Catholic Business

A Times of Malta article writes about the significance of Caritas in Veritate for the island of Malta, a country where the Roman Catholic faith has a strong influence on all aspects of life.

Goldman Sachs doing God's Work

In an interview with the UK Sunday Times, Goldman Sachs CEO Lloyd Blankfein, claimed that he is doing God's work.  An article on the AOL DailyFinance site questions this claim.  I was quoted in the latter article, saying,

"The question of whether the CEO of Goldman Sachs is doing God's work is at one level a very complex one," says Dr. Andrew Abela, chairman of the Department of Business & Economics at the Catholic University of America. Abela, who is working on a book, Catechism for Business, says, "The vast size of the bank and its extensive influence on markets and on government policy, means that it is operating at all times in a moral minefield."

Unfortunately the rest of my quote didn't make it in:

"But at another level, the issue is a simple one: If you want to serve God in business then you need to have the intention to do so, and you need to act in ways that serve society. If your intention is instead to make lots of money, and you happen to do some social good along the way, there is not much honor or spiritual benefit there.  Similarly, if you intend to serve God and society, but the kinds of things you do actually harm people (government regulation often falls into this trap) then neither God nor society are served.  You need both the right intention and the right actions."

Finance and ethics...

Pope Benedict, in Caritas in Veritate, wrote: 

What should be avoided is a speculative use of financial resources that yields to the temptation of seeking only short-term profit, without regard for the long-term sustainability of the enterprise, its benefit to the real economy and attention to the advancement, in suitable and appropriate ways, of further economic initiatives in countries in need of development (#40).

Financiers must rediscover the genuinely ethical foundation of their activity, so as not to abuse the sophisticated instruments which can serve to betray the interests of savers. Right intention, transparency, and the search for positive results are mutually compatible and must never be detached from one another (#65).

David P. Goldman, in First Things' Spengler blog, writes today:

A close look at the circumstances of the bank bailout of the past year, particularly the government’s decision to pay out AIG’s guarantees of other banks’ subprime derivative at 100 cents on the dollar, might reveal embezzlement on the grand scale. ... [more]

Caritas in Veritate and US Federal Regulation

Today's post is a guest post by Dr. Brian Engelland, Chairman of the Department of Marketing, Quantitative Analysis and Business Law at Mississippi State University's College of Business, and a Visiting Professor at the Catholic University  of America's Department of Business and Economics for Fall 2009.  

The current Administration strongly supports an increased role for federal regulation over many sectors of the economy - banking, automobile manufacturing, and healthcare insurance, to name a few - as a means to improve economic development and cure social ills. What might Pope Benedict say about this strategy?  Let's look at Caritas in Veritate for clues.

First, the Holy Father suggests that "authentically human social relationships of friendship, solidarity and reciprocity" (CV 36) can indeed be conducted within economic activity, provided that it is structured and governed ethically. Further, he cautions that economic life needs just laws and regulations that ensure benefits to all stakeholders who contribute to the life of the business. Generally, then, he is in favor of government regulation when it is ethical and serves broad stakeholder interests.  

But the Holy Father sets very high standards for ethicality in regulation. Specifically, ethical regulation must incorporate trust and love of truth, strive toward the common good, be animated by charity, be enlightened by reason and faith, safeguard the human person, respect the transcendent value of natural moral norms, respect subsidiarity and promote the reciprocal sharing of duties. Furthermore, regulation should respect all of Catholic Social Teaching and not allow disparities in wealth to increase excessively. Finally, regulation can only be effective when regulators are able to incorporate their faith understanding into the decision process. Taken together, this represents a very high standard.  

Today in the United States, regulations are written with little presumption of trust, regulatory bodies adjudicate based upon secular notions of political correctness, and neither regulation nor regulator pays any attention to charity. Regulations disproportionately favor large corporations that lobby well, stress individual rights at the exclusion of duties, and are implemented in a rigid, autocratic mode that violates the principle of subsidiarity. Certainly, American-style regulation is not what Pope Benedict had in mind. Pursuing this approach to regulation is a cure that may be worse than the disease!  

One result is that small businesses are hurt disproportionately. A recent study found that small firms incur 40% more regulatory costs per employee than do large corporations, and these costs are a significant contributor to business failure. Since we know that small businesses drive economic growth, it makes economic sense to lessen the burden on small firms rather than increase it.

So where do we begin to improve federal regulation? Perhaps a first step to move in the direction that Pope Benedict envisioned is to apply charity by implementing differential levels of control. When I was a child, my parents claimed to apply the family rules equally across all of us kids, but in reality supervised us older trouble-makers much more closely than the younger ones. They knew which kids could create the most damage and they devoted their "regulatory" attention accordingly. In the same way, government regulation should be applied differentially so that the larger firms that could potentially create the biggest problems would receive closer scrutiny and have greater reporting requirements than smaller firms. 

A second step is to apply more subsidiarity to the regulatory process. Responsibilities for regulatory oversight could be delegated to individual firms, channel partners or industry groups, rather than be applied only at the federal level. Directives from on high tend to neuter individual firm responsibility for the quality of the products and services they offer to the public. Individual firms will act more responsibly and apply more innovation when their managers have greater involvement in the regulation-setting process.      

Differential control and delegated responsibility are two approaches inspired by Caritas in Veritate that could lift some of the regulatory burden away from fledgling businesses and respond more effectively to the needs of the common good. 

Mpower launch

Mpower Media (http://www.mympowerbox.com/) has an amazing new technology for protecting families from television violence, sex, etc.  I love this company and what they are doing, and have been helping them with their market research and marketing efforts since their startup three years ago.

Here's their launch video:

ISI Conference and Patronizing Small Business

I gave a lecture on Saturday (October 10) at ISI's National Leadership Conference, Freedom and Virtue: Challenges and Prospects in a Time of Economic Crisis.  My lecture was titled Consumerism and Concentration of Power: The (Im)moral Roots of the Current Crisis, and it was a variation I gave as the Calihan lecture Thursday night (October 8).  Once I am happy with it, the Acton Institute will publish the text.  

Also at the ISI Conference was Robert P. Murphy, author of the Politically Incorrect Guide to the Great Depression and the New Deal, who gave a really very talk on how everything you learned in US history about the Great Depression and the New Deal is wrong.  Murphy's work is of course very timely, given the parallels between the current crises and the Great Depression, and the current government response and the New Deal.

After my lecture, Murphy asked me a question about buying locally and Wal-Mart.  He posted this question on his blog, and I commented, to amplify on my original response. I am reproducing part of the exchange here:

Murphy: People are actually supposed to feel good about "buying local" even when they're from out of town. Do you see how ridiculous that is? Would the waiter have objected if I ordered a cut of meat, raised in Indiana, while sitting in a restaurant in Nashville?

I know I know, one of the reasons you're supposed to prefer locally grown vegetables etc. is that it is fresher. Fair enough. But a lot of the "buy local" people aren't simply saying, "You should do this because it tastes better and is better for you." No, it is a moral argument, that you should provide income to people who live down the street from you, rather than providing income to people who live in other states, or--gasp!--people who live in other countries.

Abela: I think it's important to distinguish between small and local. My talk was about the dangers of concentration of economic power, and so I was mostly focusing on supporting small businesses. Small and local often go together, but the rationale for local is somewhat different. Yes, it's more environmentally friendly, as one of your commentators noted. Yes, in terms of food it also means more freshness, as you noted. More important than freshness, though, is food security. If I buy my milk from a local farmer, the chances of it being contaminated with melamine are infinitesimally smaller than if I buy milk that has been shipped from China, because the local farmer knows that any such trick would spell the end of his business, whereas a global supplier can easily start again under a different name. And therefore (here's an argument a libertarian can love) there is less call for regulation when transactions are local.

I think you can generalize this point: local transactions are easier to monitor by the parties involved, and therefore there is less justification for state regulation, be it for product safety, workplace safety, truth in advertising, etc.

 Obviously, much much more to be said and done on this topic.  

Subsidiarity and Healthcare

Here are two interesting takes on how the principle of subsidiarity should guide us in the current US health care debate.

Dr. Stephen Schneck of the Catholic University of America wrote Subsidiarity 101: A Lesson for the Health Care Debate, and Kansas City, Kansas Archbishop Joseph F. Naumann and Kansas City – St. Joseph Bishop Robert W. Finn issued their pastoral letter Principles of Catholic Social Teaching and Health Care Reform.

Calihan Lecture - October 8 at 5:30 p.m.

I will be delivering the 2009 Calihan Lecture this coming week, on Thursday, October 8, at the Catholic University of America.  Reception at 5:30 p.m., lecture at 6:30 p.m.  All are welcome. 

Further details here.

"not giving a person a fish, nor teaching them how to fish, but fishing with them"

John Mundell, president and founder of Mundell and Associates, an Indianapolis environmental consulting company, and a contributor to this blog, was interviewed recently by Zenit.  The interview was published in two parts.

People are searching for meaning in work, ways to aid people and the environment while earning profits, and Benedict XVI is pointing the way, says an Economy of Communion member.
...
There is a big push to find the meaning of work, to ask, "How do I integrate myself and my faith with my work life?" [The Economy of Communion] is seen as one of those ways of doing that, of practicing your beliefs within the context of a faith tradition. Thus we have people who are experts, and they start a business. Or they convert the company they have according to this new vision and begin operating it according to Economy of Communion principles.

Read part 1 here and part 2 here.

For more blog posts on the Economy of Communion, click on the "Economy of Communion" link under "categories" to the right, or click here.  

Caritas in Veritate online symposium at First Things

First Things magazine has an online symposium on the new papal encyclical Caritas in Veritate. The symposium includes an article by John Mueller, a commentator on this blog, called A Return to Augustinian Economics.

...Catholics on both the left and the right have analyzed Benedict XVI’s latest encyclical with the same dichotomous logic they applied to SRS [John Paul II's encyclical Sollicitudo Rei Socialis]: The Church says there is no Third Way. If not, we must choose between the First Way of Adam Smith and the Second Way of Karl Marx.

But, by emphasizing in his new encyclical the central role of gifts in the divine economy of creation and salvation, as well as in personal, domestic, and political economy, Benedict XVI (like John Paul II before him) poses a very different choice.

Following that neglected economic realist St. Augustine (whom the pope has called “my great master”) and Augustine’s contemporaries the Cappadocian Fathers, Benedict XVI says the choice is among the same three world views that confronted one another in the marketplace of Athens when the Apostle Paul (probably in a.d. 51) prefaced his proclamation of the gospel with a biblically orthodox adaptation of Greco-Roman natural law and “some Epicurean and Stoic philosophers argued with him” (Acts 17:18). As Benedict XVI succinctly summarizes, “For believers, the world derives neither from blind chance, nor from strict necessity, but from God’s plan . . . living as a family under the Creator’s watchful eye” (CV, 57).

Read the full article here.