Who Understands The Markets Better, The Pope Or His Critics?

One of the recurring themes about Pope Francis is that the criticisms he makes about Capitalism and markets are misplaced because he does not understand them. He does not understand, much less acknowledge, that Capitalism is the path out of poverty into prosperity. He should be praising Capitalism for the unequalled success it has had in raising living standards around the world rather than criticize what he sees as its excesses and shortcomings. The Pope, however, understands markets and the outcomes of those markets. It is his critics who do not understand them or who purposefully gloss over the negatives. They misunderstand or misstate the consequences of markets and the outcomes they produce. The Pope acknowledges what they will not, that one of the outcomes of Capitalism is that not everyone benefits and that there will always be those at the bottom of the income scale. It is inherent in how a Capitalist economy runs. The Pope’s critics do not see or ignore these poor. The critics say they are poor of their own doing and not as a result of the workings of the market. If only they tried harder, learned more, invested in their future then they too could move up into the higher incomes. The critics of the Pope would have us believe that Capitalism and markets will lift all boats, that everyone will prosper from them. The Pope’s critics seem to believe these poor just appear as if by magic, while the rich are the well-deserving beneficiaries of the market’s largesse. It is a beautiful, optimistic story and if we only fully embrace Capitalism then all will be well. It is a Lake Woebegone world where everyone can be above average. But markets do not work that way. While this is true enough individually, it ignores that there will always be low paying jobs and those for whom working is very difficult. Some prosper and others do not. Not everyone can do well enough to leave the bottom; there is a distribution of outcomes that are produced as a natural course from the operations of a market economy. The US has had a Capitalist economy for more than 200 years, how long does it take for those at the bottom to prosper? Who do they think will do all the low paying jobs? The Pope understands this – the poor will always be with us – and this is the genesis of his criticisms. That and the attitudes of those who have prospered from Capitalism. He sees that many of the rich disdain the less fortunate, blame them for their poverty, and accuse them of being leeches on the economy. The Pope sees that many of the rich are proud of their wealth and feel God gave it to them because of their virtue. What he does not see is humility, generosity, or empathy. Granted, the Pope should acknowledge the importance of Capitalism to the fight against poverty, just as his critics should admit the role of the markets in producing poor people. We can give the Pope more of a pass on this matter, his focus and concern is on how to help those in need today and not let them suffer until some future nirvana. His critics, however, get no such pass. Their argument is misinformed or misleading and serves to justify their inaction. They look only at the parts that tell their happy story and ignore the rest. How can you work to solve a problem when you only acknowledge half the issue? A policy that ignores a significant part of the problem cannot succeed. To deny the way that markets work is to bury one’s head in the sand when a clear view of reality is needed. Why do they deny the market? To be generous, they want to focus on the optimistic, the success so far of Capitalism in raising billions from poverty and its ability to do even more. Less generously, they just do not understand how markets work and do not realize that the poor are a function of the markets and not something that just appears. Least generously, the critics are trying to distract attention from the inequality and put the blame on the poor for being poor. Helping the poor in fact is akin to keeping them poor and dependent. It is a convenient way to absolve themselves of responsibility to them or taking action to help the poor and reinforces their belief in how God has blessed them for their virtue. The Pope begs to differ. Capitalism is not a religion and markets do not perform miracles.