Financial Crisis Shows Poverty of Thought, Economist Says
In a talk on wealth and poverty and the current financial crisis, economist Charles M.A. Clark (pictured, at right) began his presentation by apologizing for his profession’s role in “wrecking our economy” and that no one will be able to retire “until they’re 235.”
Clark, a senior fellow at the Vincentian Center for Church and Society and professor of economics at St. John’s University in New York, spoke Jan. 16 at the Association of Catholic Colleges and Universities’ 10th Annual Peace and Justice Meeting held at the University of San Diego.
He discussed how principles of Catholic Social Thought — such as respect for the dignity of each person and a preferential option for the poor — can shed light on the causes of the current economic crisis and the need for a new understanding of wealth creation and business models.
Economists missed seeing the crisis because of the “usual suspects” such as the bubbles in the housing and stock markets and excessive financial deregulation combined with exotic and risky financial tools such as derivatives and sub-prime mortgages.
But he also cited the “deeper causes”  such as the growing gap between rich and poor that created a huge pool of wealth that required ever-riskier investments to generate returns and a lack of income growth among the middle and lower-classes that generated a need for greater debt. As of the year 2000, the richest 10 percent of the world’s population held 85 percent of the wealth while the rest of the world held just 15 percent, Clark said.
Too much of an emphasis on individual wealth creation instead of also promoting the greater economic good not only helped cause the crisis but also created a false sense that the accumulation of wealth is the “best way to promote universal happiness,” he argued.
Commenting on Clark’s presentation, Stephen Conroy (pictured, left), associate professor of economics at USD, noted Pope Leo XIII’s criticism of unfettered capitalism during the late 19th century while Pope John Paul II helped bring down communism in the 1980s.  Principles of Catholic Social Thought are a “GPS” or global positioning system that can provide a healthy balance, helping to keep both the political and economic system from veering too far to the left or right, he said.
— Liz Harman
