Love, Truth and the Economy: A Reflection on Benedict XVI's Caritas in Veritate

INTRODUCTION There is an old joke that goes something like this: It's late at night and two junkies are sitting on a park bench, both of them coming down from the high of their latest fix. One turns to the other and says, "Do you know what my problem is? Do you know what's wrong with the world? It's these dealers! They control everything! They control the supply and the quality. They corner the market and they charge whatever the hell they want! My problem is I can't afford the good stuff." The second junkie looks at the first with an incredulous smile. As it begins to rain on the two of them, he responds to his complaining bench mate with uncommon clarity and insight: "No, you got it all wrong. That's not your problem. Your problem is you're a junkie." Although the respective situations are, of course, vastly different, in many important respects, the comments of the first addict are not unlike the government's response to the economic crisis that began in 2007 with the collapse of the subprime mortgage market--a collapse that led to the near total failure of the economy in the fall of 2008. In the aftermath of the crisis, several household names in the fields of financial services, insurance, securities, banking, and investment banking either ceased to exist, were acquired by other firms, or accepted substantial amounts of government money and partial government ownership in the face of imminent collapse. Among these entities were Countryside Financial, Lehman Brothers, Washington Mutual, Bear Stearns, AIG, Merrill Lynch, General Motors, and Chrysler--to name only the most obvious examples. (1) The U.S. Treasury, the Federal Reserve System, and other government officials responded with a practical diagnosis of the financial crisis that had befallen the world. They looked to the existing structures and institutions to understand the problem and to formulate a solution. The problem was a lack of liquidity. The problem was the crushing burden of toxic assets. The problem was the opaque nature of the transactions. The problem was the faulty and insufficient information the ratings agencies provided. The problem was the atrocious lack of regulatory oversight. (2) In a few instances, the government sought to assign blame to those whom it regarded as the responsible parties. For the most part, however, the government simply sought to provide immediate relief by dramatically increasing the supply of what everyone agreed was desperately lacking-namely, credit. Although a more ambitious reform agenda has since been proposed, (3) this basic approach to basic structural reform remains in place. The addict who complains about his supply of dope and the prices he must pay seems to offer a reasonable, perhaps even sophisticated analysis of the situation in which he finds himself. He looks to the market and sees a systemic problem--one of supply and demand. He seeks to assign blame by pointing to his unsympathetic pusher as the cause of his misery. We know, however, that his analysis falls short. It does not penetrate down to the reality in which his life is truly grounded. No matter how plausible it may sound when spoken, a relatively superficial analysis always yields a relatively superficial solution--a solution that will inevitably prove inadequate over time as circumstances change and the flawed premises upon which the solution is grounded reveal their true weakness. Some might say that the addict is simply framing the problem as a "practical" matter that calls for a "practical" solution. Invoking such language, however, often masks the deeper values that are at stake in the matter at hand--values that lie hidden beneath the rhetorical gloss of practicality. What is presented as an obvious and simple matter of "common sense" is, upon closer examination, often revealed as something that is highly contestable, indeed, at odds with the values most people hold most dear. Again, although clearly different in many important respects, the analysis offered by the second addict in the brief story recounted above is not unlike the diagnosis of the world economy offered by the former Joseph Ratzinger, now Pope Benedict XVI, in his recent social encyclical, Caritas in Veritate (4)--"Charity in Truth. …