Show Me the Way to Poverty

In a recent speech in Bolivia, Pope Francis voiced his indictment of what he calls “the globalization of exclusion and indifference.” Speaking of what he believes to be problems universal to Latin America, he wishes, “May the cry of the excluded be heard in Latin America and throughout the world.” But who, I wonder, are they listening to?

It is true that the plight of the poor in Latin America can be tragic. Francis shared the harrowing stories he heard about people struggling to survive, lacking basic human rights and the means to support themselves. But it is not at all true that their voices have not been heard. As Sam Gregg recently pointed out, Latin American politics have been dominated by demagoguery for decades. And unfortunately the Pope’s own solutions to the problems of the poor are difficult to differentiate from the same protectionist populism that has kept so many in poverty in Latin America for so long.

Pope Francis boldly calls for “change, real change, structural change.” What change would Pope Francis like to see? He makes this clear: “It is an economy where human beings, in harmony with nature, structure the entire system of production and distribution in such a way that the abilities and needs of each individual find suitable expression in social life.” So far so good. Who doesn’t want that?

So what stands in the way, according to the pontiff?—“corporations, loan agencies, certain ‘free trade’ treaties, and the imposition of measures of ‘austerity’ which always tighten the belt of workers and the poor.” Really?

Business, credit, trade, and fiscal responsibility are marks of healthy economies, not the problem, popular as it may be to denounce them. Indeed, these are also marks of economies that effectively care for “Mother Earth,” whose plight the Pope claims “the most important [task] facing us today.” That’s right, more important than the plight of the poor, to His Holiness, is the plight of trees, water, and lower animals.

That moral confusion aside, is there any way we could study what policies correlate with the Pope’s laudable goals? As it turns out, there is. The United Nations Human Development Index (HDI) ranks countries based upon an aggregate rating of economic growth, care for the environment, and health and living conditions—precisely the measures the Pope seems to care most about. Yet of the top 20 countries on the most recent HDI ranking, 18 also rank as “free” or “mostly free” on the most recent Heritage Index of Economic Freedom.

The only two exceptions were Liechtenstein, which wasn’t ranked at all by Heritage, and France, which was ranked 20th of the 20 according to the HDI, and which once was far more economically free. The takeaway? Nearly all of the top countries that have the sort of economies the Pope wants are also characterized by fiscal responsibility, openness to trade, accessible credit, and generally business-friendly environments. That is, precisely the policies that the pope decries.

Now, it might be unfair of me to criticize Francis for not being an economist . . . or, for that matter, not even being familiar with the basic conditions of economic growth taught in any Econ 101 course. At least he didn’t forget to mention Jesus. But it shouldn’t be controversial to say that he is still speaking outside of his competence and vocation. It is one thing to call attention to the moral roots of economic problems; it is another to pass judgment upon which prudential policies are the best means to moral ends.

Gone are the days of a pontiff who would only speak with great caution and nuance on such matters, and then in favor of, rather than against, the basic tenets of a free economy. As Pope John Paul II put it in his 1991 encyclical Centesimus Annus:

Can it perhaps be said that, after the failure of Communism, capitalism is the victorious social system, and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? Is this the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress?

Acknowledging the answer to be complex, he cautiously answered yes, and rightly so, proposing that the free economy “ought to be proposed to the countries of the Third World.” Too many of these countries, including in Latin America, are still yet to experience such freedom, however. And John Paul’s most recent successor isn’t helping them see what a help it could be.

Instead, while actual dictators, Venezuela’s Nicolás Maduro and the Castro brothers in Cuba, sit at the head of Latin American countries, Francis prefers to denounce the “subtle dictatorship” of the economic freedom so few Latin Americans have been fortunate enough to enjoy. And it is for this reason, whether they know it or not, that the poor are excluded and cry out for justice.

It is not economic liberty but high taxes and overregulation that prop up “the domination of the big corporations” in Latin America. Only big corporations can afford to pay such taxes, hire the legal help to comply with such regulations, or otherwise bribe their way into business, undermining the rule of law. The profile of Latin America called Doing Business 2014 ranks it as one of the most difficult regions in the world to start a business. Bolivia, where the Pope decried the supposed evils of economic freedom, ranks 171 out of 189 countries in the world. Maduro’s Venezuela ranks 181.

The Pope is right to say, “This system runs counter to the plan of Jesus,” who came “to preach good news to the poor” (Luke 4:18). But he is wrong to identify that system with basic pillars of economic freedom. With the exception of Chile, economic freedom is just as scarce in Latin America as are other basic human rights, not to mention effective care for “Mother Earth.”

The poor there still wait for good news regarding their material circumstances, despite the Pope’s best intentions to spread a “globalization of hope.” He told the people there that they could take action themselves, and admirably so. But as long as their hands are tied by protectionist measures, and as long as popes and politicians continue to commend such policies to the people, I’m afraid they will excluded from the prosperity for which they hope.