Moral Economics 101

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According to one admittedly unscientific survey, 37% of Occupy Wall Street protesters believe that capitalism is inherently immoral — presumably because they think it encourages Public Enemy No. 1, greed. Evidence shows that a more free economy (reasonably regulated) can actually alleviate poverty… but it can only do that in a moral society. Fixing the American economy in the long run — helping the poor, decreasing unemployment, repaying household debt, cutting the deficit  — will take more than a beefed-up version of Dodd-Frank or a tax-cutting, regulation-killing Republican administration. It will take several key virtues.

1. Honesty. Politicians, business owners, bankers, policemen, journalists, lawyers, and judges must seek the truth, tell the truth, and act according to the truth. Otherwise the trust which underlies every market transaction and every market activity will be eroded until society devolves into chaos. Why buy from a business if you think the owner is lying to you? Why give a start-up company capital if you suspect the entrepreneur is dishonest? Why open a store if the police turn a blind eye to shop-lifting? Or in the public realm: Why pay taxes if you think politicians will keep the money for themselves? Why contribute to public welfare if you know the system is ? Why take a criminal to court if the judge can be bribed? It is no coincidence that public-sector corruption goes hand-in-hand with terrible poverty. Without honesty, there will be no prosperity.

2. Charity. “The poor you will always have with you,” right? Even the freest and richest society contains poor and disadvantaged members. We can certainly debate how best to help them — keeping in mind that even the most well-intended efforts can have negative consequences — but the obligation remains. If you’re young and broke, find somewhere to volunteer!

3. Prudence. I pity the OWS protesters whose student-loan debt amounts to tens or hundreds of thousands of dollars. But they could have chosen a more practical major, worked for a year or two before enrolling in college, attended a community college before transferring to a four-year university, selected a cheaper college in the first place, etc. Similar unwise decisions underlie the housing crisis; it’s a mix of problems, but some homebuyers bought bigger houses than they could afford.

So spending money unwisely is bad not only for the spender but also for  the welfare system, heartless as that may sound. Same thing with spending time: teenagers who drop out of high school are far more likely to face joblessness, poverty, homelessness, and a host of other problems. Without blaming them entirely for their circumstances, we must strongly encourage them to graduate from high school and acquire the skills necessary to holding down a job. Imprudent decisions contribute to poverty.

4. Chastity. Don’t have kids until you’re married. That’s another way of saying “don’t have sex until you’re married,” not only because contraception is wrong but also because it frequently fails the typical user. (Abortion won’t improve the situation, either.) Growing up without a father makes children far more likely to be poor, abuse drugs and alcohol, suffer physical and mental health problems, and commit crimes. All these factors affect children for their entire lives and virtually set them up for failure.

On a cheerier note, getting married will benefit YOU (you’ll be wealthier and healthier, both and mentally) as well as your kids. (I hardly need add that other offenses against chastity — pornography, adultery, divorce — are also bad for everyone.) Where, besides the family, will kids learn virtues like the ones I’ve described? Who will tell them to do homework, if not their parents? Who can comfort and encourage kids better than a mother? Who can better discipline an unruly son and teach a daughter self-respect than a father? In addition to being “the domestic church” (the first to preach the Gospel to children), the family is “the domestic school,” the place where kids gain practical knowledge about how to live.

So next time you’re talking to someone about Occupy Wall Street, don’t just denounce greed. Bring up honesty, prudence, and chastity: these are as important as charity in the development of a just, flourishing economy.

Anna Williams

Anna Williams

Anna Williams is a junior fellow at First Things magazine, a former Collegiate Network fellow at USA TODAY, and a recent graduate of Hillsdale College.

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13 thoughts on “Moral Economics 101”

  1. Avatar

    I especially like point #3… I have the “minimum” amount of student loans that I borrowed from the government, and once I get a job, I plan on paying them off soon… but I also have a master’s degree in Chemistry. Once I find a job in my field, those loans are on the fast track to being gone.

    I think especially our generation has gotten stuck in the mindset of what’s best for me now or my very near future (or what do I want now), and don’t think about the consequences of those actions. Sure, you might have a chance of being more successful if you go to Harvard vs. another school, but if it puts you way more in debt, is it worth it? I hope that if I have children one day, I am able to teach them financial responsibility and smarts, as my parents passed on to me, because I come across so many people my age that are one day going to wake up and realize that they have a huge amount of debt that they can’t pay off.

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    The sixty four thousand pound elephant in the room consists in the eerie silence across the boards concerning the infallibly taught anathematization of the Holy Catholic Church:

    “Serious suggestions have been made to us that communities in certain places, to the divine displeasure and injury of the neighbour, in violation of both divine and human law, approve of usury. By their statutes, sometimes confirmed by oath, they not only grant that usury may be demanded and paid, but deliberately compel debtors to pay it…….If indeed someone has fallen into the error of presuming to affirm pertinaciously that the practice of usury is not sinful, we decree that he is to be punished as a heretic; and we strictly enjoin on local ordinaries and inquisitors of heresy to proceed against those they find suspect of such error as they would against those suspected of heresy.”– Council of Vienna, Decree #29

    And what, exactly, is “usury”?

    “The nature of the sin called usury has its proper place and origin in a loan contract. This financial contract between consenting parties demands, by its very nature, that one return to another only as much as he has received. The sin rests on the fact that sometimes the creditor desires more than he has given. Therefore he contends some gain is owed him beyond that which he loaned, but any gain which exceeds the amount he gave is illicit and usurious.”– Pope Benedict XIV, “Vix Pervenit”


    The Church has anathematized, as an authentic act of Her extraordinary magisterium, the taking of interest on loans.

    She has silently, without further magisterial pronouncements, ceased enforcing this teaching since the middle of the 19th century.

    And now She speaks not a syllable about this teaching, in the face of a catastrophic, global-usury systemic collapse.


  3. Avatar

    Liesl – Yeah, financial education is something most parents neglect (in my very limited experience). But it’s definitely vital to a sustainable economy and a strong household.

    Rick – Interesting point. To be honest, I am not nearly familiar enough with Church teaching and history to debate the subject. A couple things that may be of interest to you or others on the subject — the Catholic Encyclopedia entry on usury and an article in This Rock.

    Richard – I had a hard time choosing the order! The trait that underlies all these virtues is self-denial, I guess. And Americans have not exactly been famous for that these last few decades…

  4. Avatar

    Liesl–I’ll be paying off quite a few student loans myself, after five years of architecture school… but I should be able to get a job almost right away, provided the economy isn’t as trashy in five years as it is now.

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    First off, I think we can agree that the Catholic Encyclopedia and This Rock do not constitute categories of magisterial teaching. Second, I hope we can agree that no authoritative teaching of a valid ecumenical Council can be affected in the slightest way by an article in the catholic Encyclopedia or This Rock. Third, may I say that the truly grotesque “This Rock” piece asks you to believe that money has “changed its nature”. It is my sincere hope that you will understand that your intelligence has been insulted by the author of this piece. The very idea that money has somehow “changed its nature”, and become “fruitful”, is absurd. For proof, take a dollar bill out of your pocket and water and fertilize it. Check back in a week. Usury is one of those cases where a decision to abandon Catholic Truth *in practice* has resulted in circumstances under which we will have plenty of time to reflect on how foolish we have been to substitute the best thinking of neo-Catholic apologists for the heaven-protected magisterium of Jesus Christ’s Church.

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    Now if only it wasn’t expected that EVERYONE get a college education! Not everyone can be or will be (even with said degree) become a high-paid theoretical Physicist.

    Bring back the apprentice system. it will solve all our problems.

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    Ink – Architecture school sounds awesome! We need more great architecture. Best of luck bringing it back.

    Nathaniel – Yes, I’m with you on that! Given the current wage gap between college grads and everyone else, it would take some serious economic adjustment to make apprenticeships and non-college-related careers appealing. And it would require the conversion of educators and politicians from the everyone-must-go-to-college mantra. But it’s a mission worth pursuing.

    Rick – Yeah, I didn’t find the This Rock piece convincing either; I was just looking for how Catholics typically justify usury/interest. It is an odd development that a practice explicitly condemned in the magisterium became acceptable in practice… Not a reassuring precedent to those of us trusting the Church to hold the line on abortion, contraception, euthanasia, etc.

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    I think with #3 we need to be teaching two things 1) financial responsibility with loans and 2) that a college education should provide you with knowledge, life experience AND skills and so many students leave school with only the first two at best – no matter your major you need work skills to be viable on any job market. If you’re not going to get a degree in a skilled field whether it’s a technical school degree or a medical degree that opened ended degree “in English/Art History/Mathematics/Etc.” is only going to get you so far if you’re not going on to an advanced degree or developing employable skills while in school. So many people I went to school with believed you got the work skills once you landed that first job and then wondered why they weren’t immediately employable.

    Though I also think that we need to bring back the respect that blue and white collar work deserves so that the younger generations realize that “a college degree” isn’t necessary to have a good, stable, enjoyable life for yourself and your family.

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    Anna: The remarkable truth is that the Church will never fail to hold the line on Her teaching, in terms of its authentic proclamation in acts of the magisterium.

    She will never reverse Her teaching on abortion, or contraception, or euthanasia, or even usury.

    She may indeed cease to proclaim these teachings, but She will never reverse them.

    Heaven will not permit this.

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    Rick: I didn’t read the articles Anna suggested, but the point of interest is to keep pace with the rate of inflation. If there wasn’t at least 3% interest to keep pace with 3% inflation, it would be the creditor who would be swindled. When interest gets beyond that things get fuzzy. The problem of usury troubles me because depending on your definition of money it seems it could condemn any sort of rental.

    In regard to point #3 and the prudent education discussion. Read this:
    If someone were to ask me what they should go to college for, I would say go and study what you love. That’s what will make you happiest and that what the world needs. On the other hand, stand up and take responsibility for your decisions. It was your choice. Don’t blame me for your debt.

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    Elms: Your observation applies to extrinsic titles; that is, the 3% inflation would justly entitle the lender to a 3% extrinsic title. The problem is, this teaching was abandoned and interest was instead allowed as a matter of universal practice. A couple of points. First, neither the lender nor the borrower can know in advance what inflation will be, therefore the imposition of interest is still usury, since the lender will require the interest regardless of whether inflation goes up or down. Second, it is interest itself which *guarantees* inflation, since the usurer demands that which does not exist in repayment of the loan. This must of course be brought into existence, either in the form of productive wealth diverted into the pocket of the usurer, or else in the printing of fictitious currency adequate to satisfy the demand of the usurer that he be repaid that which does not exist.

    The charging of interest (as opposed to legitimate extrinsic titles) is, exactly, “rental” on money, and is a mortal sin, in addition to being the worst conceivable economic lunacy.

    We happen to live at a moment in history where this truth is about to be re-learned, to our very great sorrow, but to our ultimate edification.

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