Thursday, October 27, 2011

Right Diagnosis, Wrong Cure

Fr. Robert Sirico writes on what the Vatican got right and wrong in the recently released document on the global financial crisis in a WSJ piece called The Vatican's Monetary Wisdom:

Contrary to what is being said, this document presumes the existence and continuation of "free and stable markets." The problem is that the Vatican imagines that a "world central bank" and a "global public authority" can do this with more competence than national governments that have a checkered history in this regard.

It was centralization that caused this mess in the first place. Central banks created paper money, easy and limitless credit, and the moral hazard that accompanies them. Why should we believe that more centralization is the solution when experience suggests precisely the opposite?

Many people who favor free markets worry about the implications of the Vatican document. And there is no question that it will be used around the world to stir up political mischief. It will also be used to convince the Catholic faithful that big-government solutions are morally justified. But let's not forget that there are really two parts to the document: the diagnosis and the prescription. We should embrace the former and eschew the latter.