Pope Bashes Global Financial System, Blasting ‘Ticking Time Bomb’ Derivatives, Rampant Inequality

by Andrea Germanos 05/24/2018

Offshore tax havens have “contributed to the creation of economic systems founded on inequality,” new Vatican document asserts

The Pope just took aim at the global financial system, particularly targeting “ticking time bomb” derivatives, offshore tax havens, and the pursuit of profit at any cost—all which serve to fuel “the inequality so pronounced today.”

The charges are laid out in a document the Vatican released Thursday, which calls for greater regulation “bound by the exigencies of equity and the public benefit.”

The 2008 financial crisis could have sparked efforts to curb “predatory and speculative tendencies” but instead, “the response seems at times like a return to the heights of myopic egoism, limited by an inadequate framework that, excluding the common good, also excludes from its horizons the concern to create and spread wealth, and to eliminate the inequality so pronounced today,” it argues.

“Pope Francis is aware that rampant, unregulated greed in the markets lies at the heart of global economic inequity.” —Matthew Kent, Public Citizen

In addition, the last several decades have shown “how naive is the belief in a presumed self-sufficiency of the markets” and demonstrated “the compelling necessity of an appropriate regulation that at the same time unites the freedom and protection of every person and operates to create healthy and proper interactions, especially with regards to the more vulnerable.”

“Profit should to be pursued but not ‘at any cost,'” the document goes on to say.

“What is morally unacceptable is not simply to profit, but rather to avail oneself of an inequality for one’s own advantage, in order to create enormous profits that are damaging to others; or to exploit one’s dominant position in order to profit by unjustly disadvantaging others, or to make oneself rich through harming and disrupting the collective common good.”

It also focused on excessive CEO pay, especially when it is not “counterbalanced by equivalent penalization.” Echoing arguments made by Wall Street watchdogs like Sen. Elizabeth Warren (D-Mass.), the document also denounced the current culture that fosters executive wrongdoing because “one often does not hesitate to commit a crime when the foreseen benefits exceed the expected penalty.”

Referencing offshore tax havens, it says, “It appears clear that all these have removed decisive resources from the actual economy and contributed to the creation of economic systems founded on inequality.”

Commenting on the new document, Jesuit priest and author James Martin tweets that it “places human dignity and the common good at the center of any morally just economic system. In fact, it makes them requirements for decision-making in the economic sphere. This is, of course, at the heart of Catholic social teaching.”

“The critique of corporate leaders engaged in tax avoidance is timely and important,” adds John Gehring, an author and the Catholic program director at the national Faith in Public Life network. “A humane financial system that values human dignity and not simply maximizing profits can never be built on structures that privilege the few at the expense of the many.”

Gehring also says it’s noteworthy the document “has the imprimatur of Vatican’s doctrine office. The Church’s teachings on economic dignity have theological weight. [House Speaker] Paul Ryan, who dismissed Pope Francis’ understanding of capitalism because—in his words—’the guy is from Argentina,’ should remember this.”

Ethical principles aimed at advancing the common good

According to Matthew Kent, regulatory policy associate at advocacy group Public Citizen’s Congress Watch division, the document merely “reflects the growing consensus that strong regulatory measures are the only way to ensure our financial system is guided by ethical principles aimed at advancing the common good.”

“Pope Francis is aware that rampant, unregulated greed in the markets lies at the heart of global economic inequity. His message is incredibly important and should resonate with all Americans, especially considering the abysmally low ethical standards in the current administration and the climate of hostility to strong public protections,” he added.

But lawmakers appear to be heading in the opposition direction, said Kent, given that the House is poised to vote on legislation “that would roll back Wall Street reforms and set the stage for another financial crisis. Lawmakers should heed the Pope’s warnings and reject this sweeping deregulatory package.”

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