WASHINGTON (CNS) – The tension in U.S. economic life is between “wealth creation” and “wealth capturing,” according to an economics professor who delivered a keynote address Feb. 11 at the 2013 Catholic Social Ministry Gathering in Washington, D.C.
According to Charles M.A. Clark, a senior fellow at the Vincentian Center for Church & Society at St. John’s University in Jamaica, and an economics professor at the university, wealth creation allows those on the lower rungs of the economic ladder to acquire money for spending, saving or entrepreneurship.
But wealth capturing creates economic inequality, leading to the contentiousness seen in Congress and elsewhere, Clark said in his address, “Catholic Social Thought and Our Current Economic Policy Challenges.”
“Fake issues” take up space in the policy debates, Clark charged. One such issue, he said, deals with the size of government. “It was almost impossible to get aid to the hurricane victims in New York and New Jersey,” he said, because some in Congress were “arguing things that should have been settled a long time ago.”
Other fake issues cited by Clark included the notion that government will run out of money, that government spending crowds out private money, that taxes are too high to create jobs, that deficits will cause interest rates and inflation to rise, and that “government is like a household.”
Clark said a favorite notion of some in Congress is that President Barack Obama is a socialist. Adding that he relished a chance to be able to use a popular phrase, he continued: “Some of my best friends are socialists. Barack Obama is not a socialist. … He has favored some of the most moderate Republican policies of the 1990s.”
A recent issue flaring up in the country, Clark said, is that the U.S. should have a “constitutional government,” acting in accord with what the Founding Fathers would have done. But the Founding Fathers, he added, never had to deal with a society as complex as America in the 21st century.
“Health care for the Founding Fathers was making sure you had enough leeches,” he said. Education expenses, Clark added, also were of little concern since “all you needed was a strong back. And whenever we needed more land, we just stole more from the Indians.”
The largest companies in the private sector, he charged, are “sitting on” an estimated $1.9 trillion in reserves that could be used to create jobs, and Congress cannot agree on federal job-creation incentives because of a philosophical divide among its members.
Financialization of the Economy
Clark said issues associated with inequality-creating wealth capturing are the “financialization” of the economy that brought about the last recession, industry monopolies and lobbying to protect the financial gains made by companies at the expense of potential future innovators.
“The real issue, No. 1, is poverty,” Clark said. “Poverty is very high, and it’s persistently high.” The “war on poverty” begun by President Lyndon Johnson in the 1960s and continued to some degree by President Richard Nixon cut poverty in half from the late 1950s to the early 1970s, but he said lawmakers should have kept attacking the problem.
Clark said the U.S. ranks last among the 19 most industrialized economies, as ranked by the International Monetary Fund, in enacting public policies to cut poverty. Without public policies designed to cut policy, the U.S. would rank a bit below average in poverty rate among the other industrialized nations. But when public policy is factored in, U.S. poverty ranks highest; the other 18 countries have effectively cut their poverty rates in half.
In a response to Clark’s address, Eric Mitchell, director of government operations for the anti-hunger lobby Bread for the World, took note of a host of numbers spelling out the effects of poverty in America.
About 44.7 million Americans are fed with Supplemental Nutrition Assistance Plan (SNAP) benefits, once known as food stamps. Of those households receiving SNAP benefits, 99 percent are below the poverty line, currently $28,000 a year for a family of four.
Of all food assistance given in the U.S., Mitchell said, only five percent comes from private sources such as food banks and churches. The rest comes from federal outlays such as SNAP, school meals and Women, Infants and Children benefits.