This month marks the tenth anniversary of the investment bank Lehman Brothers filing for bankruptcy. This event is generally regarded as the turning point in the economic event called the Great Recession. Today, the economy is booming, though many are predicting the next recession. With that in mind, what lessons might we take from the past ten years of economic recession and recovery?
For starters, while it is easy to speak of “the economy” as a monolithic entity which is either good or bad, doing so hardly captures the economic experience of most human beings. Looking at the economy in such a singular manner can bring less clarity, not more. Better (but still not ideal) is to look at levels of workers across the tripartite division of low, middle, and upper class.
The Recession hit low-income workers hardest and they have been the slowest to catch up in the recovery. The middle class has certainly felt the effects of the Recession, but as unemployment has fallen to historic lows, finding a job for a college grad has become significantly easier.
What about the upper class? It seems that the 1%-ers have done better than anyone else in the economic recovery. But what exactly does “better” mean? Obviously, in this context, “better” means “more”, as in the wealth and income of the richest has increased at a higher rate.There is, however, a problem: more doesn’t always mean better. Certainly, for those on the lower end of the income scale, when more means rising out of destitution, we can call that better. However, at the other end of the spectrum, it is not clear if having more does anyone any good.
These words of Jesus can point us in the right direction: “Again I say to you, it is easier for a camel to pass through the eye of a needle than for one who is rich to enter the kingdom of God” (Mt 19:24). Jesus asserts here that when it comes to salvation, riches can be a real moral hazard. So while the economic recovery has further increased the wealth of the richest, perhaps in the long run it’s actually made them worse off.
The influential 20th-century economist John Maynard Keynes is famous for his quotation: “In the long run, we are all dead.” He’s not wrong. But he may have overlooked the significance of what happens after we die. Maybe we can best interpret his observation as a sort of memento mori — we will have to meet our Maker eventually, so we had better prepare now.
What does it mean to consider the ultimate end in economic matters? Does the admonition of Jesus mean that we ought to seek a radical redistribution of wealth? Should the rich just give their money away, as Peter Singer suggests? I think the wisdom of the Catholic tradition offers a reasonable middle way: instead of considering the good of the whole economy as a mere aggregate of the wealth of its parts, we ought to re-introduce a robust understanding of the common good. The common good is a foundational concept in Catholic social teaching which recognizes that the dignity of the human person as foundational and places material needs in a larger spiritual and existential context. In seeking the common good we are called to balance our own needs with those of the whole community. In other words, we can’t be purely self-interested, as most economics assumes.
Acting with an eye to the common good doesn’t mean acting purely altruistically, but it does entail putting the good of the whole at the forefront. Concretely, for those of us who enjoy economic status, this might mean acting against what are your short term economic interests. For example, expanding government funding to address a problem specific crises like opioid addiction seems consistent with the common good, but so does allowing for a high degree of freedom in markets to stimulate investment, growth, and innovation.
Ultimately, in the wake of the Great Recession, calls for economic reform and greater economic justice must not fall on deaf ears. As we sit in a relatively comfortable economic situation, with stock markets hitting record highs, the time for structural change is upon us. In the face of polls indicating that the economy is not a major political concern, Catholics and people of good will ought to advocate for change while we can afford it, not just for the material benefit of the poor but also for the spiritual benefit of the rich.
This article is a continuation of TJP’s November ’18 midterm elections series focused on faithful and discerning citizenship.
Image courtesy FlickrCC user Bernard Spragg. NZ.