Monday, December 2, 2013

Greg Mankiw Answers Pope Francis

Last week Pope Francis offered these views of economic policy:

Some 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 naive trust in the goodness of those wielding economic power and in the sacra­lized workings of the prevailing economic system.
Harvard economics professor and former Chairman of the Council of Economic Advisers, Greg Mankiw replied:

First, throughout history, free-market capitalism has been a great driver of economic growth, and as my colleague Ben Friedman has written, economic growth has been a great driver of a more moral society.

Second, "trickle-down" is not a theory but a pejorative used by those on the left to describe a viewpoint they oppose.  It is equivalent to those on the right referring to the "soak-the-rich" theories of the left.  It is sad to see the pope using a pejorative, rather than encouraging an open-minded discussion of opposing perspectives.

Third, as far as I know, the pope did not address the tax-exempt status of the church.  I would be eager to hear his views on that issue. Maybe he thinks the tax benefits the church receives do some good when they trickle down.


n.n said...

In principle, there is an optimal distribution. In practice, trickle-down wealth and trickle-up poverty concentrate capital and control with a select minority, by chance (i.e. evolutionary) and premeditation (i.e., design), respectively. Neither is capable of producing an optimal system in the real world.

The intelligent design theory has a record of producing gross misalignments of social, economic, etc. development. Human beings simply lack sufficient awareness in order to design, let alone implement, massively-scaled, stable systems. The recurring lesson of history is that we should refrain from pretenses of god-like omniscience.

The principles which should concern us are: individual dignity, intrinsic value, and corruption. The latter is the function of unbridled egos and limited and finitely available resources. It is also sponsored by promises to fulfill dreams of instant or immediate gratification.

Anyway, we should respect each other. We should respect life from conception to death. We should avoid practices and policies which sponsor corruption. We should seek solutions through voluntary exploitation: economic development and charitable works.

Leo G said...

As an old Jew once said, aboot 2,000 years ago - there will always be poor in the world!

Unknown said...

I'm not so sure that we have tried a Free-market. We have perhaps a more free market than most, but we are not free.

Those with wealth and influence spend a lot of time eliminating competition with excessive regulations. The net result is that well crafted rules help the rich stay rich, and the poor stay poor.

Unknown said...

Supporting my statement above are these two comments my men who have started successful businesses in the past:

Fedex Founder Frederick Smith: "Frederick Smith, founder of FedEx, is definitely not the first major business leader to attest to how much more difficult it is to get new companies off of the ground today, and I shudder to think of all the would-be businesses (and would-be jobs!) that would have had a much better shot out of the starting gate if not for our woefully stagnant economy and the ever-growing costs of regulatory compliance. As Mr. Smith notes, after he founded his company in 1971, a transportation-related regulatory rollback was what allowed his business to grow and thrive, and the regulatory environment today is nothing short of prohibitive."

Home Depot co-founder Ken Langone: "it would be a “stone cold certainty that Home Depot would not have gotten off the ground if it was started today."

Anonymous said...

So an economist and a theologian walk into a bar...

Nothing good coming out of this conversation.