by Bill Scholl
The economy’s hurting. Don’t ask me how it happened. (If you can explain derivatives, I’ll treat you to a Coke at the chancery).
However, we all sense that this sudden economic downturn is the function of a systematic moral failure.
A corporate culture of greed and indifference, functioning at the highest levels of economic activity, has ultimately led to this mess. As with all things moral, the church’s doctrine provides a sure guide that could have prevented our troubles. In particular, our economic woes manifest the need to apply the Catholic social justice principles of solidarity and subsidiarity in order to return to prosperity.
Pope Benedict XVI in a recent address, entitled “Pursuing the Common Good: How Solidarity and Subsidiarity Can Work Together,” taught that understanding and applying these principles are crucial to addressing the manifold problems that currently beset mankind.
He summarizes these principles when he teaches: “Solidarity refers to the virtue enabling the human family to share fully the treasure of material and spiritual goods, and subsidiarity is the coordination of society’s activities in a way that supports the internal life of the local communities.”
While not the worst problem that besets us, the economy is pressing on most of our minds. The principles of solidarity and subsidiarity offer the framework upon which we should restructure our system.
The global economic meltdown has shown the human family’s interconnectivity. Many bubbles have burst. One is the myth that if everyone acts in his own selfish interest, then the “invisible hand” will guide the markets to achieving the greatest possible prosperity.
Solidarity calls us to act in ways that look for the win-win. While recognizing the equality of all, solidarity is best achieved when each participant puts himself at the service of others. Bereft of solidarity, the system encouraged bankers to make risky loans to people they knew could not repay and then bundle the debt into securities deceptively labeled as low risk. Consequently, money stopped flowing because there is a loss of trust. The market expects solidarity and when that’s gone, it falters till its return. Conversely, solidarity is maintained by subsidiarity, the principle that enables respect for the local decision-makers. Banks, pressured to make loans to low-income/high-risk applicants, lost discretion as local lenders. This failure to apply subsidiarity led to the practice of bundling: toxic debt and good debt mixed together and sold to investors. The lenders making the decisions were detached from the risk.
Applying the principles of solidarity and subsidiarity to how we organize enables the healthy functioning of society’s most basic communities. They are a part of the framework for how humanity will flourish. The times have shown we ignore these teachings at our peril.