Pontiff-icating on the Free-Market System: A New Freakonomics Radio Podcast
This week’s episode of Freakonomics Radio takes a look at Pope Francis’s critique of the free-market system in “Evangelii Gaudium” (“The Joy of the Gospel”), his first apostolic exhortation. (You can subscribe to the podcast at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript, which includes credits for the music you’ll hear in the episode.)
The pontiff’s 224-page document covers a wide range of topics, but a small sub-section discussing “some challenges of today’s world” has captured the most attention. Using fiery language, Pope Francis condemns a global economy that “kills,” promotes inequality, and allows “the powerful [to] feed upon the powerless.” (Rush Limbaugh argued that this sounds like “pure Marxism.”) Here is a sample passage of “Evangelii Gaudium”:
“[S]ome 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. … One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! … While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules.
Most papal documents tend to be pored over primarily by the Catholic faithful, but this one has opened the door for a larger secular question: what is the role of markets in causing — or alleviating — human suffering?
To answer this question, Stephen Dubner turns to Jeffrey Sachs, a longtime advocate for both the market system and the poor. Before bumping elbows with the likes of Bono and Angelina Jolie in the fight against poverty, Sachs was a very young tenured economics professor at Harvard, a globe-trotting market fixer and reformer, and an economic adviser to Pope John Paul II; he continues to have a working relationship with the Vatican, and has met Pope Francis. Sachs is currently the director of the Earth Institute at Columbia University and a special adviser to U.N. Secretary General Ban Ki-moon on the Millennium Development Goals. As you’ll hear in the podcast, Sachs doesn’t always sound like an economist when he talks about how the economy should work:
SACHS: First let me say I am a believer in a market economy … and I would imagine Pope Francis, too, is a believer in a market economy, but what the Church has taught … is the idea that an economy needs a moral framework. This is a very, very basic idea that we have mostly discarded but that I believe in.
We also hear from Notre Dame economics professor Joseph Kaboski, a devout Catholic and president of CREDO, the Catholic Research Economists Discussion Organization. Kaboski says that the Pope makes important points in “Evangelii Gaudium,” but stresses that markets are crucial for eliminating poverty:
KABOSKI: The pope has a point on a number of fronts. And you know, markets aren’t perfect, and ethics are important. I think that’s one of the things he’s trying to say. … But on the other hand, we’ve never seen an example of any country that has escaped extreme poverty because of foreign aid or NGOs. … More people have escaped extreme poverty in the past 25 years in part through the growth of China and India than in any period of human history. And all of these miracle countries — “miracle” in the economic sense, China, South Korea, Taiwan, Hong Kong, Singapore, Chile down in Latin America — they’ve all grown through, high levels of trade, market economies. And that’s important.
Not long ago, Dubner moderated a discussion with Richard Thaler and Dean Karlan about how to fight poverty with evidence, and this is an expansion — philosophically and in scope — of that conversation. With more than 1 billion people living in extreme poverty, and Pope Francis just named Time‘s Person of the Year, it is both a timeless and a timely subject.