics are embracing conservative economics . . .

GreggTea Party Catholic
Samuel Gregg
Crossroads, 2013
272 pages, $24.95 paperback

Subtitled The Catholic Case for Limited Government, a Free Economy, and Human Flourishing, Gregg’s book shows how, over the past 50 years, increasing numbers of U.S. Catholics have abandoned the economic positions associated with Roosevelt’s New Deal and chosen to embrace the principles of economic freedom and limited government.

These ideas, upheld by Reagan and the Tea Party, are also deeply rooted in the American founding. Gregg argues that limited-government Catholics can help transform the wider movement to reground the U.S. upon the best insights of the American Experiment — and thereby save that Experiment itself.

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Deficits, debt and self-deception

Dr. Samuel Gregg writes that most of us have become dazed by America’s upward spiral of debt. Societies that embrace excessive indebtedness as a way of life eventually begin to deceive themselves. Before the 2008 crash, for example, banks leveraged their assets at ratios of 40-to-1 on the hubristic basis that ‘the models never fail’ . . .

Dr. Sam Gregg

Dr. Sam Gregg

It passed almost unnoticed, but in late July the Obama administration raised the federal government’s budget deficit forecast for fiscal year 2011 to $1.4 trillion. That’s up from February’s forecast of $1.267 trillion. In July alone, the government’s deficit was $165 billion, of which $20 billion was for interest payments on debt.

The long-term outlook is even worse. The U.S. government is now borrowing approximately 41 cents of every dollar it spends. It’s also predicting additional borrowing of $8.5 trillion until 2020. If that eventuates, America’s national debt would exceed 77% of its annual economic output.

At some point, most of us become dazed by all these numbers that track America’s upward spiral of debt. This numbness is only exacerbated by the fact that governments’ debt-excesses in most developed countries have been matched and even surpassed by household and financial-sector debt.

In Spain, for instance, household debt rose from 69% of disposable income in 2000 to 130% in 2008. Britain was worse, with the ratio rising from 105% to 160% over the same period. Average American household debt increased from $27,000 in 2001 to $44,000 today.

The economic effects of servicing all this debt (let alone paying down the principle) are not hard to grasp. For many households, it means either bankruptcy or severe curtailing of lifestyles so that expectations match people’s actual incomes. For others, it translates into less access to credit, even for those with good credit records or well-conceived business plans that need only sufficient capitalization to succeed. The cost of servicing government debt also reduces the amount of private sector capital available for investment. This means slower growth, which further impedes our ability to shrink government deficits.

Then there is the increased possibility that governments will resort to other less-conventional means of deficit-reduction. As Adam Smith observed long ago in his book The Wealth of Nations (1776) “when national debts have once been accumulated to a certain degree, there is [hardly] a single instance of their having been fairly and completely paid.” Smith went on to explain that “the liberation of the public revenue, if it has ever been brought about at all, has always been brought about by a bankruptcy; sometimes by an avowed one, but always by a real one, though frequently by a pretended payment.”

By “pretended payment,” Smith meant governments would seek to escape their debts by inflating the currency. In this way, governments could legally deny creditors what they are due in real terms, while simultaneously avoiding formal bankruptcy.

Of course, whenever a government resorts to inflation to diminish its debts, it has, for all intents and purposes, effectively acknowledged its insolvency. But such actions, as Smith noted, also constitute gross injustices against numerous innocents. Those who have been frugal and industrious suddenly find the value of their savings and capital arbitrarily reduced because of others’ financial irresponsibility. This also reduces the incentives for people to save and invest. For why should anyone bother to do so if they cannot be reasonably sure that the worth of their savings will not be suddenly diluted by government fiat?

Here we begin to see how excessive debt can have deleterious moral effects upon the economic culture. Another such effect is a breakdown in what Pope Benedict XVI has called “intergenerational solidarity” — the responsibilities that each generation owes to those who have preceded them and to those who will follow them in the future.

Increasing numbers of people below the age of 30 are aware that their long-term financial security has been undermined by the excessive personal, corporate and government debt incurred by previous generations. It is much harder to honor your father and mother when you think they have recklessly squandered your financial future.

A second cultural consequence of excessive debt is an erosion of trust. Just as wealth-creation and sound credit arrangements are ultimately built upon substantial reserves of trust, so too does a widespread inability to repay debts corrode a society’s reservoirs of trust and subsequent wealth-creation capacities.

But perhaps most worryingly, societies that embrace excessive indebtedness as a way of life eventually begin to deceive themselves. Before the 2008 crash, for example, this manifested itself in banks’ leveraging their assets at ratios of 40-to-1 on the hubristic basis that “the models never fail.” In a post-crisis world, this self-deception appears in many continental European banks’ refusal to allow a full vetting of their balance sheets, presumably because of the ramifications of revealing just how much bad debt they’re holding.

The truth, as the Gospel of John reminds us, sets us free. Part of that liberation involves a ruthless self-reckoning and acknowledgment of our errors. The experience is rarely pleasant. Sometimes it can be positively dispiriting as we come face-to-face with our trespasses against the moral truth known by faith and reason — and our failures to fulfill our concrete responsibilities to God and our fellow human beings.

The alternative, however, is to continue living the lie that our debt problems — personal, corporate, government — will somehow go away without substantial changes of attitudes, actions, expectations and priorities on our part. And that, surely, is no alternative at all.

Dr. Samuel Gregg is the Acton Institute’s research director. He has authored several books including “On Ordered Liberty,” and his prize-winning “The Commercial Society.” His latest, “Wilhelm Röpke’s Political Economy,” was published earlier this year.