1 00:00:06,000 --> 00:00:09,279 Speaker 1: Welcome to Kobe Time, a podcast series on Markets and 2 00:00:09,289 --> 00:00:12,609 Speaker 1: Economies from DVS Group Research. I'm Pam Rbe, chief Economist, 3 00:00:12,750 --> 00:00:17,860 Speaker 1: welcoming you to our 109th episode. This is an atypical 4 00:00:17,870 --> 00:00:21,469 Speaker 1: episode for the first time in this podcast history, we 5 00:00:21,479 --> 00:00:25,559 Speaker 1: will discuss the intersection of faith and economics, in particular, 6 00:00:25,569 --> 00:00:28,649 Speaker 1: some of the foundational principles of Catholic faith and the 7 00:00:28,659 --> 00:00:32,299 Speaker 1: role they have played and could play going forward in 8 00:00:32,310 --> 00:00:34,339 Speaker 1: modern economic practices and policy. 9 00:00:34,729 --> 00:00:38,168 Speaker 1: Our guest is Doctor Tony Annette, a visiting scholar at 10 00:00:38,180 --> 00:00:42,580 Speaker 1: the Center for sustainable development Columbia University. Previously, Tony spent 11 00:00:42,590 --> 00:00:45,799 Speaker 1: two decades, actually, more than two decades at the International 12 00:00:45,810 --> 00:00:48,860 Speaker 1: Monetary Fund. He is also a member of the College 13 00:00:48,869 --> 00:00:52,930 Speaker 1: of Fellows at the Dominican School of Philosophy and Theology. 14 00:00:53,130 --> 00:00:57,599 Speaker 1: Last year, Tony published Catatonics. How Catholic tradition can create 15 00:00:57,610 --> 00:01:01,889 Speaker 1: a more just economy? Now, I'm not a Catholic nor 16 00:01:01,900 --> 00:01:03,599 Speaker 1: most likely are most listeners of copy, 17 00:01:04,199 --> 00:01:06,819 Speaker 1: but I think there is room to hear a moral 18 00:01:06,830 --> 00:01:10,120 Speaker 1: voice from a different faith. At the very least, it 19 00:01:10,129 --> 00:01:15,610 Speaker 1: demonstrates the universality of our imperatives and goals. Tonya Net. 20 00:01:15,620 --> 00:01:16,610 Speaker 1: Welcome to Copy Time. 21 00:01:17,389 --> 00:01:19,480 Speaker 2: Thanks, Time or it's a great pleasure to be here. 22 00:01:19,489 --> 00:01:20,250 Speaker 2: Thanks for inviting 23 00:01:20,260 --> 00:01:23,169 Speaker 1: me. I think uh we should do a full disclosure 24 00:01:23,180 --> 00:01:26,480 Speaker 1: to our listeners that more than a decade ago, you 25 00:01:26,489 --> 00:01:30,260 Speaker 1: and I had a blog called Reasons and Opinions. And 26 00:01:30,269 --> 00:01:34,129 Speaker 1: I would like to think that your thoughts on Catholic 27 00:01:34,139 --> 00:01:35,809 Speaker 1: economics began way back then. 28 00:01:36,160 --> 00:01:38,889 Speaker 2: That's a definitely true. I would say that. Yes. 29 00:01:39,290 --> 00:01:41,779 Speaker 1: And we were early in the days of vlogging. Um 30 00:01:41,790 --> 00:01:46,190 Speaker 1: So Tony, uh let's start with the background. Uh What 31 00:01:46,199 --> 00:01:49,510 Speaker 1: is the or explain to us the historical foundations of 32 00:01:49,519 --> 00:01:50,860 Speaker 1: Catholic social teachings? 33 00:01:51,589 --> 00:01:56,290 Speaker 2: Sure. So Catholic social teaching is a body of teaching 34 00:01:56,300 --> 00:02:01,019 Speaker 2: that relates to the economy and to society more generally. 35 00:02:01,330 --> 00:02:06,849 Speaker 2: Uh This relates all the way back to biblical teachings. 36 00:02:07,059 --> 00:02:09,928 Speaker 2: If you, if you go back to the Hebrew scriptures, 37 00:02:09,940 --> 00:02:11,529 Speaker 2: you will see things like 38 00:02:12,119 --> 00:02:17,038 Speaker 2: do not charge us on loans, look after the strangers 39 00:02:17,050 --> 00:02:20,330 Speaker 2: in your society and then you have things like every 40 00:02:20,339 --> 00:02:24,539 Speaker 2: seven years, you want to relieve all debt every 49 years. 41 00:02:24,550 --> 00:02:27,339 Speaker 2: You want to relieve all debt and and restore all 42 00:02:27,350 --> 00:02:30,639 Speaker 2: property that has been sold in the previous 49 years 43 00:02:30,649 --> 00:02:34,250 Speaker 2: to its original owners. So there's a set of very 44 00:02:34,258 --> 00:02:37,619 Speaker 2: radical economic teachings that go all the way back to 45 00:02:37,630 --> 00:02:39,100 Speaker 2: the Hebrew scriptures. 46 00:02:39,389 --> 00:02:42,619 Speaker 2: Now, Catholic social teaching has been working out this for 47 00:02:42,630 --> 00:02:48,369 Speaker 2: about 2000 years. Modern Catholic social teaching started in the 48 00:02:48,380 --> 00:02:53,610 Speaker 2: late 19th century when Pope Leo the 13th was grappling 49 00:02:53,619 --> 00:02:57,139 Speaker 2: with the moral challenges of the industrial revolution. And the 50 00:02:57,149 --> 00:02:57,679 Speaker 2: massive 51 00:02:57,970 --> 00:03:02,429 Speaker 2: economic and social upheavals and the mistreatment of workers in 52 00:03:02,440 --> 00:03:06,470 Speaker 2: the new factories. So he wrote a document called Rum Novara, 53 00:03:06,970 --> 00:03:10,350 Speaker 2: which was really a strong statement in favor of the 54 00:03:10,360 --> 00:03:15,008 Speaker 2: rights of workers in this new capitalist economy. And ever 55 00:03:15,020 --> 00:03:16,149 Speaker 2: since then, 56 00:03:17,149 --> 00:03:22,309 Speaker 2: the Popes have been trying to provide moral guidance to 57 00:03:22,380 --> 00:03:27,100 Speaker 2: the great challenges we face whether it's the Great Depression, 58 00:03:27,110 --> 00:03:31,720 Speaker 2: the wave of decolonization after the second World War all 59 00:03:31,729 --> 00:03:34,330 Speaker 2: the way through to the global financial crisis 60 00:03:35,095 --> 00:03:40,304 Speaker 2: and then to the climate crisis we face today. Um Basically, 61 00:03:40,505 --> 00:03:46,354 Speaker 2: the Popes have been trying to apply timeless ethical principles 62 00:03:46,365 --> 00:03:51,294 Speaker 2: to very concrete and specific realities that we're facing today. 63 00:03:53,229 --> 00:03:58,490 Speaker 1: Timeless principles. So can moral principles exist without faith 64 00:03:59,910 --> 00:04:03,550 Speaker 2: and moral principles exist without faith? I think they absolutely 65 00:04:03,559 --> 00:04:08,070 Speaker 2: can in a sense. One sense is that Catholic social teaching, 66 00:04:08,089 --> 00:04:12,679 Speaker 2: one leg, one branch traces back to the Bible. But 67 00:04:12,690 --> 00:04:18,269 Speaker 2: another branch traces back to the philosophy of Aristotle who 68 00:04:18,279 --> 00:04:22,279 Speaker 2: talked about in our economic life. You want the sense 69 00:04:22,290 --> 00:04:24,279 Speaker 2: of balance and moderation, 70 00:04:24,579 --> 00:04:27,890 Speaker 2: you don't want greed, you don't want grasping, you don't 71 00:04:27,899 --> 00:04:32,519 Speaker 2: want too much materialism and happiness is not about seeking wealth. 72 00:04:32,589 --> 00:04:36,570 Speaker 2: Happiness is about living a full flourishing, thriving life. This 73 00:04:36,579 --> 00:04:40,789 Speaker 2: is Aristotle and this is very influential in Catholic social teaching. 74 00:04:41,119 --> 00:04:44,308 Speaker 2: And I would also appeal to one of my favorite 75 00:04:44,320 --> 00:04:48,489 Speaker 2: modern political philosophers that's John Rawles who argued from a 76 00:04:48,500 --> 00:04:50,989 Speaker 2: very non-religious foundation 77 00:04:51,839 --> 00:04:56,040 Speaker 2: that ethically we should be trying to maximize the position 78 00:04:56,049 --> 00:04:58,769 Speaker 2: of the least worst off person in society. And that's 79 00:04:58,829 --> 00:05:02,099 Speaker 2: very resonant with Catholic social teaching. I would argue, but 80 00:05:02,109 --> 00:05:06,500 Speaker 2: there are plenty of ethical traditions uh that provide a 81 00:05:06,540 --> 00:05:11,690 Speaker 2: grounding in how we want to structure our economy today. 82 00:05:11,760 --> 00:05:15,649 Speaker 2: It's neoclassical economics, which is kind of a little bit weird. 83 00:05:15,660 --> 00:05:17,529 Speaker 2: It's a little bit of an outlier here. 84 00:05:18,279 --> 00:05:21,940 Speaker 1: We will talk about neoclassical economics. Tony, no worries. Um 85 00:05:21,950 --> 00:05:24,420 Speaker 1: But let's talk a little bit about your book Economics. 86 00:05:24,428 --> 00:05:27,220 Speaker 1: Uh Why did you write it? And was it written 87 00:05:27,230 --> 00:05:28,420 Speaker 1: only for Catholics? 88 00:05:29,760 --> 00:05:34,179 Speaker 2: So I wrote this book with two audiences in mind. 89 00:05:34,540 --> 00:05:38,980 Speaker 2: One is indeed for Catholics because I have discovered over 90 00:05:38,988 --> 00:05:44,700 Speaker 2: the years that most Catholics are rather unfamiliar with the 91 00:05:44,709 --> 00:05:48,660 Speaker 2: tradition of Catholic social teaching. They don't hear it in churches, 92 00:05:48,670 --> 00:05:51,579 Speaker 2: they don't read the documents. It's kind of a mystery 93 00:05:51,589 --> 00:05:55,019 Speaker 2: to them. Somebody it's often referred to as the church's 94 00:05:55,029 --> 00:05:59,049 Speaker 2: best kept secret. So I wrote it one for Catholics, 95 00:05:59,428 --> 00:06:03,660 Speaker 2: but I also wrote it for non-catholics. That's the second group. 96 00:06:03,850 --> 00:06:08,769 Speaker 2: And I wanted this to provide input into the growing 97 00:06:08,779 --> 00:06:12,089 Speaker 2: literature on what a 98 00:06:13,029 --> 00:06:15,989 Speaker 2: to put it to use the slogan. What a post 99 00:06:16,010 --> 00:06:19,320 Speaker 2: neo liberal world would look like. A lot of economists 100 00:06:19,329 --> 00:06:22,859 Speaker 2: and political thinkers are trying to grapple with the great 101 00:06:22,869 --> 00:06:26,779 Speaker 2: problems we face today. The problems of inequality, exclusion and 102 00:06:26,790 --> 00:06:30,260 Speaker 2: climate change, the future of work. And they realize you 103 00:06:30,269 --> 00:06:34,988 Speaker 2: need a stronger ethical grounding to tackle these questions so 104 00:06:35,000 --> 00:06:36,829 Speaker 2: they're trying to do. So there's a lot of people 105 00:06:36,839 --> 00:06:39,329 Speaker 2: trying to do that. So I wanted this book to 106 00:06:39,339 --> 00:06:40,250 Speaker 2: kind of be 107 00:06:40,670 --> 00:06:44,529 Speaker 2: one input into that growing debate from a kind of 108 00:06:44,540 --> 00:06:46,000 Speaker 2: a faith perspective. 109 00:06:47,320 --> 00:06:50,269 Speaker 1: OK, I appreciate that. Um You know, you earlier, you 110 00:06:50,279 --> 00:06:53,549 Speaker 1: said that some of the foundational principles go all the 111 00:06:53,559 --> 00:06:57,299 Speaker 1: way back to the Hebrew scriptures. So then why cats 112 00:06:57,769 --> 00:07:01,299 Speaker 1: and why not just economics as for judeo-christian 113 00:07:01,309 --> 00:07:02,040 Speaker 2: principles, 114 00:07:02,678 --> 00:07:06,100 Speaker 2: right? Because I think that the the kind of the 115 00:07:06,109 --> 00:07:12,220 Speaker 2: advantage of Catholic social teaching is that it's a really 116 00:07:12,230 --> 00:07:13,820 Speaker 2: thoroughly worked out 117 00:07:14,459 --> 00:07:18,260 Speaker 2: framework, ethical framework based on a set of principles that 118 00:07:18,269 --> 00:07:23,640 Speaker 2: are very applicable to the modern economy. So, um and 119 00:07:23,649 --> 00:07:28,690 Speaker 2: in my book, Economics, I basically compare and contrast the 120 00:07:28,700 --> 00:07:34,220 Speaker 2: assumptions of Neoclassical economics with the assumptions of Catholic social teaching. 121 00:07:34,320 --> 00:07:38,670 Speaker 2: And I argue that this framework is actually better placed 122 00:07:38,700 --> 00:07:40,200 Speaker 2: to not only explain 123 00:07:40,290 --> 00:07:44,410 Speaker 2: human motivation but to provide the grounding for how we 124 00:07:44,420 --> 00:07:49,109 Speaker 2: would structure the global economy today. So for this reason, 125 00:07:49,119 --> 00:07:53,190 Speaker 2: I think that because it's so well worked out, it's coherent, 126 00:07:53,200 --> 00:07:57,190 Speaker 2: it's internally consistent and it's pretty sophisticated. 127 00:07:58,619 --> 00:08:03,079 Speaker 1: OK. Um All right, let's talk about what's wrong with, 128 00:08:03,089 --> 00:08:06,549 Speaker 1: you know, classical economics. Uh what's your take on this? 129 00:08:07,459 --> 00:08:13,200 Speaker 2: OK. So neoclassical economics, most economists would say that 130 00:08:13,850 --> 00:08:17,049 Speaker 2: this is just this is kind of the void of 131 00:08:17,059 --> 00:08:22,109 Speaker 2: ethics which is completely wrong. Of course, every, every, every 132 00:08:22,119 --> 00:08:26,390 Speaker 2: you know framework is based on some ethical principles So 133 00:08:26,600 --> 00:08:28,350 Speaker 2: I would argue that 134 00:08:29,019 --> 00:08:33,079 Speaker 2: this is based a lot on the insights of Adam Smith, 135 00:08:33,239 --> 00:08:36,090 Speaker 2: but it's also based a lot on the ethical framework 136 00:08:36,099 --> 00:08:37,520 Speaker 2: known as utilitarianism. 137 00:08:38,510 --> 00:08:42,799 Speaker 2: So it basically says that we are motivated by self interest. 138 00:08:42,809 --> 00:08:47,270 Speaker 2: This is Adam Smith's famous dictum that it's not due 139 00:08:47,280 --> 00:08:49,489 Speaker 2: to the benevolence of the butcher, the baker and the 140 00:08:49,500 --> 00:08:52,159 Speaker 2: brewer that we get our dinner. But it's due solely 141 00:08:52,169 --> 00:08:57,689 Speaker 2: to self-interest Catholic social teaching would say that's too simplistic. 142 00:08:57,700 --> 00:09:04,390 Speaker 2: It's also kind of dangerous. We are also motivated by benevolence, fraternity, solidarity, 143 00:09:04,400 --> 00:09:05,650 Speaker 2: and reciprocity. 144 00:09:06,349 --> 00:09:10,468 Speaker 2: But I think even more dangerous is the assumption about 145 00:09:10,479 --> 00:09:15,750 Speaker 2: what we are supposed to do. Neoclassical economics says we 146 00:09:15,760 --> 00:09:22,400 Speaker 2: are supposed to maximize the satisfaction of our subjective preferences. Now, 147 00:09:22,409 --> 00:09:27,039 Speaker 2: we need to break that down into distinct little pieces. 148 00:09:27,309 --> 00:09:30,640 Speaker 2: First of all, it says, preferences are subjective, 149 00:09:31,070 --> 00:09:34,409 Speaker 2: you like what you like and nobody has the right 150 00:09:34,419 --> 00:09:38,849 Speaker 2: to tell you otherwise, anything that's legal is a valid preference. 151 00:09:39,229 --> 00:09:43,570 Speaker 2: There's no concept of any objective notion of what is 152 00:09:43,580 --> 00:09:49,130 Speaker 2: good for the individual, for society, for politics, for the 153 00:09:49,140 --> 00:09:50,049 Speaker 2: common good. 154 00:09:50,780 --> 00:09:56,150 Speaker 2: And of course, in reality, what is matters is goods 155 00:09:56,159 --> 00:09:59,059 Speaker 2: and services that you can buy on the market. That's 156 00:09:59,070 --> 00:10:03,330 Speaker 2: in fact how Neoclassical economics says you measure whether your 157 00:10:03,340 --> 00:10:06,319 Speaker 2: preferences are satisfied or not by what you can buy 158 00:10:06,330 --> 00:10:10,900 Speaker 2: on the market. There's no notion of anything that contributes 159 00:10:10,909 --> 00:10:14,119 Speaker 2: to human flourishing, that's not a 160 00:10:14,609 --> 00:10:17,510 Speaker 2: consumer good that you can buy in the market. So 161 00:10:17,520 --> 00:10:22,270 Speaker 2: no notion of relational or meaning and purpose or spirituality 162 00:10:22,280 --> 00:10:25,900 Speaker 2: or the stuff that we know from science contributes to 163 00:10:25,909 --> 00:10:30,159 Speaker 2: happiness and well being. Another assumption is that your wants 164 00:10:30,169 --> 00:10:35,190 Speaker 2: are unbounded. All that stops you from consuming everything you 165 00:10:35,200 --> 00:10:38,020 Speaker 2: desire is your income. Or I guess the number of 166 00:10:38,030 --> 00:10:39,229 Speaker 2: hours in the day 167 00:10:39,650 --> 00:10:43,909 Speaker 2: and this of course, gives rise to the notion that 168 00:10:43,919 --> 00:10:48,760 Speaker 2: all that matters is the accumulation of wealth. Um Whereas 169 00:10:48,770 --> 00:10:52,239 Speaker 2: in the tradition of Catholic social teaching, there's a strong 170 00:10:52,250 --> 00:10:59,030 Speaker 2: emphasis on your desires being bounded, your needs, being limited 171 00:10:59,330 --> 00:11:04,510 Speaker 2: and what they call lower goods, being subordinated to higher goods. 172 00:11:04,520 --> 00:11:06,869 Speaker 2: The final thing I would say on this in response 173 00:11:06,880 --> 00:11:08,869 Speaker 2: to your question is 174 00:11:09,559 --> 00:11:12,580 Speaker 2: what do we mean by rationality? Um 175 00:11:13,309 --> 00:11:17,929 Speaker 2: economists pride themselves on the assumption of rationality. But really 176 00:11:17,940 --> 00:11:21,450 Speaker 2: all this means is you satisfy your preferences to the 177 00:11:21,460 --> 00:11:25,390 Speaker 2: best extent possible. But in the tradition that goes all 178 00:11:25,400 --> 00:11:28,289 Speaker 2: the way back to Aristotle, which has been adopted by 179 00:11:28,299 --> 00:11:32,989 Speaker 2: Catholic social teaching, rationality means something different. In fact, I 180 00:11:33,000 --> 00:11:37,179 Speaker 2: would argue something quite opposite. Rationality. Here is about the 181 00:11:37,190 --> 00:11:40,010 Speaker 2: deployments of the virtue of proof 182 00:11:40,539 --> 00:11:46,130 Speaker 2: or practical reason, what Aristotle called phrases to figure out 183 00:11:46,140 --> 00:11:49,539 Speaker 2: what is good for you and then to actively choose 184 00:11:49,549 --> 00:11:55,218 Speaker 2: that good, good for the individual good, socially, good politically. Well, 185 00:11:55,229 --> 00:11:59,829 Speaker 2: of course, neoclassical economics has nothing to say about any 186 00:11:59,840 --> 00:12:03,359 Speaker 2: of these issues. It's all about the maximization of your 187 00:12:03,369 --> 00:12:06,809 Speaker 2: preferences and this is why I think that 188 00:12:07,140 --> 00:12:13,799 Speaker 2: neoclassical economics, its ethical framework is kind of unique, most 189 00:12:13,809 --> 00:12:19,799 Speaker 2: ethical traditions, both secular and religious would argue that there 190 00:12:19,809 --> 00:12:22,280 Speaker 2: is some notion of the good that we should be 191 00:12:22,289 --> 00:12:22,530 Speaker 2: pursuing 192 00:12:22,614 --> 00:12:26,395 Speaker 2: suing. But that doesn't exist in neoclassical economics. So I 193 00:12:26,405 --> 00:12:28,354 Speaker 2: I've been going on for a little bit. I hope 194 00:12:28,364 --> 00:12:30,593 Speaker 2: that answers your question. Well, it 195 00:12:30,604 --> 00:12:33,914 Speaker 1: it answers but also raises other questions. So let's imagine 196 00:12:33,924 --> 00:12:36,744 Speaker 1: for a second, Milton Friedman is sitting with us and 197 00:12:36,755 --> 00:12:41,315 Speaker 1: he's telling us that what you say ethics is um 198 00:12:41,395 --> 00:12:43,155 Speaker 1: in my view, nothing but 199 00:12:43,489 --> 00:12:48,109 Speaker 1: constrained optimization. If there are externalities from people's behavior that 200 00:12:48,119 --> 00:12:52,770 Speaker 1: harms society harms the environment. Well, we can have laws 201 00:12:52,780 --> 00:12:55,599 Speaker 1: for that, we can have regulations, we set certain constraints 202 00:12:55,750 --> 00:12:58,750 Speaker 1: and then people will optimize for the society. What is 203 00:12:58,760 --> 00:13:01,239 Speaker 1: the best? It's not about, you know, trying to figure 204 00:13:01,250 --> 00:13:05,030 Speaker 1: out some nebulous notion of the common good people can 205 00:13:05,039 --> 00:13:07,390 Speaker 1: pursue individualism. We just have to make sure that their 206 00:13:07,400 --> 00:13:10,849 Speaker 1: externalities are internalized. Is it a bit of a too cute? 207 00:13:10,859 --> 00:13:12,390 Speaker 1: Uh retort? 208 00:13:12,929 --> 00:13:15,789 Speaker 2: I mean, a little bit, I mean, there's nothing in 209 00:13:15,799 --> 00:13:20,900 Speaker 2: Catholic social teaching that says you shouldn't internalize externalities. Uh 210 00:13:20,929 --> 00:13:25,968 Speaker 2: or you know, um in fact, Pope Francis does argue 211 00:13:25,979 --> 00:13:30,709 Speaker 2: quite strongly that businesses need to pay for the social 212 00:13:30,719 --> 00:13:33,549 Speaker 2: cost of the environmental damage they do. So there's no, 213 00:13:33,559 --> 00:13:37,469 Speaker 2: there's no inconsistency there. But I think the Friedman Night 214 00:13:37,479 --> 00:13:40,979 Speaker 2: approach is very ethically simplistic. I will 215 00:13:41,174 --> 00:13:44,114 Speaker 2: argue that it's very limited in its approach. The idea 216 00:13:44,125 --> 00:13:50,674 Speaker 2: of optimization, the idea that markets somehow by coordinating all 217 00:13:50,684 --> 00:13:55,244 Speaker 2: this decentralized knowledge can further the common good we know 218 00:13:55,255 --> 00:13:58,255 Speaker 2: in reality that it doesn't, it doesn't work out that way. 219 00:13:58,304 --> 00:14:01,335 Speaker 2: It's too cute and too simple. I would argue. 220 00:14:01,859 --> 00:14:07,200 Speaker 1: But would you deny that by pursuing neoclassical approaches to 221 00:14:07,210 --> 00:14:10,570 Speaker 1: economic problem solving over the last half century, there has 222 00:14:10,580 --> 00:14:13,099 Speaker 1: been substantial prosperity around the world and there has been 223 00:14:13,109 --> 00:14:17,809 Speaker 1: substantial alleviation of poverty in India and China and elsewhere. 224 00:14:18,679 --> 00:14:21,859 Speaker 2: Yeah. So II, I would say a few things about that. 225 00:14:22,049 --> 00:14:25,479 Speaker 2: So I think that there is no doubt in my 226 00:14:25,489 --> 00:14:30,710 Speaker 2: mind that markets can create wealth. Uh central planning does 227 00:14:30,719 --> 00:14:34,989 Speaker 2: not create wealth very well. We've had a kind of 228 00:14:35,000 --> 00:14:38,090 Speaker 2: a long 20th century experiment on that and that was 229 00:14:38,099 --> 00:14:42,020 Speaker 2: a failed experiment. So central planning does not work markets 230 00:14:42,030 --> 00:14:46,179 Speaker 2: actually work. But two caveats to that 231 00:14:46,729 --> 00:14:51,250 Speaker 2: the most successful economic experiment in human history, I would 232 00:14:51,260 --> 00:14:56,320 Speaker 2: argue was post-war social democracy. And that's when in both 233 00:14:56,330 --> 00:15:00,440 Speaker 2: Europe and the United States, they took the market economy, 234 00:15:00,469 --> 00:15:04,909 Speaker 2: but they twinned it with social protections, they twinned it 235 00:15:04,919 --> 00:15:07,229 Speaker 2: with labor rights and they twinned 236 00:15:07,330 --> 00:15:11,059 Speaker 2: with the respect for economic rights, not just property rights. 237 00:15:11,260 --> 00:15:13,710 Speaker 2: And that turned out to be a phenomenal period in 238 00:15:13,719 --> 00:15:18,109 Speaker 2: history in terms of high growth, high productivity, full employment, 239 00:15:18,119 --> 00:15:23,390 Speaker 2: low inequality, and pretty much no financial crises so that 240 00:15:23,400 --> 00:15:27,830 Speaker 2: market can work when yoked to the power of the state. 241 00:15:28,229 --> 00:15:31,330 Speaker 2: And we also see that I would argue with the 242 00:15:31,340 --> 00:15:36,270 Speaker 2: rise of China, China accepted the market after Deng Xiaoping's 243 00:15:36,400 --> 00:15:42,250 Speaker 2: um reforms in 1978. But uh uh actually Milton Friedman 244 00:15:42,260 --> 00:15:43,320 Speaker 2: went to China 245 00:15:43,640 --> 00:15:48,169 Speaker 2: and actually shocked them by what he said, they actually 246 00:15:48,179 --> 00:15:50,119 Speaker 2: threw him out because they thought that what he was 247 00:15:50,130 --> 00:15:54,260 Speaker 2: saying was absolutely crazy. Uh So China accepted the market 248 00:15:54,270 --> 00:15:56,960 Speaker 2: but with a strong role for the state in terms 249 00:15:56,969 --> 00:16:00,369 Speaker 2: of especially in terms of industrial policy, which it still 250 00:16:00,380 --> 00:16:04,500 Speaker 2: does to this day. So yes, markets can work. But 251 00:16:04,510 --> 00:16:06,729 Speaker 2: you need a strong relationship between 252 00:16:06,849 --> 00:16:10,030 Speaker 2: in public and private sectors. And this is why this 253 00:16:10,039 --> 00:16:13,710 Speaker 2: is where an ethical framework like Catholic social teaching is 254 00:16:13,719 --> 00:16:17,270 Speaker 2: very helpful because it argues that markets can work. But 255 00:16:17,280 --> 00:16:20,419 Speaker 2: markets need to have a moral boundary. And one way 256 00:16:20,429 --> 00:16:23,469 Speaker 2: you can impose that moral boundary is have the government 257 00:16:23,479 --> 00:16:26,659 Speaker 2: come in and protect people from kind of the swings 258 00:16:26,669 --> 00:16:29,950 Speaker 2: and arrows of fortune that comes with any market economy. 259 00:16:30,789 --> 00:16:33,690 Speaker 1: OK, without getting too much into politics. But I think 260 00:16:33,700 --> 00:16:35,390 Speaker 1: it's sort of an appropriate juncture for me to ask 261 00:16:35,400 --> 00:16:38,859 Speaker 1: you this question having seen the 2.5 years of Joe 262 00:16:38,869 --> 00:16:43,409 Speaker 1: Biden's policy. Do you see reflections of Catholic social teaching 263 00:16:43,419 --> 00:16:43,809 Speaker 1: in that? 264 00:16:44,559 --> 00:16:48,979 Speaker 2: I think so. Um I think he tried, he tried 265 00:16:48,989 --> 00:16:52,090 Speaker 2: and failed to implement what I would regard as pro 266 00:16:52,130 --> 00:16:56,099 Speaker 2: family policies, which was very resonant with Catholic social teaching, 267 00:16:56,349 --> 00:17:00,609 Speaker 2: the child tax credit, which in its very short incarnation 268 00:17:00,700 --> 00:17:04,260 Speaker 2: managed to reduce child poverty by 40%. And then they 269 00:17:04,270 --> 00:17:05,219 Speaker 2: just threw it out 270 00:17:05,648 --> 00:17:11,879 Speaker 2: um promoting things like paid parental leave or universal pre K. 271 00:17:11,898 --> 00:17:15,828 Speaker 2: These are all policies that are definitely uh have a 272 00:17:15,838 --> 00:17:21,359 Speaker 2: moral bound boundary bounding. Sorry, I would also argue that 273 00:17:21,588 --> 00:17:23,269 Speaker 2: some of his policies 274 00:17:23,375 --> 00:17:28,954 Speaker 2: on industrial policy are also the right track. Uh in 275 00:17:28,964 --> 00:17:32,045 Speaker 2: terms of the Inflation Reduction Act and the Chips Act, 276 00:17:32,055 --> 00:17:35,435 Speaker 2: I think this is kind of setting the scene for 277 00:17:35,444 --> 00:17:39,824 Speaker 2: what a post neo liberal world would look like if 278 00:17:39,834 --> 00:17:41,024 Speaker 2: you want to 279 00:17:42,060 --> 00:17:46,599 Speaker 2: pursue the energy transition, which is going to be the 280 00:17:46,609 --> 00:17:52,198 Speaker 2: most unbelievably large economic transformation in human history. In the 281 00:17:52,209 --> 00:17:56,669 Speaker 2: shortest possible time, you can't rely on market signals to 282 00:17:56,680 --> 00:18:00,459 Speaker 2: simply let that happen. You need a strong guiding role 283 00:18:00,469 --> 00:18:04,609 Speaker 2: from industrial policy, which the United States actually has a 284 00:18:04,619 --> 00:18:07,719 Speaker 2: strong tradition in doing going all the way back to 285 00:18:07,729 --> 00:18:09,520 Speaker 2: President Kennedy in the 19 286 00:18:09,599 --> 00:18:14,780 Speaker 2: sixties and the Moonshot which you know, shows very clearly 287 00:18:14,790 --> 00:18:20,260 Speaker 2: what industrial policy and goal based development can accomplish. So, yes, 288 00:18:20,270 --> 00:18:24,139 Speaker 2: I think that President Joe Biden is definitely on the 289 00:18:24,150 --> 00:18:24,859 Speaker 2: right path. 290 00:18:25,800 --> 00:18:29,010 Speaker 1: But would you say that some of these um uh 291 00:18:29,020 --> 00:18:33,400 Speaker 1: you know, market related skepticism or intervention of the state 292 00:18:33,410 --> 00:18:37,390 Speaker 1: type policy? It's almost like a bipartisan thing now because 293 00:18:37,400 --> 00:18:39,859 Speaker 1: I don't know how many people watch the second Republican debate, 294 00:18:39,869 --> 00:18:43,020 Speaker 1: but it seems like those candidates themselves are also sort 295 00:18:43,030 --> 00:18:45,099 Speaker 1: of falling over each other as to how interventionist they 296 00:18:45,109 --> 00:18:46,739 Speaker 1: can be on a wide range of things. 297 00:18:47,619 --> 00:18:50,438 Speaker 2: Yeah, I definitely think there is the kind of the 298 00:18:50,449 --> 00:18:54,280 Speaker 2: ground is definitely shifting on that and I certainly don't 299 00:18:54,290 --> 00:18:57,160 Speaker 2: watch Republican debates, but I do follow what people are 300 00:18:57,170 --> 00:19:01,530 Speaker 2: saying and I think it's, it's somewhat reassuring that some 301 00:19:01,540 --> 00:19:06,919 Speaker 2: on the right are recognizing that you need to protect workers, 302 00:19:07,089 --> 00:19:10,880 Speaker 2: to support unions, to promote industrial policy, things like this. 303 00:19:10,890 --> 00:19:13,520 Speaker 2: And one thing I say about this is that 304 00:19:14,339 --> 00:19:19,349 Speaker 2: some of the architects of the post-war social democratic boom 305 00:19:19,359 --> 00:19:23,800 Speaker 2: in Europe were actually center right. Christian Democrats in countries 306 00:19:23,810 --> 00:19:28,188 Speaker 2: like Germany and France and Italy, the post war era, 307 00:19:28,199 --> 00:19:30,560 Speaker 2: the early post war era, the 1st 20 years 308 00:19:30,795 --> 00:19:35,214 Speaker 2: were dominated by center right parties and they built out 309 00:19:35,224 --> 00:19:40,064 Speaker 2: the welfare states and they build worker protections in Germany. 310 00:19:40,074 --> 00:19:44,214 Speaker 2: They even built things like co determination which allows workers 311 00:19:44,224 --> 00:19:47,764 Speaker 2: to share in the management of the enterprise. This is 312 00:19:47,775 --> 00:19:52,515 Speaker 2: not a socialist uh endeavor, this is a center right endeavor. So, 313 00:19:52,625 --> 00:19:55,055 Speaker 2: you know, they've done it before they can do it again, 314 00:19:55,064 --> 00:19:58,224 Speaker 2: but we definitely need an alliance of right and left 315 00:19:58,234 --> 00:19:59,334 Speaker 2: to get this done. 316 00:20:00,550 --> 00:20:03,369 Speaker 1: OK. I hope I'm not gonna going on a tangent now. 317 00:20:03,380 --> 00:20:07,119 Speaker 1: But what is your assessment of the economic policies pursued 318 00:20:07,130 --> 00:20:09,650 Speaker 1: by your native uh uh Ireland governments? 319 00:20:11,020 --> 00:20:14,540 Speaker 2: I don't follow it that closely, to be honest. Uh I, 320 00:20:14,550 --> 00:20:18,650 Speaker 2: I would not agree with some of their tax policies. 321 00:20:18,660 --> 00:20:21,839 Speaker 2: I was getting in that actually. Yes, I think, you know, 322 00:20:22,130 --> 00:20:26,359 Speaker 2: if you try to set your tax policy with the 323 00:20:26,369 --> 00:20:29,849 Speaker 2: goal of beggar thy neighbor and to try and, you know, 324 00:20:30,010 --> 00:20:35,280 Speaker 2: just attract business from somebody else that is not consistent 325 00:20:35,290 --> 00:20:37,479 Speaker 2: with the global common good. And Catholics 326 00:20:37,555 --> 00:20:42,094 Speaker 2: social teaching does see something called the universal common good 327 00:20:42,104 --> 00:20:46,214 Speaker 2: that we are global citizens. We do have global responsibilities. 328 00:20:46,224 --> 00:20:49,734 Speaker 2: There is such a thing as global solidarity, especially to 329 00:20:49,744 --> 00:20:52,834 Speaker 2: the poorest people in the world. And one problem in 330 00:20:52,844 --> 00:20:57,395 Speaker 2: the neo liberal era is the race to the bottom 331 00:20:57,405 --> 00:21:01,844 Speaker 2: in corporate taxes and in financial sector regulations that try 332 00:21:01,854 --> 00:21:05,734 Speaker 2: and entice businesses and that does not 333 00:21:06,260 --> 00:21:08,750 Speaker 2: support the global common gule with our views. 334 00:21:09,449 --> 00:21:12,319 Speaker 1: OK. That's a good segue to my new question about, 335 00:21:12,329 --> 00:21:14,989 Speaker 1: you know, global common good. I understand that, you know, 336 00:21:15,000 --> 00:21:18,800 Speaker 1: you have worked on interfaith dialogues uh in recent years. 337 00:21:18,810 --> 00:21:21,829 Speaker 1: So give us a sense of the Vatican's role in that. 338 00:21:22,920 --> 00:21:29,760 Speaker 2: Yes. OK. So from around 2016 to 2018, I was 339 00:21:29,770 --> 00:21:34,989 Speaker 2: involved in the Vatican initiative um uh Coor coordinate by 340 00:21:35,000 --> 00:21:40,069 Speaker 2: Jeffrey Sachs called Ethics and Action for sustainable development. And 341 00:21:40,079 --> 00:21:44,270 Speaker 2: this brought together religious leaders and scholars from all the 342 00:21:44,280 --> 00:21:52,089 Speaker 2: different traditions. So Catholic orthodox Jewish Muslim, Hindu Buddhist Confucian indigenous, 343 00:21:53,040 --> 00:22:00,359 Speaker 2: also with business people, labor leaders, activists, economists, development practitioners 344 00:22:00,949 --> 00:22:05,189 Speaker 2: to discuss whether we could come up with a common 345 00:22:05,209 --> 00:22:10,218 Speaker 2: ethical framework for the great challenges today of sustainable development 346 00:22:10,520 --> 00:22:11,459 Speaker 2: for what 347 00:22:12,229 --> 00:22:17,329 Speaker 2: uh John Raws called an overlapping consensus. In other words, 348 00:22:17,380 --> 00:22:22,109 Speaker 2: can you agree on an ethical consensus, even though the 349 00:22:22,119 --> 00:22:26,170 Speaker 2: basis for your agreement might differ across the different traditions? 350 00:22:26,310 --> 00:22:29,500 Speaker 2: And the answer is yes. And we published a book 351 00:22:29,510 --> 00:22:30,448 Speaker 2: on that called Ethics 352 00:22:30,560 --> 00:22:35,369 Speaker 2: in Action and it shows that there is a strong 353 00:22:35,640 --> 00:22:40,448 Speaker 2: moral and ethical grounding for the challenges of sustainable development. 354 00:22:40,569 --> 00:22:47,040 Speaker 2: And I'm talking about such issues as climate change, biodiversity, poverty, inequality, 355 00:22:47,180 --> 00:22:48,810 Speaker 2: the future of work 356 00:22:49,089 --> 00:22:53,800 Speaker 2: migration, all of these issues we discussed in these meetings 357 00:22:53,810 --> 00:22:57,829 Speaker 2: and I think we succeeded in coming up with an 358 00:22:57,839 --> 00:23:02,650 Speaker 2: ethical grounding to lay out the contours of the global 359 00:23:02,660 --> 00:23:06,109 Speaker 2: common good. And those contours can actually be seen by 360 00:23:06,185 --> 00:23:13,525 Speaker 2: the 17 Sustainable Development Goals adopted by 196 countries in 2015. 361 00:23:13,795 --> 00:23:17,675 Speaker 2: Um These have a strong moral grounding and this, this 362 00:23:17,685 --> 00:23:20,185 Speaker 2: forms the basis of what we came up with in 363 00:23:20,194 --> 00:23:23,165 Speaker 2: terms of the universal common good. 364 00:23:23,949 --> 00:23:24,729 Speaker 2: Has there been 365 00:23:24,739 --> 00:23:27,359 Speaker 1: more progress in that effort? Because you said that was 366 00:23:27,369 --> 00:23:30,819 Speaker 1: between 2016 and 2018. Uh Have there been more, you know, 367 00:23:30,829 --> 00:23:33,050 Speaker 1: I don't know, communiques or papers? 368 00:23:33,599 --> 00:23:36,290 Speaker 2: Yes. So we have a new initiative right now. I'm 369 00:23:36,300 --> 00:23:39,449 Speaker 2: actually going back to the Vatican in a few weeks. 370 00:23:39,689 --> 00:23:44,629 Speaker 2: Um This new initiative is called the Fraternal Economy. And 371 00:23:44,640 --> 00:23:46,169 Speaker 2: this is kind of, 372 00:23:47,180 --> 00:23:51,270 Speaker 2: it's not so much inter religious dialogue, it's bringing together 373 00:23:51,280 --> 00:23:56,579 Speaker 2: experts in economics and finance to try and figure out 374 00:23:56,589 --> 00:24:01,369 Speaker 2: what a fraternal economy would look like based on the 375 00:24:01,380 --> 00:24:05,239 Speaker 2: inspiration provided to us by Pope Francis uh as a 376 00:24:05,250 --> 00:24:08,629 Speaker 2: role model. Um though it's not religious in its, in 377 00:24:08,640 --> 00:24:08,880 Speaker 2: its 378 00:24:08,964 --> 00:24:12,784 Speaker 2: mooring and the meaning that's coming up in a few 379 00:24:12,795 --> 00:24:18,584 Speaker 2: weeks is actually on how private finance can be leveraged 380 00:24:18,594 --> 00:24:23,045 Speaker 2: to support the global common good, especially by promoting sustainable 381 00:24:23,055 --> 00:24:25,185 Speaker 2: development in low income countries 382 00:24:26,290 --> 00:24:30,579 Speaker 1: in these forums. Do you see enthusiasm among the youth 383 00:24:30,589 --> 00:24:34,649 Speaker 1: or it's just a bunch of talking heads and middle 384 00:24:34,680 --> 00:24:35,540 Speaker 1: age and older people. 385 00:24:36,500 --> 00:24:39,609 Speaker 2: It's a bit of both. Um There is basically we 386 00:24:39,619 --> 00:24:44,159 Speaker 2: have a Vatican symposium which brings together young people typically 387 00:24:44,170 --> 00:24:47,780 Speaker 2: once a year to discuss these issues and their energy 388 00:24:47,790 --> 00:24:52,060 Speaker 2: and dynamism and enthusiasm is always great to see. Um 389 00:24:52,069 --> 00:24:55,449 Speaker 2: There are also older people in these meetings too. Uh So, yeah, 390 00:24:55,459 --> 00:24:57,839 Speaker 2: I would say it's, it's a mixture, it's a good mix. 391 00:24:58,969 --> 00:25:02,410 Speaker 1: So Tony, so far you have talked about sort of 392 00:25:02,420 --> 00:25:07,390 Speaker 1: the canon of uh Catholic social uh principles. And uh 393 00:25:07,400 --> 00:25:09,410 Speaker 1: it would seem to somebody who's not sort of well 394 00:25:09,420 --> 00:25:11,800 Speaker 1: versed on these issues that this is sort of universally 395 00:25:11,810 --> 00:25:14,699 Speaker 1: accepted within the faith. Um But shall I be a 396 00:25:14,709 --> 00:25:17,149 Speaker 1: little provocative and ask you, is your interpretation of cat 397 00:25:17,160 --> 00:25:19,790 Speaker 1: cat economics widely accepted among Catholics? 398 00:25:20,869 --> 00:25:25,949 Speaker 2: I think it's broadly but not universally accepted. So I 399 00:25:25,959 --> 00:25:31,449 Speaker 2: basically argue that in Catholics that the principles of Catholic 400 00:25:31,459 --> 00:25:38,670 Speaker 2: social teaching align themselves well with Christian democracy, social democracy, 401 00:25:38,680 --> 00:25:42,489 Speaker 2: sustainable development. With the idea that you need to prove 402 00:25:42,829 --> 00:25:47,438 Speaker 2: the government needs to protect people from the fluctuations. You 403 00:25:47,449 --> 00:25:49,160 Speaker 2: get in any market economy, 404 00:25:49,400 --> 00:25:52,510 Speaker 2: you need to elevate the rights of labor as kind 405 00:25:52,520 --> 00:25:55,599 Speaker 2: of countervailing power against the against the power of work 406 00:25:55,609 --> 00:25:56,810 Speaker 2: of employers. 407 00:25:57,170 --> 00:26:00,430 Speaker 2: And you need to guarantee economic rights as well as 408 00:26:00,439 --> 00:26:04,978 Speaker 2: property rights. And you need to protect nature, protect the 409 00:26:04,989 --> 00:26:09,909 Speaker 2: environment because there's no human flourishing on a planet that 410 00:26:09,920 --> 00:26:14,619 Speaker 2: where climate change, biodiversity and pollution run out of control. 411 00:26:14,630 --> 00:26:17,719 Speaker 2: So for all of these reasons, I think Catholic social 412 00:26:17,729 --> 00:26:23,150 Speaker 2: teaching is very resonant with social democracy and sustainable development. Now, 413 00:26:23,160 --> 00:26:24,899 Speaker 2: there are other opposing views. 414 00:26:25,530 --> 00:26:31,909 Speaker 2: Uh There is a branch of more Catholic libertarianism, which 415 00:26:31,920 --> 00:26:35,420 Speaker 2: I do not think is consonant with the principles of 416 00:26:35,430 --> 00:26:38,359 Speaker 2: Catholic social teaching because it, I think I just think 417 00:26:38,369 --> 00:26:42,420 Speaker 2: you can't gel that, but those people would appeal to 418 00:26:42,430 --> 00:26:46,310 Speaker 2: the principles of subsidiarity which says that you want to 419 00:26:46,319 --> 00:26:49,719 Speaker 2: take decisions at the lowest level possible and the highest 420 00:26:49,729 --> 00:26:50,909 Speaker 2: level necessary. 421 00:26:51,280 --> 00:26:57,780 Speaker 2: Um There's also an alternative tradition called distributor which says 422 00:26:57,790 --> 00:27:02,589 Speaker 2: that you want to create an economy where as many 423 00:27:02,599 --> 00:27:07,130 Speaker 2: people have as much private property as possible. Now, my 424 00:27:07,140 --> 00:27:09,369 Speaker 2: issue with distributor is 425 00:27:09,729 --> 00:27:15,069 Speaker 2: it's rather romantic and not very practical. I always ask distributors. Well, 426 00:27:15,079 --> 00:27:19,188 Speaker 2: how do you distribute property to as many people as 427 00:27:19,199 --> 00:27:26,520 Speaker 2: possible without massive state expropriation and redistribution, which would you know, 428 00:27:26,530 --> 00:27:29,380 Speaker 2: be on the scale of anything that communists would do 429 00:27:29,390 --> 00:27:31,698 Speaker 2: and they, I find they never really have an answer 430 00:27:31,709 --> 00:27:32,280 Speaker 2: to that. 431 00:27:32,640 --> 00:27:36,260 Speaker 2: Um But that is a, it's a tradition in Catholic 432 00:27:36,270 --> 00:27:41,659 Speaker 2: social teaching. Uh and property owning democracy is actually promoted 433 00:27:41,670 --> 00:27:46,500 Speaker 2: by John Raws. John Rawls actually taught that his principle. Yes, 434 00:27:46,510 --> 00:27:51,229 Speaker 2: his principle of the um the different principle is most clear, 435 00:27:51,339 --> 00:27:55,689 Speaker 2: clearly expressed through property owning democracy. So these are kind 436 00:27:55,699 --> 00:27:57,060 Speaker 2: of alternative traditions. 437 00:27:57,589 --> 00:28:00,550 Speaker 1: All right, Tony. So those are reasonable differences within a 438 00:28:00,560 --> 00:28:05,209 Speaker 1: very large umbrella of the Catholic faith. Uh understandable. Uh 439 00:28:05,229 --> 00:28:07,239 Speaker 1: I want to sort of go back to some of 440 00:28:07,250 --> 00:28:10,929 Speaker 1: the things we discussed earlier when we were critiquing neoclassical economics. 441 00:28:10,939 --> 00:28:12,649 Speaker 1: And I was sort of pushing back saying that hasn't 442 00:28:12,660 --> 00:28:15,550 Speaker 1: it succeeded in, you know, raising people out of poverty 443 00:28:15,560 --> 00:28:19,849 Speaker 1: and so on. So help me sort of understand between 444 00:28:19,859 --> 00:28:20,599 Speaker 1: these two, 445 00:28:21,310 --> 00:28:24,349 Speaker 1: you know, words that we throw around one is prosperity 446 00:28:24,449 --> 00:28:27,790 Speaker 1: and the other is progress. Is there a tension between 447 00:28:27,800 --> 00:28:28,150 Speaker 1: the two? 448 00:28:30,089 --> 00:28:32,680 Speaker 2: I guess you could say there's a tension, I mean, 449 00:28:32,689 --> 00:28:36,900 Speaker 2: it's clear as I mentioned that markets can create wealth. 450 00:28:36,910 --> 00:28:42,349 Speaker 2: So markets can definitely create prosperity and you certainly need 451 00:28:42,359 --> 00:28:46,829 Speaker 2: economic growth to lift people out of poverty. Uh certainly 452 00:28:46,839 --> 00:28:49,780 Speaker 2: a necessary maybe not a sufficient condition. But let's just 453 00:28:49,790 --> 00:28:50,660 Speaker 2: leave that there. 454 00:28:51,050 --> 00:28:56,109 Speaker 2: And the problem with market economies uh that left to 455 00:28:56,119 --> 00:28:59,719 Speaker 2: their own devices is that they can lead to lots 456 00:28:59,729 --> 00:29:04,050 Speaker 2: of exclusion and inequality. And we have seen this in 457 00:29:04,060 --> 00:29:09,500 Speaker 2: the past 40 years. Especially in countries like the US 458 00:29:09,510 --> 00:29:12,790 Speaker 2: and the UK, which are much more market oriented than 459 00:29:12,800 --> 00:29:16,650 Speaker 2: say countries and continental Europe. So we are seeing 460 00:29:17,160 --> 00:29:21,060 Speaker 2: uh levels of inequality that we haven't seen since the 461 00:29:21,069 --> 00:29:26,079 Speaker 2: gilded age. Uh We are seeing in the USA real 462 00:29:26,089 --> 00:29:30,839 Speaker 2: wage stagnation for workers that do not have college degrees 463 00:29:30,849 --> 00:29:36,369 Speaker 2: in particular. Um We're seeing very high poverty rates in 464 00:29:36,380 --> 00:29:40,020 Speaker 2: the US uh that go hand in hand with 465 00:29:40,719 --> 00:29:43,020 Speaker 2: very high GDP per capita. 466 00:29:43,760 --> 00:29:48,339 Speaker 2: And uh most ominously, we're seeing these, this phenomenon that case. 467 00:29:48,349 --> 00:29:52,219 Speaker 2: And Deaton referred to as the deaths of despair that 468 00:29:52,229 --> 00:29:58,939 Speaker 2: people are dying due to drug overdoses, alcohol poisoning and 469 00:29:58,949 --> 00:30:04,489 Speaker 2: suicides um due to the despair they're facing in their lives. 470 00:30:04,500 --> 00:30:07,880 Speaker 2: And this is kind of shocking in a country that's 471 00:30:07,890 --> 00:30:09,260 Speaker 2: so rich 472 00:30:09,699 --> 00:30:16,560 Speaker 2: uh that these, that these um social dysfunctions would exist. 473 00:30:16,910 --> 00:30:20,729 Speaker 2: Uh And I think this is a real serious indictment 474 00:30:20,739 --> 00:30:25,500 Speaker 2: of the neo liberal agenda of the past four decades. 475 00:30:25,689 --> 00:30:27,959 Speaker 2: Uh That's why I think we need to get back 476 00:30:27,969 --> 00:30:31,000 Speaker 2: to something that looks a lot more like social democracy. 477 00:30:32,020 --> 00:30:35,709 Speaker 1: Do you have some sympathy with uh Thomas Piketty's work 478 00:30:35,719 --> 00:30:39,069 Speaker 1: in terms of return on capital being greater than returns 479 00:30:39,079 --> 00:30:40,040 Speaker 1: on labor and so on? 480 00:30:40,869 --> 00:30:45,869 Speaker 2: Yeah. Uh I'm very sympathetic to, to Piketty. Um you know, 481 00:30:45,880 --> 00:30:49,209 Speaker 2: his uh but it's funny though because his first book, 482 00:30:49,219 --> 00:30:54,329 Speaker 2: his first book, Capital was a very pessimistic book, basically 483 00:30:54,339 --> 00:30:57,010 Speaker 2: argued that inequality is 484 00:30:57,569 --> 00:31:02,390 Speaker 2: a natural part of capitalism given almost like a universal 485 00:31:02,400 --> 00:31:06,219 Speaker 2: law of how capital accumulates. But in his most recent book, 486 00:31:06,229 --> 00:31:09,310 Speaker 2: a Brief History of Equality, he takes a much more 487 00:31:09,319 --> 00:31:13,050 Speaker 2: optimistic tone, which I think is quite different. He basically 488 00:31:13,060 --> 00:31:17,880 Speaker 2: argues that over the past two centuries, we have actually 489 00:31:17,890 --> 00:31:22,969 Speaker 2: seen a trend towards greater equality and he provides a 490 00:31:22,979 --> 00:31:25,819 Speaker 2: road map for how we can extend this into the 491 00:31:25,829 --> 00:31:27,150 Speaker 2: 21st century. 492 00:31:29,130 --> 00:31:33,670 Speaker 1: OK. Um That's definitely encouraging. Um And Tony, you just 493 00:31:33,680 --> 00:31:35,939 Speaker 1: spoke about debts of despair in the context of the 494 00:31:35,949 --> 00:31:39,939 Speaker 1: United States. Well, I mentioned earlier that your native country 495 00:31:39,949 --> 00:31:42,270 Speaker 1: is Ireland, but you're a dual citizen of Ireland, the 496 00:31:42,280 --> 00:31:45,150 Speaker 1: United States. So let's talk a little bit about your 497 00:31:45,160 --> 00:31:48,849 Speaker 1: adopted homeland. Uh This is probably something that I should 498 00:31:48,859 --> 00:31:50,569 Speaker 1: discuss at the very beginning. This is the very first 499 00:31:50,579 --> 00:31:55,260 Speaker 1: principle questions. Um The essence of America uh Tony lies 500 00:31:55,270 --> 00:31:57,229 Speaker 1: in the freedom of the individual. 501 00:31:57,660 --> 00:32:02,479 Speaker 1: So is that antithetical to a social contract for common good? 502 00:32:04,099 --> 00:32:07,040 Speaker 2: I would say it depends on what you mean by freedom. 503 00:32:07,150 --> 00:32:11,400 Speaker 2: The way freedom is typically interpreted in countries like the 504 00:32:11,410 --> 00:32:16,510 Speaker 2: United States is a much more concept of negative freedom, 505 00:32:16,520 --> 00:32:21,689 Speaker 2: freedom from coercion, leave me alone. If you tax me, 506 00:32:21,699 --> 00:32:26,000 Speaker 2: you are impinging on my property rights to own and 507 00:32:26,010 --> 00:32:28,319 Speaker 2: enjoy the fruits of my own labor. 508 00:32:28,739 --> 00:32:33,050 Speaker 2: That's very much negative freedom. But there's another definition of freedom, 509 00:32:33,060 --> 00:32:37,130 Speaker 2: that's positive freedom and that's the freedom to flourish, the 510 00:32:37,140 --> 00:32:41,209 Speaker 2: freedom to develop and become the best version of yourself, 511 00:32:41,219 --> 00:32:45,079 Speaker 2: the freedom to choose your own path in life. And 512 00:32:45,089 --> 00:32:45,469 Speaker 2: this 513 00:32:45,569 --> 00:32:50,709 Speaker 2: positive freedom is blocked by poverty and inequality. And when 514 00:32:50,719 --> 00:32:55,349 Speaker 2: you lack the basic needs and necessities. So I think 515 00:32:55,359 --> 00:32:58,430 Speaker 2: it depends on what you mean by freedom. One kind 516 00:32:58,439 --> 00:33:01,219 Speaker 2: of freedom is a very libertarian kind of freedom and 517 00:33:01,229 --> 00:33:02,349 Speaker 2: that's very cramped. 518 00:33:02,829 --> 00:33:06,459 Speaker 2: Now, you do want some negative freedoms. You want freedom 519 00:33:06,469 --> 00:33:09,479 Speaker 2: from government coercion, for example, as you would get in 520 00:33:09,489 --> 00:33:14,099 Speaker 2: a totalitarian country, which you also want positive freedoms, you 521 00:33:14,109 --> 00:33:16,449 Speaker 2: want to be able to flourish. You want the freedom 522 00:33:16,459 --> 00:33:19,920 Speaker 2: to develop your capacities as the Maria Sen would say 523 00:33:19,930 --> 00:33:23,880 Speaker 2: to develop your capabilities. So we need a much more 524 00:33:23,890 --> 00:33:27,500 Speaker 2: holistic and rounded view of freedom. I would argue. 525 00:33:28,719 --> 00:33:32,040 Speaker 1: Sure you just mentioned Amaria Sen. I, I recall way 526 00:33:32,050 --> 00:33:35,339 Speaker 1: back when reading ethics and economics and I think that 527 00:33:35,349 --> 00:33:39,819 Speaker 1: there is a threat between that uh work by sen 528 00:33:39,829 --> 00:33:41,959 Speaker 1: and the work that you're trying to do Tony because 529 00:33:41,969 --> 00:33:44,469 Speaker 1: it seems to me that you're striving to create an 530 00:33:44,479 --> 00:33:47,699 Speaker 1: ethical and practical guide to dealing with modern problems. So 531 00:33:47,709 --> 00:33:51,900 Speaker 1: let me put you on the spotlight here. So using 532 00:33:52,390 --> 00:33:56,079 Speaker 1: ethical and practical sort of best principles, have you worked 533 00:33:56,089 --> 00:34:00,560 Speaker 1: up solutions to climate change and inequity and monopolistic practices? 534 00:34:01,939 --> 00:34:04,619 Speaker 2: Well, that's a complicated question. So I'll give you a 535 00:34:04,630 --> 00:34:08,939 Speaker 2: slightly complicated answer. Uh I think that we have actually 536 00:34:08,949 --> 00:34:12,320 Speaker 2: solved a lot of these problems. I mean, I mentioned 537 00:34:12,330 --> 00:34:17,830 Speaker 2: earlier the post-war experiment of social democracy. So we saw 538 00:34:17,840 --> 00:34:22,120 Speaker 2: very clearly from that period, how you can have high 539 00:34:22,129 --> 00:34:25,120 Speaker 2: economic growth and low in and low inequality. 540 00:34:25,550 --> 00:34:28,489 Speaker 2: You do it through the tax transfer system, you do 541 00:34:28,500 --> 00:34:31,310 Speaker 2: it through government spending and you do it through making 542 00:34:31,320 --> 00:34:35,209 Speaker 2: sure unions have sufficient power to bargain collectively for their 543 00:34:35,219 --> 00:34:40,870 Speaker 2: wages and benefits. And also with some elements of workplace democracy. 544 00:34:41,229 --> 00:34:46,080 Speaker 2: Um we've also solved some of the problems of sustainable 545 00:34:46,090 --> 00:34:50,250 Speaker 2: development even though we choose not to do it. Let 546 00:34:50,260 --> 00:34:52,679 Speaker 2: me give you a, an interesting example here. 547 00:34:53,100 --> 00:34:57,239 Speaker 2: The World Bank claims that there are approximately around 700 548 00:34:57,250 --> 00:35:01,250 Speaker 2: million people living in extreme poverty today that's living on 549 00:35:01,260 --> 00:35:06,770 Speaker 2: less than $2.15 per day. Um Let's conceive of this 550 00:35:06,780 --> 00:35:12,040 Speaker 2: little experiment. Let's take for simplicity's sake, a billion people. 551 00:35:12,719 --> 00:35:17,929 Speaker 2: And let's say you give them all $1000 a year. 552 00:35:18,370 --> 00:35:21,600 Speaker 2: Now that should be enough to meet their basic needs. 553 00:35:21,620 --> 00:35:24,279 Speaker 2: They won't be rich by any means, but they have 554 00:35:24,290 --> 00:35:29,899 Speaker 2: their basic, absolute bare minimum, basic needs met that will 555 00:35:29,909 --> 00:35:34,659 Speaker 2: cost $1 trillion. That's 1% of global GDP. 556 00:35:35,750 --> 00:35:39,819 Speaker 2: As a global society, an incredibly rich global society, we 557 00:35:39,830 --> 00:35:43,929 Speaker 2: can afford to do this very easily, but we choose 558 00:35:43,939 --> 00:35:47,419 Speaker 2: not to. And that's because I think even though we 559 00:35:47,429 --> 00:35:52,659 Speaker 2: have great technological power and financial power, we don't have 560 00:35:52,669 --> 00:35:57,000 Speaker 2: the moral power necessary to deploy these kinds of solutions. 561 00:35:57,110 --> 00:36:01,089 Speaker 2: So I think that we have solutions readily available, but 562 00:36:01,100 --> 00:36:02,810 Speaker 2: we choose not to do them. 563 00:36:03,379 --> 00:36:06,360 Speaker 2: Now, let me turn to climate change. Climate change is 564 00:36:06,370 --> 00:36:11,629 Speaker 2: a complicated one because I think that given the immense 565 00:36:11,810 --> 00:36:16,040 Speaker 2: developments in wind solar batteries and evs and all these 566 00:36:16,050 --> 00:36:20,138 Speaker 2: new technologies over the past 10 to 15 years, we 567 00:36:20,149 --> 00:36:23,120 Speaker 2: are on the cusp of an era of cheap energy 568 00:36:23,129 --> 00:36:26,050 Speaker 2: abundance that a lot of people on both. Right and 569 00:36:26,060 --> 00:36:27,620 Speaker 2: left don't realize 570 00:36:28,290 --> 00:36:30,560 Speaker 2: a lot of people on the right think we need 571 00:36:30,570 --> 00:36:33,989 Speaker 2: fossil fuels forever. That's crazy. But a lot of people 572 00:36:34,000 --> 00:36:37,580 Speaker 2: on the left think we need the growth that we 573 00:36:37,590 --> 00:36:40,100 Speaker 2: need to like reduce our living standards. I don't think 574 00:36:40,110 --> 00:36:43,110 Speaker 2: that's true either. As I said, we're on the cusp of, 575 00:36:43,120 --> 00:36:47,770 Speaker 2: you know, clean energy abundance that said, as I mentioned earlier, 576 00:36:47,800 --> 00:36:51,158 Speaker 2: the energy transformation is the single group, 577 00:36:51,245 --> 00:36:54,574 Speaker 2: this economic challenge that we have ever faced, given the 578 00:36:54,584 --> 00:36:57,395 Speaker 2: short time frame, we have to get this done, which 579 00:36:57,405 --> 00:37:00,915 Speaker 2: is going to require everything we have in terms of technology, 580 00:37:01,034 --> 00:37:04,044 Speaker 2: in terms of finance, in terms of politics and in 581 00:37:04,054 --> 00:37:08,334 Speaker 2: terms of ethics. Um do we have everything we need 582 00:37:08,344 --> 00:37:11,465 Speaker 2: to solve this problem? Probably not. There are a lot 583 00:37:11,475 --> 00:37:14,024 Speaker 2: of really, really hard challenges like 584 00:37:14,520 --> 00:37:19,239 Speaker 2: how do you decarbonize in uh uh industries like steel 585 00:37:19,250 --> 00:37:22,529 Speaker 2: and cement. These are really hard challenges for which we 586 00:37:22,629 --> 00:37:26,639 Speaker 2: don't probably don't have full technical solutions right yet. So 587 00:37:26,649 --> 00:37:29,790 Speaker 2: I would say yes. In response to your question, there 588 00:37:29,800 --> 00:37:34,069 Speaker 2: are some challenges of sustainable development that are really, really 589 00:37:34,080 --> 00:37:36,939 Speaker 2: hard and what we still have a lot of hard 590 00:37:36,949 --> 00:37:38,620 Speaker 2: work to do to solve them. 591 00:37:39,510 --> 00:37:43,100 Speaker 1: Uh But I, I really like your first framing of 592 00:37:43,110 --> 00:37:45,590 Speaker 1: this question. Uh I think that was really profound that 593 00:37:45,600 --> 00:37:49,219 Speaker 1: we have great technological and financial power, but it seems like, 594 00:37:49,229 --> 00:37:51,840 Speaker 1: you know, we don't have the moral fortitude yet. Uh 595 00:37:51,850 --> 00:37:53,959 Speaker 1: I think, you know, that really, in a way sums 596 00:37:53,969 --> 00:37:56,810 Speaker 1: up the essence of your calling. Uh So I appreciate 597 00:37:56,820 --> 00:38:00,259 Speaker 1: that Tony. Now, Tony, you spent almost a quarter of 598 00:38:00,270 --> 00:38:03,350 Speaker 1: a century working at the IMF so I want to 599 00:38:03,360 --> 00:38:07,270 Speaker 1: ask you a question about the role of multilateral organizations. 600 00:38:07,850 --> 00:38:12,389 Speaker 1: Do they undermine sovereignty or should they be seen as 601 00:38:12,399 --> 00:38:15,820 Speaker 1: providers of global public good? Not just in theory, but 602 00:38:15,830 --> 00:38:17,370 Speaker 1: also in practice? 603 00:38:18,129 --> 00:38:22,350 Speaker 2: Ok, so let me answer that question using two principles 604 00:38:22,360 --> 00:38:27,629 Speaker 2: of Catholic social teaching and those principles are solidarity and subsidiarity. 605 00:38:28,270 --> 00:38:32,419 Speaker 2: Solidarity is quite simple. It's basically the idea that we 606 00:38:32,429 --> 00:38:37,219 Speaker 2: are all responsible for all and that includes every person 607 00:38:37,229 --> 00:38:41,939 Speaker 2: in the world today, including people from the poorest countries 608 00:38:41,949 --> 00:38:44,569 Speaker 2: in the world. We have a moral responsibility to them. 609 00:38:45,080 --> 00:38:47,489 Speaker 2: The second principle of subsidiarity, 610 00:38:47,929 --> 00:38:51,219 Speaker 2: this is that you want to do make decisions at 611 00:38:51,229 --> 00:38:55,929 Speaker 2: the lowest level possible and the highest level necessary. Sometimes 612 00:38:55,939 --> 00:38:59,620 Speaker 2: that highest level necessary is the global level. When you 613 00:38:59,629 --> 00:39:02,989 Speaker 2: have global challenges that cannot be solved by national or 614 00:39:03,000 --> 00:39:05,120 Speaker 2: local governments, you need to solve them 615 00:39:05,310 --> 00:39:09,129 Speaker 2: a global level. The classic example, there is climate change, 616 00:39:09,370 --> 00:39:13,090 Speaker 2: the climate as we all know does not respect national borders, 617 00:39:13,100 --> 00:39:17,129 Speaker 2: does not respect sovereignty, which requires a global solution. This 618 00:39:17,139 --> 00:39:20,600 Speaker 2: is why the Paris Agreement on climate change is so profound, 619 00:39:20,610 --> 00:39:22,570 Speaker 2: so important and so transformative. 620 00:39:22,919 --> 00:39:29,540 Speaker 2: So yes, there is a vital role for multinational multilateral 621 00:39:29,550 --> 00:39:34,320 Speaker 2: organizations today like the IMF like the World Bank. And 622 00:39:34,330 --> 00:39:37,860 Speaker 2: I think there should be an international organization set up 623 00:39:37,870 --> 00:39:41,060 Speaker 2: to monitor the implementation of the Paris Agreement. For example, 624 00:39:41,070 --> 00:39:43,500 Speaker 2: we need to give that we need to create something 625 00:39:43,510 --> 00:39:45,540 Speaker 2: with real teeth there and real power. 626 00:39:46,600 --> 00:39:50,989 Speaker 1: OK? But in the context of that, is there necessarily 627 00:39:51,000 --> 00:39:53,639 Speaker 1: a need for a faith based approach or it can 628 00:39:53,649 --> 00:39:57,340 Speaker 1: just go on in a similarly seemingly secular manner? 629 00:39:58,530 --> 00:40:00,370 Speaker 2: Well, it depends on what you mean by a faith 630 00:40:00,379 --> 00:40:04,350 Speaker 2: based approach. I mean, what we really need as I 631 00:40:04,360 --> 00:40:07,370 Speaker 2: keep coming back to this point, we need an ethical 632 00:40:07,379 --> 00:40:13,428 Speaker 2: and moral grounding for all of our economic and social decisions. 633 00:40:13,639 --> 00:40:19,030 Speaker 2: Um As I mentioned earlier, we have great technology, we 634 00:40:19,040 --> 00:40:21,629 Speaker 2: have finance, we are very rich, 635 00:40:22,149 --> 00:40:25,979 Speaker 2: but we do not have the ethical grounding needed to 636 00:40:25,989 --> 00:40:30,560 Speaker 2: solve these profound problems and these problems are getting more 637 00:40:30,570 --> 00:40:34,209 Speaker 2: serious year after year and we just bury our heads 638 00:40:34,219 --> 00:40:36,909 Speaker 2: in the sand and we pretend they don't exist. This 639 00:40:36,919 --> 00:40:41,759 Speaker 2: is why we need a realignment around these core ethical values. Now, 640 00:40:41,770 --> 00:40:44,580 Speaker 2: whether they come from religions or whether they come from 641 00:40:44,590 --> 00:40:48,428 Speaker 2: secular ethics I would argue it doesn't really matter matter, 642 00:40:48,439 --> 00:40:50,330 Speaker 2: but we need better ethics 643 00:40:51,280 --> 00:40:53,959 Speaker 1: here here. Very well said, Tony. Uh thank you so 644 00:40:53,969 --> 00:40:57,139 Speaker 1: much for your time and insights and coming to this podcast. 645 00:40:58,010 --> 00:40:59,959 Speaker 2: Oh, it's a, it's a great pleasure time or I 646 00:40:59,969 --> 00:41:02,589 Speaker 2: was delighted to do this and thank you for your 647 00:41:02,600 --> 00:41:03,459 Speaker 2: interest in 648 00:41:04,040 --> 00:41:06,800 Speaker 1: Kons. No, I think not just me but my listeners 649 00:41:06,810 --> 00:41:08,830 Speaker 1: would also find this absolutely fascinating. 650 00:41:09,120 --> 00:41:12,549 Speaker 1: Uh KPI Time is for information only and does not 651 00:41:12,560 --> 00:41:17,699 Speaker 1: represent any trade recommendations. Definitely not this podcast. All 109 652 00:41:17,709 --> 00:41:20,689 Speaker 1: episodes of CPI time are available on youtube and on 653 00:41:20,699 --> 00:41:25,100 Speaker 1: all major podcast platforms including Apple Google and Spotify. As 654 00:41:25,110 --> 00:41:28,739 Speaker 1: for our research publications, webinars and live streams, you can 655 00:41:28,750 --> 00:41:32,270 Speaker 1: find them all by Googling D BS Research Library. Have 656 00:41:32,280 --> 00:41:33,020 Speaker 1: a great day.