Big is Beautiful
One of the most common fallacies on the right is the mis-use of the subsidiarity principle to support an ideological opposition to the role of government. Of course, it is true that oppressive state power can trample upon human dignity; the experience of the former Soviet Union comes to mind, and Pope John Paul warned that a welfare state (necessary though it is) can sometimes become overly-bureaucratic and far removed from the dignity of each person.
But the popes who developed Catholic social teaching were worried about something quite different – about overly-powerful business interests and corporations who deny workers fair wages and benefits, and who use their financial leverage to reward themselves and tilt public policy in an unjust direction. Pope Pius XI, who more than anyone laid out the intellectual underpinnings of subsidiarity, railed against “immense power and despotic economic dictatorship ..consolidated in the hands of a few” who use their muscle to ”gain supremacy over the State”. A correct social order, in the view of Pope Pius, would be one where the “riches that economic-social developments constantly increase ought to be so distributed among individual persons and classes that the common advantage of all” and where ”one class is forbidden to exclude the other from sharing in the benefits”.
This is as true today as it was during the 1930s when Pius wrote these prescient words. As I’ve said before, by the dawn of the twenty-first century, the level of inequality was back up to the peak of the 1930s. It is really no accident an economic calamity was the result of such an imbalance each time. This rise in inequality was characterized by a decline in union power (often a breaking of union power), a change in social norms regarding wealth (the Reagan and Wall Street era), and the rising power of monied interests in the political sphere (possibly the most important reason of all). Pius XI had especially sharp words to say about the power of big finance, as the people who “regulate the flow, so to speak, of the life-blood whereby the entire economic system lives, and have so firmly in their grasp the soul, as it were, of economic life that no one can breathe against their will”.
And today, economists like Simon Johnson make similar arguments, claiming that the finance industry has effectively captured government. This sector accounted for 16 percent of corporate profits before 1985 – this has risen to 41 percent. And what did they want? Basically, the removal of any impediments to further wealth accumulation, without heed to risk. And they got it – repeal of regulations separating commercial and investment banking, bans on the regulation of credit-default swaps, major increases in investment bank leverage, a hands-off regulatory environment, an agreement to let banks assess their own riskiness, and free movement of capital across borders. And when the house of cards collapsed, and the government had to clean up the mess, they still ended up using a “velvet-glove approach” with the bankers. And today, the big banks are bigger, more concentrated, and more powerful than ever.
The new financial sector legislation is a major step forward, although it shies away from breaking up the oligarchs or taxing them seriously. The jury is still out on whether it will work. But while Wall Street has been given a bloody nose, it has not been knocked out. In fact, it is enraged and out for revenge. And the revenge comes in the form of political campaign contributions – Wall Street is pulling money away from Democrats at lightening speed. Contributions are down over 60 percent, and this money is being funnelled to Republicans, who are more than happy to do Wall Street’s bidding – as we saw clearly with the financial regulation bill.
Look too at the Chamber of Commerce. In a fascinating expose, James Verini shows how powerful this group has become, and how it singularly looks out for the interests of its largest, richest, and most powerful members. In 2009, it spent over $120 million on lobbying, five times more than the next group. It went all in to destroy the healthcare legislation, and lost. Just like Wall Street, it is now seeking the restoration of its power alongside a dose of revenge. It has pumped $50 million into Congressional races, with $4 out of every $5 going to the GOP. For while the Chamber theoretically represents small businesses (96 percent of its members have fewer than 100 employees), it is beholden to the largest corporations who control its purse strings (a third of its revenues come from just 19 companies). The Chamber is on record as supporting this strategy: “You can no longer run a huge national organization on the backs of small companies” claims president Thomas Donohue.
And what do they want? No healthcare reform. No financial sector regulation. No environmental legislation (they even question the existence of climate change). Breaking the power of labor. Continued deregulation.
Big finance and big business are as strong as ever. The warnings given by Pope Pius XI in the 1930s ring as strongly today as they did during that period. And yet, in the American political system, money always wields power, opens doors, and gets results. Millions of unemployed workers can be callously denied benefits, but the oil companies still get their subsidies. The titans of industry are not crossed. This capture extends all the way to the Supreme Court, where John Roberts is steering the court in a sharply pro-business direction, even if it means thumbing the nose at the legislature. Just remember Citizens United, which gives unprecedented power to monied interests.
On the right, subsidiarity is given lip service. In reality, the power of big business and big finance are leading to outcomes that violate the common good and the norms of justice. It is time to restore authentic Catholic social teaching.
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There’s a big difference: in the nineteen-thirties the people hurt most by the over-concentration of wealth knew they wanted the field levelled; today, many cheer as they are further robbed.
Given that you seem to agree that the wealthy and industry have “captured” our governing system, why do you look forward to using government to regulate the industry that captured it? The only legislation that the people on top favor is that which benefits them. All legislation that threatens their interest will not pass.
Put another way, if the wealthy have captured government, how can government be the answer?
how can government be the answer?
Only by becoming incrementally more progressive through the will of the people as expressed through the vote. Granted, the chances of this happening are few-to-none. Still, to be extremely unlikely is not to be impossible. And this is point at which one invites Christian morality to enter the scene.
Given that you seem to agree that the wealthy and industry have “captured” our governing system, why do you look forward to using government to regulate the industry that captured it?
As Churchill said, “Democracy — the worst form of government except for all the rest.” While our system of representative government may tilt towards the rich and powerful, it is still our best hope along with a strong and robust labor movement (and free trade unions have only existed under democratic regimes).
The Wall Street Reform Act, while neither radical nor bureaucratic, makes important forward progress. The extremely mild provisions for shareholder rights is also a welcome though modest step in making companies accountable to their owners.
As Simon Johnson said about the Wall Street Reform Act (the one negotiated by the “absolutely brilliant” Barney Frank): “Essentially nothing in the entire legislation will reduce the potential for massive system risk as we head into the next credit cycle.”
The Act is a bad joke. No Glass-Steagall. No break up of the “too big to fail” institutions. A watered down Volker Rule. Taxpayer bailouts now enshrined in policy.
On the right, subsidiarity is given lip service.
Yep.
It is not possible to make greed work for everybody.
Big Government and Big Business, are married. Big business are dependent of big government, the more there are concentration of wealth to fewer individuals, the more government are needed to guarantee and protect their wealth. It is a myth, for those who claim themselves “conservatives”, to say that big business as it dominates today are “natural” without big government. Big government is a wonderful tool for big business, and big business wouldn’t last long without it.
This capture extends all the way to the Supreme Court, where John Roberts is steering the court in a sharply pro-business direction, even if it means thumbing the nose at the legislature. Just remember Citizens United, which gives unprecedented power to monied interests.
Actually the main effect of Citizens United so far has been more spending by unions, not by corporations.
Rodak & Kurt–
You are still evading my point. What makes you think that progressive legislation that you are working for won’t in the end be twisted to the benefit of the upper classes? If electing progressive people is the solution how do you expect to do this if the only way to run a candidate (or even a popular movement) is with lots of money–which is had mostly by the upper class–without the movement being corrupted by the source of the money?
Changing the subject somewhat: Why is the principle of subsidiarity part of Catholic social teaching in the first place?
The principle, as it is usually explained, is simply a principle of rational organization: decisions should be made as “low down” in the organization as is compatible with efficient organization (or something along those lines). But what is specifically Catholic about that? If it’s just a principle of rationality in organization, it’s valid everywhere and for everyone. Compare “one should know all the facts before coming to a conclusion”. That’s a principle of rational thinking. It’s not part of Catholic theology. It’s just part of rational thinking, Catholic or not, theological or not. So the same question applies to the principle of subsidiarity: if it is just a principle of rational organization, what’s it doing in Catholic social teaching?
The obvious answer is that, in Catholic social teaching, it is much more than a principle of rationality; it is a disguised political doctrine, namely, big government is bad. But why should THAT be part of Catholic social teaching? Nothing about the Gospel entails that big government is bad.
Mike–
I thought that I had made it clear that I didn’t expect it to happen. I don’t expect to live a morally perfect life, either. But that does not mean that a morally perfect life should not be my ideal and my goal.
The alternative is to drop out of politics altogether and be content to “tend one’s own garden” rather than continually choosing the lesser of two (or more) evils.
I haven’t decided, and may never be able to decide, whether the former or the latter is the better route to take. Right now, however, I must frankly admit that I’m leaning towards simply washing my hands of politics. Sometimes it is necessary to hit bottom in order to make subsequent ascendence a possibility.
America is well on her way to descending into a uniquely American form of fascism. Perhaps it is best to simply let that happen and hope that an equally strong, but morally superior reaction will finally develop in opposition to it.
“America is well on her way to descending into a uniquely American form of fascism. Perhaps it is best to simply let that happen and hope that an equally strong, but morally superior reaction will finally develop in opposition to it.”
Oh man I sure hope this will not go down this way. Frankly it is not only an American issue just like in the 30′s.
These are confusing times around the world – the way the system is set up right now most folks in finance do great regardless off the direction of the Market while actual working people loose jobs/houses/perspective very much depending on the direction of the market. It does not help that the smartest kids these days of course follow the money and use there talents to write sophisticated automatized routines to make money within seconds of the markets going up or down. And yes we all sit around and watch this trainwreck happening helplessly from the sidelines.
When I grew up in Germany I kept asking my parents and grandparents how in the world something like Hitler could happen in such a cultured,smart and sophisticated country – I never really personally understood how helpless the individual can feel when societal forces march off in the wrong direction – not until the last ten years that is- not until I witnessed Bushs cynical ploy to deliver to his buddies at Halliburton in reaction to 9/11 – and the ‘good’ American public who was lusting for a fight and ate it all up. It is so painful these days for me to see Geitner and Obama doing big finances bidding for the sake of keeping the markets up. It is painful to see somebody so utterly unqualified as Palin step into the void. Of course history does not repeat itself 1:1 -still in some ways the parallels between a the ‘popular’crazed leader of the old days who rose from the bottom and was behind the scenes very much supported by the big money of his day and what this country is about to endure if populist airheads are given power and will manage to strip within years what generations have built up.
http://andrewsullivan.theatlantic.com/the_daily_dish/2010/07/palins-chances-ctd-2.html
Grega,
I think Germany in part went the way it did because of “boogey-man distortions” like those in your post.
Phillip–
Would you care to quote the “boogey-man distortions” to which you refer for the benefit of those of us who don’t know what the heck you’re talking about?
d. This capture extends all the way to the Supreme Court, where John Roberts is steering the court in a sharply pro-business direction, even if it means thumbing the nose at the legislature.
For a more nuanced and well-informed view, see http://www.scotusblog.com/2010/06/everything-you-read-about-the-supreme-court-is-wrong/
Philip,
I disagree. While most certainly my quick inconsequential write up is just that a personal rant ( something, you of course can very much disagree with) – by the way MM’s post rather eloquently sums up the real issues nicely –
the type of ‘boogey-man distortions’ of actual consequence that you seem to refer too IMHO are the sort of lies that got this country into IRAQ.
And yes in my opinion a number of people abused the willingness of patriotic Americans to fight for their country rather shamelessly.
And yes I happen to dislike and distrust people like Ms. Palin – the women IMHO obviously is foremost interested in making some money for her family – which is o.k. as long as she is a private citizen.
Her recent mama bear meme is for example just the latest twist in a cynical fake attempt to spearhead the actual justified grievances of actual hard working people – folks who unlike her actually might loose their jobs in a heartbeat if corporate finances go this way or that way.
As a liberal leaning catholic I also happen to very much dislike her evangelical idea of religion – but that is for another discussion.
Rodak,
The comment that Bush’s response after 9/11 was to benefit Halliburton to begin with.
grega,
Even the Democratic led Senate inquiry into the intelligence that led to the Gulf War concluded that there were not distortions.
I also don’t know why you object to people making money if they are public figures. Obama is a millionaire due to his autobiograpies.
It’s not THAT they make money; it’s HOW they make money.