On Monday, the following message was posted on the Pope’s official Twitter account: “Inequality is the root of social evil.” This follows on the heels of several other extremely harsh statements that he has made about capitalism over the past year. The Pope appears to believe that inequality is one of the greatest evils that humanity is facing. So if we redistributed all money and all property and made sure that everyone had an equal amount, would that wipe out social evil? Of course not. Such a notion is absolutely absurd. Being the Pope, he should know that the evil that we see all around us is not the result of the distribution of wealth. Rather, it is the result of humanity’s deep rebellion against God. Yes, the fact that the wealth of the planet is being increasingly funneled to a very small minority at the top of the pyramid is a major problem. This is something that I have written about repeatedly. But the answer is not to make sure that everyone has the exact same amount of money and property. In the end, that would only turn us into North Korea.
In case you missed it, here is the tweet by the Pope that is causing such an uproar…
https://twitter.com/Pontifex/status/460697074585980928
By itself, that statement could perhaps be “interpreted” a number of different ways. But this follows other statements by the Pope that make it exceedingly clear what he is talking about. Here is one example…
Just as the commandment “Thou shalt not kill” sets a clear limit in order to safeguard the value of human life, today we also have to say “Thou shalt not” to an economy of exclusion and inequality. Such an economy kills. How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by when food is thrown away while people are starving? This is a case of inequality.
Yes, the Pope is correct to highlight the plight of the homeless and the needy. Even in “wealthy America”, we have an epidemic of hunger. This is something that I wrote about yesterday.
And yes, the Pope is correct to point out society’s obsession with the stock market. Personally, I have been relentless in criticizing the big Wall Street banks.
But the solution is not to take everything away from everybody and put it into a giant pile and redistribute it equally.
History has shown us what happens when a society adopts an extreme form of socialism or communism.
The incentive to work is destroyed, the incentive to create new ideas and new businesses is destroyed, and living standards for everyone go down.
Please don’t think that I am defending our current system. What we have in the United States today is not the kind of pure capitalism that our founders intended. Instead, it is a form of collectivism where nearly all of the economic power is now in the hands of giant collectivist institutions. That includes public collectivist institutions (the government) and private collectivist institutions (large corporations). In this type of economic environment, it should not be a surprise that government dependence is at an all-time high, the number of Americans that are self-employed is at an all-time low and millions of small businesses are being regulated out of existence.
Collectivism, socialism and communism are all close cousins. People are promised that such systems will result in greater “equality”, but it never seems to actually work out that way. Instead, the small elite that hold all the power usually end up enjoying the vast majority of the benefits.
And without a doubt, as the power of the government and the power of the corporations has increased, inequality has been rising. Just check out the following chart from a new book by 42-year-old French economist Thomas Piketty entitled “Capital In The Twenty-First Century“…
As I write this, Pinketty’s book is the number one seller on Amazon. That is pretty remarkable for an economics treatise. But Pinketty fails to realize what actually caused U.S. income inequality to start skyrocketing in 1971. As Brian Domitrovic recently detailed, that was the year when the U.S. completely went off the gold standard and the Federal Reserve started running wild…
The big switch to the foundation of the American financial structure at the advent of this period was the U.S. decision in 1971 to go off the gold standard. Before that time, it was basically clear that outside of wartime (when gold-standard conventions were often suspended), you could basically count on the dollar holding its value against major things like the consumer price level, foreign currencies, and commodities such as gold itself.
After 1971, in contrast, it became basically clear that you could count on no such thing. The CPI might go up 125% in one decade (as it did 1971-1981), the dollar could permanently lose 66% against major currencies (as it did against the yen in this period), and commodities could shoot up ten-to twenty-five fold (as was the case with oil and gold).
Therefore a new day in financial planning also arrived. Suddenly the importance of simply saving money diminished. Money that was saved also had to be hedged. If you simply saved money after 1971, you stood to get killed as the dollar lost value against things it was supposed to be able to procure in the future.
This is where the financial services industry began its long march upward in the share of U.S. economic output it gobbled up. People who had significant money—the rich—threw their money into the products offered by the financial sector, in that the worst thing to happen to a fortune diligently built up over the years would be to see it frittered away on account of currency depreciation.
So much has gone wrong since 1971. Out national debt has gotten more than 40 times larger, our economic infrastructure has been absolutely gutted and the value of the U.S. dollar has declined by well over 80 percent.
Once again, we need to go back to a system that much more closely resembles what our founders intended.
Did you know that the greatest period of economic growth in U.S. history was when there was no income tax, no IRS and no Federal Reserve?
We could have such a system again.
But the solutions being proposed by the mainstream media, our politicians and even the Pope involve even more centralization of economic power.
If we follow this path to the end, we will ultimately become like North Korea.
It is hard to describe the crushing poverty that exists in that hellhole of a country. In North Korea, there is so little electricity that the country appears almost totally dark from space at night. Just check out this picture taken by NASA…
North Korea may have more “equality” than we do, buy in that country “a ballpoint pen is considered a luxury item“. Here is much more on what life is like for ordinary people inside North Korea from the New York Post…
Jobs often come without salaries. Those who do get a paycheck, earn, on average, between $1,000-2,000 a year. Food and clothing are rationed by the government.
Most North Koreans have access to that one TV station and one newspaper, both state-run; they are told that their country is the only functioning and prosperous nation on Earth and that outside rages an apocalypse. Only elites are allowed cellphones, but they can just make calls or text — there is no Internet.
Would you like to live in such a society?
When you take away the incentive to work and the incentive to create, you end up with a much poorer society. Without outside help, much of North Korea would have already starved to death by now…
“The majority of North Koreans believe completely in the regime,” says Barbara Demick, a Seoul-based journalist and author of “Nothing to Envy: Ordinary Lives in North Korea.”
“They are barely surviving,” she says. “Only the rich can afford to eat rice. They’re in a chronic state of food shortage.”
The average citizen eats twice a day — a manageable state of affairs for citizens who lived through the great famine of the ’90s, which reduced millions of people to eating tree bark and plucking undigested kernels of corn from animal excrement.
Yes, something needs to be done about the rising level of income inequality in our country. The middle class is being systematically destroyed and most of our politicians do not seem to care. Some big steps in that direction would be going back to a much purer form of capitalism, shutting down the Federal Reserve, changing laws to shift power much more in the direction of individuals and small businesses, and ending the practice of shipping millions of our good paying jobs to communist nations such as China.
We also need a massive shift in our culture. We need to shift away from a culture of greed and selfishness to a culture of love, compassion and generosity. Those that have been blessed have a responsibility to be a blessing. That is something that we have largely forgotten.
But trying to use government and taxation to wipe out inequality never works and will only make society poorer. This is a lesson that Barack Obama, the Democrats, the Republicans, the mainstream media and the Pope all desperately need to learn.
15 Quotes From Our Founding Fathers About Economics, Capitalism And Banking
Most people are under the illusion that the United States has a “capitalist economy” today, but that simply is not accurate. At best, we have a “mixed economy” that is becoming a little bit more socialist with each passing day. We pay dozens of different types of taxes each year, and some Americans actually end up giving more of their earnings to the government than they keep themselves. But that is still not enough, and so our state governments have accumulated astounding amounts of debt, and our federal government has amassed the largest single debt that the world has ever seen. If future generations of Americans get the chance, they will curse us for the chains of debt that we have placed upon their shoulders.
So what do our government officials do with all of this money?
Well, today approximately 70 percent of all federal government activity involves taking money from some Americans and giving it to other Americans.
Despite this unprecedented wealth-redistribution program, poverty is absolutely exploding in this country and 49 million Americans are dealing with food insecurity.
Meanwhile, the bankers have been getting fabulously wealthy from all of this debt. The Federal Reserve system was designed to trap the U.S. government in an endless spiral of debt from which it could never possibly escape, and that mission has been accomplished. In fact, the U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created a little more than 100 years ago.
Most people like to think of big banks as “capitalist” institutions, but that is not really accurate. In the end, giant corporate banks like we have in the United States are actually collectivist institutions. They tend to greatly concentrate wealth and power, and socialists find those kinds of banks very useful.
In fact, Vladimir Lenin once said that “without big banks, socialism would be impossible.”
While there may be a bit of animosity between big government and big banks once in a while, the truth is that they are usually very closely tied to one another. We saw this close relationship very clearly during the financial crisis of 2008, and it is no secret that there is a revolving door between the boardrooms of Wall Street and the halls of power in Washington. The elite dominate both spheres, and it is not for the benefit of the rest of us.
In America today, government just keeps getting bigger and the banks just keep getting bigger. Meanwhile, the percentage of self-employed Americans is at an all-time low and the middle class is steadily dying.
What we are doing right now is clearly not working.
So why don’t we go back and do the things that we were doing when we were extremely successful as a nation?
In case you don’t know what those things were, here are some clues…
#1 “A wise and frugal government… shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.” — Thomas Jefferson, First Inaugural Address, March 4, 1801
#2 “A people… who are possessed of the spirit of commerce, who see and who will pursue their advantages may achieve almost anything.” – George Washington
#3 “Government is instituted to protect property of every sort; as well that which lies in the various rights of individuals, as that which the term particularly expresses. This being the end of government, that alone is a just government which impartially secures to every man whatever is his own.” – James Madison, Essay on Property, 1792
#4 “Banks have done more injury to the religion, morality, tranquility, prosperity, and even wealth of the nation than they can have done or ever will do good.” – John Adams
#5 “To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it.” — Thomas Jefferson, letter to Joseph Milligan, April 6, 1816
#6 “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence. If ‘Thou shalt not covet’ and ‘Thou shalt not steal’ were not commandments of Heaven, they must be made inviolable precepts in every society before it can be civilized or made free.” — John Adams, A Defense of the Constitutions of Government of the United States of America, 1787
#7 “I place economy among the first and most important virtues, and public debt as the greatest of dangers to be feared. To preserve our independence, we must not let our rulers load us with perpetual debt. If we run into such debts, we must be taxed in our meat and drink, in our necessities and in our comforts, in our labor and in our amusements.” – Thomas Jefferson
#8 “Beware the greedy hand of government thrusting itself into every corner and crevice of industry.” – Thomas Paine
#9 “If we can but prevent the government from wasting the labours of the people, under the pretence of taking care of them, they must become happy.” – Thomas Jefferson to Thomas Cooper, November 29, 1802
#10 “All the perplexities, confusion and distress in America arise not from defects in the Constitution or Confederation, not from a want of honor or virtue so much as from downright ignorance of the nature of coin, credit and circulation.” – John Adams, at the Constitutional Convention (1787)
#11 “The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” – Thomas Jefferson
#12 “Liberty must at all hazards be supported. We have a right to it, derived from our Maker. But if we had not, our fathers have earned and bought it for us, at the expense of their ease, their estates, their pleasure, and their blood.” – John Adams, 1765
#13 “If ever again our nation stumbles upon unfunded paper, it shall surely be like death to our body politic. This country will crash.” – George Washington
#14 “I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.” – Thomas Jefferson
#15 “When the people find that they can vote themselves money, that will herald the end of the republic.” — Benjamin Franklin