Muitos textos sobre Distributismo hoje (contra e a favor)

Vi hoje no blog de Mark Shea um texto de Thomas Storck sobre o que é Distributismo. É um bom texto para quem não conhece o assunto.

Para um debate sobre Distributismo temos os textos de David Deavel:

"O que há de Certo no Distributismo".
"O que há de Errado no Distributismo".

Temos também a resposta de Storck aos textos de Deavel.

Vídeo: São Maximiliano Kolbe

Hoje é dia dele, patrono deste blog. Aqui vai um vídeo sobre sua história em Auschwitz.

Uma Economia Humana

Stratford Caldecott nos fala do livro de Edward Hadas. No geral, ele elogia o livro por ele defender que economistas precisam entender que o capital é humano e assim deve ser tratado, apesar do livro considerar que a economia moderna "está fundamentalmente" boa, o que eu discordo e Caldecott também. 

É um ótima crítica para um livro que merece ser comprado.

Quanto Custa um Filho de Pobre?

 

(post publicado inicialmente no meu outro blog Thyself O, Lord)

Fazer a pergunta que dá título a este post já é uma ofensa a Deus e respondê-la é ainda pior. Mas um órgão orçamentário dos Estados Unidos tentou responder e obviamente resultou em estupidez  e preconceito.

A  Câmara dos Deputados dos Estados Unidos aprovou uma lei proibindo abortos de crianças após a vigésima semana de gravidez. A lei não deve ser aprovada pois o presidente Obama que é o presidente que mais defendeu o aborto na história dos Estados Unidos vai vetar, se passar pelo Senado, dominado por membros do partido dele, que também idolatram o aborto.

Obama chegou a até a dizer que se uma de suas filhas engravidasse sem querer, ele não queria "puni-la com uma criança". Uma criança para Obama pode ser uma punição então sempre que alguém achar que está sendo punido com uma gravidez indesejada pode matar a criança.

Eu costumo dizer que o aborto, além de ser o fator que divide os partidos nos Estados Unidos,  é o real problema do mundo. A aprovação do aborto significa aprovar a cultura da morte e isto tem efeito deletérios em todos os fatores de uma sociedade.

Mas voltando para a lei aprovada pela Câmara de Deputados nos Estados Unido, um órgão bipartidário dos Estados Unidos, Congressional Budget Office  (CBO,Escritório Orçamentário do Congresso) resolveu fazer uma análise da lei.

A conclusão foi de que é mais barato matar a criança, pois como 40% dos nascimentos são pagos pelo Medicaid (um tipo de SUS dos Estados Unidos que dá assistência aos pobres), os abortos de crianças poupariam 170 milhões de dólares entre 2014 e 2023.

Então, cada vida de um pobre custa no período de 10 anos custa 170 milhões de dólares.

A vida deste filho de pobre é analisada apenas pelo custo de nascer aos cofres públicos. O que vai fazer durante a sua vida, o quanto de benefício ele vai trazer, o quanto ele vai produzir, quanto ele vai pagar de impostos, não é considerado.  O quanto os abortos prejudicam a sociedade, as pessoas e as famílias também não é considerado.

Então, pela lógica só deve nascer quem pode pagar. Mas e se alguém se perguntar se os ricos trazem benefício à sociedade? Será que o estado agora não deveria criar uma junta de (supostos) especialistas para julgar quem deve nascer e quem deve morrer?

É para esto de raciocínio absurdo que nos leva a cultura da morte.

(Agradeço a informação da análise do CBO ao blog Creative Minority Report)

Mammon (Poder Material) e a Pílula - texto de John Médaille

Não conheço o autor, mas uma recomendação de John Médaille pesa muito. No artigo abaixo, publicado na Ethika Politika, Médaille discute o livro de Ross Douthat, Bad Religion: How We Become a Nation of Heretics.

O texto de Médaille é sensacional, vejam abaixo:

RINOs and CINOs: The Cult of Mammon and the Future of America

We have just passed through a rather odd election in which a weak president running on a doubtful record in the midst of an uncertain recovery was, nevertheless, able to gain a decisive victory over his Republican opponent. The loss has triggered a civil war in the Republican Party, a battle that has pitted principles against pragmatism. Those who would stand on principle assume that a “real” conservatism, whatever that might be, would have vast appeal across a sufficiently wide swath of the population to make the party competitive. The pragmatists contend that Romney was hampered by a “conservatism” that was mostly about social issues and missed the “real” conservatism of economic issues. The result is that that party has formed itself into a circular firing squad in an effort to root out the RINOs (Republicans In Name Only.)

But what if the real problem isn’t about politics, but about religion? What if the question is not about RINOs but about CINOs (Christians In Name Only) and the real issue isn’t about deviation from the party line but from the gospel message? This is the question implicit in Ross Douthat’s brave new book, Bad Religion: How We Became a Nation of Heretics. The bravery begins with the title: “Bad” religion? Isn’t that a charge we are likely to hear from conservatism’s enemies on the left? And who in this day and age speaks of “heresy”?

Yet if we are serious about conservatism than we must be serious about what it is we wish to conserve. And if religion is among those things worth conserving, then we cannot be indifferent to its content. Of course, one could take the position of Dwight Eisenhower, that our country depends on a deeply felt faith “and I don’t care what it is.” But surely, this already concedes too much to liberalism, already acknowledges that faith is no more than a feeling, and if this is so, then we cannot say that one person’s feelings are better than another’s. In such a case, there can be no “bad” religion because there can be no “good” religion, and the use of the term “heresy” is itself heretical.

But for Douthat, our politics are a reflection of our faith and can never be better than that faith. Faith is not something optional, as certain liberals would have it; indeed, the claim to be standing on some “neutral” ground is always bogus, always an attempt to gain an unfair advantage for one’s own faith by claiming it is not a faith at all. What is usually meant by this claim is a naïve and touching faith in something called “progress,” a progress that advances by crushing or at least marginalizing any competing faith. The great questions of politics will always involve contending faiths, that is to say, contending visions of what constitutes the “good” for men and society. Nor is this a question that can be settled by some “science,” for it lies completely outside the domain of empirical science and depends on sciences of a different order.

If faith is not something we can avoid, then the content of religion is not something we can ignore, even politically. Here, Douthat advances a radical proposition about the nature of America’s malaise:

America’s problem isn’t too much religion, or too little of it. It’s bad religion: the slow-motion collapse of traditional Christianity and the rise of a variety of destructive pseudo-Christianities in its place. Since the 1960s, the institutions that sustained orthodox Christian belief— Catholic and Protestant alike— have entered a state of near-terminal decline. The churches with the strongest connection to the Christian past have lost members, money, and authority; the elite that was once at least sympathetic to Christian ideas has become hostile or indifferent; and the culture as a whole has turned its back on many of the faith’s precepts and demands. (Douthat, Bad Religion: How We Became a Nation of Heretics, 3)

Douthat locates the high point of Christian influence in the period following World War II. The world wars made it difficult to maintain a naïve belief in Enlightenment and peace. Indeed, the wars pointed out the consequences of making man the measure of all things. During this time there was a kind of “Christian convergence,” where the Churches grew together. The leading Protestant lights of this convergence were Reinhold Niebuhr, Billy Graham, and Martin Luther King. Niebuhr was a proponent of a modern, neo-orthodoxy, which he preferred to call prophetic Christianity, an orthodoxy which rejected the liberal rejection of sin and judgment, but which was nevertheless “alive to the possibility of social reform but constantly attuned to the realities of power and to the perpetual temptations of hubris, self-righteousness, and pride.” (Ibid., 30)

Billy Graham managed to move Fundamentalism from the margins to the mainstream, mainly by softening the edges and being more open to more traditional Protestantism, and even by being open—or at least less hostile—to Catholics. And Martin Luther King married the Niebuhr’s neo-orthodoxy to the energy of the Black Churches.

But in many ways, this was a Catholic moment. The American Church, after a long struggle seemed to find a way to live with the modern world and yet remain above it; it was, “a church that (as Charles Morris puts it) ‘would be in America, vehemently for America, but never of America.’ By the Eisenhower era, they seemed to have succeeded beyond their wildest dreams.” (Ibid.)

By the 1950’s America had created a society that resembled the vision of the good society outlined in Pope Pius XI’s encyclical Quadragesimo Anno, which Franklin Roosevelt had proclaimed “one of the greatest documents of modern times.” America seemed to have fulfilled the Pope’s vision of a third-way between laissez-faire Capitalism and socialism. This was also the time of the “great compression,” when differences in income between rich and poor shrank to their lowest level evel. The portion of national income going to the top 10% fell from its pre-war high of nearly 50% in 1928 to a low of about 33%, and stayed there from 1947 to 1982. America had created, arguably, the most egalitarian society on the face of the Earth and quite possibly in the history of mankind. This was due, at least in some measure, to the efforts of Catholics in the political arena. Some measure of the popular prestige of the Catholic Church can be gathered by the fact that Bishop Fulton Sheen’s television program garnered 30 million viewers, beating the popular comedian Milton Berle in the ratings. Berle, the old-time vaudevillian, would say in his own defense, “We both use old material.”

And yet, this seemingly secure structure collapsed with amazing rapidity, allowing the heretics to carry the day and the country. Douthat indicts five major catalysts for the sudden change: Political fragmentation, the sexual revolution, globalization of culture, the effects of wealth, and the effects of class. Political fragmentation came about through the convergence of the two most divisive issues in America since the Civil War: Vietnam and civil rights. As the country became more divided, the Christian message became confused and compromised by being identified with one party or another. Religion, rather than being a secure place from which to critique the culture, became a mere prop of the political parties.

But no other change affected human society as much as did “The Pill.” Every other technology magnifies some human power—strength, or speed, or thought—but the pill changed the very nature of the relationship between men and women. Not only were two millennia of Christian teaching overturned at a stroke, but every cultural assumption was called into question. In the headlong rush to embrace the new technology, even before knowing where it would lead, the papacy was the only institution that would stand against the trend, and the Vatican received precious little support from the bishops and the national Churches. Indeed, little was heard of the issue until the current dust-up over the contraceptive mandate, and even then the Bishops would fight the battle not over the merits of contraception, but over the issue of “religious freedom,” as if contraception were just a religious quirk, like Lenten fasts or Church vestments.

The response to these changes alternated between accommodation and resistance. Accommodation took the form of demanding that the Churches become more secular, more concerned with this world and less with the next. Harvey Cox’s The Secular City asked us to pay attention to “what God is doing in politics.” This faction was strongest among the elites: the universities, the seminaries, the religious orders and church bureaucracies. Whatever one thinks of the Second Vatican Council, its interpretation and implementation was, in large measure, in the hands of the accommodationists. This is especially true in the United States, where the Vatican, through Paul VI’s apostolic nuncio, Archbishop Jean Jadot, took control of the appointment of bishops. Traditionally, this had been a process largely influenced by the local bishop’s councils, but Jadot, a liberal’s liberal, over-rode the local Churches to create a group of “progressive” bishops who would be known as “The Jadot Boys.”

At the same time, the Catholic Universities, under the leadership of Notre Dame’s Fr. Theodore Hesburgh, issued the “Land O’Lakes Statement,” demanding more autonomy from the Church. The seminaries became less attractive to “straight” men and all the more so to homosexuals, so much so that the priesthood came to be dominated by a “Lavender Mafia,” one which (although Douthat does not mention this) was more inclined to turn a blind eye to pedophilia.

The strategy left the Church’s position in ruins. As Ralph Inge noted, “He who marries the spirit of the age is soon left a widower.” Religion calls for sacrifice which needs justification, and accommodationism simply could not provide it. As Douthat notes, “Why would you need to wash down your left-wing convictions with a draft of Communion wine, when you could take the activism straight and do something else with your weekends?” (Ibid., 109)

The second response was resistance, a response which united Catholics and evangelicals; members of both groups declared a theological truce for purposes of political cooperation. This cooperation was largely on the social issues, abortion and the consequences of the sexual revolution in general. The high point of this approach came with the “compassionate conservatism” of the George W. Bush administration. But while this approach achieved political success, it was a pyrrhic victory. In all the cultural controversies— the debate over embryo-destroying stem cell research, the arguments over abstinence education, the tragic case of Terri Schiavo— the conservative position became a distinct minority. With the politicization of faith came a decline in actual Church attendance. Attendance dropped by 30% among white Catholics between 1978 and 2000. Mass attendance was only sustained by immigrants. Evangelicals likewise saw a fall-off, especially among the young; in the 1980’s, 25% of people under 30 were evangelicals, but by 2008, that number fell to below 20%, and was dropping.

But the path of political resistance had another effect, one that Douthat does not mention, but is crucial in understanding what happened. By confining themselves to the so-called “social issues,” the resisters lacked a coherent Christian response to economic and regulatory issues. Into this void stepped varieties of “capitalist” orthodoxy, running the gambit from Austrian Libertarianism to crony capitalism, that is to say, all the things that used to be called “liberalism.” This meant that the content of the new “conservatism” was nothing less than the old liberalism. The distinguishing mark of paleo-liberalism was the reduction of all values to one value, namely a poorly defined “liberty” which itself was reduced to nothing more than a lack of external restraint, especially any restraint by the governing authorities. The result was a strict traditionalism on marriage and sexual issues, and an aggressive liberalism on everything else. Thus, these new conservatives were demanding that people adopt on Sunday principles which they insisted they abandon on Monday. So while the social issues may have led to short-term political victories, they tended towards long-term cultural irrelevance.

The collapse of orthodoxy, whether Catholic or Protestant, led to the spread of heresy, and by “heresy,” Douthat means something very specific. He points out that every argument about Christianity is really an argument about Christ, is really an answer to the question, “Who do you say that I am?” But the Christ of the gospels escapes any simple definition; he is a contradictory figure in every way. Heresy is that attempt at a “simplified” Jesus, one stripped of the contradictions and one that was, frankly, less able to demand of us any real commitment or sacrifice.

The heresies are legion, as heresies always are, but they are united by a search for a god that will give us exactly what we want, not ultimately, but right here, right now. Of course, this god will not help us shape these wants; he (or she) is a cosmic Santa Claus, far too busy passing out gifts to have time to keep lists of the naughty and the nice.

For the more ‘refined,’ the heresy comes in the search for the “authentic” Jesus of history, who always turns out to be a Jesus conformable to our desires. This is the Jesus of Elaine Pagels and John Dominic Crossan, the Jesus suppressed by a conspiracy of the Father of the Church. The “search” is largely predicated on a lack of evidence, which itself is proof of a conspiracy. These writers combine, as Douthat notes, a brave certainty with a paranoid style; it comes as little surprise that the popular expression of these theories comes with Dan Brown’s The DaVinci Code.

For those with less need to cloak their hedonism in academic robes, there is the Gospel of Wealth, the “pray and grow rich” gospel which provides a convenient marriage of God and mammon. As silly as this sounds, it really isn’t all that different from the Gospel of Americanism. John Courtney Murray insisted that the Church must learn from American democracy, but Michael Novak goes him one better by insisting on “Democratic Capitalism,” as the one true Church, and a church with some strange saints. Mr. Novak compares Ken Lay (of ENRON fame) to the Suffering Servant of Yahweh. To this day, he has not acknowledged the absurdity, much less the blasphemy, of this comparison.

While these heresies may seem diverse, they are all actually about the “God within,” the god of Oprah Winfrey and Elizabeth Gilbert (Eat, Pray, Love). Here the spiritual quest leads no further than the mirror. If the prosperity gospel makes god your broker, the god within makes him your shrink. But not a particularly demanding shrink, since the one rule seems to be, “The god within never has to settle.” This is, of course, not really a new thing; the quest for the supreme self goes back to the garden and the serpent’s promise that “You shall be as gods.”

Is there any way forward for Christians? Douthat believes that a Christian renaissance will have to be political without being partisan, ecumenical but also confessional, moralistic but also holistic. He sees some potential sources for the recovery of Christianity. The first he calls the postmodern opportunity, which appropriates the language of postmodernism to deconstruct modernism itself, for God is what remains when every other human foundation has been deconstructed. The second is almost the opposite of the first, not a movement towards the postmodern world, but away from the world entirely, with a period of withdrawal and purification, or what Rod Dreher calls “The Benedict option.” In any case, the lived reality of the moral breakdown contains its own call for renewal, and in the end, we can foresee the “survival of the Godliest,” on demographic grounds alone.

In any case, the debate cannot be what the debate has been. As Douthat notes, “a conservative Christianity that lets figures like Newt Gingrich and David Vitter serve as its public champions shouldn’t be surprised when its claim to be protecting the sacredness of the family falls on deaf ears.” (Ibid., 290) And a Christianity that attacks the cult of Dionysus, but ignores—or even aligns itself—with the cult of mammon, no longer opposes the world, but becomes part of the world’s problems. In the end, it is only Beauty and sanctity that can save us, and the Christian faith has to provide examples of both, or else it must become just another faction, and the losing faction at that.

Por que Economistas deveriam ensinar sobre Casamento?

Eu acho muito interessante este tipo de análise, gostaria que todos os meus colegas economistas lessem sobre o assunto. Se as pessoas casadas são mais ricas materialmente e vivem mais, por que os economistas apenas defendem que as pessoas tenham faculadade para que fiquem ricas e não que se casem?

É um texto de Megan Mcardle.

Diz ela (traduzo em azul):

Ter curso superior melhora suas perspectivas de ganhos. Ser casado também. Maior nível educacional aumenta a probabilidade de viver mais tempo. O casamento também. No entanto, enquanto economista vocalmente apoiam iniciativas de que as pessoas consigam nível superior, muito poucos deles vocalmente favorecem iniciativas para conseguir mais pessoas casadas. Por que isto acontece? Pascal-Emmanuel Gobry tem uma resposta: 
"...economistas com a "perspectiva cosmopolita" não se sentem bem com a idéia de políticas públicas que possam interferir com as escolhas pessoais (imaginando que se casar é uma "escolha pessoal" de uma forma que ir para a faculdade não é). A maioria dos economistas acha que o governo não deve interferir ou ter uma postura de uma maneira ou de outra com as decisões intimas das pessoas. Isso é um completo juízo de valor. E é defensável. 


Mas, no nível da profissão de economista, isso leva a um viés:. Muita mais análise é feita sobre o prémio salarial da faculdade do que sobre o prémio salarial do casamento Um é mais elogiado e interpretado de uma certa maneira, enquanto o outro é ignorado. E, claro, a coisa que a economia acadêmica foca tem um efeito sobre o debate de elite e de políticas públicas, especialmente quando os socialmente liberais se alinham com o resto da elite."
 
Tenho lá minhas explicações de por que isto acontece. Podemos pensar que é mais fácil conseguir professores universitários para ensinar classes técnicas do que ensinar que os cônjuges se tratem bem.
 
Podemos não querer fazer as pessoas se sentirem mal por não serem casadas, já que muitos delas provavelmente já se sente muito mal com isso. 
Por outro lado, existem grandes buracos nessas histórias. Economistas que passam muito tempo falando sobre como trazer as pessoas para a faculdade não passam muito tempo falando sobre como melhorar os ensinos nas faculdades. E enquanto é verdade que algumas pessoas não gostam do casamento, ou tem má sorte em encontrar bons parceiros, elas vão se sentir pior ainda pior se falarmos que elas se tornarão menos felizes, ricas, e viverão menos, em média, do que as pessoas casadas, também é verdade que algumas pessoas não gostam de faculdade, ou optam por cursos ruins, e sofrerão as consequências disso. Elas também não se sentiriam mal se dissermos a elas que ter nível superior é fantástico? 

O que me faz gravitar em torno de uma explicação mais parcimoniosa: ... Todos os economistas são, por definição, muito bom na faculdade. Mas nem todos os economistas são bons em casamento dizendo que mais pessoas deveriam ir para a faculdade vai fazer  0% de seus colegas se sentirem  mal dizendo que mais as pessoas devem se casar e permanecer casados fará uma fração significativa dos seus colegas se sentirem mal. E, em geral, a maioria das pessoas têm uma aversão a temas que são susceptíveis de desencadear um rancor pessoal em um colega de trabalho.

---

Concordo plenamente com as explicações do texto, mas acho que falta a crítica da idéia de que o secularismo é bom, que discutir aspectos religiosos não é permitido. É o preconceito contra a religião. É o preconceito também contra a família domina o mundo hoje, tornando as pessoas mais tristes e também mais pobres.


(Agradeço o texto de Megan Mcardle ao site Culture War Notes. Publiquei este post também no meu outro blog Thyself, O Lord)

Mario Draghi (presidente BCE) e a Doutrina Social da Igreja

É a primeira vez que vejo alguém de tão alto nível no mercado falando da importância da Doutrina Social da Igreja para a economia. Mario Draghi, presidente do Banco Central Europeu, fez o seguinte discurso na Katholische Akademie em Bayern (Alemanha).

Ele ressalta tanto a subsidiaridade como a solidariedade, os pilares da Doutrina.

The policy and the role of the European Central Bank during the crisis in the euro area

Speech by Mario Draghi, President of the ECB,
at the Katholische Akademie in Bayern,
Munich, 27 February 2013

Excellencies,
Ladies and Gentlemen,
I am delighted to be here in Munich at the Catholic Academy and thank you for this kind invitation. As befits this setting, I would like to begin my remarks by noting the momentous nature of the current period for the Catholic Church, on the eve of the last day of the pontificate of Benedict XVI.
Pope Benedict, a great son of Bavaria, used his eight years at the helm of the Church to address a variety of pressing concerns of the modern world. Among them was an emphasis on ethical concerns in the economic relationships of our globalised world.
Those concerns have become more relevant than ever during the economic and financial crisis that now extends into its fifth year.
The crisis has dented people’s confidence in the capacity of markets to generate prosperity for all. It has strained Europe’s social model. Alongside the accumulation of staggering wealth by some, there is widespread economic hardship. Entire countries have been suffering from the consequences of misguided past actions – but also from market forces that are sometimes beyond their control. 
In a sense, the “social question” of the 19th century, which inspired the Catholic Social Doctrine, has re-emerged – but today it transcends national borders: what is the right framework for reconciling free enterprise and individual profit motives with concerns for the common good and solidarity with the weak?
In recent decades, this question seemed to be approached from a purely economic perspective. The invisible hand of the market, if only left unconstrained, would eventually generate better outcomes for all. The rational actions of ‘homo oeconomicus’ were seen as divorced from ethical concerns about compassion, charity and decency. It seemed forgotten that Adam Smith, the philosophical father of market economics, saw his “Wealth of Nations” as inextricably linked to his “Theory of Moral Sentiments”.
Thankfully not everywhere. At the Jesuit school in Italy where I was educated, we had a fundamental guiding principle: our striving for excellence had to be paired with integrity and a moral message – an ultimate sense of purpose in the service of social justice and fairness.
I have previously noted that “without ethics, there cannot be a genuine development”. We cannot have an economic model that allows excesses to go uncorrected, which relies exclusively on self-regulation of markets and in which individuals believe that “anything goes”. ^[1] Ultimately, we must be guided by a higher moral standard and a profound belief in creating an economic order that serves every person.
Here I find myself in the company of Marx. Not Karl, but Reinhard. Cardinal Reinhard Marx has rightly insisted that “the economy is not an end in itself, but is in the service of all mankind.”
And caring for the welfare of our neighbours is not only an ethical principle of the Christian faith: it also makes eminent economic sense. No-one knows this better than the successful entrepreneurs of Bavaria. Interdependence is not just a catchword. The economic health of the countries around you affects us here and now.
So these are the challenges facing European policy-makers today: how do we recreate confidence in the capacity of our economies to grow and generate prosperity so that they can ultimately serve the people? How do we shape our economic model so that it reconciles individual freedom and social justice? And how, as the European Union, do we strike the right balance between the responsibilities of individual countries and those of the Union as a whole?

How the ECB plays its part

Let me begin by focusing on the role of the European Central Bank (ECB).
We have been given a special responsibility by the people of the euro area to ensure price stability. Price stability is the foundation of a functioning economy. It is also the basis for a just and fair society. It is a common good for all Europeans.
As Walter Eucken, the philosophical father of ordoliberalism, noted, “all efforts to establish a liberal order are futile unless a certain monetary stability is guaranteed. Monetary policy therefore has a primary importance for the liberal order.” ^[2]
Price stability ensures that the market mechanism works properly, which is the best way we know to create growth, jobs and prosperity for all. It preserves the purchasing power of our money and the value of our savings.
And it has profound social implications. Stable prices support the weakest members of our societies – including pensioners and the unemployed – who depend on fixed incomes to live. In that sense, a stability-oriented monetary policy is a key component of the Social Market Economy.
I do not say this based on theory: the history of this country has taught us that inflation undermines not only economic wealth but also political stability. The deep-seated fear of inflation is therefore more than understandable. Your own national experience is at once a powerful reminder and steadfast obligation for the central bank.

 

The challenges of the crisis

But preserving price stability today requires different actions than it did in the past. We have required new tools to ensure that our monetary policy decisions are able to reach firms and households.
This is because the crisis has severely fragmented the euro area’s financial system. It has disrupted the way our interest rate changes are passed on by banks to the wider economy. As a result, our low interest rates have simply not been getting through to people in some parts of the euro area.
This may sound like a technical matter. But the transmission of interest rates is fundamental. The euro area is a bank-based economy. Around three quarters of firms’ financing comes from banks. So if banks in some countries will not lend at reasonable interest rates, the consequences are dire.
Perfectly healthy companies would be forced to close. Credit for new investment would not be available. Not because business models are flawed or because investment projects are too risky, but because firms happen to be located in the wrong place.
Worse still, in the first half of last year fragmentation in the euro area had become so serious that some investors were questioning the future of our currency. Fears of a potential break-up were sending capital fleeing from the periphery to the core. For some in the financial markets, the most fundamental notion of confidence in a currency – that a euro is a euro regardless of where you are – was no longer a given.
But a currency whose integrity is in doubt cannot be a stable currency.
So we had to decide: do we passively let events take their course and accept severe risks for price stability? Or do we assume the responsibility, within our mandate, to defend the stability of our currency and our monetary union?
Those were difficult and existential decisions. They required deep reflection, a proper assessment of risks in the short and long term, and a clear-headed judgement of possible alternatives. They also required the courage to face the inevitable criticism and engage with those who disagreed.
But we chose to act – because we judged this to be right and necessary to safeguard price stability.

 

Defending the transmission of monetary policy

First, we acted to remove blockages that were stopping banks from passing on our low interest rates to borrowers.
We allowed banks to take as much liquidity as they needed from our operations. We allowed a wider set of collateral that banks could use to access this liquidity. And we extended the maturity of our operations, going up to 3 years.
Second, we acted to remove the unfounded fears about the future of the euro area that were undermining the stability of our currency.
We launched a new measure called Outright Monetary Transactions (OMTs) to provide a fully effective backstop in the sovereign bond market.
We focused on this market because it has a “knock-on” effect on other markets. Fears in the sovereign bond market were seeping into the banking system. They were paralysing the economy, and ultimately threatening price stability. By putting in place a credible backstop, we were able to remove those fears at the source.
Those fears were unjustified by economic fundamentals. They were the result of market failure: a situation where investors seem to act rationally, but collectively they create destructive outcomes. Countries that were fundamentally adjusting were being driven to the wall by panic. And the result would have been unnecessary hardship and suffering.
Much has been written about this measure, especially in this country, and some fundamental questions have been raised:

• Is the ECB still independent?
  
• And will the ECB stay focused on fighting inflation?
  

The answer to both these questions is a categorical “yes”.
First, we always protect our independence.
We take all our monetary policy decisions in full independence. And we have designed the OMTs so that these decisions could never be dominated by fiscal policies. This is why a pre-condition for access to the OMTs is a strong economic adjustment programme. It ensures that we would only ever intervene in situations where fiscal discipline is firmly ensured.
Second, we keep a permanent watch on inflation.
We understand and take very seriously people’s concerns about possible inflationary threats. But it is a fallacy to make a mechanical connection between the creation of central bank liquidity and a rise in the money supply. The liquidity we provide to banks is used in the markets where banks lend to each other. It does not automatically increase credit or money in the economy – and so does not automatically lead to price pressure in the economy.
Indeed, money growth is currently well below an inflationary level. Credit provision to the private sector is overall weak, and contracting in large parts of the euro area. And inflation expectations are firmly anchored. So risks of inflation down the road are firmly in check.

 

The euro area dimension to our actions

It is also important to understand that our measures are designed not only to help the people in countries under stress. In fact, in line with our mandate, they serve the citizens of the whole euro area.
Many of the financial developments that concern people in this country – such as meagre returns on their savings or large imbalances in the Target-2 payment system – are really only the mirror image of fragmentation in the rest of the euro area.
As money flows out of stressed countries and into safe-haven countries like Germany, it pushes up interest rates in the stressed countries, and pushes down interest rates here. These flows cause Target-2 imbalances to increase.
What has not been sufficiently acknowledged, however, is that these imbalances would only affect German taxpayers in the event of a break-up of the euro area. This means that actions by the ECB that protect the euro area against such outcomes – like the OMTs – also reduce hypothetical risks for German taxpayers.
And this is exactly what we have seen. Since the announcement of the OMTs, the Bundesbank’s Target-2 exposure has decreased by more than 100 billion euros.
In sum, the ECB has acted, and will continue to act, to fulfil its mandate. We are committed to preserving the integrity of our currency, in the interests of all people of the euro area.
We do not act to help banks. We do not act to help governments. We act to help maintain the flow of credit to real firms and households. We act to preserve price stability.
Incidentally, while some in this country are wondering whether the ECB does “too much”, elsewhere in the euro area I am asked why the ECB does not “do more”. I just returned from the Spanish Parliament in Madrid – and the concerns expressed there are very different from what I hear in Germany. People worry that a stagnating economy will lead to the emergence of a “lost generation”, where young people have no jobs, and even worse, no hope.
But our answer – both to those who want us to do less and to those who want us to do more – is the same: we will preserve price stability. This is our mandate.

 

How governments play their part

It is important to stress that the ECB’s mandate only extends so far. There are clear limits to what monetary policy can and should aim to achieve.
We cannot repair unsound budgets. We cannot clean up struggling banks. We cannot solve deep-rooted problems in the structure of Europe’s economies.
Our monetary union was deliberately constructed so that these policies would be the preserve of elected governments in each Member State. Sharing a common currency would only be sustainable if each country assumed its own responsibility.
This reflects the subsidiarity principle embedded in our European Treaties. And in that sense, it also echoes a central tenet of Catholic Social Doctrine. As Pope Pius XI wrote in 1931, “It is a fundamental principle that one should not withdraw from individuals and commit to the community what they can accomplish by their own enterprise and industry.” ^[3]
Individuals have to do what they can to help themselves before they seek help from the community. The same is true for the countries in the euro area.
Fortunately, this is what we are seeing across Europe today.
Governments have already done a lot to tackle the imbalances that accumulated in previous years.
Progress in implementing economic reforms has been extraordinary. Deficits are being reduced. Current account imbalances are being unwound. Wide-ranging structural reforms are underway.
Particularly impressive is the scale of the adjustment that has taken place in countries receiving financial assistance.
In many countries these efforts have largely removed the underlying drivers of the sovereign debt crisis. But while sovereign debt markets have improved, bank lending is still very fragmented across the euro area. Credit in some countries is still difficult to obtain. The benefits of the painful actions undertaken so far have not yet materialised.
And this means that economic adjustment is coming at a heavy social cost. Economists often speak about “inevitable adjustment costs”, which to some sounds cold, heartless and lacking compassion. But we are fully aware of the human dimension that lies behind it.
Euro area GDP is currently lower than it was in 2008. Almost 19 million people are unemployed – more than the population of the Netherlands.
Unemployment is a tragedy. It squanders the vitality of our workers. It prevents people from playing a full and meaningful part in society. It induces a sense of hopelessness, which drains the inspiration from our young.

 

Reform as the path to growth and fairness

Reducing unemployment is therefore a pressing challenge.
Governments need to address the structural problems in their economies. They need to enact fundamental reforms that boost the potential of their economies to grow.
We need reforms that make doing business easier. That guarantee that those who owe taxes actually pay taxes. That ensure that public services actually serve the public.
And these reforms should aim not only to create more growth and jobs, but also to make society fairer.
Fairness starts within countries.
In one country in the euro area, more than fifty percent of young people cannot currently find jobs. Is it fair that, as a result, this generation has to bear the bulk of the burden in the downturn?
In another country, an estimated 55 billion euros of tax revenue remains unpaid. Is it fair that, as a result, other people who are taxed on their salaries have to make up the difference?
This is why I say that reforms that make economies work better also make them fairer.
And fairness also matters between generations.
Many countries have to think hard about how they can support ageing populations and generous welfare states. The unsustainable option is to keep increasing debt. But this means nothing else than passing the burden onto future generations. There is no real equity through debt.
The sustainable option is to generate the higher growth that is needed to maintain Europe’s social model. And this is only possible by walking the path of determined reform.
There is no doubt that this is the hard path. But it is also the courageous path. It is the path that will create jobs; that will support our social model in the future; and that, in the end, will contribute to a fairer society.
For this reason, it is wrong to claim that countries are undertaking reforms only to please the markets or to satisfy the demands of technocrats in Brussels, Frankfurt or Washington. They are doing it for their own benefit. And it is time that this message gets more emphasis.

 

The place for mutual support

But what if countries cannot succeed on their own?
The ethical imperative when we see others in need is to help. It is to do what we can to limit their hardship.
Should this not also apply within the euro area? Should countries support those in difficulty?
The answer is yes. Catholic Social Doctrine makes absolutely clear that subsidiarity has to be paired with support. But what binds these together is trust.
Trust that each will put its own house in order – even if it is politically difficult.
Trust that each will play by the rules – even if this imposes unpopular choices.
Trust that each will constrain its sovereignty – even if this means making a break with the past.
Such trust has to be built through actions, which is a further reason why the process of reform across the euro area is so important. It shows that countries are ready and willing to be full members of the community. And this makes mutual support between them possible.
Certainly, countries in Europe are already doing a lot to help each other. They are providing generous financial assistance on condition that underlying problems are fixed. But in my view, once trust is established, we should go further still.
We should take stronger collective responsibility over national economic and financial policies, to ensure that countries do not get into trouble in the first place. We should make better use of common resources, to encourage reforms and restore the dynamism of our economies.
In other words, we should aim to build a strong and deep economic and political union in Europe, which would be to the benefit of all members of the single currency.
As I said at the beginning of my remarks, today’s social question is not just a national one. It transcends borders. And this path – building a stronger union based on mutual trust – is the way to answer that question for Europe.

 

Conclusion

Let me conclude by returning to the theme of Cardinal Reinhard Marx – that the economy should be in the service of humanity.
Our common currency exists not as an end, but as a means. As Nobel Prize winning economist Amartya Sen has reminded us, our “instrumental objectives – like the single market and monetary union – should not overshadow our social commitment to the well-being and basic freedoms of the people.” ^[4]
The euro is a means to foster peace between nations; and a means to further our collective prosperity.
In many ways, we have already achieved this. War among the countries of Europe is unthinkable. We have integrated our nations and our markets. The ECB has overseen the longest period of price stability in post-war history.
But there are also important ways in which we have not succeeded. The terrible economic hardship in some parts of the euro area is testament to this.
So what we cannot afford now is to stay where we are.
Federal President Joachim Gauck recently called upon all of us to have more courage for more Europe: “What Europe needs now are not doubters but standard-bearers.” ^[5]
We need to reinvigorate our social models by reforming our economies.
And we need to harness the market mechanism in the service of humanity.
In this way we can safeguard our primary capital, which is the human person in his or her integrity .
Thank you for your attention.

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^[1]M. Draghi “Non c’è vero sviluppo senza etica” - Articolo per "L’Osservatore Romano" del 9 luglio 2009: “La crisi attuale conferma la necessità di un rapporto fra etica ed economia, mostra la fragilità di un modello prono a eccessi che ne hanno determinato il fallimento. Un modello in cui gli operatori considerano lecita ogni mossa, in cui si crede ciecamente nella capacità del mercato di autoregolamentarsi, in cui divengono comuni gravi malversazioni, in cui i regolatori dei mercati sono deboli o prede dei regolati, in cui i compensi degli alti dirigenti d'impresa sono ai più eticamente intollerabili, non può essere un modello per la crescita del mondo.”

^[2]Walter Eucken, (1952) “Grundsätze der Wirtschaftspolitik”, p. 265: “Alle Bemühungen, eine Wettbewerbsordnung zu verwirklichen, sind umsonst, solange eine gewisse Stabilität des Geldwertes nicht gesichert ist. Die Währungspolitik besitzt daher für die Wettbewerbsordnung ein Primat.“

^[3]Pope Pius XI, Quadragesimo Anno, 79

^[4]Sen, A. K. (1996), ‘Social Commitment and Democracy: The Demands of Equity and Financial Conservatism,’ in P. Barker (ed.), Living as Equals

^[5]Joachim Gauck, Speech on the prospects for the European idea, 22 February 2013