Francis I, the newly installed Pope, has called on Catholics to protect all humanity, “especially the poorest, the weakest, the least important, those whom Matthew lists in the final judgment on love: the hungry, the thirsty, the stranger, the naked, the sick and those in prison.”
If the Pope really wants to see a world in which all people can prosper, he needs to understand that the route to that goal is not government redistribution of wealth or even private charity. It is free markets.
Cry for Argentina
Consider his native country of Argentina. In the early twentieth century it was one of the top ten in GDP and per capita income, giving rise to the saying “Rich as an Argentine.” It had first-world infrastructure—rail transport, electricity—thanks mainly to British capital, and a world-class agricultural sector, with its beef especially prized. Argentina was really a European country that just happened to be in South America.
But things went south with a military dictatorship in the 1930s followed by the accession to power of the demagogue Juan Peron in 1945. He modeled the country’s economy after the “corporatism” pioneered by his recently-executed hero Benito Mussolini. Government had a heavy hand in managing the various sectors of the economy. When he was driven from power by another military coup, his country’s economy was in shambles. But in the following decades, the government never allowed true free markets to operate and the country went back and forth between unstable democracy and military juntas.
So as the then-Archbishop Jorge Bergoglio of Buenos Aires, the now-new Pope was wrong to complain concerning his country that “the social-economic crisis and the resulting poverty has its causes in policies inspired by forms of neo-liberalism that considers earnings and market laws as absolute parameters, to the detriment of the dignity of persons and peoples.” In fact, the Heritage Foundation’s latest Index of Economic Freedom gave Argentina only a score of 46.7 out of 100, ranking it as the 160th freest economy. Argentines don’t enjoy economic liberty, “neo” or otherwise but, rather, suffer under statism.
If Pope Francis seeks economic salvation for the world, he might peruse The Other Path , the revolutionary 1987 book by Peruvian economist Hernando DeSoto. That author documented how in his own country the poor were kept in their place by government regulations that restricted economic freedom in order to protect corrupt vested interests. For example, DeSoto and his researchers found that it would take a poor Peruvian 289 days to get permission from the government to set up a small business with two sewing machines. To secure a piece of abandoned land would take nearly seven years.
Because of heavy-handed regulations, the poor in Peru—and in most other less developed countries—simply operate in the “informal sector” or “black market.” Some 90 percent of the bus and public transportation in Lima was performed outside the law. Retail markets were mostly informal. So was housing construction.
But while the informal sector affords the poor an opportunity to literally survive, it does not allow them to fully flourish. This is because their property and contracts are not protected by the law. So if Pope Francis wants to see the wealth-creating capacities of individuals unleashed, he should speak up loud and clear for private property rights in free markets. He might also read DeSoto’s follow-up book The Mystery of Capital , published in 2000, which details the legal structures needed to protect property.
In his desire to help the poor, Pope Francis must face a moral challenge at the heart of his theology. Like his predecessors, this Pope is concerned about “materialism” and speaks of self-sacrifice as the highest virtue. But are not better material conditions just what he wants for the poor? But is it not “selfish” for the poor to desire such conditions and to seek them through their own honest efforts?
Religions have always been at best confused on these goals. Perhaps deists two centuries ago might have argued that the “pursuit of happiness” was instilled in us by God and should be our highest goal as individuals. But that’s hardly what the Supreme Pontiff of the Catholic Church is proposing.
Pope Francis will have to wrestle with these theological conundrums. But if he’s serious about seeing a world in which all can prosper, he needs to understand that individuals acting in their own self-interest, dealing with their fellows based on mutual consent, is the way to such earthly salvation.
Hudgins is director of advocacy and a senior scholar at The Atlas Society.
For further reading:
*Edward Hudgins, “ Make Trade, Not War. ”
*Edward Hudgins, “ Why Africa Needs Economic Freedom. ” February 16, 2008.
*Edward Hudgins, “ Secular Spirituality. " December 2006.
Edward Hudgins is research director at the Heartland Institute and former director of advocacy and senior scholar at The Atlas Society.