It is understandable that Pope Francis has misgivings about market economies, given that his formative experience comes from his native Argentina, which has been governed horribly and has much widespread corruption and poverty.
It is unfortunate that he seems to have absorbed the Marxist critique of capitalism that is embedded in the Liberation Theology endemic to much of Latin America.
It is a tragedy for the poor that he apparently has never read, or does not accept, the wisdom of Peruvian economist and hero Hernando de Soto in his book The Mystery of Capital. I pray that Francis will seek de Soto’s counsel.
The Mystery of Capital
In his revelatory book, de Soto sees the primary problem for the poor throughout the developing world as the fact that most of them are excluded from the formal, legal economy and must operate in the shadows of the informal economy. Thus, the extension of property rights to the poor in the form of having title to their homes and property is seen as the beginning of the extension of capital, credit, and legitimacy that will unlock their creativity and productivity, leading to prosperity for all. This soft infrastructure of the rule of law is what the Third World lacks that developed countries do not.
Thus, capitalism is not the problem, it is the lack of a completely inclusive capitalism in the Third World that causes such widespread poverty even with supposed market economies.
The Leftist Politics of Climate Change
There is some evidence that human activity may contribute to a slight warming of the Earth’s average temperature, all else held equal. But the histrionic claims of widespread death, disease, and destruction in 100 years unless massive taxes on carbon or other means of dramatically raising the cost of energy are enacted are farcical. There is no scientific basis for such claims. And the guaranteed result would be much greater suffering for the world’s poor.
Remember that a computer model run is not a test of a scientific hypothesis. In fact, climate change seems to be an untestable and unfalsifiable hypothesis, because any predictions made now will not be tested for 100 years, conveniently after today’s climate scientists have collected their salaries and other largesse, and have passed to the great beyond. We should return to first scientific principles, and the scientific method a la Karl Popper.
If gigantic costs are to be imposed on society based on a scientific hypothesis, then the burden of proof should be very high. Cost-benefit analysis and a rational search for lowest-cost solutions should be the next step, rather than attempting to lower the standard of living for all to something like that of 1850 out of a moralizing desire to impose a painful penance on humanity.
The Search for Solutions
Even if the disaster scenario is true, the way to approach the problem is as an engineering problem. Impoverishing people today for a slight postponement of disaster a century from now is a sadistic gesture, not a sensible program for change.
Much more sensible are the suggestions of Bjorn Lomborg to invest in technology (such as solar power improvements) that can solve the problem out of abundance rather than austerity and poverty. This is the way to actually help the poor.