Vatican Rejects Deregulation, Trickle-Down Economics in Major Financial Reform Document
An important document on financial reform released today by the Vatican’s justice and peace office is a timely challenge to conservative political leaders eager to carve up the Dodd-Frank Wall Street reform law passed last year. For that matter, the 41-page document – “Toward Reforming the International Financial and Monetary Systems in the Context of Global Public Authority” – is far to the left of almost any politician in the United States (short of Sen. Bernie Sanders) and should also give pause to Democrats whose fundraising coffers spill over with contributions from a financial sector that has been allowed to run amok over the past three decades.
If deregulation and free-market fundamentalism have largely defined the American posture, the Vatican is challenging world financial and political leaders to rethink structural systems and the moral foundation of neoliberal economics. Showing that Vatican officials think in centuries but also read the morning headlines, it addresses “the speculative bubble in real estate,” and calls for a “minimum, shared body of rules to manage the global financial market” – pointing to “rapid, uneven growth” that has arisen because of the “overall abrogation of controls on capital movements and the tendency to deregulate banking and financial activities.” Catholic News Service has the most complete coverage so far.
The document cited the teachings of popes over the last 40 years on the need for a universal public authority that would transcend national interests. The current economic crisis, which has seen growing inequality between the rich and poor of the world, underlines the necessity to take concrete steps toward creating such an authority, it said. One major step, it said, should be reform of the international monetary system in a way that involves developing countries. The document foresaw creation of a “central world bank” that would regulate the flow of monetary exchanges; it said the International Monetary Fund had lost the ability to control the amount of credit risk taken on by the system. The document also proposed:
– Taxation measures on financial transactions. Revenues could contribute to the creation of a “world reserve fund” to support the economies of countries his by crisis, it said.
– Forms of recapitalization of banks with public funds that make support conditional on “virtuous” behavior aimed at developing the real economy.
– More effective management of financial shadow markets that are largely uncontrolled today.
In the next Republican presidential debate someone should ask Newt Gingrich and Rick Santorum, both proudly Catholic, whether they support the Vatican’s call for more robust financial reform. While we’re at it let’s keep challenging House Speaker John Boehner and Rep. Paul Ryan, both Catholics, on why their economic plans depart so dramatically from Catholic social teaching. Catholic conservatives who like to puff up their chests as valiant defenders of orthodoxy might find themselves tight-lipped for a change.
The Vatican’s timely call for global economic justice should also inspire U.S. Catholic bishops, scheduled to gather for a national meeting next month, to start offering a bolder critique of economic libertarianism and anti-government ideology now ascendant in our nation’s politics.