Where Pope Francis Goes Terribly Incorrect With His Economics

July 10, 2015 Nemes Random

Much of exactly what Pope Francis states in his latest encyclical, Laudato Si, is totally in line with conventional Catholic socio-economic teaching. Unfortunately, that’s so much the worse for standard Catholic socio-economic teaching, as at the heart of it there’s a number of assumptions that are simply entirely untrue. And offered that these mistakes are at the heart of the argument they do work to rather negate the remainder of the teaching.

The fundamental ideas, that the environment is essentialis very important, that environment change is a genuine thing that we ought to so something about, those are great obviously. It’s not my childhood Catholicism that leads me to support a carbon tax (as an example) but the output of all of the economic research that has been done into the subject.

However, the 2 mistakes are here:

“The idea of unlimited or limitless development, which proves so attractive to economists, investors and specialists in innovation … is based on the lie that there is an infinite supply of the earth’s products, and this causes the world being pressed dry beyond every limit,” composed Pope Francis.

The first error right here is a definitional one. The idea that economists think that there’s a limitless supply of the earth’s items. I’m sorry but this is simply nonsense. Since economics doesn’t have anything to state about something that’s in boundless supply. Economics is all about scarce goods and their allotment. We do not, for example, have an economics of seawater. Supply isn’t limitless, there’s some knowable and known quantity of it out there. But compared to what human beings use seawater for there is a boundless supply. Therefore there is no constraint, there’s no shortage: hence there’s no economics about it.

We do have a deficiency of farmland, therefore we have an economics of farmland: undoubtedly a few of the structures of the subject in the contemporary age were about precisely that, Ricardo on lease for example. We do have an economics of fresh water due to the fact that we do have a shortage of fresh water offered all of the things that human beings prefer to finish with fresh water.

If you’re going to start your financial analysis by presuming that the topic is the very opposite of exactly what it is you’re going to wind up with some beautiful kooky results.

The second problem right here is a rational one. Stemming again from a definitional mistake. We do not assume that unlimited or unlimited development is possible due to the fact that there’s that boundless supply of the earth’s products. On the grounds, explained above, that the very first thing we do note is the shortage of those resources. Rather, we note that economic growth is not dependent upon the supply of the earth’s products. Financial growth is defined as a boost in the value developed, that value being defined as whatever subjective and or arbitrary value humans put on exactly what is produced.

As an example, humans appear to value MP3 files. The creation of a new MP3 file, including brand-new info or sounds, is not especially constricted by the consumption or supply of the earth’s items. Nor is the duplication of an extant MP3 file so constricted: but there is that boost in value as defined by humans.

The supply of resources, of the earth’s items, is undoubtedly limited. However given that value itself is not a physical thing, the quantity of value that can be produced is not limited by the supply of physical inputs or goods.


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