In this episode, Trent answers his patron’s questions on economics and Catholic social teaching.
Welcome to the Counsel of Trent podcast, a production of Catholic Answers.
As Rafiki would say, it is time to answer the questions for our Catholic Economics open mailbag. Welcome to the Counsel of Trent podcast. I’m your host, Catholic Answers apologist and speaker Trent Horn. I’m still recording while I’m on the road. This is my last morning here in my hotel room at Oceanside as I’m getting ready, set to finish filming my Evidence for God course for the Catholic Answers School of Apologetics.
I miss my kiddos, I miss my wifey. Normally, I don’t take long trips like this. In fact, that’s one reason I’m so jazzed… do people say that anymore? They’re jazzed? Are you ever jazzed about something? In any case, it’s one reason I’m so jazzed to be living in the Dallas/Fort Worth metroplex area, because I can get on a flight in DFW and get to almost anywhere in the country in three hours, so I’m hoping when I do talks in the future I can be there, do the talk, sometimes even come back that night or the next day, because I really miss my family. It’s not the same.
I will say this. It is fun when you sleep in a hotel room and there’s nobody who comes in the middle of the night because they’re upset or they need something, and you just get your sleep; but at the same time, you miss that little person who wants to come by your bed or needs help, or jumps into your bed in the morning to tell you about everything they want to do in the day. So, that’s just me. That’s just me being sappy Dad, being on the road, commiserating with you about being away from the kiddos.
But today, I want to finish the Catholic Economics roundtable. In fact, I only got through one question last week. Two weeks ago, or a few weeks ago, I did the Catholic Economics roundtable on the Reason and Theology Channel; so, I had a discussion with Thomas Hackett, who represented distributism, kind of an older view of distributism; very G.K. Chesterton, Hilaire Belloc; Jose Mena, one of the few people out there who will out and out call himself a Catholic socialist. We had a good discussion, and so, I thought to help break down some of the issues that showed up in the discussion, I asked my Patrons at TrentHornPodcast.com to submit to me questions they had about Catholic economics: some of them related to the roundtable, others are just on economic issues in general.
So I thought it would be fun, and if you want to submit questions for future open mailbag episodes, be sure to become a Premium Subscriber at TrentHornPodcast.com. For just five dollars a month, you could submit questions, leave comments under episodes, send messages to me, get access to the Catechism Studies series every week at 8 AM. It’s a half-hour video presentation on the Catechism. Over the next eight months, we’re going to go through the entire thing, and then after that, I am probably going to debut a new study series after that for our Patrons, so lots of great content there. Go to TrentHornPodcast.com to check it out, or leave a review at iTunes, Google Play. That’s always a big help.
Now, on to the questions that our Patrons have submitted to us. Here’s the first one. “Where do you draw the line on supporting businesses that are in direct conflict with Catholic teaching? You have companies like Starbucks that are anti-life”… I’m sure he’s referring to Starbucks supporting organizations like Planned Parenthood… “Netflix, anti-marriage, sexuality issues; Twitter has religious censorship. Why do we support them, and where is the line?”
The fact of the matter is, we live in an evil world. We live in a world dominated by sin. The Bible says that Satan is called the god of this world; not that he’s an actual god, but that he has so much dominion and control over fallen humanity, he almost kind of is the god of this world. Look at the world around us. Look at what it celebrates, especially in the Western world. You turn on TV, people celebrate debauchery, they celebrate greed, they celebrate calumny and detraction and anger and malice. We live in an evil world. I’m glad God promised Noah He’d never flood the Earth again, because sometimes you feel like, “What is going on? What kind of a world is this?” We live in an evil world.
But here’s the thing: some people, a small minority of people, may be called to completely detach from the world itself. You have priests or religists who might be called to live a life of a hermit, or we know a nun, for example, who prays in a monastery and she only has visitors once a year, and she sends letters in and out, but she’s basically cut off from the world. She knows what’s going on, but she’s not in the world like you and I are, as lay people. So, some religious priests, nuns, monks… they may be detached in a way from the world.
But the fact of the matter is in order for us to share the Gospel, in order to spread the Gospel and evangelize, Jesus said in Matthew 28, “Go and make disciples of all nations, baptizing them in the name of the Father, and of the Son, and of the Holy Spirit.” In order to do that, we’ll have to be out and about in the world, and it’s an evil world, and we have to live and operate businesses and engage with people in this evil world. So, how do we do that?
This reminds me of something that St. Paul said in 1 Corinthians, Chapter 5. So, in 1 Corinthians, Chapter 5, Paul was really, really grumpy with the… I mean, Paul is grumpy in a lot of his letters, except for Philippians. He loves the Philippians. They’re his favorites. It’s always like… well, St. Paul in 1 Corinthians 4:15 says, you have had 10,000 guides in Christ, or countless guides in Christ, but you have not had many fathers. I became your father in Christ Jesus. Parents are not supposed to have their favorite, but clearly when you read St. Paul, the Philippians are his favorite. “You love the Philippians more than us!” Yeah, well, they don’t always get into idolatry and go back to the mosaic law to save them like you Corinthians or you Galatians.
So, in Corinth, in 1 Corinthians, Chapter 5, Paul is livid that there is gross sexual immorality taking place in Corinth, and Corinth was… imagine Las Vegas on the seashore. That’s basically Corinth. It’s a port city not too far away from Athens; major cosmopolitan hub. So, there was a lot of idolatry and bad things were going on there. One of those things was a guy who was having sexual relations with his own stepmother, and Paul was saying, “And you are arrogant. Ought you not rather mourn? Let him who has done this be removed from among you.” He was mad about what the guy was doing, but he was more mad about the Corinthians saying, “Live and let live. I don’t want to be harsh. I don’t want to be judgmental.”
Here’s what he says is interesting. 1 Corinthians 5, 9-10: “I wrote to you in my letter not to associate with immoral men”… in the word immoral here, Paul is most likely referring to fornication, sexual immorality… “Not at all meaning the immoral of this world, or the greedy and robbers, or idolaters, since then you would need to go out of the world; but rather, I wrote to you not to associate with anyone who bears the name of brother if he is guilty of immorality, greed, an idolater, a reveler, a drunkard, or a robber.” Actually, then when Paul goes into 1 Corinthians, Chapter 6, he talks about these are the people who will not inherit the kingdom of God: people who unrepentantly engage in drunkenness, revelry, greed, robbery, fornication, and he uses two words to refer to homosexual behavior… arsenokoitai, a man better, and a malakoi, which is the weaker, feminine one. He’s referring to the active and passive partners in male sexual behavior.
But in any case, here’s what’s interesting to me: not at all meaning the immoral of this world. He’s saying, look, if there are Christians who are not acting like Christians and are total hypocrites, don’t be connected to them because people will think all Christians are like that. He’s saying, I’m not saying don’t refuse to be around people who are non-Christians who are sinners… the greedy, the robbers, the idolaters. He says, since then you would need to go out of the world. He’s saying, look, the only way you could not associate with evil people would be if you weren’t even in the world at all, and as I said, there are some people who may be called to that, but if we are going to evangelize, we have to be present in the world.
Jesus understood this. He went out and he dined with tax collectors who were robbers. It would be like if Jesus went out and dined with Enron executives, basically. Why is Jesus dining with Enron executives? Why is Jesus dining with these women who put up these awful Instagram pictures or engage in even worse sexual immorality online? Why is Jesus with the Enron executives or the sexually immoral female models? Jesus would tell us the same thing he told the Pharisees. It is not the well that need a doctor… I think it’s Mark 2:17… it’s not those who are healthy who need a doctor, it is the sick. I came not to call the righteous, but sinners.
So, all right, then. What does that mean? Where do we draw the line? Does that mean we can shop at any store we want because, hey, it’s an evil world, what are you going to do about it? No, I just can’t give you a firm line. I can’t give you a firm criteria to say, this business is okay, this is not okay. You’re going to have to ask yourself… do kind of like an examination of conscience when it goes to a particular establishment. You should ask yourself, what is the business’s core mission, and what percentage of it is illicit?
So, for example, you might go to Target, for example, and Target sells all kinds of stuff. I end up at Target all the time, mostly because the fluorescent lights at Walmart, they just make me really depressed. When I go into Walmart, I just get sad and slow. Target, I always feel a little bit more of a spring in my step, but even there, it’s not the greatest, but it’s useful… but there are things in Target that are evil. They sell DVDs that may not satisfy the legal definition of pornography, but would certainly satisfy the moral definition of pornography. They’ll have books like Fifty Shades of Grey, awful books or blasphemous things, but that’s a very small percentage of what Target does. The pornographic elements in there, it’s a very small percentage; it’s not the core aspect of the business’s mission, and the other things it does are neutral or morally good. It’s good that I can go somewhere and buy diapers, or buy over-the-counter medicine, or buy food. These are good things to supply to people.
Now, contrast this with a pornography store. I guess there’s still some brick and mortar pornography businesses out there, but the business’s core mission is to provide evil, and so a Catholic should never support a mission like that in any way, shape or form. You could compare a Walgreens to a Planned Parenthood. A Walgreens may provide the morning after pill, or not just contraceptives; you go to a Walgreens, there’s the family planning aisle that has condoms, it has contraceptives, and those things are evil, and it may even provide a prescription for something like Plan B, which would be emergency contraceptives, so there’s a bit of a debate about how they operate, about what percentage, if any of it, involves preventing an embryo from implanting in the womb. I might do a full episode just on the morning after pill and emergency contraceptives, because there’s things that pro-choice advocates say that are false, and there’s things that pro-life advocates say about that that we don’t have enough data to back up those claims… so, I might handle that for a future episode.
But you still look at Walgreens, the vast majority of what they do is morally neutral or it’s morally good, compared to a business like Planned Parenthood, whose core business model is promoting evils like abortion, contraception, facilitating fornication, things like that. So, you’ll have to pray, seek discernment… not all business are going to fall into a neat line here of definitely okay or definitely not okay. Just ask, what is the business’s core mission, and what percentage of it is devoted to illicit products? Easily, if more than 50% of what the business does is devoted towards illicit things, immoral things, then Catholics shouldn’t support it. So, more than 50% would be the majority of what the business does.
Now, how much of it is a plurality? How much of it… I guess a plurality would be if it has a lot of different services, but the main 20, 25% of it is evil; that would definitely be cause for concern. Target, Walgreens, I would say it’s less than five percent, maybe even less than one percent. So, use your best judgment and discernment, and follow your conscience on that matter.
Here’s question number two. “Please discuss the minimum wage issue. Do we need a law?” This came up a little bit in the roundtable when we talked about a just wage, that Thomas and, I think, Jose, and one of the biggest criticisms of capitalism is that there can be conditions that people can freely choose to work or not work and set their own working arrangements… that they freely engage in this, they might settle for a wage that is unable to support a family. The Popes, Pope Leo XIII, Pope Pius XI, were very clear that a business owner has a responsibility to provide a wage so that a worker can care for himself and his family.
In the debate, I said that’s true. If you look at the whole of Catholic teaching, we need to create a society where if somebody works, you should be able to support yourself and support a family. I think we were all in agreement on that. So, I think what would have been more helpful on my end to push forward is, how do we get to making sure everyone has the opportunity to find a job so that they can work and provide for themselves and a family? What is the best way to get to that point?
Now, I would argue that free markets and capitalism generally causes wages to rise over time and creates a proliferation of jobs so that fewer people are unemployed, and you’re more likely to acquire skills to get a job so that you can support others. When we look at jobs that pay the minimum wage, it’s about, I think, 1.9% of jobs in the United States pay the federal minimum wage, and the majority of people who work there are unskilled, those who don’t have higher education; often, they’re younger… not exclusively, but usually, they are younger, or they don’t have children. There are obviously exceptions to that.
I think Thomas and Jose would fire back and say, no, every job needs to be able to support… a worker needs to be able to support his family. The point I raised was that, well, look… I wanted to ask them, what is a wage, because you might say, look, a wage should just be able to support a family, even a large Catholic family. The shortcut to get to that is to say that the government should pass a law saying every job needs to be able to pay a wage that supports a family.
Now, this idea of a just wage is going to be different. A wage that supports… when I was a single, unmarried individual, and I was doing pro-life work in Wichita, Kansas, my studio apartment cost $300 a month, and I lived in the nice part of town, also, and it was still $300 a month. So, the wage that I needed to support myself was an unmarried man in Wichita, Kansas, was way different than what a large family might need in Manhattan or San Francisco.
So, right off the bat, I would say if we’re trying to provide a just wage, a federal minimum wage is not the way we should do it, because it violates the principle of subsidiarity. The Catholic principle of subsidiarity says that local organizations should handle issues and matters of concern, and we should only go to larger entities when the local organization can’t do that. Look, Catholics can have different views on the minimum wage; this is my personal opinion. Some Catholics may think, hey, I do think we need minimum wage laws or a certain kind of minimum wage law. You can believe that. That’s fine. That’s something Catholics can reasonably disagree about, though if you do support a minimum wage, I would strongly encourage you not to use something like a federal minimum wage, because we live in a country of 330 million people.
When I went to Bismarck, North Dakota a few summers ago to finish my Masters, I went and saw Avengers: Endgame when I was in Bismarck, and I went Saturday night to see the movie. It cost $5. It cost $5 to see a movie in Bismarck, North Dakota. If I was back in San Diego, it would cost me $15, so markets and prices are so different, and in a huge country like ours, if you’re going to set rules saying wages have to be at a certain level, then I would strongly recommend that should be set by the state or a local municipality. I think Seattle was one of the first to do the $15 minimum wage. So, if you are in favor of the minimum wage, I would strongly encourage you to support state, or at the very least, local municipalities setting that issue, not just a blanket federal approach to the issue… but, of course, that’s my opinion.
But when it comes to the minimum wage, here’s a problem. For Thomas and Jose, the point I brought up that I don’t think was sufficiently answered… that the Popes also say, Pope Pius XI also says we should try to create as many opportunities for people to be able to work and support themselves. So, now you have a conflicting goal because as you raise wages, if you mandate that wages have to be set at a certain level, that’s a price, and if you raise the price of something, the demand for it goes down.
I’ll give you an easy example. A lot of people might enjoy going and getting a cheeseburger. I like getting a cheeseburger. It’s a nice, simple, easy thing to drive through and get food. My wife will tell you I go get them maybe too often. But if the price of getting a cheeseburger went from… I go to different places. A really nice burger might be like $5 or $7. You can go to In and Out and get one for $3, but if a cheeseburger went up to $10, I’m not going to buy as many cheeseburgers, because I’m going to say, oh, that’s more money than I would like to spend for that, so I’m going to cut back on my cheeseburger intake.
The same is true for labor. When the price of labor goes up, the demand for labor goes down. Let’s say that you pass a law that says the minimum wage is $25. It’s not the case that every worker in America will make at least $25. Some will, but many, many others will not be making… let’s say they were making $7 an hour. They won’t be making $25 an hour, they’ll be making $0 an hour because they’ll lose their job.
The Congressional Budget Office said that if the federal minimum wage was raised, I think, to $15 incrementally, 1.3 million jobs would be lost. So, what do you do as a Catholic? Is it good Catholic social teaching to institute a policy that causes over a million people to lose their jobs? Also, shouldn’t we have some jobs that are not meant to support a family?
For example, maybe you have a single income family, and maybe the wife wants to tutor kids at home with her other kids and make some money on the side. We’ve had debates about women working in the past. Let’s say she’s at home and she’s tutoring her kids, and other people drop off their kids. Does she have to make a family wage, or can she just pick up extra hours? What about someone who has retirement income and Social Security and they’re generally provided for, but they want to work just for leisure? They just want to get out and do something, so they’re willing to take a lower wage because they don’t need the money to support themselves.
Having that flexibility in the marketplace generally serves people, and in doing that, you end up getting more jobs that have higher wages anyways. If you try to just mandate minimum wages, it doesn’t work in the way you would want it to work, and when you read Pope Leo XIII, he doesn’t support something like… the Popes don’t say that the government ought to institute some kind of minimum wage. Leo XII, for example, strongly recommended labor unions to enhance the collective bargaining power of employees so they can secure higher wages, and that’s the case in the Nordic countries.
When you look at Sweden, when you look at Denmark, in these countries, they can secure higher wages; it’s not through minimum wage legislation, it’s that most workers are unionized. I am fully in favor for people to be able to unionize, to organize; that’s a great thing to have in the market. I do have, though, a concern about one particular kind of union, and those are public sector unions. Here’s the thing. In a private union, let’s say you have ACME Clothing Company, and the workers at ACME Clothing Company, they form a union to bargain with management to secure higher wages, but let’s say the union gets really, really powerful at ACME and they demand that all the workers at this clothing store get $50 an hour, or something like that, and the management pays them, and then the clothes at ACME Clothing Company cost four times as much as any other clothing store. It’s like Gucci or something. What’s going to happen?
Well, the market will redirect. People will see ACME clothing and say, well, that’s too expensive. I can’t afford that. Then, people won’t shop there. They won’t shop there. ACME Clothing will not have revenue to pay the workers, and the union is going to have to budge or everyone is going to be laid off and out of a job. So, you see that there are checks and balances here between the union serves as a check on the management, but the consumer serves as a check on the union to prevent them from asking for grossly high wages, which is something that Pope Pius XI also condemned. He condemned immorally low wages and immorally high wages that could hurt a business.
But with a public sector union, it’s different. Take the public school teachers’ unions. There’s no competition. As the public, I can’t have a check. If the public school teachers, who right now are lobbying, saying we’re not going to go back to schools unless everyone is vaccinated or every kid is vaccinated, even though private schools, Catholic schools are back in session and there’s no outbreaks… it’s absolutely absurd.
The city of San Francisco… to give you how absurd this is… the city of San Francisco, which sued the Catholic Church for having outdoor masses with more than 12 people… think about how far off the city of San Francisco is. Even the city of San Francisco is so fed up with their teachers’ unions, they have sued the teachers’ unions to get them to go back to work, because the teachers’ unions, instead of reopening public, a.k.a. government schools, they’re spending their time renaming the schools, saying that a school named after George Washington or Dianne Feinstein is somehow offensive. They’re focusing on wokeness instead of their job.
But what’s the problem here? Notice they’re public sector. So, in the private sector at ACME Clothing Company, if the union goes bonkers, I, as a consumer, can choose to not shop there. The business is then punished for their bonkers behavior because they don’t get my dollar. They don’t get my disposable income, and so, the business will suffer. But public schools will always get money from the state. No matter how bonkers the public school teachers’ unions act, the state essentially comes to me with a gun… that was the point I made in the roundtable, that the state is able to get what it wants because it has guns. It has the monopoly on violence. If I don’t pay my taxes, I’ll go to jail. If I don’t appear in court to go to jail, they’ll send people to my house with guns and they’ll take me to jail. The state can take the tax money from me and give it to the public schools no matter how bad of a job they’re doing. So, public sector unions are problematic because there’s no check on what they’re doing.
In any case, there’s a lot more I could talk about with minimum wage, but I would say that capitalism as opposed to distributism and socialism makes the balance… it strikes the balance so that you’re able to create a society where many jobs proliferate and you are going better at a trajectory to get jobs that provide wages to support for people than trying to just mandate it at a federal level by setting a wage, which is a price for labor; if you try to set the price beyond what it’s worth, people whose labor is not worth that just won’t be hired.
My first job was a minimum wage job. I tore tickets at a Harkins movie theater. I was paid $5.75 an hour. If that had been $10 or $15 an hour, nobody would have given dopey, 16-year-old Trent a job, because I was dopey. I was bad at that job. I was bad at working. But you know what’s really good? That job taught me how to have a work ethic. It taught me how to not be a little screwball, and then from that, I was able to get my next job at Macy’s Shoes, which was a commission-based job, and during feast years or seasons, I was making $20, $30 an hour; during famines, I was making $7 an hour because I make commissions on the shoes I sold. But I was glad that I had a job that was at a wage that reflected the price of my labor, because the price of my labor at that time was really low, because I was a screwball. I was 16, and then I was able to learn good working practices to be able to secure a job at a higher wage.
All right, here’s the next one. “I have an atheist friend who claims socialism does not include state-owned property. He claims socialism is only when the employees own the company and then take part in the decisions. How do I answer him?”
Well, employee ownership of companies is something that can exist in any economic system. The capitalist model that I defended in the roundtable perfectly is harmonious with a company that freely chooses to have a structure where the employees are co-owners in the company, and I agree that that can be a good model if it works for you. Where I disagree is with a federal government saying that every single company must operate with this model, because sometimes it doesn’t always work to have all the employees be equal co-owners. Sometimes it seems to work well; I think Covenant Eyes, the anti-pornography software company, they recently became all employee-owned, and that’s great, but some companies that are employee-owned… some of it is just employee stock. They’re not managers, but they get stock returns from the company. That can be a good incentive. If you’re free to do that, great.
But others, like the really small… I read a story about a small vegan bakery, where it had seven employees and they’re all equal owners. The problem is with that is that the company has a hard time growing because in order to make any decisions, you have to get a consensus among seven or 12 or 20 people, and it becomes almost impossible to do. It becomes really inefficient.
So, employee ownership of companies can be in any economic model. Where it starts to become socialist is when the government demands that employees… all businesses subscribe to this model, but even there you would have disparities. People would not be satisfied if they just demanded all companies do this. Consider, for example… let’s say a Chick-Fil-A and a McDonalds. Chick-Fil-A, I think, probably has higher wages, seems like a nicer working condition. The employees in Chick-Fil-A always get Sunday off; that is a really nice perk. So, those employees are doing better off probably than McDonalds; if I had to work in fast food, I would work at Chick-Fil-A rather than McDonalds. That’s my personal preference.
So, even if the McDonalds employees own the McDonalds, and the Chick-Fil-A employees, they own that franchise, some places, you’re going to have higher wages and better working conditions, and you’ll have those disparities, and people will complain about those disparities. So, what people will be upset about… especially, what about a big, rich technology company, where the employees involved are all obscenely wealthy and they’re all co-owners in that? Socialists will still be opposed to that kind of disparity and then try to say, well, it’s not just that employees own their own company, it’s that everybody, the entire society owns all of the means of production.
But as I mentioned in the debate, we’ve got, what, 21 trillion dollars of GDP in this country? You and I don’t have the time to sit down and decide how all of that should be managed in our country. So, if it’s the idea that the workers, as a whole, own the country’s means of production as a whole, the state ends up doing that on their behalf. The state ends up doing that, and then that ends up being socialism, and you see its flaws, especially in a country like Venezuela. Check out my book for more of the unfortunate details in that regard.
Here’s the next question. “Both of your roundtable peers based their arguments against capitalism not on wealth creation, but on the morality of capitalist economies. What’s the best moral argument you’ve heard against capitalism, and why do moral arguments against capitalism fall short?”
Well, there’s two arguments. One I would say is that capitalism can encourage sub-human or inhuman working conditions. When I read about sweatshops in Bangladesh or in East Asia, I get sad. I get depressed. When I read about… just a few years ago, there was that garment factory that collapsed in Bangladesh and killed a bunch of workers. It’s sad to see that, and I don’t like that, and I would love to just pass a law saying if you are going to have a company, it has to meet this regulation and that regulation. I would just want to do that, and we should do that in countries where we are capable of doing that. We did that here in the United States.
100 years ago, you had the Triangle Shirtwaist Company fire. This was a garment company. Women worked there. The working conditions were awful. The managers were so concerned about theft they created fire hazards. They locked all the women up in this high-rise building to work in a fire trap, and then it caught fire, they couldn’t get out; women were jumping from the building, throwing themselves down the elevator shaft, and that encouraged reforms to improve worker safety.
So, I don’t like it. I agree that capitalism can create conditions where unscrupulous business owners can subjugate their workers, and that’s what Pope Leo XIII spoke about in Rerum Novarum, saying that employers cannot treat their employees… don’t grind them into dust. Don’t give them jobs unsuitable for their sex or their age. Don’t treat your employees like they’re a mere commodity, like a sack of coal.
But at the same time, if you just try to say, I’m just going to outlaw this, that doesn’t work either. Paul Krugman… so, Paul Krugman is a fairly liberal economist, published in The New York Times. He’s definitely not some kind of Reagan-ite capitalist or anything like that, but even Krugman has defended sweatshops or factories overseas with working conditions we would never tolerate in the United States, because it’s better than the alternative. Krugman was saying, look, if you outlaw sweatshop labor, it’s not like the people working in the sweatshops end up going to work at a nice office building; they just go back to even worse work in agricultural work, mining, or in many cases for women and children, they just go to prostitution.
So, the idea here is that… I would say that in these capitalist ventures, especially in overseas, you go through kind of a rough period with capitalism where, when you transfer from… and we saw this in Europe. If you look at Europe now, especially look at England… England now seems like a nice, pleasant place. I’m not a big fan of the food there. I don’t quite get it, but otherwise, England seems like a really nice place to be; a little cold, a little foggy, but there’s a magic to it. If you like C.S. Lewis and Tolkien, you would like England.
But 200 years ago, if you went to English towns, they were dirty, they were disgusting. The working conditions were awful, but it was still better than the hand-to-mouth agrarian lifestyle people were fleeing from to go and work in the cities, and so, you kind of had to push through this hard period, and this happens in all other kinds of capitalist environments. You go from agrarianism to modern economies. You pass through a rough growing pain where you have awful working conditions, environmental issues, but then as the standard of living rises, as wages increase, as wealth is created, as people’s basic needs are met… food, shelter, clothing, medicine… as their needs are met, their wants… they want their wants to be met. They want working conditions to be better. They want the air to be nice. They want the water to be clean.
So, you transition out of these growing pains, and so, England today is nothing like England was 200 years ago, but 200 years ago, it was a good stepping stone from how England was 500 years ago, and as I pointed out in the debate, with especially distributists, the older ones… the newer distributists might agree with me on this, but I think that Thomas had a very rose-colored glasses view of what life was like for agrarian living and medieval peasants, because if you go back to saying, well, we can ensure everyone has a high age, the way they did that 500 years ago… the way they did that in the Middle Ages was through guilds, and the guilds were basically like unions with guns. They were like unions and cartels mixed together. They didn’t have guns, so they had muscle. They had the king and the government to back them, and they would say, okay, there can only be this many cobblers, there can only be this many blacksmiths, and you have the right to work in this field once you’re apprenticed and once we deem you capable of being able to work in this field.
So, what happened was there’s a lot of people who simply couldn’t get jobs in those fields. They were crowded out by the guilds, and they ended up half having to become beggars as a result. Actually, the guild mentality we still see today with occupational licensing, demanding that any job, even the simplest kind of cosmetic job, requires onerous licensing, which punishes immigrants that might go over to the U.S. and want to start a nail salon shop or something like that and burden them with onerous occupational licensing.
I’ll give you another example: tour guides. People want to say, I’m going to give you a tour of the city here… that you have to go through a ridiculous licensing process to just walk people around town and tell people about the city. Oh my gosh, is it going to be some horrible human drama if the tour guide doesn’t get everything quite right, as if the government always gets its own facts right? Just give me a break when it comes to that.
The other moral argument is the surplus value argument, which is one that sounds good at first. The idea here is this, that the capitalist, the guy who owns the business… he’s stealing money from the workers. So, if a worker makes a chair for $10, and the capitalist sells the chair for $20 in his store, where did the extra $10 come from? The chair is worth $10. Where did that other $10… that should have gone to the guy who made the chair, not the guy who merely sold it; put “merely” in quotation marks because I’ll return to it shortly.
So, people will say that it’s a surplus value, and the capitalist is stealing it from the labor. Where does the extra value come from? The problem here is that this view of economics derives from Marx’s labor theory of value, the idea that the value, the price of a good, is related to the value of the labor that is put into it. I know some people are saying that distributism sounds like Marxism, and sometimes it does, frankly… when it says a just price, for example, is what a good is worth in virtue of the labor that was used to create it.
Now, in some cases, yes, labor does determine the price of a good, but primarily, what determines the price of a good is the demand for it. For example, imagine you had two houses that used the same construction material and company and teams, so it costs the exact same amount of money to build these two houses. But there’s one difference between the two houses: one house is gray/white, it’s the standard color for houses that are usually sold, and the other house is hot pink… a hot pink house. Both homes are sold for $500,000, or offered for $500,000, and the white or gray house goes in a week, but the pink house… nobody buys the pink house. So, would it be unjust for the owner of the pink house to drop the price to $450,000 or $400,000… let’s say $450,000. Would it be unjust? After all, if they were built with the same labor, same materials, same team, according to the older medieval just price theory, you would have to say, well, no, they’re both worth the same. You can’t charge less for them what it’s worth.
Yes, you can, because here’s the difference. Even though it costs the same to make a white house and a pink house, hardly anybody wants to buy a pink house. Demand sets the price for what the home is worth. Some people may say, well, I’ll buy it, but I’ll buy it for $430,000, or I’ll but it 450 because I’m going to have to pay $20,000 to repaint it to make it nice. So, the demand will determine that when it comes to the price.
So, that’s important to understand, that when people engage in trade, the price is related to the value we have, and that is why when you exchange, when you freely exchange… some people, when they look at exchanges in the market, they think that one person has to win and the other person has to lose, but that’s not true. If it’s a free exchange, then you will end up both people win. It’s a win-win situation, and the fact that you engage in the trade creates value. That’s how wealth is created. When you have all these free interactions, people think, well, look, if the price of the labor and the goods is the same, and we’re trading and it’s equal, how do you ever make wealth?
Well, you make wealth by having more people’s needs being met. There’s value in the trade in and of itself. I’ll give you an example of this. This was back in 2005. Kyle McDonald was a Canadian blogger, and he engaged in a series of trades over a year, and in one year, he started with a red paper clip, and in one year, after the end of all these trades, he got a two-story farmhouse. How did he do it? Well, if you go online, you can look at the trades. He traded the red paperclip for a pen; he traded the pen for a doorknob, and it was a hand-sculpted doorknob; he traded the hand-sculpted doorknob for a camp stove; he traded the camp stove for a generator; the generator for an instant party; the instant party for a Ski-Doo; the Ski-Doo for a two-person trip; the two-person trip for a box truck; the box truck for a recording contract; the recording contract for a year’s rent; a year’s rent for an afternoon with celebrity Alice Cooper; the afternoon with Alice Cooper for a KISS motorized snow globe.
He traded the snow globe to Corbin Bernsen… he’s on Psych, he’s a great actor… for a role in a movie, and the role in the movie he traded for the two-story farmhouse. A lot of these things, you might say, well, why would someone make that trade? Go back to the beginning. Why would someone trade a camp stove for a hand-sculpted doorknob? If you go on the market, buying a doorknob is probably going to be cheaper than a camp stove. Well, not necessarily. If it’s a used camp stove and the guy just hates camping, but he needs a doorknob, and the doorknob is a really cool hand-sculpted doorknob and he doesn’t know where he could find another one like it, then its value increases for him. The value increases based on the demand of the particular consumer, not necessarily just the labor that went into it. That’s why when it comes to economics and prices, you have to be able to factor that in.
So, it’s a fair trade. If no one is compelled to get involved, it’s a fair trade, and value is created as a result, and value is created then when the capitalist buys a chair wholesale from the laborer, sells it at a higher price at retail. Also, he offers more. He doesn’t “merely” resell it, because when he sells the chair… my wife and I, we were looking at buying stuff on Nextdoor. You buy something… some people make furniture and they sell it directly on Nextdoor, but it’s a gamble there because you might buy something and not like it. Guess what? All sales are final.
But there’s a convenience in going to a store with a return policy, with a pleasant sales associate, with lots of inventory for you to be able to peruse and look at. Guess what? For all those conveniences, you have to pay for them, and how do you pay for it? Well, what they sell has to cost more than what they bought at wholesale, for example. Now, some people might critique me and say, Aquinas allows for marking up for wholesale, [inaudible 00:40:31]. There’s more that we could get into here, but those, I would say, are the best moral arguments that I’ve heard, and otherwise, I haven’t heard any other compelling ones.
My main point to bring up is, capitalism is not perfect. It is a human tool that we discovered, but it allows us to harness our God-given self-interests in order to indirectly benefit others. Now, it doesn’t mean that it’s perfect. As I said in the debate, it’s an aspect of human nature that grace can build upon. It will not fix the world, and people who think… that’s why with capitalism, there are extremes, like Ayn Rand. She wrote Atlas Shrugged, for example. If you want to take a good nap, you can open that brick of a book and start reading it, especially John Galt’s speech.
But Rand wrote the virtue of selfishness, and it’s a very selfish, and it’s a very pro-capitalist mindset, but it’s also opposed to Christian virtue. So, I would say that Catholics cannot be Randian capitalists, but that’s not the only game in town. We can be like John… isn’t it, what, John Mackey, I think? He’s the Whole Foods CEO. He’s a conscious capitalist. He wants to use wealth in order to benefit workers, to benefit consumers. People who have wealth should use it in an efficient way to help others.
You have Elon Musk, for example… he went on Twitter and just said, hey, how do I use my fortune to benefit the world? People said, there are things you could do that will help and things that won’t. You have Bill Gates and Mark Zuckerberg… they spent millions of dollars on public school education. There’s no return for that. They would have been way better if they had just spent those tens of millions of dollars… they should have just spent that on mosquito nets to fight malaria and deworming initiatives in developing nations. That way, it would have done far more good than wasting it on the public school monopoly here in the United States… although you don’t have to be a millionaire to do that. You can go online right now. Search Against Malaria. I think it’s, what, $5, and you buy a malaria net? That will save somebody’s life in a place that’s overrun with malaria.
Kiva is one. I haven’t fully researched Kiva, but it’s the most popular, but there are other organizations you can go to that have micro-loans. There’s people over in developing countries, they just need $100 to buy sewing equipment for their tailoring company in this village in Mozambique, or something like that, and they need the loan, but banks consider them too risky and won’t give them the loan. You can give them a 0% interest loan. 0%… you can set interest if you want, but you can also do 0%. Give them $100, they’re on their feet; you get the $100 back; you give it to somebody else who wants to start a business and thrive in the developing world. There’s lots of ways to do this. Maybe I’ll do a future episode on Catholic capitalism: how to use our money wisely.
Here’s the thing. In the Old Testament, in Deuteronomy, it says, “Love the Lord, your God, with all your heart, mind, and strength, and love your neighbor as yourself.” Love the Lord with all your strength. What does that mean? It doesn’t mean with your ability to benchpress. It means with your (foreign language), in Hebrew, and one of its primary meanings is money. Love the Lord with all your money. Love your neighbor with your money. The love of money is the root of all evil… 1 Timothy 6:10. It’s really easy to love money. It’s a temptation. It’s a gigantic temptation. We have to pray and have grace. It’s why we veil ourselves in the Sacraments as Catholics: to have grace, to not serve money. You cannot serve God and money. We do not serve money. We, instead, must make money serve us and serve our fellow man.
That’s what I believe we need to do and we ought to do. So, hope this was helpful. Thank you guys for submitting these questions, and I look forward to more of them. If you want to go to TrentHornPodcast.com for future open mailbags, other great stuff… you guys have been awesome, and I hope you have a very blessed day.
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