Friday, May 15, 2009

Quote from: Belloc
Usury-why that is a great pillar of those "authoratative" Spanish monks crafting free-market capitalist idol.silly Popes Leo XIII, Pius IX, JP2,etc....

I certainly yield to the "silly popes" when it comes to moral theology. But I believe they're conflating moral theology and economic science when they condemn bankers charging "excess" interest (i.e., committing usury) and employers paying "insufficient" wages (i.e., failing to pay the minimum wage). The popes' hearts are in the right place, but their economic knowledge is lacking. They certainly aren't doing the poor any favors.

Setting an arbitrary ceiling on any good or service--such as oil or money-lending--merely creates a shortage of that good or service. Remember when the government tried to protect the poor from greedy oil companies by controlling gasoline prices in the 1970s? All those price controls did was create long lines at the gas pump. And that's all the government does when it passes laws against usury: lenders stop lending to people who would otherwise freely borrow at the higher interest rate. By the same token, setting an arbitrary floor on any good or service merely creates an oversupply of that good or service. That's why minimum wage laws create an oversupply of labor, i.e., unemployment, among the young and unskilled.

This is in fact a case of the Spanish monks' "authoritativeness" in economic science (but not moral theology) surpassing that of the popes. There's no crime in that--popes never claimed to be infallible in matters of economic science, weather forecasting, stock-picking, sports, or astronomy. I whole-heartedly agree with the rest of Vox's post, though.



Post a Comment

<< Home