Catholic Social Teaching and the Financial Crisis

By: Séamus P. Finn, OMI

The current financial crisis provides an excellent opportunity for the church to highlight some core elements of Catholic Social Tradition to inform both the search for a solution to the crisis and a renewed debate about globalization. The financial services sector has been a preeminent beneficiary and example of globalization. No other recent event has brought home to all corners of the world so quickly and so clearly the integrated nature of our global financial system and the inherent vulnerabilities in the financial system and the globalization process.

The private sector has been the driver of globalization. Within the private sector, it has been the financial sector that has been front and center in the establishment of the framework and mechanisms to drive the process. It has used advancements in technology and communication to establish the networks and create new tools for credit and risk diversification that served to deepen and accelerate systemic integration. Just consider how withdrawing cash from ATM machines or transferring money electronically from one place to another has become normal practice in nearly all corners of the world.

The globalization process, which has accelerated the growth of our global financial system, has been founded on the basis of a corporate business model that has failed to take account of two very important realities: the billions of people who are forced to survive on less than $2 a day and the impact it has on the ecological system. The global integration process that we have lived with has been telling only half of the story. When we build our future on half truths, the house will neither withstand the test of time nor the destructive pressures exerted by those who seek to maximize personal profits and leave the losses to be socialized.

Catholic Social Teaching can make an important contribution to the debate about a new global economic system. The church can provide much needed moral leadership in the following four areas:

(1) the role of government in society;

(2) the common good;

(3) the option for the poor and

(4) telling the ecological truth.

By working with others to make these contributions heard by government leaders, the proposals to emerge from the upcoming debate will be more responsive to the needs confronting people in all regions of the world and take seriously our dependence on an earth system that is limited and fragile.

(1) The intervention of the state in economic matters and specifically in the regulation of financial markets has been at the core of a long standing debate between those who preach the gospel of the free market and recite a litany of its accomplishments and those who believe that market forces by themselves cannot solve many of society’s challenges. The crisis has clearly shown that institutions abandoned established customs about responsible lending and willfully took on great risks A permissive regulatory framework failed to intervene appropriately in its own jurisdictions and the mechanisms for global and systemic action were found wanting.

(2) We live at a time in which we are continuously made aware of the fact that we participate in a global system that grows increasingly integrated and more interdependent each day. Today the boundaries of the common good have taken on global dimensions. The myriad ways in which our nations and regions are connected and the countless ways that actions or decisions in one corner of the world can have global repercussions are often brought home to us. All the more then must the basic human needs of people globally be front and center in the debate about the financial system and the regulatory framework put in place to govern that system.

(3) As a special dimension of her contribution to this debate the church can remind those at the table about the billions who continue to live in poverty and the ways in which the promises made to those who have been left behind by the recent architecture of globalization remain unfulfilled. The increasing inequality that the financial system has facilitated between and within countries and regions must be addressed. The “preferential option for the poor” as a hallmark of the tradition must be a benchmark in the discussion. (Mt 25;Lk; 16)

(4) In recent decades the church has carefully explored the care of creation as a new challenge and priority. Recovering what some of the great teachers in the tradition have enshrined in their writings, Pope John Paul II called the church to embrace its “ecological vocation”. Making sure that the ecological truth is included in any reformulation of the financial system and discussion of globalization is absolutely necessary. As new tools are developed to measure and quantify this reality, the system must be able to include them into its calculations and rules.

By joining with the voices of men and women of good will from all corners of the world, the church, through its tradition of social teaching, can make a much needed contribution to bringing about a financial system that is both truly responsive to the needs of people everywhere and that counts the ecological costs. By highlighting the responsible role that government must play in the economy and the regulation of financial markets for the sake of the common good, the church will be able to bring balance to a debate that has for too long been dominated by a free market message that undermines the value of the government’s role.

Markets are useful mechanisms, but they do not do everything perfectly, and their failures and shortcomings can be improved by appropriate state intervention. This is especially the case with risk taking and market transparency — two market shortcomings closely linked to the crisis.

A free enterprise doctrine that promotes the free movement of capital, goods, and jobs must be tempered by society’s commitment to the common good as expressed by world leaders in the Millennium Development Goals. The impact of this crisis on people in developing countries and regions, especially those with few safety nets to cushion their suffering, must be a high priority for people of faith.

A principle of sustainability that begins with the integration of the ecological truth into the global financial system and in the operation of financial markets must also be a high priority in the upcoming summits and meetings. Catholic social teaching tradition on ecology can be particularly helpful as we seek to respond to the consequences of a business model that externalizes costs, while exacerbating climate change through such things as unsustainable transportation and energy costs.

The tradition can bring new and renewed wisdom to a globalization process to insure that it will not shy away from addressing the ethical and moral challenges. A global financial system needs to be fair, robust and flexible and make access to capital and credit real for those who need it.

Eco-Tips: Practical Ideas for Earth-Friendly Living

Everyone is looking for ways to cut spending these days and we need to cut our energy use as much as possible. Here are things we can do FOR FREE to save energy AND money. Please share them with widely.

Put your PC to sleep. Keep your computer andits monitor in sleep mode rather than leaving themon around the clock. You stand to use 80 percentless electricity, which over the course of a yearcould have the effect of cutting CO2 emissions byup to 1,250 pounds, according to EPA estimates.

Turn down the heat in the winter, and turndown the cool in the summer. Lower the thermostat(in winter) 5° to 10° F when you’re sleeping - or are outof the house. “A 10° decrease can cut your heatingbill by as much as 20 percent.” In the summer, for every degree you raise the thermostat setting for the air-conditioner, you can expect to cut your cooling costsby at least 3 percent.

Lower the shades and raise the windows. Be old-fashioned and use your windows andshades to help cool your house. Pull the shades in west-facing rooms in the afternoon. At night, if the forecastcalls for cooler temperatures and low humidity,give the AC a rest. Open windows upstairs anddown, and use window fans.

Take care of your air conditioner, and it willtake care of you. Your air conditioner will runmore efficiently if you clean or replace its filterevery other week during heaviest use. Keep leavesand other debris away from the central air’s exteriorcondenser, and keep the condenser coils clean.

Drive steadily—and a bit slower. Hard accelerationand abrupt braking will use more fuel than ifyou start and slow more moderately. Keeping downyour overall speed matters, too, because aerodynamicdrag increases dramatically as you drivefaster. If you travel at 65 mph instead of 55, you arepenalized by lowering your mileage 12.5 percent.If you get your vehicle up to 75 mph, you’re losing25 percent compared with mileage at 55 mph.

Roof racks are a drag. Most cars are reasonablystreamlined, but you work against their slipperinessif you carry things on the roof. A loadedroof rack can decrease an SUV’s fuel efficiency by5% and that of a more aerodynamic car by15% or more. Even driving with empty racks wastes gas.

Stick with regular. If your car’s manufacturerspecifies regular gas, don’t buypremium with the thought of going fasteror operating more efficiently. You’d bespending more with no benefit. Mostcars have built-in sensors that adjust theengine timing to the gas in the tank.Even if the owner’s manual recommendshigh-octane gas, ask the dealership aboutswitching to regular.

No loitering. Don’t let the engine run at idle any longer than necessary. After starting the car in the morning, begin drivingright away; don’t let it sit and “warm up” forseveral minutes. An engine actually warms upfaster while driving. With most gasoline engines,it’s more efficient to turn off the engine than toidle longer than 30 seconds.

Spend less for hot water. Set the hot waterheater at 120° F (or the “low” setting), which ishot enough for most needs. If the tank feelswarm to the touch, consider wrapping it withconventional insulation or a blanket made forthat purpose. To help conserve the water’s heaton its way to the faucets, insulate the plumbingwith pipe sleeves; with these, you can raise theend-use temperature by 2° to 4° F.

Wash clothes in cold water. You might guessthat most of the energy used by a washingmachine goes into vigorously swishing the clothesaround. In fact, about 90% of it is used to heat the water for the load. You cansave substantially by washing and rinsing at coolertemperatures. Warm water helps the suds to getat the dirt, but cold-water detergents will workeffectively for just about everything in the hamper.

Hang it up. Clotheslines aren’t just a bit ofbackyard nostalgia, and this works even for busy people! You spare the energya dryer would use, and your clothes will smellfresh without the perfumes infabric softeners and dryer sheets. You’ll also getmore useful life out of your clothes – all that lint in the dryer is just your clothing wearing out!

Let the dishwasher do the work. Don’t botherpre-rinsing dishes- this added step can waste 20 gallons ofheated water a day. All you need to do is to scrape off leftover food. Enzyme-based detergents will help make sure the dishes emerge spotless.

Think twice before turning on the oven.If you have a microwave, know that it uses only 20 percentof the energy required by a full-sized oven.And while the second-hand heat from the ovenmay be welcome in winter, it can put an addedload on your air conditioner in warmer months.

Use the right pan. When cooking on the stovetop,pick your pan - then put it on an element orburner that’s roughly the same size. Steam foods instead of boil – less water to heat and you lose fewer nutrients. If you do boil, be sure to put a lid on thepot to make the water come to a boil faster.

Dust off the Crock-Pot. Slow cooking in aCrock-Pot uses a lot less energy than simmeringon the stove.

Clean the coils on your refrigerator using atapered appliance brush. Your fridge’s motorwon’t have to run as long or as often. In addition tosaving energy dollars, you’ll prolong the life of theappliance.

Read the label. The EnergyGuide label, thatis. When you shop for a new appliance, look forthe label that gives an estimate of annual energyconsumption. To help make sense of thatstatistic, the label states the highest andlowest figures for similar models.

AND IF YOU DON’T MINDSPENDING A FEW DOLLARS

1. A tighter home is a toastier home. Insulationis an important way to tighten your house, but first, seal those leaks with Inexpensivefoam strips and caulking. This can cut your heatingand cooling bills by 5 to 30 percent.

2. Try do-it-yourself low-E windows. If yourwindows don’t have a low-E coating, considerapplying a self-adhesive film on the glass. Thistreatment is a lot cheaper than replacing the units,and better-quality films are quite durable.

3. Use a programmable thermostat. Heating and cooling eat up roughly half of a typical home’s energy bill, according to the Department ofEnergy. The easiest way to save, short of sweatingor shivering, is to use programmable thermostats.They can pay for themselves in about a year.

4. Switch to those funny-looking fluorescents. A single CFL bulbcan save from $25 to $45 over its life. And it’sa long life: Manufacturers claim that CFLs lastbetween 5 and 13 times longer than standardincandescent bulbs.