AIPIS 240 - Pope Francis' Vision for a Caring Society with Dr Robert Whaples

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Welcome to the show. This is Jason Hartman, your host and every 10th episode we do something kind of special, kind of different. We what we do is we go off topic. So regardless of which show it is on the Hartman Media Network, whether it be one of the financial shows, economics, real estate, investing, travel, longevity, all of the other topics that we have, every 10th episode we go off topic and we explore something of general interest, something of general life, success, value. And so many of our listeners around the world in 164 countries have absolutely loved our 10th episode shows. So that's what we're gonna do today. And let's go ahead and get to our guest with a special 10th episode show. And of course, on the next episode, we'll be back to our regular programming. Here we go. It's my pleasure to welcome Dr. Robert Waples to the show. He is book review Editor for the Economic History association, research fellow at the Independent Institute, Managing Editor for the Independent Review, and Professor of Economics at Wake Forest University, and editor of the New Pope Francis and the Caring Society. Robert, welcome. How are you?

Thanks for having me on. I'm doing great today.

It's good to have you on. Good to have you on. So, Pope Francis, this is quite a really a new direction, isn't it, for the Catholic Church? I mean, sort of a very modern pope. Right.

In many ways, he's moving the church into some new directions, but it turns out that the church's history is long and rich. And so especially when it comes to what the Pope's saying about the economy and also the environment and those kinds of things, actually not that groundbreaking, just maybe moving, tacking the church back over in a direction that some of the earlier popes would have had, maybe a little less friendly to the market than his most immediate predecessors would be.

Okay. Okay, good. So what does he think about, you know, give us some of maybe his worldview on capitalism, charitable giving, things like that?

Yeah. So I think the best place you can find him talking about this is in the encyclical that came out a couple years ago called Laudato Si on the Care of Our Common Home. And while a lot of people think of it as his environmental encyclical, it's as much about the economy as it is about the environment. It's as much about the rich and the poor as about the earth itself. And so I think one way to frame the Pope's view on these things is to think about his background. Until just five years ago, he was living down in Argentina, and I think that gave him a little different view on the economy than we would have here. He describes himself as kind of allergic to all things economic. And, you know, you just don't see him being as supportive of a market system as some of his predecessors were. And I think that has a lot to do with his Argentine background. Argentina, if you went back a century, a little more than a century ago, was one of the most successful economies in the world. It was up there in the top handful in terms of standards of living.

It's amazing what decades of corruption will do.

Yeah, their standards of living have gone up as they have all over the world, because we have better technology and all that. But you are exactly right. The corporatist model, the Juan Peron, the Peronistas, which is a model where the government is totally intertwined with business. And to be successful in business, you need to be in league with the government. And so we would call that crony capitalism around here. I think that's what Pope Francis views as capitalism. So, you know, I would consider that kind of a misperception on his part. But you can understand why, coming from where he does, we always have to be worried about crony capitalism, having the government be the one determining the winners and losers, but it isn't really the rule. And a better functioning economy has one where, you know, firms really do compete for customers to deliver the best products at the best prices. And then much more of the benefits go along to the consumers there and standards of living are a lot higher and you solve tough problems like absolute poverty so much more quickly when you adopt a more free market oriented economy.

Okay, so I just want to make sure this is clear for, for, well, myself and then of course, the listeners. So you're saying that because he has this somewhat like tainted view of capitalism because of the Argentine model, for it's much more, I mean, it's, you know, that we complain about crony capitalism here in the States, but you know, God, it's, it's worse there. So that would make him less capitalistic in his statements and his worldview. Right?

I think that's exactly right. That he just kind of has a natural gut reaction to this thing, that a market economy isn't going to solve your problems very well. Because I think he's seen a market economy that just wasn't a strong market economy. It was one that had handcuffs on. And so one thing to compare him with is John Paul ii, who grew up in Poland under communism. So he saw how bad communism worked, and he said more supportive things of a democratic capitalist system than like just about any other Pope ever has. And you can see how their backgrounds would have affected that. Now, one thing that economists would say if they had a chance to sit down and chat with Pope Francis is that, in fact, the various types of economies around the world that are moving toward the free market have generated so much economic growth in recent decade that it has wiped out much absolute poverty that existed around the world. The World bank calculates that over a billion people in the last few decades have been lifted out of absolute poverty. And they define that people living on less than $1.90 a day. And so as China has moved to market mechanisms, India, countries in Africa, Indonesia, big places all over the world have done this. We have seen. They copied what we did in this country and other countries did, capturing the power of a market economy, people working together, and they've seen just absolute poverty melt. And so that's a wonderful success that I don't think the Pope acknowledges as much as you would like him to.

Yeah, definitely agree with you there. So connect the economy with the environment, if you would. Of course, it's extremely connected, but connected in the Pope's worldview, if you would.

I guess in the Pope's worldview, business can be a noble profession if directed to the right ends, but he worries that, in fact, it gets directed toward the wrong ends. And, you know, people trying to just line their own pockets and earn big profits, and in the process, maybe just putting their cost off onto other people if they can get away with it. And that obviously happens. And when you see that happening in the environment, it can be very destructive.

Absolutely. And in so many other ways. If I may interrupt you for a moment, I just want to bring this up to the listeners because I think this word that I'm about to say, and of course, you know, the word is not used enough in our dialogue about the economy, the environment, or many other parts of life. And the word is externalities. Externalities. We really need to start talking about externalities more often. So in the kind of context. We're using it, of course. You know, the. The company goes out and they do their manufacturing and they pollute the river. Right. Polluting the river is not a cost of doing business directly to the company, but it's an externality and a cost that we all bear because the river's polluted. Right. Someone has to clean it, hopefully. But there are externalities in so many other areas of life. I mean, you know, the little pet peeves that I have in my life, like leaf blowers, One of the worst inventions in human history, I believe, is.

That whining sound for a half an hour and the dust block away.

You're like the dust and the pollution. It's terrible. Yeah. And loud motorcycles and loud cars. These are externalities. Other people bear the cost of them. So back to the Pope, I just wanted to go on that little tangent for a moment.

Yeah. And so I think Pope Francis is entirely right that many individuals, many businesses, will push their costs off onto other people if they can get away with it. But what a successful market economy does is make sure that they don't get away with it. Right. And so we pass laws that say polluters have to pay. And you know what? It turns out I'm a polluter, too. I've got lights on in my office, and there's a place not too many miles away from here that's burning coal to create the electricity. And luckily, they've got scrubbers and things in their smokestacks, so there's not too much soot that comes out. But I'm the one paying them to do that. Right. And so when an economist says the solution to this problem is to make the polluter pay, they don't just mean the businesses. I mean the consumers as well. They share those costs. And it will, you know, depend on the forces of competition who bears those costs. But in fact, what you need to do to solve an environmental problem like that is sit down and make polluters pay. That can be through a tax if there's no other way. But another way that usually works much more successfully is to create a property, right. So that somebody owns something and then has an incentive to take care of it. Now, owning the air, that's a hard one. But, you know, think about owning the land, owning water, those kinds of things. And so here's an example that one of the authors in our book brings out. You can see from hundreds of miles up in space a difference between one end of the island of Hispaniola and the other end. That's the island of the Caribbean. That's got Haiti on one end.

Right.

And the Dominican Republic on the other.

Right. The DRO is much better off than.

Haiti on one side of the island than the other. And the reason goes back to decades of corrupt governments in Haiti where nobody had a secure property. Right. You owned your land, sort of, but the government could come on and grab stuff. Their cronies could come in and grab stuff. They could clear cut your land or something.

Absolutely.

So what did you do? You cut the trees down before they got a chance. Or maybe you didn't cut the trees down before they got the chance, but everything just kind of gets cut down and then there's all this erosion and you know, the whole environment is out of whack because they didn't have an honest government that defined and enforced property.

Okay, so I'm so glad Robert, you brought this up. Let me ask you a couple questions about this. I agree with you philosophically, no question. And I remember reading a Greenpeace magazine and it was, you know, your several years after the Soviet Union had finally collapsed, you know, and it just profiled and the pictures were astonishing. They were just terrible. The birth defects, the pollution.

There was more environmental degradation within the Soviet Union and has been in communist countries than any other place in the whole.

And the thesis being what is what you say is that when people don't own something they don't care about it. And I agree, you know, how well do you take care of your own car versus a rental car? How well do you take care of a rented house versus your own house? Of course that's true. But, but, but you know, if Monsanto or Dow Chemical, they want to buy a big plot of land next to and you know, pollute it, I mean that might actually be a good equation for them, you know, that even though they own it, the ownership society concept is, is true and philosophically valid. It just might be an expedient business decision. You know, it, it does seem like, and as much of a libertarian as I think I am, you know, it seems like we do have to have some, some tax or some kind of regular regulation is a tax. But, but I don't know what are your comments on that?

I think you are right. In fact, there are times when it makes sense for if there's a product we really want and it's messy to make it, the mess has to go somewhere. And so it makes sense that you would give them a place that they could put it on their own land rather than dumping it on somebody else's land. But what's really interesting is if you just look at the most basic measures of environmental quality, you know, how much junk there is in the air that you breathe, how clean is the water that you actually get to drink, those kinds of things. What economists have discovered is a distinct pattern that you see for just about every pollutant. And that is as economies grow from the very low agrarian kind of level, the pollution levels start to go up, but then they peak and they start to go down once countries get rich enough. How do they get rich like that? Well, they're the market economies. And so the market economies get richer and richer and then we can afford to clean things up. We demand to clean things up. We have the spare resources with which we can clean things up. And so we've got about the cleanest air in the world around here. In this country, it's far cleaner than it was a few decades ago. When I was growing up, I remember before there were catalytic converters on cars.

I remember too, and things like that.

Just feeling it in my lungs.

Oh yeah, you go to other, well, the leaks, leaf blowers don't have catalytic converters, you know, and these, these dumb little golf carts running around Belize and you know, I mean, I've been to 81 countries and it's just disgusting how they are. But in a sense, couldn't one argue that the US through its trade policy, which is, we're seeing that reverse now, through its trade policy, has exported the pollution to China and created an externality? You know, as Kennedy said, we all breathe the same air, right? It's, I, I don't know, you know, have we just moved the pollution to Beijing?

There is a degree of validity to that argument. But of course what also needs to be brought in is that sometimes people are willing to make trades like that with you. China receives money for the products that we buy from them, raising their standards of living. And they have, I guess collectively said that we're okay getting dirtier air at the same time that we're getting richer. But even if they're not collectively saying that, even if it's kind of forced on them from above, China is now at the level basically of a mid income country. The richer areas along the coast are now above the world average and moving up toward first world standards. And in fact the environment in many Chinese cities is now getting cleaner, right?

It's getting attention.

Look at objective measures of this, right? Just the total amount of soot in the air and those kinds of things is going Down. And so they've turned that corner in an important way.

Yeah, yeah, good point, good point.

My wife and I have been, have been binge watching lately old Mission Impossible episodes.

I watched them.

So, you know, they're from the late 1960s and early 1970s. And you see a car driving off and there's all this stuff that comes out of the tailpipe. You see planes taking off and there's all this junk coming out. It's such a change in, you know, the 40 or 50 years since that happened. It's just you can spot it with your eyes.

My mom used to tell me about how businessmen would go to work in the morning with a white shirt and at the end of the day it would be gray. In many American cities they had detachable.

Collars back in the old days. You know, that's the part sticking out above your vest or whatever. And you just take the collar off and put a new one on midway through the day or something like that so you could have a clean collar.

That's just incredible. Yeah, yeah. So the point being, and you know, we agree on that, look, capitalism is good for the environment. But the folks on the left listening would argue that that's because of government regulation. And I remember when I was in a group called Leadership Tomorrow in, when I lived in Southern California, we spent an entire day at the aqmd, the Air Quality Management District in I believe Yorba Linda, California or Diamond Bar. And I remember the person speaking to us, she proudly got up and said, she spoke to our group and said, you know, we don't take any taxpayer money here. And they had these gorgeous offices with brand new, you know, beautiful furniture. And I thought, wow, this place is pretty posh. And she proudly said, we don't take any taxpayer money. And I said, well, where do you get your revenue? And she said, by assessing levying fines against companies that don't comply with things like making it a longer walk. If you don't have a fuel efficient car in the parking lot, you have to park further away, if you don't carpool, if you don't have a fuel efficient car, et cetera. So, you know, they would find big companies, you know, thousands of dollars a day, like in exorbitant fines, of course, that passes through to the consumer.

Of course, a fine is a tax by another name.

Of course it is. Yes, I know.

And so the point is that there are sometimes we do need to get together and act collectively. Okay. And so, yeah, I mean, government needs to be part of the solution. Not part of the problem. What economists have generally found, though, is that government has had a track record, especially the federal government, when they put these regulations in place, they do so in a very inefficient way. They could have had other regulations, other rules that reduced the pollution the same amount at a much, much lower cost because they want to call the shots on everything rather than just give you the incentive to reduce the things and you find out the cheapest way to do it. Right. Like the walking from the parking lot example. And so, you know, I think that's very important to realize that, that government is part of the solution, but maybe not a perfect part of the solution. If you look at the trend in many of the levels of pollutants in the United States before and after the federal government passed their clean air or clean whatever acts, the pollution levels were already coming down. And the trend didn't really change too much when the federal government got into the game.

Interesting. Interesting. Yeah, yeah, yeah. I can't imagine government being inefficient. That's just really. I'm joking, of course.

You know, the incentives just aren't there. It's not part of your bottom line. And, you know, bureaucrats have a hard time. I've talked with bureaucrats about issues like this, and I can empathize with them. They just don't have the same incentives. They have to please higher ups in different ways than people in business who please them by earning more profits and things like that. So you can see why they often end up implementing rules that aren't going to work that way.

Well, speaking of bureaucrats, just, you know, let's wrap up with. I want to ask you about one other chapter in the book, Uneven Playing Fields, Markets and Oligarchy. What about that? And where does the Catholic Church and the Pope come in on that?

Yeah, and so that's an interesting chapter in the book that's by Gabriel Martinez, who's down at Ave Maria College down in Florida. And so I would say of all the chapters in the book, it's kind of the one that goes out of its way to take Pope Francis on his own terms and not trying to be the outsider economist, being critical, kind of showing him what we can teach him. And I think a number of the other places in the book, the authors, including myself in the introduction, point out that we have a lot of things that we can learn from what Pope Francis says. I think the most important one of them, in my opinion, would be this. Fans of the free market. Many economists often take a Completely materialistic view of things, as though spiritual matters are of no concern whatsoever. And that especially comes through when you kind of open up an economics textbook and it just gives you a blunt assertion that we're going to run with from now on. More is better. Economists would say more is better. And post Francis says, you know what, I just don't buy that. In fact, more can be very bad for you. You know that you could eat too much food. You know that you could, right. You could consume too much. He points out that so many of us have kind of traded God in for mammon and we're caught up, as he says, in this just whirlwind of consumption. You know, we've got to have the latest thing and then this phone is two years old and you got to turn it in or get rid of it and get the even newer, spiffier one. And we just like turn our lives over to these things. The lesser lights of the world drown out the eternal light. And that is such an important point that we people in prosperous societies are not using our economy to its greatest potential. We don't have to be using the economy to just be getting more and more junk that we don't really need. We could be using it for higher purposes.

Yeah, well that's a great point and I'm glad that you kind of closed on that note because what's interesting about it is the way the consumer society was created in America. You know, it goes back to who the Torches of Freedom Guy, what's his name? I can't think of it right now. That really created modern PR and advertising in Madison Avenue before Mad Men. Gosh, his name's going to come to me right after this interview. But you know where the women smoke the cigarettes and you know who I'm talking about. I'm sure before that Americans, like other people around the world were not into. They didn't always have to have the newest, better thing. The consumer society. Really, you can see like right where it changed. It was, you know, it was within a decade. It, it just, there was this shift, this growth at all costs. That's the way the economy is set up. You just got to sell more widgets and more widgets. No matter how much of a steward of the environment you are, you're not, you need them. Yeah, yeah. You're going to create externalities. And what do we do about that? Is there even a solution?

If there is a solution, it's not a top down solution. You know, it's not like somebody would get elected to office on a platform like that and then be able to implement some policies. It's from the sold out, right? It's a person at an individual level saying, I don't need this extra stuff. I don't need to work this extra time to get this extra thing. Or maybe if I am going to work more, I don't need to take it and buy something to show up my neighbor or catch up with my neighbor. I could use it for more noble purposes. I could donate to my excess funds to somebody who needs them far more than I do. I could just reorient my life so that I don't need to use all the resources because I'm not in this giant rat race with other people. And so really it's. It's one that you've got to do you and God together rather than you and Uncle Sam together, you know.

Mm. By the way, the name I was looking for was Edward Bernays who really invented modern public relations in 1929. And that's when they look it up, folks. If you have not read about this or watched any of the documentaries about Edward Bernays and Torches of Freedom, it's quite fascinating. And so that there was this shift, you know, right at the Great Depression when companies had to figure out how to get people to want stuff they didn't need. And boy, have we doubled down on that one more than once.

There's a lot of human creativity and intelligence that was harnessed for that project and maybe could have been harnessed for better.

No question.

No question about that. No question about that. Well, hey, it was great talking with you about the book. I wish you a lot of success with it. Give out your website and tell people you know where they can find you.

Go to the Independent Institute's website so it's www.independent.org and you will find this book there and all sorts of other wonderful things that the Institute does.

Excellent stuff. Robert. Thanks for joining us.

It was my privilege to be on. Thank you so much.

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