Monday, January 20, 2014

Catholic Economics: Paradox or Truth?

One of the things that first drew me to learn more about Catholic Social Teaching were the questions I had about the Church’s teaching as an Economics major. Economics is all about supply and demand, searching for the perfect equilibrium and maximizing outcomes. An interest in public policy has also prompted me to question what the role is of Catholic teaching in regards to government and the economy. My interests have prompted some nagging questions about the government’s role in providing for the poor, specifically in regards to people living on welfare and the minimum wage.

Both of these topics inspired many talks and debates with friends and family as I struggled through what the Church thought and my understandings of its teachings. After learning a couple years ago about the difficulty for those in a low socioeconomic group to live on minimum wage, I had become convinced that raising the minimum wage was not only the answer to ridding the U.S. of poverty, but a necessity in order to allow people to live with the dignity that they deserve. At that point, I became a big advocate of the minimum wage.

As I learned more about economics, in particular labor economics, I began to change my mind. I began to understand that increasing the minimum wage would decrease the amount of jobs and lead to many jobs going to part time, similar to the response to the Affordable Care Act seen by many businesses. Many small businesses would not be able to survive in this type of economy as they would end up running a deficit. If small businesses are not able to survive and many jobs are cut, this policy would hurt the poor even more. So perhaps we should not raise the minimum wage. But this did not change the fact that it is nearly impossible to live on a minimum wage in the United States. So what is the answer to this conundrum?

Many conversations with my dad and his perspective as a small business owner, prompted me to look deeper into what the Church teaches on the minimum wage and other welfare policies. My Introduction to Catholic Social Teaching class last semester provided me with the perfect opportunity to study and discuss exactly what it is that the Church teaches on this topic. What I discovered is that the Church’s teaching on these social economic issues are still being worked out as the perfect answer has yet to be discovered.

My biggest breakthrough in understanding the Church’s teaching came with the understanding that the Church does not encourage one perfect system of government. The Church acknowledges that there are pros and cons to different government systems, and that as long as the government is based on human dignity, many different types of government set-ups can be considered just. In regards to minimum wage, the Church advocates for a liberal teaching; not, however, in the traditional terms of ‘liberal’. The Church advocates for a personal liberal stance – that each business owner should take into account his or her employees and pay them both according to their ability and taking into account their dignity and familial circumstances. Small businesses that are just beginning and not producing a profit, may have to pay their employees a lesser wage in order to be able to compete in the market and get their feet on the ground. Once the business starts to return a profit, however, the employees should be rewarded. In regards to a government-set minimum wage, however, I personally do not see a strong Catholic argument for such a policy. The Church does not necessarily see this as the role of government but the responsibility of each of us to look out for our brothers and sisters. I understand the Church’s call to advance the economic freedom of everyone as a call to personal liberalism rather than a liberal government. This idea revolves around the notion of subsidiarity -- that what can be done on a local level, should be done on that level rather than relying on a more centralized organization. This difference was key to my understanding of the teaching of the Catholic Church. Because Catholic Social Teaching is still being expanded upon, these are questions that are being debated and dialogued about with many Church authorities. As a Catholic Economist I will definitely be keeping an eye out for what the future holds in light of these teachings!

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