Wednesday, March 9, 2011

Final Thoughts Regarding Thomas Sowell's Book

Sowell’s book is a depressing reminder that secular, or religious crusades for social justice are a poor substitute for the Catholic notion of common good, which includes material goods along with those of a social, cultural and spiritual nature.  His work highlights a paradox: that the market is ultimately a surer safeguard of the common good than government action predicated on the basis of a presumed solidarity with the oppressed, which pays no heed to proper limits.   In Catholic Social Doctrine, the government's exercise of power to regulate and direct economic activity towards the common good must be tempered by the principle of subsidiarity, which requires that a body of higher order (e.g., Congress, HUD, Fannie Mae, The Department of Justice) must not arrogate to itself the function of a body of a lesser order (e.g., lenders, credit officers).  Human initiative, ingenuity and creativity are thereby safeguarded by the limiting principle.  They are perverted without it.  In the run up to the financial crisis, the state mistook its principal role of governing economic and business arrangements to accord with the dictates of distributive justice by badly overstepping its bounds.  Politicians and their appointees have no special expertise with respect to lending, or determining its appropriate criteria and conditions; they grossly overstepped their bounds by micromanaging and coercing lending decisions.  The consequences were near financial ruin, and a radical adjustment in the relationship between government and business, even further away from the limiting dictates of subsidiarity.

Distributive justice is not served by crude government policies awarding benefits to one class of people at the expense of others merely by virtue of their not having the wherewithal to purchase a home on their own.  While housing is a dire need that often is not endowed with purchasing power, and while efforts to help people find housing may be due simply by reason of human dignity, enabling people in need to purchase homes they cannot afford, and do not have the habits to take care of, does not help them make a contribution to the common good.  All were disserved when they abandoned their homes in difficult circumstances, leaving others (e.g., taxpayers, lenders, investors) to bear the burden of government’s social experiment.  No economic system, or society can work that way, as it will cease to produce the resources at the margin that politicians are so eager to redistribute according to their ideological lights.

Centesimus Annus, section 48 is an important text for consideration of these themes.

The State has the further right to intervene when particular monopolies create delays or obstacles to development. In addition to the tasks of harmonizing and guiding development, in exceptional circumstances the State can also exercise a substitute function, when social sectors or business systems are too weak or are just getting under way, and are not equal to the task at hand. Such supplementary interventions, which are justified by urgent reasons touching the common good, must be as brief as possible, so as to avoid removing permanently from society and business systems the functions which are properly theirs, and so as to avoid enlarging excessively the sphere of state intervention to the detriment of both economic and civil freedom.

FDR’s Fannie Mae is the first “supplementary intervention” that comes to Noman's mind.  Created in the 1930s, it is still pursuing its “affordable housing” mission with noxious consequences.  In the 1990s, the Clinton Administration seized upon contentious studies that supported what it already believed: that lending decisions were made on the basis of racism, not sound business reasons.  It did not want to consider the possibility that, all things considered, Asian borrowers were simply better lending risks than white borrowers, who in turn were better risks than black and Hispanic borrowers.  Nor did it care that vast majorities of all borrowers, across race, received loans.  It acted in a heavy- handed and relatively permanent manner to appropriate functions that properly belonged to business.  It enlarged the “sphere of state intervention to the detriment of both economic and civil freedom.”  The results were the Great Recession, and the financial crisis.

Pope John Paul II continues:

However, excesses and abuses, especially in recent years, have provoked very harsh criticisms of the Welfare State, dubbed the "Social Assistance State." Malfunctions and defects in the Social Assistance State are the result of an inadequate understanding of the tasks proper to the State. Here again the principle of subsidiarity must be respected: a community of a higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need and help to coordinate its activity with the activities of the rest of society, always with a view to the common good.

The US government, especially when under the sway of the Democratic Party, manifests a similarly “inadequate understanding of the tasks proper to the State.” The principle of subsidiarity safeguards the existence of intermediate associations—societies intermediate to the individual and the state (e.g., corporations, banks)—permitting them to fulfill their mission and enjoy their proper sphere of autonomy.  Unless the freedom of these intermediate associations is respected, the common good cannot be administered properly.  Closer to home, the Obama Administration’s corporatist management of vast sectors of the American economy would seem to fail the test.

In section 13 of Centesimus Annus, John Paul II discusses intermediate associations, along with the human nature that gives them life and meaning:

[T]he social nature of man is not completely fulfilled in the State, but is realized in various intermediary groups, beginning with the family and including economic, social, political and cultural groups which stem from human nature itself and have their own autonomy, always with a view to the common good. This is what I have called the "subjectivity" of society, which, together with the subjectivity of the individual, was canceled out by "Real Socialism.”

Avoiding comparisons between contemporary American politics and “Real Socialism,” the point stands that government encroachments on the autonomy of economic, social and cultural groups (always with a view to the common good) disserves the person.  Sowell’s analysis indicates that mistakes of a monumental nature were made, and continue to be made, and provides reasons for Catholics to do something about it.  This gives a new twist to a venerable term: Catholic action.

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