Fairness in the 21st Century

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After the score of reviews already written about Thomas Piketty’s Capital in the Twenty-First Century over the last few months, it is futile to rehearse the same arguments about the economics of the book yet one more time. Suffice it to refer the reader to the reviews of Debraj Ray, Larry Summers, or Per Krusell and Tony Smith. However, the readers of this newsletter may find of some interest to reflect not on the book itself, but on the reasons of its success and why those reasons point out to the challenges that Catholic economists need to address to help building a fair society in the twenty-first century. …

Inequality in Developing Countries: What Do We Know?

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In an April 28 2014 tweet, the Pope declared inequality to be “the root of social evil”.  Thomas Piketty’s book, Capital in the Twenty-First Century attracted considerable attention, particularly on this side of the Atlantic.  By presenting a number of facts on inequality over the past 200 years, it forcefully documents the almost-uninterrupted increase in the concentration of wealth that took place within the wealthiest nations.  An intense and often passionate debate ensued on what these facts meant for economic development in general and what policies were warranted.  While the countries included in Piketty’s analysis are exclusively the wealthiest ones, one wonders about the extent to which these observations and the broader lessons derived from them are applicable to the developing world (Milanovic 2014).

Welcome from the President of CREDO

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Welcome to the inaugural issue of the CREDO newsletter, “On the Margin.” What do you think of the title? More importantly, what did it make you think of?

The phrase “on the margin” has many different meanings to many different people. To research economists, we use the phrase to think about the costs or benefits of an additional good consumed, worker hired, etc. We think of phrases like “marginal cost”, “marginal product”, or “marginal utility”. To a finance economist, the phrase might mean buying securities “on the margin”, that is, with borrowed money. To businesspersons, the word “margin” might remind them of profit margins. To a person directly engaged with the social ministry of the Church, “on the margin” is a phrase that emphasizes a commitment to those on those people who are sometimes forgotten or neglected members of society, e.g., the poor, indigenous peoples, women and children, the elderly. …

Minimum wage/just wage/family wage

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Pope Francis–Time Magazine’s Person of the Year–has captured the attention and the imagination of the world.  His recent Apostolic Exhortation, Evangelii Gaudium (The Joy of the Gospel) has provoked much comment and no little controversy.  In it, echoing his predecessors, he laments a consumerism focused on things rather than people.  He mourns for the many places where humans serve the economy rather the other way around.  He condemns what he calls a “throw away culture” that excludes and marginalizes the weakest and the most vulnerable of our brothers and sisters.

His words should provoke reflection–and lead to action–especially in the face of the challenges faced by low-wage workers in our economy today. …

Why Minimum Wage Increases are a Poor Way to Help the Working Poor

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Recently Archbishop Wenski, on behalf of the U.S. Conference of Catholic Bishops, wrote: “while they are not economists or labor market experts…they see the pain and struggles caused by an economy that simply does not produce enough jobs with a just wage.”  They do propose one solution—a raise in the federal minimum wage—because currently it fails “to provide sufficient resources for individuals to form and support families.  A full-year, full-time worker making the minimum wage does not make enough money to raise a child free from poverty.”

Neither the Bishops’ concern over the economic plight of the working poor nor the economic policy prescription they support is a surprise. …

As a Catholic economist, the minimum wage has always presented a conundrum for me.

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As a Catholic economist, the minimum wage has always presented a conundrum for me. The argument that the minimum wage does not deliver the poverty relief it promises, and that programs such as the Earned Income Tax Credit (EITC) are more efficient, is rather persuasive. However, I worry that the current system does too little to preserve the dignity of work for low-skilled workers. The dignity of the person must be upheld in all aspects of life, including work. As stated in the Catechism of the Catholic Church (CCC),“In work, the person exercises and fulfills in part the potential inscribed in his nature (CCC, 2428).” Worker dignity is preserved in part when one’s efforts are “able to draw from work the means of providing for his life and that of his family, and of serving the human community (CCC, 2433).” In an increasingly global economy, the ability for low-skilled workers in the U.S. to provide for themselves and their families has diminished. …