What economic policies should Catholics support?
Philosophies of political economy — capitalism, socialism and others — can pose challenges for Catholics to discern because nearly all agree with at least some elements of church social teaching. Michael Greaney, a parishioner of the Cathedral of St. Thomas More in Arlington, and his colleague Dawn Brohawn argue for boosting individual ownership and more lenient banking policies in their new book “The Greater Reset: Reclaiming Personal Sovereignty Under Natural Law.” They posit that one solution to economic injustice is giving everyone access to owning capital.
Greaney and Brohawn point out that wage earners own their own labor, that is, they garner income through working. But if they lose their job or are unable to work, they can no longer make money. Some can’t make a living wage even with a job. However, ownership of property, machinery or part of a company can still generate income for people when they can’t work. For that reason, Greaney and Brohawn believe ownership can support more economic freedom and facilitate a more just economy.
Greaney and Brohawn believe some church teachings offer the basis to support more widespread ownership. “As Leo XIII said (in his encyclical ‘Rerum Novarum’), ‘the law should favor ownership, and its policy should be to induce as many as possible of the people to become owners,’ ” they write.
The authors also cite the views of Archbishop Fulton J. Sheen, who wrote: “There are three possible solutions to the problem of property. One is to put all the eggs into a few baskets, which is Capitalism; the other is to make an omelet out of them so that nobody owns, which is Communism; the other is to distribute the eggs in as many baskets as possible, which is the solution of the Catholic Church.”
Power naturally and necessarily follows property, said American statesman Daniel Webster. So how can Catholics give power, and property, to the people? “Ironically, demands for power often end up meaning consumption power (income) rather than production power (ownership), or mere political power without the economic power to back it up,” write Greaney and Brohawn.
Their book and the Arlington-based economic think tank they’re a part of — the Center for Economic and Social Justice — offer several solutions, a few inspired by the works of economist Louis Kelso and his co-author, philosopher Mortimer Adler. Greaney and Brohawn propose creative ways to make loans more accessible.
Currently, if a borrower is creditworthy and their project is expected to generate a profit, a bank will temporarily buy the project by issuing a promissory note, or a loan agreement. When the project makes a profit, the borrower repays the bank plus a fee for the service, thereby buying back their project.
However, the bank will give that person money only if they have collateral, which makes new capital only available to those who already have collateral, or capital. But what if collateral wasn’t needed?
“Banks demand collateral for loans as a form of insurance and charge a premium for making loans with a higher risk of default,” they write. “Why not take that risk premium and use it as the premium for an insurance policy that will then serve as collateral? In this way, anyone can be creditworthy, because the risk shifts from the borrower to the project itself. Everything except the financial feasibility of the project would be a matter of complete indifference to the bank.”
Other ideas include Kelso’s employee stock ownership plan, which provides widespread access to capital credit to each employee in a company, or a citizens land development cooperative, which allows residents control over local land use decisions. “It will enable every citizen within a defined community area to become an equal owner in a land development entity,” said Brohawn.
This year, Missouri passed the Citizen’s Land Development Cooperative Act. Greaney and Brohawn hope the new law will encourage communities to form cooperatives, which they believe will provide a self-sustaining way to finance development and combat systemic poverty, starting in some of the roughest neighborhoods in St. Louis. “We have to look at the social environment that we have and enable it to reflect universal principles of justice and truth,” Brohawn said.
