His speeches in Washington weren’t just allegory and hope. They were a clear message to Congress to avoid creating a permanent American economic underclass.
- By Daniel AltmanDaniel Altman is the owner of North Yard Analytics LLC, a sports data consulting firm, and an adjunct associate professor of economics at New York University’s Stern School of Business.
Pope Francis has won plaudits for many things since the start of his pontificate in March 2013: his desire to put the Roman Catholic Church’s vast wealth to work in service of the poor, his progressive views on social issues, and his plain-spoken manner. But a quick look at his speech to Congress and other remarks this week reveals that his true strength may lie in the dismal science — and there’s much American politicians could learn from his understanding of the economy.
One of the biggest themes of the pope’s visit has been helping people in need. “A political society endures when it seeks, as a vocation, to satisfy common needs by stimulating the growth of all its members, especially those in situations of greater vulnerability or risk,” he told Congress. And in economic terms, these comments could not be more pertinent to the United States. The workforce is essentially stagnant in size, with virtually zero growth in the number of people in their prime working years and a low participation rate to boot. As a result, increasing the economy’s output means raising productivity.
It’s easiest to raise the productivity of people at the low end of the scale; a bit more education or training makes a much bigger difference to a burger-flipper than it does to a medical device engineer who already has a doctorate. And when productivity rises a lot, so do income and tax revenue, while demand for social services falls. This boost to the government’s budget is exactly what helps society to satisfy those common needs. So those people in vulnerable and risky situations — typically poor, handicapped, or lacking social support networks — are the right ones to think about as the source for future growth.
The pope’s speech also drew a parallel between the global refugee crisis and mass immigration to the United States. “On this continent, too, thousands of persons are led to travel north in search of a better life for themselves and for their loved ones, in search of greater opportunities,” he said. “Is this not what we want for our own children?” As a guide for dealing with incoming migrants, he suggested the Golden Rule: “Do unto others as you would have them do unto you.” If future growth is the goal, economists would probably offer an identical prescription.
There’s no economic reason not to offer immigrants the same opportunities accorded to native-born Americans; the U.S. economy benefits the most when resources go to those with the most ability, wherever they happened to be born. Moreover, forcing millions of people to live as second-class citizens reduces their access to health care, education, financial services, and all the other necessities that will make them and their children productive members of society. Immigrants make the biggest contribution when they are treated the same as everyone else. Or, as the pope said, “let us seek for others the same possibilities which we seek for ourselves.”
The pope also condemned homelessness in the United States during remarks at St. Patrick’s Catholic Church in Washington. “We can find no social or moral justification, no justification, no justification whatsoever, for lack of housing,” he said. This rings true for economists as well. Does it make sense never to provide housing to someone who can’t pay for it? It’s illegal for most hospitals to deny medical care to people with emergency conditions, regardless of their ability to pay. Housing somehow doesn’t fall into the same category, though it can be just as important to safety and well-being — and possibly to being productive in the economy. By comparison, any disincentive to work that might arise from access to free housing would likely be of minor economic importance.
Despite his discussion of poverty, hunger, homelessness, and other byproducts of the American economic system, the pope never mentioned the word inequality. Yet he did warn against the “polarization” that fed a “simplistic reductionism which sees only good or evil; or, if you will, the righteous and sinners.”
This us-versus-them dynamic has a long and unfortunate history in American economic policy, from the demonized welfare recipients of the Ronald Reagan era to Mitt Romney’s deadbeat 47 percent. It’s the sort of dynamic that leads Congress to cut food stamps for 850,000 households at a stroke — they didn’t earn that food, even if their state governments think they need it and should get it. When members of Congress themselves are mostly millionaires, it’s not hard to figure out why the concerns of poor Americans are so far from their minds. And so polarization feeds greater inequality, which pulls us and them still further apart.
It’s a recipe for economic ruin, especially in a nation that needs to harness all of its talents to grow. The creation of an economic underclass does nothing for the social stability that an economy needs to function, and wasting the potential of smart kids who happen to be born poor just means that productivity and economic growth will continue to lag.
The pope gets this, and he delivered his sermon in language that was allegorical but still rather easier to grasp than the testimony of most Federal Reserve officials. Hopefully, his audience was paying attention.
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